Holding: A license used to show objective indicia of nonobviousness does not require a showing of nexus with respect to the specific claims at issue, only to the patent as a whole. Additionally, to establish nexus, a particular patent does not need to be the only patent being licensed or the sole motivation to enter into the license.
Ancora appealed final written decisions in two IPRs of various claims of US Patent No. 6,411,941 finding these claims to be unpatentable. The ‘941 Patent relates to software designed to prevent hackers from copying a software program that was licensed for use on a computer. The claimed method restricts use of a licensed software program on a computer that has at least two non-volatile memory areas and one volatile area. The non-volatile areas are inside a BIOS module for startup of the computer. Claim 1 of the ‘941 Patent recites a method of restricting software operation that uses an agent to set up a verification structure in the erasable, non-volatile memory of the BIOS that accommodates data including a license record to verify a program that is stored in the volatile memory. In some examples, the agent is described as an electrically erasable programmable read-only memory (EEPROM).
To overcome prior art references cited in the IPRs, Ancora argued that the claim term “agent” should be construed to mean a software program or routine limited to use at the operating system level and that this term excludes hardware. However, neither the patent nor the prosecution history made clear and unmistakable disclaimer that the term “agent” is meant to exclude hardware. Additionally, one of Ancora’s experts included in a declaration that the term “agent” is generally understood to include both software and hardware. Alternatively, Ancora argued that the term “agent” should be limited to use at the operating system level. However, again, Ancora did not include this limitation in the specification and no disclaimer was made during prosecution. Therefore, the Federal Circuit upheld the PTAB’s construction of the term “agent” as a software program or routine without limiting the term to use at the operating system level or just in software.
The PTAB also found that Ancora failed to establish a sufficient nexus between the claimed invention and evidence of objective indicia of nonobviousness for industry praise and licensing. To be given weight in the obviousness analysis, there must be a legally and factually sufficient connection between the evidence of secondary considerations and the patented invention. The burden to establish nexus is on the patent owner. There is a presumption of nexus if the evidence is tied to a specific product that embodies the claimed features, but there is no presumption of nexus if the patented invention is only a small component of the product.
For industry praise, Ancora offered evidence in the form of a joint press release between Ancora and American Megatrends (“AMI”) that directly named the ‘941 Patent and stated that AMI would offer products using the patent. However, the PTAB found that the praise in the press release was directed more to the ‘941 Patent, itself, rather than the claims challenged in the IPRs. The Federal Circuit agreed with the PTAB, stating that Ancora failed to link the BIOS-based security products that were the subject of the press release to the challenged claims.
As for licensing, the PTAB found that Ancora failed to show that the unique characteristics of the claimed subject matter of the ‘941 Patent resulted directly in the two licenses that Ancora offered as evidence of secondary considerations. The Federal Circuit held that the PTAB erred in its nexus analysis for the licenses by applying a more exacting nexus standard than required for license evidence. Unlike products which may contain more features than what is claimed in a patent, a license to the relevant patent is inherently tied to the patented technology. Licenses to a challenged patent do not require a nexus with respect to the specific claims at issue. Additionally, nexus law does not require that a particular patent be the only patent being licensed or the sole motivation for entering into the license.
The PTAB also erred in requiring information regarding the potential exposure, such as a showing of damages, that would have resulted in lieu of the license that was offered as evidence of secondary considerations. However, damages for litigation costs are not an appropriate comparator for evaluating the significance of a license. Damages are a measure of an infringer’s usage of a patent and not an indication of the patent’s strength. Therefore, comparing a license to a potential damages award is not a reliable indicator of a patent’s strength.
Federal Circuit Precedential 
Leave a comment