The US Court of Appeals for the Federal Circuit reversed a Patent Trial and Appeal Board (PTAB) decision invalidating the challenged claims in an inter partes review (IPR), finding that the PTAB’s conclusions in support of the decision were not sufficiently explained in its final written decision, nor could the Court gain any such explanation from the record. DSS Tech. Mgmt. v. Apple Inc., Case Nos. 16-2523; -2524; -2018 (Fed. Cir., Mar. 23, 2018) (O’Malley, J) (Newman, J, dissenting).

Apple filed two IPR petitions challenging claims of DDS’s patent directed to a wireless communication network. In two final written decisions, the PTAB found that all of the challenged claims were invalid as obvious in light of two prior art references. DDS conceded that the cited prior art references disclosed every limitation except one limitation that related to a “transmitter[] being energized in low duty cycle RF bursts.” Thus, the sole issue on appeal was the PTAB’s finding that it would have been obvious to modify part of the prior art disclosure to be “energized in low duty cycle RF bursts.”

The Federal Circuit found that the PTAB’s decision failed to provide sufficient explanation for its obviousness finding. In particular, the PTAB relied on “ordinary creativity” or “common sense” to supply the missing claim limitation. The Court explained that, ordinarily, common sense may be used in an obviousness rejection in order to provide motivation to combine prior art references. Common sense should not be used to supply a missing claim term, however, unless the claim limitation is simple and the technology is straightforward. Here, the Court found that the limitation at issue was not simple and the technology was not straightforward. Additionally, the Court was unable to find evidence in the record to support the PTAB’s conclusion, as the testimony from Apple’s expert was conclusory and failed to consider the overall functionality of the cited prior art.

Judge Newman dissented from the majority for two reasons. First, Judge Newman found that the PTAB’s explanation was sufficient, as the PTAB acknowledged and adopted Apple’s cited evidence and expert’s views, while finding that Apple persuasively refuted DSS’s arguments. Second, Judge Newman found that if the PTAB’s explanation was insufficient, the Court should either remand the decision to the agency for additional investigation or limit its decision to the question of law. Judge Newman stated that the majority’s decision to reverse the ruling of the PTAB, as opposed to remanding the decision, cements an improper final judgment of patentability, which will have estoppel effects in district court, is contrary to the body of precedent and dilutes the purpose of IPR proceedings.