McM Portfolio LLC v. Hewlett-Packard Company
812 F.3d 1284
| Fed. Cir. | 2015Background
- MCM Portfolio LLC owns U.S. Patent No. 7,162,549 claiming a controller-based system/method for interfacing flash memory cards (with or without onboard controllers) to computers, including firmware error-correction and bad-block mapping.
- HP petitioned for inter partes review (IPR) of claims 7, 11, 19, and 21 asserting obviousness over Kobayashi and Kikuchi; Board instituted IPR and later issued a final decision finding those claims obvious.
- MCM argued at the PTO (and on appeal) that institution was time-barred under 35 U.S.C. § 315(b) because HP was a privy of Pandigital, which had been sued over the patent more than one year earlier; the Board rejected the privy/time‑bar argument when instituting review.
- MCM also argued the IPR scheme violated Article III and the Seventh Amendment because only Article III courts (with jury trials) may adjudicate patent validity; the Board rejected those constitutional challenges.
- On the merits the Board found substantial evidence that a person of ordinary skill would have been motivated to combine Kobayashi (card/reader selector and ATA controller architecture) and Kikuchi (ATA controller with error‑correction and bad‑block mapping), rendering the challenged claims obvious; the Federal Circuit affirmed.
Issues
| Issue | Plaintiff's Argument (MCM) | Defendant's Argument (HP/PTO) | Held |
|---|---|---|---|
| Whether Board's institution decision under §314(d)/§315(b) is reviewable | Pandigital was a privy of HP; institution was time‑barred by §315(b) | §314(d) makes institution nonappealable; Board properly found no privy relationship | Institution decision is nonappeable under §314(d); court lacks jurisdiction to review institution ruling |
| Whether IPR violates Article III | Only Article III courts can cancel issued patents (relying on McCormick II) | Patent validity adjudication involves public rights; Congress may assign review to PTO; precedents support agency adjudication | IPR does not violate Article III; constitutional challenge rejected |
| Whether IPR violates Seventh Amendment (jury right) | Patent owner has a right to jury trial on validity issues | Patents involve public rights; administrative adjudication without jury is permissible | Seventh Amendment not violated; no jury right in IPR |
| Whether claims 7, 11, 19, 21 are obvious over Kobayashi + Kikuchi | References cannot be combined to produce a single controller chip as claimed; certain detection/placement limitations preclude combination | A person of ordinary skill would combine teachings and could implement error correction/bad‑block mapping on a single controller chip; substantial evidence supports combination and motivation | Board’s obviousness determination affirmed; challenged claims would have been obvious |
Key Cases Cited
- McCormick Harvesting Mach. Co. v. Aultman, 169 U.S. 606 (Sup. Ct.) (Patent Office cannot unilaterally cancel an issued patent absent statutory authority)
- Murray's Lessee v. Hoboken Land & Improvement Co., 59 U.S. 272 (Sup. Ct.) (Congress may assign public‑rights adjudication outside Article III)
- Crowell v. Benson, 285 U.S. 22 (Sup. Ct.) (public‑rights doctrine and administrative adjudication)
- Thomas v. Union Carbide Agric. Prods. Co., 473 U.S. 568 (Sup. Ct.) (statutory schemes may use agency adjudication for specialized regulatory disputes)
- Commodity Futures Trading Comm'n v. Schor, 478 U.S. 833 (Sup. Ct.) (private dispute resolution by agency permissible in certain public‑rights contexts)
- Stern v. Marshall, 564 U.S. 462 (Sup. Ct.) (limits of public‑rights exception; some claims require Article III adjudication)
- Patlex Corp. v. Mossinghoff, 758 F.2d 594 (Fed. Cir.) (upholding reexamination against Article III and Seventh Amendment challenges)
- Cuozzo Speed Techs. v. Lee, 793 F.3d 1268 (Fed. Cir.) (institution decision under §314(d) nonappealable)
- Achates Reference Pub., Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir.) (§314(d) bars review of Board's §315(b) time‑bar determinations)