942 F.3d 1352
Fed. Cir.2019Background
- This appeal arises from two consolidated IPRs in which the PTAB invalidated all claims of U.S. Patents No. 9,014,243 and 8,718,158 as obvious over Shively and Stopler (and other references).
- The patents claim reducing peak-to-average power ratio (PAR) in DMT multicarrier transmitters by phase-scrambling carriers so they do not peak simultaneously.
- Shively discloses spreading/despreading bits across carriers to improve throughput but says nothing about PAR.
- Stopler discloses a phase scrambler applied to overhead symbols (and, for simplicity, to all symbols), but does not discuss PAR or clipping.
- The Board adopted Cisco’s petition and relied heavily on Cisco’s expert (Dr. Tellado) to find a motivation to combine Stopler’s phase scrambler with Shively to reduce PAR.
- The Federal Circuit held the Board’s motivation-to-combine factfinding rested on conclusory expert assertions untethered to the cited prior art and therefore was not supported by substantial evidence; it reversed the PTAB’s obviousness rulings.
Issues
| Issue | Plaintiff's Argument (TQ Delta) | Defendant's Argument (Cisco) | Held |
|---|---|---|---|
| Obviousness / motivation to combine | Stopler’s phase scrambler does not teach or motivate using phase randomization to reduce PAR in Shively; Board lacked substantial evidence. | A POSITA would recognize Stopler’s phase scrambling as a straightforward solution to reduce Shively’s PAR; Dr. Tellado shows motivation and expectation of success. | Reversed: PTAB’s finding of motivation to combine relies on conclusory expert testimony and Stopler’s two-sentence disclosure does not supply the necessary link — not substantial evidence. |
| Admissibility of post-hoc/reply evidence and discarded simulations | Board erred in permitting Dr. Tellado’s testimony after he discarded simulations and in considering reply material. | Cisco relied on the expert and proffered reply material to support its petition; Board properly exercised discretion. | Court not persuaded by these objections and declined extended discussion because reversal on substantial-evidence ground was dispositive. |
| Claim construction of “phase scrambling” | Board’s construction was incorrect and affected obviousness analysis. | Board’s construction was appropriate. | Court did not reach a detailed ruling; it was not necessary to resolve after reversing on substantial-evidence ground. |
| Due process (reliance on new evidence in reply/final decision) | Board violated due process by construing terms relying on evidence not in the institution record. | Board acted within IPR procedures. | Not resolved on the merits; court declined to address because reversal on main ground disposed of appeal. |
Key Cases Cited
- KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007) (obviousness: flexible approach to motivation to combine; forbids hindsight-driven, conclusory reasoning)
- InTouch Techs., Inc. v. VGo Commc’ns, Inc., 751 F.3d 1327 (Fed. Cir. 2014) (conclusory expert testimony insufficient to show motivation to combine)
- ActiveVideo Networks, Inc. v. Verizon Commc’ns, Inc., 694 F.3d 1312 (Fed. Cir. 2012) (experts must explain how specific references are combinable; bare modularity claims are inadequate)
- DSS Tech. Mgmt., Inc. v. Apple Inc., 885 F.3d 1367 (Fed. Cir. 2018) (IPR findings cannot rest on unspecific or conclusory expert testimony)
- In re Van Os, 844 F.3d 1359 (Fed. Cir. 2017) (a conclusory assertion of motivation to combine is inadequate)
- In re Lee, 277 F.3d 1338 (Fed. Cir. 2002) (agency must develop an evidentiary basis for findings to permit meaningful judicial review)
- In re Kahn, 441 F.3d 977 (Fed. Cir. 2006) (obviousness rejections require articulated reasoning and rational underpinning)
- Graham v. John Deere Co. of Kansas City, 383 U.S. 1 (1966) (framework for obviousness inquiry and warning against reading the invention into the prior art)