NOTE: This disposition is nonprecedential.

 

United States Court of Appeals 

for the Federal Circuit ______________________ 

NICHIA CORPORATION,

Appellant

v.

DOCUMENT SECURITY SYSTEMS, INC.,

Cross-Appellant

______________________ 

2020-2261, 2020-2287

______________________ 

Appeals from the United States Patent and Trademark 

Office, Patent Trial and Appeal Board in No. IPR2018-

01165.

______________________ 

Decided: April 26, 2022

______________________ 

THOMAS R. MAKIN, Shearman & Sterling LLP, New 

York, NY, argued for appellant. Also represented by DAVID 

JEFFREY COOPERBERG, ERIC SEBASTIAN LUCAS; MATT 

BERKOWITZ, PATRICK ROBERT COLSHER, Menlo Park, CA.

 PAUL ANTHONY KROEGER, Russ August & Kabat, Los 

Angeles, CA, argued for cross-appellant. Also represented 

by BRIAN DAVID LEDAHL, SHANI M. WILLIAMS. 

 ______________________ 

Case: 20-2261 Document: 46 Page: 1 Filed: 04/26/2022
2 NICHIA CORPORATION v. DOCUMENT SECURITY SYSTEMS

Before DYK, REYNA, and STOLL, Circuit Judges.

REYNA, Circuit Judge. 

Document Security Systems owns U.S. Patent 

No. 7,524,087, directed to light emitting diode display panels. Nichia Corporation petitioned for inter partes review 

of claims 1–19. The Patent Trial and Appeal Board determined Nichia proved claims 1 and 6–8 unpatentable but 

did not prove claims 2–5 and 9–19 unpatentable. Both parties appeal. We affirm the Board’s findings as to all claims 

except claims 15–19. We reverse on claim 15 and remand 

for further proceedings regarding dependent claims 16–19. 

BACKGROUND

U.S. Patent No. 7,524,087 (“the ’087 patent”) is owned 

by Document Security Systems, Inc. (“Document Security”) 

and describes an optical device with a light emitting diode 

(“LED”) die. ’087 patent, abstract. The device can be used 

in a display panel as one of numerous LEDs and consists of 

an LED die mounted to a plastic housing. In one embodiment, LEDs are mounted in a housing and encapsulated 

for protection from the environment. ’087 patent, 1:50–52. 

Figure 1 below shows the top perspective and figure 2 

shows the bottom perspective of an exemplary optical device. 

’087 patent, figs. 1 & 2. 

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NICHIA CORPORATION v. DOCUMENT SECURITY SYSTEMS 3

In relation to figures 1 and 2, the device contains reflector housing 20 with a sidewall 26 extending between a 

top 22 and bottom 24. ’087 patent at 2:12–17. A first 

pocket, or cavity, 30 is formed on the top of the housing 22 

and a second pocket 34 is formed on the bottom 24. Id. The 

first pocket 30 contains light sources 12, 14, and 16 

mounted on an electronically conductive lead frame 32. 

’087 patent at 2:17–21. Each lead 36, 40, 42, 44, 46, and 50

is positioned at a lead receiving compartment (e.g., 52) 

formed in the exterior sidewall 26 of the reflector housing 

20. ’087 patent at 2:64–67. The first pocket 30 may be 

filled with encapsulant to cover and protect the LED dies, 

which may be a substantially transparent silicone material. ’087 patent at 3:26–30. Independent claim 1 is representative. 

1. An optical device comprising:

a lead frame with a plurality of leads;

a reflector housing formed around the lead frame, 

the reflector housing having a first end face and a 

second end face and a peripheral sidewall extending between the first end face and the second end 

face, the reflector housing having a first pocket 

with a pocket opening in the first end face and a 

second pocket with a pocket opening in the second 

end face;

at least one LED die mounted in the first pocket of 

the reflector housing;

a light transmitting encapsulant disposed in the 

first pocket and encapsulating the at least one LED 

die; and

wherein a plurality of lead receiving compartments 

are formed in the peripheral sidewall of the reflector housing.

’087 patent at 6:23–37.

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4 NICHIA CORPORATION v. DOCUMENT SECURITY SYSTEMS

Nichia Corporation (“Nichia”) petitioned for inter 

partes review of all 19 claims of the ’087 patent, and the 

Patent Trial and Appeal Board (“Board”) instituted review. 

Nichia Corp. v. Document Security Systems, Inc., IPR2018-

01165, 2019 WL 6719173 at *1 (P.T.A.B. Dec. 10, 2019)

(“Decision”). Three prior art references from Nichia’s petition are relevant to this appeal.

The first prior art reference is U.S. Patent Application 

Publication No. US 2004/0135156 A1 (“Takenaka”), which 

is titled “Semiconductor Light Emitting Device and Fabrication Method Thereof.” Takenaka illustrates a semiconductor LED including an LED chip, a frame upon which the 

chip is mounted, a second electronically connected lead 

frame, and a resin portion surrounding the chip and securing the lead frame. Decision at *3, *6–7. A metal body sits 

between the lead frames secured by a resin portion. Id. 

Second, Japanese Patent Application Publication A

No. 2001 118868 (“Kyowa”) is titled “Surface mounted 

parts and their manufacturing method” and illustrates a 

surface-mounting device that stores light-emitting parts 

such as light-emitting chips that are mounted to portions 

of the device by die bonding. Decision at *3, *7. The chips 

are connected to a common area, the outer lead frame has 

outer leads continuing to the common area, and the device 

is enclosed in a resin package. Id. 

And third, U.S. Patent No. 6,653,661 B2 (“Okazaki”) 

describes “a chip-type LED utilized as a light source for 

various display panels or a backlight source for liquid crystal display devices.” Decision at *3, *31. The device includes a tubular vessel with an upper and lower opening 

with an LED positioned between the openings. Id. 

The Board found Nichia demonstrated by a preponderance of the evidence that claims 1 and 6–8 are unpatentable as obvious over Takenaka in combination with Kyowa. 

Decision at *15, *20–21. The Board found a motivation to 

combine Takenaka and Kyowa. According to the Board, a 

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NICHIA CORPORATION v. DOCUMENT SECURITY SYSTEMS 5

person of ordinary skill in the art would have been motivated to combine the lead receiving compartments of 

Kyowa with the sidewall of Takenaka’s LED housing to 

protect the leads from external forces. Id. at *13–14. The 

Board found Takenaka teaches most of claim 1 and Kyowa 

teaches the remaining limitation requiring multiple leadreceiving compartments in the reflector housing sidewall, 

thus rendering claim 1 and dependent claims 6–8 unpatentable as obvious. Id. at *13–15. 

The Board further determined Nichia did not demonstrate that claims 2–5 and 9–19 are unpatentable based on

any asserted grounds. Decision at *20, *22–23, *30, *37. 

The Board determined claims 1 and 6–14 are not unpatentable in view of Okazaki and Kyowa because Okazaki discloses a tubular vessel rather than the claimed two pockets. 

Id. at *33–36. The Board’s findings were based on its determination that Document Security’s relevant testimony 

was more credible than Nichia’s. Id. at *34. The Board 

determined the relevant art is LED displays and that 

Mr. Credelle, Document Security’s expert, is qualified in 

this field because he has an M.S. degree in Electrical Engineering, more than 40 years of experience, and received 

recognition in the field. Id. at *32–33. The Board relied on 

Mr. Credelle’s testimony that a person of ordinary skill 

would understand Okazaki to describe a tubular vessel rather than two pockets. Id. at *33–36. The Board explained 

Okazaki does not refer to the interior of the tubular vessel 

as having separate spaces, and the pinching in of the tubular vessel serves purposes requiring a through-hole rather 

than pockets. Id.

Additionally, the Board determined Nichia did not 

demonstrate claims 9–19 are unpatentable over Takenaka 

in view of Kyowa. Decision at *21–23. The Board found 

that Nichia did not identify any disclosure in Takenaka regarding the “plastic phrase” in claim 9. Id. Claim 9 begins: 

“A display comprising a plurality of plastic leaded chip carrier LEDs, the plastic leaded chip carrier LEDs each 

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6 NICHIA CORPORATION v. DOCUMENT SECURITY SYSTEMS

comprising . . . .” ’087 patent at 6:55–57 (emphasis added). 

The underlined portion above is referred to as the “plastic 

phrase.” The Board determined that the preamble for 

claim 9 is “[a] display comprising” and accordingly, that the 

plastic phrase is limiting. Decision at *21–22. The Board 

found Nichia did not meet its burden on claim 9 and dependent claims 10–14 because it failed to point to any disclosure regarding plastic in Takenaka. Id.

In the Final Written Decision, the Board found that 

Nichia also did not identify any disclosure in Takenaka 

that teaches or suggests the “electrical connection limitation” in independent claim 15. Decision at *22–23. Claim 

15 is essentially the same as claim 1 with the additional 

limitation that “at least one LED die” is “electronically connected to said plurality of electrically conductive leads.” 

’087 patent at 7:20–22. The Board found Nichia did not 

identify any disclosure in Takenaka for this limitation and 

thus did not meet its burden for claim 15 and dependent 

claims 16–19. Decision at *22–23.

Nichia appeals the Board’s determination that it had 

not proven claims 1 and 6–14 unpatentable based on Okazaki in view of Kyowa or proven claims 9–19 unpatentable

based on Takenaka in view of Kyowa. Appellant’s Br. 22. 

Document Security cross-appeals the Board’s finding that 

claims 1 and 6–8 are obvious. Appellee’s Br. 24. We have

jurisdiction pursuant to 28 U.S.C. § 1295(a)(4)(A).

STANDARD OF REVIEW

We review decisions by the Board in accordance with 

the Administrative Procedure Act, 5 U.S.C. § 706. See 

Dickinson v. Zurko, 527 U.S. 150 (1999). We review the 

Board’s legal conclusions de novo and its factual findings 

for substantial evidence. See ACCO Brands Corp. v. Fellowes, Inc., 813 F.3d 1361, 1365 (Fed. Cir. 2016). Substantial evidence is “such relevant evidence as a reasonable 

mind might accept as adequate to support a conclusion.” In 

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NICHIA CORPORATION v. DOCUMENT SECURITY SYSTEMS 7

re Gartside, 203 F.3d 1305, 1312 (Fed. Cir. 2000) (citations 

omitted). 

The Board’s ultimate obviousness determination is a 

legal conclusion reviewed de novo. See In re Cuozzo Speed 

Techs., LLC, 793 F.3d 1268, 1280 (Fed. Cir. 2015). The 

Board’s factual findings underlying its obviousness determination are reviewed for substantial evidence. Id. (citing 

Graham v. John Deere Co., 383 U.S. 1, 17–18 (1966)). “The 

scope and content of the prior art, as well as whether the 

prior art teaches away from the claimed invention, are determinations of fact.” In re Mouttet, 686 F.3d 1322, 1330 

(Fed. Cir. 2012).

DISCUSSION

I. Nichia’s Appeal 

Nichia appeals two issues. First, that the Board erred 

in its finding that Nichia failed to show that claims 1 and 

6–14 of the ’087 patent were unpatentable over Okazaki in 

view of Kyowa. Second, that the Board erred in its finding

that Nichia did not prove that claims 9–19 of the ’087 patent were unpatentable as obvious over Takenaka in view 

of Kyowa. Appellant’s Br. 24–26, 48–49. 

A 

Nichia’s argument regarding claims 1 and 6–14 is directed to the Board’s finding that Okazaki does not disclose 

a device with two pockets. Appellant’s Br. 27–48. The 

claims require a reflector housing having two pockets. Decision at *33–34. The parties disagreed whether the tubular vessel bisected by lead frames described in Okazaki 

taught or suggested the required two pockets. Id. 

Document Security’s expert, Mr. Credelle, explained 

that a person of ordinary skill in the art would understand 

the tubular vessel as a “through-hole” or tube, rather than 

two pockets. Id. Nichia’s expert, Dr. Shealy, testified that 

a person of ordinary skill would have understood the lead 

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8 NICHIA CORPORATION v. DOCUMENT SECURITY SYSTEMS

frames to bisect the tubular vessel into separate spaces, 

i.e., pockets. Id. The Board weighed the expert testimonies 

and found Mr. Credelle’s testimony more credible. 

The Board explained that Mr. Credelle’s testimony 

“more closely reflect[ed] Okazaki’s disclosure.” Decision 

at *33. Mr. Credelle’s testimony aligns with Okazaki’s descriptions of the tubular vessel as being a single space. Id.

at *33–35. Additionally, the Board credited Mr. Credelle’s 

testimony that the pinching in of the tubular vessel is for 

the purpose of reflecting light upwards rather than creating two pockets. Id. at *35. Based on Mr. Credelle’s testimony, the Board determined that a person of ordinary skill 

in the art would not understand Okazaki to teach or suggest a reflector housing having two pockets. Id. at *36.

The Board’s determination is a question of fact that we 

review for substantial evidence. See Cuozzo, 793 F.3d at 

1280. In its Final Written Decision, the Board pointed to

Mr. Credelle’s testimony that Okazaki describes the tubular vessel as a single space. The Board cited to the descriptions and figures from Okazaki that support Mr. Credelle’s 

testimony and the Board’s determination. In particular, 

the Board explained that figures 3 and 4 do not describe 

two separate spaces as Nichia contended, but rather described the tubular vessel as a singular tube. Decision 

at *33–36. We conclude that the expert testimony and disclosures from Okazaki provide substantial evidence supporting the Board’s decision. We also reject Nichia’s 

alternative request to find that Okazaki’s single, tubular 

vessel satisfies claim 9’s single cavity limitation. The 

Board correctly determined that Nichia never proposed

that Okazaki disclosed anything other than two pockets or 

cavities. 

Thus, we affirm the Board’s finding that Okazaki does 

not teach the required two pockets and that claims 1 and 

6–14 of the ’087 patent were not shown to be unpatentable.

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NICHIA CORPORATION v. DOCUMENT SECURITY SYSTEMS 9

B 

Nichia argues that the Board erred in finding that 

Nichia failed to show that claims 9–19 are unpatentable 

over Takenaka in view of Kyowa. Appellant’s Br. 49–65. 

Nichia makes three arguments. 

First, Nichia argues that the Board erred in its construction of claim 9. Appellant’s Br. 49–52. The Board determined that the preamble for claim 9 is “[a] display 

comprising” and accordingly, that the plastic phrase—“a 

plurality of plastic leaded chip carrier LEDs, the plastic 

leaded chip carrier LEDs each comprising”—is limiting. 

Decision at *21–22. According to Nichia, the plastic phrase 

should be construed as a preamble, not a limitation. Appellant’s Br. 49–52. 

Claim construction is an issue of law that we review de 

novo. See Cuozzo, 793 F.3d at 1280. A preamble is “a general description of all the elements or steps of the claimed 

combination . . . .” 37 C.F.R. § 1.75(e)(1). “Claims are usually structured with a preamble, a ‘transition phrase,’ and 

the elements or steps that are necessary to the right to exclude.” CIAS, Inc. v. Alliance Gaming Corp., 504 F.3d 

1356, 1360 (Fed. Cir. 2007) (citation omitted). The phrase 

“[a] display comprising” is a general description followed by 

the transition word “comprising” and then the required elements. Accordingly, we affirm the Board’s determination 

that “[a] display comprising” is the preamble to claim 9 and 

that “a plurality of plastic leaded chip carrier LEDs, the 

plastic leaded chip carrier LEDs each comprising” is a limitation.

Second, Nichia argues that statements from Takenaka 

addressing plastic were included in its claim charts for 

claim 1, and the Board abused its discretion by not applying this information to claim 9. Appellant’s Br. 52–65. 

In inter partes review proceedings, the patent challenger bears the burden and must “show with particularity 

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10 NICHIA CORPORATION v. DOCUMENT SECURITY SYSTEMS

why the patent it challenges is unpatentable.” Harmonic 

Inc. v. Avid Tech., Inc., 815 F.3d 1356, 1363 (Fed. Cir. 

2016). The patent challenger must provide an understandable explanation of the element-by-element specifics of its 

unpatentability contentions, identifying supporting disclosures from the asserted prior art. See 35 U.S.C. § 312(a)(3). 

This burden combined with the structure of Board proceedings means “in some cases, a challenge can fail even if different evidence and arguments might have led to success.” 

Ariosa Diagnostics v. Verinata Health. Inc., 805 F.3d 1359, 

1367 (Fed. Cir. 2015). “[A]buse of discretion is found if the 

decision: (1) is clearly unreasonable, arbitrary, or fanciful; 

(2) is based on an erroneous conclusion of law; (3) rests on 

clearly erroneous fact finding; or (4) involves a record that 

contains no evidence on which the Board could rationally 

base its decision.” Bilstad v. Wakalopulos, 386 F.3d 1116, 

1121 (Fed. Cir. 2004) (citations omitted).

Nichia failed to establish anywhere in its petition or 

expert declaration that Takenaka disclosed “plastic.” Decision at *21–22; J.A. 173. Nichia’s claim charts disclose 

solely the use of resin, and Nichia makes no argument comparing resin and plastic. J.A. 160–61; 173. Nichia failed 

to demonstrate with particularity that Takenaka discloses 

“plastic leaded chip carrier LEDs.” We therefore affirm the 

Board’s conclusion that Nichia did not meet its burden on 

claim 9 and dependent claims 10–14. 

Third, Nichia argues that the Board abused its discretion in finding that Nichia did not prove claim 15 unpatentable based on Takenaka in view of Kyowa. Appellant’s 

Br. 60–65. Claim 15 is essentially the same as claim 1 with 

an additional limitation—“at least one LED die . . . electronically connected to said plurality of electrically conductive leads.” Compare ’087 patent at 6:23–38, with id. at 

7:15–8:7. The Board found Takenaka and Kyowa render 

claim 1 obvious. Decision at *12. Further, the Board found 

that Nichia did not identify where Takenaka teaches an 

electrical connection as required by claim 15 and thus, did 

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NICHIA CORPORATION v. DOCUMENT SECURITY SYSTEMS 11

not prove claim 15 unpatentable based on Takenaka in 

view of Kyowa. Id. at *22–23. 

Nichia argues that the Board abused its discretion by 

ignoring Nichia’s reference to its claim chart for claim 1

and finding that Nichia did not prove claim 15 unpatentable as obvious due to the combination of Takenaka and 

Kyowa. Appellant’s Br. 60–65. Nichia contends its discussion of claim 15 references the discussion of claim 1, which 

addresses the electrical connection. Id. 

Here, it was Nichia’s burden to demonstrate Takenaka 

disclosed the required electrical connection. See, e.g., Harmonic, 815 F.3d at 1363; Ariosa Diagnostics, 805 F.3d at 

1367. Unlike with the plastic phrase, Nichia’s petition specifically stated that Takenaka disclosed an electrical connection. In discussing claim 15, the petition cites to Section 

VI.D.1., which discusses grounds for unpatentability of 

claim 1 based on Takenaka. J.A. 177–79. The petition 

quotes Takenaka’s description of how the leads are connected. “LED chip 4 is mounted on first lead frame 1 with 

Ag paste 7 therebetween. Bonding wire 5 is attached to 

second lead frame 2. Accordingly, second lead frame 2 is 

mechanically and electrically connected to LED chip 4.” 

J.A. 163–64 (emphasis added). This shows Takenaka discloses an LED die electrically connected to a conductive 

lead. Thus, Nichia demonstrated with particularity that 

this claim limitation is disclosed in the prior art. The 

Board’s conclusion to the contrary demonstrates a clearly 

erroneous fact finding qualifying as an abuse of discretion. 

Because we find that Nichia proved the electrical limitation is disclosed in Takenaka, we reverse the Board’s decision regarding claim 15 and remand to the Board to 

address dependent claims 16–19.

II. Document Security’s Cross-Appeal

On cross-appeal, Document Security challenges the 

Board’s finding that claims 1 and 6–8 of the ’087 patent are 

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12 NICHIA CORPORATION v. DOCUMENT SECURITY SYSTEMS

obvious over Takenaka in view of Kyowa. Appellee’s 

Br. 57. Document Security presents two issues for appeal. 

First, Document Security argues that Takenaka meets all 

the limitations of the asserted patent’s disclosed method to 

protect the leads from external forces. And as a result, 

there was no need to combine Takenaka with Kyowa. Appellee’s Br. 61–66. 

The Board determined that a person of ordinary skill 

would have been motivated to combine Takenaka with 

Kyowa with a reasonable expectation of success. Decision 

at *13–15. Motivation to combine is a finding of fact. See 

Mouttet, 686 F.3d at 1330. We review the Board’s factual 

findings for substantial evidence. See ACCO Brands, 813 

F.3d at 1365. 

In its Final Written Decision, the Board relied on the

testimony of Dr. Shealy, Nichia’s expert. Decision 

at *13–14. Dr. Shealy opined that a person of ordinary 

skill in the art would have been motivated to add the compartments described in Kyowa to the LED housing sidewall 

of Takenaka to protect the leads from external forces. Id. 

In his testimony, Dr. Shealy pointed to Kyowa’s discussion 

that sidewall compartments protect the leads from external forces. Id. The Board thus found that Kyowa teaches 

or suggests improving the LED assembly of Takenaka by 

protecting the leads from external forces. Id. at *15. 

Dr. Shealy’s expert testimony and Kyowa’s disclosure provide “relevant evidence as a reasonable mind” would find 

supports the Board’s conclusion. Gartside, 203 F.3d at 

1312. Thus, we conclude that the Board’s finding that a 

person of ordinary skill in the art would be motivated to 

combine Takenaka and Kyowa is supported by substantial 

evidence. 

Second, Document Security argues that even if a person of ordinary skill in the art were motivated to combine 

Kyowa and Takenaka, the Board erred because Kyowa 

does not teach a required element of the claims at issue. 

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NICHIA CORPORATION v. DOCUMENT SECURITY SYSTEMS 13

The Board found claim 1 unpatentable as obvious because

Takenaka teaches most of claim 1, including the reflector 

housing, and Kyowa teaches the remaining limitation requiring multiple lead-receiving compartments in a sidewall. Decision at *13–15. According to Document Security, 

Kyowa does not disclose or suggest reflector housing and 

therefore cannot teach the lead-receiving compartments

limitation. Appellee’s Br. 58–61. 

What the prior art teaches is a finding of fact we review 

for substantial evidence. ACCO Brands, 813 F.3d at 1365. 

The Board explained that Kyowa teaches the device is enclosed in a resin package, which is an LED housing, and 

the sidewall contains multiple compartments in the housing. Decision at *11–12. Further, the Board reasoned that 

Takenaka teaches a housing formed of “white resin having 

high reflectance,” which corresponds to the required reflector housing. Id. at *8. The Board pointed to the disclosures 

in Takenaka that teach the reflector housing and the disclosures in Kyowa that teach the multiple compartments 

within the housing. Id. at *7–15. We conclude that the 

Board’s finding that Takenaka and Kyowa teach all the 

limitations of claim 1 is supported by substantial evidence. 

Accordingly, we affirm. 

CONCLUSION

We affirm the Board’s decision with respect to all 

claims except claims 15–19. We reverse with respect to

claim 15 and remand for findings on dependent claims 

16–19. We have considered both parties’ remaining arguments and find them unpersuasive.

AFFIRMED-IN-PART, REVERSED-IN-PART AND 

REMANDED

COSTS

No Costs.

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