Tq Delta, LLC v. Cisco Systems, Inc. ( 2019 )

United States Court of Appeals
for the Federal Circuit
______________________
TQ DELTA, LLC,
Appellant
v.
CISCO SYSTEMS, INC., DISH NETWORK LLC,
COMCAST CABLE COMMUNICATIONS, LLC, COX
COMMUNICATIONS, INC., TIME WARNER CABLE
ENTERPRISES LLC, VERIZON SERVICES CORP.,
ARRIS GROUP, INC.,
Appellees
______________________
2018-1766, 2018-1767
______________________
Appeals from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in Nos. IPR2016-
01020, IPR2016-01021, IPR2017-00254, IPR2017-00255,
IPR2017-00417, IPR2017-00418.
______________________
Decided: November 22, 2019
______________________
PETER J. MCANDREWS, McAndrews, Held & Malloy,
Ltd., Chicago, IL, argued for appellant. Also represented
by ANDREW B. KARP, JAMES P. MURPHY.
THEODORE M. FOSTER, Haynes & Boone, LLP, Dallas,
TX, argued for all appellees. Appellee Cisco Systems, Inc.
also represented by DAVID L. MCCOMBS, DEBRA JANECE
2 TQ DELTA, LLC v. CISCO SYS., INC.
MCCOMAS.
HEIDI LYN KEEFE, Cooley LLP, Palo Alto, CA, for appel-
lee DISH Network LLC. Also represented by JENNIFER
VOLK-FORTIER, Reston, VA.
JOHN MATTHEW BAIRD, Duane Morris LLP, Washing-
ton, DC, for appellees Comcast Cable Communications,
LLC, Cox Communications, Inc., Time Warner Cable En-
terprises LLC, Verizon Services Corp., ARRIS Group, Inc.
Also represented by CHRISTOPHER JOSEPH TYSON.
______________________
Before REYNA, HUGHES, and STOLL, Circuit Judges.
Opinion for the court filed by Circuit Judge STOLL.
Circuit Judge HUGHES dissents without opinion.
STOLL, Circuit Judge.
In a pair of inter partes review proceedings, the Patent
Trial and Appeal Board invalidated all claims of two re-
lated patents. TQ Delta, LLC, the patent owner, appeals
the Board’s determination that all claims of the challenged
patents would have been obvious in view of the prior art
asserted by Cisco Systems, Inc., and the other appellees
(collectively, “Cisco”). TQ Delta also raises several other
challenges to the IPR proceedings relating to the admissi-
bility of evidence, claim construction, and due process. Be-
cause fact findings underlying the Board’s obviousness
determinations are not supported by substantial evidence,
we reverse the Board’s decisions on that ground.
BACKGROUND
This is a consolidated appeal from the final written de-
cisions in a pair of IPRs, IPR2016-01020 and IPR2016-
TQ DELTA, LLC v. CISCO SYS., INC. 3
01021, 1 in which the Board invalidated all claims of two
related patents, U.S. Patent Nos. 9,014,243 and 8,718,158,
respectively. The Board held each claim unpatentable as
obvious in view of various prior art combinations that in-
clude the two references at issue on appeal, U.S. Patent
Nos. 6,144,696 (Shively) and 6,625,219 (Stopler).
I
The challenged patents relate to certain improvements
to electronic communications systems that lower the peak-
to-average power ratio (PAR) of the transmitted signals.
PAR is the ratio of the maximum value of a parameter
(e.g., voltage) to the time-averaged value of that parame-
ter. Lowering the PAR of a communications system is de-
sirable because it reduces power consumption and the
likelihood of transmission errors.
The challenged patents specifically address a PAR
problem that arises in the transmission of digital data us-
ing multicarrier communications systems, such as digital
subscriber line (DSL) systems. See, e.g., ’243 patent col. 3
ll. 25–37. 2 In a multicarrier communications system, mul-
tiple bits are transmitted simultaneously across a series of
narrow frequency bands called “carriers” in an approach
known as “Discrete Multitone Modulation” (DMT). See id.
at col. 1 ll. 33–47. Each carrier is independently modulated
in accordance with its assigned bit, and the carriers are
1 IPR2017-00254 and IPR2017-00418 were joined in
the IPR2016-01020 proceeding. IPR2017-00255 and
IPR2017-00417 were joined in the IPR2016-01021 proceed-
ing.
2 For brevity, we cite only to the specification of the
’243 patent, which is substantively the same as that of the
’158 patent. Unless otherwise noted, all citations to the
’243 patent reference the analogous passage in the ’158 pa-
tent.
4 TQ DELTA, LLC v. CISCO SYS., INC.
then combined into a single multicarrier signal for trans-
mission of the data. See id.
PAR problems can arise when the carriers are com-
bined into a single signal for transmission of the data. Typ-
ically, the transmitted bits are randomly distributed, so
they tend to counterbalance each other when summed into
the multicarrier transmission signal. But when many of
the bits have the same value (i.e., mostly 0 or mostly 1) at
or near the same time, they can sum to create multicarrier
waveforms with a high amplitude. This situation can arise
when multiple carriers are each used to transmit the same
data in parallel. As a general matter, high amplitude
waves are problematic because the equipment required to
deal with them is costlier. But an extremely high ampli-
tude wave also presents a risk of “clipping,” a phenomenon
in which the peak of the transmitted signal is truncated at
the maximum range of the equipment, leading to transmis-
sion failure and potential data loss. In the context of DMT
systems, when one reduces the probability of these prob-
lematic “clipping” events, one is said to have reduced the
PAR of the signals transmitted by the system.
The inventors purport to reduce PAR in DMT systems
using a new technique. The crux of the invention is to
“scramble” the phases of the parallel carriers such that the
carriers will not peak at the same time, even if the trans-
mitted bits have mostly the same value. See id. at col. 2
l. 34–col. 3 l. 3. The phase of each carrier is shifted in ac-
cordance with a value that is determined independently of
the bit value carried by that carrier. Id. at col. 2 ll. 36–43.
The resulting transmission signal has a “substantially
minimized” PAR. Id. at col. 4 ll. 35–38. The challenged
patents disclose a variety of scrambling algorithms that
shift the phase of each carrier by some independent
amount, thereby reducing PAR. See id. at col. 6 l. 58–col. 8
l. 22, col. 9 l. 53–col. 10 l. 44 (Phase Shifting Examples #1–
4).
TQ DELTA, LLC v. CISCO SYS., INC. 5
II
Shively is the primary prior art reference asserted by
Cisco in the IPRs. Shively is directed to an improvement
to the use of DMT by DSL modems—the same field of tech-
nology at issue in the challenged patents. Shively col. 1
ll. 5–8. But Shively addresses a different problem: how to
increase transmission capacity by efficiently allocating bits
across the various carriers in long-loop systems. See id.
at Abstract. In relevant part, Shively increases data
throughput by utilizing carriers in combination that would
each be inadequate to transmit data independently. See id.
at col. 3 l. 54–col. 4 l. 34. Specifically, Shively spreads the
transmission of a single bit across several carriers at re-
duced power levels, and then “despread[s]” the transmis-
sion on the receiving end to overcome what would
otherwise be unacceptable noise levels in each carrier. Id.
at col. 3 ll. 58–67. Shively does not discuss PAR or clipping.
The parties’ experts debated the extent to which PAR and
clipping would change under Shively’s system.
Stopler is the secondary prior art reference asserted by
Cisco in the IPRs. Like the challenged patents and Shively,
Stopler is directed to digital data communication systems,
including DMT. See Stopler col. 1 ll. 7–11, 42–64. But
Stopler is focused on a different problem: improving the ef-
ficiency of transmission by mitigating noise and other in-
terference. See id. at Abstract. Specifically, Stopler
discloses a “diagonalization” scheme for interleaving the
assignment of bits across the various carriers over time,
which mitigates the effect of interference on any particular
data stream by spreading its impact across different carri-
ers. See id. at col. 5 ll. 10–43, col. 8 ll. 28–53. Like Shively,
Stopler never mentions PAR or clipping. Toward the end
of its disclosure, Stopler briefly suggests applying a phase
scrambling sequence “to randomize the overhead channel
symbols” that it sends alongside the transmitted data. Id.
at col. 12 ll. 24–26. In order “to simplify implementation,”
6 TQ DELTA, LLC v. CISCO SYS., INC.
however, Stopler also suggests applying its phase scram-
bler to all of the transmitted data. Id. at col. 12 ll. 26–28.
III
TQ Delta sued a number of telecommunications com-
panies, including the appellees, for infringement of the ’158
and ’243 patents (among others) in parallel lawsuits in the
U.S. District Court for the District of Delaware. In
May 2016, Cisco filed two IPR petitions challenging all
claims of the ’158 and ’243 patents, which the other appel-
lees joined after institution. Every ground in the petitions
was based on the combination of Shively and Stopler, ei-
ther standalone or in combination with other prior art ref-
erences not at issue on appeal.
In October 2017, the Board issued its final written de-
cisions. The Board’s decisions invalidated all of the chal-
lenged claims as obvious in view of Shively and Stopler,
along with other references not at issue on appeal. In doing
so, the Board accepted Cisco’s positions as its own findings
and conclusions. The Board also relied almost exclusively
on the testimony of Cisco’s expert, Dr. Tellado, to rebut
TQ Delta’s arguments that a person of ordinary skill would
not have been motivated to combine Shively and Stopler.
In the final written decisions, the Board also rejected
TQ Delta’s proffered claim construction and dismissed as
moot TQ Delta’s motion to exclude certain portions of
Cisco’s expert testimony. TQ Delta appeals, and we have
jurisdiction under 28 U.S.C. § 1295(a)(4)(A).
DISCUSSION
On appeal, TQ Delta raises a variety of issues, includ-
ing the admissibility of evidence, the Board’s claim con-
struction, the Board’s obviousness determinations, and
certain due process concerns. We focus on the Board’s ob-
viousness determinations, and in particular, its factfinding
regarding motivation to combine. We hold that the Board’s
factfinding is based on conclusory testimony and is
TQ DELTA, LLC v. CISCO SYS., INC. 7
therefore unsupported by substantial evidence. Because
the Board’s obviousness determinations are not supported
by substantial evidence, we reverse the Board’s decisions
on that ground.
I
A patent is invalid as obvious “if the differences be-
tween the subject matter sought to be patented and the
prior art are such that the subject matter as a whole would
have been obvious at the time the invention was made to a
person having ordinary skill in the art to which said subject
matter pertains.” 35 U.S.C. § 103(a) (2012). 3 Obviousness
is a question of law based on multiple underlying factual
determinations, including “whether a [person of ordinary
skill in the art] would have been motivated to combine the
prior art to achieve the claimed invention and whether
there would have been a reasonable expectation of success
in doing so.” In re Warsaw Orthopedic, Inc., 832 F.3d 1327,
1333 (Fed. Cir. 2016) (quoting DyStar Textilfarben GmbH
& Co. Deutschland KG v. C.H. Patrick Co., 464 F.3d 1356,
1360 (Fed. Cir. 2006)). Identifying a motivation to combine
the prior art is important because “inventions in most, if
not all, instances rely on building blocks long since uncov-
ered, and claimed discoveries almost of necessity will be
combinations of what, in some sense, is already known.”
KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 418–19 (2007).
We review the Board’s obviousness determination de novo
and its underlying factual determinations for substantial
evidence. Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064,
3 Because the ’158 and ’243 patents do not contain
any claim with an effective filing date on or after March 16,
2013, the version of 35 U.S.C. § 103 that applies here is the
one preceding the changes made by the America Invents
Act. See Leahy-Smith America Invents Act, Pub. L.
No. 112-29 § 3(n), 125 Stat. 284, 293 (2011).
8 TQ DELTA, LLC v. CISCO SYS., INC.
1073 (Fed. Cir. 2015) (citing Randall Mfg. v. Rea, 733 F.3d
1355, 1362 (Fed. Cir. 2013)).
Our review of the Board is rooted not only in the law of
obviousness, but also in basic principles of administrative
law. We review the Board’s decisions under the standards
set forth in § 706 of the Administrative Procedure Act.
Yeda Research v. Mylan Pharm. Inc., 906 F.3d 1031, 1040
(Fed. Cir. 2018) (first citing Novartis AG v. Torrent Pharm.
Ltd., 853 F.3d 1316, 1323 (Fed. Cir. 2017); then citing
5 U.S.C. § 706). Because “[t]he APA requires meaningful
review,” the Supreme Court has “stressed the importance
of not simply rubber-stamping agency factfinding.” Dick-
inson v. Zurko, 527 U.S. 150, 162 (1999) (citing Universal
Camera Corp. v. NLRB, 340 U.S. 474, 490 (1951)). Accord-
ingly, our “[d]eferential judicial review under the Adminis-
trative Procedure Act does not relieve the agency of its
obligation to develop an evidentiary basis for its findings.
To the contrary, the Administrative Procedure Act rein-
forces this obligation.” In re Lee, 277 F.3d 1338, 1344
(Fed. Cir. 2002) (first citing Motor Vehicle Mfrs. Ass’n v.
State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983); then
citing SEC v. Chenery Corp., 318 U.S. 80, 94 (1943)). “[O]ur
review of a patentability determination is confined to ‘the
grounds upon which the Board actually relied.’” Power In-
tegrations, Inc. v. Lee, 797 F.3d 1318, 1326 (Fed. Cir. 2015)
(quoting In re Applied Materials, Inc., 692 F.3d 1289, 1294
(Fed. Cir. 2012)). In order to provide for effective judicial
review, then, the Board is obligated to “provide an admin-
istrative record showing the evidence on which the findings
are based, accompanied by the agency’s reasoning in reach-
ing its conclusions.” Lee, 277 F.3d at 1342 (first citing In re
Zurko, 258 F.3d 1379, 1386 (Fed. Cir. 2001); then citing
In re Gartside, 203 F.3d 1305, 1314 (Fed. Cir. 2000)).
II
In finding the challenged patents obvious, the Board
expressly adopted as its own findings and conclusions
TQ DELTA, LLC v. CISCO SYS., INC. 9
Cisco’s evidence and argument regarding motivation to
combine. Cisco, in turn, relied on certain disclosures in
Stopler and the declaration of its expert, Dr. Tellado, to
support the arguments in its petition regarding motivation
to combine. For that reason, we focus our review on the
disclosures of Stopler and Dr. Tellado’s declaration. 4 Be-
cause the issue before us is whether the Board’s obvious-
ness determination is supported by substantial evidence,
we first examine the substantial evidence standard and ex-
amples of how this court has applied it to expert testimony
supporting an obviousness determination.
A
The substantial evidence standard asks “whether a
reasonable fact finder could have arrived at the agency’s
decision,” and “involves examination of the record as a
whole, taking into account evidence that both justifies and
detracts from an agency’s decision.” Gartside, 203 F.3d
at 1312 (first citing Consol. Edison Co. v. NLRB, 305 U.S.
197, 229 (1938); then citing Universal Camera, 340 U.S.
4 Although Cisco introduced some additional evi-
dence with its reply to support the Board’s factfinding,
TQ Delta objected to the admission of the evidence and the
Board expressly declined to consider it. As noted above,
our review is limited to “the grounds upon which the Board
actually relied.” Power Integrations, 797 F.3d at 1326
(quoting Applied Materials, 692 F.3d at 1294). Further-
more, “[i]t is of the utmost importance that petitioners in
the IPR proceedings adhere to the requirement that the in-
itial petition identify ‘with particularity’ the ‘evidence that
supports the grounds for the challenge to each claim.’” In-
telligent Bio-Sys., Inc. v. Illumina Cambridge Ltd.,
821 F.3d 1359, 1369 (Fed. Cir. 2016) (quoting 35 U.S.C.
§ 312(a)(3)). Accordingly, we do not consider the additional
evidence provided by Cisco but not considered by the
Board.
10 TQ DELTA, LLC v. CISCO SYS., INC.
at 487–88). Conclusory expert testimony does not qualify
as substantial evidence. See, e.g., MobileMedia Ideas LLC
v. Apple Inc., 780 F.3d 1159, 1172 (Fed. Cir. 2015) (“Con-
clusory statements by an expert . . . are insufficient to sus-
tain a jury’s verdict.”); Regents of Univ. of Minn. v. AGA
Med. Corp., 717 F.3d 929, 941 (Fed. Cir. 2013) (quoting Sit-
rick v. Dreamworks, LLC, 516 F.3d 993, 1001 (Fed. Cir.
2008)) (“Conclusory expert assertions cannot raise triable
issues of material fact . . . .”); Koito Mfg. Co. v. Turn-Key-
Tech, LLC, 381 F.3d 1142, 1152 (Fed. Cir. 2004) (“General
and conclusory testimony . . . does not suffice as substan-
tial evidence of invalidity.”); Sea Robin Pipeline Co. v.
FERC, 795 F.2d 182, 188 (D.C. Cir. 1986) (“[I]nordinate
faith in the conclusory assertions of an expert . . . cannot
satisfy the requirement . . . [of] substantial evidence.”).
“Rejections on obviousness grounds,” in particular,
“cannot be sustained by mere conclusory statements; in-
stead, there must be some articulated reasoning with some
rational underpinning to support the legal conclusion of ob-
viousness.” KSR, 550 U.S. at 418 (quoting In re Kahn,
441 F.3d 977, 988 (Fed. Cir. 2006)). 5 “This requirement is
as much rooted in the Administrative Procedure Act, which
ensures due process and non-arbitrary decisionmaking, as
it is in § 103.” Kahn, 441 F.3d at 988 (citing Lee, 277 F.3d
at 1344–45). Accordingly, “a conclusory assertion with no
explanation is inadequate to support a finding that there
5 Conclusory expert testimony is equally inadequate
as substantial evidence in other areas of patent law. See,
e.g., Trs. of Bos. Univ. v. Everlight Elecs. Co., 896 F.3d
1357, 1362–64 (Fed. Cir. 2018) (enablement); WBIP, LLC
v. Kohler Co., 829 F.3d 1317, 1337–39 (Fed. Cir. 2016)
(written description); Whitserve, LLC v. Comput. Packages,
Inc., 694 F.3d 10, 23–24 (Fed. Cir. 2012) (anticipation);
Kim v. ConAgra Foods, Inc., 465 F.3d 1312, 1319–20
(Fed. Cir. 2006) (infringement).
TQ DELTA, LLC v. CISCO SYS., INC. 11
would have been a motivation to combine” because “[t]his
type of finding, without more, tracks the ex post reasoning
KSR warned of and fails to identify any actual reason why
a skilled artisan would have combined the elements in the
manner claimed.” In re Van Os, 844 F.3d 1359, 1361–62
(Fed. Cir. 2017) (citing KSR, 550 U.S. at 418, 421).
B
This court’s opinions have repeatedly recognized that
conclusory expert testimony is inadequate to support an
obviousness determination on substantial evidence review.
In InTouch, the challenger relied solely on the testi-
mony of its expert to establish a motivation to combine the
asserted prior art references. InTouch Techs., Inc. v. VGo
Commc’ns, Inc., 751 F.3d 1327, 1349 (Fed. Cir. 2014). In
addressing a challenged claim relating to remote
telepresence robotic systems, the challenger’s expert de-
scribed combining two of the asserted prior art references
as “something that that person of ordinary skill in the state
of art of the robotics will do.” Id. at 1351. In addressing
another challenged claim, the expert testified that “I do be-
lieve that somebody could look at a telepresence robot and
combine that with what we’re really looking at is military
telepresence. If you put those two things together, a person
of ordinary skill can do that.” Id. at 1353.
We reversed the district court’s judgment of invalidity
because the expert’s conclusory testimony did not provide
substantial evidence to support the jury’s finding. See id.at 1351–54. We explained that the expert testimony “failed
to provide any meaningful explanation for why one of ordi-
nary skill in the art would be motivated to combine these
references at the time of this invention.” Id. at 1353–54.
We observed that the expert testimony “primarily con-
sisted of conclusory references to [the expert’s] belief that
one of ordinary skill in the art could combine these refer-
ences, not that they would have been motivated to do so.”
Id. at 1352 (citing ActiveVideo Networks, Inc. v. Verizon
12 TQ DELTA, LLC v. CISCO SYS., INC.
Commc’ns, Inc., 694 F.3d 1312, 1327 (Fed. Cir. 2012)).
Thus, we concluded that the expert appeared to have im-
properly “relied on the [challenged] patent itself as her
roadmap for putting what she referred to as pieces of a ‘jig-
saw puzzle’ together.” Id. at 1351.
In ActiveVideo, we rejected similarly conclusory expert
testimony regarding patent invalidity. See ActiveVideo,
694 F.3d at 1327–28. In addressing six prior art refer-
ences, the challenger’s expert testified that “[t]hese are all
components that are modular, and when I add one, it
doesn’t change the way the other one works,” without
providing any factual basis for that assertion. Id. at 1327
(alteration in original). We explained that such a conclu-
sory statement is “not sufficient and is fraught with hind-
sight bias.” Id. (first citing KSR, 550 U.S. at 418; then
citing Innogenetics, N.V. v. Abbott Labs., 512 F.3d 1363,
1373–74 (Fed. Cir. 2008)). In particular, “[t]he expert
failed to explain how specific references could be combined,
which combination(s) of elements in specific references
would yield a predictable result, or how any specific combi-
nation would operate or read on the asserted claims.” Id.The challenger’s expert further testified that:
The motivation to combine would be because you
wanted to build something better. You wanted a
system that was more efficient, cheaper, or you
wanted a system that had more features, makes it
more attractive to your customers, because by com-
bining these two things you could do something
new that hadn’t been able to do before.
Id. at 1328. We rejected this testimony because it “fail[ed]
to explain why a person of ordinary skill in the art would
have combined elements from specific references in the way
the claimed invention does.” Id. (first citing KSR, 550 U.S.
at 418; then citing Innogenetics, 512 F.3d at 1373). We ex-
plained that “[k]nowledge of a problem and motivation to
solve it are entirely different from motivation to combine
TQ DELTA, LLC v. CISCO SYS., INC. 13
particular references.” Id. (quoting Innogenetics, 512 F.3d
at 1373).
In DSS, we similarly objected to the Board’s apparent
reliance on conclusory expert testimony in the context of
inter partes review proceedings. See DSS Tech. Mgmt.,
Inc. v. Apple Inc., 885 F.3d 1367, 1374–77 (Fed. Cir. 2018).
The sole issue was whether it would have been obvious to
modify the base station transmitter of an asserted prior art
reference to be “energized in low duty cycle RF bursts,” as
required by the challenged claims. Id. at 1374. The chal-
lenger’s expert opined that “it would have been obvious to
a [person of ordinary skill in the art] to have the base sta-
tion [in the prior art reference] operate in an analogous
manner” to the mobile units of that same prior art refer-
ence—which the parties agreed operated in “low duty cycle
RF bursts.” Id. at 1375–76. The expert further testified
that, because the base station and mobile stations of the
prior art had RF systems with the same physical structure,
a person of ordinary skill in the art “would have conceived
a system in which . . . the transmitter and the receiver of
the base station . . . operate in ‘low duty cycle RF bursts.’”
Id. at 1376.
After identifying several technical gaps in the expert’s
testimony, id., we explained that “[t]he similarities in
transmission hardware cannot close these gaps without ad-
ditional, reasoned analysis,” id. at 1376–77. We under-
scored that the expert’s “conclusory statements and
unspecific expert testimony” did not qualify as substantial
evidence that could support the Board’s conclusions re-
garding obviousness. Id. at 1376 (quoting Arendi S.A.R.L.
v. Apple Inc., 832 F.3d 1355, 1366 (Fed. Cir. 2016)).
In cases like InTouch, ActiveVideo, and DSS, we re-
jected obviousness determinations based on conclusory and
unsupported expert testimony. We repeatedly expressed
concerns that crediting such testimony risks allowing the
challenger to use the challenged patent as a roadmap to
14 TQ DELTA, LLC v. CISCO SYS., INC.
reconstruct the claimed invention using disparate ele-
ments from the prior art—i.e., the impermissible ex post
reasoning and hindsight bias that KSR warned against.
See Van Os, 844 F.3d at 1361 (citing KSR, 550 U.S. at 418,
421). Those same concerns apply here.
III
Here, the Board’s obviousness determinations rest on
several key findings regarding the scope and content of the
prior art. Of particular relevance on appeal, the Board
found that Stopler discloses the use of a phase scrambler
that an ordinarily skilled artisan would have recognized as
a solution to reduce the PAR of Shively. The Board based
its findings on the assertions in Cisco’s petition, which the
Board expressly adopted as its own findings and conclu-
sions. For the reasons that follow, we conclude that no rea-
sonable factfinder could find, based on Cisco’s petition and
supporting expert declaration, that a person of ordinary
skill would have recognized Stopler’s disclosure of phase
scrambling as a solution to reduce the PAR of Shively. Ac-
cordingly, we reverse the Board’s conclusions of obvious-
ness.
The Board relied on two paragraphs in Cisco’s petition
to conclude that Stopler discloses the use of phase scram-
bling as a solution to reduce the PAR of Shively. See Cisco
Sys., Inc. v. TQ Delta, LLC, No. IPR2016-01020, 2017 WL
4864547, at *7 (P.T.A.B. Oct. 26, 2017) (Decision) (citing
J.A. 135–36). 6 Those two paragraphs, in turn, are based on
two paragraphs in Dr. Tellado’s declaration and two
6 For brevity, we cite to documents submitted in
IPR2016-01020, which, for the purposes of this appeal, are
substantively the same as those submitted in IPR2016-
01021. Unless otherwise noted, all citations to IPR2016-
01020 should be understood to reference the analogous pas-
sage in IPR2016-01021.
TQ DELTA, LLC v. CISCO SYS., INC. 15
sentences of Stopler. See J.A. 135–36 (first citing Stopler
col. 12 ll. 24–28; then citing J.A. 2928–29 (Tellado Decl.
¶¶ 67–68)).
In the cited paragraphs, Dr. Tellado stated:
67. Stopler provides a solution for reducing the
PAR of a multicarrier transmitter. Specifically,
Stopler teaches that a bit scrambler followed by a
phase scrambler can be employed to randomize the
phase of the individual subcarriers. [Citation to
Stopler col. 12 ll. 24–28.] A POSITA would have
recognized that by randomizing the phase of each
subcarrier, Stopler provides a technique that al-
lows two or more subcarriers in Shively’s system to
transmit the same one or more bits, but without
those two or more subcarriers having the same
phase. Since the two subcarriers are out-of-phase
with one another, the subcarriers will not add up
coherently at the same time, and thus the peak-to-
average power ratio for the overall system will be
less than in Shively’s original system.
68. Combining Stopler’s phase scrambler into
Shively’s transmitter would have been a relatively
simple and obvious solution to reduce Shively’s
PAR.
J.A. 2928–29.
Stopler’s disclosure of phase scrambling, as identified
by Cisco in its petition and Dr. Tellado in his declaration,
is limited to two sentences at the end of the patent specifi-
cation:
In order to randomize the overhead channel sym-
bols, a phase scrambling sequence is applied to the
output symbols. However, to simplify implementa-
tion, the phase scrambler is applied to all symbols,
not just the overhead symbols.
16 TQ DELTA, LLC v. CISCO SYS., INC.
Stopler col. 12 ll. 24–28. 7
This passage of Stopler provides no express discussion
of, nor any connection to, the PAR of a multicarrier trans-
mitter. Instead, Stopler explains that the phase scram-
bling sequence is applied “[i]n order to randomize the
overhead channel symbols,” and is only applied to the other
symbols in order “to simplify implementation.” Id. Dr. Tel-
lado fails to identify any other evidence that provides this
necessary link. Dr. Tellado instead offers only unsup-
ported and conclusory statements asserting that an ordi-
narily skilled artisan at the time of the invention would
have been motivated to apply the randomization disclosed
in Stopler as a means to reduce PAR in Shively. Dr. Tel-
lado first provides a brief, high-level explanation of how
randomizing the phase of each subcarrier in Shively will
reduce its PAR, but that explanation is unsupported by any
evidence other than the disclosure of the invention in the
patents-in-suit. J.A. 2928–29 ¶ 67. Then, Dr. Tellado
states in conclusory fashion—again without any support—
that the combination “would have been a relatively simple
and obvious solution to reduce Shively’s PAR.” J.A. 2929
¶ 68.
Untethered to any supporting evidence, much less any
contemporaneous evidence, Dr. Tellado’s ipse dixit declara-
tion “fail[s] to provide any meaningful explanation for why
one of ordinary skill in the art would be motivated to com-
bine these references at the time of this invention.”
7 Although not cited in support of motivation to com-
bine by Cisco in its petition, nor by Dr. Tellado in his dec-
laration, Stopler includes two additional sentences and a
table that provide an example of a phase scrambling se-
quence generated by a pseudo-random generator. See
Stopler col. 12 ll. 28–45. This additional passage does not
change our determination because it similarly fails to ad-
dress PAR.
TQ DELTA, LLC v. CISCO SYS., INC. 17
InTouch, 751 F.3d at 1353–54 (emphasis added). It also
“fails to explain why a person of ordinary skill in the art
would have combined elements from specific references in
the way the claimed invention does.” ActiveVideo, 694 F.3d
at 1328 (first citing KSR, 550 U.S. at 418; then citing In-
nogenetics, 512 F.3d at 1373). Without this support, Dr.
Tellado’s declaration ultimately fails “to resist the tempta-
tion to read into the prior art the teachings of the invention
in issue.” Graham v. John Deere Co. of Kan. City,
383 U.S. 1, 36 (1966). Indeed, the only support for Dr. Tel-
lado’s assertions is found in the description of the invention
of the patents-in-suit:
The modulator 46 also includes a phase scram-
bler 66 that combines a phase shift computed for
each QAM-modulated carrier signal with the phase
characteristic of that carrier signal. Combining
phase shifts with phase characteristics, in accord-
ance with the principles of the invention, substan-
tially scrambles the phase characteristics of the
carrier signals in the transmission signal 38. By
scrambling the phase characteristics of the carrier
signals, the resulting transmission signal 38 has a
substantially minimized peak-to-average (PAR)
power ratio.
’243 patent col. 4 ll. 29–38.
Dr. Tellado’s “conclusory statements and unspecific ex-
pert testimony” are thus inadequate to support the Board’s
factfinding regarding motivation to combine. DSS,
885 F.3d at 1376 (quoting Arendi, 832 F.3d at 1366). The
Board does not identify any evidence beyond Stopler and
Dr. Tellado’s declaration that it considered to conclude that
a person of ordinary skill would have recognized the
18 TQ DELTA, LLC v. CISCO SYS., INC.
disclosure in Stopler as a solution to reduce PAR in
Shively. 8 The Board’s factual determination on this point
is therefore unsupported by substantial evidence. Accord-
ingly, we reverse the Board’s obviousness determination.
IV
TQ Delta raises numerous other challenges to the
Board’s decisions, including that the Board erred in allow-
ing Dr. Tellado to testify after he discarded certain simula-
tions, that the Board erred in its construction of “phase
scrambling,” and that the Board denied TQ Delta due pro-
cess when it construed a claim term in the final written
decisions and purportedly relied on new evidence first pre-
sented in Cisco’s reply. We are not persuaded by these ar-
guments, and we decline to discuss them at length
considering that we reverse the Board’s ultimate conclu-
sion of obviousness because substantial evidence does not
support key factual findings underlying its determination.
8 In rebutting TQ Delta’s hindsight arguments, the
Board cited to an additional paragraph of Dr. Tellado’s dec-
laration for the proposition that Stopler’s phase scrambler
reduces PAR. See Decision, 2017 WL 4864547, at *12 (cit-
ing J.A. 2926 ¶ 60). The cited paragraph is not referenced
by Cisco in support of motivation to combine, and is outside
the section of Dr. Tellado’s testimony regarding motivation
to combine. In any event, it does not change the result here
because it includes similarly unsupported and conclusory
testimony. See J.A. 2926 ¶ 60 (asserting without support
that “[a] POSITA would have recognized that a purpose for
implementing the phase scrambler to randomize the data
symbols would be to reduce the PAR of transmitted sig-
nals”).
TQ DELTA, LLC v. CISCO SYS., INC. 19
CONCLUSION
For the foregoing reasons, we reverse the Board’s final
written decisions holding all claims of the ’158 and ’243 pa-
tents invalid as obvious.
REVERSED
COSTS
No costs.