[00:00:01] Speaker 02:
The United States Court of Appeals for the Federal Circuit is now open and in session.

[00:00:05] Speaker 02:
God save the United States and this honorable court.

[00:00:08] Speaker 00:
We're ready to proceed, Your Honor.

[00:00:13] Speaker 01:
Okay.

[00:00:13] Speaker 01:
Thank you and good morning, everyone.

[00:00:15] Speaker 01:
And so the first argued case on this line is number 19, 1937, Mobile Technology Incorporated against Senco Solutions Incorporated.

[00:00:27] Speaker 01:
So Mr. Norman, proceed.

[00:00:34] Speaker 02:
May it please the court.

[00:00:36] Speaker 02:
After the first issue, the board erred in failing to find claims five and eight through 12 obvious in view of Seabrook and Rabinowitz.

[00:00:48] Speaker 04:
Mr. Norman, this is Judge Wallach.

[00:00:51] Speaker 04:
As a housekeeping matter, is independent claim one illustrative or representative?

[00:00:59] Speaker 02:
Independent claim one is

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is a bit illustrative.

[00:01:05] Speaker 02:
I mean, claim five depends from claim one, and the board found claim one of the 809 patent to be obvious based on the Seabrook reference.

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ZENCO did not appeal that finding, so the obviousness of claim one is not at issue.

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And a lot of the limitations that are in claim one are also in independent claim eight.

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But with respect to claim five, then we're looking at only some additional limitations because it depends directly on claim one.

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The only reason given by the board in refusing to find claim five obvious is based on the board's mistaken understanding of the scope of claim five.

[00:01:56] Speaker 02:
Claim five requires a plunger that triggers an alarm.

[00:02:02] Speaker 04:
The board did not conclude it would be... Mr. Norman, this is Judge Wallach again.

[00:02:08] Speaker 04:
In the blue break at 14, you argue that it would have been obvious to add a plunger to Seabrook's head unit.

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And so render claim five obvious.

[00:02:19] Speaker 04:
Right.

[00:02:19] Speaker 04:
And your position is that the PTAB ignored your expert testimony in the prior art.

[00:02:26] Speaker 04:
But aren't you asking us to reweigh the evidence on that?

[00:02:31] Speaker 02:
Well, no, because our point is that the board, what the board did decide, the board ignored evidence, the board ignored a lot of the issues, but the issues that the board did address, the board was incorrect on.

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So if we at least look at what the board decided, we can address that and see that what the board decided was incorrect.

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And so the case should be,

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reversed on that ground and remanded.

[00:03:04] Speaker 02:
So what the board did not conclude, the board didn't conclude that it would be unobvious to add a plunger switch to activate an alarm in the head unit of retail theft prevention device.

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But then the board asserted that putting Rabinowitz's plunger switch in Seabrook's head unit would not work when the Seabrook head unit is in the third position

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That is, when the head unit is disconnected from the base.

[00:03:33] Speaker 04:
Well, again, this is Judge Wallach.

[00:03:36] Speaker 04:
In the red brief at 18, Zenco argues that the combination of Seabrook and Rabinowitz wouldn't function.

[00:03:46] Speaker 04:
What evidence did you present to the PTAB that it would function?

[00:03:51] Speaker 02:
OK, well, first of all, that was the first time that

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SENCO made that argument.

[00:04:01] Speaker 02:
SENCO did not make that argument to the board, and that's not something that the board decided.

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But the whole aspect of it would not function.

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And I want to make sure that I'm hitting the right point, that I'm understanding the particular position that was being addressed.

[00:04:22] Speaker 02:
But as far as the not function, it

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it would have functioned if we combined, if we put a plunger switch into the head unit.

[00:04:36] Speaker 02:
And we had that in appendix 901 to 902 is the testimony of Dr. Cameron.

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Plane five doesn't require the plunger switch to operate

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in every position of the head unit.

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It doesn't require the plunger switch to operate in the position addressed by the board.

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The only reason given by the board against the obvious claim five is based on Seabrook and Rabinowitz is a limitation not present in claim five.

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So Seabrook does not require that the head unit that the plunger switch

[00:05:22] Speaker 02:
operate in that third position of the head unit.

[00:05:27] Speaker 03:
See, I thought the issue with respect to claim five, and correct me if I'm mistaken about this, was that the board found that there wouldn't be an electrical connection in the third position that would trigger the alarm.

[00:05:43] Speaker 03:
Is that correct?

[00:05:45] Speaker 02:
Well, there wouldn't be an electrical connection that's going to trigger the alarm in the third position in either device, but I think that is correct.

[00:05:53] Speaker 02:
I think that is what the board signed.

[00:05:55] Speaker 03:
Wait, wait.

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What I'm asking you is what's the board's rationale here, which is what we're reviewing.

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My understanding is that what the board said with respect to claim five, and I'm mistaken about this, is that

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there wouldn't be an electrical connection in the third position that would trigger the alarm.

[00:06:17] Speaker 03:
Is that correct?

[00:06:19] Speaker 02:
I think that is correct.

[00:06:20] Speaker 02:
I think that's what the board decided.

[00:06:22] Speaker 03:
All right.

[00:06:23] Speaker 03:
And your response to that is your exit said you could have a battery, right?

[00:06:30] Speaker 02:
Well, the battery would be one option, yes.

[00:06:35] Speaker 02:
Yes, but we have two positions.

[00:06:37] Speaker 03:
One is, you're not.

[00:06:39] Speaker 03:
Wait.

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Stick with this one, OK?

[00:06:41] Speaker 03:
You'll have time to do the other one.

[00:06:43] Speaker 03:
On this question, the board did not mention the battery possibility even though you had sent it evidence that the motivation to use a battery to trigger the alarm, right?

[00:06:57] Speaker 03:
That is correct.

[00:06:59] Speaker 03:
OK.

[00:06:59] Speaker 03:
And my understanding is that the patentee responds to that by saying that the response to that by saying

[00:07:11] Speaker 03:
saying that that was raised for the first time in your reply and that that wasn't a proper reply.

[00:07:17] Speaker 03:
That is not a position that the board took, correct?

[00:07:21] Speaker 02:
That is correct.

[00:07:23] Speaker 03:
OK, so what's your response to the patentee's position that you shouldn't have raised this for the first time in the reply?

[00:07:33] Speaker 02:
OK, so our response to that is, first of all, it's up to the board to decide

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of whether to exercise that discretion.

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The board has the option to allow us to raise that.

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The board never said that it was improper to raise the battery issue at that time.

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But also that was in response to a position that SENCO had raised in their opposition.

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Our position is that

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even without that third position because the claim doesn't require that the alarm operate when it's in that third position.

[00:08:20] Speaker 02:
The evidence was that if a user would, I'm sorry, if a theft would rip off a phone from the head unit and then release the head unit, even if you had that switch, even if it wasn't powered when the head unit is in a raised position,

[00:08:37] Speaker 02:
when the tether is retracted by the recoiler, then once the head unit reattaches to the base, it has the electrical connection, and it would sound an alarm.

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So because the claim, so even forgetting about a battery, the system would have still operated, because a seat is going to rip off the head unit, and it's not going to

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continue to hold the head.

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You've got to release it so that he or she can walk away.

[00:09:12] Speaker 02:
So that's our position with respect to claim five.

[00:09:19] Speaker 02:
Turning to claims eight through 12, the only limitation addressed by the board was claim eight's limitation of the spring is remote from the connector in the third position of the head.

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The board correctly construed remote as requiring two structures to be spaced apart from each other.

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In reality, the only issue with respect to this remote issue was based on claim construction.

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Benko's argument against the remote limitation was based solely on Benko's proposed construction of remote.

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The board rejected Benko's

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plane disruption and adopted that which was proposed by MTI.

[00:10:12] Speaker 01:
Well, what was the difference, the distinction that you think is dispositive as to invalidity?

[00:10:20] Speaker 02:
Okay, so the distinction on that particular point is the, what Stenco argued is remote required a disconnection

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of both of the experts, the experts of both parties agree that the spring and connector of Seabrook are capable of being spaced apart from each other in the third position of the head unit.

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And so the evidence is that the Seabrook has that capability, the remote limitation, and it's all based on a capability, how the board

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The board seems to look at this, the board seems to look at Claim H as being a method claim.

[00:11:07] Speaker 01:
Because the board... Well, they called it a system.

[00:11:10] Speaker 01:
I don't think that that difference is going to make a difference between validity and invalidity.

[00:11:16] Speaker 01:
Do you?

[00:11:18] Speaker 02:
It's not that it makes a difference of validity or invalidity.

[00:11:21] Speaker 02:
It makes a difference as to what would be required for the prior art to disclose.

[00:11:27] Speaker 02:
Because it's a system claim, for the prior art to invalidate, the prior art system has to have the capability.

[00:11:38] Speaker 02:
It doesn't need to disclose, it doesn't need to explicitly teach that capability as long as that capability is present in the prior art combination.

[00:11:53] Speaker 02:
And both of the experts agreed

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that would be present in the prior combination.

[00:12:03] Speaker 02:
And I see that my time is up, so I would like to reserve the rest of my time for rebuttal.

[00:12:08] Speaker 01:
All right, let's hear from the other side.

[00:12:10] Speaker 01:
We'll save the full rebuttal, and we want to make sure we hear your arguments.

[00:12:14] Speaker 01:
Okay, Mr. Belson.

[00:12:17] Speaker 05:
Good morning, and may it please the court.

[00:12:19] Speaker 05:
As the court's aware, this is a split decision at the board.

[00:12:22] Speaker 05:
The board found six claims unpatentable,

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And Senco disagreed with that part of the decision, but it didn't appeal or cross-appeal because it's mindful of the substantial evidence standard of review.

[00:12:34] Speaker 04:
Mr. Balsam.

[00:12:35] Speaker 04:
Mr. Balsam.

[00:12:38] Speaker 04:
Mr. Balsam.

[00:12:40] Speaker 04:
This is Judge Wallach.

[00:12:42] Speaker 04:
Just as a housekeeping matter, as I raised with your friend, is independent claim one illustrative or representative?

[00:12:53] Speaker 05:
No, in the sense that

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The claims that are at issue in this appeal all have features that are distinct from claim one.

[00:13:05] Speaker 01:
Well, the elements of claim one are included in the claims that are dependent on claim one.

[00:13:10] Speaker 01:
There's no problem with that, is there?

[00:13:13] Speaker 05:
No, there's no problem with that.

[00:13:17] Speaker 05:
But the particular elements like the remoteness and all of that

[00:13:21] Speaker 05:
Those are unique to the claim eight, and the groove is unique to claim three, and the plunger aspect is unique to claim five, and those are what the appeal is being argued.

[00:13:36] Speaker 03:
Could you address claim five and the battery issue which the board did not address?

[00:13:42] Speaker 03:
And there was testimony that someone skilled in the art would know to add a battery so that in the third

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harm would be triggered.

[00:13:54] Speaker 03:
Why wasn't there for the board not to address that possibility?

[00:14:02] Speaker 05:
Well, for the first part, no battery was asserted as the art that rendered this obvious in the petition.

[00:14:13] Speaker 05:
The battery came into the case when MTI ran into trouble in front of the board.

[00:14:19] Speaker 05:
And their expert came back and tried to backfill that testimony by adding the requirement of a battery that's nowhere, they did it to try to salvage functionality when they realized that it wouldn't, that the invention wouldn't function with just a plain combination of Seabrook and Rabinowitz.

[00:14:40] Speaker 03:
Okay, so it's responsive to an argument that you made.

[00:14:44] Speaker 03:
And the board didn't find that it was an improper argument.

[00:14:48] Speaker 03:
They just ignored it, right?

[00:14:51] Speaker 05:
Correct.

[00:14:54] Speaker 03:
So why should we send it back to have the board consider that issue?

[00:15:02] Speaker 05:
Well, because I think, I mean, first of all, again, it wasn't asserted in the petition.

[00:15:08] Speaker 05:
And I mean, if they have to,

[00:15:11] Speaker 05:
add a battery at the end of the argument because they realized that what they did assert wasn't functional as they asserted it.

[00:15:20] Speaker 05:
It sounds like that's not obvious.

[00:15:25] Speaker 05:
What they asserted was not obvious.

[00:15:28] Speaker 05:
I mean, we are talking about what a person of ordinary skill in the art would find obvious, and if they've got to start adding stuff at the end,

[00:15:39] Speaker 05:
How is that obvious if they keep having to modify what parts of the art they want to use?

[00:15:47] Speaker 05:
So I would not think you'd have to send it back for that sort of determination.

[00:15:52] Speaker 03:
Let's assume that the battery issue was properly before the board.

[00:15:57] Speaker 03:
Is there any reason that the board could permissibly ignore that?

[00:16:07] Speaker 05:
Well, if it's properly before the board, it would have to, it should take it into account.

[00:16:19] Speaker 05:
But if it's not properly before the board, they have discretion not to consider it.

[00:16:27] Speaker 05:
And these are not a novice board.

[00:16:30] Speaker 05:
They would exercise their discretion to consider it or not if they saw fit.

[00:16:38] Speaker 05:
So I just don't see how the addition of a battery at the 11th hour to try to salvage a functionality argument of the art that they asserted is somehow worthy of a remand on the issue of obviousness.

[00:16:57] Speaker 05:
If it was so obvious, why didn't they put it in their petition?

[00:17:07] Speaker 01:
Okay, please continue with your further argument.

[00:17:11] Speaker 05:
Okay.

[00:17:12] Speaker 05:
Relevant to claims 8 and 12, the claim 8, as the court knows, requires that the spring be remote from the connector in the third position of the head unit.

[00:17:24] Speaker 05:
But the board found that Seabrook doesn't teach a spring remote from the connector in the third position.

[00:17:29] Speaker 05:
Within no embodiment or discussion or drawing does Seabrook have that spring remote from the connector.

[00:17:36] Speaker 05:
Their argument on claim aid is forced to rely on expert testimony, basically two declarations discussing the hypothetical.

[00:17:46] Speaker 05:
And they would basically require that the device be rendered inoperable, almost broken, in order to keep the head unit apart from the spring.

[00:18:00] Speaker 05:
So the board, on all of these issues, their argument is

[00:18:06] Speaker 05:
Their argument is basically that their experts said X and the board erred by not following what their experts said.

[00:18:15] Speaker 05:
But on all of these issues that are before the court, our experts said the opposite or the evidence was such that the board with its eyes and ears and brain could see that in such a position something wouldn't function or there was some sort of contradictory evidence to everything that they're talking about.

[00:18:36] Speaker 05:
And so the board was not required to accept MTI's views.

[00:18:42] Speaker 05:
The main problem with them is that they've selected art that is basically inapt.

[00:18:50] Speaker 05:
It's not in the same area.

[00:18:54] Speaker 05:
Some of it predates smartphones.

[00:18:57] Speaker 05:
One of it is like this huge machine with spools and wires.

[00:19:03] Speaker 05:
None of the combinations were obvious to combine.

[00:19:06] Speaker 05:
It was not a difficult decision for this board.

[00:19:10] Speaker 05:
And most of them wouldn't even function for their intended purpose.

[00:19:14] Speaker 05:
And substantial evidence backs every decision that their combinations would not function.

[00:19:22] Speaker 05:
And while complete functionality is not always required,

[00:19:29] Speaker 05:
If the primary reference is rendered inoperable or unsatisfactory for its intended purpose, well, that's a very, very strong indicia of non-obviousness.

[00:19:39] Speaker 05:
And so our position is that this board, on every one of these claims, there's evidence in the record to back the board's decision.

[00:19:47] Speaker 05:
The board's decision makes sense.

[00:19:49] Speaker 05:
And the board was not required to accept MTI's expert's advice.

[00:19:57] Speaker 05:
And our view is that,

[00:19:59] Speaker 05:
substantial evidence backs all of these opinions.

[00:20:03] Speaker 05:
And if you just listen to these machinations that they have to go through to try to say that these are obvious, well, that's pretty indicative that maybe they're not obvious.

[00:20:12] Speaker 05:
So that's kind of our overall position.

[00:20:15] Speaker 05:
I can address any individual questions the court might have, but we're content to... We've pointed out where in the record the evidence lies to support these, the rulings.

[00:20:29] Speaker 05:
We believe they should be affirmed on that basis.

[00:20:33] Speaker 01:
Okay.

[00:20:34] Speaker 01:
Any questions from the panel?

[00:20:38] Speaker 01:
If not, we'll proceed with rebuttal.

[00:20:44] Speaker 01:
Okay.

[00:20:46] Speaker 01:
All right.

[00:20:46] Speaker 01:
Mr. Norman, are you ready?

[00:20:48] Speaker 02:
I am.

[00:20:50] Speaker 01:
Okay.

[00:20:50] Speaker 01:
You have your full rebuttal time.

[00:20:53] Speaker 02:
With respect to Claim A, Mr. Norman,

[00:20:59] Speaker 04:
Yes.

[00:21:00] Speaker 04:
Battery issue the same as power cable in the prior?

[00:21:07] Speaker 02:
The power cable issue is a bit different.

[00:21:11] Speaker 02:
There is power that's coming up through a cable.

[00:21:17] Speaker 02:
There is power that's coming up.

[00:21:18] Speaker 02:
I guess the battery is, in some respects, it is so that you don't necessarily need power coming up

[00:21:28] Speaker 02:
if you have this plunger switch.

[00:21:31] Speaker 02:
The whole point would be you could have a battery with a plunger switch in the head unit so that if the phone is disconnected, the head unit itself would sound an alarm.

[00:21:45] Speaker 02:
So that's the issue with respect to the battery.

[00:21:49] Speaker 02:
Now, otherwise, the retractor cable would bring the head unit down.

[00:21:55] Speaker 02:
And at that point, once the retractor brings the head unit down, an alarm was found based on the activation of that plunger switch.

[00:22:04] Speaker 02:
But if I can turn to claim eight, the expert testimony, both Senco's expert and MTI's expert agreed that with

[00:22:19] Speaker 02:
with the claim construction that MTI asserted for the remote limitation and which the board adopted the Seabrook device as its capability.

[00:22:36] Speaker 03:
Because the problem is that there isn't any testimony that there was a motivation to do that.

[00:22:43] Speaker 02:
But that's not an issue that the board decided.

[00:22:46] Speaker 02:
The board did not find a lack of motivation.

[00:22:50] Speaker 02:
And also, SENCO is saying that this would somehow break the system.

[00:23:01] Speaker 02:
But to operate it in SENCO, it doesn't require breaking Seabrook and the board never found that.

[00:23:10] Speaker 02:
It requires a disconnection because that's what the claim required.

[00:23:15] Speaker 02:
says wherein the head unit is disconnected from a post, the connector, and the first cable in a third position.

[00:23:22] Speaker 02:
So in the Seabrook device, it still requires a disconnection, because it has to be a disconnection to be in the third position.

[00:23:29] Speaker 02:
So there's no dispute that the spring can be spaced apart from the connector.

[00:23:36] Speaker 02:
And that is, in fact, shown in figure 7a of Seabrook.

[00:23:44] Speaker 02:
These are fact issues, though, that the board needs to consider in the first place.

[00:23:50] Speaker 02:
The board has an obligation to address the argument of the parties presented to it, and the board did not do so.

[00:24:07] Speaker 02:
And I think that's all I have.

[00:24:11] Speaker 01:
Okay, anything further from the panel?

[00:24:14] Speaker 01:
Okay, in that case, with thanks to counsel, the case is submitted.