Addressing the appropriate test for determining obviousness, the US Court of Appeals for the Federal Circuit reversed the Patent Trial and Appeal Board’s (PTAB’s) obviousness decision, finding that the PTAB erred by conflating its anticipation and obviousness analyses. CRFD Research, Inc. v. Matal, Case Nos. 16-2198; -2298; -2437 (Fed. Cir., Dec. 5, 2017) (O’Malley, J).

CRFD owns a patent directed to a system that allows a user to start a software session on one communication device, then transfer the session to another device. The patent’s claims require that transmission of the session history occur after the session on the first device has been discontinued, among other limitations.

Dish Network, Hulu, Netflix and Spotify filed petitions for inter partes review challenging several claims in CRFD’s patent. The PTAB instituted a review based on four grounds of unpatentability:

• Anticipated by the Bates patent

• Obvious over Bates and the Chan article

• Obvious over Bates and the Zou dissertation

• Obvious over Bates, Zou and Chan

The PTAB did not institute review on the ground that CRFD’s patent was obvious on Bates alone, finding that institution on that ground would be redundant. Ultimately, the PTAB concluded that the challenged claims were not anticipated or obvious on any of the instituted grounds, finding that Bates does not inherently disclose transmitting a session history from a first device after the session, but instead discloses transmission of session history during the session. CRFD appealed.

The Federal Circuit affirmed the PTAB’s anticipation finding but reversed the obviousness finding because the PTAB failed to conduct a separate obviousness analysis. The Court found that the PTAB’s obviousness analysis relied solely on its anticipation finding—i.e., that Bates did not disclose transmission of session history after the session is discontinued on the first device—and that the PTAB erred by not conducting a separate analysis to determine whether Bates suggests transmission of session history after discontinuation. The Court found the PTAB’s obviousness analysis improper because the tests for anticipation and obviousness are different, and the PTAB’s anticipation analysis was insufficient to decide the obviousness inquiry.

The Federal Circuit also found that the PTAB erred in not instituting the obviousness ground of Bates alone for redundancy reasons. The Court noted that barring Hulu from pressing an argument it raised in a ground that the PTAB found redundant would not only unfairly prejudice Hulu, but would also raise questions about the propriety of the PTAB’s redundancy decision.

Turning to the obviousness analysis, the Federal Circuit found that the asserted claims were obvious over Bates alone. While the system described in Bates did not disclose the transmission of session history after discontinuation of the first session, the Court found that both parties agreed that a skilled artisan would have understood that Bates’ system could transmit browser information prior to or after discontinuation of a session. The Court found that even in light of the parties’ admissions and supporting expert testimony, the PTAB failed to consider whether Bates suggested transmitting a session history after discontinuation. Having considered that evidence, the Court determined that the asserted claims were obvious over Bates.