Microsoft Corporation v. Proxyconn, Inc.
789 F.3d 1292
| Fed. Cir. | 2015Background
- Proxyconn owns U.S. Patent No. 6,757,717, which claims systems/methods using small digital "digests" to avoid redundant data transmission in packet-switched networks (embodiments include direct sender–receiver and intermediary gateway/cache models).
- Microsoft petitioned two inter partes reviews (IPRs) challenging many claims; the PTAB found most challenged claims unpatentable (anticipation and/or obviousness) but held claim 24 patentable and denied Proxyconn’s motion to amend claims 1 and 3.
- Proxyconn appealed several claim-construction rulings and the denial of its motion to amend; Microsoft appealed the PTAB’s holding that claim 24 was patentable. The Director intervened limited to the amendment/claim-construction standard issues.
- The Federal Circuit reviewed claim constructions de novo (intrinsic record controlling) and substantial-evidence for factual findings, and applied Teva/Phillips frameworks where relevant.
- The court vacated the PTAB’s invalidity findings that depended on constructions treating the gateway/caching computers as interchangeable with the sender/receiver, affirmed the PTAB’s construction of the "searching" limitation and that claim 24 is patentable, affirmed anticipation of claims 11,12,14 by DRP, and affirmed denial of Proxyconn’s motion to amend.
Issues
| Issue | Proxyconn's Argument | Microsoft/Director's Argument | Held |
|---|---|---|---|
| Whether PTAB must use broadest reasonable interpretation (BRI) in IPRs | BRI is inappropriate in IPRs and PTO exceeded authority | Cuozzo upholds BRI; PTO regulation is valid | BRI applies in IPRs (Cuozzo controls), but constructions cannot be unreasonably broad and must follow intrinsic record |
| Proper scope of "gateway ... between at least two other computers" (claims 6,7,9) | "Two other computers" limited to sender and receiver (distinct from gateway/cache) | Phrase not so limited; could include caching computer | PTAB erred by construing "two other computers" to include caching computer; vacated invalidity of claims 6,7,9 and remanded |
| Scope of "sender/computer" and "receiver/computer" (claims 1,3,10,22,23) | Terms limited to the distinct sender and receiver, not intermediaries | Terms can encompass intermediaries that perform send/receive functions | PTAB erred in treating intermediaries as sender/receiver; vacated invalidity of claims 1,3,10,22,23 and remanded |
| Meaning of "searching for data with the same digital digest in said network cache memory" (claim 22) | Searching = identifying matching object among many (Proxyconn) | Searching = mere digest-to-digest comparison (Microsoft) | Court affirmed PTAB: "searching" means looking among a set of data objects (distinct from a single comparison); claim 24 remains patentable |
| Whether PTAB permissibly relied on DRP to deny Proxyconn’s motion to amend (claims 35/36 replacing 1/3) | PTAB exceeded § 42.121(a)(2) by relying on DRP (not part of instituted grounds) and applied additional Idle Free requirements unfairly | Director/PTAB: patentee bears burden to show patentability over prior art of record; §42.20 and Idle Free guidance permissible; DRP was on the record | Court held §42.121(a)(2) is not exhaustive, PTAB permissibly required showing patentability over prior art of record (including DRP); denial of motion to amend affirmed |
Key Cases Cited
- Teva Pharm. U.S.A., Inc. v. Sandoz, 135 S. Ct. 831 (2015) (framework for appellate review of claim construction; factual findings reviewed for substantial evidence)
- Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (claim-construction principles; intrinsic evidence controls)
- In re Cuozzo Speed Techs., LLC, 778 F.3d 1271 (Fed. Cir. 2015) (upholding PTO regulation applying BRI in IPRs)
- In re Gartside, 203 F.3d 1305 (Fed. Cir. 2000) (standards for reviewing Board’s legal conclusions and factual findings)
- In re NTP, Inc., 654 F.3d 1279 (Fed. Cir. 2011) (claims must be read in light of specification; BRI limited by specification)
- In re Skvorecz, 580 F.3d 1262 (Fed. Cir. 2009) (BRI does not permit legally incorrect claim constructions)
- In re Suitco Surface, Inc., 603 F.3d 1255 (Fed. Cir. 2010) (BRI constrained by patent disclosure; cannot be unreasonably broad)
- Auer v. Robbins, 519 U.S. 452 (1997) (deference to agency interpretation of its own ambiguous regulations)
- SEC v. Chenery Corp., 332 U.S. 194 (1947) (agency discretion to choose adjudication over rulemaking)