Appellate Review Archives

Bit Swap: Motivation to Modify Prior Art Needn’t Be Inventor’s Motivation

Addressing the issue of obviousness, the US Court of Appeals for the Federal Circuit reversed a Patent Trial & Appeal Board decision, finding that the challenged patent claims were obvious because a person of ordinary skill in the art (POSITA) would have been motivated to switch two specific information bits in a 20-bit codeword to improve performance. Honeywell Int’l Inc. v. 3G Licensing, S.A., Case Nos. 23-1354; -1384; -1407 (Fed. Cir. Jan. 2, 2025) (Dyk, Chen, JJ.) (Stoll, J., dissenting).

3G Licensing owns a patent concerning a coding method for transmitting a channel quality indicator (CQI) in mobile communication systems. The CQI, a five-bit binary integer (0 to 30) is sent from user equipment, such as a cell phone, to a base station to indicate cellular connection quality. Base stations adjust data rates using adaptive modulation and coding, assigning higher rates to strong signals and lower rates to weaker ones. CQI accuracy is critical for maximizing data transmission efficiency and ensuring recovery of the original message despite transmission errors.

The challenged claims of the 3G patent relate to a CQI code designed to maximize protection of the most significant bit (MSB) to reduce the impact of transmission errors. The prior art disclosed a method and a basis sequence table that provided additional protection to the MSB, minimizing root-mean-square error. However, the claimed invention differed in that it required swapping the last two bits of the basis sequence table. The Board found that a skilled artisan would not have been motivated to make this modification to enhance MSB protection, nor would a skilled artisan have deemed it desirable. Honeywell appealed.

The Federal Circuit reversed, finding the claims obvious for four primary reasons. First, the Court determined that the Board incorrectly concluded that a POSITA would not have been motivated to swap the last two bits to improve MSB protection. The Court emphasized that the motivation to modify prior art does not need to align with the inventor’s motivation. As a result, the Board’s reasoning that minimizing root-mean-square error was not the patent’s primary purpose should not have been a primary consideration.

Second, the Federal Circuit found that prior art explicitly taught the importance of protecting the MSB through redundancy. A skilled artisan would have understood that swapping the two bits, as claimed, would add redundancy and enhance protection. Honeywell’s expert testimony further supported the conclusion that the prior art would have provided the requisite motivation to arrive at the claimed invention, and 3G’s expert did not dispute that the swap increased MSB protection.

Third, the Federal Circuit concluded that the Board improperly conflated obviousness with anticipation by requiring that the prior art disclose swapping the two bits. Anticipation requires the prior art to specifically disclose the claimed modification, but obviousness does not. The Court found that the Board erroneously treated the two standards as interchangeable.

Finally, the Federal Circuit found that the Board wrongly required that the claimed basis sequence table represent the preferred or most optimal combination. As the Court [...]

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No Appellate Jurisdiction to Review Post-Verdict Appeal of Previously Denied SJ Motion

In a closely watched trademark/counterfeiting case, the US Court of Appeals for the Second Circuit affirmed a judgment for contributory infringement, award of permanent injunction and monetary damage award against a commercial landlord found to have been willfully blind to trademark infringement and counterfeiting occurring on its leased property. Omega SA v. 375 Canal, LLC, Case No. 19-969 (2d Cir. Jan. 6, 2021) (Menashi, J.) (Lohier, J., concurring in part, dissenting in part). The Court also concluded that it could not consider a post-verdict appeal on a legal issue raised in a denied summary judgment motion (i.e., whether the landlord needed to know of a specific vendor involved in the counterfeiting) when the appellant failed to file a timely notice of appeal and did not seek an interlocutory appeal or file a Rule 50 motion for judgment as a matter of law on the issue.

375 Canal LLC is a commercial landlord with properties in Manhattan, including 375 Canal Street. Omega SA is a watch company. Omega sued Canal for contributory trademark infringement, alleging that Canal had continued to lease space at 375 Canal Street to vendors despite knowing that the vendors were selling counterfeit Omega goods. After discovery, Canal moved for summary judgment, contending that Omega did not identify a specific vendor to which Canal continued to lease property despite knowing or having reason to know that the specific vendor was selling counterfeit goods. Omega argued that its primary theory of willful blindness did not require identification of a specific vendor. The district court denied Canal’s motion, agreeing that Omega was not required to identify a specific vendor.

The jury found that Canal had contributorily and willfully infringed Omega’s trademarks, and awarded $1.1 million in statutory damages. The district court amended the final judgment to include a permanent injunction prohibiting Canal from infringing and taking other actions with respect to Omega’s marks, even outside of 375 Canal Street. Canal appealed, arguing that the district court erred by not requiring Omega to identify a specific vendor that Canal knew or should have known was infringing Omega’s trademarks. Canal raised this argument by appealing the pre-trial order denying Canal’s motion for summary judgment and the jury instructions.

The Second Circuit dismissed Canal’s appeal of the summary judgment denial and affirmed the jury instructions on the merits. On Canal’s challenge to the summary judgment denial, the Court began with the premise that a party generally cannot appeal an order denying summary judgment after a full trial on the merits because of its interlocutory character, which is not within appellate jurisdiction. The denial of Canal’s summary judgment motion did not qualify for an exception allowing review, such as situations where Congress has provided for review of certain interlocutory decisions, or where the Supreme Court has construed certain denials of summary judgment, such as those on the basis of qualified immunity, as final decisions permitting review. But even if it had qualified, Canal would have been required to file a notice of appeal within [...]

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