Kingston Technology Company v. Spex Technologies, Inc.

• Court: Court of Appeals for the Federal Circuit
• Decided: February 21, 2020
• Docket: 19-1256
• Status: Unpublished

Opinion

Case: 19-1256 Document: 46 Page: 1 Filed: 02/21/2020

NOTE: This disposition is nonprecedential.

United States Court of Appeals for the Federal Circuit ______________________

KINGSTON TECHNOLOGY COMPANY, INC., Appellant

v.

SPEX TECHNOLOGIES, INC., Appellee ______________________

2019-1256 ______________________

Appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in No. IPR2017- 01021. ______________________

Decided: February 21, 2020 ______________________

DAVID M. HOFFMAN, Fish & Richardson, P.C., Austin, TX, argued for appellant. Also represented by OLIVER RICHARDS, San Diego, CA.

KRISTOPHER DAVIS, Russ August & Kabat, Los Angeles, CA, argued for appellee. Also represented by MARC AARON FENSTER, PAUL ANTHONY KROEGER, BENJAMIN T. WANG. ______________________

Before DYK, O’MALLEY, and STOLL, Circuit Judges. Case: 19-1256 Document: 46 Page: 2 Filed: 02/21/2020

STOLL, Circuit Judge. Kingston Technology Company, Inc. appeals the Pa- tent Trial and Appeal Board’s final written decision declin- ing to find claims 55–57 of U.S. Patent No. 6,003,135 anticipated by PCT Application WO 95/16238 (Jones). Be- cause substantial evidence supports the Board’s determi- nation that Jones does not expressly or inherently disclose certain limitations of claims 55 and 56, we affirm as to those claims. With regard to claim 57, we hold that the Board abused its discretion when it rejected Kingston’s supplemental briefing for purportedly presenting a new theory of invalidity. We therefore vacate the Board’s deci- sion as to claim 57 and remand for the Board to consider Kingston’s supplemental briefing addressing claim 57. BACKGROUND I The ’135 patent, titled “Modular Security Device,” is di- rected to a modular, typically portable, device that com- municates with a host computing device—e.g., a host computer. The disclosed modular device contains a secu- rity module and a target module. The security module pro- vides security functionality such as encryption or password control, while the target module provides non-security functionality such as data storage, biometric scanning, a modem, or a smart card reader. The ’135 patent discloses that separating the security elements of the modular de- vice from other functionality provides for a single security module that can be used to provide security to multiple types of interactions with the host computer. In certain embodiments, the security module can be po- sitioned inline such that all communications between the target module and the host computer must travel through it. The same security module can also be used with a vari- ety of target modules, thereby increasing flexibility. In ad- dition, the modular device can be implemented to assume Case: 19-1256 Document: 46 Page: 3 Filed: 02/21/2020

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the identity of the target module such that the security module is transparent to the host computer. Claims 55 and 57 are illustrative: 55. For use in a modular device adapted for com- munication with a host computing device, the mod- ular device comprising a security module that is adapted to enable one or more security operations to be performed on data and a target module that is adapted to enable a defined interaction with the host computing device, a method comprising the steps of: receiving a request from the host computing device for information regarding the type of the modular device; providing the type of the target module to the host computing device in response to the request; and operably connecting the security module and/or the target module to the host computing device in re- sponse to an instruction from the host computing device. ... 57. For use in a modular device adapted for com- munication with a host computing device, the mod- ular device comprising a security module that is adapted to enable one or more security operations to be performed on data and a target module that is adapted to enable a defined interaction with the host computing device, a method comprising the steps of: communicating with the host computing device to exchange data between the host computing device and the modular device; Case: 19-1256 Document: 46 Page: 4 Filed: 02/21/2020

performing one or more security operations and the defined interaction on the exchanged data; mediating communication of the exchanged data between the host computing device and the modu- lar device so that the exchanged data must first pass through the security module; and operably connecting the security module and/or the target module to the host computing device in re- sponse to an instruction from the host computing device. ’135 patent col. 26 ll. 12–53 (emphases added to highlight disputed claim limitations). The specification of the ’135 patent explains that some embodiments conform to the PCMCIA standard. PCMCIA cards, popularized in the 1990s, were removable modules with a variety of functions—e.g., modem, smart card reader, data storage—that could be inserted into a desig- nated slot in a laptop computer. The Personal Computer Memory Card International Association established the standard for PCMCIA cards (hence the name), 1 and the PCMCIA standard is comprised of multiple discrete speci- fications. II Jones is the only prior art reference at issue on appeal. Jones is a PCT Application directed to “[a] detachable PCMCIA memory card . . . incorporating a smartcard inte- grated circuit.” Jones at Abstract. The memory card of Jones provides removable data storage secured by a pass- word, encryption, or both. Jones discloses at least one embodiment that conforms to the PCMCIA standard. Jones specifically cites to the

1 PCMCIA cards were later dubbed “PC Cards.” Case: 19-1256 Document: 46 Page: 5 Filed: 02/21/2020

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“PC Card Standard Specification, Release 2.01, published in November, 1992,” but does not expressly incorporate that specification by reference. Jones col. 5 ll. 22–23; see also id. at col. 8 ll. 26–29 (similar). Elsewhere, Jones ex- plains that “[t]he programming interface to the PCMCIA Card Services software is defined in Section 3 of the PCMCIA Standard (Release 2.01),” but again does not ex- pressly incorporate that disclosure by reference. Id. at col. 9 ll. 16–19. III Kingston petitioned for inter partes review of claims 55–58 of the ’135 patent based on anticipation by Jones, obviousness over Jones alone, and obviousness over Jones in view of other prior art. The Board initially de- clined to institute review for claims 55–57, but modified its institution decision to include those claims following SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018). The Board then permitted Kingston to submit supplemental infor- mation pursuant to 37 C.F.R. § 42.123. The Board also au- thorized the parties to file supplemental briefing addressing the supplemental information submitted by Kingston. The Board issued a final written decision in which it held claim 58 unpatentable, but declined to hold claims 55–57 unpatentable. See generally Kingston Tech. Co. v. SPEX Techs., Inc., No. IPR2017-01021, 2018 WL 4773543, at *1 (P.T.A.B. Oct. 1, 2018) (“Decision”). Rele- vant here, the Board found that Kingston had failed to show by a preponderance of the evidence that claims 55–57 of the ’135 patent are anticipated by Jones. 2 In so finding, the Board declined to consider Kingston’s supplemental

2 Although not at issue on appeal, the Board also re- jected Kingston’s obviousness arguments based on Jones alone and in combination with other references. Case: 19-1256 Document: 46 Page: 6 Filed: 02/21/2020

briefing regarding claim 57 because Kingston had, in the Board’s assessment, presented “new argument and new in- validity theories not presented or relied upon in the Peti- tion.” Id. at *12 (first citing 37 C.F.R. § 42.23(b); then citing Office Patent Trial Practice Guide, August 2018 Up- date 14, https://go.usa.gov/xU7GP). Kingston appeals the Board’s finding of no anticipation of claims 55 and 56 along with the Board’s refusal to con- sider Kingston’s arguments addressing claim 57 in its sup- plemental briefing. We have jurisdiction under 28 U.S.C. § 1295(a)(4)(A). DISCUSSION I We first address the Board’s finding of no anticipation of claims 55 and 56. “A patent claim is invalid as antici- pated only if each and every element of the claim is ex- pressly or inherently disclosed in a single prior art reference.” Guangdong Alison Hi-Tech Co. v. Int’l Trade Comm’n, 936 F.3d 1353, 1363 (Fed. Cir. 2019) (first citing 35 U.S.C. § 102 (2006); 3 then citing SRI Int’l, Inc. v. Inter- net Sec. Sys., Inc., 511 F.3d 1186, 1192 (Fed. Cir. 2008)). Anticipation is a question of fact that we review for sub- stantial evidence. Blue Calypso, LLC v. Groupon, Inc., 815 F.3d 1331, 1341 (Fed. Cir. 2016) (citing Kennametal, Inc. v. Ingersoll Cutting Tool Co., 780 F.3d 1376, 1381 (Fed. Cir. 2015)). For the reasons that follow, we conclude

3 Because the ’135 patent does not contain any claim with an effective filing date on or after March 16, 2013, the applicable version of 35 U.S.C. § 102 is the one preceding the changes made by the America Invents Act. See Leahy-Smith America Invents Act, Pub. L. No. 112-29 § 3(n), 125 Stat. 284, 293 (2011). Case: 19-1256 Document: 46 Page: 7 Filed: 02/21/2020

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that the Board’s findings as to claims 55 and 56 are sup- ported by substantial evidence, and accordingly, we affirm. Claim 55 recites, in relevant part, “receiving a request from the host computing device for information regarding the type of the modular device,” and “providing the type of the target module to the host computing device in response to the request.” ’135 patent col. 26 ll. 19–22. Claim 56 de- pends from claim 55 and therefore includes the same “re- ceiving” and “providing” limitations. In its petition, Kingston identified certain passages of Jones as disclosing the “receiving” and “providing” limita- tions. In particular, Kingston pointed to Jones’s disclosure that, “[t]o implement the PCMCIA interface standard,” its secure memory card “stores information enabling the host computer to automatically identify the particular PCMCIA card as soon as the card and host are connected.” Jones col. 5 ll. 24–29 (emphasis added). The Board was not per- suaded by this passage because, in its view, “automatically identify” is not specific enough to disclose the separate “re- ceiving” and “providing” steps of claim 55. Indeed, the Board noted that Jones’s reference to “automatic” identifi- cation actually suggests that Jones does not require any request from the host computer prior to the identification of the PCMCIA card. In support of its supplemental briefing for claims 55 and 56, Kingston submitted excerpts from two PCMCIA standard specifications. Before the Board, Kingston con- tended that this additional evidence established that the “automatic” identification of Jones incorporates functions from the PCMCIA standard that satisfy the “receiving” and “providing” limitations of claims 55 and 56. In particular, Kingston pointed to the GetTupleData and GetConfigura- tionInfo functions as implementing the automatic identifi- cation described in Jones. The Board was not persuaded by the additional evi- dence submitted by Kingston. Although Jones expressly Case: 19-1256 Document: 46 Page: 8 Filed: 02/21/2020

references the “PC Card Standard Specification, Re- lease 2.01, published in November, 1992,” Jones col. 5 ll. 22–23, the Board noted that Jones does not incorporate that specification by reference. And even assuming that Jones incorporates the identified specification, the Board noted that the functions relied on by Kingston are de- scribed in a different specification, the PCMCIA Card Ser- vices Specification, Release 2.0. Finding no express disclosure in Jones, the Board turned to inherent disclosure. The Board found that Jones also fails to inherently disclose the “receiving” and “provid- ing” limitations through its general references to the PCMCIA standard. Specifically, the Board was unper- suaded that a person of ordinary skill in the art would have understood the automatic identification of Jones to require use of the GetTupleData and GetConfigurationInfo func- tions—not least because Jones makes no reference to the PCMCIA specification that describes those functions. Even assuming that an ordinarily skilled artisan would have un- derstood Jones’s “automatic” identification to reference those functions, the Board further reasoned that the speci- fication identified by Kingston provides no indication that the functions are mandated by the PCMCIA standard. In- deed, the passage that Kingston cited for the GetTuple- Data function explains that Card Services clients may need to process a PC Card’s Card Information Structure (CIS) to de- termine if and how they will interact with a card detected in a socket. (Some clients may receive all the information they require from the CARD_INSERTION event). J.A. 1623 (emphases added). On this record, we cannot say that the Board’s finding of no anticipation is unsupported by substantial evidence. Kingston bore the burden of proof on this issue, and there are numerous material flaws in the evidence that Kingston Case: 19-1256 Document: 46 Page: 9 Filed: 02/21/2020

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presented. The Board reasonably found that Jones itself does not expressly disclose the limitations at issue through its automatic identification feature, and further that Jones does not incorporate by reference any PCMCIA specifica- tion, much less the ones proffered by Kingston. The Board also reasonably declined to find inherent anticipation here, where Kingston’s theory of invalidity relies on multiple in- ferential leaps. In particular, Kingston’s theory requires an inference that an ordinarily skilled artisan would have understood Jones’s general reference to the PCMCIA standard to necessarily disclose the use of the GetTuple- Data and GetConfigurationInfo functions—the use of which, based on the official descriptions provided by King- ston, does not appear to be a requirement of the PCMCIA standard. See Alison, 936 F.3d at 1364 (“An element may be inherently disclosed only if it ‘is “necessarily present,” not merely probably or possibly present, in the prior art.’” (quoting Rosco, Inc. v. Mirror Lite Co., 304 F.3d 1373, 1380 (Fed. Cir. 2002))). We have considered the other arguments advanced by Kingston—including that Jones must disclose the limita- tions at issue because it discloses the initial communica- tion at the same level of detail as the ’135 patent; that the Board’s application of inherency was too strict; and that the Board ignored key evidence and arguments from a parallel district court litigation—but we discern no reversible error in the Board’s analysis. We therefore affirm the Board’s determination as to claims 55 and 56. II We next address the Board’s finding of no anticipation of claim 57. Kingston specifically challenges the Board’s rejection of its supplemental briefing for improperly pre- senting a new theory of invalidity for claim 57. We review the Board’s decision not to consider a new argument for an abuse of discretion. See Intelligent Bio-Sys., Inc. v. Illu- mina Cambridge Ltd., 821 F.3d 1359, 1367 (Fed. Cir. Case: 19-1256 Document: 46 Page: 10 Filed: 02/21/2020

2016). For the reasons that follow, we hold that the Board abused its discretion when it declined to consider the argu- ments addressing claim 57 in Kingston’s supplemental briefing. We therefore vacate the Board’s finding of no an- ticipation of claim 57 and remand to the Board for further consideration. Claim 57 recites, in relevant part, “performing one or more security operations and the defined interaction on the exchanged data.” ’135 patent col. 26 ll. 45–46 (emphasis added). In its petition, Kingston identified the “defined in- teraction” in Jones as “the transfer of data between the host computer 110 and the data storage 150.” J.A. 1825– 26 (citing Jones col. 11 ll. 15–20). 4 In its supplemental briefing, Kingston argued that SPEX Technologies, Inc., the patent owner, had taken a po- sition regarding claim 57 in the IPR that was “directly con- trary” its position on infringement in a parallel district court litigation. J.A. 1017. Kingston specifically pointed to the testimony of SPEX’s litigation expert, who had purport- edly identified data storage as the “defined interaction” in the accused devices. In the course of doing so, Kingston characterized its own argument in the petition as having established that “Jones allow[s] for the transfer and stor- age of data.” J.A. 1016 (emphasis added) (citing J.A. 1824– 26); see also J.A. 1017 (“Spex cannot argue that claim limi- tations can be met by transfer and storage of data for in- fringement purposes, then deny that transfer or storage of data is sufficient to anticipate these elements.”). In its final written decision, the Board rejected King- ston’s supplemental arguments addressing claim 57 for

4 Kingston similarly identified the “defined interac- tion” in the ’135 patent as “the exchange of data between the host and the target module (memory).” J.A. 1824 (cit- ing ’135 patent col. 20 ll. 28–36). Case: 19-1256 Document: 46 Page: 11 Filed: 02/21/2020

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improperly presenting a new theory of invalidity outside of the scope of the petition. The Board explained that King- ston’s argument in the petition identified the “defined in- teraction” in Jones as the transfer of data, not the storage of data. According to the Board, “the only mention of the word ‘storage’ . . . in the Petition is a parenthetical state- ment identifying the physical components between which the ‘transfer of data,’ alleged in the Petition to be the re- cited ‘defined interaction,’ allegedly takes place.” Decision, 2018 WL 4773543, at *12 (citing J.A. 1825–26). The Board thus concluded that Kingston’s supplemental briefing on claim 57 constituted an “impermissible new argument” that the Board would not consider—regardless of any in- consistent positions that SPEX may have taken in the par- allel litigation. Id. On appeal, Kingston admits that it did not use the words “data storage” in its petition. But Kingston insists that its supplemental argument was proper because it merely clarified Kingston’s original theory of invalidity for claim 57 in response to criticism from the Board and incon- sistent litigation positions taken by SPEX. We agree with Kingston. Although the Board “‘has broad discretion to regulate the presentation of evidence,’ that discretion is not without limits.” Altaire Pharm., Inc. v. Paragon Bioteck, Inc., 889 F.3d 1274, 1285 (Fed. Cir. 2018) (first quoting Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064, 1081 (Fed. Cir. 2015); then citing Ultratec, Inc. v. CaptionCall, LLC, 872 F.3d 1267, 1274 (Fed. Cir. 2017)), remand order modified by stipulation, 738 F. App’x 1017 (Fed. Cir. 2018). We acknowledge that the Board’s rules prohibit a petitioner from submitting new evidence or new argument in reply that the petitioner could have presented earlier. See, e.g., 37 C.F.R. § 42.23(b). Indeed, we have re- peatedly endorsed that proposition. See, e.g., Henny Penny Corp. v. Frymaster LLC, 938 F.3d 1324, 1330–31 (Fed. Cir. 2019) (affirming Board’s rejection of a reply argument pre- senting an “entirely new rationale” for why a claim would Case: 19-1256 Document: 46 Page: 12 Filed: 02/21/2020

have been obvious); Intelligent Bio-Sys., 821 F.3d at 1369– 70 (affirming Board’s rejection of a reply argument pre- senting an “entirely new rationale” for motivation to com- bine). Yet we have also explained that “[p]arties are not barred from elaborating on their arguments on issues pre- viously raised,” Chamberlain Grp., Inc. v. One World Techs., Inc., 944 F.3d 919, 925 (Fed. Cir. 2019) (citing In- teractive Gift Express, Inc. v. CompuServe Inc., 256 F.3d 1323, 1347 (Fed. Cir. 2001)), and that a reply argument is proper if it “cites no new evidence and merely expands on a previously argued rationale,” Ericsson Inc. v. Intellectual Ventures I LLC, 901 F.3d 1374, 1381 (Fed. Cir. 2018). Here, we conclude that Kingston did not improperly in- troduce new issues or new evidence relating to claim 57 in its supplemental briefing. Instead, Kingston’s supple- mental briefing merely elaborates upon its original argu- ment in order to clarify that the identified transfer of data in Jones incorporates the act of storing that data. Kingston did not identify or discuss any new theory based on Jones in its supplemental briefing, citing instead to the corre- sponding pages of its petition. See J.A. 1016–17 (citing J.A. 1824–26). 5 Kingston’s petition characterizes the de- fined interaction in Jones as “the transfer of data between the host computer . . . and the data storage.” J.A. 1825–26 (emphases added). As Kingston points out, in common par- lance “a memory module is storage.” Reply at 24. And at oral argument before this court, counsel for SPEX conceded that the act of transferring data from a host computer to memory is normally understood to include the act of storing that data. See Oral Arg. at 28:28–28:41, http://oralargu- ments.cafc.uscourts.gov/default.aspx?fl=2019-1256.mp3.

5 The only new evidence offered by Kingston relating to claim 57—i.e., SPEX’s arguments in district court—was previously unavailable because those arguments were made after the petition was filed. Case: 19-1256 Document: 46 Page: 13 Filed: 02/21/2020

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Indeed, counsel for SPEX could not articulate any act be- yond storage that would normally take place when data is transferred from a host computer to memory. See id. at 28:00–28:28. On this record, Kingston’s supplemental briefing on claim 57 is properly characterized as a “clarification of its prior position in response to [others’] arguments,” as in Chamberlain, 944 F.3d at 925, not “an entirely new ra- tionale” worthy of being excluded, as in Intelligent Bio-Sys- tems, 821 F.3d at 1370. To hold otherwise would endorse an overly formalistic approach that would unduly inhibit a petitioner from responding to criticisms of issues that it properly presented in the petition. Accordingly, we vacate and remand for the Board to consider Kingston’s argu- ments addressing claim 57 in its supplemental briefing. CONCLUSION We have considered the parties’ other arguments, and we do not find them persuasive. For the foregoing reasons, we affirm the Board’s finding of no anticipation for claims 55 and 56, vacate the Board’s finding of no anticipa- tion for claim 57, and remand to the Board to consider Kingston’s supplemental briefing on claim 57. AFFIRMED-IN-PART, VACATED-IN-PART, AND REMANDED COSTS No costs.