Honeywell International Inc. v. 3G Licensing, S.A., Appeal Nos. 2023-1354, -1384, -1407 (Fed. Cir. Jan. 2, 2025)

In this week’s Case of the Week, the Federal Circuit reversed an inter partes review finding of the Patent Trial and Appeal Board, which had upheld the patentability of challenged claims of appellee 3G Licensing’s U.S. Patent No. 7,319,718. The ’718 patent claimed transmission encoding methods essential to the 3G and 4G cellular communications standards, and was weighed against prior art that comprised 3G consortium members’ consideration of desirable standards shortly before the patent’s critical date. A majority of the reviewing panel found the challenged claims reflected no more than routine experimentation and optimization of a proposal that had been circulated prior to the patent’s filing, and were therefore unpatentable as obvious.

Broadly speaking, the ’718 patent claimed a method of reducing errors in the transmission of channel quality information (CQI), a metric that had been used in cellular communications services to inform the allocation of bandwidth. The ’718 patent’s claims were directed to encoding the five-bit CQI into a 20-bit “codeword,” using conversion methods that redundantly repeated certain bits of the CQI to compensate for transmission errors. By the time 3G consortium member LG Electronics filed the application leading to the ’718 patent, it and other members had been considering 20-bit codeword solutions for several months, and Koninklijke Philips N.V. (Philips) had recently proposed a method that differed from the claimed method only by the transposition of two bits in a conversion table. The patent was later transferred to the 3G Licensing entity, which sued appellant Honeywell after Honeywell refused to take a license. Honeywell then filed the IPRs underlying this appeal.

In upholding the challenged claims as patentable, the Board relied largely on the ’718 patent’s stated purpose of maximizing total system throughput, which was different from the Philips proposal’s stated objective of reducing errors in transmission of the most significant bits (MSBs) of the CQI. The Board found that an ordinarily skilled artisan would not have been motivated to modify the Philips proposal to maximize system throughput, and therefore that the challenged claims of the ’718 patent had not been shown to be obvious. The Federal Circuit explained that the Board committed legal error by considering only the problem expressed in the patent itself, which ran counter to Supreme Court precedent that any known motivation to modify the prior art could support an obviousness challenge. Here, the prior art Philips proposal itself stated that it was desirable to reduce transmission errors in the most significant bits, and the effect of transposing the final two bits in Philips’ conversion table—that is, the modification claimed in the ’718 patent—would have been to maximize protection of the most significant bit at the expense of the second-most significant bit. The majority thus found that the Board’s contrary determination—that there was no motivation to modify Philips—was not supported by substantial evidence. The majority found that the Board’s decision was premised on several other errors, and ultimately reversed the Board’s ruling that the challenged claims had not been shown to be obvious.

Judge Stoll dissented. She agreed with portions of the majority’s reasoning, but argued the decision should have been vacated and remanded instead of reversed. In her view, the majority’s “clear error” review crossed the line into impermissibly weighing evidence and finding facts, which should have been left to the Board on remand. Judge Stoll also faulted the majority for considering only claim 1 of the ’718 patent and not the other challenged claims, notwithstanding the parties had treated claim 1 as representative and argued only that claim on appeal.

The full opinion can be found here.

By Jason A. Wrubleski

This article summarizes aspects of the law. This article does not constitute legal advice. For legal advice regarding your situation, you should contact an attorney.