Less Heightened Standard for the Nexus Requirement regarding the Licenses Offered as Objective Indicia of Nonobviousness
| June 18, 2025
Case Name: ANCORA TECHNOLOGIES, INC. v. ROKU, INC., VIZIO, INC., NINTENDO CO., LTD., NINTENDO OF AMERICA INC.
Date of Decision: June 16, 2025
Panel: Lourie (author), Reyna, and Hughes
Summary:
The CAFC held that unlike products, actual licenses to the subject patent do not demand the same heightened standard as products. The CAFC held that licenses to the challenged patent do not require a nexus with respect to the specific claims at issue, and that nexus case law does not require that a particular patent be the only patent being licensed or the sole motivation for entering into a license. Therefore, the CAFC vacated and remanded for the PTAB to reconsider the nexus requirement regarding the licenses offered as objective indicia of nonobviousness for Ancora’s patent.
Details:
Ancora owns U.S. Patent No. 6,411,941 (“’941 patent), which is directed to the restriction of unauthorized use of licensed software programs on computers by preventing hackers from copying a software program that was licensed for use on a computer.
This patent describes a method of restricting use of a licensed software program on a computer that has at least two “non-volatile memory areas” (inside BIOS module) and one volatile area.
At issue are claims 1-3, 6-14, and 16 of the ’941 patent, and claim 1 is an independent claim. Independent claim 1 reads:
1. A method of restricting software operation within a license for use with a computer including an erasable, non-volatile memory area of a BIOS of the computer, and a volatile memory area; the method comprising the steps of:
selecting a program residing in the volatile memory,
using an agent to set up a verification structure in the erasable, non-volatile memory of the BIOS, the verification structure accommodating data that includes at least one license record,
verifying the program using at least the verification structure from the erasable non-volatile memory of the BIOS, and
acting on the program according to the verification.
PTAB
In 2021, Nintendo Co., Ltd. and Nintendo of America, Inc. (collectively, “Nintendo”) and Roku, Inc. and VIZIO, Inc. (collectively, “Roku”) filed petitions for IPR of the ’941 patent.
In 2023, the PTAB issued two final written decisions finding that claims 1-3, 6-14, and 16 are unpatentable as obvious over Hellman, Chou, and a third prior art.
In each decision, the PTAB construed the claim term “agent” as “a software program or routine.” Based on this construction, the PTAB determined that the challenged claims of the ’941 patent are unpatentable as obvious.
Ancora appealed both decisions.
CAFC
Ancora raised three issues on appeal.
First, Ancora argued that the PTAB erred in construing the claim term “agent.”
Second, Ancora argued that, even if the PTAB correctly construed the term “agent,” the PTAB nonetheless erred in determining obviousness under 35 U.S.C. § 103 based on a combination of Hellman and Chou.
Third, Ancora argued that the PTAB erred in its analysis of secondary considerations of nonobviousness.
With regard to the first issue, Ancora argued that the “agent” should be construed as a software program or routine limited to use at the OS-level and that excludes hardware.
However, the CAFC disagreed with Ancora’s argument because neither the patent nor prosecution history provide a clear disclaimer that “agent” must be limited to exclude hardware.
With regard to the second issue, Ancora argued that (i) the combination of Hellman and Chou is inoperable; (ii) the PTAB’s determination of obviousness based on this combination is erroneous because a person of ordinary skill in the art would not be motivated to combine their teachings because they are redundant; and (iii) the PTAB’s determination of obviousness is also erroneous because Hellman’s memory address H is not a “verification structure.”
However, the CAFC disagreed with Ancora’s arguments.
With regard to the third issue, the PTAB determined that Ancora failed to establish a sufficient nexus between the claimed invention and evidence of two objective indicia of nonobviousness: industry praise and licensing.
Nexus: “[T]o be accorded substantial weight in the obviousness analysis, the evidence of secondary considerations must have a ‘nexus’ to the claims, i.e., there must be a legally and factually sufficient connection between the evidence and the patented invention.” Henny Penny Corp. v. Frymaster LLC, 938 F.3d 1324, 1332 (Fed. Cir. 2019)
With regard to industry praise, the PTAB considered Ancora’s evidence of a “joint press release” from American Megatrends Inc. (“AMI”) and Ancora that directly named the ’941 patent, and an agreement, in which AMI would offer products using the patent.
After reviewing this industry praise, the PTAB found that this praise was directed to “more broadly to the ’941 patent itself,” but not specifically to “the challenged claims.”
The CAFC agreed with the PTAB’s determination and held that the PTAB did not clearly err in finding that Ancora did not link up their products to the challenged claims.
With regard to licensing, the PTAB found that Ancora failed to show a nexus between the challenged claims and two licenses[1] that Ancora entered into with other parties during settlements in other cases. Also, the PTAB did not consider a third license, which Ancora entered into with another party during settlement.
This time, the CAFC agreed with Ancora because the PTAB incorrectly applied a strict nexus standard for license evidence.
The CAFC held that unlike products, actual licenses to the subject patent do not demand the same heightened standard as products. In other words, the CAFC held that licenses to the challenged patent do not require a nexus with respect to the specific claims at issue, and that nexus case law does not require that a particular patent be the only patent being licensed or the sole motivation for entering into a license.
Therefore, the CAFC held that the PTAB applied an improperly heightened nexus standard and concluded that the PTAB’s findings constituted legal error and were not supported by substantial evidence.
Accordingly, the CAFC vacated and remanded for the PTAB to reconsider the nexus requirement regarding the licenses offered as objective indicia of nonobviousness.
Takeaway:
- Unlike products, actual licenses to the subject patent do not demand the same heightened standard as products with regard to the nexus requirement regarding the licenses offered as objective indicia of nonobviousness.
- In other words, the licenses to the challenged patent do not require a nexus with respect to the specific claims at issue, and that nexus case law does not require that a particular patent be the only patent being licensed or the sole motivation for entering into a license.
[1] The ’941 patent was the only patent identified in the first license agreement.
