IN RE AFFINITY LABS OF TEXAS, LLC: May 5, 2017. Before Taranto, Chen, Stoll.

Takeaway:

• The estoppel provision under 35 U.S.C. 317(b) does not extend to all parties and all claims, but rather only to an inter partes requester that was a party to the civil action (or its privies) and only to the litigated claims in the civil action.

• For evidence of commercial success there must be an explanation or analysis that corroborates the relationship between the claims of an asserted patent and the relevant market.

• The mere fact of licensing alone cannot be considered strong evidence of nonobviousness if it cannot also be shown that the licensees entered into their agreements out of respect for the patent rather than to avoid the expense of litigation.

Procedural Posture:

Patent Owner Affinity appealed from the Patent Trial and Appeal Board’s decision which arose from a merger of two inter partes reexaminations and an ex parte reexamination.

Synopsis:

• 317(b) Estoppel /Petition to Terminate: The CAFC affirmed the Board’s decision to terminate a reexamination as to only the claims in which a final decision in the civil action had been entered. The CAFC rejected Affinity’s argument that the Board improperly maintained all three reexaminations over the estoppel provision of pre-AIA 35 U.S.C. § 317(b). The decision not to terminate all three reexaminations did not frustrate section 317(b)’s underlying policy goal of preventing duplicative, harassing actions. Specifically, the CAFC concluded that a “straightforward reading of the plain language of section 317(b)” precluded Affinity’s overly broad interpretation of the estoppel provision. The Board correctly did not terminate all three reexamination proceedings as they involved several claims beyond two litigated claims, the other inter partes reexamination requester had no involvement or relationship to that prior litigation, and the third proceeding was an ex parte reexamination. Specifically, the CAFC found no basis in the statute for Affinity’s argument that the final decision in the Volkswagen litigation should have preclusive effect on the reexaminations requested by King or Apple. By its plain and unambiguous terms, pre-AIA section 317(b) extends only to inter partes reexaminations—not ex parte reexaminations. Thus, the estoppel effect of the statute has no bearing on the ex parte King reexamination. Moreover, the CAFC held that the statute imposes the aforementioned limitations only on a requester that was a party to the civil action or its privies. Since Apple was neither a party to the Volkswagen litigation nor was there any evidence Apple was Volkswagen’s privy, the CAFC found no error in PTAB’s decision not to terminate the inter partes reexamination requested by Apple. The CAFC found that the Board correctly severed only the Volkswagen reexamination from the merged proceeding and held that no rejection could be maintained in that reexamination as to the two litigated claims. Affinity had failed to demonstrate that the PTAB’s denial of its petitions to vacate the entire merged proceeding was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”

• Anticipation: The CAFC affirmed the Board’s decision in the King/Apple reexamination that the asserted claims were anticipated by a prior art reference or obvious over the prior art reference in view of additional secondary references. Specifically, the CAFC held that substantial evidence supported the Board’s finding that asserted claims were unpatentable based on the asserted prior art rejections.

• Obviousness: The CAFC affirmed the Board’s decision that the asserted claims were obvious based on two prior art references. Substantial evidence supported the Board’s finding that the combination of the prior art references disclosed the claimed physical interface. The CAFC also rejected Affinity’s argument that the Board improperly rejected its objective indicia of nonobviousness Substantial evidence supported the Board’s decision not to give dispositive weight to Affinity’s objective indicia argument. Specifically, the Board correctly recognized that Affinity provided no explanation or analysis that corroborated the relationship between the claims of the asserted patent and the market for in-vehicle device integration technology generally. Affinity’s argument that the claims of the asserted patent were directed to the general field of device connectivity and interoperability, without more, did not establish a meaningful connection with the asserted commercial success. Thus, there was no error in the Board’s decision that this evidence of nonobviousness was entitled to little weight.

• Obviousness: The CAFC held that the mere fact of licensing alone cannot be considered strong evidence of nonobviousness if it cannot also be shown that the licensees entered into licenses out of respect for the patent rather than to avoid the expense of litigation. Here, to support its licensing argument, Affinity did not enter the actual licenses into the record but rather submitted the unsupported declaration of Affinity’s Affinity did not explain what percentage of its revenue—if any—was attributed to the asserted patent instead of the related patents, the terms of the licenses, the nature and number of other patents at issue in the licenses, or the circumstances under which they were granted. The Board correctly afforded little weight to Affinity’s evidence because of the lack of specificity in Affinity’s licensing argument.