MCM Portfolio LLC v. Hewlett-Packard Co.

812 F.3d 1284

MCM PORTFOLIO LLC, Appellant

v.HEWLETT–PACKARD COMPANY, Appellee.

No. 2015–1091.

United States Court of Appeals, Federal Circuit.

Dec. 2, 2015.

Edward Peter Heller III, Alliacense Limited LLC, San Jose, CA, argued for appellant. Also represented by Susan Anhalt, Fountainhead IP, San Jose, CA.

Marcia H. Sundeen, Goodwin Procter LLP, Washington, DC, argued for appellee. Also represented by Jennifer A. Albert ; Robert Louis Hails, Jr., Adeel Haroon, T. Cy Walker, Kenyon & Kenyon LLP, Washington, DC; Rose Cordero Prey, New York, NY.

William Ernest Havemann, Appellate Staff, Civil Division, United States Department of Justice, Washington, DC, argued for intervenor Michelle K. Lee. Also represented by Mark R. Freeman, Benjamin C. Mizer ; Nathan K. Kelley, Scott Weidenfeller, Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA.

Robert Greenspoon, Flachsbart & Greenspoon, LLC, Chicago, IL, for amicus curiae J. Carl Cooper.

Before PROST, Chief Judge, DYK, and HUGHES, Circuit Judges.

DYK, Circuit Judge.

MCM Portfolio LLC ("MCM") owns U.S. Patent No. 7,162,549 ("the '549 patent"), which claims methods and systems for coupling a computer system with a flash memory storage system. Hewlett–Packard Co. ("HP") filed a petition with the Patent and Trademark Office ("PTO") requesting inter partes review of claims 7, 11, 19, and 21 of the '549 patent. The Patent Trial and Appeal Board ("Board") determined that HP's petition demonstrated a reasonable likelihood that the challenged claims of the '549 patent were invalid as obvious and instituted an inter partes review. Thereafter, the Board issued a final decision holding that the challenged claims would have been obvious. MCM appeals.

We hold that we lack jurisdiction to review the Board's decision that the institution of inter partes review was not barred by 35 U.S.C. § 315(b), but we conclude that we can review the question of whether the final decision violates Article III and the Seventh Amendment. On the merits, we reject MCM's argument that inter partes review violates Article III and the Seventh Amendment, and we affirm the Board's decision that claims 7, 11, 19, and 21 of the '549 patent would have been obvious over the prior art.

BACKGROUND

The '549 patent, entitled "Multimode Controller for Intelligent and ‘Dumb’ Flash Cards," issued on January 9, 2007, and claims a priority date of July 6, 2000. The patent claims methods and systems for coupling flash memory cards to a computer utilizing a "controller chip." '549 patent at Abstract. In general, a controller is a device that performs the physical transfer of data between a computer and a peripheral device, such as a monitor, keyboard, or, as here, a flash memory card. See Allan Freedman, The Computer Glossary 75–76 (9th ed. 2001).

The primary purpose of the controller here is to achieve error correction. See '549 patent col. 28, ll. 37–54. Error correction tests for accurate data transmission in order to "present a flawless medium to the system, in a specific format, so the computer [ ] sees an error-free storage medium [ ], rather than a flash [memory] that may have certain defects." Id. at col. 28, ll. 37–41; see also Freedman, supra, at 135. As described in the patent, removable flash memory cards are commonly used in digital cameras to store image or video files and enable the convenient transfer of those files to a computer using a card reader. '549 patent at col. 1, ll. 50–56. At the time the '549 patent was filed, flash memory cards were made by various companies and came in many shapes and formats, such as CompactFlash, Secure Digital, and Memory Stick. Id. at col. 2, ll. 28–55. The specification describes a need for a flash memory card reader that can be used with flash memory cards of several different formats, and, relevant here, a controller on the card reader "that can work with multiple types of flash memory cards that have controllers, and also with flash memory cards that do not have controllers." Id. at col. 3, l.53 to col. 4, l.22.

The patent claims improvements to flash memory card readers, including a controller chip that can determine whether the flash memory card has an onboard controller for error correction, and if it does not, using firmware to manage error correction for the flash memory card.

Claims 7 and 11 are illustrative:

7. A method comprising:

using a controller chip to interface a flash storage system with or without a controller to a computing device, the controller chip comprising a flash adapter, wherein the flash storage system comprises a flash section and at least a medium ID;

determining whether the flash storage system includes a controller for error correction; and

in an event where the flash storage system does not have a controller for error correction, using firmware in the flash adapter to perform operations to manage error correction of the flash section, including bad block mapping of the flash section in the flash storage system that is coupled to the flash adapter section.

11. A system comprising:

a computing device;

a flash storage system comprising a flash section and at least a portion of a medium ID; and

a controller chip coupled between the computing device and the flash storage system to interface the flash storage system to the computing device, the controller chip comprising an interface mechanism capable of receiving flash storage systems with controller and controllerless flash storage systems, a detector to determine whether the flash storage system includes a controller for error correction and a flash adapter which comprises firmware to perform, in an event where the flash storage system does not have a controller for error correction, operations to manage error correction of the flash section, including bad block mapping of the flash section in the flash storage system that is coupled to the flash adapter section.

Id. at col. 30, ll. 23–37, 48–65. Claims 19 and 21, which depend from claims 7 and 11, respectively, further require that the flash adapter comprise a plurality of interfaces capable of receiving a plurality of flash storage systems. Id. at col. 32, ll. 1–3, 7–9.

On March 27, 2013, HP petitioned for inter partes review of claims 7, 11, 19, and 21 of the '549 patent under 35 U.S.C. § 311, asserting that those claims were anticipated by, or obvious over, five prior art references. MCM filed a preliminary response on June 27, 2013. MCM argued, inter alia, that institution of inter partes review was barred under 35 U.S.C. § 315(b). MCM argued that HP was a privy of Pandigital, Inc. ("Pandigital"), because HP was reselling allegedly infringing digital picture frames manufactured by Pandigital. Because MCM had filed suit for infringement of the '549 patent against Pandigital more than one year before HP filed the petition for inter partes review, MCM argued that § 315(b) barred inter partes review.

On September 10, 2013, the Board instituted inter partes review with respect to claims 7, 11, 19, and 21 of the '549 patent. The Board found that there was a reasonable likelihood that HP would prevail with respect to at least one of the challenged claims based on obviousness over two prior art references: U.S. Patent No. 6,199,122 ("Kobayashi") and WO 98/03915 ("Kikuchi"). The Board rejected MCM's argument that it could not institute inter partes review under 35 U.S.C. § 315(b), holding that the fact that Pandigital and HP were successive owners of the same allegedly infringing property was not sufficient to confer privity for the purposes of § 315(b).

MCM filed a patent owner response on December 9, 2013, and HP filed the petitioner's reply to the patent owner response on March 10, 2014. After conducting a trial hearing, the Board issued its final written decision on August 6, 2014. The Board rejected MCM's argument that inter partes review proceedings violate Article III and the Seventh Amendment. On the merits, the Board concluded that HP had shown by a preponderance of evidence that claims 7, 11, 19, and 21 would have been obvious over a combination of the Kobayashi and Kikuchi prior art references. MCM appealed. The PTO intervened. We have jurisdiction to review the Board's final decision under 28 U.S.C. § 1295(a)(4)(A). We review constitutional, statutory, and legal issues de novo, and the Board's factual findings for substantial evidence. Giorgio Foods, Inc. v. United States, 785 F.3d 595, 600 (Fed.Cir.2015) ; In re Morsa, 713 F.3d 104, 109 (Fed.Cir.2013).

DISCUSSION

I

We first address MCM's contention that the Board improperly instituted inter partes review. 35 U.S.C. § 315(b) provides that "[a]n inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner ... or privy of the petitioner is served with a complaint alleging infringement of the patent." MCM asserts that it filed a complaint alleging infringement of the '549 patent on Pandigital more than one year prior to HP's petition, and that, contrary to the Board's determination, Pandigital is a privy of HP. MCM argues on appeal that the Board therefore erred in instituting inter partes review.

The law is clear that there is "no appeal" from the decision to institute inter partes review. 35 U.S.C. § 314(d).

Section 314(d) provides that "[t]he determination ... whether to institute an inter partes review under this section shall be final and nonappealable." Id. We have held that a patent owner cannot appeal the Board's decision to institute inter partes review, even after a final decision is issued. In re Cuozzo Speed Techs., 793 F.3d 1268, 1273–74 (Fed.Cir.2015). Specifically, in Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652, 658 (Fed.Cir.2015), we held that " § 314(d) prohibits this court from reviewing the Board's determination to initiate inter partes review proceedings based on its assessment of the time-bar of § 315(b)." Achates controls here. Review of whether the...