HTC Corporationv.Advanced Audio Devices, LLC

Patent Trial and Appeal Board

Dec 29, 2015

11557317 (P.T.A.B. Dec. 29, 2015)

Trials@uspto.gov Paper 36
571-272-7822 Date: December 29, 2015

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

HTC CORPORATION and HTC AMERICA, INC.,
Petitioner,

v.

ADVANCED AUDIO DEVICES, LLC,
Patent Owner.

____________

Case IPR2014-01156
Patent 7,817,502 B2
____________

Before SCOTT A. DANIELS, CHRISTOPHER L. CRUMBLEY, and
GEORGIANNA W. BRADEN, Administrative Patent Judges.

CRUMBLEY, Administrative Patent Judge.

FINAL WRITTEN DECISION
35 U.S.C. § 318 and 37 C.F.R. § 42.73

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I. INTRODUCTION
In this inter partes review trial, instituted pursuant to 35 U.S.C. § 314,
Petitioner HTC Corporation and HTC America, Inc. (collectively, “HTC”)
challenges the patentability of claims 1, 2, 14, 20, and 43–47 of U.S. Patent
No. 7,817,502 B2 (Ex. 1001, “the ’502 patent”), owned by Advanced Audio
Devices, LLC (“AAD”).
We have jurisdiction under 35 U.S.C. § 6(c). This Final Written
Decision, issued pursuant to 35 U.S.C. § 318(a) and 37 C.F.R. § 42.73,
addresses issues and arguments raised during trial. For the reasons
discussed below, we determine that HTC has met its burden to prove, by a
preponderance of the evidence, that claims 1, 2, 14, 20, and 43–47 of the
’502 patent are unpatentable.
A. Procedural History
On July 11, 2014, HTC filed a Petition requesting inter partes review
of claims 1, 2, 14, 20, and 43–47 of the ’502 patent. Paper 1, “Pet.” AAD
filed a Patent Owner’s Preliminary Response. Paper 5. In a Decision on
Institution of Inter Partes Review (Paper 6, “Dec.”), we instituted trial on
claims 1, 2, 14, 20, and 43–47 based on the following grounds:
1. Whether claims 1, 2, 14, 20, and 43–47 are unpatentable under
35 U.S.C. § 103 as having been obvious over the combined
disclosures of Nathan ’2591 and Nathan ’255;2 and

1 Ex. 1002, WO 96/12259 to Nathan et al. (Apr. 25, 1996).
2 Ex. 1003, WO 96/12255 to Nathan et al. (Apr. 25, 1996).
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2. Whether claims 1, 2, 14, 20, and 43–47 are unpatentable under
35 U.S.C. § 103 as having been obvious over the combined
disclosures of Sound Blaster,3 Lucente,4 Ozawa,5 and Hawkins.6
Dec. 22.
Following institution, AAD filed a Patent Owner’s Response to the
Petition (Paper 13, “PO Resp.”), and HTC filed a Reply (Paper 20, “Pet.
Reply”).
HTC supported its Petition with the Declaration of Christopher
Schmandt (Ex. 1008), and submitted a Rebuttal Declaration of Mr.
Schmandt (Ex. 1013) with its Reply.
With its Patent Owner Response, AAD filed the Declaration of Joseph
C. McAlexander III. Ex. 2007. HTC took the cross-examination of Mr.
McAlexander via deposition. Ex. 1017. AAD also submitted the testimony
of Peter J. Keller, a named inventor on the ’502 patent. Ex. 2008.7

3 Ex. 1004, Exhibit B, Sound Blaster 16 User Reference Manual. With
Sound Blaster, HTC submits the Declaration of Kyle A. Miller, which states
that Sound Blaster was publicly available “no later than the early spring of
1995.” Ex. 1004 ¶ 13.
4 Ex. 1005, EP 0598547 A2 to Lucente et al. (May 25, 1994).
5 Ex. 1006, US 5,870,710 to Ozawa et al. (filed Jan. 22, 1997).
6 Ex. 1008, US 5,333,116 to Hawkins et al. (July 26, 1994).
7 Exhibit 2008 was the subject of a Motion to Seal (Paper 14), which was
granted. Paper 26. A public, redacted version of Exhibit 2008 was also filed
by AAD under the same exhibit number.
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AAD filed a Motion to Exclude Exhibit 1004 (Paper 23, “Mot.
Exclude”), to which HTC filed an Opposition (Paper 25, “Exclude Opp.”)
and AAD filed a Reply (Paper 28, “Exclude Reply”).
Oral hearing was requested by both parties, and a consolidated oral
hearing involving this trial and related trials IPR2014-01154, IPR2014-
01155, IPR2014-01157, and IPR2014-01158 was held on September 17,
2015. A transcript of the oral hearing is included in the record. Paper 35,
“Tr.”
B. The ’502 Patent
The ’502 patent discloses an audio recording device that the
specification terms a “music jukebox.” Ex. 1001, 1:16–17. According to
the specification, existing recording devices permitted music to be recorded
onto a compact disc in real time, but did not provide editing functions, the
ability to store music on the recorder for making multiple copies of the disc,
or the ability to customize easily the order in which tracks are recorded onto
the disc. Id. at 2:28–62. The described music jukebox is said to address
these issues, as well as permit a user to “audition” a stored audio track by
listening to it before recording onto a compact disc. Id. at 3:23–39.
Various hardware components of the jukebox are described in the
specification, including: audio inputs for receiving music in the form of
analog signals (id. at 7:49–55); one or more data storage structures for
storing and retrieving audio stored in digital form (id. at 9:9–16); and a drive
for recording stored audio onto compact discs (id. at 13:55–57). The audio
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data stored in the memory permits audio tracks to be played back selectively,
or “auditioned,” prior to recording. Id. at 4:34–43. The components of the
music jukebox are contained in a housing having a display for providing
information to a user, for example, through a graphical user interface. Id. at
4:50–5:10. The housing also comprises a plurality of push buttons for
controlling operation of the device. Id. at 5:11–36.
The specification of the ’502 patent describes the operation of the
device as permitting a user to create “sessions,” which are groups of sound
tracks selected from a master song list. Id. at 15:43–45, 16:51–59. A user
also may reorder the songs within a session by selecting songs and moving
them up or down within the session list. Id. at 16:18–26. The session then
can be written to a compact disc. Id. at 15:39–43.
C. Illustrative Claim
Of the challenged claims, only claim 1 is independent; all other
challenged claims depend directly from claim 1. The challenged
independent claim reads as follows:
1. A method of storing sound tracks in a personal digital stereo audio
player and playing the stored sound tracks for personal enjoyment,
said method comprising:
deploying the personal digital stereo audio player, wherein the
personal digital stereo audio player comprises:
a unitary, integral housing containing at least non-volatile memory
and a processor connected to the non-volatile memory and
configured for maintaining and selectively accessing and playing
sound tracks stored in the non-volatile memory, the housing further
comprising a display controlled by the processor, the processor
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being configured to cause the display to display a plurality of
menus relating to a library of sound tracks, wherein all of the
sound tracks in the library and their names are stored in the non-
volatile memory of the personal digital stereo audio player,
wherein the menus include at least one of a list of names of sound
tracks and a list of groups of sound tracks;
a headphone jack in the housing;
an input in the housing for receiving audio data;
an amplifier operatively connected to the processor and the headphone
jack and configured to amplify audio output signals produced
during playing, which are transmitted to the headphone jack; and
at least one touch-operable control in the housing and in
communication with the processor, wherein the processor is
configured such that
at least one of the at least one touch-operable control is touchable to
allow selection from the menus which the processor causes to be
displayed on the display,
at least one of the at least one touch-operable control is touchable to
control the volume at which audio is played,
at least one of the at least one touch-operable control is touchable to
pause a sound track which is being played,
at least one of the at least one touch-operable control is touchable to
stop a sound track as it is being played and play the next sound
track in a group of sound tracks,
at least one of the at least one touch-operable control is touchable to
selectively power the personal digital stereo audio player on and
off, and
at least one of the at least one touch-operable control is touchable to
select and play at least one of an individual sound track and a
group of sound tracks through the headphone jack,
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wherein the personal digital stereo audio player is configured to
display on the display at least one of time elapsed (ascending) and
time remaining (descending) for the sound track being played,
wherein the personal digital stereo audio player is configured such
that the non-volatile memory stores a library of sound tracks that is
received by the input and which has been pre-selected by a user,
wherein the non-volatile memory comprises at least one of a Hard
Disk Drive, solid state memory, and random address memory,
said method further comprising:
inputting audio data through the input of the personal digital stereo
audio player to cause audio data to be received by the personal
digital stereo audio player, whereby sound tracks become stored in
the non-volatile memory as digital data; and
touching a one of the at least one touch-operable control []8 to display
on the display at least one of a list of names of sound tracks, and a
list of groups of sound tracks,
touching a one of the at least one touch-operable control to play at
least one of a specific sound track and a group of sound tracks
through the headphone jack, and
touching a one of the at least one touch-operable control to control the
volume at which sound tracks are played through the headphone
jack.
Id. at 20:56–21:65.

8 The words “in order” were removed from claim 1 by a Certificate of
Correction, entered Jan 4, 2011. Ex. 1001.
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II. DISCUSSION
A. Claim Construction
For purposes of our Decision to Institute, we analyzed each claim
term in light of its broadest reasonable interpretation, as understood by one
of ordinary skill in the art and as consistent with the specification of the ’502
patent. 37 C.F.R. § 42.100(b); see In re Cuozzo Speed Techs., LLC, 778
F.3d 1271, 1281–82 (Fed. Cir. 2015). In the Decision to Institute, we
construed the terms soundtrack and selectively accessing. See Dec. 8–10.
During the course of the trial, neither party challenged our constructions of
these claim terms. We see no reason to alter the constructions of these claim
terms as set forth in the Decision to Institute, and we incorporate our
previous analysis for purposes of this Decision. Therefore, for the reasons
set forth in the Decision to Institute, we interpret these claim terms of the
’502 patent as follows:
sound track digital or analog signals, or audio
data

selectively accessing obtaining from a number or group
by fitness or preference

Dec. 8–10 (citing 37 C.F.R. § 42.100(b)).
B. Alleged Obviousness of Claims 1, 2, 14, 20, and 43–47 in
View of Nathan ’259 and Nathan ’255
The elements of an obviousness analysis under 35 U.S.C. § 103 were
set forth by the Supreme Court as follows: “the scope and content of the
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prior art are to be determined; differences between the prior art and the
claims at issue are to be ascertained; and the level of ordinary skill in the
pertinent art resolved.” Graham v. John Deere Co., 383 U.S. 1, 17 (1966).
Furthermore, as a guard against hindsight reasoning, we must “withhold
judgment on an obviousness challenge until [we] consider[] all relevant
evidence, including that relating to the objective considerations” such as
commercial success or long-felt need. In re Cyclobenzaprine Hydrochloride
Extended-Release Capsule Patent Litig., 676 F.3d 1063, 1079 (Fed. Cir.
2012). While we may apply “an expansive and flexible approach” to the
question of obviousness, and take the sequence of the Graham factors in a
different order depending on the particular case, “the factors continue to
define the inquiry that controls.” KSR Int’l. Co. v. Teleflex Inc., 550 U.S.
398, 407, 415 (2007).
We note, at the outset, that AAD does not contest that a person of
ordinary skill in the art would have combined the disclosures of Nathan ’259
and Nathan ’255. Tr. 80:16–24. Rather, AAD disputes HTC’s interpretation
of the Nathan references, and whether a person of ordinary skill in the art
would have understood them to disclose all elements of the challenged
claims. PO Resp. 9. Upon review of HTC’s asserted reasons to combine the
Nathan references (Pet. 17–18), Mr. Schmandt’s testimony on that point (Ex.
1008 ¶ 83), and the lack of challenge from AAD, we find that a person of
ordinary skill would have had reason to combine the Nathan references in
the manner asserted.
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1. Disclosures of the Nathan References
The primary dispute between the parties on the Nathan references is
over what the references actually disclose. According to HTC, the jukebox
systems described in the Nathan systems permit purchase and download of
songs from a remote server, into a master song list stored locally on the
jukebox. Pet. 16–18. A user may then select songs from the master song list
into a queue; after the songs are played, they are deleted from the queue, but
not the local storage. Id. By contrast, AAD asserts that the jukeboxes of
Nathan permit users to purchase the right to play a song only once; when the
songs are downloaded, they are immediately added to the queue, then
deleted from local storage immediately after they are played. PO Resp. 10–
12. According to AAD, therefore, a user of the Nathan system has no
control over the order of songs in the queue other than the order in which the
songs were purchased. Id. at 26. Nor does Nathan, in AAD’s reading,
provide any library distinct from the queue. Id. at 19 (“The queue is not a
subset of an internal music library; the queue is the music library.”) (citing
Ex. 2007 ¶ 62)
In our Decision to Institute, we determined that the record at that time
did not support AAD’s interpretation of the Nathan references. Rather, we
concluded that “it appears that Nathan ’259 discloses deleting songs from
the queue once they are played, not from the music library altogether.” Dec.
15 (citing Ex. 1002 ¶ 86 (“[w]hen the selection has been reproduced in its
entirety, it is removed from the queue file”)). We also determined that the
record supported the conclusion that Nathan ’259 discloses a “new
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selections acquisition mode” (“NSAM”) for ordering and downloading new
music onto the jukebox. Dec. 15; Ex. 1002 ¶¶ 64–73. A “selection graphics
screen” then permits a user to add these newly acquired songs to a queue for
playback. Ex. 1002 ¶ 74. We concluded that Nathan ’259 appeared to
describe a master song list to which songs are added via the NSAM, as well
as the ability to create a queue of songs selected from the master song list
using the selection graphics screen. Dec. 15.
AAD’s Response contends that our interpretation of Nathan ’259 was
in error (PO Resp. 10), and Mr. McAlexander testifies in support of AAD’s
interpretation of the reference. Ex. 2007 ¶¶ 32–65. AAD raises several
issues regarding the disclosure of Nathan ’259, which it contends are
inconsistent with HTC’s interpretation of the reference.
First, AAD asks why, if songs are not deleted entirely from the device
immediately following playback, Nathan ’259 does not disclose some sort of
“delete” function so that users can clear songs from the memory. PO Resp.
14–15. HTC responds by noting that Nathan ’259, as a patent document,
likely is focused on the novel aspects of the disclosed device as opposed to
known functions such as deleting files. Pet. Reply 11.
Prior art references are evaluated according to what they would
disclose to a person of ordinary skill in the art. See Sundance, Inc. v.
DeMonte Fabricating Ltd., 550 F.3d 1356, 1361 n.3 (Fed. Cir. 2008). As
such, the fact that a reference is silent regarding a particular feature only
signifies exclusion of that feature if a person of ordinary skill would
understand silence to imply exclusion. AAD provides no compelling
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evidence this is the case with Nathan ’259. Mr. McAlexander, AAD’s
expert, testifies that there is no disclosure of a delete function in Nathan
’259, but does not state that he, or any other person of ordinary skill, would
interpret this silence to imply that a delete function is excluded. Ex. 2007
¶ 62. Furthermore, we note that Nathan ’255 explicitly discloses a manual
delete function for removing little-heard titles. Ex. 1003 ¶ 7. We do not
find the absence of an explicit “delete function” in Nathan ’259 to imply that
the Nathan jukebox does not have such a common and known function.
Second, AAD notes that Nathan ’259 discloses a system having as
little as 32 megabytes of RAM, and asks why such a small amount of
memory is contemplated if a local music library is stored. PO Resp. 15–16.
HTC responds by noting that the 32 megabyte capacity is a minimum, and
Nathan ’259 puts no upper limit on the number of songs that can be stored.
Pet. Reply 11–12. Furthermore, HTC notes that Nathan ’255 discloses that
its device may store a “minimum of 350 to 400 titles.” Id. at 12 (citing Ex.
1003 ¶ 7). We consider HTC’s interpretation on this point to be persuasive,
and do not understand the disclosure of a 32 megabyte minimum memory
capacity to be inconsistent with our understanding of the Nathan references.
Third, AAD points out a passage in Nathan ’259 that states that a
button “allows validation of the selection or selections for initiating their
introduction into the queue,” (Ex. 1002 ¶ 74) and argues that “validation”
refers to purchase of a song. PO Resp. 11–12, 19. Therefore, under AAD’s
theory, purchase of a song results in immediate addition to the queue. Id.
HTC contends that such an interpretation would render Nathan ’259’s two
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modules redundant, as there would be no reason to have both a “new
selections acquisition module” (“NSAM”) and a “selection graphics screen,”
if songs are directly added from the NSAM to the queue. Pet. Reply 9–10.
We agree with HTC, and additionally note that Nathan ’259 uses the word
“validate” in other contexts meaning “to confirm.” Ex. 1002 ¶ 75
(“validates his choice”), ¶ 114 (“validates the credit card”). We, therefore,
interpret “validation of his the selection” in paragraph 74 of Nathan ’259 to
refer to confirming that a song will be added to the queue, rather than
purchase of a song.
At oral argument, AAD discussed these issues, and asked several
other questions regarding the disclosure of Nathan ’259 which had not been
raised previously in briefing. Tr. 53–54. Even if we were to consider such
arguments properly raised,9 we do not find them persuasive. Based on our
review of the Nathan references in light of the expert testimony, our
interpretation of the Nathan disclosures has not changed.
We find that Nathan ’259 discloses a jukebox that permits the
downloading of song tracks via its NSAM. Ex. 1002 ¶ 64, 73 (“The display
of FIG. 9 allows the user to access the new selections acquisition mode in
connection with the NSAM module. . . . Button (1038) allows ordering of
the selection which is then downloaded according to the above described

9 “A party may . . . only present [at oral hearing] arguments relied upon in
the papers previously submitted. No new evidence or arguments may be
presented at the oral argument.” Office Patent Trial Practice Guide, 77 Fed.
Reg. 48,756, 48,768 (Aug. 14, 2012).
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mode.”). A different “selection graphics screen” shows the songs that have
been downloaded, permits the user to sort the songs according to different
criteria, and gives the user the ability to add songs to a queue. Id. ¶ 74
(“Button (124) allows validation of the selection or selections for initiating
their introduction into the queue or their immediate and successive
performance if the queue is empty.”). Contrary to AAD’s argument, we see
no reason to conclude that when a file is purchased and downloaded, it is
immediately added to the queue, and deleted from local memory
immediately after it is played. Nor do we find that the Nathan systems only
permit the order of the queue to be determined by purchase order, as
opposed to the order in which the songs are selected from the library of all
downloaded songs.
2. Analysis of Obviousness Over Nathan ’259 and Nathan ’255
a. Claim 1
There is no dispute between the parties that the Nathan references
disclose several of the elements found in the independent claims, of which
we discuss claim 1 as representative. We find that Nathan ’259 discloses a
unitary, integral housing (“box,” Ex. 1002 ¶ 46); non-volatile memory and a
connected processor (“RAM,” id. ¶ 51); a headphone jack (“stereo audio
output,” id. ¶ 42); an input for receiving audio data (“telecommunications
interface,” id. ¶ 3); and at least one touch-operable control (“a set of
buttons,” id. ¶ 46). Nathan ’255 additionally discloses an amplifier (Ex.
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1003 ¶ 27, “integrated amplified loudspeakers”). AAD does not contest
these elements.
Furthermore, the combination of Nathan ’259 and Nathan ’255
discloses a digital display in the housing, configured to display a plurality of
menus relating to a library of soundtracks. As AAD recognizes, Nathan
’255 discloses a touchscreen display within its housing for controlling the
jukebox. Ex. 1003 ¶ 24; PO Resp. 33. The touchscreen is a 14 inch “Intelli
Touch” screen that “allows display of various selection data used by the
customers.” Ex. 1003 ¶ 24. Mr. Schmandt, HTC’s expert and a founder of
the MIT Media Lab with more than thirty years of experience in the media
technology field, testifies that “[a] person skilled in the art would be
motivated to implement the touch screen disclosed in Nathan 255 on the
LCD screen . . . disclosed in Nathan 259, to allow more intuitive control of
the jukebox.” Ex. 1008 ¶¶ 12, 13, 103. We, therefore, conclude that it
would have been obvious to include the touchscreen of Nathan ’255 in the
housing of Nathan ’259, to display the modules of Nathan ’259 such as the
selection graphics screen. See Ex. 1002 ¶ 74. The display in the housing
would be capable of displaying a plurality of menus, wherein the menus
include at least one of a list of song names, as required by claim 1.
The parties’ dispute centers on two additional elements. AAD first
argues that the references do not disclose selectively accessing and playing
soundtracks stored in the non-volatile memory. PO Resp. 33–34. To
support this argument, AAD relies on its interpretation of Nathan as
permitting only “single-play” downloads of songs, with immediate
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introduction of downloaded songs into a queue that cannot be selectively
accessed. Id. As discussed above, we do not find this interpretation of
Nathan ’259’s disclosure to be the correct one.
Given our finding that Nathan ’259 discloses the ability to select
songs to download to local storage, followed by the ability to select songs
for introduction into a queue, we find that the Nathan references disclose the
ability to selectively access songs stored in memory. The songs downloaded
into Nathan’s local memory become “songs stored in memory,” and the
selection of songs into a queue is “selectively accessing” those songs. This
satisfies our construction of selectively accessing, originally proposed by
AAD, of “obtaining from a number or group by fitness or preference.” See
supra, Section II.A.
AAD also argues that the Nathan references do not disclose a touch-
operable control touchable to play at least one of an individual sound track
and a group of sound tracks stored in the non-volatile memory. PO Resp.
34–35. As outlined above, however, we find that Nathan ’259 discloses
buttons that can be used to introduce songs into its queue. Ex. 1002 ¶¶ 46,
66, 74 (“Button (124) allows validation of the selection or selections for
initiating their introduction into the queue.”). Alternatively, we find that
Nathan ’255 discloses a touchscreen that may be used to “allow[] display of
various selection data used by the customers.” Ex. 1003 ¶ 24. Once
introduced to the queue, the song will be played; if there are no songs in the
queue, the song plays immediately. Ex. 1002 ¶ 74.
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For these reasons, we find that the combination of Nathan ’259 and
Nathan ’255 teaches each limitation of claim 1. AAD’s arguments to the
contrary are not persuasive.
b. Dependent Claims
AAD does not address separately the limitations of dependent claims
2, 14, 20, and 43–47. These claims recite additional steps such as touching a
control to turn the device on or off (claim 2), or touching a control to
advance the playing of the sound track (claim 45). We find that these
additional elements are taught or suggested by the combination of Nathan
’259 and Nathan ’255, or that a person of ordinary skill in the art would have
modified the Nathan system to add such features. We, therefore, conclude
that HTC has met its burden of showing that each element of challenged
dependent claims 2, 14, 20, and 43–47 is taught by the combination of
Nathan ’259 and Nathan ’255. As discussed above, we also find that a
person of ordinary skill in the art would have had reason to combine the
Nathan references.
c. Objective Indicia of Nonobviousness
Factual inquiries for an obviousness determination include secondary
considerations based on evaluation and crediting of objective evidence of
nonobviousness. See Graham, 383 U.S. at 17. Notwithstanding what the
teachings of the prior art would have suggested to one of ordinary skill in the
art at the time of the invention, the totality of the evidence submitted,
including objective evidence of nonobviousness, may lead to a conclusion
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that the challenged claims would not have been obvious to one of ordinary
skill in the art. In re Piasecki, 745 F.2d 1468, 1471–72 (Fed. Cir. 1984).
Secondary considerations may include any of the following: long-felt but
unsolved needs, failure of others, unexpected results, commercial success,
copying, licensing, and praise. See Graham, 383 U.S. at 17; Leapfrog
Enters., Inc. v. Fisher-Price, Inc., 485 F.3d 1157, 1162 (Fed. Cir. 2007).
To be relevant, evidence of nonobviousness must be commensurate in
scope with the claimed invention. In re Kao, 639 F.3d 1057, 1068 (Fed. Cir.
2011) (citing In re Tiffin, 448 F.2d 791, 792 (CCPA 1971)); In re Hiniker
Co., 150 F.3d 1362, 1369 (Fed. Cir. 1998). In that regard, in order to be
accorded substantial weight, there must be a nexus between the merits of the
claimed invention and the evidence of secondary considerations. In re
GPAC Inc., 57 F.3d 1573, 1580 (Fed. Cir. 1995). “Nexus” is a legally and
factually sufficient connection between the objective evidence and the
claimed invention, such that the objective evidence should be considered in
determining nonobviousness. Demaco Corp. v. F. Von Langsdorff Licensing
Ltd., 851 F.2d 1387, 1392 (Fed. Cir. 1988). The burden of showing that
there is a nexus lies with the patent owner. Id.; see Paulsen, 30 F.3d at
1482.
AAD argues that the “clear commercial success” of the invention
claimed in the ’502 patent demonstrates its nonobviousness, notwithstanding
the disclosures of the Nathan references. PO Resp. 45–46. To demonstrate
this alleged commercial success, AAD submits the testimony of Peter
Keller, supported by a number of confidential licenses which are said to
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have generated more than $10,000,000 of gross revenue. Id. at 46. Mr.
Keller describes the “AAD Family of Patents,” which includes the ’502
patent, other related United States Patents, and foreign counterparts. Ex.
2008 ¶¶ 5, 8. Mr. Keller testifies that, for each licensee, he ensured that “at
least one commercial product sold” was covered by “at least one claim of at
least one patent” of the family. Id. ¶ 11.
In cases in which the proffered evidence of commercial success is
licenses, rather than sales of products embodying the invention, there is a
danger that the licenses may have been taken only because they were
cheaper than defending an infringement suit. See EWP Corp. v. Reliance
Universal Inc., 755 F.2d 898, 908 (Fed.Cir.1985). In such situations, nexus
between the commercial success and the patent cannot be inferred; rather,
“affirmative evidence of nexus” is required. Iron Grip Barbell Co. v. USA
Sports, Inc., 392 F.3d 1317, 1324 (Fed. Cir. 2004). In other words, a patent
owner must demonstrate “a nexus between the merits of the invention and
the licenses of record,” otherwise the licenses are to be accorded little
weight. In re GPAC Inc., 57 F.3d at 1580 (emphasis added).
HTC notes that each of the licenses listed by Mr. Keller includes at
least two patents that explicitly claim a compact disc recorder, an element
not present in the claims of the ’502 patent. Pet. Reply 23–24. HTC also
contends that AAD fails to demonstrate any link between the invention of
the ’502 patent and the taking of the license; for example, AAD provides no
apportionment of revenues to show the amount attributable to the ’502
patent, as opposed to the other members of the licensed family. Id. at 23.
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We agree with HTC that the evidence provided by AAD does not
establish a sufficient link between the merits of the invention claimed in the
’502 patent and the taking of the licenses. Although Mr. Keller notes that
some of the provided licenses were taken in situations where there was no
pending litigation against the licensee (Ex. 2004 ¶ 9), he does not address
whether litigation had been threatened against those parties. We, therefore,
cannot determine whether the licenses reflect the commercial value of the
invention claimed in the ’502 patent, or whether they were taken merely to
avoid the cost of litigation, either pending or threatened. Absent a
persuasive showing of nexus, AAD’s evidence of licensing fails to establish
commercial success.
We conclude that the evidence of objective indicia of nonobviousness
is insufficient to overcome the evidence of obviousness over the combined
Nathan references.
d. Conclusion on Obviousness
For the foregoing reasons, HTC has proven by a preponderance of the
evidence that Nathan ’255 and Nathan ’259 teach all elements of challenged
claims 1, 2, 14, 20, and 43–47, and that a person of ordinary skill in the art
would have had reason to combine the disclosures. Furthermore, we
conclude that such a combination would have been within the level of
ordinary skill in the art, as evidenced by the prior art of record. We,
therefore, conclude that claims 1, 2, 14, 20, and 43–47 would have been
obvious at the time of the invention, and thus are unpatentable under
35 U.S.C. § 103.
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C. Alleged Obviousness of Claims 1, 2, 14, 20, and 43–47 Over Sound
Blaster, Lucente, Ozawa, and Hawkins
We instituted trial to determine whether claims 1, 2, 14, 20, and 43–47
would have been obvious over the combined disclosures of Sound Blaster,
Lucente, and Hawkins, finding persuasive HTC’s unchallenged analysis in
its Petition of how the elements of the challenged claims are taught by the
references. Dec. 16–17, 21. In so doing, we noted that AAD did not dispute
the alleged disclosures of the references, but instead disputed that Sound
Blaster qualified as prior art to the ’502 patent, and argued that a person of
ordinary skill in the art would have not combined the references. Id. at 17.
In its Response, AAD again does not address the disclosures of the
references, and instead argues that the references are not combinable
because the combined teachings would produce an inoperable device. PO
Resp. 36–45. According to AAD, to combine Sound Blaster with the
teachings of Lucent would require a substantial reconstruction and redesign
of the elements in Lucent. Id. at 39–42. Thus, AAD concludes that the
combination of Sound Blaster and Lucent and any other prior art would not
have rendered the challenged claims obvious. Id. at 45. In addition, AAD
moved to exclude Exhibit 1004 (Miller Declaration, Miller CV, and the
Sound Blaster reference). Mot. Exclude 1.
Sound Blaster discloses audio software with a graphical user interface
designed for organizing and playing back audio files. Ex. 1004, 2-1.10

10 HTC did not add page numbers to the Sound Blaster reference, as required
by our Rules. See 37 C.F.R. § 42.63(d)(2)(i). We refer to the page numbers
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Sound Blaster also discloses the ability to group sound tracks into playlists.
Id. at 2-20–2-28, Fig. 2-8.
Lucente discloses a “pen-based computer with an integral flat panel
display and digitized screen.” Ex. 1005 1:3–4. The housing of Lucente
includes an audio input and output, processor, and memory. Id. at 12:2–13,
7:39–49. According to HTC, the hardware of Lucente is capable of running
the Sound Blaster software. Pet. 35.
Ozawa discloses a portable audio device that can download music
from a network service center and save audio files to a hard drive in the
device. Ex. 1006, 4:48–53. The Ozawa device has push-button controls on
its face for controlling the operation of the device, such as playing and
pausing music. Id. at 5:30–33.
Hawkins discloses “a computing device in [the] form of a
combination laptop and pad computer.” Ex. 1007, Abstract. HTC contends
that Hawkins discloses that the computing device has an on/off control, and
that a person of ordinary skill in the art would recognize the benefit of
having an on/off control. Pet. 39.
At oral hearing, AAD’s counsel did not concede that Sound Blaster,
Lucente, Ozawa, and Hawkins disclose all elements of the claims if
combined, but acknowledged that AAD’s briefs had provided no argument
on that point. Tr. 90–91. Specifically, AAD did not provide any evidence
or testimony contrary to the evidence and testimony provided by Petitioner

of the original Sound Blaster manual when citing the reference.
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regarding the disclosures of Sound Blaster, Lucent, and Ozawa. Our
Scheduling Order in this case cautioned AAD that “any arguments for
patentability not raised in the [Patent Owner Response] will be deemed
waived.” Paper 7, 3. The Board’s Trial Practice Guide, furthermore, states
that the Patent Owner Response “should identify all the involved claims that
are believed to be patentable and state the basis for that belief.” Office
Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,766 (Aug. 14, 2012)
(emphasis added). As the Board has stated, our governing statute and Rules
“clearly place some onus on the patent owner, once trial is instituted, to
address the material facts raised by the petition as jeopardizing patentability
of the challenged claims.” Johnson Health Tech Co. v. Icon Health &
Fitness, Inc., Case IPR2013-00463, slip op. at 12 (PTAB Jan. 29, 2015)
(Paper 41). By addressing only the combination of the references, AAD
conveyed to the Board and HTC that the only bases for its belief that the
challenged claims are patentable were (i) whether Sound Blaster and
Lucente were combinable and (ii) whether Sound Blaster is admissible.
In our Decision to Institute, we concluded that HTC had made a
threshold showing that Sound Blaster, Lucente, Ozawa, and Hawkins taught
all the limitations of the challenged claims, sufficient for us to conclude that
there was a reasonable likelihood that HTC would prevail in showing that
the challenged claims were obvious over the combined references. Dec. 21.
We must now determine whether the preponderance of the evidence of
record supports a finding of obviousness. 35 U.S.C. § 316(e). Given
AAD’s waiver of argument that the combination of references does not teach
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all elements of the challenged claims, the record now contains the same
arguments and evidence on that point as it did at the time of our Decision to
Institute. After careful consideration of the entire record, including the
Petition, Patent Owner’s Response, and all evidence submitted by the
parties, we find that the preponderance of the evidence of record supports a
finding that HTC has set forth how all limitations of the challenged claims
are taught by Sound Blaster, Lucente, Ozawa, and Hawkins. Pet. 39–56; Ex.
1008 ¶¶ 152–195 (Schmandt declaration including claim charts). We,
therefore, turn to the two remaining issues on this ground of unpatentability:
AAD’s Motion to Exclude Sound Blaster, and whether a person of ordinary
skill would have had reason to combine Sound Blaster, Lucente, Ozawa, and
Hawkins.
1. Motion to Exclude Exhibit 1004
Exhibit 1004 contains two related documents: (1) the Declaration of
Kyle A. Miller, attesting to the public availability of the Sound Blaster
reference; and (2) the Sound Blaster reference itself. Mr. Miller testifies that
Sound Blaster is a copy of a Sound Blaster 16 User Reference Manual he
received during the course of his employment at Creative Labs, “no later
than the early spring of 1995.” Ex. 1004 ¶ 19. According to Mr. Miller, his
employer provided him with commercial versions of Creative Labs’ most
popular products, including the Sound Blaster 16 Audio Card. Id. ¶ 12. Mr.
Miller testifies that the product he received included the User’s Manual, and
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would have been the same documentation provided to a commercial
purchaser of the product. Id. ¶ 14.
AAD moves to exclude Exhibit 1004 on several grounds. Mot.
Exclude 1. Pursuant to our Rules, a motion to exclude evidence must be
filed to preserve any previously-made objections to evidence. 37 C.F.R. §
42.64(c). The motion must identify where in the record the objections were
made, and must explain the objections. Id.
We note that AAD does not identify where in the record its objections
to evidence were made prior to their being the basis of the Motion to
Exclude, in violation of Rule 42.64(c). Indeed, the Board is aware of AAD’s
prior objections only because they were quoted in HTC’s opposition to the
Motion to Exclude. For this reason, AAD’s Motion is procedurally
deficient, and may be denied on this basis alone.
Even if we were to overlook the procedural deficiency of the motion
itself, we would not exclude Exhibit 1004. First, AAD argues that the Miller
Declaration is hearsay. Mot. Exclude 3–5. It does not appear that AAD
previously made this objection, as required by our Rules. According to
HTC, the only hearsay-based objection made by AAD was that Exhibit B
(the Sound Blaster reference itself) did not satisfy the business records
exception to the hearsay rule. Exclude Opp. 2. Furthermore, even if AAD
had preserved such an objection, we do not consider the Miller Declaration
to be hearsay, as it is not an out-of-court statement. In an inter partes
review, direct testimony is typically provided via affidavit, with cross-
examination taken via deposition 37 C.F.R. § 42.53(a). In this respect,
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testimony via affidavit before the Board is distinguishable from the
affidavits submitted in District Court cases cited by AAD, such as
Hilgraeve, Inc. v. Symantec Corp., 271 F. Supp. 2d 964 (E.D. Mich. 2003).
See Polaris Wireless, Inc. v. TruePosition, Inc., Case IPR2013-00323, slip
op. at 41 (PTAB Nov. 3, 2014) (Paper 62).
Second, AAD objects to the copyright date on the Sound Blaster
reference as hearsay. Mot. Exclude 5–7. Again, AAD has not established
that it previously made such an objection, other than the general objection to
“Exhibit B” as not being within the business records exception. This is
insufficient to put HTC on notice that AAD was specifically objecting to the
copyright date of the reference as hearsay. See 37 C.F.R. § 42.64(b)(1)
(“The objection must identify the grounds for the objection with sufficient
particularity to allow correction in the form of supplemental evidence.”). In
any event, we consider the exclusion of the copyright date to be moot, as we
do not rely on the copyright date to reach our determination that Sound
Blaster was publicly available. Mr. Miller’s testimony that Sound Blaster
was publicly available rests on his personal recollection, and merely cites the
copyright date as corroboration for that recollection. Ex. 1004. Miller Decl.
¶ 17.
Third, AAD contends that Sound Blaster is not within the business
records exception to the hearsay rule. Mot. Exclude 8. While it does appear
that AAD previously made this objection, the Motion does not cite to where
in the record the objection was made, as required by our Rule 42.64(c).
Nevertheless, the application of a hearsay exception is irrelevant, as Sound
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Blaster is not offered for a hearsay purpose. As a prior art reference, Sound
Blaster is offered to show what information it would have conveyed to a
person of ordinary skill in the art; the truth of the contents of Sound Blaster
is not relevant to this inquiry. See EMC Corp. v. Personal Web Techs., LLC,
Case IPR2013-00085, slip op. at 66 (PTAB May 15, 2014) (Paper 73) (“a
prior art document submitted as a ‘printed publication’ under 35 U.S.C.
§ 102(b) is offered simply as evidence of what it described, not for proving
the truth of the matters addressed in the document.”); see Joy Techs., Inc. v.
Manbeck, 751 F. Supp. 225, 233 n.2 (D.D.C. 1990), aff’d, 959 F.2d 226
(Fed. Cir. 1992)).
Finally, AAD seeks to exclude Sound Blaster as not authenticated, as
there is no evidence to authenticate the reference “except the inadmissible
Miller Declaration.” Mot. Exclude 8. We have not found the Miller
Declaration to be inadmissible, however. To authenticate an item of
evidence, a party must “produce evidence sufficient to support a finding that
the item is what the proponent claims it is.” Fed. R. Evid. 901(a). The
Miller Declaration provides sufficient evidence to support the finding that
Sound Blaster is what HTC contends it to be: a document distributed to the
public with the commercially available version of the Sound Blaster 16
Audio Card.
For these reasons, even if AAD’s Motion to Exclude were
procedurally proper, we would not exclude Exhibit 1004, including the
Sound Blaster reference, from the record.
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2. Combinability of References
HTC contends that a person of ordinary skill in the art would have had
reason to combine Sound Blaster, Lucente, Ozawa, and Hawkins. Pet. 37–
39. First, HTC argues that the references pertain to personal computing
devices with similar hardware, for similar purposes of reproducing audio.
Pet. 34. In addition, HTC argues the devices of Lucente, Ozawa, and
Hawkins are directed to portable devices, and HTC asserts that a person of
ordinary skill in the art would have combined the software of Sound Blaster
with these devices to “improv[e] multimedia user experience.” Id. at 38.
To the contrary, AAD argues that combining Sound Blaster with
Lucente would have been outside the level of ordinary skill at the time of the
invention. PO Resp. 36–38. AAD first focuses on hardware
incompatibilities between the tablet computer of Lucente and the software of
Sound Blaster. Id. Citing the McAlexander Declaration, AAD argues that
“[t]he amount of skill required to make the Lucente device compatible with
the Sound Blaster software would substantially exceed the level of ordinary
skill.” Id. at 36 (citing Ex. 2007 ¶¶ 23–28). Mr. McAlexander testifies that
modification of the Lucente computer to run Sound Blaster would include
such drastic steps as “redesign of the battery and thermal management
within the housing to provide the designed battery operating time while
preventing overheating of the internal circuits” (Ex. 2007 ¶ 25) and redesign
of the “entire interface structure of the Sound Blaster 16 audio card . . . from
an ISA configuration to a different bus standard, including firmware re-write
to conform to the different bus protocol.” Id. ¶ 27.
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Mr. McAlexander also testifies that the Sound Blaster software
required a Windows 3.1 operating system, which allegedly was incompatible
with the “pen-based computer” disclosed in Lucente. Id. ¶ 28. For example,
Mr. McAlexander points out Lucente’s recitation of the ability to rotate the
display to permit either right-handed or left-handed operation, and states that
such a functionality was not provided in Windows 3.1. Id. ¶ 30.
In response, HTC argues that AAD focuses too heavily on the
physical combinability of the devices disclosed in the references, as opposed
to whether the teachings of the references would be combined. Pet. Reply
16–17. HTC submits the testimony of Mr. Schmandt, who testifies that a
person of ordinary skill in the art would have recognized that the
functionality of the Sound Blaster software (such as storing and managing
audio files, including making playlists) would provide similar benefits in a
portable touchscreen computer, such as the one described in Lucente. Ex.
1008 ¶ 148. The disclosures of Sound Blaster and Lucente, according to Mr.
Schmandt, would allow a person of ordinary skill in the art to construct a
device as claimed in the ’502 patent. Ex. 1013 ¶ 52. Mr. Schmandt also
addresses Mr. McAlexander’s opinion that a person of ordinary skill in the
art would have been unable to combine the computer of Lucente with the
software of Sound Blaster, and testifies that a person of ordinary skill would
have both the knowledge and a reason to combine the teachings of these
references. Id. ¶¶ 54–65.
In our view, HTC’s proposed analysis better comports with the
“expansive and flexible approach” to obviousness set forth by the Supreme
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Court in KSR. “The test for obviousness is not whether the features of a
secondary reference may be bodily incorporated into the structure of the
primary reference.” In re Keller, 642 F.2d 413, 425 (CCPA 1981). Our
inquiry is, therefore, not “whether the references could be physically
combined but whether the claimed inventions are rendered obvious by the
teachings of the prior art as a whole.” In re Etter, 756 F.2d 852, 859 (Fed.
Cir. 1985) (en banc).
Based on the combination of references proposed by HTC, Mr.
Schmandt testifies that a person of ordinary skill in the art would have
recognized the advantages of Sound Blaster’s functionality, and sought to
incorporate those features into Lucente. Ex. 1008 ¶ 148 (“a person of
ordinary skill in the art would be motivated to combine a system with the
flexibility, portability, and ease of use of Lucente with the audio
management capabilities of Sound Blaster.”); id. at ¶ 150 (“it would be
obvious to design a system with physical (e.g. push-button) controls to carry
out the various functions designed by Sound Blaster, particularly in view of
Lucente and Ozawa”) (emphasis added). The record reflects that such a
modification would not have been outside the level of ordinary skill, which
both experts define similarly. Ex. 1008 ¶ 25 (Schmandt: at least a bachelor’s
degree in electrical engineering, computer science, or equivalent, and 1–3
years of experience in designing and programming consumer electronic
devices); Ex. 2007 ¶ 8 (McAlexander: bachelor’s degree in electrical
engineering or computer engineering, and at least two years of experience in
the design of audio systems). This level of skill is also reflected by the prior
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art of record. See Okajima v. Bourdeau, 261 F.3d 1350, 1355 (Fed. Cir.
2001). AAD’s focus on whether the Sound Blaster hardware sound card
could be installed on the Lucente device, or whether the Sound Blaster
software could run on Lucente’s operating system, ignores that a person of
ordinary skill is a “person of ordinary creativity, not an automaton.”
KSR, 550 U.S. at 421.
It would not have been outside the level of ordinary skill in the art, as
defined by both experts, to modify the device of Lucente to have the
functionality described in Sound Blaster—including grouping and ordering
songs—as well as the ability to download songs as described in Ozawa and
the on/off control of Hawkins. We, therefore, find that a person of ordinary
skill in the art would have had reason to combine the disclosures of Sound
Blaster, Lucente, Ozawa, and Hawkins and would have had a reasonable
expectation of success in doing so.
3. Objective Indicia of Nonobviousness
As discussed above, we have considered AAD’s evidence of objective
indicia of nonobviousness, but conclude that the evidence is insufficient to
support a conclusion of nonobviousness.
4. Conclusion on Obviousness
For the foregoing reasons, HTC has proven by a preponderance of the
evidence that Sound Blaster, Lucente, and Ozawa teach all elements of
challenged claims 1, 2, 14, 20, and 43–47, and that a person of ordinary skill
in the art would have had reason to combine the disclosures. Furthermore,
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we conclude that such a combination would have been within the level of
ordinary skill in the art, as evidenced by the prior art of record. We,
therefore, conclude that claims 1, 2, 14, 20, and 43–47 would have been
obvious at the time of the invention, and thus are unpatentable under
35 U.S.C. § 103.
III. CONCLUSION
We conclude that HTC has demonstrated, by a preponderance of the
evidence, that claims 1, 2, 14, 20, and 43–47 of the ’502 patent are
unpatentable under 35 U.S.C. § 103, as having been obvious over the
following combinations of prior art references:
Claims 1, 2, 14, 20, and 43–47: Nathan ’259 and Nathan ’255; and
Claims 1, 2, 14, 20, and 43–47: Sound Blaster, Lucente, Ozawa, and
Hawkins.

IV. ORDER
Accordingly, it is
ORDERED that claims 1, 2, 14, 20, and 43–47 of U.S. Patent No.
7,817,502 B2 are unpatentable;
FURTHER ORDERED that Patent Owner’s Motion to Exclude is
denied;
FURTHER ORDERED that, pursuant to 35 U.S.C. § 318(b), upon
expiration of the time for appeal of this decision, or the termination of any
such appeal, a certificate shall issue canceling claims 1, 2, 14, 20, and 43–47
in U.S. Patent No. 7,817,502 B2; and
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FURTHER ORDERED that, because this is a final decision, parties to
the proceeding seeking judicial review of the decision must comply with the
notice and service requirements of 37 C.F.R. § 90.2.
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For Petitioner:

Bing Ai
Hwa C. Lee
Thomas N. Millikan
Matthew C. Bernstein
Evan S. Day
PERKINS COIE LLP
Ai-ptab@perkinscoie.com
HLee@perkinscoie.com
TMillikan@perkinscoie.com
MBernstein@perkinscoie.com
EDay@perkinscoie.com

For Patent Owner:

James R. Foley
Timothy M. McCarthy
John Paniaguas
CLARK HILL PLC
jfoley@clarkhill.com
tmccarthy@clarkhill.com
jpaniaguas@clarkhill.com