Ancora Techs., Inc. v. Roku, Inc

Authored by: Jeremy J. Gustrowsky

In a recent decision, the U.S. Court of Appeals for the Federal Circuit stepped into a patent dispute over technology designed to protect licensed software from unauthorized copying on computers. The case centered on U.S. Patent No. 6,411,941, owned by Ancora Technologies, which describes a method using a computer’s BIOS (the basic startup software) to verify and restrict software use through unique keys and verification structures stored in non-volatile memory. Companies like Roku, Vizio, and Nintendo challenged the patent’s validity through inter partes review proceedings at the Patent Trial and Appeal Board (PTAB), arguing that key claims were obvious in light of prior inventions like Hellman and Chou patents, which dealt with software authorization and BIOS security routines.

The PTAB sided with the challengers, ruling that the claims were unpatentable as obvious and interpreting the term “agent” in the patent broadly as any software program or routine, without limiting it to operating system-level functions or excluding hardware. Ancora appealed, contesting the claim interpretation, the obviousness finding, and the PTAB’s dismissal of evidence showing industry praise and lucrative licensing deals as proof of the invention’s nonobvious value. The Federal Circuit upheld the broad interpretation of “agent” based on the patent’s text and industry norms, and found substantial evidence supporting the PTAB’s initial obviousness analysis, including motivation to combine the prior art for better software protection.

However, the court took issue with how the PTAB handled Ancora’s licensing evidence—deals with major companies that involved substantial payments for rights to the patent, often settled late in related lawsuits. The PTAB had demanded too strict a connection (or “nexus”) between these licenses and the specific patent claims, overlooking that licenses to the exact patent inherently tie to its technology and reflect real market value. The court emphasized that such evidence, especially high-value settlements aware of the same prior art, deserves significant weight in assessing nonobviousness, without needing to dissect every claim or compare to potential lawsuit costs. As a result, the Federal Circuit vacated the PTAB’s decision and remanded for a fresh look at this evidence.

This ruling underscores the importance of properly weighing real-world licensing success in patent challenges, potentially strengthening defenses for software innovations. It reminds patent owners that broad evidence of commercial adoption can counter obviousness arguments, even if not perfectly aligned with every claim detail.