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Wasica Finance Gmbh v. Continental Automotive Systems
Citations: 853 F.3d 1272; 122 U.S.P.Q. 2d (BNA) 1267; 2017 U.S. App. LEXIS 5767; 2017 WL 1228579Docket: 15-2078
Court: Court of Appeals for the Federal Circuit; April 4, 2017; Federal Appellate Court
Original Court Document: View Document
The case involves Wasica Finance GmbH and Bluearc Finance AG as appellants against Continental Automotive Systems, Inc., Schrader-Bridgeport International, Inc., Sensata Technologies Holding NV, and SI International (TOPCO. Inc.) as cross-appellants in an appeal to the United States Court of Appeals for the Federal Circuit. The appeals arise from two inter partes review proceedings concerning U.S. Patent No. 5,602,524, which has 21 claims, with Claim 1 being the only independent claim. In the first proceeding (IPR2014-00295), initiated by Continental, the Patent Trial and Appeal Board (PTAB) deemed claims 1–3, 5, 10–19, and 21 unpatentable due to anticipation or obviousness, while claims 6–9 and 20 were found patentable. The second proceeding (IPR2014-00476) was initiated by Schrader, where claims 1–5, 10, 12–19, and 21 were similarly found unpatentable, with claims 6 and 9 deemed patentable. The PTAB declined to review claims 4 and 11 in their respective proceedings. Wasica appeals the unpatentability findings, while Continental and Schrader cross-appeal regarding the patentability of claims 6–9 and 20. The Court upheld the PTAB’s conclusions regarding the unpatentability of claims 1–5, 10–19, and 21, and affirmed the patentability of claims 6–8 and 20, but reversed the patentability decision regarding claim 9. The ’524 patent details systems for monitoring vehicle tire pressure, emphasizing that prior art systems struggled with accuracy due to interference, leading to incorrect pressure warnings. The ’524 patent addresses the synchronization of tire pressure monitoring components by integrating pressure measuring devices and transmitters in each tire (R1–R4), which send pressure data to corresponding receivers (E1–E4). Each transmission includes an “identification signal” to distinguish between different transmitters, allowing the receiver to process data only from designated transmitters. The system features a “pairing mode” for synchronization, where the strongest signal from a transmitter is coupled with the receiver. Tire pressure data is displayed to the driver via a display device. Claim 1 of the patent details a monitoring device for pneumatic tires, incorporating a pressure measuring device, a transmitter, a receiver, and a display device. It specifies that the transmitter includes an emitter-control device and a signal-generating device for a unique identification signal. The receiver must store an identification reference signal and use a comparison device to ensure further processing occurs only if the identification signals match specified criteria. The identification reference signal is changeable, and the receiver can switch between monitoring and pairing modes. Continental and Schrader have filed inter partes review petitions against the patent's validity. Continental's petition challenges all 21 claims based on anticipation and obviousness, referencing Italian Patent No. 1,219,753 and several U.S. patents. Schrader's petition targets claims 1–6, 9–19, and 21, asserting similar grounds of anticipation and obviousness, primarily based on Oselin and other patents. Separate trials were conducted by the Board on two petitions, primarily examining the Oselin reference, which is related to tire pressure monitoring systems similar to the ’524 patent. Continental and Schrader asserted that Oselin discloses or suggests most features of the challenged claims, while Wasica countered that Oselin does not fulfill all limitations of independent claim 1, particularly lacking a “pressure measuring device,” an “electrical pressure signal,” and a “pressure transmitting signal” as defined by Wasica. Additionally, Wasica defended the patentability of various dependent claims based on its definitions of “bit sequence” and “emittance.” The proceedings concluded with two Final Written Decisions from the Board, which included the construction of key terms such as “pressure measuring device,” “bit sequence,” and “emittance.” Based on these constructions, the Board determined that Oselin anticipated claims 1, 2, 5, 10, 13, 15, 17–19, and 21, while claims 3, 4, 10–12, 14, 16, and 17 were deemed obvious when considered with other references. However, the Board found that Continental and Schrader did not demonstrate that Oselin (or in combination with Williams) rendered claims 6–9 and 20 unpatentable. Wasica is appealing the Board’s decisions regarding the unpatentability of claims 1–5, 10–19, and 21, while Continental and Schrader are cross-appealing the Board's decisions affirming the patentability of claims 6–9 and 20. The jurisdiction for these appeals is established under 28 U.S.C. 1295(a)(4)(A) and 35 U.S.C. 141(c). The standard of review for IPR decisions includes de novo review of legal conclusions, substantial evidence review for factual findings, and specific standards for anticipation and obviousness determinations. Claim construction also involves de novo review for legal issues, with factual determinations assessed for substantial evidence. The appeals from the two IPR proceedings are consolidated, with Wasica appealing certain aspects while Continental and Schrader cross-appeal regarding different elements of the decisions. Wasica argues that the Board wrongly deemed claims 1–5, 10–19, and 21 unpatentable based on the Oselin reference, which describes a pressure sensor for tire air pressure that signals abnormal levels through a binary alarm bit. Wasica asserts that Oselin lacks the "pressure measuring device" required by claim 1, contending that this claim necessitates a numerical representation of tire pressure, which Oselin's binary signal does not provide. The Board disagreed, stating that the claims do not limit the pressure measuring device to numeric values and referenced embodiments of Wasica's ’524 patent that use similar binary sensors. On appeal, Wasica shifts its argument to the terms "electrical pressure signal" and "pressure transmitting signal," maintaining that these must also represent numerical values. Although Wasica acknowledges that the ’524 patent includes switch-based sensors like those in Oselin, it insists that these should complement, not replace, quantitative measuring devices. The opposing parties, Continental and Schrader, argue that the Board correctly interpreted the claim terms broadly, asserting that the claims do not exclusively require numeric values, and point to the patent's specification as supporting this interpretation. The analysis concludes that Wasica does not dispute the unpatentability of the claims under the Board’s construction. The only issue for determination is whether the Board correctly interpreted the terms "electrical pressure signal" and "pressure transmitting signal" to include non-numeric representations. The Board's construction aligns with established legal standards, which dictate that claim terms be understood according to their ordinary meanings and in the context of the patent's specification. The Board's interpretation is upheld as correct. Claim 1 of the 524 patent specifies that the data displayed can be in the form of either numeric values or symbols derived from a pressure transmitting signal, indicating that these two forms are distinct alternatives. The use of "or" suggests that the terms are interchangeable, as supported by case law. Wasica acknowledges that the pressure transmitting signal can include both numerical values and symbols indicating low tire pressure. The claim does not restrict the electrical pressure signal to numeric values; rather, it requires that the signal is "representative of" air pressure, which can include non-numeric representations, akin to how a gas warning light indicates low fuel without specifying an exact quantity. The specification of the patent supports this interpretation, disclosing embodiments that utilize non-numeric pressure signals. The Board found that the disclosed examples in the specification do not exclude non-numeric representations, and Wasica's argument that switch-based pressure sensors only supplement quantitative measurements lacks merit. Therefore, the Board's broad construction of the signal terms to include non-numeric representations is upheld, leading to the affirmation of the unpatentability of claims 1–5, 10–16, 18, 19, and 21. Wasica challenges the patentability of dependent claim 17, which builds upon claims 13 and 1. Claim 13 specifies a device with pressure measuring devices and transmitters on at least two vehicle wheels. Claim 17 adds that each transmitter includes a detector for a predetermined switching signal, activating a pairing mode that emits an identification signal along with a pairing mode indicator. The Board interpreted “emittance of a predetermined switching signal” to encompass both wired and wireless communications, a point Wasica contests, asserting the term should only refer to wireless signals based on its ordinary meaning. Wasica further claims that prior art does not demonstrate such wireless transmission, but ultimately concedes that claim 17 is unpatentable under the Board's interpretation. Continental and Schrader argue that “emit” simply means “to send out,” which includes wired signals, and they point to examples in the specification that depict wired transmission of the switching signal. The central issue is whether the Board incorrectly construed “emittance” to include wired transmissions. The analysis concludes that the Board acted correctly, as patent terminology should not be limited beyond its ordinary meaning without explicit support from the claim language, specification, or prosecution history. The term “emittance” is affirmed to encompass both wired and wireless transmissions, supported by the definition of “emit” and various embodiments in the ’524 patent demonstrating both types of signal propagation. Claim terms are typically not interpreted to exclude examples disclosed in the specification. The terms “emit” and “transmit” are treated interchangeably in the context of claim construction, as established in precedent cases. The specification indicates that “transmit” pertains to wireless communications, implying that “emit” is not limited to this context. The Board's conclusion that “emittance” in claim 17 encompasses both wired and wireless transmissions is upheld, with Wasica not arguing against its patentability under this interpretation. Continental and Schrader's cross-appeals relate to claims 6–9 and 20, which the Board previously found patentable over Oselin and other references. Claim 6 relies on claim 2, which includes a converter device for signals transmitted from a transmitter. Specifically, claim 6 states that the transmission involves electromagnetic waves of a constant frequency. Both Continental and Schrader argued that Oselin’s disclosures negated the constant frequency requirement, but the Board found otherwise, stating that Oselin permitted variable frequencies. The Board dismissed their obviousness arguments as lacking substantial support. Schrader contends Oselin implies a constant frequency, while Continental claims the Board missed key evidence indicating Oselin's compatibility with constant frequency signals. After reviewing the evidence, the conclusion that claim 6 is patentable over Oselin is affirmed, with distinct responses from each cross-appellant addressed separately. Schrader's cross-appeal emphasizes that anticipation requires a reference to describe the claimed invention with sufficient precision to establish its existence in prior art. Legal precedents, such as Verve, LLC v. Crane Cams, Inc., assert that ambiguous references cannot anticipate a claim. The Board found that Oselin's reference of a "common" working frequency does not confirm that the frequency of each transmitted signal is constant, suggesting it could represent an average frequency with potential fluctuations. This ambiguity means Oselin does not clearly disclose the features of claim 6, which necessitates a constant frequency. The Board's conclusion is supported by expert testimony, and Schrader's reliance on attorney argument does not suffice as evidence. Additionally, Schrader did not separately argue obviousness for claim 6, leading to a waiver of that argument on appeal, in accordance with established legal principles that require arguments to be fully presented in the opening brief to avoid waiver. Continental argues that the prior art reference Oselin renders claim 6 unpatentable, proposing that Oselin's broad reference to “any modulation scheme” includes constant-frequency signals. The Board rejected this argument as imprecise and underdeveloped, affirming that the disclosure of a genus in prior art does not inherently disclose all species within that genus. The Board specifically determined that Oselin’s reference to “any modulation scheme” lacks the necessary detail to disclose the constant-frequency modulation scheme specified in claim 6. This conclusion was supported by substantial evidence from the record. In the context of consolidated appeals from two inter partes review (IPR) proceedings, Wasica appeals the Board's finding that claims 1–5, 10–19, and 21 are unpatentable due to Oselin. Wasica asserts that Oselin's pressure sensor does not meet the claim's requirement for a numerical representation of tire pressure, as Oselin only provides a binary signal indicating abnormal pressure levels. The Board disagreed, determining that the claims did not restrict the pressure measuring device to numeric values and referenced similar embodiments in the related patent. Consequently, the Board upheld the unpatentability of the claims based on this interpretation. Wasica's appeal subsequently shifts focus to the terms “electrical pressure signal” and “pressure transmitting signal” in claim 1, maintaining a similar argument regarding the lack of numerical precision. Wasi-ca asserts that the signals in question must include numerical pressure values and argues that the ’524 patent incorporates switch-based sensors like Oselin as supplementary to quantitative measuring devices, not as replacements. Consequently, Wasi-ca claims the Board incorrectly interpreted the terms of claim 1 and mistakenly deemed claims 1–5, 10–19, and 21 unpatentable based on Oselin and other references. In contrast, Continental and Schrader argue that the Board's interpretation of the signal and pressure measuring device limitations in claim 1 was correct, asserting that the claims are broadly worded and not limited to numerical values. They maintain that the patent’s specification supports this interpretation by illustrating the use of non-numeric pressure sensors. The analysis reveals that Wasi-ca does not contest the unpatentability of claims 1–5, 10–16, 18, 19, and 21 under the Board’s interpretation. The sole issue is whether the Board erred in defining “electrical pressure signal” and “pressure transmitting signal” to include non-numeric representations. The Board's construction aligns with the Phillips v. AWH Corp. standard, which dictates that claim terms are understood in their ordinary meaning, informed by the claims and the specification of the patent. The claim language indicates that the signal terms are not restricted to numeric values, as claim 1 specifies data can be displayed “as numbers or symbols,” using “or” to denote alternatives. This suggests that the pressure transmitting signal can encode non-numeric symbols. Wasi-ca implicitly acknowledges this by noting that the pressure transmitting signal encompasses both numerical values and symbols indicating low tire pressure. The claim also indicates that the “electrical pressure signal” need only represent air pressure, without restriction to numerical values. The ordinary meaning of "representative" is interpreted as "serving to symbolize" or "standing for," allowing for non-numeric signals to be considered representative of air pressure, akin to how a vehicle's gas warning light symbolizes low fuel levels. The interpretation aligns with prior case law (Honeywell Int'l Inc. v. Universal Avionics Sys. Corp.) that emphasizes non-numeric signals are not restricted to numerical values. The specification of the ’524 patent supports this interpretation, detailing an embodiment where a sensor outputs non-numeric pressure signals, confirmed by related European applications that describe switch-based pressure sensors. The Board's decision, which Wasica does not dispute, asserts that these sensors do not merely supplement other sensors but are integral in generating signals under specified conditions. Thus, the Board's broad construction of signal terms to include non-numeric representations is upheld, leading to the affirmation of claims 1–5, 10–16, 18, 19, and 21 as unpatentable. Regarding claim 17, which depends on claim 13, Wasica argues for its patentability. Claim 17 describes a monitoring device that includes a transmitter capable of entering a pairing mode upon detecting a predetermined switching signal. The Board interpreted this signal to encompass both wired and wireless transmissions, a point of contention for Wasica, who insists it should be limited to wireless communications. Wasica argues that “emit” in the patent specification should only refer to wireless signals, claiming that prior art does not disclose such wireless transmission for claim 17. However, Wasica acknowledges that claim 17 is unpatentable under the Board's construction. In contrast, Continental and Schrader assert that “emit” means to send out and does not exclude wired transmissions, citing embodiments in the specification where the signal passes through wired components. The core issue is whether the Board erred in interpreting “emittance” to include wired transmissions, which it did not. The court reinforces that claim terms should not be narrowed beyond their plain meaning without supportive evidence from the claim, specification, or prosecution history. The term “emittance” is interpreted to encompass both wired and wireless transmissions, as both are forms of “sending out” signals. The specification provides numerous examples of both types of transmission, and the interchangeable use of “emit” and “transmit” further supports this broader interpretation. The conclusion is that the term “emittance” should include both wired and wireless modes, as excluding any disclosed examples would contradict standard interpretative practices. Claim 1 of the patent involves a "transmitter" that emits both a pressure transmitting signal and an identification signal to a receiver. The claims frequently interchange the terms "transmitter" and "emitter," which is also reflected in the written description. The specification indicates that "transmit" pertains to wireless communications without reserving "emit" for any specific purpose. The Board concluded that “emittance” in claim 17 encompasses both wired and wireless transmissions, a conclusion affirmed due to Wasica's failure to argue for the patentability of claim 17 under this interpretation. Continental and Schrader appeal the Board's decisions regarding claims 6–9 and 20, which were deemed patentable over prior art, including Oselin. Claim 6, dependent on claim 2, specifies a monitoring device where signals from the transmitter to the receiver are transmitted via electromagnetic waves of constant frequency. Oselin, however, describes transmissions using structurally analogous signals with a frequency common to all transmitters in a group, which the Board interpreted as potentially allowing for variable frequencies. The Board accepted Wasica's evidence that Oselin's description does not satisfy the constant frequency requirement of claim 6 and dismissed the petitioners' obviousness arguments as unsubstantiated. Continental and Schrader's appeals are based on differing grounds from the Board's conclusions. Schrader contends that Oselin's reference to transmitting signals at "a" frequency implies a constant frequency requirement. Continental argues that the Board missed critical evidence, asserting that Oselin can work with any modulating scheme, including constant frequency signals specified in claim 6. Wasica defends the Board's decision, emphasizing reliance on its expert testimony regarding Oselin's disclosures, as Schrader did not provide expert testimony. In the ’295 proceeding, Wasica claims Oselin discusses a broad category of modulating schemes but not the constant-frequency type in claim 6. Wasica also argues that Continental waived its obviousness claim by not sufficiently developing it before the Board. The Board's conclusion that claim 6 is patentable over Oselin is supported by substantial evidence, leading to affirmation of its decision. Anticipation requires a single reference to precisely describe the claimed invention; ambiguous references cannot establish prior art. Claim 6 specifically necessitates carrier waves with a constant frequency. Although Oselin mentions a "common" working frequency, the Board found this does not imply each signal’s frequency is constant, as it could represent an average frequency of fluctuating signals. The Board concluded that Oselin is "unclear" regarding the constancy of its transmissions, making it ambiguous and thus not anticipatory of claim 6. Schrader's appeal arguments fail to demonstrate any error by the Board. Schrader's argument that Oselin's transmitters must utilize a constant frequency is deemed irrelevant, as anticipation is assessed from the viewpoint of a person skilled in the art. Frequency shift keying, described in the '524 patent, involves encoding information by varying the signal's frequency. The core question of anticipation revolves around whether a skilled individual could infer that all elements of a claim are disclosed in a single prior art reference. The Board found that Oselin did not disclose what Schrader claimed, supported by evidence, and Schrader failed to present counter-evidence. Attorney arguments are not considered evidence and cannot refute established record evidence. Additionally, Schrader did not present a distinct argument regarding the obviousness of claim 6, resulting in a waiver of that argument, as established legal precedent dictates that arguments not raised in the opening brief are waived on appeal. Similarly, in Continental's cross-appeal, it argued that Oselin renders claim 6 unpatentable under a different theory, asserting that Oselin could employ any modulation scheme, including constant-frequency signals. The Board dismissed this argument as insufficiently specific and underdeveloped, affirming that disclosing a genus does not inherently disclose every species within it. Thus, Oselin's reference to "any modulation scheme" does not adequately disclose the specific constant-frequency modulation scheme required for claim 6. The factual determination made by the Board was reasonable, based on record evidence and admissions by Continental's counsel. The Board's findings are backed by substantial evidence, as established in In re Jolley. If the record supports multiple reasonable but contradictory conclusions, the Board's choice among them is deemed sufficient. Continental failed to demonstrate that a prior art genus anticipated a later species in this case, as required in Kennametal and AbbVie, since the petition did not provide necessary factual components or identify the relevant "modulating scheme" genus or its species. Continental's claim of obviousness was similarly unsupported, relying on conclusory statements without the required articulated reasoning, as noted in In re Kahn. The Board found this lack of factual substantiation significant and maintained that differences between the prior art and the claims must be determined. Additionally, Continental's later attempts to address deficiencies in its petition were unpersuasive, emphasizing the crucial need for petitioners in IPR proceedings to present a well-supported case within their initial filings, as outlined in Illumina. Ultimately, Continental did not adequately establish its obviousness claim in its petition. Continental's initial challenge to claim 6, based on Oselin’s “common” working frequency, was deemed insufficient as it merely alleged that differences were obvious. After Wasica highlighted these deficiencies, Continental shifted its argument, proposing that an ordinary skilled person would reference a different part of Oselin concerning binary data encoding and modify it using constant-frequency modulation from other sources. This shift constituted a new theory of obviousness that was not included in the original petition, which is contrary to statutory requirements and established precedent prohibiting such changes (35 U.S.C. 312(a)(3)). The Board correctly declined to consider this new argument, affirming the patentability of claim 6. Claims 7, 8, and 20, which depend on claim 6, were not separately challenged by Schrader and were upheld by the Board based on the deficiencies of Oselin as they relate to claim 6. Continental did not present distinct arguments against the patentability of these claims on appeal, leading to their affirmation alongside claim 6. For claim 9, which depends on claims 1, 5, and 2, both parties contended that the Board erred in finding it patentable. Claim 5 specifies a monitoring device with a digital sequence for an identification signal. Although Continental briefly suggested the Board overlooked evidence regarding claims 7, 8, and 20, this was insufficient to challenge the Board's decisions. Continental’s petition challenged claims 7, 8, and 20, asserting they were obvious based on Williams's use of frequency key shifting. However, this method contradicts the “constant frequency” requirement of claim 6 by resulting in nonconstant frequency waves. Continental failed to provide adequate reasoning for the obviousness claim, which is necessary according to precedent (Illumina, 821 F.3d at 1369–70). The Board found no error in its analysis. In relation to claim 9, which involves a monitoring device transmitting a sequence of at least four bits, there is a dispute over the interpretation of “bit sequence.” Continental and Schrader argue that it can mean "one or more bits," while Wasica contends it must imply "two or more bits." The Board sided with Wasica, ruling that a “bit sequence” must contain at least two bits, concluding that Oselin’s single-bit pressure alarm does not fulfill the requirements of claim 9. However, upon analysis, it was determined that the Board erred in its construction. Claim 9’s requirement for transmitting “at least a 4 bit sequence” suggests that each of its four component sequences could be a single bit, allowing for the inclusion of four bits total. The Board's interpretation, which necessitated a minimum of eight bits (two for each component), misinterpreted the claim and excluded valid configurations of four to seven bits that the claim explicitly allows. Determining the ordinary and customary meaning of claim terms requires considering the context of surrounding words. In this case, the term "bit sequence" must include single-bit sequences to avoid rendering other limitations, such as "first bit sequence" and "second bit sequence," optional or meaningless. It is generally disfavored to interpret terms in a manner that makes them void or superfluous. The specification supports this interpretation by demonstrating an embodiment where a bit sequence consists of a single bit. The conclusion is that "bit sequence" includes single-bit sequences, and since Oselin's prior art anticipates claim 9 under this interpretation, the Board's decision declaring claim 9 patentable is reversed. The Board correctly found claims 1–5, 10–19, and 21 unpatentable, and substantial evidence supports the patentability of claims 6–8 and 20. Thus, the Board's decisions regarding claims 1–8 and 10–21 are affirmed, while its decision on claim 9 is reversed. Each party will bear its own costs.