Honeywell International Inc., et al. v. 3G Licensing, S.A., Nos. 2023-1354, -1384, -1407 (Fed. Cir. (PTAB) Jan. 2, 2025). Opinion by Dyk, joined by Chen. Dissenting opinion by Stoll.
3G Licensing owns a patent directed to a coding method for translating a binary string denoting signal strength into a “codeword” to better protect the information from errors during transmission. The method uses a Channel Quality Indicator (CQI), sometimes referred to as channel quality information. The CQI is represented in five bits of binary data, and the bits increase in significance from left to right with the rightmost bit being the “most significant bit” (MSB).
Honeywell filed an IPR petition challenging the patentability of certain claims in 3G Licensing’s patent. Honeywell argued that the claims are unpatentable as obvious over the “Philips” reference or, for certain claims, a combination of the Philips reference and the “Nokia” reference.
In a final written decision, the Patent Trial and Appeal Board acknowledged that the only difference between the Philips reference and claim 1 was “that the 1 and 0 in the last row of the basis sequences table were switched.” But the Board found that skilled artisans would not have been motivated to switch the last two bits in the table to provide additional protection to the MSB, and would not have believed such a switch would be desirable. The Board thus declined to hold any of the challenged claims unpatentable as obvious. Honeywell appealed.
The Federal Circuit reversed, holding that “the Board’s final written decision is predicated on multiple legal errors and is unsupported by substantial evidence.” The court provided four key bases for its ruling. First, the Board “ignore[d] the Supreme Court’s directive in KSR” by considering only the patent’s “primary motivation” rather than, per KSR, “any need or problem known in the field of endeavor at the time of the invention and addressed by the patent.”
Second, substantial evidence did not support the Board’s finding that skilled artisans would not have been motivated to switch the last two bits in the Philips table. The court explained that “the uncontroverted evidence in the record demonstrates that the Philips reference teaches protecting the MSB through redundancy and that a person of ordinary skill in the art would understand that flipping the two digits in the last row of the basis sequence table would repeat the MSB and hence increase its protection.”
Third, “the Board’s decision appears to be based in part on a conflation between the relevant standards for obviousness and anticipation.” The Board had found it significant that the Philips reference did not propose swapping the last two bits. The Federal Circuit noted, however, that if the Philips reference had done so, it “would anticipate the [3G Licensing] patent, and the inquiry before the Board would be at an end.”
Fourth, the Board erred in finding an insufficient motivation to switch the last two bits because of uncertainty as to what coding scheme would be the “preferred” approach. The Federal Circuit ruled that “Honeywell was not required to make this showing.” The court explained: “We have long recognized that obviousness does not require that a particular combination must be the preferred, or the most desirable, combination described in the prior art to provide motivation for the current invention.” The Federal Circuit thus reversed the Board’s decision.
Judge Stoll dissented. She agreed with the majority that “the Board erred by giving weight to the fact that the Philips reference did not propose swapping the last two bits of the last row of its basis sequence table,” thus conflating obviousness with anticipation. But in her view the majority improperly took “the extraordinary step of fact finding, a role not appropriate at the appellate stage, making arguments for the parties that they did not make and then deciding those arguments.” She explained that “we should not be reversing” the Board’s decision; instead “this case should be vacated for the Board to review the evidence and make fact findings” on remand.