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Federal Circuit Clarifies Nexus Standard For Secondary Consideration Licensing Evidence
06/24/2025On June 16, 2025, the U.S. Court of Appeals for the Federal Circuit (“CAFC”) vacated and remanded two final written decisions by the Patent Trial and Appeal Board (“PTAB”) that found several claims of Ancora Technologies, Inc.’s (“Ancora”) U.S. Patent No. 6,411,941 (the “’941 patent”) unpatentable as obvious. Ancora Techs., Inc. v. Roku, Inc., No. 2023-1647, 2025 WL 1679967 (Fed. Cir. Jun. 16, 2025).
The ’941 patent is directed to the prevention of unauthorized use of licensed software. The claims focus on the use of an “agent” to set up a verification structure, including at least one license record, in the erasable, non-volatile memory of a computer’s Basic Input/Output System (BIOS).
In 2021, two Nintendo entities, as well as Roku, Inc. and VIZIO, Inc., filed two petitions for inter partes review of the ’941 patent. In 2023, the PTAB issued two final written decisions determining that several claims of the ’941 patent were unpatentable as obvious over a combination of three prior art references—i.e., U.S. Patent No. 4,658,093 (“Hellman”), U.S. Patent No. 5,892,906 (“Chou”), and a third reference (not relevant here). In those decisions, the PTAB found that Ancora’s proffered evidence of secondary considerations of nonobviousness lacked a nexus to the claims.
On appeal to the CAFC, Ancora raised three issues: (1) the PTAB erred in construing the claim term “agent” to encompass hardware in addition to software; (2) even if the PTAB correctly construed “agent,” it nonetheless erred in determining obviousness based on a combination of Hellman and Chou; and (3) the PTAB erred in its analysis of secondary considerations of nonobviousness.
With respect to the first issue, the CAFC affirmed the PTAB’s construction of “agent” as “a software program or routine,” with no further limitations. Contrary to Ancora’s argument that “agent” should be limited to software operating at the operating system (OS) level, the CAFC found no “clear and unmistakable disclaimer” in the patent or prosecution history to support this restriction. Rather, the CAFC found substantial evidence for the PTAB’s broader construction through the plain and ordinary meaning of the term, expert testimony, and the Oxford Dictionary of Computing.
With respect to the second issue, the CAFC affirmed the PTAB’s prima facie finding of obviousness based on the combination of Hellman and Chou. The CAFC rejected Ancora’s arguments against the combination of prior art—including inoperability, redundancy, and misinterpretation of the Hellman patent—finding those arguments either waived or based on misinterpretations of the PTAB’s reasoning.
With respect to the third issue, the CAFC found that the PTAB correctly analyzed nexus with respect to one type of proffered secondary considerations evidence—i.e., industry praise—but that it erred in analyzing nexus with respect to the second type of proffered evidence—i.e., licensing agreements.
Regarding industry praise, the CAFC agreed with the PTAB that Ancora failed to link its proffered evidence of industry praise to the challenged claims, as the praise was directed more broadly at the patent and BIOS-based security products.
Regarding licensing, however, the CAFC disagreed with the PTAB’s nexus analysis. Below, the PTAB found that Ancora failed to show a nexus between the challenged claims and two licenses that Ancora entered into with parties in other cases. Specifically, the PTAB found that Ancora failed to establish that the licenses resulted directly from the unique characteristics of the claimed subject matter. The CAFC found that the PTAB had applied an overly strict standard, which unnecessarily required proof that the licenses were motivated solely by specific claims.
The CAFC drew a distinction between the nexus showing that is required when dealing with products and the nexus that is required when licenses are at issue. The CAFC explained that, unlike products, which may incorporate numerous features beyond those claimed or described in the patent (and, therefore, may require careful parsing to establish a nexus), actual licenses to the subject patent do not demand the same, because they are, by their nature, directly tied to the patented technology. “Licenses to the challenged patent then, unlike products or other forms of objective evidence of nonobviousness, do not require a nexus with respect to the specific claims at issue, nor does our nexus law require that a particular patent be the only patent being licensed or the sole motivation for entering into a license.” The CAFC further explained that “when it comes to licenses, clear evidence that substantial license fees were paid for licenses to a specific patent late in a litigation should be given the significance that their magnitude deserves.”
Here, the CAFC found that the evidence supported a nexus finding, as the ’941 patent was clearly identified in the licensing agreements, which “necessarily conveys a right to all of the challenged claims . . . whose limitations are incorporated into every claim of the patent.”
The CAFC concluded that the PTAB’s nexus findings on licensing were legal error, and therefore vacated and remanded for the PTAB to reconsider the nexus issue as it pertains to the proffered licenses.
