The Federal Circuit affirmed a Patent Trial and Appeal Board (“Board”) decision to uphold the unpatentability of several claims of a patent owned by Affinity Labs of Texas, LLC (“Affinity”). An Examiner initially found the claims to be unpatentable during two inter partes reexaminations and an ex parte reexamination of Affinity’s patent. Apple and Affinity settled and Apple withdrew from participation in the reexamination. In district court, a jury found that VW infringed Claims 28 and 35 of Affinity’s patent, which VW failed to prove, are invalid. VW appealed, but then settled with Affinity, and VW withdrew from the reexamination.
Affinity petitioned the PTO to terminate the merged proceedings, under the estoppel provision of pre-AIA 35 U.S.C. § 317(b), which “bars a party from using the inter partes reexamination process after a final decision has been entered against that party in a civil action, finding ‘that the party has not sustained its burden of proving the invalidity of any patent claim in a suit.’” The PTO dismissed Affinity’s request, but severed the VW reexamination, noting that estoppel applied to VW with respect to its litigation of independent Claims 28 and 35 and their dependent claims.
Affinity appealed to the Federal Circuit. First, Affinity argued that the PTO erred in maintaining the reexaminations in light of the final decision in co-pending litigation that VW failed to prove invalidity of Claims 28 and 35. “Section 317(b) bars a party from using the inter partes reexamination process after a final decision has been entered against that party in a civil action.” Affinity urged the Court to order the PTO to terminate all three reexamination proceedings even though they involve several claims beyond the litigated claims 28 and 35.
Dwyer relates to portable digital recorders and the “effective and convenient interaction between a portable digital recorder and a personal computer.” Dwyer discloses a recorder that stores audio files and comprises a touch screen with a variety of functions that allow a user to control recording, editing, and playback. Dwyer also discloses the ability to upload identification data to a personal computer, for use in a GUI display. This allows the user to view and manipulate the information stored on the portable device via the GUI on the personal computer. Regarding objective indicia of non-obviousness, Affinity argued that (i) a $25 billion industry has developed around in-vehicle device integration, which Affinity claimed to be covered by its patent and (ii) Affinity licensed the patent-at-issue and related patents to a number of entities in excess of $50 million.
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The Court then rejected Affinity’s second objective indicia argument, explaining that “the mere fact of licensing alone cannot be considered strong evidence of nonobviousness if it cannot also be shown that the licensees did so out of respect for the patent rather than to avoid the expense of litigation.” Affinity did not enter any actual licenses into the record, and “