source: Caselaw Access Project

author: CHEN, Circuit Judge.

license: Public Domain

text:
    IN RE: AFFINITY LABS OF TEXAS, LLC, Appellant
    2016-1092, 2016-1172
    United States Court of Appeals, Federal Circuit.
    Decided: May 5, 2017

      William Manske, Robins Kaplan LLP, Minneapolis, MN, argued for appellant. Also represented by Ryan Michael Schultz.
    Robeet McBride, Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA, argued for intervenor Michelle K. Lee. Also represented by Thomas W. Krause, Joseph Matal, Scott Weidenfeller.
    Before TARANTO, CHEN, and STOLL, Circuit Judges.
   CHEN, Circuit Judge.

This appeal arises from two inter partes reexaminations and an ex parte reexamination of U.S. Patent No. 7,324,833 (the ’833 patent), owned by Affinity Labs of Texas, LLC (Affinity). Richard King requested ex parte reexamination of all original claims of the ’833 patent, based on multiple asserted grounds of unpatentability. Volkswagen Group of America, Inc. (Volkswagen) requested inter partes reexamination of all claims based on additional, different asserted grounds of unpatentability. And Apple Inc. (Apple) requested inter partes reexamination of all claims based on still different asserted grounds of unpatentability. The United States Patent and Trademark Office (PTO) granted all three requests and sua sponte merged these three reexaminations into a single proceeding.

Volkswagen subsequently received an adverse final judgment in a parallel district court proceeding, upholding the validity of claims 28 and 35 of Affinity’s ’833 patent. In response, Affinity petitioned the PTO to vacate the entire merged reexamination proceeding, arguing that the estop-pel provision in pre-America Invents Act (AIA) 35 U.S.C. § 317(b) extends to all parties, not just Volkswagen, and all claims challenged in the three reexaminations, not just litigated claims 28 and 35. The PTO denied Affinity’s termination request, but it severed the Volkswagen reexamination from the merged proceeding and held that no rejection could be maintained in that reexamination as to the claims at issue in the district court action. The Examiner then evaluated the Volkswagen reexamination separately from the merged King/Apple reexamination and ultimately issued a Right of Appeal Notice in each proceeding, rejecting numerous claims of the ’833 patent as unpatentable. The Patent Trial and Appeal Board (Board) affirmed the Examiner’s rejections. See Apple Inc. v. Affinity Labs of Tex., LLC, No. 2015-004281, Reexamination Nos. 95/001,264 and 90/010333, 2015 WL 4038964, at *1 (P.T.A.B. June 30, 2015) (-4281 Board Decision); Apple Inc. v. Affinity Labs of Tex., LLC, No. 2015-006122, Reexamination No. 95/001223, 2015 WL 5092841, at *1 (P.T.A.B. Aug. 26, 2015) (-6122 Board Decision). Affinity appealed to this court and the Director of the United States Patent and Trademark Office (Director) intervened. We have jurisdiction under 28 U.S.C. § 1295(a)(4)(A).

Affinity first argues that the PTO erred in maintaining the reexaminations in light of the final decision that Volkswagen failed to prove invalidity of two of the patent’s claims, which were asserted in the co-pending litigation and, therefore, the Board’s decisions in the reexaminations should be reversed pursuant to the section 317(b) estoppel provision. Affinity also asserts that, assuming the reexaminations were properly maintained, the Board’s decisions are based on misreadings of the asserted prior art and a misevaluation of Affinity’s objective indicia evidence of non-obviousness. Because the plain language of pre-AIA section 317(b) precludes Affinity’s estoppel argument and because we see no error in the -4281 Board Decision upholding the Examiner’s findings of unpatenta-bility as to all claims at issue, we affirm. We, therefore, dismiss as moot Affinity’s appeal of the -6122 Board Decision upholding the unpatentability of a subset of claims affirmed as unpatentable in the - 4281 Board Decision.

Background

I. The ’833 Patent

The ’833 patent relates to a system and method for connecting a portable media player, such as an MP3 player, to a different electronic device, such as a car audio system. ’833 patent col. 3,1. 35-col. 4,1. 34. When the portable media player is connected to the different electronic device, the system provides the user with a graphical user interface on the display of that different electronic device. Id. col. 11, 11. 28-44. The user can then select and play music stored on the portable media player by pressing soft buttons displayed in the graphical user interface of the different electronic device. The ’833 patent’s claims are directed to systems and methods of displaying on the different electronic device a menu of titles associated with media files stored on the portable media player. Claim 1 is representative:

1. An audio system, comprising:
a portable electronic device having a display, a memory, and an audio file player;
a first portion of software saved at the portable electronic device and configured to initiate a displaying of a graphical interface item on the display, the graphical interface item comprising a name associated with an audio file saved in the memory;
a mounting location on the portable electronic device that includes a physical interface configured to communica-tively couple the portable electronic device to a different electronic device having an associated display; and
an other portion of software saved at the portable electronic device and configured to communicate a representation of the graphical interface item to the different electronic device via the physical interface to facilitate a displaying of the representation on the associated display, wherein the portable electronic device is configured to communicate interface information to the different electronic device in order to allow a user to view at least a partial representation of a graphical user interface that includes the graphical interface item on the associated display, wherein the graphical user interface comprises a plurality of pre-programmed soft buttons that are linked to respective audio information sources.

Id. col. 18,11. 36-61.

II. Merger and Severance of the Reexaminations

Richard King filed a request for ex parte reexamination of all claims of the ’833 patent on November 7, 2008. Volkswagen filed a request for inter partes reexamination of all claims of the ’833 patent on September 22, 2009, soon after Affinity sued Volkswagen for infringement of the ’833 patent, among other patents, in district court. Apple also filed a request for inter partes reexamination of all claims of the ’833 patent on November 13, 2009, after Affinity brought suit against Apple on a series of patents, including the ’833 patent. The PTO granted all three reexamination requests, and on June 14, 2010, the PTO sua sponte merged the three reexaminations into one proceeding. In addition to traversing the asserted grounds of rejection, Affinity also sought to add new claims 36-49.

During the merged reexamination proceeding, Apple and Affinity reached a settlement, Apple took a license to the ’833 patent, and the parties filed a joint stipulation of dismissal in the co-pending district court case. Pursuant to the joint stipulation, the district court dismissed Affinity’s infringement action with prejudice and Apple’s invalidity counterclaims without prejudice. Apple then filed a notice of non-participation in the reexamination on October 3, 2011. The district court litigation between Affinity and Volkswagen, however, proceeded to trial and a jury returned a verdict that Volkswagen infringed claims 28 and 35 of the ’833 patent and Volkswagen had not proven that the two asserted claims are invalid in view of prior art it presented at trial. Volkswagen initially appealed the verdict but dismissed its appeal following its own settlement with Affinity. Volkswagen filed a notice of non-participation in the reexamination on June 14, 2012.

Affinity then petitioned the PTO to terminate the entire merged proceedings under 35 U.S.C. § 317(b). Affinity argued that a final judgment was entered adverse to inter partes requester Volkswagen regarding the validity of the challenged claims, inter partes requester Apple no longer had a legal or economic incentive in maintaining the reexamination given the settlement, and all grounds for unpa-tentability raised by the ex parte reexamination were traversed. The PTO dismissed Affinity’s request to terminate the merged proceeding. It did, however, sever the Volkswagen reexamination and held the estoppel provision of pre-AIA section 317(b) would apply in the severed proceeding as to independent claims 28 and 35. Therefore, the PTO concluded that no rejections would be asserted in that proceeding of claims 28 and 35 and as a natural consequence, their dependent claims 29-34, 48, and 49.

III. Rejections and Appeal

The Examiner issued Right of Appeal Notices in both proceedings. In the severed Volkswagen reexamination, the Examiner rejected claims 1-5, 8-20, and 22-27 as unpatentable based on various prior art references and combinations. The Examiner stated that claims 28-35, 48, and 49 were no longer subject to reexamination; claims 6, 7, and 21 were patentable over the asserted art; and newly added claims 36-46 were objected to as dependent upon rejected base claims but would be allowed if rewritten in independent form. In the merged King/Apple reexamination proceeding, the Examiner rejected claims 1-27 and new claims 37-42, 45, and 46, added during reexamination. The Examiner stated that claims 28-35, 48, and 49, however, are patentable over the asserted prior art and claims 36, 43, 44, and 47 are objected to as dependent upon rejected base claims but would be allowed if rewritten in independent form.

Affinity appealed and the Board affirmed the Examiner’s rejections in two final written decisions. In particular, the Board sustained the following grounds of rejection in the merged King/Apple reexamination:

• Claims 1-27, 39, and 45 as anticipated by U.S. Patent No. 6,671,567 (Dwyer), or obvious over Dwyer in combination with additional secondary references; and
• Claims 1-26, 37-42, and 45-46 as obvious over U.S. Patent No. 6,694,200 (Naim) and U.S. Patent No. 6,728,531 (Lee), or obvious over Naim and Lee in combination with additional secondary references.

The Board also sustained the following grounds of rejection in the severed Volkswagen reexamination:

• Claims 1-5, 8-11, 13-18, 20, 22-23, and 25-27 as anticipated by EP Patent App. No. EP0982732 (Hahm) or obvious over Hahm in combination with additional secondary references; and
• Claims 1-3, 5, 8-17, 19-20, 22-26, and 27 as anticipated by U.S. Patent No. 6,407,750 (Gioscia) or obvious over Gioscia in combination with additional secondary references.

Discussion

We review the PTO’s decisions under the standards set forth in the Administrative Procedure Act (APA), 5 U.S.C. § 706. Pride Mobility Prods. Corp. v. Permobil, Inc., 818 F.3d 1307, 1313 (Fed. Cir. 2016). We set aside the agency’s actions if they are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law’-’ or “unsupported by substantial evidence.” 5 U.S.C. § 706(2). We review its legal conclusions de novo and its factual findings for substantial evidence. In re Gartside, 203 F.3d 1305, 1316 (Fed. Cir. 2000). A finding is sup-ported by substantial evidence if a reasonable mind might accept the evidence as adequate support for the finding. Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938).

I. Affinity’s Petition to Terminate

We first address Affinity’s argument that the PTO improperly maintained all three reexaminations over the estoppel provision of pre-AIA 35 U.S.C. § 317(b). Affinity argues that § 317(b) requires the PTO to terminate the Volkswagen reexamination in its entirety after Volkswagen received an adverse ruling as to the asserted claims—claims 28 and 35—in the co-pending litigation. Affinity also argues that because the Volkswagen reexamination was merged with the Apple and King reexaminations into a single proceeding at the time—and the parties were permitted to comment on proposed grounds of unpa-tentability that were not advanced in their respective petitions—the PTO’s decision not to terminate the entire merged proceeding was error. Affinity does not tie this argument to the language of the statute but argues the decision not to terminate all reexaminations frustrates section 317(b)’s underlying policy goal of preventing duplicative, harassing actions. We conclude that a straightforward reading of the plain language of section 317(b) precludes Affinity’s overly broad conception of the estoppel provision. We, therefore, find no grounds to reverse the Board’s final decisions based on section 317(b).

In order to further encourage parties to use the PTO’s patent reexamination procedure, Congress enacted in 1999 inter partes reexamination “as an option to the existing ex parte reexamination proceedings.” 145 Cong. Rec. 29,972 (1999). With inter partes reexamination, Congress hoped, as it had when it enacted ex parte reexamination years earlier, to “reduce litigation in district courts and make reexamination a viable, less costly alternative to patent litigation.” 145 Cong. Rec. 26,984 (1999) (statement of Sen. Hatch). In contrast to ex parte reexamination, Congress specifically provided the third party reexamination requester the opportunity to fully participate in the inter partes proceeding. See generally 35 U.S.C. § 311 et seq. (pre-AIA).

In addition to allowing requester participation in inter partes reexamination, Congress enacted measures in the inter partes reexamination statute to “prevent abusive reexamination requests, including broad estoppel provisions.” 145 Cong. Rec. 26,-984 (1999) (statement of Sen. Hatch). Those provisions are reflected, in part, in 35 U.S.C. § 317 (the pre-AIA version), entitled “Inter partes reexamination prohibited,” which limits an inter partes reexamination requester’s ability to continually attack the validity of a patent’s claims by using the inter partes reexamination process. Section 317(a), for example, generally prohibits an inter partes reexamination requester, whose reexamination request has been granted and the proceeding on that patent is pending, from filing “a subsequent request for inter partes reexamination of the patent” until the first inter partes reexamination has been completed and a reexamination certificate issues. Section 317(b) bars a party from using the inter partes reexamination process after a final decision has been entered against that party in a civil action, finding “that the party has not sustained its burden of proving the invalidity of any patent claim in suit.” The statute provides in pertinent part:

Once a final decision has been entered against a party in a civil action ... that the party has not sustained its burden of proving the invalidity of any patent claim in suit or if a final decision in an inter partes reexamination proceeding instituted by a third-party requester is favorable to the patentability of any original or proposed amended or new claim of the patent, then neither that party nor its privies may thereafter request an inter partes reexamination of any such patent claim on the basis of issues which that party or its privies raised or could have raised in such civil action or inter partes reexamination proceeding, and an inter partes reexamination requested by that party or its privies on the basis of such issues may not thereafter be maintained by the Office ....

35 U.S.C. § 317(b) (pre-AIA).

A few notable features of the inter partes reexamination statutory estoppel provision stand out from its plain language: (1) it applies to the party in the civil action that loses its validity attack against “any patent claim” as well as the party’s privies; (2) it- applies to validity issues raised in the civil action or that could have been raised in that action; (3) unlike section 317(a), it speaks in terms of any “patent claim,” as opposed to the “patent;” (4) it prohibits the losing party and its privies from requesting an inter partes reexamination “of any such patent claim;” and (5) “on the basis of such issues,” it prohibits the PTO from “maintaining]” any inter partes reexamination requested by the losing party.

Affinity urges that we order the PTO to terminate all three reexamination proceedings—even though they involve several claims beyond the litigated claims 28 and 35, the other inter partes reexamination requester had no involvement or relationship to that prior litigation, and the third proceeding was an ex parte reexamination—based on its reading of section 317(b). The PTO offers a counter reading of this statutory estoppel provision, which follows its established practice set forth in Manual of Patent Examining Procedure (MPEP) § 2686.04(V)(A).

“Our first step in interpreting a statute is to determine whether the language at issue has a plain and unambiguous meaning with regard to the particular dispute in the case. Our inquiry must cease if the statutory language is unambiguous and the statutory scheme is coherent and consistent.” Pennzoil-Quaker State Co. v. United States, 511 F.3d 1365, 1373 (Fed. Cir. 2008) (quoting Robinson v. Shell Oil Co., 519 U.S. 337, 340, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997)). “Absent a clearly expressed legislative intention to the contrary, [the statute’s plain] language must ordinarily be regarded as conclusive.” Wyeth v. Kappos, 591 F.3d 1364, 1369 (Fed. Cir. 2010) (quoting Consumer Prod. Safety Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S.Ct. 2051, 64 L.Ed.2d 766 (1980)) (alteration in original). Moreover, “statutory language cannot be construed in a vacuum. It is a fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.” Davis v. Mich. Dep’t. of Treasury, 489 U.S. 803, 809, 109 S.Ct. 1500, 103 L.Ed.2d 891 (1989).

The crux of Affinity’s argument is that the statute operates differently and has a much broader impact against a losing party’s active, pending inter partes reexamination compared to a losing party’s request for an inter partes reexamination. According to Affinity, if a patent challenger conclusively loses its validity challenge in court against, say, claims 1-5 of a 20-claim patent, section 317(b) prevents that party from requesting an inter partes reexamination on just claims 1-5 (and not claims 6-20) of that patent on issues that had been raised or could have been raised in the civil action. No one disagrees there. But, in Affinity’s view, section 317(b) requires termination of a pending inter partes reexamination that had been requested by the losing party, regardless of which claims of the patent are being reexamined in the proceeding: it could be claims 1-10, or 1-20, or even 6-20. For Affinity then, the scope of the statutory estoppel is claim-specific as to requests for inter partes reexamination, but is purely patent-as-a-whole-driven for maintaining a pending inter partes reexamination. We disagree with Affinity’s proposed interpretation and instead see the estoppel provision’s claim-based approach applying in the same way to both a request for inter partes reexamination and the maintenance of a pending inter partes reexamination.

The structure of pre-AIA section 317(b) contemplates a parallel and consistent approach to limiting a party’s ability to request a reexamination and to maintain a reexamination once a final decision has been entered against the party in a civil action. The statute first explains that the party may not request reexamination on “any such patent claim on the basis of issues which that party or its privies raised or could have raised in such civil action.” This language limits the scope of estoppel in two ways: (i) to the specific claims that were actually at issue in the district court proceeding; and (ii) to challenges to those claims that were raised or could have been raised. In other words, the “issues that could have been raised” are necessarily bounded by the preceding reference to “any such patent claim.” When the statute subsequently prohibits maintaining a reexamination “on the basis of such issues,” the issues in question are similarly bounded by the “any such patent claims” limitation. If Congress had intended the statutory estoppel provision to apply in a different, broader, patent-based way for pending inter partes reexaminations (and we see nothing in the legislative history suggesting such an intent), it understood how to do so, as it did for the subsection immediately preceding section 317(b). As explained above, in section 317(a), a party who has already triggered a still-pending inter partes reexamination of a patent’s claims may not file “a subsequent request for inter partes reexamination of the patent” until a reexamination certificate issues for the pending proceeding.

Moreover, the inter partes reexamination statutory scheme consistently reflects a careful, express focus on implementing this regime on a claim-by-claim basis. Section 311 requires an inter partes reexamination requester to “set forth the pertinen-cy and manner of applying cited prior art to every claim for which reexamination is requested.” 35 U.S.C. § 311(b)(2) (pre-AIA) (emphasis added). Under section 312, “the Director shall determine whether a substantial new question of patentability affecting any claim of the patent concerned is raised by the request.” Id. § 312 (emphasis added). Furthermore, “[i]f ... the Director finds that a substantial new question of patentability affecting a claim of a patent is raised, the determination shall include an order for inter partes reexamination of the patent for resolution of the question.” Id. § 313 (emphasis added). In other words, the order to conduct an inter partes reexamination is to resolve the patentability questions of particular claims specifically raised by a requester—not an entire patent—once a substantial new question of patentability is raised for those selected patent claims. Had Congress wanted the inter partes reexamination to extend to all claims of a patent, regardless of how many claims were requested for review, it would have left out the final phrase “resolution of the question” and ended the provision with “an order for inter partes reexamination of the patent.”

In addition, this claim-by-claim focus is also reflected in the converse estoppel provision that prohibits a challenge to a patent claim which has been finally determined to be valid in an inter partes reexamination proceeding. Section 315 provides:

A third-party requester whose request for an inter partes reexamination results in an order under section 313 is es-topped from asserting at a later time, in any civil action arising in whole or in part under section 1338 of title 28, the invalidity of any claim finally determined to be valid and patentable on any ground which the third-party requester raised or could have raised during the inter partes reexamination proceedings.

35 U.S.C. § 315(c) (pre-AIA) (emphasis added). Thus, as with section 317(b), the statute in section 315(c) similarly estops the requester from challenging again, in a different venue, the validity of claims that were actually decided against the requester. Nothing in section 315(c), however, estops the requester from challenging at a later time the validity of a claim that was not previously requested pursuant to section 311 and reexamined pursuant to section 313.

Upon review of the text, structure, and history of the inter partes reexamination statute, we decline to read section 317(b) in an incongruous way that would cause the statutory estoppel provision to apply differently for requesting an inter partes reexamination compared to maintenance of a pending inter partes reexamination. Such a reading would require us to read a patent-based assumption into a portion of that provision where there is none and Affinity offers no reason why one would exist. We, therefore, conclude that section 317(b) plainly limited the scope of estoppel in all circumstances to only those claims actually challenged and for which the requesting party received an adverse final decision in the district court proceeding. Congress could have mandated that any challenge to any claim in a patent in an inter partes reexamination would be estopped once a validity challenge to one or more claims of the patent had been rejected in a prior proceeding, yet it did not do so. Rather, Congress chose to estop only further validity challenges—using inter partes reexamination—to the specific claims the validity of which had -been previously resolved against the requester. As such, we reject Affinity’s argument that the PTO was required to terminate the Volkswagen reexamination with respect to all claims in that reexamination. We instead affirm the PTO’s decision to terminate that reexamination as to only the claims in which a final decision in the civil action has been entered—claims 28 and 35.

We also find no basis in the statute for Affinity’s argument that the final decision in the Volkswagen litigation should have preclusive effect on the reexaminations requested by King or Apple. By its plain and unambiguous terms, pre-AIA section 317(b) extends only to inter partes reexaminations—not ex parte reexaminations. The estoppel effect of the statute, therefore, has no bearing on the ex parte King reexamination. Moreover, the statute also imposes the aforementioned limitations only on a requester that was a party to the civil action or its privies. Because Apple was neither a party to the Volkswagen litigation nor was there any evidence Apple was Volkswagen’s privy, we also find no error in the PTO’s decision not to terminate the inter partes reexamination requested by Apple.

Affinity’s invocation of the general policy goal of preventing abusive reexamination practices cannot override the statute. “It is a bedrock canon of statutory construction that our judicial inquiry ends where statutory language is plain and unambiguous.” Pfizer, Inc. v. Lee, 811 F.3d 466, 471 (Fed. Cir. 2016) (quoting White v. United States, 543 F.3d 1330, 1337 (Fed. Cir. 2008)). “[Ojnly a ‘most extraordinary showing of contrary intentions’ by Congress justifies a departure from the plain language of a statute.” Wyeth, 591 F.3d at 1371 (quoting Garcia v. United States, 469 U.S. 70, 75, 105 S.Ct. 479, 83 L.Ed.2d 472 (1984)). The plain language of the statute does not permit extending the reach of estoppel as far as Affinity suggests. Moreover, we- have reviewed the legislative history and find no such extraordinary showing sufficient to overcome the statute’s plain language.

In sum, Affinity has failed to demonstrate that the PTO’s denial of its petitions to vacate the entire merged proceeding was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.

II. Unpatentability of the ’833 Patent

We next address Affinity’s arguments that the Board erred in upholding the Examiner’s unpatentability rejections in both decisions. We conclude that substantial evidence supports the Board’s unpa-tentability findings as to all challenged claims in the merged King/Apple reexamination. Because the claims at issue in the Volkswagen reexamination comprise only a subset of the claims in the King/Apple reexamination, we do not address the alternative grounds of unpatentability at issue in the Volkswagen reexamination appeal.

A. Anticipation by Dwyer

Affinity appeals the Board’s decision in the King/Apple reexamination that claims 1-27, 39, and 45 are anticipated by Dwyer or obvious over Dwyer in view of additional secondary references. Affinity argues specifically that Dwyer does not disclose (i) a portable electronic device configured to display a graphical interface item, having “a name associated with an audio file saved in memory,” as required by independent claim 1; or (ii) “a plurality of preprogrammed soft buttons that are linked to respective audio information sources,” as required by independent claims 1 and 17. We find both of Affinity’s arguments unpersuasive.

A claim is unpatentable as anticipated “if each and every limitation is found either expressly or inherently in a single prior art reference.” King Pharm., Inc. v. Eon Labs, Inc., 616 F.3d 1267, 1274 (Fed. Cir. 2010) (citation omitted). Anticipation is a question of fact we review for substantial evidence. REG Synthetic Fuels, LLC v. Neste Oil Oyj, 841 F.3d 954, 958 (Fed. Cir. 2016).

Dwyer generally relates to the field of portable digital recorders and the “effective and convenient interaction between a portable digital recorder and a personal computer.” Dwyer col. 1, 11. 36-38. Figure 1 shows the general configuration disclosed in Dwyer, whereby a digital portable recorder 12 is physically connected, by way of a cradle 14 and a cable 15 to a personal computer 16 (see id. col. 3,11. 18-24):

Dwyer’s recorder stores digital audio files and includes a touch screen that “provides information to the user of the recorder, and through which the user inputs information;” Id. col. 4, ll. 41-42. Dwyer discloses a variety of touch screen functions and notes that “it is contemplated to allow the user to control recording, editing and playback 'functions via the touch screen, which also may be used to navigate among voice files and to select an existing voice file for playback and/or additional recording.” Id. col. 4, 1. 66-col. 5, 1. 3; col. 6,11.10-12. Dwyer also discloses that “[r]e-corded with, or otherwise associated with, each voice file is header data,” id. col. 5,11. 16-17, as shown in Figure 5:

That header information includes, specifically, “title or other identifying data 116, which indicates a title or other name used to identify the corresponding voice file.” Id. col. 5,11. 31-32.

Given the disclosure above, the Board was reasonable to conclude that Dwyer’s portable electronic device necessarily displays name information on the graphical interface to allow the user to meaningfully navigate the digital files stored on the device. Substantial evidence supports the Board’s finding that this limitation is disclosed by Dwyer.

Dwyer also teaches communicating information from the portable recorder device to the user’s personal computer. Specifically, the Dwyer system contemplates that the recorder “uploads to the personal computer voice file identification data corresponding to all of the voice files (i.e. the portion of the header data indicated as ‘title/I.D.’ data 116 and discussed above in connection with FIG. 5).” Id. col. 6, 11. 24-28. That header data is used to create a graphical user interface display on the user’s personal computer, indicative of the files stored in the recorder. In this way, the user can view and manipulate information stored on the recorder via the graphical user interface displayed on the personal computer.

Dwyer specifically discloses that information, including a name, associated with audio files is displayed in the graphical user interface for selection and playback by the user. Id. col. 6, 11. 24-36. Figure 8 depicts the information presented through the computer screen’s display:

“Field 218 allows the user to focus in on particular voice files in the recorder,” id. col. 8,11. 34-35, “[i]cons 220 in field 218 are each respectively indicative of a voice file stored in the portable recorder,” id. col. 8, 11. 35-37, and “[n]ame information indicated at 222 corresponds to the header data component 116 (FIG. 5) for the voice files, which was uploaded to the PC....” Id. col. 8, 11. 37-39. When the user attempts to access information stored in the portable recorder via the graphical user interface, Dwyer explains, “the specific file may be selected, for example, by designating the corresponding icon in the field 218 of the display of FIG. 8.” Id. col. 9,11. 6-9.

Based on this disclosure, the Board’s finding that Dwyer teaches soft buttons (comprised of the icon 220 and name 222 information found in field 218) linked to respective audio information sources (as stored in the portable digital recorder) is eminently reasonable. We, therefore, conclude that substantial evidence supports the Board’s finding that claims 1-27, 39, and 45 are unpatentable based on the asserted Dwyer rejections.

B. Obviousness Based on Naim and Lee

Affinity also appeals the Board’s obviousness conclusion as to claims 1-26, 37-42, and 45-46 in view of the combination of Naim and Lee. Affinity argues that neither Naim nor Lee discloses (i) communicating a graphical item comprising a name from a portable electronic device to a different electronic device, as required by claims 1 and 17; or (ii) a portable electronic device with a mounting location that includes a physical interface, as required by claims 1, 23, and 24. Affinity further argues that the Board improperly rejected its objective indicia of nonobviousness evidence. We disagree with Affinity’s challenges to the disclosures of Naim and Lee and conclude that substantial evidence supports the Board’s decision not to give dispositive weight to Affinity’s objective indicia argument.

A claim is unpatentable if the differences between the claimed subject matter 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. 35 U.S.C. § 103; KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 406, 127 S.Ct. 1727, 167 L.Ed.2d 705 (2007). Obviousness is a question of law based on underlying findings of fact. Harmonic Inc. v. Avid, Tech., Inc., 815 F.3d 1356, 1363 (Fed. Cir. 2016). The underlying findings of fact include the scope and content of the prior art, the differences between the prior art and the claimed invention, whether there is a motivation to combine prior art references, the level of ordinary skill in the art, and relevant secondary considerations. Merck & Cie v. Gnosis S.P.A, 808 F.3d 829, 833 (Fed. Cir. 2015), cert. denied, — U.S. -, 137 S.Ct. 297, 196 L.Ed.2d 238 (2016).

Naim relates to the field of portable digital devices and specifically teaches a system where recorded audio files can be transferred from a portable electronic device to a different electronic device. Naim col. 11,11. 17-22. Figure IB depicts Naim’s system as follows:

Naim’s portable device comprises two main parts, the portable player 2 and the hard drive 3. Id. col. 5, 11. 4-5. Naim explains that “control buttons 15 on the portable device 1 allow for operation of the player 2 and its interface with the hard disk 3 via an interface 9, which can be a physical hard connector or a wireless interface.” Id. col. 5, 11. 21-24. In addition, the portable device “can also have an interface 10 to allow data-file download/upload from an external communications device 11, such as a PC, to the portable device hard disk 3.” Id. col. 5,11. 24-27.

Lee discloses an Internet radio system that can be incorporated into a car. The Lee system uses a multimedia device with a graphical user interface in an automobile that can interact with portable devices such as notebook computers, cellular phones, and MP3 players. Lee col. 5, 11. 47-65; col. 7, 11. 55-61; col. 8, 11. 47-64. As depicted in Figure 2 below, the Lee multimedia device includes a display to present audio information to the user via the graphical user interface.

The display includes soft buttons that a user can manipulate to play audio files stored on a portable device. Id. col. 10, 11. 23-27.

Affinity first contends that the Board erred in concluding Naim discloses a portable electronic device graphical interface item comprising a name because the only transfer of data in Naim from the portable device to a PC “is either ... statistical information or voice recorded content,” and “[t]his information need not include identifying information.” Affinity Opening Br. 45. We disagree. First, Naim contemplates bi-directional transfer of information between the two devices via interface port 10. Moreover, “[i]f the portable han-dheld audio device is used as a recorder, this port can be used to upload the recorded content to the computer.” Id. col. 11,11. 20-22. That uploaded content is stored in memory as a digital data file and would necessarily include identifying information such as file name. From this, it was reasonable for the Board to find that Naim discloses communicating the claimed information from the portable electronic device 2 to the external communications device, PC 11. We therefore conclude substantial evidence supports the Board’s finding that this limitation is disclosed by Naim.

We next address Affinity’s argument that the Board erred in finding that Lee teaches a “mounting location ... that includes a physical interface.” Affinity contends that, properly construed, this phrase excludes wireless coupling. And, according to Affinity, Lee teaches only wireless communication. We, like the Board, reject Affinity’s narrow construction. The Board adopted the Examiner’s interpretation of the claimed physical interface to comprise any circuitry or the like on or within a device that allows it to communicate wire-lessly or via a wire. It also endorsed the Examiner’s construction of “mounting location” as any location on or within the portable device in which the physical interface is installed or mounted. We agree with the Examiner that neither the express language of the claim nor the specification precludes a wireless interface formed by physical components having a mounting location on the portable device. See In re Rambus, Inc., 753 F.3d 1253, 1255 (Fed. Cir. 2014) (noting that, during reexamination, the Board must construe claims giving them their broadest reasonable interpretation consistent with the specification). Under the broadest reasonable interpretation, substantial evidence supports the Board’s finding that Lee teaches the claimed “mounting location ... that includes a physical interface.” Moreover, the Examiner also expressly found “Naim’s portable player is capable of communicating to a PC either wirelessly or via a wire.” J.A. 10643. Indeed, Naim discloses that the interface between the two devices “can be a physical hard connector or a wireless interface.” Naim col. 5, 11. 24-28. Thus, even applying Affinity’s narrow construction, substantial evidence supports the Board’s finding that the combination of Naim and Lee discloses the claimed physical interface.

Finally, we are not persuaded that the Board erred in its analysis of Affinity’s proffered objective indicia of nonobviousness. Affinity pointed to (i) a $25 billion industry developed around in-vehicle device integration, which it says is covered by the claims of the ’833 patent; and (ii) Affinity’s licensing of the ’833 patent and its siblings to a number of entities in excess of $50 million. Upon review, however, we agree with the Examiner that this evidence, at best, establishes a tenuous connection with the claimed invention.

Evidence of commercial success is only relevant to the obviousness inquiry “if there is a nexus between the claimed invention and the commercial success.” Ormco Corp. v. Align Tech., Inc., 463 F.3d 1299, 1312 (Fed. Cir. 2006). There is no nexus unless the evidence presented is “reasonably commensurate with the scope of the claims.” See Rambus Inc. v. Rea, 731 F.3d 1248, 1257 (Fed. Cir. 2013). Here, the Board correctly recognized that Affinity provided no explanation or analysis that corroborates the relationship between the claims of the ’833 patent and the market for in-vehicle device integration technology generally. Affinity’s argument that the claims of the ’833 patent are directed to the general field of device connectivity and interoperability, without more, does not establish a meaningful connection with the asserted commercial success. We, therefore, see no error in the Board’s decision that this evidence of nonobviousness was entitled to little weight. See Pro-Mold & Tool Co. v. Great Lakes Plastics, Inc., 75 F.3d 1568, 1574 (Fed. Cir.’ 1996) (“It is within the province of the fact-finder to resolve these factual disputes regarding whether a nexus exists between commercial success of the product and its patented features, and to determine the probative value of ... evidence of secondary considerations.... ”).

Moreover, the mere fact of licensing alone cannot be considered strong evidence of nonobviousness if it cannot also be shown that the licensees did so out of respect for the patent rather than to avoid the expense of litigation. See Iron Grip Barbell Co. v. USA Sports, Inc., 392 F.3d 1317, 1324 (Fed. Cir. 2004) (“Our cases specifically require affirmative evidence of nexus where the evidence of commercial success presented is a license, because it is often ‘cheaper to take licenses than to defend infringement suits.’ ”). To support its licensing argument, Affinity did not enter the actual licenses into the record but, rather, submitted the unsupported declaration of Affinity’s President that it “has generated revenues of over $50,000,000 for licensing the ’833 patent and related patents.” J.A. 10488 (emphasis added). Affinity did not explain what percentage of this revenue—if any—was attributed to the ’833 patent instead of the related patents, the terms of the licenses, the nature and number of other patents at issue in the licenses, or the circumstances under which they were granted, except to concede that some “were entered as part of settlement of pending lawsuits.” Id. This court has explained' that, as here, “[w]hen the specific licenses are not in the record, it is difficult for the court to determine if ‘the licensing program was successful either because of the merits of the claimed invention or because they were entered into as business decisions to avoid litigation, because of prior business relationships, or for other economic reasons.’ ” In re Cree, Inc., 818 F.3d 694, 703 (Fed. Cir. 2016) (quoting In re Antor Media Corp., 689 F.3d 1282, 1294 (Fed. Cir. 2012)). Because of the lack óf specificity in Affinity's licensing argument, the Board correctly afforded this evidence little weight.

Conclusion

For the foregoing reasons, we affirm the -4281 Board Decision that claims 1-27, 37-42, and 45-46 are unpatentable. Because claim 36 was rejected by the Examiner and Affinity has made no independent argument that claim 36 was improperly rejected apart from those arguments made with respect to the independent claims, we remand to the Board for the limited purpose of correcting the record to reflect that claim 36 is rejected as unpatentable before issuing a reexamination certificate. Because we affirm the -4281 Board Decision, we need not resolve Affinity’s appeal relating to the -6122 Board Decision upholding the unpatentability of claims 1-5, 8-20, and 22-27, and dismiss that appeal as moot.

AFFIRMÉD-IN-PART, REMANDED-IN-PART, DISMISSED-IN-PART

Costs

No costs.

      . When Congress enacted the AIA, it replaced the extant statutory provisions for inter partes reexamination with provisions for a new type of proceeding, inter partes review. In doing so, Congress amended the provisions of 35 U.S.C. § 317 to apply only to inter partes review proceedings, which, by definition, are filed post-AIA. Congress also specified that the pre-AIA provisions of the inter partes reexamination statute remain applicable to inter partes reexamination proceedings.

      . We note that the Examiner actually rejected claim 36 as obvious over Naim in view of Lee in the body of the Right of Appeal Notice in the merged King/Apple reexamination but mistakenly identified that claim as being objected to on the cover page. The Board adopted this mistake and, therefore, omitted claim 36 from its review of the Examiner's rejections. Both parties acknowledge the oversight. We therefore instruct the PTO to correct the record to reflect that claim 36 stands rejected prior to issuing the reexamination certificate.

      . Although section 317(b) estops parties who have received a final adverse decision in either a civil action or an inter partes reexamination, for convenience our discussion focuses on how the estoppel provision operates when a party receives a final adverse decision • in a civil action. Our analysis and conclusion, however, is equally relevant in both situations.

      . We also find meritless Affinity's argument that by merging the proceedings the PTO “effectively created an inter partes review.” Affinity Opening Br. at 25. Affinity provides no statutory, regulatory, or rule-based support for its allegation, nor can we comprehend how it could do so, given the PTO merged the proceedings on June 14, 2010—more than two years before inter partes review was established. We áre also unaware of any justification supporting Affinity's suggestion that the PTO’s sua sponte decision to merge the proceedings somehow modifies the scope of the statutory estoppel applied against the requester.

      . We reject the Director's alternative argument that dismissal of Affinity's petitions to terminate the reexaminations was not a "final” agency action pursuant to the Manual of Patent Examining (MPEP) § 1002.02 ("A dismissal of a petition, a denial of a petition without prejudice, and other interlocutory orders are not final agency action.”). To the extent the Director argues the refusal to terminate the proceeding under section 317(b) is unreviewable under 5 U.S.C. § 704, we have previously held that such a decision is reviewable once the Board issues a decision on the merits. See Automated Merchandising Sys., Inc. v. Lee, 782 F.3d 1376, 1381 (Fed. Cir. 2015). We also reject the Director’s argument that Affinity was required to first seek reconsideration under the circumstances of this case. There was no indication in the PTO dismissal of Affinity's petitions that further action was required by Affinity to receive the PTO's final answer. Indeed, the PTO’s dismissal—a fifteen-page decision from the Office of Patent Legal Administration—had all the hallmarks of a final action marking the consummation of the agency’s decision-making process. In that decision, the PTO did not reference MPEP § 1002.02, nor did it inform Affinity that it was required to seek reconsideration in the dismissal. We, therefore, think it would be unnecessary to have required Affinity to have done more.

      . Affinity did not argue to the Board that the dependent claims were separately patentable and it does not argue the claims separately on appeal. We consider Affinity's argument with respect to independent claims 1 -and 17 as dispositive of all rejections based on Dwyer. See 37 C.F.R. § 41.37(c)(l)(iv) (2012) ("For each ground of rejection applying to two or more claims, the claims may be argued ... as a group (all claims subject to the ground of rejection rise and fall together)....”); In re Kaslow, 707 F.2d 1366, 1376 (Fed. Cir. 1983) ("Since the claims are not separately argued, they all stand or fall together.”) (citation omitted).

      . Because Affinity does not separately argue the rejected dependent claims, with the exception of claims 23 and 24, those claims rise and fall with the independent claims.

      . Congress amended § 103 when it passed the Leahy-Smith America Invents Act ("AIA”). Pub. L. No. 112-29, § 3(c), 125 Stat. 284, 287 (2011). However, because the application that led to the '833 patent has never contained a claim having an effective filing date on or after March 16, 2013 (the effective date of the statutory changes enacted in 2011), or a reference under 35 U.S.C. §§ 120, 121, or 365(c) to any patent or application that ever contained such a claim, the pre-AIA § 103 applies. Id. § 3(n)(l), 125 Stat. at 293.


text:
    IN RE: AFFINITY LABS OF TEXAS, LLC, Appellant
    2016-1173
    United States Court of Appeals, Federal Circuit.
    Decided: May 5, 2017

      William Manske, Robins Kaplan LLP, Minneapolis, MN, argued for appellant. Also represented by Ryan Michael Schultz.
    Robert McBride, Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA, argued for intervenor Michelle K. Lee. Also represented by Thomas W. Krause, Joseph Matal, Scott Weidenfeller.
    Before TARANTO, CHEN, and STOLL, Circuit Judges.
   CHEN, Circuit Judge.

This appeal arises from the inter partes reexamination of all claims, claims 1-42, of U.S. Patent No. 7,440,772 (the ’772 patent), owned by Affinity Labs of Texas, LLC (Affinity). Apple Inc. (Apple) requested the present reexamination after Affinity brought an action against it in district court, asserting infringement of claims 1, 4, and 11-13 of the ’772 patent. While the reexamination was pending, the parties settled their dispute and filed a joint stipulation of dismissal with the district court. Affinity’s infringement action was dismissed with prejudice and Apple’s invalidity counterclaims were dismissed without prejudice. Apple also filed a notice of non-participation in the reexamination. Affinity petitioned the United States Patent and Trademark Office (PTO) to terminate the patent reexamination that had been requested by Apple in view of the dismissal of Apple’s district court counterclaims pursuant to pre-America Invents Act (AIA) 35 U.S.C. § 317(b). That statutory section prohibits the PTO from maintaining an inter partes reexamination after the party who requested the reexamination has received a final decision against it in a civil action concluding “that the party has not sustained its burden of proving the invalidity of any patent claim in suit.” The PTO dismissed Affinity’s termination request because it did not view the district court’s dismissal, without prejudice, of Apple’s invalidity counterclaims as meeting section 317(b)’s required condition for terminating the reexamination. The Examiner ultimately rejected all of the patent’s claims, and Affinity appealed to the Patent Trial and Appeal Board (Board), which upheld the Examiner’s rejection.

Affinity now appeals the Board’s decision. The Director of the United States Patent and Trademark Office (Director) has intervened. We have jurisdiction under 28 U.S.C. § 1295(a)(4)(A) to review the Board’s decision. Affinity argues that the PTO improperly maintained the reexamination in view of § 317(b) and, on that basis, the Board’s decision upholding the rejection of the ’772 patent’s claims should be reversed. Affinity also argues that the Board’s finding that all claims are unpat-entable is based on an improper claim construction of three related limitations, the so-called dual download feature.

Because we conclude the estoppel provision of § 317(b) did not prohibit the PTO from maintaining the reexamination of the ’772 patent’s claims and the Board’s construction of the dual download feature is consistent with the broadest reasonable interpretation, we affirm the Board’s decision.

Discussion

I. 35 U.S.C. § 317(b)

We first address Affinity’s argument that the reexamination was improperly maintained over the estoppel provision of pre-AIA 35 U.S.C. § 317(b).

Pursuant to the joint stipulation filed by Affinity and Apple in the concurrent district court litigation, the district court dismissed Apple’s invalidity counterclaims without prejudice. The estoppel provision of section 317(b), however, is expressly conditioned upon the entry of a “final decision” “that the party has not sustained its burden of proving the invalidity of any patent claim in suit.” Because Affinity presents no evidence of a final decision that Apple has not sustained its burden of proving invalidity, we reject its argument based on section 317(b).

Under the plain language of section 317(b), the district court’s dismissal without prejudice of Apple’s invalidity counterclaims does not reflect a “final decision” that Apple failed to “sustain[ ] its burden of proving the invalidity” of the asserted claims. The dismissal without prejudice of Apple’s claims neither reflects an assessment by the district court of Apple’s invalidity challenge nor a concession by Apple that it did not or could not meet its burden of proving the asserted claims’ invalidity. Nor does the dismissal without prejudice prevent Apple from again challenging the validity of the ’772 patent’s claims in subsequent litigation. See, e.g., Jet, Inc. v. Sewage Aeration Sys., 223 F.3d 1360, 1364 (Fed. Cir. 2000) (“Dismissal without prejudice indicates that judgment is not on the merits and will have no preclusive effect.”); Rivera v. PNS Stores, Inc., 647 F.3d 188, 194 (5th Cir. 2011) (“ “Without prejudice’ indicates that the suit is dismissed without a decision on the merits and is not conclusive of the rights of the parties.”) (citation omitted). The estoppel provision of pre-AIA section 317(b) therefore did not serve as a bar to maintain the inter partes reexamination of the ’772 patent’s claims.

II. The Dual Download Feature

We next address the Board’s decision upholding the rejection of the ’772 patent’s claims as unpatentable.

The ’772 patent relates to an audio download method whereby content (e.g., a music file) is made available for download to different devices (e.g., an mp3 player and a personal computer). ’772 patent, Abstract; J.A. 2867. In particular, the ’772 patent discloses a graphical user interface that allows a user to search for and select audio files and to also select multiple destination devices to which the selected audio files will be sent. Id. col. 10, 11. 30-50; J.A. 2882. According to Affinity, one of the key features of the ’772 patent is the so-called dual download feature, whereby a user makes a single request to download content via the user interface of a first device and the selected content is downloaded to the first device in a format suitable to that device .and also to a second device in a format suitable to that second device.

Independent claim 4, as amended during reexamination, is representative of the ’772 patent’s claimed invention:

4. A content delivery method comprising:
maintaining a user interface page that is accessible to a wireless user device that has a player configured to execute a specific format of content file, the user interface page configured to present a user with a first graphical element associated with a piece of selectable content;
recognizing receipt of a request for the piece of selectable content from the wireless user device;
in response to receiving the request, making a first version of the piece of selectable content available for downloading to the wireless user device and a second version of the piece of selectable content available for downloading to a personal computer of the user, wherein the first version has the specific format and the second version has a different format playable by the personal computer;
sending the first version of the piece of selectable content to the wireless user device; and
sending the second version of the piece of selectable content to the personal computer.

’722 patent, claim 4 as amended; J.A. 19.

The parties agree that the dual download feature is embodied in the last three claim elements of claim 4, beginning with “in response to receiving the request.” Central to the parties’ dispute, however, is whether the “in response to” language modifies only the immediately following “making ... available” step or also modifies (and thus triggers) the two following “sending” steps. During reexamination, the Examiner found that “[t]he claim merely requires that the selectable content be ‘made available’ to both devices in response to the request, but it does not require that the content can be sent to both devices in Response to the request.” J.A. 2213. In other words, the Examiner explained, “the two claimed ‘sending’ steps are not specified as being ‘in response to receiving the request.’ ” Id. The Board explicitly adopted the Examiner’s construction and found that “one of the downloads may be made following a subsequent request.” J.A. 7. So' construed, the Board concluded that all claims are unpatentable as obvious over the asserted prior art.

Affinity argues that the steps of “sending” the desired content to two different devices must automatically occur, without any intervening step, “in response to receiving the request” for that content. According to Affinity, support for this connected functionality is supported by the specification, which states:

[A] user may select a plurality of devices as destination devices for receiving downloads of the selected audio information. For example, the user may want to download the information to a home stereo system, a PDA device, and an automobile stereo. As such, the selected information may be communicated to more than one destination device. In addition, the format of the download may match or conform to the selected destination device(s).

’772 patent col. 16, 11. 4-11; J.A. 2885. When read in view of the claim’s overall structure and the specification, Affinity argues, the “making ... available” and “sending” steps are necessarily tied together and must be performed following a single request.

During reexamination, the Board must construe claims giving them their broadest reasonable interpretation consistent with the specification. In re Rambus, Inc., 753 F.3d 1253, 1255 (Fed. Cir. 2014). We review the Board’s ultimate construction de novo and any underlying factual determinations for substantial evidence. Microsoft Corp. v. Proxyconn, Inc., 789 F.3d 1292, 1297 (Fed. Cir. 2015). When findings of fact extrinsic to the patent are not at issue, as here, we review de novo the Board’s determination of the broadest reasonable interpretation of the claims. See Cuozzo Speed Techs., LLC v. Lee, — U.S. -, 136 S.Ct. 2131, 2142, 195 L.Ed.2d 423 (2016); Ruckus Wireless, Inc. v. Innovative Wireless Sols., LLC, 824 F.3d 999, 1002 (Fed. Cir. 2016).

We have considered Affinity’s argument and disagree with its narrow interpretation of the dual download feature. The plain language of claim 4 does not require the selected content to be sent to the two devices in response to the same request found in the preceding “making ... available” step. We note that each of the five steps of method claim 4—including the three steps of the so-called dual download feature—are offset by semicolons. This punctuation choice strongly indicates that each step is separate and distinct. It would, therefore, be reasonable to conclude the fourth and fifth steps—the sending steps—hre not tied to the “making ... available” step and not performed “in response to” the same request found in the “making ... available” step, as Affinity suggests.

Moreover, claim 4 uses the transition “comprising,” indicating that the claimed method is open-ended and allows for additional steps. See Vivid Techs., Inc. v. Am. Sci. & Eng’g, Inc., 200 F.3d 795, 811 (Fed. Cir. 1999) (noting that the word “comprising” is “generally understood to signify that the claims do not exclude the presence in the accused apparatus or method of factors in addition to those explicitly recited”). This language choice signals that the breadth of claim 4 allows for additional steps interleaved between the recited steps. Therefore, it was reasonable for the Board to conclude that claim 4 does not prohibit additional, intervening steps, between the “making ... available” step and the “sending” steps—such as an additional request to send the requested content to a specific device.

In addition, we disagree with Affinity that the specification supports only its understanding of the claim. The passage on which Affinity relies refers to “selecting” destination devices for possible downloads and provides only that, in one contemplated embodiment, the requested information “may be communicated to more than one destination device.” ’772 patent col. 16, 11. 8-9 (emphasis added). Moreover, the passage concludes that the format of the download “may match or conform to the selected destination device(s).” Id. col. 16, 11. 9-11. This passage is indeed consistent with the notion that the selected content may be downloaded to multiple destination devices in the format appropriate to each device. However, it is hardly a command that the requested content must be simultaneously and automatically downloaded to all selected destination devices based on a single request, without any subsequent action by the user. The specification elsewhere in fact contemplates embodiments to the contrary: “In another embodiment, homepage 401 may allow a user to select when to download the information to an electronic device.” Id. col. 11, 11. 25-27. Thus, the specification also supports the reasonableness of the Board’s construction.

We conclude that the Board’s claim construction is correct, particularly under the broadest reasonable interpretation rule. Affinity concedes that if this court affirms the Board’s claim construction, the challenged claims would be unpatentable based on the grounds asserted in the reexamination. See Oral Arg. at 9:50-10:45, http:// oralarguments.eafe.uscourts.gov/default. aspx?fl=2016-1173.mp3. We therefore affirm the Board’s decision that all claims of the ’772 patent are unpatentable.

Conclusion

For the foregoing reasons, the Board’s decision is

AFFIRMED

Costs

No costs.

      .When Congress enacted the AIA, it replaced the extant statutory provisions for inter partes reexamination with provisions for a new type of proceeding, inter partes review. In doing so, Congress amended the provisions of 35 U.S.C. § 317 to apply only to inter partes review proceedings, which, by definition, are filed post-AIA. Congress also specified that the pre-AIA provisions of the inter partes reexamination statute remain applicable to inter partes reexamination proceedings.

      . As we explain in In re Affinity Labs of Tex., LLC, Appeal Nos. 2016-1092, -1172, also decided today, the scope of section 317(b)’s es-toppel as it applies to maintaining a pending inter partes reexamination focuses on a comparison of the claims litigated with the claims in the reexamination, rather than a patent-based approach.

      . Affinity canceled claim 1 during the reexamination and the Board rejected all remaining claims, claims 2-42.

      . During the reexamination, both the Examiner and the Board treated claim 4 as representative of all challenged claims. Affinity raised no objection to that choice and on appeal to the Board argued patentability only in the context of claim 4. Based on this record, we likewise treat claim 4 as representative of all challenged claims. See 37 C.F.R. § 41.37(c)(l)(iv) (2012) (“For each ground of rejection applying to two or more claims, the claims may be argued ... as a group (all claims subject to the ground of rejection stand or fall together)....”); In re McDaniel, 293 F.3d 1379, 1383 (Fed. Cir. 2002) (noting "the Board is free to select a single claim from each group of claims subject to a common ground of rejection as representative of all claims in that group and to decide the appeal of that rejection based solely on the selected representative claim” in the absence of a clear statement asserting separate patent-ability of the claims).


author: REYNA, Circuit Judge.

text:
    BOOMERANG TUBE LLC, TMK IPSCO, Energex Tube, a division of JMC Steel Group, Welded Tube USA Inc., United States Steel Corporation, Plaintiffs-Appellants v. UNITED STATES, Jubail Energy Services Company, Duferco SA, Defendants-Appellees
    2016-1554, 2016-1561
    United States Court of Appeals, Federal Circuit.
    Decided: May 8, 2017

      Roger Brian Schagrin, Sehagrin Associates, Washington, DC, argued for plaintiffs-appellants Boomerang Tube LLC, TMK IPSCO, Energex Tube, Welded Tube USA Inc. Also represented by John W. Bohn, Christopher Cloutier, Paul Wright Jameson, Jordan Charles Kahn.
    Jonathan Gordon Cooper, Quinn Emanuel Urquhart & Sullivan, LLP, Washington, DC, argued for plaintiff-appellant United States Steel Corporation. Also represented by Debbie Leilani Shon, Jon David Corey, Kelsey Rule, Philip Charles Sternhell.
    Emma Bond, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee United States. Also represented by Benjamin C. Mizer, Jeanne E. Davidson, Claudia Burke; Heather Noel Doherty, United States Department of Commerce, Washington, DC.
    Nancy Noonan, Arent Fox, LLP, Washington, DC, argued for defendants-appel-lees Jubail Energy Services Company, Duferco SA. Also represented by John M. Gurley, Diana Dimitriuc Quaia.
    Before REYNA, HUGHES, and STOLL, Circuit Judges.
   REYNA, Circuit Judge.

Boomerang Tube LLC and United States Steel Corporation appeal a decision from the U.S. Court of International Trade, which affirmed the U.S. Department of Commerce’s final determination in an antidumping investigation. The parties failed to exhaust their arguments before Commerce, and the Trade Court abused its discretion in waiving the exhaustion requirement in this case. Therefore, we vacate and remand.

Background

A. Investigation and Preliminary Determination

On July 29, 2013, Commerce initiated an investigation into whether oil country tubular goods (“OCTGs”) from Saudi Arabia and other countries imported into the United States from July 1, 2012 through June 20, 2013 were sold for less than fair value—i.e., dumped. OCTGs are a family of seamless rolled steel products consisting of drill pipes, casing, and tubing used in connection with oil and gas production. Commerce selected Duferco SA, the largest of fourteen known Saudi Arabian OCTGs exporters, to serve as the sole mandatory respondent in the investigation. Duferco is the exporter of record for OCTGs produced by Jubail Energy Services Company (“JESCO”).

In August 2013, the Trade Commission preliminarily determined that there is a reasonable indication that a U.S. domestic industry was materially injured by reason of sales in the United States of OCTGs from Saudi Arabia at less than fair value. In February 2014, Commerce issued its preliminary determination that OCTGs from Saudi Arabia were being, or were likely to be, sold in the United States at less than fair value. Commerce preliminarily calculated an anti-dumping duty margin of 2.92 percent ad valorem.

In its preliminary determination, in accordance with 19 C.F.R. § 351.401(f), Commerce sua sponte determined to treat Duferco SA and three of its affiliates as a single entity (“Duferco entity”) because it found a significant potential for manipulation of price or production. After collapsing the Duferco affiliates into a single entity, Commerce further determinéd that Duferco is affiliated with JESCO, the producer of the subject OCTGs imported into the United States. This affiliation was based on the fact that the Duferco entity owns ten percent of JESCO. JESCO was not included in the Duferco entity, nor were several other Duferco SA affiliates. J.A. 6628-29 & n.26.

JESCO participated in the antidumping duty investigation as a voluntary respondent. Early in the investigation, Commerce asked JESCO to submit data regarding its third-country sales of OCTGs for potential use in calculating normal value. JESCO responded by providing data of sales made in Colombia to an unaffiliated customer and an affiliated distributor.

In calculating normal value, Commerce concluded that JESCO had no viable home market sales; because its home market sales either failed the arm’s length test or were made below cost of production. Commerce determined to construct normal value under 19 U.S.C. § 1677b(ej(2)(B)(iii), which provides for using “any other reasonable method.” Commerce calculated a profit value for JESCO’s constructed value (“CV”) using the profit figures in the public 2012 audited financial statements of Saudi Steel Pipes Company (“Saudi Steel”). J.A. 6630-33, 6640-41.

B. Party Briefing to Commerce

Following Commerce’s preliminary determination, interested parties submitted briefs on, among other issues, the profit value used in CV for JESCO. Boomerang, JESCO, and Duferco submitted case and rebuttal briefs. U.S. Steel did not.

Boomerang’s case brief challenged Commerce’s reliance on the financial statements of Saudi Steel, arguing that the data were unreliable because the company is more of a pipe line producer than an OCTGs producer. Boomerang suggested that Commerce use profit data from Ten-aris S.A., a multinational corporation that produces OCTGs in several countries, or profit data of the U.S. producers of OCTGs. Data for each of those options were added to the record after Commerce’s preliminary determination.

Duferco’s and JESCO’s case briefs contended that Commerce should continue using the financial statements of Saudi Steel, or, alternately, the financial statements of Arabian Pipes Company, a Saudi entity. As another option, Duferco and JESCO suggested that Commerce use profit data from JESCO’s sales to its affiliated Colombian distributor. These data were placed in the investigation record prior to the preliminary determination.

Boomerang submitted a rebuttal brief that argued against using JESCO’s Colombia sales: “[JESCO] suggests that the Department can use the profits on JESCO’s sales to Colombia for CV profit. Again, this is sort of a mini-alternative (i) scenario, and there is no basis in the statute to use such a method to calculate CV profit.” J.A. 7033 (redactions omitted). Significantly, Boomerang did not argue that the affiliated Colombian distributor was a member of the Duferco entity, or that the Colombian sales were intra-company sales.

C. Commerce’s Final Determination

Commerce published its final determination in July 2014, again concluding that Saudi OCTGs were being dumped in the U.S. and recalculating the antidumping duty margin of 2.69 percent ad valorem,. With respect to CV profit, Commerce determined that JESCO’s sales to Colombia were “the best available option” and explained why the Colombian transactions were preferable. J.A. 7140-46.

Following issuance of the final determination, JESCO identified a ministerial error in Commerce’s calculation of CV profit; specifically, Commerce failed to deduct certain movement expenses. Correcting this error lowered JESCO’s CV profit, sig-nifieantly reducing the dumping margin for JESCO from 2.69 percent to the de minimis value of 1.37 percent. Commerce issued an amended negative final determination that imposed no antidumping duties on imports of OCTGs from Saudi Arabia and terminated its investigation.

D. Appeal to the U.S. Court of International Trade

Boomerang and U.S. Steel appealed Commerce’s final determination to the Trade Court. The sole issue raised on appeal was whether Commerce erred in its use of JESCO’s sales to the affiliated Colombian distributor to calculate CV profit. Plaintiffs argued that JESCO’s sales to the Colombian distributor were intra-company transfers within the Duferco entity and were, therefore, not an appropriate basis to construct CV profit. Duferco and JES-CO countered that plaintiffs failed to exhaust their administrative remedies with respect to this argument because it was not made during the dumping investigation and was raised for the first time on appeal before the Trade Court.

The Trade Court affirmed Commerce’s determination and found that Boomerang and U.S. Steel did not fail to exhaust their administrative remedies. The Trade Court reasoned that applying the exhaustion requirement would be unwarranted in this case because the parties did not have any indication that Commerce was considering using the Colombian sales until it issued the final determination. The Trade Court rejected the argument that U.S. Steel and Boomerang were on notice that Commerce might use the Colombian transactions because this argument was made in JESCO’s case brief. According to the Trade Court, adopting that argument would require parties to predict among proposed substitutes in an opposing brief, and preemptively defend against it:

Denying relief on exhaustion grounds would require the court to conclude that plaintiffs should have predicted that Commerce might accept JESCO’s proposal to use sales by Duferco SA/JES-CO to Colombia to calculate CV profit and should have raised, in their case briefs, potential arguments against that possibility. The court declines to require such speculation. The court concludes, instead, that petitioners did not have a full and fair opportunity during the investigation to challenge the Department’s method of determining CV profit. Therefore, the court adjudicates on the merits the claims of all plaintiffs in this litigation.

J.A. 10.

The Trade Court further decided that substantial evidence supports Commerce’s treatment of the Colombian distributor as a separate entity. The Trade Court characterized Commerce’s decision as an implicit determination that the Colombian distributor is not part of the Duferco entity, a determination supported by substantial evidence. J.A. 14-18. As a result of the Trade Court’s decision, the de minimis dumping margin remained in effect.

Boomerang and U.S. Steel appeal. This court has jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

Standabd. of Review

This court reviews decisions of the Trade Court de novo, applying the same standard of review applied by the Trade Court in reviewing the administrative record before Commerce. Union Steel v. United States, 713 F.3d 1101, 1106 (Fed. Cir. 2013). Thus, this court will uphold Commerce’s determination unless it is unsupported by substantial evidence in the record or otherwise not in accordance with law. Id.

We review a decision of the Trade Court on whether to require exhaustion in a particular case for abuse of discretion. See Corus Staal BV v. United States, 502 F.3d 1370, 1381 (Fed. Cir. 2007). Thus, we will reverse only if the Trade Court erred in interpreting the law, exercised its judgment on clearly erroneous findings of material fact, or made an irrational judgment in weighing the relevant factors. See Int’l Custom Prods., Inc. v. United States, 843 F.3d 1355, 1358 (Fed. Cir. 2016).

Discussion

On appeal, Boomerang and U.S. Steel argue that Commerce erred when it failed to collapse the affiliated Colombian distributor into the Duferco entity. The government, JESCO, and Duferco respond that Boomerang and U.S. Steel failed to exhaust their administrative remedies because they did not argue before Commerce that the Colombian distributor should be collapsed into the Duferco entity. Boomerang and U.S. Steel argue that the Trade Court acted within its discretion in finding that the exhaustion requirement did not apply in this case.

By statute, the Trade Court “shall, where appropriate, require the exhaustion of administrative remedies.” 28 U.S.C. § 2637(d). We have explained that this statutory mandate “indicates a congressional intent that, absent a strong contrary reason, the court should insist that parties exhaust their remedies before the pertinent administrative agencies.” Corns Staal, 502 F.3d at 1379; see also Kingdom ware Techs., Inc. v. United States, — U.S. -, 136 S.Ct. 1969, 1977, 195 L.Ed.2d 334 (2016) (“Unlike the word ‘may,’ which implies discretion, the word ‘shall’ usually connotes a requirement.”).

Here, the Trade Court found that Boomerang and U.S. Steel exhausted their administrative remedies because they were not required to speculate from positions advanced in briefs which position Commerce would adopt, thereby depriving them of a full and fair opportunity to present their argument. According to the Trade Court, Boomerang and U.S. Steel did not have notice that Commerce might use data relating to JESCO’s third party transaction with the affiliated Colombian distributor to calculate CY profit. We disagree.

The Trade Court’s decision constitutes an abuse of discretion for two reasons. First, the decision is legally erroneous to the extent it stands for the proposition that Commerce must expressly notify interested parties any time it intends to change its methodology between its preliminary and final determinations, despite the inclusion of the relevant data in the record and the advancement of arguments related to that data before Commerce. There is no support for such a requirement.

Second, the decision is based on a clearly erroneous finding of material fact that the parties did not have an opportunity to raise their single entity objection to using the Colombian transactional data before Commerce. It is undisputed that the data regarding JESCO’s transactions with the affiliated distributor were in the record prior to Commerce’s preliminary determination. At that point, U.S. Steel and Boomerang either knew or should have known that Commerce may consider those data during its calculations, especially given that the basis of CV profit was at issue. It is also undisputed that, in its case brief, JESCO suggested using those data to calculate CV before Commerce. At that point, Boomerang and U.S. Steel had notice of the potential that Commerce might use the Colombian data to calculate JESCO’s CV profit. Indeed, Boomerang’s rebuttal brief to Commerce reveals that it recognized JESCO’s. suggestion to use the Colombian data for CV profit and that Boomerang objected to that approach. Unfortunately for Boomerang, its rebuttal brief made no mention of its current argument that the affiliated Colombian entity should be collapsed into the Duferco entity. As such, the argument was not exhausted before Commerce and should not have been considered by the Trade Court.

Conclusion

Because Boomerang and U.S. Steel failed to exhaust administrative remedies before Commerce, the Trade Court should have dismissed this appeal without reaching the merits. Its failure to do so was an abuse of discretion. Accordingly, we vacate the Trade Court’s decision and remand for proceedings in accordance with this opinion.

VACATED AND REMANDED

Costs

Each party to bear its own costs.

      . Initiation of Antidumping Duty Investigations, 78 Fed. Reg. 45,505 (Dep't of Commerce July 29, 2013).

        . Certain Oil Country Tubular Goods from India, Korea, the Philippines, Saudi Arabia, Taiwan, Thailand, Turkey, Ukraine, and Vietnam: Determinations, 78 Fed. Reg. 52,213 (Dep’t of Commerce Aug. 22, 2013).

      . Certain Oil Country Tubular Goods from Saudi Arabia: Preliminary Determinations of Sales at Less Than Fair Value, and Postponement of Final Determination, 79 Fed. Reg. 10,489, 10,490 (Dep’t of Commerce Feb. 24, 2014).

      . Certain Oil Country Tubular Goods from Saudi Arabia: Final Determination of Sales at Less Than Fair Value, 79 Fed. Reg. 41,986 (Dep't of Commerce July 18, 2014) (final determination).

      . Amended Final Determination and Termination of the Investigation of Sales at Less Than Fair Value: Certain Oil Country Tubular Goods from Saudi Arabia, 79 Fed. Reg. 49,051 (Dep’t of Commerce Aug. 19, 2014).

        . Boomerang Tube LLC v. United States, 125 F.Supp.3d 1357 (Ct. Int’l Trade 2015).


author: O’MALLEY, Circuit Judge.

text:
    Charles P. ADKINS, Jane E. Adkins, Plaintiffs-Appellants v. UNITED STATES, Defendant-Appellee
    2016-1961
    United States Court of Appeals, Federal Circuit.
    Decided: May 8, 2017

      John Franklin Rodgers, Redmon, Pey-ton & Braswell, LLP, Alexandria, VA, argued for plaintiffs-appellants.
    Anthony T. Sheehan, Tax Division, United States Department of Justice, Washington, DC, argued for defendant-appellee. Also represented by Richard Farber, Caroline D. Ciraolo.
    Before LOURIE, O’MALLEY, and TARANTO, Circuit Judges.
   O’MALLEY, Circuit Judge.

Charles P. Adkins and Jane E. Adkins seek review of the February 23, 2016 decision of the Court of Federal Claims (the “Claims Court”) dismissing with prejudice their complaint for an income tax refund. Adkins v. United States, 125 Fed.Cl. 304 (2016). For the following reasons, we vacate and remand.

Background

This case concerns a federal income tax refund sought by the Adkinses, based on financial losses they sustained as victims of a fraudulent investment scheme. The main facts are not in dispute—the central issue on appeal is whether that loss was properly claimed as a deduction in the 2004 tax year, as opposed to some other year. For context, we reiterate the background facts as found by the Claims Court.

Beginning in 1997, the Adkinses began investing in securities via Donald & Company, primarily through its employee Mr. Otto Kozak. Unbeknownst to the Adkinses, Donald & Co. was operating a “pump-and-dump” scheme—(1) purchasing stock in a company; (2) encouraging its customers to do the same; (3) selling stock in the company at the artificially increased price for a profit; and (4) leaving its customers holding stock worth significantly less due to the aforementioned sales. At their peak in 2000, the Adkinses’ investments with Donald & Co. were valued at $3.6 million. By the end of 2001, as a result of the scheme, the value of their investments had declined to $9,849. In February 2002, the Adkinses, discovering that they had been the victims of fraud, submitted a statement of claim to the National Association of Securities Dealers (“NASD”) in support of arbitration against Donald & Co. and three of its principals: David Stetson, Slava Volman, and Steven Ingrassia.

In March 2003, the Adkinses requested that their arbitration hearing (then scheduled for April) be postponed in light of recent information from the Department of Justice indicating that indictments would be handed down against several Donald & Co. principals and employees in the near future. In particular, the Adkinses’ lawyers “suggested that the arbitration claim be left open in the event that proceedings in the criminal matter revealed pertinent information.” Adkins, 125 Fed.Cl. at 309. In May 2004, an indictment was returned in the United States District Court for the Eastern District of New York against Vol-man, Ingrassia, Kozak, and others, charging conspiracy to commit securities fraud, securities fraud, and conspiracy to commit money laundering. In September and October of 2004, Volman, Ingrassia, and Stetson pleaded guilty, receiving sentences including imprisonment, supervised release, fines, mandatory restitution, and forfeiture. Proceedings against other Donald & Co. principals continued from 2005 to 2009.

While the criminal proceedings were pending, in 2006, the Adkinses attempted to recoup some of their losses by claiming a federal income tax deduction for theft loss under 26 U.S.C. § 165. Specifically, the Adkinses claimed a loss of $2,118,725 for tax year 2004, with excess refund portions carried back over the three previous years, 2001-2003. On December 12, 2008, the IRS disallowed the Adkinses’ refund claims for all tax years but 2002. The Adkinses protested at the IRS Office of Appeals, but thereafter filed suit in the Claims Court before their appeal was complete, removing the IRS’s jurisdictional authority to settle the claim. After disposing of certain preliminary disputes via summary judgment, the Claims Court conducted a trial and concluded that the Adkinses were “not entitled to a theft loss deduction for the 2004 tax year.” Adkins, 125 Fed.Cl. at 305. In particular, the Claims Court found that the Adkinses had failed to satisfy the requirements of 26 C.F.R. § 1.165-1(d)(3) (i.e., Treas. Reg. § 1.165-1(d)(3)), insofar as they had not shown that, in 2004, they could have “ascertained with reasonable certainty that they would not receive reimbursement of their losses.” Id. at 317. The Adkinses timely appealed to this court.

Discussion

“The Claims Court’s legal determinations, including interpretations of statutes and regulations, are subject to de novo review and its factual determinations are re-viewed for clear error.” Tinton Falls Lodging Realty, LLC v. United States, 800 F.3d 1353, 1357-58 (Fed. Cir. 2015). On appeal, the Adkinses make essentially four arguments: (1) the Claims Court failed to correctly apply Treas. Reg. § 1.165-1(d)(3)’s test for determining the year in which a taxpayer can deduct a theft loss under 26 U.S.C. § 165; (2) even under the Claims Court’s interpretation of Treas. Reg. § 1.1654(d)(3), it improperly required abandonment of their arbitration claim; (3) the Claims Court failed to apply Revenue Procedure 2009-20 in this case; and (4) if 2004 was not the correct loss year, the Claims Court should have ruled in favor of the Adkinses under the mitigation provisions of Treas. Reg. § 1.1311(c), using 2003 as the loss year instead.

First, we examine the requirements of Treas. Reg. § 1.165-l(d)(3):

Any loss arising from theft shall be treated as sustained during the taxable year in which the taxpayer discovers the loss (see § 1.165-8, relating to theft losses). However, if in the year of discovery there exists a claim for reimbursement with respect to which there is a reasonable ‘prospect of recovery, no portion of the loss with respect to which reimbursement may be received is sustained, for purposes of section 165, until the taxable year in which it can be ascertained with reasonable certainty whether or not such reimbursement will be received.

(emphases added). In interpreting and applying this regulation, the Claims Court reiterated the conclusion reached by another Claims Court judge in Johnson v. United States, 74 Fed.Cl. 360 (2006). That is, although other courts “tend[ ] to combine the ‘reasonable prospect of recovery’ inquiry and the ‘ascertain with reasonable certainty’ inquiry,” the “two inquiries are distinct and the standards to be applied are different.” Adkins, 125 Fed.Cl. at 318 (quoting Johnson, 74 Fed.Cl. at 365).

Put differently, under Johnson, the “reasonable prospect” language tolerates a greater probability of recovery than the “reasonable certainty” language. In practice, this means that plaintiffs are required to make a stronger evidentiary showing when attempting to claim their loss in any year subsequent to discovery. As the Claims Court stated in Johnson, for example, an “estimate” made by “lawyers and accountants may [be] sufficient to determine whether there was a ‘reasonable prospect for recovery’ in the year of discovery,” but it would not be “sufficient to ‘ascertain with reasonable certainty.’ ” Johnson, 74 Fed.Cl. at 366 (emphasis added). Because the Adkinses discovered their loss in 2002 and attempted to claim their loss in 2004, the Claims Court applied the higher, more stringent standard of “reasonable certainty”—and held that the Ad-kinses failed to meet that standard.

The Adkinses argue that Treas. Reg. § 1.165-l(d)(3), properly interpreted, does not set forth two different standards. Rather, Treas. Reg. § 1.1654(d)(3) merely describes two sides of the same probabilistic coin: a “reasonable prospect for recovery” is the inverse of “reasonable certainty” that there will be recovery. That is, the test in Treas. Reg. § 1.1654(d)(3) may ■ be simplified as follows: the proper year in which to claim a loss is the first year in which no reasonable prospect of recovery exists anymore, starting with the year of discovery. Accordingly, the Adkinses suggest, they should not have been held to a stricter standard to claim their loss in 2004 than the standard to which they are held for 2002.

We agree with the Adkinses’ interpretation of the regulation. Although few of our sister circuits have addressed this issue explicitly, those few who have appear to have reached the same conclusion. See, e.g., Vincentini v. Comm’r of Internal Revenue, 429 Fed.Appx. 560, 564 (6th Cir. 2011) (describing Treas. Reg. § 1.165-1(d)(3) as setting forth a single test, and describing that test as whether the claimant “demonstrate^] with reasonable certainty that there was no reasonably] prospect of recovery”); Jeppsen v. Comm’r of Internal Revenue, 128 F.3d 1410, 1414-17 (10th Cir. 1997) (using “reasonable prospect” and “reasonable certainty” language interchangeably); Rainbow Inn, Inc. v. Comm’r of Internal Revenue, 433 F.2d 640, 644 (3d Cir. 1970) (describing “the test” under Treas. Reg. § 1.1654(d)(3) as “whether there was a reasonable prospect of recovery at the time the deduction was claimed”). We find no basis in the language of Treas. Reg. § 1.1654(d)(3) to deviate from this straightforward and sensible approach.

This interpretation aligns, moreover, with common-sense incentives for victims of theft. Good-faith efforts to recover losses—such as lawsuits and arbitration—will tend to push the claim year later than the year of discovery by creating a probability of recovery. To the extent that it is rendered more difficult to succeed on a loss claim in years subsequent to discovery, taxpayers will be dissuaded from those good-faith efforts. Neither the government nor the Claims Court has explained why such a result possibly could have been intended by the Treasury Department.

Having addressed the proper application of Treas. Reg. § 1.1654(d)(3), we turn next to the Adkinses’ second argument—whether, under either interpretation of § 1.1654(d)(3), the Claims Court additionally erred by treating abandonment of their arbitration claim as a prerequisite to a reasonable certainty of no recovery. Once again, we find the Adkinses’ argument persuasive, and hold that the Claims Court so erred.

In reaching that conclusion, we begin with Treas. Reg. § 1.165-1 (d)(2)(i), which provides elaboration on what constitutes “reasonable certainty” for purposes of § 1.1654(d)(3):

Whether a reasonable prospect of recovery exists with respect to a claim for reimbursement is a question of fact to be determined upon an examination of all facts and circumstances. Whether or not such reimbursement will be received may be ascertained with reasonable certainty, for example, by a settlement of the claim, by an adjudication of the claim, or by an abandonment of the claim. When a taxpayer claims that the taxable year in which a loss is sustained is fixed by his abandonment of the claim for reimbursement, he must be able to produce objective evidence of his having abandoned the claim, such as the execution of a release.

(emphasis added). The Adkinses contend that the Claims Court effectively treated the emphasized section above as an exhaustive list rather than a mere collection of examples. The Adkinses concede that their arbitration claim with NASD was still pending in 2004; nevertheless, they argue that a holistic examination of the facts and circumstances as of that time demonstrates a reasonable certainty of no recovery. The Adkinses note in particular that, as of 2004, they had reason to believe that: (1) the government intended to seize any documentation concerning the identity and ownership of the defendants’ assets, foreclosing independent investigation; (2) the government intended to seize all of defendants’ discovered assets; and (3) the defendants had no chance of generating future assets given their plea agreements and debarments.

In its opinion, the Claims Court acknowledges at the outset that the list in the emphasized section above is “expressly designated as ‘example[s],’ ” such that “a taxpayer is not precluded from ascertaining the viability of his claim in another manner.” Adkins, 125 Fed.Cl. at 319. Because the Adkinses had a live arbitration claim, however, the Claims Court appeared to hold that abandonment of that claim became the only acceptable manner to ascertain viability:

Although plaintiffs do not say so explicitly, the court—based on the facts adduced at trial, plaintiffs’ arguments, and the relevant regulations—infers that it is plaintiffs’ position that in 2004, they ascertained with reasonable certainty that they would not recover anything on their arbitration claim. The facts further reflect that plaintiffs did not arrive at this conclusion because they settled or litigated the claim, but instead came to believe that the claim was no longer viable because they would not be able to collect on it, and therefore stopped actively pursuing it. In other words, notwithstanding their protestations otherwise, plaintiffs must be contending that they abandoned their arbitration claim.
[Thus,] the objective evidence in the record sup-ports two other abandonment dates: (1) 2003, when plaintiffs’ arbitration attorneys requested that the NASD adjourn the scheduled hearing and when plaintiffs stopped paying their arbitration attorneys, or (2) 2008, when plaintiffs formally withdrew their arbitration claim. Accordingly, plaintiffs have not met their burden of establishing that they sustained their theft loss in 2001.

Id. at 320-21 (emphases added). That holding cannot stand.

We read Treas. Reg. § 1.165-1 (d)(2)(i) as setting forth a general totality-of-the-circumstances standard, followed by an alternative method for a plaintiff to demonstrate that no reasonable prospect of recovery existed as of a certain date. That is, rather than make their case under the general “all facts and circumstances” standard, a plaintiff may rely on the date that their arbitration or lawsuit for the loss was settled, abandoned, or adjudicated. In the case of abandonment, because no dated court order or settlement agreement exists, the plaintiff must be able to provide some other form of “objective evidence” as .to when abandonment occurred. But even in cases where the plaintiff does have a related arbitration or lawsuit, we do not read Treas. Reg. § 1.165-1 (d)(2)(i) as precluding them from making their case under the more general standard, should they so choose.

This court recognizes that the existence of a live arbitration or lawsuit typically is at least probative evidence of the potential for recovery. A plaintiffs decision to incur the costs associated with maintaining such a proceeding reveals something about their subjective beliefs regarding the potential for recovery therein. But the court must take into account what those costs actually are. In this case, for example, the Claims Court noted that “plaintiffs’ arbitration attorneys took no action” after 2004 other than “requests for further postponements.” Adkins, 125 Fed.Cl. at 320. The Adkinses, for their part, allege that they were no longer even paying their attorneys at this point. Where, as appears to be the case here, the associated maintenance costs are almost zero, the plaintiffs decision to keep the proceeding open tells the court exceedingly little about their beliefs as to the chances for recovery. No matter the odds, even a perfectly rational actor doesn’t turn down a free lottery ticket.

Accordingly, unless the plaintiff has chosen abandonment (or settlement or adjudication) as the factual predicate for their loss date, the existence of an ongoing lawsuit or arbitration is only one factor to be considered among many-—-all facts and circumstances. Because the Adkinses did not so choose, we direct the Claims Court on remand to engage in this more holistic analysis, including additional factfinding as necessary.

Because we agree with the Adkinses that the Claims Court both misinterpreted Treas. Reg. § 1.165-l(d)(3) and improperly required abandonment of their arbitration claim, we need not reach their alternative arguments regarding Revenue Procedure 2009-20 and Treas. Reg. § 1.1311(c).

Conclusion

For these reasons, the Claims Court’s opinion and order dismissing the Adkinses’ complaint with prejudice is vacated, and the case is remanded for further proceedings consistent with this opinion.

VACATED AND REMANDED

Costs

Costs to appellants.

      . It appears that the 2002 portion of the claim was neither allowed nor formally denied, although no portion of the record offers an explanation as to why. Neither party, however, suggests that the treatment of the 2002 portion has any relevance to the issues now on appeal.

      . In their opening brief, in a single footnote, the Adkinses also mention a Motion to Compel filed below that was denied:
      [We] were then prejudiced by the fact that the Trial Court failed to grant [our] Motion to compel discovery as [to] the contents of the Government's copies of the Donald & Company records and the investigative files of the Service in the criminal investigations and the case should be remanded for a new trial.
      Appellants’ Br. at 3 n.a. The Adkinses do not elaborate further on this contention or, indeed, provide any relevant legal authority or factual background. Because the disposition of a Motion to Compel is a matter "committed to the discretion of the trial court,” the Ad-kinses' threadbare assertions are not a sufficient basis for this court to second-guess the Claims Court’s reasoning. Florsheim Shoe Co. v. United States, 744 F.2d 787, 797 (Fed. Cir. 1984).

      . To put it in more explicit mathematical terms, we know that F,.ecovely + Pno recovery 1. Let a "reasonable prospect” for recovery mean that Frecovei-y £ x f°r some probability x. The Adkinses argue that "reasonable certainty” of no recovery simply means that Pno ,.ecov_ ery > 1 — x, so that Frecoveiy < x- The threshold probability in both inquiries is, therefore, identical: x.

      . The test could be equivalently simplified as: the proper year in which to claim a loss is the first year in which it can be ascertained with reasonable certainty that there will be no recovery, starting with the year of discovery.