Appeals from the United States Patent and Trademark Office,
Patent Trial and Appeal Board in Nos. IPR2016-01020,
IPR2016-01021, IPR2017-00254, IPR2017-00255, IPR2017-00417,
J. McAndrews, McAndrews, Held & Malloy, Ltd., Chicago,
IL, argued for appellant. Also represented by Andrew B. Karp,
James P. Murphy.
Theodore M. Foster, Haynes & Boone, LLP, Dallas, TX,
argued for all appellees. Appellee Cisco Systems, Inc. also
represented by David L. McCombs, Debra Janece McComas.
Lyn Keefe, Cooley LLP, Palo Alto, CA, for appellee DISH
Network LLC. Also represented by Jennifer Volk-Fortier,
Matthew Baird, Duane Morris LLP, Washington, DC, for
appellees Comcast Cable Communications, LLC, Cox
Communications, Inc., Time Warner Cable Enterprises LLC,
Verizon Services Corp., ARRIS Group, Inc. Also represented by
Christopher Joseph Tyson.
Reyna, Hughes, and Stoll, Circuit Judges.
Circuit Judge Hughes dissents without opinion.
pair of inter partes review proceedings, the Patent Trial and
Appeal Board invalidated all claims of two related patents.
TQ Delta, LLC, the patent owner, appeals the Board's
determination that all claims of the challenged patents would
have been obvious in view of the prior art asserted by Cisco
Systems, Inc., and the other appellees (collectively,
"Cisco"). TQ Delta also raises several other
challenges to the IPR proceedings relating to the
admissibility of evidence, claim construction, and due
process. Because fact findings underlying the Board's
obviousness determinations are not supported by substantial
evidence, we reverse the Board's decisions on that
a consolidated appeal from the final written decisions in a
pair of IPRs, IPR2016-01020 and IPR2016- 01021,
which the Board invalidated all claims of two related
patents, U.S. Patent Nos. 9, 014, 243 and 8, 718, 158,
respectively. The Board held each claim unpatentable as
obvious in view of various prior art combinations that
include the two references at issue on appeal, U.S. Patent
Nos. 6, 144, 696 (Shively) and 6, 625, 219 (Stopler).
challenged patents relate to certain improvements to
electronic communications systems that lower the
peak-to-average power ratio (PAR) of the transmitted signals.
PAR is the ratio of the maximum value of a parameter (e.g.,
voltage) to the time-averaged value of that parameter.
Lowering the PAR of a communications system is desirable
because it reduces power consumption and the likelihood of
challenged patents specifically address a PAR problem that
arises in the transmission of digital data using multicarrier
communications systems, such as digital subscriber line (DSL)
systems. See, e.g., '243 patent col. 3 ll.
25-37. In a multicarrier communications system,
multiple bits are transmitted simultaneously across a series
of narrow frequency bands called "carriers" in an
approach known as "Discrete Multitone Modulation"
(DMT). See id. at col. 1 ll. 33-47. Each carrier is
independently modulated in accordance with its assigned bit,
and the carriers are then combined into a single multicarrier
signal for transmission of the data. See id.
problems can arise when the carriers are combined into a
single signal for transmission of the data. Typically, the
transmitted bits are randomly distributed, so they tend to
counterbalance each other when summed into the multicarrier
transmission signal. But when many of the bits have the same
value (i.e., mostly 0 or mostly 1) at or near the same time,
they can sum to create multicarrier waveforms with a high
amplitude. This situation can arise when multiple carriers
are each used to transmit the same data in parallel. As a
general matter, high amplitude waves are problematic because
the equipment required to deal with them is costlier. But an
extremely high amplitude wave also presents a risk of
"clipping," a phenomenon in which the peak of the
transmitted signal is truncated at the maximum range of the
equipment, leading to transmission failure and potential data
loss. In the context of DMT systems, when one reduces the
probability of these problematic "clipping" events,
one is said to have reduced the PAR of the signals
transmitted by the system.
inventors purport to reduce PAR in DMT systems using a new
technique. The crux of the invention is to
"scramble" the phases of the parallel carriers such
that the carriers will not peak at the same time, even if the
transmitted bits have mostly the same value. See id.
at col. 2 l. 34-col. 3 l. 3. The phase of each carrier is
shifted in accordance with a value that is determined
independently of the bit value carried by that carrier.
Id. at col. 2 ll. 36-43. The resulting transmission
signal has a "substantially minimized" PAR.
Id. at col. 4 ll. 35-38. The challenged patents
disclose a variety of scrambling algorithms that shift the
phase of each carrier by some independent amount, thereby
reducing PAR. See id. at col. 6 l. 58-col. 8 l. 22,
col. 9 l. 53-col. 10 l. 44 (Phase Shifting Examples #1- 4).
is the primary prior art reference asserted by Cisco in the
IPRs. Shively is directed to an improvement to the use of DMT
by DSL modems-the same field of technology at issue in the
challenged patents. Shively col. 1 ll. 5-8. But Shively
addresses a different problem: how to increase transmission
capacity by efficiently allocating bits across the various
carriers in long-loop systems. See id. at Abstract.
In relevant part, Shively increases data throughput by
utilizing carriers in combination that would each be
inadequate to transmit data independently. See id.
at col. 3 l. 54-col. 4 l. 34. Specifically, Shively spreads
the transmission of a single bit across several carriers at
reduced power levels, and then "despread[s]" the
transmission on the receiving end to overcome what would
otherwise be unacceptable noise levels in each carrier.
Id. at col. 3 ll. 58-67. Shively does not discuss
PAR or clipping. The parties' experts debated the extent
to which PAR and clipping would change under Shively's
is the secondary prior art reference asserted by Cisco in the
IPRs. Like the challenged patents and Shively, Stopler is
directed to digital data communication systems, including
DMT. See Stopler col. 1 ll. 7-11, 42-64. But Stopler
is focused on a different problem: improving the efficiency
of transmission by mitigating noise and other interference.
See id. at Abstract. Specifically, Stopler discloses
a "diagonalization" scheme for interleaving the
assignment of bits across the various carriers over time,
which mitigates the effect of interference on any particular
data stream by spreading its impact across different
carriers. See id. at col. 5 ll. 10-43, col. 8 ll.
28-53. Like Shively, Stopler never mentions PAR or clipping.
Toward the end of its disclosure, Stopler briefly suggests
applying a phase scrambling sequence "to randomize the
overhead channel symbols" that it sends alongside the
transmitted data. Id. at col. 12 ll. 24-26. In order
"to simplify implementation," however, Stopler also
suggests applying its phase scrambler to all of the
transmitted data. Id. at col. 12 ll. 26-28.
Delta sued a number of telecommunications companies,
including the appellees, for infringement of the '158 and
'243 patents (among others) in parallel lawsuits in the
U.S. District Court for the District of Delaware. In May
2016, Cisco filed two IPR petitions challenging all claims of
the '158 and '243 patents, which the other appellees
joined after institution. Every ground in the petitions was
based on the combination of Shively and Stopler, either
standalone or in combination with other prior art references
not at issue on appeal.
October 2017, the Board issued its final written decisions.
The Board's decisions invalidated all of the challenged
claims as obvious in view of Shively and Stopler, along with
other references not at issue on appeal. In doing so, the
Board accepted Cisco's positions as its own findings and
conclusions. The Board also relied almost exclusively on the
testimony of Cisco's expert, Dr. Tellado, to rebut TQ
Delta's arguments that a person of ordinary skill would
not have been motivated to combine Shively and Stopler. In
the final written decisions, the Board also rejected TQ
Delta's proffered claim construction and dismissed ...