Nichia Corporation v. Document Security Systems

Case: 20-2261 Document: 46 Page: 1 Filed: 04/26/2022
NOTE: This disposition is nonprecedential.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: 2 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 pan-
els. Nichia Corporation petitioned for inter partes review
of claims 1–19. The Patent Trial and Appeal Board deter-
mined Nichia proved claims 1 and 6–8 unpatentable but
did not prove claims 2–5 and 9–19 unpatentable. Both par-
ties 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 embodi-
ment, 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 de-
vice.
’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 re-
flector 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 mate-
rial. ’087 patent at 3:26–30. Independent claim 1 is repre-
sentative.
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 extend-
ing 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 reflec-
tor housing.
’087 patent at 6:23–37.
Case: 20-2261 Document: 46 Page: 4 Filed: 04/26/2022
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 peti-
tion 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 Fabri-
cation Method Thereof.” Takenaka illustrates a semicon-
ductor 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 secur-
ing 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 crys-
tal display devices.” Decision at *3, *31. The device in-
cludes a tubular vessel with an upper and lower opening
with an LED positioned between the openings. Id.The Board found Nichia demonstrated by a preponder-
ance of the evidence that claims 1 and 6–8 are unpatenta-
ble 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 moti-
vated 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 lead-
receiving compartments in the reflector housing sidewall,
thus rendering claim 1 and dependent claims 6–8 un-
patentable as obvious. Id. at *13–15.
The Board further determined Nichia did not demon-
strate 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 unpatent-
able in view of Okazaki and Kyowa because Okazaki dis-
closes a tubular vessel rather than the claimed two pockets.
Id. at *33–36. The Board’s findings were based on its de-
termination 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 Engi-
neering, 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 ra-
ther 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 tub-
ular 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 re-
garding the “plastic phrase” in claim 9. Id. Claim 9 begins:
“A display comprising a plurality of plastic leaded chip car-
rier 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 de-
pendent claims 10–14 because it failed to point to any dis-
closure 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 limita-
tion” 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 con-
nected 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 Oka-
zaki 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. Fel-
lowes, Inc., 813 F.3d 1361, 1365 (Fed. Cir. 2016). Substan-
tial evidence is “such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion.” In
Case: 20-2261 Document: 46 Page: 7 Filed: 04/26/2022
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 deter-
mination 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 de-
terminations 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 pa-
tent 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 di-
rected 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. De-
cision at *33–34. The parties disagreed whether the tubu-
lar 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
Case: 20-2261 Document: 46 Page: 8 Filed: 04/26/2022
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 de-
scriptions 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 creat-
ing two pockets. Id. at *35. Based on Mr. Credelle’s testi-
mony, the Board determined that a person of ordinary skill
in the art would not understand Okazaki to teach or sug-
gest 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 tubu-
lar vessel as a single space. The Board cited to the descrip-
tions 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 de-
scribed the tubular vessel as a singular tube. Decision
at *33–36. We conclude that the expert testimony and dis-
closures from Okazaki provide substantial evidence sup-
porting 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.
Case: 20-2261 Document: 46 Page: 9 Filed: 04/26/2022
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 con-
struction of claim 9. Appellant’s Br. 49–52. The Board de-
termined 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. Ap-
pellant’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 gen-
eral description of all the elements or steps of the claimed
combination . . . .” 37 C.F.R. § 1.75(e)(1). “Claims are usu-
ally structured with a preamble, a ‘transition phrase,’ and
the elements or steps that are necessary to the right to ex-
clude.” 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 el-
ements. 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 lim-
itation.
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 apply-
ing this information to claim 9. Appellant’s Br. 52–65.
In inter partes review proceedings, the patent chal-
lenger bears the burden and must “show with particularity
Case: 20-2261 Document: 46 Page: 10 Filed: 04/26/2022
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 understand-
able explanation of the element-by-element specifics of its
unpatentability contentions, identifying supporting disclo-
sures from the asserted prior art. See 35 U.S.C. § 312(a)(3).
This burden combined with the structure of Board proceed-
ings means “in some cases, a challenge can fail even if dif-
ferent 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.” De-
cision at *21–22; J.A. 173. Nichia’s claim charts disclose
solely the use of resin, and Nichia makes no argument com-
paring 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 discre-
tion in finding that Nichia did not prove claim 15 unpatent-
able 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 . . . elec-
tronically connected to said plurality of electrically conduc-
tive 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
Case: 20-2261 Document: 46 Page: 11 Filed: 04/26/2022
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 unpatenta-
ble as obvious due to the combination of Takenaka and
Kyowa. Appellant’s Br. 60–65. Nichia contends its discus-
sion 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., Har-
monic, 815 F.3d at 1363; Ariosa Diagnostics, 805 F.3d at
1367. Unlike with the plastic phrase, Nichia’s petition spe-
cifically stated that Takenaka disclosed an electrical con-
nection. 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 con-
nected. “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 dis-
closes 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 limi-
tation is disclosed in Takenaka, we reverse the Board’s de-
cision 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
Case: 20-2261 Document: 46 Page: 12 Filed: 04/26/2022
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. Ap-
pellee’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 com-
partments 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 exter-
nal 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 pro-
vide “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 per-
son 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 re-
quiring multiple lead-receiving compartments in a side-
wall. 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 en-
closed in a resin package, which is an LED housing, and
the sidewall contains multiple compartments in the hous-
ing. 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 reflec-
tor housing. Id. at *8. The Board pointed to the disclosures
in Takenaka that teach the reflector housing and the dis-
closures 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 argu-
ments and find them unpersuasive.
AFFIRMED-IN-PART, REVERSED-IN-PART AND
REMANDED
COSTS
No Costs.