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Personal Audio, LLC v. CBS Corp.

United States Court of Appeals, Federal Circuit

January 10, 2020

PERSONAL AUDIO, LLC, Plaintiff-Appellant
v.
CBS CORPORATION, Defendant-Appellee

          Appeal from the United States District Court for the Eastern District of Texas in No. 2:13-cv-00270-JRG, Judge J. Rodney Gilstrap.

          Jeremy Seth Pitcock, The Pitcock Law Group, New York, NY, argued for plaintiff-appellant. Also represented by Jennifer Ishimoto, Banie & Ishimoto LLP, Menlo Park, CA; Papool Subhash Chaudhari, Chaudhari Law, PLLC, Wylie, TX.

          Steven M. Lieberman, Rothwell, Figg, Ernst & Manbeck, PC, Washington, DC, argued for defendant-appellee. Also represented by Sharon Davis, Jennifer Maisel, Daniel McCallum, Brian S. Rosenbloom.

          Before Moore, Reyna, and Taranto, Circuit Judges.

          TARANTO, CIRCUIT JUDGE.

         Personal Audio, LLC brought this case against CBS Corporation, alleging that CBS infringed a Personal Audio patent. A jury found for Personal Audio on infringement and invalidity as to three claims of the patent. When the Patent Trial and Appeal Board (Board) of the United States Patent and Trademark Office (PTO) issued a final written decision determining that those claims are unpatentable, the district court, with the parties' consent, stayed entry of its judgment in this case until completion of direct review of the Board's decision in our court. We eventually affirmed the Board's final written decision. The district court then asked Personal Audio and CBS how they wished to proceed, and they agreed that, under governing precedent, CBS was entitled to entry of final judgment in its favor. The district court entered such a judgment.

         Personal Audio appeals. To the extent that Personal Audio challenges the Board's final written decision, the district court lacked jurisdiction to consider the challenges, and we have no jurisdiction to review them on appeal from the district court's judgment. The exclusive avenue for review was a direct appeal from the final written decision. To the extent that Personal Audio challenges the district court's determination of the consequences of the affirmed final written decision for the proper disposition of this case, Personal Audio conceded that governing precedent required judgment for CBS. We therefore affirm the district court's judgment.

         I

         Personal Audio owns U.S. Patent No. 8, 112, 504, which describes a system for organizing audio files, by subject matter, into "program segments." '504 patent, Abstract. The system arranges the segments through a "session schedule" and allows a user to navigate through the schedule in various ways, such as skipping the remainder of a segment, restarting a segment from its beginning, listening to predetermined "highlight passages" within a segment, or jumping to a "cross-referenced position" within another segment. Id., col. 2, lines 21-56.

         In 2013, Personal Audio sued CBS, alleging infringement of the '504 patent. Later that year, a third party (the Electronic Frontier Foundation) petitioned for an inter partes review (IPR) of claims 31-35 of the '504 patent under 35 U.S.C. §§ 311-319. The Board instituted a review in April 2014, but the district court case proceeded to trial, with the issues limited to infringement and invalidity of claims 31-34. On September 14, 2014, a jury found that CBS had infringed claims 31-34 and that CBS had failed to establish by clear and convincing evidence that those claims were invalid. The jury awarded Personal Audio $1, 300, 000 as damages for CBS's infringement.

         On April 10, 2015, the Board issued a final written decision in the IPR under 35 U.S.C.§ 318(a), concluding that claims 31-35 are unpatentable. Electronic Frontier Foundation v. Personal Audio, LLC, No. IPR2014-00070, 2015 WL 13685137 (P.T.A.B.). Personal Audio and CBS agreed to stay proceedings in the district court case pending this court's review of the Board's decision pursuant to 35 U.S.C. §§ 141(c) and 319 and 28 U.S.C. § 1295(a)(4)(A). Before pressing the appeal of the Board's decision in this court, Personal Audio sought rehearing with the Board, making two arguments that are relevant to this appeal: (1) that the Board, through its final written decision, violated the Seventh Amendment by reexamining jury findings and (2) that the final written decision was unlawful because the inter partes review scheme violates the Due Process Clause of the Fifth Amendment. J.A. 583-85. After the Board denied rehearing, Personal Audio appealed to this court. In its opening brief in this court, Personal Audio continued to assert that the Board's final written decision violated the Seventh Amendment. J.A. 2118.

         On August 7, 2017, this court affirmed the Board's final written decision. Personal Audio, LLC v. Electronic Frontier Foundation, 867 F.3d 1246, 1253 (Fed. Cir. 2017). The Supreme Court denied Personal Audio's petition for a writ of certiorari on May 14, 2018. Personal Audio, LLC v. Electronic Frontier Foundation, 138 S.Ct. 1989 (2018).

         In December 2017, based on our decision affirming the Board, the district court asked Personal Audio and CBS to submit a joint status report. They did so on May 29, 2018, after the Supreme Court denied certiorari from our decision. In the joint status report, Personal Audio stated that it "continue[d] to believe that overturning the verdict of the jury with a later IPR proceeding violates the Seventh Amendment of the Constitution" and that "the outcome of the IPR should not be given collateral estoppel effect, since it was filed by a third party under a different standard." J.A. 423. But Personal Audio agreed to judgment against it because "current authority supports rendering a judgment in favor of the Defendant CBS." Id.

         The district court entered judgment for CBS on July 11, 2018. One week later, on July 18, 2018, the PTO performed the ministerial act, under 35 U.S.C. § 318(b), of issuing a certificate that ...


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