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8 May 2017Patents

Federal Circuit affirms patent invalidation despite Volkswagen settlement

The US Court of Appeals for the Federal Circuit has affirmed the invalidation of audio patents brought against Apple and Volkswagen.

Handed down on Friday, May 5, the two precedential decisions backed the Patent Trial and Appeal Board’s (PTAB) invalidation of the patents through a re-examination.

US patent number 7,324,833, which relates to an audio download method, and 7,440,772, covering a system and method for connecting a portable media player to a different electronic device, were the patents concerned.

Both patents are owned by Affinity Labs of Texas, a company that calls itself an “innovation consulting firm”.

Volkswagen Group of America had requested inter partes re-examination of all claims of the ‘833 patent, while Apple also requested are-examination.

The US Patent and Trademark Office (USPTO) granted the requests and merged them along with another request into a single proceeding.

Apple had also requested a re-examination of the ‘772 patent, but while this was pending, the parties settled their dispute.

Affinity and Apple also reached a settlement over the ‘833 patent, with Apple taking a licence to the patent.

In the dispute centring on the ‘833 patent, Volkswagen received an adverse final judgment in a parallel district court proceeding: the court upheld the validity of two of the patent’s claims.

Volkswagen initially appealed against the verdict, but dismissed its own appeal following a settlement with Affinity. The car company then filed a notice of non-participation in the re-examination.

Affinity petitioned the USPTO to vacate the entire merged re-examination proceeding, arguing that the estoppel provision in the pre-America Invents Act (AIA) 35 USC, § 317(b)1 extended to all parties, not just Volkswagen, and all claims challenged in the three re-examinations.

The office denied Affinity’s termination request, but it severed the Volkswagen re-examination from the merged proceeding and held that the estoppel provision would apply to the two claims that were held to be valid previously.

An examiner then evaluated the Volkswagen re-examination separately and issued a right of appeal notice in each proceeding, rejecting numerous claims of the ‘833 patent as unpatentable.

The PTAB affirmed the examiner’s rejections, so Affinity appealed.

Affinity argued that the USPTO had erred in maintaining the re-examinations in light of the final decision that Volkswagen failed to prove invalidity of two of the patent’s claims, meaning the board’s decisions should be reversed.

It also argued that if the re-examination were properly maintained, the board’s decisions are based on “misreadings of the asserted prior art and a misevaluation of Affinity’s objective indicia evidence of non-obviousness”.

Circuit Judge Raymond Chen, speaking on behalf of the court, said: “Because the plain language of pre-AIA section 317(b) precludes Affinity’s estoppel argument and because we see no error in the board decision upholding the examiner’s findings of unpatentability as to all claims at issue, we affirm.”

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