Honeywell filed a petition for inter partes review of 3G Licensing’s U.S. Patent No. 7,319,718, which claims a coding scheme for transmitting information in 3G mobile communication systems. The PTAB found none of the challenged claims unpatentable. Honeywell appealed. The Federal Circuit reversed, finding that the PTAB erred by (1) requiring identity between the motivations for the prior art and the ’718 patent, (2) failing to support its findings with substantial evidence, (3) conflating anticipation and obviousness, and (4) requiring the modification to be the most desirable modification.
Prior to the ’718 patent’s priority date, Koninklijke Philips N.V. proposed a coding scheme that added four bits to the end of a “codeword” included with transmission to preserve message integrity. The ’718 patent swaps the last two of those four bits. The PTAB found (1) no motivation to modify Philips because Philips’ goals differed from the ’718 patent, and (2) such modification was not the most desirable way to achieve Philips’ goals.
The Federal Circuit rejected the PTAB’s reliance on different motivations for Philips and the ’718 patent, emphasizing longstanding authority that the motivation to modify prior art need not be the same as the challenged patent. The Court found that the PTAB’s conclusion was not supported by substantial evidence, in part due to Honeywell’s unrebutted expert opinion regarding motivation to modify Philips. The Court also found that the PTAB conflated anticipation and obviousness standards by finding significant the fact that Philips did not actually propose furthering its goals by swapping the last two bits.
Finally, the Federal Circuit found that the PTAB erred in relying on the fact that the 3G standards-setting working group had not reached consensus on the most desirable coding scheme. The Court emphasized that an obviousness combination need not be the preferred or most desirable combination.
