Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-15-01091/USCOURTS-ca13-15-01091-0/pdf.json

Parties Involved:
Hewlett-Packard Company
Appellee
MCM Portfolio LLC
Appellant

Document Text:

United States Court of Appeals 

for the Federal Circuit ______________________ 

MCM PORTFOLIO LLC,

Appellant

v.

HEWLETT-PACKARD COMPANY,

Appellee

______________________ 

2015-1091

______________________ 

Appeal from the United States Patent and Trademark 

Office, Patent Trial and Appeal Board, in No. IPR2013-

00217.

______________________ 

Decided: December 2, 2015

______________________ 

EDWARD PETER HELLER III, Alliacense Limited LLC, 

San Jose, CA, argued for appellant. Also represented by 

SUSAN ANHALT, Fountainhead IP, San Jose, CA.

 MARCIA H. SUNDEEN, Goodwin Procter LLP, Washington, DC, argued for appellee. Also represented by 

JENNIFER A. ALBERT; ROBERT LOUIS HAILS, JR., ADEEL 

HAROON, T. CY WALKER, Kenyon & Kenyon LLP, Washington, DC; ROSE CORDERO PREY, New York, NY.

 WILLIAM ERNEST HAVEMANN, Appellate Staff, Civil 

Division, United States Department of Justice, WashingCase: 15-1091 Document: 80-2 Page: 1 Filed: 12/02/2015
2 MCM PORTFOLIO LLC v. HEWLETT-PACKARD COMPANY

ton, DC, argued for intervenor Michelle K. Lee. Also 

represented by MARK R. FREEMAN, BENJAMIN C. MIZER;

NATHAN K. KELLEY, SCOTT WEIDENFELLER, Office of the 

Solicitor, United States Patent and Trademark Office, 

Alexandria, VA.

 ROBERT GREENSPOON, Flachsbart & Greenspoon, LLC, 

Chicago, IL, for amicus curiae J. Carl Cooper.

______________________ 

Before PROST, Chief Judge, DYK, and HUGHES, Circuit 

Judges.

DYK, Circuit Judge. 

MCM Portfolio LLC (“MCM”) owns U.S. Patent No. 

7,162,549 (“the ’549 patent”), which claims methods and 

systems for coupling a computer system with a flash 

memory storage system. Hewlett-Packard Co. (“HP”) filed 

a petition with the Patent and Trademark Office (“PTO”) 

requesting inter partes review of claims 7, 11, 19, and 21 

of the ’549 patent. The Patent Trial and Appeal Board 

(“Board”) determined that HP’s petition demonstrated a 

reasonable likelihood that the challenged claims of the 

’549 patent were invalid as obvious and instituted an 

inter partes review. Thereafter, the Board issued a final 

decision holding that the challenged claims would have 

been obvious. MCM appeals. 

We hold that we lack jurisdiction to review the 

Board’s decision that the institution of inter partes review 

was not barred by 35 U.S.C. § 315(b), but we conclude 

that we can review the question of whether the final 

decision violates Article III and the Seventh Amendment. 

On the merits, we reject MCM’s argument that inter 

partes review violates Article III and the Seventh 

Amendment, and we affirm the Board’s decision that

claims 7, 11, 19, and 21 of the ’549 patent would have 

been obvious over the prior art.

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MCM PORTFOLIO LLC v. HEWLETT-PACKARD COMPANY 3

BACKGROUND

The ’549 patent, entitled “Multimode Controller for 

Intelligent and ‘Dumb’ Flash Cards,” issued on January 9, 

2007, and claims a priority date of July 6, 2000. The 

patent claims methods and systems for coupling flash 

memory cards to a computer utilizing a “controller chip.” 

’549 patent at Abstract. In general, a controller is a device 

that performs the physical transfer of data between a 

computer and a peripheral device, such as a monitor, 

keyboard, or, as here, a flash memory card. See Allan 

Freedman, The Computer Glossary 75–76 (9th ed. 2001). 

The primary purpose of the controller here is to 

achieve error correction. See ’549 patent col. 28, ll. 37–54. 

Error correction tests for accurate data transmission in 

order to “present a flawless medium to the system, in a 

specific format, so the computer [] sees an error-free 

storage medium [], rather than a flash [memory] that may 

have certain defects.” Id. at col. 28, ll. 37–41; see also

Freedman, supra, at 135. As described in the patent, 

removable flash memory cards are commonly used in 

digital cameras to store image or video files and enable 

the convenient transfer of those files to a computer using 

a card reader. ’549 patent at col. 1, ll. 50–56. At the time 

the ’549 patent was filed, flash memory cards were made 

by various companies and came in many shapes and 

formats, such as CompactFlash, Secure Digital, and 

Memory Stick. Id. at col. 2, ll. 28–55. The specification 

describes a need for a flash memory card reader that can 

be used with flash memory cards of several different 

formats, and, relevant here, a controller on the card 

reader “that can work with multiple types of flash 

memory cards that have controllers, and also with flash 

memory cards that do not have controllers.” Id. at col. 3, l. 

53 to col. 4, l. 22. 

The patent claims improvements to flash memory 

card readers, including a controller chip that can deterCase: 15-1091 Document: 80-2 Page: 3 Filed: 12/02/2015
4 MCM PORTFOLIO LLC v. HEWLETT-PACKARD COMPANY

mine whether the flash memory card has an onboard 

controller for error correction, and if it does not, using 

firmware to manage error correction for the flash memory 

card.

Claims 7 and 11 are illustrative:

7. A method comprising: 

using a controller chip to interface a flash storage 

system with or without a controller to a computing device, the controller chip comprising a 

flash adapter, wherein the flash storage system comprises a flash section and at least a 

medium ID; 

determining whether the flash storage system includes a controller for error correction; and 

in an event where the flash storage system does 

not have a controller for error correction, using 

firmware in the flash adapter to perform operations to manage error correction of the flash 

section, including bad block mapping of the 

flash section in the flash storage system that is 

coupled to the flash adapter section.

11. A system comprising: 

a computing device; 

a flash storage system comprising a flash section 

and at least a portion of a medium ID; and 

a controller chip coupled between the computing 

device and the flash storage system to interface the flash storage system to the computing 

device, the controller chip comprising an interface mechanism capable of receiving flash 

storage systems with controller and controllerless flash storage systems, a detector to determine whether the flash storage system 

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MCM PORTFOLIO LLC v. HEWLETT-PACKARD COMPANY 5

includes a controller for error correction and a 

flash adapter which comprises firmware to 

perform, in an event where the flash storage 

system does not have a controller for error correction, operations to manage error correction 

of the flash section, including bad block mapping of the flash section in the flash storage 

system that is coupled to the flash adapter section.

Id. at col. 30, ll. 23–37, 48–65. Claims 19 and 21, which 

depend from claims 7 and 11, respectively, further require

that the flash adapter comprise a plurality of interfaces

capable of receiving a plurality of flash storage systems. 

Id. at col. 32, ll. 1–3, 7–9. 

On March 27, 2013, HP petitioned for inter partes 

review of claims 7, 11, 19, and 21 of the ’549 patent under 

35 U.S.C. § 311, asserting that those claims were anticipated by, or obvious over, five prior art references. MCM 

filed a preliminary response on June 27, 2013. MCM 

argued, inter alia, that institution of inter partes review 

was barred under 35 U.S.C. § 315(b). MCM argued that 

HP was a privy of Pandigital, Inc. (“Pandigital”), because 

HP was reselling allegedly infringing digital picture 

frames manufactured by Pandigital. Because MCM had 

filed suit for infringement of the ’549 patent against 

Pandigital more than one year before HP filed the petition 

for inter partes review, MCM argued that § 315(b) barred 

inter partes review. 

On September 10, 2013, the Board instituted inter 

partes review with respect to claims 7, 11, 19, and 21 of 

the ’549 patent. The Board found that there was a reasonable likelihood that HP would prevail with respect to 

at least one of the challenged claims based on obviousness 

over two prior art references: U.S. Patent No. 6,199,122 

(“Kobayashi”) and WO 98/03915 (“Kikuchi”). The Board 

rejected MCM’s argument that it could not institute inter 

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6 MCM PORTFOLIO LLC v. HEWLETT-PACKARD COMPANY

partes review under 35 U.S.C. § 315(b), holding that the 

fact that Pandigital and HP were successive owners of the 

same allegedly infringing property was not sufficient to 

confer privity for the purposes of § 315(b). 

MCM filed a patent owner response on December 9, 

2013, and HP filed the petitioner’s reply to the patent 

owner response on March 10, 2014. After conducting a 

trial hearing, the Board issued its final written decision

on August 6, 2014. The Board rejected MCM’s argument 

that inter partes review proceedings violate Article III 

and the Seventh Amendment. On the merits, the Board 

concluded that HP had shown by a preponderance of 

evidence that claims 7, 11, 19, and 21 would have been 

obvious over a combination of the Kobayashi and Kikuchi 

prior art references. MCM appealed. The PTO intervened. 

We have jurisdiction to review the Board’s final decision 

under 28 U.S.C. § 1295(a)(4)(A). We review constitutional, 

statutory, and legal issues de novo, and the Board’s 

factual findings for substantial evidence. Giorgio Foods, 

Inc. v. United States, 785 F.3d 595, 600 (Fed. Cir. 2015);

In re Morsa, 713 F.3d 104, 109 (Fed. Cir. 2013).

DISCUSSION

I 

We first address MCM’s contention that the Board 

improperly instituted inter partes review. 35 U.S.C. 

§ 315(b) provides that “[a]n inter partes review may not 

be instituted if the petition requesting the proceeding is 

filed more than 1 year after the date on which the petitioner . . . or privy of the petitioner is served with a complaint alleging infringement of the patent.” MCM asserts 

that it filed a complaint alleging infringement of the ’549 

patent on Pandigital more than one year prior to HP’s 

petition, and that, contrary to the Board’s determination, 

Pandigital is a privy of HP. MCM argues on appeal that 

the Board therefore erred in instituting inter partes 

review. 

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The law is clear that there is “no appeal” from the decision to institute inter partes review. 35 U.S.C. § 314(d). 

Section 314(d) provides that “[t]he determination . . . 

whether to institute an inter partes review under this 

section shall be final and nonappealable.” Id. We have 

held that a patent owner cannot appeal the Board’s 

decision to institute inter partes review, even after a final 

decision is issued. In re Cuozzo Speed Techs., 793 F.3d 

1268, 1273–74 (Fed. Cir. 2015). Specifically, in Achates 

Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652, 658

(Fed. Cir. 2015), we held that “§ 314(d) prohibits this 

court from reviewing the Board’s determination to initiate 

inter partes review proceedings based on its assessment 

of the time-bar of § 315(b).” Achates controls here. Review 

of whether the PTO properly instituted inter partes 

review is forbidden by § 314(d).

II

MCM next argues that inter partes review is unconstitutional because any action revoking a patent must be 

tried in an Article III court with the protections of the 

Seventh Amendment. Here there is no bar to review, 

under § 314(d), of MCM’s claim that the Board lacked 

authority to issue a final decision. Jurisdiction exists 

because MCM challenges only the final decision of the 

Board, not its decision to institute proceedings. 

In support of its constitutional argument, MCM urges

that the Supreme Court’s decision in McCormick Harvesting Machine Co. v. Aultman (“McCormick II”), 169 U.S. 

606 (1898), bars the PTO from invalidating patents in 

inter partes review proceedings and that only an Article 

III court can exercise that authority. 

In McCormick II, the owner of U.S. Patent No. 

159,506, a patent on automatic twine binders for harvesting machines, brought suit for infringement of claims 3, 

10, 11, 25, and 26 against two accused infringers. See

McCormick Harvesting Mach. Co. v. Aultman (“McCorCase: 15-1091 Document: 80-2 Page: 7 Filed: 12/02/2015
8 MCM PORTFOLIO LLC v. HEWLETT-PACKARD COMPANY

mick I”), 69 F. 371, 388 (6th Cir. 1895). The defendants 

pointed out that the patentee had submitted to the Patent 

Office an application for reissue including both claims in 

the original patent and newly added claims. McCormick 

II, 169 U.S. at 607. The examiner rejected five of the 

original claims (the same as those asserted in the infringement suit) as invalid, but allowed other claims, both 

old and new. Id. at 607–08. The patent owner subsequently withdrew the application for reissue, and the original 

patent was returned by the Patent Office. Id. The trial 

court held that there was no infringement liability because the amended claims had been found invalid by the 

Patent Office. Id. at 607. On appeal the Sixth Circuit 

certified the question as to the effect of the Patent Office 

action. McCormick I, 69 F. at 401.1

The Supreme Court held that the original patent 

claims were not invalid because the reissue statute provided that the “surrender [of the original patent] shall 

take effect upon the issue of the amended patent,” Rev. 

Stat. § 4916 (1878), and that “until the amended patent 

shall have been issued the original stand[s] precisely as if 

a reissue had never been applied for . . . and must be 

returned to the owner upon demand. . . . If the patentee 

abandoned his application for reissue, he is entitled to a 

return of his original patent precisely as it stood when 

1 The certified question asked: “If a patentee applies for a reissue of his patent, and includes among the 

claims under the new application the same claims as 

those which were included in the old patent, and the 

examiner of the patent office rejects some of such claims, 

and allows others, both old and new, does the patentee, by 

abandoning his application for a reissue, and by procuring 

a return of his original patent, hold his patent invalidated 

as to those claims which the examiner rejected?” McCormick I, 69 F. at 401. 

 

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such application was made.” McCormick II, 169 U.S. at 

610 (citation omitted). Because the patentee had never 

surrendered the original patent, the Patent Office’s rejection of the original claims was a nullity. Only the patentee’s decision to surrender the original patent and to 

accept the reissued patent without the rejected claims 

would have eliminated the claims found to be invalid. 

Because that did not occur, “[t]he only authority competent to set a patent aside, or to annul it, or to correct it for 

any reason whatever, is vested in the courts of the United 

States, and not in the department which issued the patent.” Id. at 609. Without statutory authorization, an 

“attempt [by the Commissioner of Patents] to cancel a 

patent upon an application for reissue when the first 

patent is considered invalid by the examiner . . . would be 

to deprive the applicant of his property without due 

process of law, and would be in fact an invasion of the 

judicial branch of the government by the executive.” Id. at 

612; see also United States v. Am. Bell Tel. Co., 128 U.S. 

315, 364–65 (1888) (noting lack of statutory authority for 

the Patent Office to cancel patents). 

McCormick II did not address Article III and certainly 

did not forbid Congress from granting the PTO the authority to correct or cancel an issued patent. Congress has 

since done so by creating the ex parte reexamination 

proceeding in 1980; the inter partes reexamination procedure in 1999; and inter partes review, post-grant review, 

and Covered Business Method patent review in 2011. See

Bayh-Dole Act, Pub. L. No. 96-517, 94 Stat. 3015 (1980) 

(codified as amended at 35 U.S.C. §§ 302–07); Intellectual 

Property and Communications Omnibus Reform Act of 

1999, Pub. L. No. 106-113, 113 Stat. 1501 (codified as 

amended at 35 U.S.C. § 311 et seq. (1999)); Leahy–Smith 

America Invents Act (“AIA”), Pub. L. No. 112-29, § 6(a), 

125 Stat. 284, 299–304 (2011) (codified at 35 U.S.C. 

§§ 311 et seq. (2013)). Supreme Court precedent demonCase: 15-1091 Document: 80-2 Page: 9 Filed: 12/02/2015
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strates that these statutes, and particularly the inter 

partes review provisions, do not violate Article III. 

As early as in Murray’s Lessee v. Hoboken Land & 

Improvement Co., 59 U.S. 272, 284 (1855), the Court 

recognized that “there are matters, involving public 

rights, which may be presented in such form that the 

judicial power is capable of acting on them . . . but which 

congress may or may not bring within the cognizance of 

the courts of the United States, as it may deem proper.”

Id. at 281; see also Crowell v. Benson, 285 U.S. 22, 50 

(1932). That is, Congress has the power to delegate disputes over public rights to non-Article III courts. The 

public rights exception was first applied to disputes 

between the government and private parties, as in Murray’s Lessee. More recently, the Court has extended the 

doctrine to disputes between private parties concerning 

public rights. In Block v. Hirsh, 256 U.S. 135, 158 (1921), 

the Court upheld the constitutionality of a District of 

Columbia statute authorizing an administrative agency to 

determine fair rents for holdover tenants as provided by 

the statute. In Ex parte Bakelite Corp., 279 U.S. 438, 460–

61 (1929), the Court held that an adversarial proceeding 

by a company against a competitor for unfair importation 

practices under federal law did not need to be heard in an 

Article III court. 

In Thomas v. Union Carbide Agricultural Products 

Co., 473 U.S. 568, 571 (1985), the Court upheld the binding arbitration scheme of the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”). Under FIFRA, 

pesticide manufacturers seeking to register a pesticide 

were required to submit health, safety, and environmental data to the EPA. Id. at 571–72. That data could be

utilized by the EPA in approving registrations by other 

manufacturers, but compensation for its use was owed to 

the earlier registrant. Id. The amount could be determined by agency arbitration instead of in an Article III 

court. Id. at 573–74. Thomas held that this statutory 

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MCM PORTFOLIO LLC v. HEWLETT-PACKARD COMPANY 11

scheme does not violate Article III, noting that “[m]any 

matters that involve the application of legal standards to 

facts and affect private interests are routinely decided by 

agency action with limited or no review by Article III 

courts.” Id. at 583. It followed that “Congress, acting for a 

valid legislative purpose to its constitutional powers 

under Article I, may create a seemingly ‘private’ right 

that is so closely integrated into a public regulatory 

scheme as to be a matter appropriate for agency resolution with limited involvement by the Article III judiciary.” 

Id. at 593–94. So too the Court later upheld the constitutionality of adversary proceedings in the Commodity 

Futures Trading Commission (“CFTC”), for customers of 

commodity brokers to seek reparations from their brokers 

for violation of the Commodity Exchange Act (“CEA”) or 

agency regulations. Commodity Futures Trading Comm’n 

v. Schor, 478 U.S. 833, 854 (1986). 

More recently, the Court expounded on the public 

rights doctrine in Stern v. Marshall, 131 S. Ct. 2594 

(2011). Stern explained that the Court continued to apply 

the public rights doctrine to disputes between private 

parties in “cases in which the claim at issue derives from 

a federal regulatory scheme, or in which resolution of the 

claim by an expert government agency is deemed essential to a limited regulatory objective within the agency’s 

authority. . . . [W]hat makes a right ‘public’ rather than 

private is that the right is integrally related to particular 

federal government action.” Id. at 2613. 

In Stern, however, the Court held that, under Article 

III, a bankruptcy court could not enter judgment on a 

state law counterclaim sounding in tort, because state law 

counterclaims “[do] not flow from a federal statutory 

scheme,” id. at 2614, “[are] not completely dependent 

upon adjudication of a claim created by federal law,” id.

(quotation marks omitted), and do not involve “a situation 

in which Congress devised an expert and inexpensive 

method for dealing with a class of questions of fact which 

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are particularly suited to examination and determination 

by an administrative agency specially assigned to that 

task,” id. at 2615 (quotation marks omitted). 

Patent reexamination and inter partes review are indistinguishable from the agency adjudications held permissable in Thomas and Schor, and wholly 

distinguishable from the review of state law claims at 

issue in Stern. Here, as in Thomas and Schor, the agency’s sole authority is to decide issues of federal law. The 

patent right “derives from an extensive federal regulatory 

scheme,” Stern, 131 S. Ct. at 2613, and is created by 

federal law. Congress created the PTO, “an executive 

agency with specific authority and expertise” in the 

patent law, Kappos v. Hyatt, 132 S. Ct. 1690, 1696 (2012), 

and saw powerful reasons to utilize the expertise of the 

PTO for an important public purpose—to correct the 

agency’s own errors in issuing patents in the first place. 

Reacting to “a growing sense that questionable patents 

are too easily obtained and are too difficult to challenge,” 

Congress sought to “provid[e] a more efficient system for 

challenging patents that should not have issued” and to 

“establish a more efficient and streamlined patent system 

that will improve patent quality and limit unnecessary 

and counterproductive litigation costs.” H.R. Rep. No. 

112–98, at 39–40. There is notably no suggestion that 

Congress lacked authority to delegate to the PTO the 

power to issue patents in the first instance. It would be 

odd indeed if Congress could not authorize the PTO to 

reconsider its own decisions.

The Board’s involvement is thus a quintessential situation in which the agency is adjudicating issues under 

federal law, “Congress [having] devised an ‘expert and 

inexpensive method for dealing with a class of questions 

of fact which are particularly suited to examination and 

determination by an administrative agency specially 

assigned to that task.’” Stern, 131 S. Ct. at 2615 (quoting 

Crowell, 285 U.S. at 46). The teachings of the Supreme 

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Court in Thomas, Schor, and Stern compel the conclusion 

that assigning review of patent validity to the PTO is 

consistent with Article III. 

Our conclusion that the inter partes review provisions 

do not violate Article III also finds support in our own 

precedent. We had occasion to consider the constitutionality, under Article III, of the ex parte reexamination statute in Patlex Corp. v. Mossinghoff, 758 F.2d 594 (Fed. Cir. 

1985), modified on other grounds on reh’g, 771 F.2d 480 

(Fed. Cir. 1985), and upheld the statute. We followed 

Supreme Court precedent that affirmed “the constitutionality of legislative courts and administrative agencies 

created by Congress to adjudicate cases involving ‘public 

rights.’” Id. at 604 (quotation marks omitted). We found 

that “the grant of a patent is primarily a public concern. 

Validity is often brought into question in disputes between private parties, but the threshold question usually 

is whether the PTO, under the authority assigned to it by 

Congress, properly granted the patent. At issue is a right 

that can only be conferred by the government.” Patlex, 

758 F.3d at 604 (citing Crowell, 285 U.S. at 50). Patlex

also distinguished McCormick II. We held that McCormick II did not “forbid[] Congress [from] authoriz[ing] 

reexamination to correct governmental mistakes, even 

against the will of the patent owner. A defectively examined and therefore erroneously granted patent must yield 

to the reasonable Congressional purpose of facilitating the 

correction of governmental mistakes.” Id. at 604. 

We again considered an Article III challenge to ex 

parte reexamination in Joy Technologies v. Manbeck, 959 

F.2d 226 (Fed. Cir. 1992). We concluded that “Patlex is 

controlling authority and has not been impaired by . . . 

subsequent Supreme Court cases,” id. at 229, and again 

held that “the issuance of a valid patent is primarily a 

public concern and involves a ‘right that can only be 

conferred by the government’ even though validity often is 

brought into question in disputes between private parCase: 15-1091 Document: 80-2 Page: 13 Filed: 12/02/2015
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ties,” id. at 228 (quoting and citing Patlex, 758 F.3d at 

604). 

We are bound by prior Federal Circuit precedent “unless relieved of that obligation by an en banc order of the 

court or a decision of the Supreme Court.” Deckers Corp. 

v. United States, 752 F.3d 949, 959 (Fed. Cir. 2014). We 

see no basis to distinguish the reexamination proceeding

in Patlex from inter partes review. Indeed, Congress 

viewed inter partes review as “amend[ing] ex parte and 

inter partes reexamination,” and as a descendant of an 

experiment began “[n]early 30 years ago, [when] Congress 

created the administrative ‘reexamination’ process, 

through which the USPTO could review the validity of 

already-issued patents on the request of either the patent 

holder or a third party, in the expectation that it would 

serve as an effective and efficient alternative to often 

costly and protracted district court litigation.” H.R. Rep. 

No. 112–98, at 45. Supreme Court authority after Patlex

and Joy Technologies (discussed above) casts no doubt on

those cases. Rather, it confirms their correctness. Governing Supreme Court and Federal Circuit authority require

rejection of MCM’s argument that inter partes review

violates Article III. 

III

MCM argues as well that it has a right to a trial by 

jury under the Seventh Amendment, which is not satisfied by the system of inter partes review. The Seventh 

Amendment provides that, “[i]n Suits at common law, 

where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved . . . .” U.S. 

Const. amend. VII. The Supreme Court has stated that 

“the Seventh Amendment is generally inapplicable in 

administrative proceedings, where jury trials would be 

incompatible with the whole concept of administrative 

adjudication and would substantially interfere with [the 

agency’s] role in the statutory scheme.” Curtis v. Loether, 

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415 U.S. 189, 194 (1974). Curtis upheld “congressional 

power to entrust enforcement of statutory rights to an 

administrative process or specialized court of equity free 

from the structures of the Seventh Amendment.” Id. at 

195. Similarly, the Court held in Atlas Roofing Co., Inc. v. 

Occupational Safety & Health Review Commission, 430 

U.S. 442, 455 (1977), that “when Congress creates new 

statutory ‘public rights,’ it may assign their adjudication 

to an administrative agency with which a jury trial would 

be incompatible, without violating the Seventh Amendment’s injunction that jury trial is to be ‘preserved’ in 

‘suits at common law.’ Congress is not required by the 

Seventh Amendment to choke the already crowded federal 

courts with new types of litigation or prevented from 

committing some new types of litigation to administrative 

agencies with special competence in the relevant field.” 

See also Tull v. United States, 481 U.S. 412, 418 n.4 

(1987) (“[T]he Seventh Amendment is not applicable to 

administrative proceedings.”). Here, when Congress 

created the new statutory right to inter partes review, it 

did not violate the Seventh Amendment by assigning its 

adjudication to an administrative agency.2 

Under Supreme Court decisions such as Curtis and 

Atlas Roofing, there is no basis for MCM’s contention that 

it has a right to a jury trial. Indeed, we have previously 

2 Markman v. Westview Instruments, Inc., 517 U.S. 

370, 377 (1996), in stating that patent infringement 

actions in district court are subject to the Seventh 

Amendment, does not suggest that there is a jury trial 

right in an administrative adjudication of patent validity. 

See also Ex parte Wood & Brundage, 22 U.S. 603 (1824).

Nor does In re Lockwood, 50 F.3d 966 (Fed. Cir.), vacated 

sub nom. Am. Airlines, Inc. v. Lockwood, 515 U.S. 1182 

(1995), imply that there is a right to a jury trial in an 

agency proceeding. 

 

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addressed the jury trial argument in the context of a 

challenge to ex parte reexamination proceedings in Patlex

and Joy Technologies. In Patlex, in addition to rejecting 

the argument that ex parte reexamination violated Article 

III, we also held that ex parte reexamination does not 

violate the Seventh Amendment because “the Constitution does not require that we strike down statutes . . . that 

invest administrative agencies with regulatory functions 

previously filled by judge and jury.” 758 F.2d at 604–05.

Seven years later, the patent owner in Joy Technologies argued that the intervening Supreme Court decision

in Granfinanciera v. Nordberg, 492 U.S. 33 (1989), cast 

doubt on the validity of Patlex. Joy Techs., 959 F.2d at 

228. In Granfinanciera, the Court held that a bankruptcy 

trustee was constitutionally entitled to a jury trial in 

bankruptcy court on an action to recover a fraudulent 

conveyance, as such suits are matters of private rights. 

492 U.S. at 55–56. The Court noted, however, that Congress “may assign [the] adjudication [of statutory public 

rights] to an administrative agency . . . without violating 

the Seventh Amendment[].” Id. at 51 (quotation marks 

omitted) (quoting and citing Atlas Roofing, 430 U.S. at 

455). We determined that Granfinanciera “affirms the 

basic underpinning of Patlex, viz., that cases involving 

‘public rights’ may constitutionally be adjudicated by 

legislative courts and administrative agencies without 

implicating the Seventh Amendment right to a jury trial.” 

Joy Techs., 959 F.2d at 228. 

Because patent rights are public rights, and their validity susceptible to review by an administrative agency, 

the Seventh Amendment poses no barrier to agency 

adjudication without a jury. 

IV 

We turn finally to the Board’s holding on the question 

of obviousness. We review the Board’s legal conclusions de 

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MCM PORTFOLIO LLC v. HEWLETT-PACKARD COMPANY 17

novo and its factual findings for substantial evidence. 

Randall Mfg. v. Rea, 733 F.3d 1355, 1362 (Fed. Cir. 2013).

HP contends that a combination of two prior art references renders the challenged claims of the ’549 patent 

obvious. Those two references are Kobayashi and Kikuchi. 

The Board found that Kobayashi discloses “a memory 

device for a computer with a converter that converts serial 

commands of the computer to parallel commands that are 

then used to control a storage medium (which can be a 

flash-memory card).” J.A. 5. One embodiment of Kobayashi depicts a flash memory card reader that can be used 

to read flash memory cards both with and without controllers. A sensor determines whether the flash memory 

card inserted includes a controller. If a controller is detected, a selector routes the data from the flash memory 

card to the computer; but if no controller is detected, the 

selector connects the flash memory card with an ATA 

controller, a controller based on the ATA interface standard that can read and write data on the memory card. 

Kobayashi does not disclose a controller that performs 

error correction. 

Kikuchi describes a flash memory card with a onechip ATA controller. See J.A. 7–9; Kikuchi, fig. 1. The 

Kikuchi ATA controller includes an error controller that 

“performs error control for read and write operations.” See

J.A. 8; Kikuchi, fig. 2. Dr. Banerjee, HP’s expert, testified

that the Kikuchi ATA controller could be placed in an 

external adapter, similar to the Kobayashi flash memory 

card reader. Dr. Banerjee also testified that “it would 

have been obvious to one of ordinary skill in the art . . . to 

incorporate Kikuchi’s error correction and bad block 

mapping in ATA controller techniques into the ATA 

controller 124 of Kobayashi . . . [and] would be motivated 

[to do so] in order to ‘reliably retain stored data.’” J.A. 

442.

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18 MCM PORTFOLIO LLC v. HEWLETT-PACKARD COMPANY

MCM argues that Kobayashi does not disclose combining different functionalities into a single chip as required by the ’549 patent claims. MCM asserts that it 

would not have been obvious, when combining the teachings of Kobayashi and Kikuchi, to integrate their functionality into a single chip. The Board found that the 

“evidence supports a determination that one of ordinary 

skill in the art would have had both the knowledge and 

the inclination to place the functionality taught by Kobayashi and Kikuchi on a single chip.” J.A. 10. Notably, 

MCM conceded at the oral hearing before the Board that 

it was “common practice” to put multiple functions into a 

single chip. J.A. 10. 

MCM now reframes its argument on appeal and argues that combining the two references cannot yield a 

single controller chip because Kobayashi requires that its 

controller be able to be placed on either the reader or the 

card.3 However, we have consistently held, as the Board 

3

 MCM also argues on appeal that Kobayashi relies 

on a physical/optical detector to determine whether there 

is a controller on the flash card and that this form of 

detection cannot be incorporated into a single chip. However, MCM candidly admits that it only raised this argument in a few scattered sentences at the oral hearing 

below. We have found that “if a party fails to raise an 

argument before the trial court, or presents only a skeletal or undeveloped argument to the trial court, we may 

deem that argument waived on appeal.” Fresenius USA, 

Inc. v. Baxter Int’l, Inc., 582 F.3d 1288, 1296 (Fed. Cir. 

2009). We deem MCM’s argument waived. 

MCM additionally argues that the ATA controllers in 

Kobayashi and Kikuchi only work with flash cards without their own ATA controllers, and not with flash cards 

that have ATA controllers. MCM provides no citation to 

 

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MCM PORTFOLIO LLC v. HEWLETT-PACKARD COMPANY 19

recognized, that “[t]he test for obviousness is not whether 

the features of a secondary reference may be bodily incorporated into the structure of the primary reference; nor is 

it that the claimed invention must be expressly suggested 

in any one or all of the references. Rather, the test is what 

the combined teachings of the references would have 

suggested to those of ordinary skill in the art.” In re 

Keller, 642 F.2d 413, 425 (CCPA 1981); see also In re 

Mouttet, 686 F.3d 1322, 1333 (Fed. Cir. 2012). 

Even if physical incorporation of the Kikuchi ATA 

controller into the Kobayashi ATA controller would have 

conflicted with Kobayashi’s instruction that its ATA 

controller could be arranged on the memory card or on the 

reader, the Board did not err in determining that the 

claimed subject matter—a single controller chip with 

error correction functionality on a flash card reader—

would have been obvious to a person of ordinary skill.

MCM did not argue that there were any secondary considerations of nonobviousness that weighed against a 

finding of obviousness. 

The Board determined that HP had shown “by a preponderance of the evidence[] that the challenged claims 

would have been obvious over the combination of Kobayashi and Kikuchi” and “a preponderance of the evidence 

demonstrates that a person of ordinary skill in the art 

would have combined the Kobayashi and Kikuchi references.” J.A. 9, 12. 

We find that the Board’s factual findings are supported by substantial evidence. We affirm the Board’s conclusions that it would have been obvious to combine 

Kobayashi and Kikuchi, and that the challenged claims of 

this proposition. This argument was not made below and 

was waived.

 

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20 MCM PORTFOLIO LLC v. HEWLETT-PACKARD COMPANY

the ’549 patent would have been obvious over a combination of the prior art references. 

AFFIRMED

COSTS

Costs to appellee. 

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