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Factual Issues Related to Motivation to Combine Preclude SJ of Nonobviousness

September 19, 2008

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Last Month at the Federal Circuit - October 2008

Judges: Lourie (concurring), Rader, Bryson (author)

[Appealed from: E.D. Tex., Judge Davis]

In Commonwealth Scientific & Industrial Research Organisation v. Buffalo Technology (USA), Inc., No. 07-1449 (Fed. Cir. Sept. 19, 2008), the Federal Circuit affirmed entry of SJ that Commonwealth Scientific and Industrial Research Organisation’s (“CSIRO”) U.S. Patent No. 5,487,069 (“the ‘069 patent”) was not invalid for anticipation, for inadequate written description, or for introducing new matter.

The Court also affirmed a grant of SJ that Buffalo Technology (USA), Inc. (“Buffalo”) infringed the ’069 patent. The Court, however, reversed entry of SJ of nonobviousness in light of genuine issues of material fact, primarily with regard to a motivation to combine prior art references.

CSIRO’s ’069 patent is directed to wireless LAN (“WLAN”) technology that transmits different portions of a series of signals containing data over a number of different frequency channels. By transmitting data on many different frequencies, the system ensures that none of the signals in the series, or their echoes, interferes with other signals transmitted on different channels, even in an indoor environment.

CSIRO sued Buffalo for infringement of the ’069 patent. After construing the asserted claims, the district court addressed the parties’ cross-motions for SJ and granted SJ in favor of CSIRO on the issues of invalidity and infringement. After the court entered a permanent injunction, Buffalo appealed.

On appeal, the Federal Circuit first addressed the standard of review. Because the parties had stipulated that the district court could make findings of fact when deciding cross-motions for SJ on the issues of anticipation, new matter, and infringement, the Federal Circuit held that the “clear error” standard of review applied to its review of these rulings. The Court concluded, however, that the stipulation did not apply to the issue of obviousness.

Regarding anticipation, the Court held that there was no clear error in finding that a 1989 article by J.C. Rault et al. did not anticipate the ’069 patent. The district court found that, although the Rault article disclosed certain limitations of independent claims, it did not anticipate all the limitations of the independent claims, including language in the preambles limiting the use of the invention to an indoor environment. Further, because Buffalo never contested that the preamble language limited the claims, the Court held that Buffalo waived this argument on appeal. Accordingly, the Court affirmed the SJ of no anticipation.

The Court rejected Buffalo’s alternative argument that the claims were anticipated by a combination of two prior art articles because they were “incorporated by reference” and thus constituted a single reference. In rejecting this argument, the Court noted that, because the first reference cited the other reference only in a footnote, the citation did not “identify with detailed particularity what specific material it incorporates and clearly indicate where that material is found in the various documents.” Slip op. at 10-11 (quoting Advanced Display Sys. v. Kent State Univ., 212 F.3d 1272, 1282 (Fed. Cir. 2000)). Accordingly, the Court affirmed the grant of SJ of no anticipation.

The Court turned next to the grant of SJ that the asserted claims of the ’069 patent were not obvious. The Court concluded that Buffalo had presented sufficient evidence of a genuine issue of material fact with regard to whether there was a motivation to combine the prior art. The Court also concluded that the district court’s application of the teaching, suggestion, and motivation test was unduly rigid in view of the Supreme Court’s decision in KSR International Co. v. Teleflex, 127 S. Ct. 1727 (2007). Applying KSR, the Court observed that under the correct analysis, “any need or problem known in the field of endeavor at the time of invention and addressed by the patent can provide a reason for combining the elements in the manner claimed.” Slip op. at 14 (quoting KSR, 127 S. Ct. at 1742). The Court also noted that, even before KSR, it had held that the motivation to combine particular references can be found in the nature of the problem, and does not have to be specific to the problem itself.

Here, the Court found that Buffalo’s expert created a material issue of fact when he testified that the suggestion to combine the prior art references derived from the fact that all the references addressed the same problem—the multipath issues that affect wireless radio communications in hostile environments. Because the problems addressed by the prior art were sufficiently similar to the problem addressed by the patented invention, the Federal Circuit concluded that there was a factual issue as to the motivation to combine the prior art references. Accordingly, the Court vacated the order of SJ with respect to obviousness.

The Court also found a factual dispute related to the secondary considerations of the obviousness inquiry, such as commercial success, long-felt but unsolved need, and failure of others. The Court found that CSIRO had put forth evidence showing that others had tried and failed to find the solution that CSIRO patented, in part due to the state of the art of silicon process development. The Court also rejected other bases of nonobviousness, including lack of corresponding structure in the prior art and the allegedly improper order of the elements disclosed in the prior art. Finally, in light of the absence of any discussion of the dependent claims by the district court and of conflicting expert testimony regarding these claims, the Court reversed SJ of nonobviousness as to the dependent claims. For these reasons, the Court reversed and remanded the grant of SJ of nonobviousness.

The Federal Circuit next addressed the grant of SJ that CSIRO did not add new matter to its patent application by amending the specification to replace several references to frequencies “in excess of 10 GHz” with the words “radio frequencies.” Because the question of whether new matter has been added to an application is a question of fact, and the parties had stipulated that the district court would act as the fact-finder for this issue, the Federal Circuit reviewed the new matter ruling for “clear error.” The Court first noted the presumption of validity despite amendments to the specification. The Court then found no clear error because it was apparent from the original application that references to 10 GHz minimum transmission frequencies were “presented as useful embodiments of the invention, not as limitations to the invention as a whole.” Id. at 26. Moreover, the Court held that other language in the specification and a “subtle allusion” in Figure 6 also supported the finding that the original application was not confined to a frequency range in excess of 10 GHz. Id. Lastly, expert testimony from both sides as well as the testimony of the inventors themselves supported the finding that the original application disclosed an invention that is operable at lower frequencies. Because it found no clear error, the Federal Circuit upheld the grant of SJ with regard to new matter.

The Federal Circuit next reviewed for clear error the grant of SJ that Buffalo infringed certain claims of the ’069 patent. The Court first addressed whether Buffalo infringed a means-plus-function limitation reciting a “means to apply data reliability enhancement.” Although Buffalo acknowledged that its accused devices performed this function, Buffalo argued that its devices nevertheless did not infringe because the structure was not identical or equivalent to the structure disclosed in the specification. The structure in the specification was an encoder consisting of two subcomponents, only one of which performed the “data reliability enhancement” function of the limitation. Buffalo argued that both subcomponents of the encoder were inseparable and, because its device did not perform both functions of the subcomponents, it did not infringe the claim. The Court disagreed, holding that the two subcomponents were separable and distinct, even though the ‘069 patent described them as performed by a single device. Noting that the district court had compared only the accused device with the separable subcomponent that performed the data reliability enhancement function, the Federal Circuit upheld the finding that the structure that performed this function in the accused devices was identical or equivalent to the structure disclosed in the ’069 patent.

Buffalo next contended that its devices did not have structure that performed the “means . . . for interleaving blocks of said data,” as required by the asserted claims. Buffalo conceded that its products performed only single bit-by-bit interleaving. However, Buffalo argued that a “block of data,” as recited in the claims, consists of two or more bits, so Buffalo could not infringe the claims. The Court disagreed, holding that, in the context of computer engineering, “a block of data is most reasonably understood to consist of one or more bits.” Id. at 34. The Court further noted that the ‘069 patent itself disclosed single-bit interleaving. Based on this finding, and on uncontroverted evidence presented by CSIRO’s expert, the Court upheld the district court’s conclusion that Buffalo’s products infringed because they, and the structure in the ‘069 patent, interleaved data in substantially similar ways and produced the same result.

In a concurring opinion, Judge Lourie addressed the issue of invalidity due to new matter as an alternative basis supporting the Court’s judgment. In Judge Lourie’s view, the original application for the ’069 patent did not support that the invention could operate at frequencies below 10 GHz. Thus, by substituting the language limiting the transmission frequencies to at least 10 GHz with language stating that the invention operates “at radio frequencies,” CSIRO was able to assert broader claims against transceivers that apparently would not have infringed the original, more limited, claims. Judge Lourie concluded that “[s]uch a change could well be viewed as the introduction of new matter that invalidates the patent.” Concurring op. at 2.