Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-15-01160/USCOURTS-ca13-15-01160-0/pdf.json

Parties Involved:
Apple Inc.
Appellee
SightSound Technologies, LLC
Appellant

Document Text:

United States Court of Appeals 

for the Federal Circuit ______________________ 

SIGHTSOUND TECHNOLOGIES, LLC,

Appellant

v.

APPLE INC.,

Appellee

______________________ 

2015-1159, 2015-1160

______________________ 

Appeals from the United States Patent and Trademark Office, Patent Trial and Appeal Board in No. 

CBM2013-00020.

______________________ 

Decided: December 15, 2015

______________________ 

MATTHEW WOLF, Arnold & Porter LLP, Washington, 

DC, argued for appellant. Also represented by JENNIFER 

SKLENAR, Los Angeles, CA. 

DOUGLAS HALLWARD-DRIEMEIER, Ropes & Gray LLP, 

Washington, DC, argued for appellee. Also represented 

by JON STEVEN BAUGHMAN, SHARON LEE, MEGAN 

FREELAND RAYMOND, PAUL MICHAEL SCHOENHARD,

DARRELL STARK; CHING-LEE FUKUDA, New York, NY; 

Case: 15-1160 Document: 20-2 Page: 1 Filed: 12/15/2015
2 SIGHTSOUND TECHNOLOGIES, LLC v. APPLE INC. 

JAMES RICHARD BATCHELDER, LAUREN NICOLE ROBINSON, 

East Palo Alto, CA. 

BENJAMIN T. HICKMAN, United States Patent and 

Trademark Office, Office of the Solicitor, Alexandria, VA, 

argued for intervenor Michelle K. Lee. Also represented 

by NATHAN K. KELLEY, SCOTT C. WEIDENFELLER. 

______________________ 

Before LOURIE, DYK, and HUGHES, Circuit Judges. 

DYK, Circuit Judge. 

SightSound Technologies, LLC (“SightSound”) is the 

owner of U.S. Patent No. 5,191,573 (the “’573 patent”) and 

5,966,440 (the “’440 patent”). Apple Inc. (“Apple”) petitioned the United States Patent and Trademark Office 

(“PTO”) for covered business method (“CBM”) review of 

claims 1, 2, 4, and 5 of the ’573 patent and claims 1, 64, 

and 95 of the ’440 patent. The PTO granted Apple’s 

petition and instituted CBM review. The Patent Trial 

and Appeal Board (“the Board”) issued a final decision 

finding all the challenged claims would have been obvious. SightSound appealed. 

We hold that we lack jurisdiction to review the PTO’s

decision to consider issues not explicitly raised in the 

petitions. We do, however, have jurisdiction to review 

whether the patents qualify as CBM patents. We affirm

the Board’s determination that the ’573 and ’440 patents 

qualify as CBM patents. Finally, we affirm the Board’s 

final decision with respect to claim construction and

obviousness. 

BACKGROUND

The ’573 and ’440 patents owned by SightSound

disclose methods for the electronic sale and distribution of 

digital audio and video signals. Each of the relevant 

Case: 15-1160 Document: 20-2 Page: 2 Filed: 12/15/2015
SIGHTSOUND TECHNOLOGIES, LLC v. APPLE INC. 3

claims requires (1) forming a connection, through telecommunications lines, between a first party’s first 

memory and a second party’s second memory; (2) selling 

the desired digital video or digital audio signals to the 

second party for a fee through telecommunications lines; 

(3) transmitting the desired signal from the first memory 

to the second memory via telecommunications lines; and

(4) storing the transmitted signal in the second memory. 

E.g., ’440 patent col. 8 ll. 44–64; ’573 patent col. 6 ll. 4–24. 

Dependent claim 2 of the ’573 patent adds the step of 

searching for and selecting a signal from the first memory 

after the signal has been transferred. ’573 patent col. 6 

ll. 25–29. Claims 4 and 5 of the ’573 patent are the same 

as claims 1 and 2 respectively, but substitute digital video

for audio signals. Id. col. 6 ll. 36–59. Claims 64 and 95 of 

the ’440 patent recite additional limitations, including 

storing digital signals “in the second party hard disk.” 

U.S. Patent No. 5,966,440 C1 (re-examination certificate)

(“’440 C1 patent”) col. 8 ll. 14–44, col. 13 ll. 14–51.

On May 6, 2013, Apple filed petitions with the Board 

seeking CBM review of the ’573 and ’440 patents under 

AIA § 18. See Leahy-Smith America Invents Act (“AIA”), 

Pub. L. 112-29, 125 Stat. 284, 329–31 (2011).1 Apple 

argued that claims 1, 2, 4, and 5 of the ’573 patent and 

claims 1, 64, and 95 of the ’440 patent were invalid as 

anticipated under 35 U.S.C. § 102. The Board instituted 

CBM review. In instituting review, the Board applied the 

definition of CBM in the statute and regulations. See AIA 

§ 18(d); 37 C.F.R. § 42.301. The Board first determined 

1 In general, the AIA is codified in various parts of 

Title 35 of the U.S. Code. Section 18 of the AIA, however, 

is not codified; it is found in pages 329–31 of 125 Stat. 

References to § 18 in this opinion are to the statutes at 

large. 

 

Case: 15-1160 Document: 20-2 Page: 3 Filed: 12/15/2015
4 SIGHTSOUND TECHNOLOGIES, LLC v. APPLE INC. 

that the ’573 and ’440 patents are CBM patents because 

they recite the electronic movement of money between 

financially distinct entities, an activity that is “financial 

in nature,” and do not include novel and non-obvious 

technological features that would otherwise excluded 

them from CBM treatment. J.A. 556–59, 987–94. The 

Board then determined that there was a reasonable 

likelihood that the asserted claims were anticipated or 

rendered obvious by a series of disclosures relating to a

computer system developed by CompuSonics in the 1980s. 

Although Apple’s petitions included the grounds on which 

the PTO instituted review with respect to anticipation 

and alleged facts to support obviousness, the petitions did 

not specifically allege obviousness over CompuSonics. 

The Board nonetheless held that it was appropriate to 

initiate review on obviousness grounds: “[I]n addition to 

Petitioner’s asserted ground of anticipation . . . we exercise our discretion to institute a covered business method 

review . . . on the ground of unpatentability over the 

CompuSonics publications under 35 U.S.C. § 103(a).” J.A. 

571.

During the CBM proceedings SightSound argued that 

it had been deprived of a fair opportunity to respond to 

the obviousness grounds on which the CBM review had 

been instituted. The Board granted SightSound additional time for argument and authorized it to file sur-replies 

and new declaration testimony on the issue of obviousness, “to ensure that Patent Owner has a full and fair 

opportunity to be heard on the issue of obviousness.” J.A. 

709, 1003. 

In its final decision on the merits, the Board rejected 

SightSound’s contention that the term “second memory” is 

limited to non-removable media, relying on the claim 

language, specification, and prosecution history to conclude that under the broadest reasonable interpretation 

standard the term encompasses any second storage space 

Case: 15-1160 Document: 20-2 Page: 4 Filed: 12/15/2015
SIGHTSOUND TECHNOLOGIES, LLC v. APPLE INC. 5

in a computer medium that is capable of retaining data or 

instructions and is not limited to hard disks. The Board 

reaffirmed the initiation decision that the Board did not 

exceed its jurisdiction when it initiated CBM review, 

explaining that, while Apple’s petitions did not assert 

obviousness explicitly, they nevertheless “supported 

[such] a ground” based on their detailed explanation of 

the various CompuSonics references. J.A. 25–27, 92–94. 

The Board held claims 1, 2, 4, and 5 of the ’573 patent and 

claim 1 of the ’440 patent invalid as obvious. It found 

that “Apple explains in detail in its Petition[s] how the 

CompuSonics publications teach every limitation” of the 

claims, J.A. 31, 98, and that the reason to combine was 

manifested by the references themselves. The Board also 

held claims 64 and 95 of the ’440 patent invalid as obvious, finding that the CompuSonics publications would 

have suggested to an ordinary artisan the desirability of 

using a hard disk in connection with the other claimed 

aspects of the invention. SightSound appealed. The PTO

intervened. We have jurisdiction to review the Board’s 

final decision under 28 U.S.C. § 1295(a)(4)(A) and 35 

U.S.C. § 329. 

DISCUSSION

I 

We first address the question of jurisdiction. CBM 

patents are governed by the special provisions of AIA 

§ 18. For purposes of conducting proceedings and appellate review, section 18 is considered part of the broader 

chapter 32 provisions of title 35 of the U.S. Code, governing post-grant review (“PGR”).2 Decisions relating to the 

2 “The transitional proceeding implemented pursuant to this subsection shall be regarded as, and shall 

employ the standards and procedures of, a post-grant 

 

Case: 15-1160 Document: 20-2 Page: 5 Filed: 12/15/2015
6 SIGHTSOUND TECHNOLOGIES, LLC v. APPLE INC. 

institution of CBM review are not reviewable. “The 

determination by the Director whether to institute a postgrant review under this section shall be final and nonappealable.” 35 U.S.C. § 324(e). As noted, this provision is 

applicable to both PGR and CBM proceedings; the Board 

acts for the Director in deciding whether to institute a 

review. See AIA § 18(a)(1); 37 C.F.R. § 42.4. After CBM 

review is instituted, CBM review proceeds before the 

Board, and concludes with the Board’s “final written 

decision” pursuant to 35 U.S.C. § 328(a). Section 329 

provides for appeal of that decision to this court. Thus the 

decision whether to initiate is not appealable, but the 

final decision is subject to review. See In re Cuozzo Speed 

Techs., LLC, 793 F.3d 1268, 1273 (Fed. Cir. 2015). 

A 

 SightSound contends that we should set aside the 

final decision because the proceedings were improperly 

initiated since Apple did not explicitly raise the issue of 

obviousness in its petitions.3 The Board rejected this 

argument, explaining that Apple’s petitions supported 

review for obviousness because they explained in detail 

how the CompuSonics disclosures “teach every limitation 

of the claims . . . and describe similar features and relate 

review under chapter 32 of title 35.” AIA § 18(a)(1). See 

also Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 

1306, 1315 (Fed. Cir. 2015) (“Versata II”). 

3 SightSound relies on 35 U.S.C. § 322(a)(3), which 

requires that a petition must recite “in writing and with 

particularity, each claim challenged, the grounds on 

which the challenge to each claim is based, and the evidence that supports the grounds for the challenge to each 

claim,” and 37 C.F.R. § 42.204(b), which requires a petition to include the “specific statutory grounds . . . on 

which the challenge to [each] claim is based.” 

 

Case: 15-1160 Document: 20-2 Page: 6 Filed: 12/15/2015
SIGHTSOUND TECHNOLOGIES, LLC v. APPLE INC. 7

to each other.” J.A. 26. Because the CompuSonics references described various advantages of a system that 

would enable electronic music processing, “the references 

themselves demonstrate that a person of ordinary skill in 

the art would have been led to create a system for users to 

purchase and download music.” Id. at 40. The PTO and 

Apple argue that the statute and our prior decision in In 

re Cuozzo Speed Technologies., 793 F.3d at 1268, bars this 

Court from reviewing whether the Board properly initiated review when obviousness was not explicitly raised in 

the petitions. We agree.

In Cuozzo we considered § 314(d), applicable to inter 

partes review proceedings, which mirrors the bar on 

appeal in § 324(e). It provides that “[t]he determination 

by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” 

35 U.S.C. § 314(d). There, Cuozzo argued that the PTO 

improperly instituted inter partes review with respect to

certain claims because it relied on prior art references not 

identified by the petitioner in its petitions contrary to the 

requirements of 35 U.S.C. § 312(a)(3). Cuozzo, 793 F.3d 

at 1272. We rejected Cuozzo’s challenge as barred by the 

statute. Id. at 1274. We held that § 314(d) “bar[s] review 

of all institution decisions, even after the Board issues a 

final decision.” Id. at 1273. We explained that generally 

institution decisions are not reviewable, and in particular 

a challenge based on a defect in the initiation that could 

have been cured by a proper pleading is not reviewable. 

Id. at 1274. Only limitations on the Board’s authority to 

issue a final decision are subject to review. 

 In Achates Reference Publishing. Inc. v. Apple Inc., 

803 F.3d 652 (Fed. Cir. 2015), we again considered alleged 

defects in the initiation of inter partes review. There, 

Achates argued that the Board improperly instituted 

inter partes review because the underlying petitions were 

time-barred under 35 U.S.C. § 315(b). Once again, we 

Case: 15-1160 Document: 20-2 Page: 7 Filed: 12/15/2015
8 SIGHTSOUND TECHNOLOGIES, LLC v. APPLE INC. 

rejected the argument as barred by the statute. Achates,

803 F.3d at 658. We explained that just as the pleading 

in Cuozzo could have been made “sufficient by the inclusion of the missing prior art reference . . . the [alleged]

timeliness issue here could have been avoided if Apple’s 

petition had been filed a year earlier or if a petition 

identical to Apple’s were filed by another party.” Id. at 

657. Achates’ argument thus challenged nothing more 

than the Board’s determination to institute inter partes 

review. 

The same is true here. SightSound argues that the 

Board erred in considering obviousness because Apple 

failed to include such argument in its petitions. As in 

Cuozzo, the statute does not limit the Board’s authority at 

the final decision stage to grounds alleged in the CBM 

petitions. The reasoning of Cuozzo and Achates applies 

not only to § 314(d), involved in Cuozzo and Achates, but 

also to § 324(e), the identical provision applicable to CBM 

review. SightSound argues that the “under this section”

language in § 324(e) only bars review of challenges to

institution decisions based on the grounds specified in 

§ 324(a) and (b). We reject this argument. Section 324(e) 

bars review of any institution decision. Cuozzo and 

Achates control, and the challenge is therefore barred by 

§ 324.4 We also see no basis for mandamus relief on the 

Board’s initiation decision, because “the situation here is 

far from satisfying the clear-and-indisputable requirement for mandamus.” Cuozzo, 793 F.3d at 1275. 

4 We see no merit in SightSound’s contention that 

the Board’s approach deprived it of due process, particularly in light of the Board’s care in giving SightSound 

multiple opportunities to comment on the obviousness 

issue beyond what was required. 

 

Case: 15-1160 Document: 20-2 Page: 8 Filed: 12/15/2015
SIGHTSOUND TECHNOLOGIES, LLC v. APPLE INC. 9

B 

SightSound also contends that the ’573 and ’440 

patents are not CBM patents, and therefore the Board 

lacked authorization to review them. The PTO and Apple 

again argue that we are barred from reviewing this 

question. Here we disagree.

We previously addressed our jurisdiction to review the 

Board’s determination of whether patents are CBM 

patents in Versata II. There we held that the question of 

whether a patent falls within the scope of the Board’s 

authority under AIA § 18 as a CBM patent is a limitation 

on the Board’s authority to issue a final decision and may 

be reviewed on appeal from a final written decision of the 

Board. Id. at 1319. While Versata II is limited to our 

review of Board determinations of whether a patent falls 

within its § 18 authority as a CBM patent, that is precisely the issue here. Accordingly, Versata II controls, and 

SightSound’s contention that the Board lacked jurisdiction to review the ’573 and ’440 patents because they are 

not CBM patents is not barred by § 324(e). 

II

CBM review is available only for patents that fall under the definition of a “covered business method patent.” 

The statute defines that term: 

For the purposes of this section, the term “covered 

business method patent” means a patent that 

claims a method or corresponding apparatus for 

performing data processing or other operations 

used in the practice, administration, or management of a financial product or service, except that 

the term does not include patents for technological 

inventions.

AIA § 18(d). There are three sources of PTO rulemaking 

relevant to CBM review. First, 35 U.S.C. § 326, which is 

Case: 15-1160 Document: 20-2 Page: 9 Filed: 12/15/2015
10 SIGHTSOUND TECHNOLOGIES, LLC v. APPLE INC. 

applicable to CBM review through the PGR provisions, 

grants the PTO authority to “prescribe regulations . . . 

setting forth the standards for the showing of sufficient 

grounds to institute a review.” 35 U.S.C. § 326(a)(2). 

Second, AIA § 18 grants the PTO general authority to 

“issue regulations establishing and implementing a 

transitional post-grant review proceeding for the review of 

the validity of covered business method patents.” AIA 

§ 18(a)(1). Third, AIA § 18 grants the PTO specific authority with respect to the “technological inventions” 

element of the covered business method patent definition:

To assist in implementing the transitional proceeding authorized by this subsection, the Director shall issue regulations for determining 

whether a patent is for a technological invention. 

AIA § 18(d)(2). 

A 

We need not decide whether Chevron deference applies because the only legal questions regarding application of AIA § 18 to the patents-at-issue were decided by 

Versata II. SightSound primarily contends that its patents are not CBM patents because to “relate to a financial product or service the invention as a whole must be 

directed to the management of money, banking, or investment or credit.” Appellant’s Br. 30. Versata II foreclosed this interpretation: “as a matter of statutory 

construction, the definition of ‘covered business method 

patent’ is not limited to products and services of only the 

financial industry, or to patents owned by or directly 

affecting activities of financial institutions.” 793 F. 3d at 

1325. We explained that the interpretation proposed by 

SightSound would “require reading limitations into the 

statute that are not there.” Id. Here, the Board concluded that a “financial activity” not directed to money management or banking can constitute a “financial product or 

Case: 15-1160 Document: 20-2 Page: 10 Filed: 12/15/2015
SIGHTSOUND TECHNOLOGIES, LLC v. APPLE INC. 11

service” within the meaning of the statute. J.A. 988; 

accord J.A. 556. Versata II directly supports this conclusion. 

SightSound also contends that its patents are not 

CBM patents because they claim technological inventions, 

since they “recite a computer to transmit, and a second 

memory to store, digital signals in a way that prior art 

hardware units did not.” Appellant’s Br. 35 n.9. Versata 

II again foreclosed this interpretation: “the presence of a 

general purpose computer to facilitate operations through 

uninventive steps” in a patent does not render it a technological invention within the meaning of the statute. Id. at 

1327. Claiming a computer without “specific, unconventional software, computer equipment, tools or processing 

capabilities” is insufficient. Id. Here, the Board concluded that a combination of known technologies does not 

amount to a “technological invention” within the meaning 

of the statute. J.A. 559–60, 993–94. Versata II also 

directly supports this conclusion. 

B 

We next address the Board’s determinations that the 

particular patents at issue are CBM patents. In this 

respect, we review the Board’s reasoning under the arbitrary and capricious standard and its factual determinations under the substantial evidence standard. “A 

reviewing court reviews an agency’s reasoning to determine whether it is ‘arbitrary’ or ‘capricious,’ or, if bound 

up with a record-based factual conclusion, to determine 

whether it is supported by ‘substantial evidence.’” Dickinson v. Zurko, 527 U.S. 150, 164 (1999). See also In re 

Gartside, 203 F.3d 1305, 1313–14 (Fed. Cir. 2000); Harry 

T. Edwards & Linda A. Elliot, Federal Standards of 

Review: Review of District Court Decisions and Agency 

Actions 167–169 (2007). In concluding that the ’573 and 

’440 patents claim a method used in a financial product or 

Case: 15-1160 Document: 20-2 Page: 11 Filed: 12/15/2015
12 SIGHTSOUND TECHNOLOGIES, LLC v. APPLE INC. 

service, the Board explained that claim 1 of both the ’573 

and ’440 patents is “directed to activities that are financial in nature, namely the electronic sale of digital audio.” 

J.A. 554, 988. The Board looked to the specifications, 

which repeatedly refer to electronic “sale,” “purchase,” 

and “money,” e.g., ’573 patent col. 1 ll. 9–14; col. 2 ll. 26–

30; col. 2 ll. 51–58, and claims 3 and 4 of the ’573 and ’440 

patents respectively, which recite “providing a credit card 

number of the second party . . . so the second party is 

charged money.” J.A. 555, 988. The Board concluded that 

“the electronic sale of something, including charging a fee 

to a party’s account, is a financial activity, and allowing 

such a sale amounts to providing a financial service.” J.A. 

988; accord J.A. 556. The Board’s reasoning is not arbitrary or capricious and its findings are supported by 

substantial evidence. 

The Board next explained that the ’573 and ’440 patents do not claim a “technological invention.” J.A. 560, 

994. It found that, while the claims of both the ’573 and 

’440 patents utilize technical components such as a “first 

memory,” “second memory,” “telecommunications line,” 

“transmitter,” and “receiver,” those components were all

“generic hardware devices known in the prior art.” J.A. 

559, 992. The Board also found that the combination of 

steps recited in the ’573 and ’440 patents did not amount 

to a technological feature that is novel and non-obvious 

over the prior art, because the steps would have been

obvious in light of the CompuSonics references. The 

Board explained that “while we agree with Patent Owner 

that the steps in claim 1 must be implemented using the 

recited hardware . . . that does not mean necessarily that 

the patent is for a technological invention because the 

components themselves were known in the art.” J.A. 560, 

993. Finding that the claims merely recited “known 

technologies to perform a method” and the “combination”

of those technologies would have been obvious, the Board 

Case: 15-1160 Document: 20-2 Page: 12 Filed: 12/15/2015
SIGHTSOUND TECHNOLOGIES, LLC v. APPLE INC. 13

concluded that the ’573 and ’440 patents did not claim a 

“technological invention.” J.A. 559–60, 993–94. The 

Board’s reasoning is not arbitrary or capricious and 

substantial evidence supports its findings here. 

III

The next question is whether the Board here properly 

construed the relevant claims. The Board applied the 

broadest reasonable interpretation standard, the standard adopted by the PTO for AIA post-grant proceedings 

and approved by this court. See Cuozzo, 793 F.3d at 1278. 

We also apply the Supreme Court’s decision in Teva 

Pharmaceuticals U.S.A., Inc. v. Sandoz, Inc., 135 S. Ct. 

831, 841 (2015). We review intrinsic evidence and the 

ultimate construction of the claim de novo. See id. We 

review underlying factual determinations concerning 

extrinsic evidence for substantial evidence. Id. 

Claims 1 and 4 of the ’573 patent and claims 1, 64, 

and 95 of the ’440 patent include the term “second 

memory,” as in “[a] method for transmitting a desired 

digital audio signal stored on a first memory of a first 

party to a second memory of a second party.” ’573 patent 

col. 6 ll. 4–24 (emphasis added). See also id. col. 6 ll. 37–

56; ’440 C1 patent col. 1 ll. 33–64, col. 8 ll. 14–44, col. 13 

ll. 14–51. The two patents have a common specification

and trace their origin to the same parent application. 

Where multiple patents “derive from the same parent 

application and share many common terms, we must 

interpret the claims consistently across all asserted 

patents.” NTP, Inc. v. Research In Motion, Ltd., 418 F.3d 

1282, 1293 (Fed. Cir. 2005). Here the claim term “second 

memory” should be interpreted the same in the ’573 and 

’440 patents. The Board construed “second memory” in 

both patents as meaning “a second storage space in a 

computer system or medium that is capable of retaining 

data or instructions.” J.A. 15, 82. The specification notes 

Case: 15-1160 Document: 20-2 Page: 13 Filed: 12/15/2015
14 SIGHTSOUND TECHNOLOGIES, LLC v. APPLE INC. 

some disadvantages of the “three basic mediums (hardware units) of music” then available: “records, tapes, and 

compact discs.” E.g., ’573 patent col. 1 ll. 17–20; ’440 

patent col. 1 ll. 24–26. Addressing the language in the 

specification, the Board appeared to conclude that “second 

memory” would not exclude those three media based on 

the specification, because the Board required a “clear 

disclaimer” in the specification to overcome the ordinary 

meaning and to exclude records, tapes, and CDs. J.A. 13, 

82. 

The Board’s analysis in this respect was incorrect. 

Claims “must be read in view of the specification, of which 

they are a part.” Phillips v. AWH Corp., 415 F.3d 1303, 

1315 (Fed. Cir. 2004) (en banc). We have explained that 

the specification is “the single best guide to the meaning 

of a disputed term and that the specification acts as a 

dictionary when it expressly defines terms used in the 

claims or when it defines terms by implication.” Id. at 

1321 (citation and internal quotation marks omitted) 

(emphasis added). Thus “a claim term may be clearly 

redefined without an explicit statement of redefinition.” 

Id. (quoting Bell Atl. Network Servs., 262 F.3d 1258, 1268 

(Fed. Cir. 2011)). We followed this approach in In re 

Abbott Diabetes Care Inc., 696 F.3d 1142 (Fed. Cir. 2012), 

where we held that the claim term “electrochemical 

sensor” excluded cables and wires based on critical language in the claims and specification, despite their having 

been no explicit disclaimer of cables or wires. See id. at 

1149–50. See also Edwards Lifesciences LLC v. Cook Inc., 

582 F.3d 1322, 1329 (Fed. Cir. 2009). The disadvantages 

identified by the specification of records, tapes, and CDs 

amount to implied disclaimer of those three media. See, 

e.g., ’573 patent col. 1 ll. 17–20; ’440 patent col. 1 ll. 24–

26. Thus we disagree with the Board’s interpretation 

insofar as it included records, tapes, and CDs in its construction of “second memory.” 

Case: 15-1160 Document: 20-2 Page: 14 Filed: 12/15/2015
SIGHTSOUND TECHNOLOGIES, LLC v. APPLE INC. 15

Nonetheless, the Board did not err in rejecting 

SightSound’s contention that floppy disks—a medium 

referenced in the CompuSonics prior art—should also be 

excluded. SightSound contends that the correct construction should exclude “all removable memory sharing the 

attributes of the prior art tapes and CDs distinguished in 

the specification and throughout prosecution,” i.e., that it 

should exclude floppy disks. Appellant’s Br. 55 (emphasis 

added). SightSound argues that the specification and 

prosecution histories make clear that a removable “second 

memory” would not fulfill the purpose of the invention to 

overcome the disadvantages of records, tapes, and CDs, 

and therefore the patents expressly disclaimed all removable memory from the scope of “second memory,” limiting 

it to a non-removable hard disk. 

The Board rejected this argument. The Board found, 

and we agree, that the specification’s description of the

disadvantages of records, tapes, and CDs does not “indicate that the identified disadvantages extend to all removable media or that the disadvantages occur 

specifically because the devices are removable. . . . To the 

contrary, some of the identified disadvantages, like limited capacity and playback capability, have nothing to do 

with whether the device can be removed.” J.A. 12, 81. 

The specification suggests that the patent’s objective was 

not to overcome the alleged disadvantages associated with 

the removable nature of the three hardware units, as 

SightSound suggests, but rather to overcome the disadvantages associated with distributing the three types of

units: “hardware units need to be physically [transferred]

from the manufacturing facility to the wholesale warehouse to [the] retail warehouse to the retail outlet, resulting in [lengthy], lag time between music creation and 

music marketing.” ’573 patent col. 1 ll. 39–43; ’440 patent 

col. 1 ll. 45–49. These disadvantages would not apply to

storing digitally purchased music on a floppy disk, for 

Case: 15-1160 Document: 20-2 Page: 15 Filed: 12/15/2015
16 SIGHTSOUND TECHNOLOGIES, LLC v. APPLE INC. 

example. See ’573 patent col. 1 ll. 39–49; ’440 patent col. 1 

ll. 45–54. Accordingly, SightSound’s reading of “secondary memory” to exclude all removable media is not supported by the specification. 

The Board also reviewed the prosecution history and 

found certain statements contradicting SightSound’s 

proposed limitation, including one made by the named 

inventor, Arthur R. Hair, that “[a]ny suitable recording 

apparatus controlled and in possession of the second party 

can be used to record the incoming digital signals.” J.A. 

14. What is more, the original claims expressly recited a 

“hard disk,” but that language was removed in favor of 

the broader term “second memory.” J.A. 15. The Board 

concluded that this “deliberate choice” to use the broader 

term “second memory” instead of the narrower “hard disk” 

strongly supports that the two are not coextensive. Id.; 

see Arlington Indus., Inc. v. Bridgeport Fittings, Inc., 632 

F.3d 1246, 1255 (Fed. Cir. 2011). 

The doctrine of claim differentiation additionally supports the Board’s construction that “second memory” is 

not limited to a non-removable hard disk. Claim 1 of the 

’440 patent recites a method for transferring desired 

digital video or audio signals by “forming a connection 

through telecommunications lines between a first memory 

of a first party and a second memory of a second party 

control unit of a second party.” ’440 C1 patent col. 1 

ll. 34–37. Claim 64 of the ’440 patent contains nearly 

identical language, but adds the following limitation: 

“forming a connection through telecommunications lines 

between a first memory of a first party and a second 

memory of a second party control unit of a second party, 

the second memory including a second party hard disk.” 

’440 C1 patent col. 8 ll. 16–18 (emphasis added). This 

distinction further underscores that “second memory” 

must be different from a non-removable “hard drive,” 

because otherwise the additional language of claim 64 

Case: 15-1160 Document: 20-2 Page: 16 Filed: 12/15/2015
SIGHTSOUND TECHNOLOGIES, LLC v. APPLE INC. 17

would be redundant. J.A. 79; see Arlington Indus., Inc., 

632 F.3d at 1254–55. The intrinsic and extrinsic evidence 

both support construing “second memory” as not limited 

to a non-removable hard disk. We see no error in the 

Board’s ultimate conclusion that the term “second 

memory” includes floppy disks. 

IV

The final question is whether the Board properly 

determined that the claims would have been obvious. We 

review the Board’s factual findings for substantial evidence and its legal conclusions de novo. Cuozzo, 793 F.3d 

at 1280 (citing In re Baxter Int’l, Inc., 678 F.3d 1357, 1361 

(Fed. Cir. 2012)). The ultimate determination of obviousness under § 103 is a question of law based on underlying 

factual findings. Id. (citing Graham v. John Deere Co., 

383 U.S. 1, 17–18 (1966)). What a reference teaches and 

the differences between the claimed invention and prior 

art are questions of fact which we review for substantial 

evidence. Id. 

The Board found that “Apple explains in detail in its 

Petition[s] how the CompuSonics publications teach every 

limitation” of the primary claims. J.A. 31, 54, 98. 

SightSound conceded that the CompuSonics publications 

“describe prior art elements working according to their 

established functions in a predictable manner,” but argued that a skilled artisan would have had no reason to 

combine those elements. J.A. 38, 105. The Board rejected 

this argument, finding that the references “expressly 

contemplate that it would be commercially desirable to 

have a system that allowed users to buy” and store music

and video electronically. J.A. 39, 55, 106. Finding that 

the reason to combine was manifested by the references 

themselves, see Brown & Williamson Tobacco Corp. v. 

Philip Morris Inc., 229 F.3d 1120, 1125 (Fed. Cir. 2000), 

the Board thus concluded that a person of ordinary skill 

Case: 15-1160 Document: 20-2 Page: 17 Filed: 12/15/2015
18 SIGHTSOUND TECHNOLOGIES, LLC v. APPLE INC. 

in the art would have had reason to combine the teachings of the CompuSonics references. 

As for claims 1, 2, 4, and 5 of the ’573 patent and 

claim 1 of the ’440 patent, SightSound argues that the 

Board erred in rejecting objective indicia of nonobviousness. On appeal, SightSound contends only that 

the Board lacked substantial evidence to conclude that 

there was no nexus between the success of the iTunes 

Music Store (“iTMS”) and the claimed invention. To 

establish a proper nexus between a claimed invention and 

the commercial success of a product, a patent owner must 

offer “proof that the sales were a direct result of the 

unique characteristics of the claimed invention—as opposed to other economic and commercial factors unrelated 

to the quality of the patented subject matter.” In re 

Huang, 100 F.3d 135, 140 (Fed. Cir. 1996). If a product 

both “embodies the claimed features” and is “coextensive” 

with the claims at issue, “a nexus is presumed.” Brown & 

Williamson, 229 F.3d at 1130. In other words, a nexus 

exists if the commercial success of a product is limited to 

the features of the claimed invention. But “if the commercial success is due to an unclaimed feature of the 

device” or “if the feature that creates the commercial 

success was known in the prior art, the success is not 

pertinent.” Ormco Corp., 463 F.3d 1299, 1312 (Fed. Cir. 

2006). Here the Board found that “iTMS embodies numerous inventions other than the general purchasing and 

downloading of music relied upon by SightSound.” J.A. 

46, 113. The Board further found that SightSound failed 

to offer proof that the commercial success of iTMS is the 

direct result of a unique characteristic of the claimed 

invention, noting that there was “persuasive evidence 

that the commercial success of the iTMS is due to features 

other than those of the claimed methods.” Id. at 47, 114. 

Specifically, the Board relied on the testimony of 

Lawrence Kenswil, former employee of the Universal 

Case: 15-1160 Document: 20-2 Page: 18 Filed: 12/15/2015
SIGHTSOUND TECHNOLOGIES, LLC v. APPLE INC. 19

Music Group and board member of the Recording Industry Association of America with over 25 years of experience in the music industry, who explained how content 

selection and the user interface were predominantely 

responsible for iTMS’ commercial success. SightSound 

objects to Mr. Kenswil’s reliance on certain other features, 

such as Genius and five-star and song-by-song popularity 

ratings, which were not available until 2008—long after 

the commercial success of iTMS had been established. 

Even putting these features to one side, the Board’s

findings are supported by substantial evidence because 

the two primary features posited as responsible for the 

commercial success of iTMS—content selection and user 

interface—were present from the beginning. The Board 

found that iTMS was successful largely because of its 

ability to acquire licensed content from the major record 

labels. SightSound admits that its inability to do the 

same was in part responsible for its failed business model. 

We see no error in the Board’s conclusion that claims 1, 2, 

4, and 5 of the ’573 patent and claim 1 of the ’440 patent 

would have been obvious. 

SightSound also argues that the Board erred in finding that claims 64 and 95 of the ’440 patent would have 

been obvious. Claims 64 and 95 of the ’440 patent recite 

similar limitations to claim 1, but expressly require that 

the digital video or audio signals be stored in a “second 

party hard disk.” SightSound contends that it would not

have been obvious to employ a hard disk to store purchased and received digital signals. SightSound acknowledges that CompuSonics “professional” devices taught 

using a hard disk for a similar purpose, but argues that 

because CompuSonics’ “consumer” devices used only

floppy disks, a skilled artisan would not have sought a 

hard disk for the patented purposes. Appellant’s Br. 66–

67. 

Case: 15-1160 Document: 20-2 Page: 19 Filed: 12/15/2015
20 SIGHTSOUND TECHNOLOGIES, LLC v. APPLE INC. 

We have explained that that the “mere disclosure of 

more than one alternative” does not amount to teaching 

away from one of the alternatives where the reference 

does not “criticize, discredit, or otherwise discourage the 

solution claimed.” In re Fulton, 391 F.3d 1195, 1201 (Fed. 

Cir. 2004). The Board here found that the publications 

“do not criticize the use of a hard disk for storing or 

receiving signals,” nor do they indicate that such a use 

“would have been undesirable.” J.A. 125. To the contrary, the Board found that at least one publication disclosed 

a “benefit to using a hard disk rather than other types of 

storage,” namely, greater storage capacity. Id. Additionally, the Board found that it would have been obvious to 

utilize a hard disk to store purchased and received digital 

signals because doing so would only require a hard disk to 

function for its known purpose of storing digital data: “we 

do not see sufficient reason why using a hard disk rather 

than a floppy disk would have achieved an unexpected 

result or would have been uniquely challenging or otherwise beyond the level of an ordinarily skilled artisan.” 

J.A. 124. The Board’s findings are supported by substantial evidence. The same secondary considerations of nonobviousness apply to claims 64 and 95 of the ’440 patent 

as discussed above, and the Board did not err in concluding that claims 64 and 95 of the ’440 patent would have 

been obvious. 

For the foregoing reasons, we affirm the Board’s 

decision. 

AFFIRMED

COSTS

Costs to appellee. 

Case: 15-1160 Document: 20-2 Page: 20 Filed: 12/15/2015