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In re Affinity Labs of Texas, LLC

United States Court of Appeals, Federal Circuit

May 5, 2017

IN RE: AFFINITY LABS OF TEXAS, LLC, Appellant

         Appeals from the United States Patent and Trademark Office, Patent Trial and Appeal Board in Nos. 90/010, 333, 95/001, 223, 95/001, 264.

          William Manske, Robins Kaplan LLP, Minneapolis, MN, argued for appellant. Also represented by Ryan Michael Schultz.

          Robert McBride, Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA, argued for intervenor Michelle K. Lee. Also represented by Thomas W. Krause, Joseph Matal, Scott Weidenfeller.

          Before TARANTO, Chen, and Stoll, Circuit Judges.

          CHEN, CIRCUIT JUDGE.

         This appeal arises from two inter partes reexaminations and an ex parte reexamination of U.S. Patent No. 7, 324, 833 (the '833 patent), owned by Affinity Labs of Texas, LLC (Affinity). Richard King requested ex parte reexamination of all original claims of the '833 patent, based on multiple asserted grounds of unpatentability. Volkswagen Group of America, Inc. (Volkswagen) requested inter partes reexamination of all claims based on additional, different asserted grounds of unpatentability. And Apple Inc. (Apple) requested inter partes reexamination of all claims based on still different asserted grounds of unpatentability. The United States Patent and Trademark Office (PTO) granted all three requests and sua sponte merged these three reexaminations into a single proceeding.

         Volkswagen subsequently received an adverse final judgment in a parallel district court proceeding, upholding the validity of claims 28 and 35 of Affinity's '833 patent. In response, Affinity petitioned the PTO to vacate the entire merged reexamination proceeding, arguing that the estoppel provision in pre-America Invents Act (AIA) 35 U.S.C. § 317(b)[1] extends to all parties, not just Volkswagen, and all claims challenged in the three reexaminations, not just litigated claims 28 and 35. The PTO denied Affinity's termination request, but it severed the Volkswagen reexamination from the merged proceeding and held that no rejection could be maintained in that reexamination as to the claims at issue in the district court action. The Examiner then evaluated the Volkswagen reexamination separately from the merged King/Apple reexamination and ultimately issued a Right of Appeal Notice in each proceeding, rejecting numerous claims of the '833 patent as unpatentable. The Patent Trial and Appeal Board (Board) affirmed the Examiner's rejections. See Apple Inc. v. Affinity Labs of Tex., LLC, No. 2015-004281, Reexamination Nos. 95/001, 264 and 90/010, 333, 2015 WL 4038964, at *1 (P.T.A.B. June 30, 2015) (-4281 Board Decision); Apple Inc. v. Affinity Labs of Tex., LLC, No. 2015-006122, Reexamination No. 95/001, 223, 2015 WL 5092841, at *1 (P.T.A.B. Aug. 26, 2015) (-6122 Board Decision). Affinity appealed to this court and the Director of the United States Patent and Trademark Office (Director) intervened. We have jurisdiction under 28 U.S.C. § 1295(a)(4)(A).

         Affinity first argues that the PTO erred in maintaining the reexaminations in light of the final decision that Volkswagen failed to prove invalidity of two of the patent's claims, which were asserted in the co-pending litigation and, therefore, the Board's decisions in the reexaminations should be reversed pursuant to the section 317(b) estoppel provision. Affinity also asserts that, assuming the reexaminations 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 nonobviousness. Because the plain language of pre-ALA section 317(b) precludes Affinity's estoppel argument and because we see no error in the -4281 Board Decision upholding the Examiner's findings of unpatentability as to all claims at issue, we affirm. We, therefore, dismiss as moot Affinity's appeal of the -6122 Board Decision upholding the unpatentability of a subset of claims affirmed as unpatentable in the -4281 Board Decision.

         Background

         I. The '833 Patent

         The '833 patent relates to a system and method for connecting a portable media player, such as an MP3 player, to a different electronic device, such as a car audio system. '833 patent col. 3, 1. 35 - col. 4, 1. 34. When the portable media player is connected to the different electronic device, the system provides the user with a graphical user interface on the display of that different electronic device. Id. col. 11, ll. 28-44. The user can then select and play music stored on the portable media player by pressing soft buttons displayed in the graphical user interface of the different electronic device. The '833 patent's claims are directed to systems and methods of displaying on the different electronic device a menu of titles associated with media files stored on the portable media player. Claim 1 is representative:

1. An audio system, comprising:
a portable electronic device having a display, a memory, and an audio file player;
a first portion of software saved at the portable electronic device and configured to initiate a displaying of a graphical interface item on the display, the graphical interface item comprising a name associated with an audio file saved in the memory;
a mounting location on the portable electronic device that includes a physical interface configured to communicatively couple the portable electronic device to a different electronic device having an associated display; and an other portion of software saved at the portable electronic device and configured to communicate a representation of the graphical interface item to the different electronic device via the physical interface to facilitate a displaying of the representation on the associated display, wherein the portable electronic device is configured to communicate interface information to the different electronic device in order to allow a user to view at least a partial representation of a graphical user interface that includes the graphical interface item on the associated display, wherein the graphical user interface comprises a plurality of preprogrammed soft buttons that are linked to respective audio information sources.

Id. col. 18, ll.36-61.

         II. Merger and Severance of the Reexaminations

         Richard King filed a request for ex parte reexamination of all claims of the '833 patent on November 7, 2008. Volkswagen filed a request for inter partes reexamination of all claims of the '833 patent on September 22, 2009, soon after Affinity sued Volkswagen for infringement of the '833 patent, among other patents, in district court. Apple also filed a request for inter partes reexamination of all claims of the '833 patent on November 13, 2009, after Affinity brought suit against Apple on a series of patents, including the '833 patent. The PTO granted all three reexamination requests, and on June 14, 2010, the PTO sua sponte merged the three reexaminations into one proceeding. In addition to traversing the asserted grounds of rejection, Affinity also sought to add new claims 36-49.

         During the merged reexamination proceeding, Apple and Affinity reached a settlement, Apple took a license to the '833 patent, and the parties filed a joint stipulation of dismissal in the co-pending district court case. Pursuant to the joint stipulation, the district court dismissed Affinity's infringement action with prejudice and Apple's invalidity counterclaims without prejudice. Apple then filed a notice of non-participation in the reexamination on October 3, 2011. The district court litigation between Affinity and Volkswagen, however, proceeded to trial and a jury returned a verdict that Volkswagen infringed claims 28 and 35 of the '833 patent and Volkswagen had not proven that the two asserted claims are invalid in view of prior art it presented at trial. Volkswagen initially appealed the verdict but dismissed its appeal following its own settlement with Affinity. Volkswagen filed a notice of non-participation in the reexamination on June 14, 2012.

         Affinity then petitioned the PTO to terminate the entire merged proceedings under 35 U.S.C. § 317(b). Affinity argued that a final judgment was entered adverse to inter partes requester Volkswagen regarding the validity of the challenged claims, inter partes requester Apple no longer had a legal or economic incentive in maintaining the reexamination given the settlement, and all grounds for unpatentability raised by the ex parte reexamination were traversed. The PTO dismissed Affinity's request to terminate the merged proceeding. It did, however, sever the Volkswagen reexamination and held the estoppel provision of pre-AIA section 317(b) would apply in the severed proceeding as to independent claims 28 and 35. Therefore, the PTO concluded that no rejections would be asserted in that proceeding of claims 28 and 35 and as a natural consequence, their dependent claims 29-34, 48, and 49.

         III. Rejections and Appeal

         The Examiner issued Right of Appeal Notices in both proceedings. In the severed Volkswagen reexamination, the Examiner rejected claims 1-5, 8-20, and 22-27 as unpatentable based on various prior art references and combinations. The Examiner stated that claims 28-35, 48, and 49 were no longer subject to reexamination; claims 6, 7, and 21 were patentable over the asserted art; and newly added claims 36-46 were objected to as dependent upon rejected base claims but would be allowed if rewritten in independent form. In the merged King/Apple reexamination proceeding, the Examiner rejected claims 1-27 and new claims 37-42, 45, and 46, added during reexamination. The Examiner stated that claims 28-35, 48, and 49, however, are patentable over the asserted prior art and claims 36, 43, 44, and 47 are objected to as dependent upon rejected base claims but would be allowed if rewritten in independent form.

         Affinity appealed and the Board affirmed the Examiner's rejections in two final written decisions. In particular, the Board sustained the following grounds of rejection in the merged King/Apple reexamination:

• Claims 1-27, 39, and 45 as anticipated by U.S. Patent No. 6, 671, 567 (Dwyer), or obvious over Dwyer in combination with additional secondary references; and
• Claims 1-26, 37-42, and 45-46 as obvious over U.S. Patent No. 6, 694, 200 (Nairn) and U.S. Patent No. 6, 728, 531 (Lee), or obvious over Nairn and Lee in combination with additional secondary references.[2]

         The Board also sustained the following grounds of rejection in the severed Volkswagen reexamination:

• Claims 1-5, 8-11, 13-18, 20, 22-23, and 25-27 as anticipated by EP Patent App. No. EP0982732 (Hahm) or obvious over Hahm in combination with additional secondary references; and
• Claims 1-3, 5, 8-17, 19-20, 22-26, and 27 as anticipated by U.S. Patent No. 6, 407, 750 (Gioscia) or obvious over Gioscia in combination with ...

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