ZTE Corp. v. ContentGuard Holdings, Inc.

In four final written decisions in inter partes review (IPR) challenges, the Patent Trial and Appeal Board (PTAB) concluded that the petitioner had not demonstrated by a preponderance of the evidence that the challenged claims of four related patents were anticipated under an inherency theory and therefore unpatentable. ZTE Corp. v. ContentGuard Holdings, Inc., Case Nos. IPR2013-00133 (PTAB, July 1, 2014) (Zecher, APJ); IPR2013-00137 (PTAB, July 1, 2014) (Kim, APJ); IPR2013-00139 (PTAB, June 26, 2014) (Lee, APJ); IPR2013-00138 (PTAB, July 1, 2014) (Zecher, APJ).

The patents at issue relate generally to the distribution and enforcement of usage rights of digital works, including audio, video, text and multimedia works, as well as any accompanying software that have been reduced to a digital representation.  ZTE filed its IPR petitions challenging similar claims in four related patents after the patent owner brought a patent infringement lawsuit against the petitioner.

In each of the four cases, the PTAB’s decision turned heavily on the construction of the term “repository.”  In its decision to institute, the PTAB construed “repository” as “a trusted system that maintains physical, communications and behavioral integrity, and supports usage rights.” The petitioner did not provide an explicit construction for “repository” in its petition, contending that the patent specifications did not mention or explain the term. By contrast, the patent owner cited to several parts of the specification in arguing that the term be construed as “a trusted system for usage rights.”

Ultimately, the PTAB preserved the construction from its decision to institute, noting that the specification “provides a glossary that explicitly sets forth a definition for ‘repository.’”  In the glossary, the patent owner stated that “[a] repository is a trusted system in that it maintains physical, communications and behavioral integrity.” (Emphasis added.)  The PTAB found that by including the verb “is” in the glossary, the patent owner had made the definition of “repository” explicit.  Though the PTAB acknowledged that evidence existed contrary to its claim interpretation, “the evidence does not have to point uniformly in a single direction.”  The PTAB further noted that, in referencing “physical integrity,” “communications integrity” and “behavioral integrity,” the specification utilized permissive terms such as “may” and “can.” Thus, the PTAB found that the specification did not indicate required limitations to those terms.

The patent owner argued that the PTAB had interpreted “repository” both too broadly and too narrowly.  Specifically, the patent owner argued that the term “behavioral integrity” was defined too broadly and should only be restricted to software that makes the repository operative, i.e., “repository software” as described in the specification.  However, the PTAB found this argument unavailing, noting portions of the specification that required functionality beyond “repository software.”

The patent owner further contended that the term “repository” was interpreted too narrowly because “behavioral integrity” did not require a digital certificate to maintain behavioral integrity, as required by the PTAB. Rather, the patent owner argued that “in order to maintain behavioral integrity, it is necessary only that the broader purpose of a repository doing what it is supposed to do is satisfied.”  Again, the PTAB noting that it did “not credit” the testimony of patent owner’s expert on this point and found the patent owner’s argument unpersuasive, noting that restrictive language in the specification would not present an “expansive construction.”

Having narrowly construed the claims (in accordance with the Broadest Reasonable Interpretation rule), the PTAB then turned its attention to the issue of whether the patent claims were anticipated. The anticipation arguments focused on whether prior art exhibited the claimed behavioral integrity—particularly whether the prior art necessarily included a digital certificate authenticating the source software. The petitioner argued that a person with ordinary skill in the art would recognize that such a certificate was inherent in the prior art, even though it was not expressly disclosed.  The PTAB, however, noted that while the prior art may include such a certificate, “mere probabilities or possibilities fall short of demonstrating that those procedures necessarily require using a digital certificate.”

Because the petitioner was unable to persuade the PTAB that a digital certificate was necessarily required, the PTAB concluded that the petitioner had failed to meet its burden of persuasion, and the patent owner’s claims survived.