Objective Indicia Not Enough to Overcome Weight of Evidence of Obviousness

In Merck Sharp & Dohme Corp. v. Hospira, Inc., [2017-1115] (October 26, 2017), the Federal Circuit affirmed the district court’s determination at a bench trial, that claims 21-34 of U.S. Patent 6,486,150, on a method for preparing the antibiotic ertapenem were invalid for obviousness.

The district court reviewed Merck’s objective evidence and concluded that commercial success and copying by others were shown, but that the objective evidence could not overcome the “strong prima facie case of obviousness” established by Hospira. The district court found that, while there was commercial success tied to the asserted claims, the evidence was weakened” by the “blocking effect” of U.S. Patent 5,478,820 on ertapenem, which was a disincentive to others to develop new ertapenem formulations.

The Federal Circuit agreed with Hospira that the district court did not
err in finding that the claimed process would have been obvious at the time the invention was made.  While Merck argued that the specific order and detail of the claimed steps constitute a novel solution to minimizing degradation by hydrolysis and minimizing dimerization, Merck’s problem was that the purported “solution” constituted nothing more than conventional manufacturing steps that implement principles disclosed in the prior art.  The Federal Circuit said that it was reasonable for the district court to deduce from the evidence that the order and detail of the steps, if not already known, would have been discovered by routine experimentation while implementing known
principles. The Federal Circuit found that the district court’s analysis thus involved no legal error.

Regarding Merck’s objective evidence of non-obviousness, the Federal Circuit agreed with Merck that Merck’s evidence of commercial success should not have been discounted simply because of the existence of
another patent of which Merck was the exclusive licensee.  The Federal Circuit said that:

developers of new compounds often obtain a package of patents protecting the product, including compound, formulation, use, and process patents. Often such patents result from Patent Office restriction requirements  relating to the technicalities of patent classifications and rulings that various aspects of claiming an invention cannot be claimed in the same patent. Or they may result from continuing improvements in a product or process. Thus, multiple patents do not necessarily detract from evidence of commercial success of a product or process, which speaks to the merits of the invention, not to how many patents are owned by a patentee. Commercial success is thus a fact-specific inquiry that may be relevant to an inference of nonobviousness, even given the existence of other relevant patents.

Nonetheless, the Federal Circuit did not discern error in the district
court’s determination that Merck’s evidence of commercial success could not overcome the weight of the evidence that the claimed process was substantially described in the prior art and required only improvement by the use of established variations. Thus, even giving the evidence of commercial success its full and proper weight, the court did not err in concluding that the claims would have been obvious at the time the invention.

The Federal Circuit also agreed that the evidence of Hospira’s copying could not overcome the weight of the competing evidence of obviousness.

 

Ungrammatical Language Not Ambiguous in View of Specification as a Whole

In Organik Kimya AS v. Rohm and Haas Co., [2015-1983, 2015-2001] (October 11, 2017), the Federal Circuit  affirmed the PTAB decisions in IPR2014-00185 and IPR2014-00350, sustaining the patentability of the challenged claims of U.S Patent Nos. 6,020,435 and 6,252,004, respectively.

The patents are directed to processes for preparing certain emulsion polymers having improved opacity.  In the claimed processes a base swelling agent and excess monomer are introduced into an aqueous emulsion of the polymer, under conditions in which there is no
substantial polymerization.  At issue was was the meaning of “swelling agent” which the PTAB construed as not merely as being capable of permeating a shell and swelling the core of a multistage emulsion
polymer in the abstract, but specifically under the conditions of the specific process for which the agent is to be used.  Organik argued that this improperly limited the term “swelling agent” in a manner that inappropriately distinguished the prior art.

Organik argued that the specification was ambiguous in describing the swelling agent:

Suitable swelling agents include, are those which, in the presence of the multistage emulsion polymer and monomer, are capable of permeating the shell and swelling the core. Swelling agents may be aqueous or gaseous, volatile or fixed bases or combinations thereof.

and that the PTAB improperly adopted the narrower construction.  The Federal Circuit noted that the Board did not find the language ambiguous, and agreed with the Board.  Even under the broadest reasonable interpretation, the Board’s construction cannot be divorced from the specification and the record evidence, and must be consistent with the one
that those skilled in the art would reach.

The Board found that the prior art asserted by Organik lacked the swelling agent as that term was used in the claims.  Organik argued the one example in a reference, inherently showed a swelling agent, but Rohm and Haas provided experimental evidence through expert testimony  that it did not.  While Organik contested this evidence, the Board noted that Organik neither provided its own evidence, or showed how different experiments would have yielded different data.

The Federal Circuit found that Board concluded that neither Toda nor Touda discloses or suggests a “swelling agent” as required by the
’435 and ’004 Patents, and that the Board’s decisions are in accordance
with law and supported by substantial evidence in the record, and are affirmed.

Broadest Reasonable Construction is Not One Not Precluded by the Specification, but is One Consistent with the Specification

In re: Smith International, Inc., [2016-2303] (September 26, 2017), the Federal Circuit reversed the PTAB’s affirmance of the Examiner’s rejections of claims in an ex parte reexamination of U.S. Patent 6,732,817 directed to a downhole drilling tool for oil and gas operations.

The Board affirmed the examiner’s interpretation of the term “body” as a broad term that may encompass other components such as “mandrel” and “cam sleeve,” reasoning that only the term “body” is recited in the
claims without further limiting features and that the specification neither defines the term “body” nor prohibits the examiner’s broad reading of it.  The Federal Circuit concluded that the Board’s construction of “body”
was unreasonably broad. Even when giving claim terms their broadest reasonable interpretation, the Board cannot construe the claims “so broadly that its constructions are unreasonable under general claim construction principles.”

The Federal Circuit noted that some of the claims at issue recite a
broad term “body” without further elaboration on what the term “body” encompasses. However the Federal Circuit noted that the remainder of the specification does not use the term as a generic body. There is no dispute that the patent specification consistently describes and refers to the body as a component distinct from others, such as the mandrel, piston, and drive ring.

On this record, the Board concluded that the Examiner’s broad construction was not precluded.  However the Federal Circuit  found that the correct inquiry in giving a claim term its broadest reasonable interpretation in light of the specification is not whether the specification proscribes or precludes some broad reading of the claim term adopted by the Examiner.  Nor is it simply an interpretation that is not inconsistent
with the specification. It is an interpretation that corresponds with what and how the inventor describes his invention in the specification, i.e., an interpretation that is “consistent with the specification.”

The Federal Circuit held that giving the term “body” such a strained breadth in the face of the otherwise different description in the specification was unreasonable.  With the correct construction, the Federal Circuit reversed the rejection of the claims.

Objective Indicia Were Properly Considered and Did Not Save Cookie Package Patent from Summary Judgment of Obviousness

In Intercontinental Great Brands LLC v. Kellogg North American Co., [2015-2082, 2015-2084] (September 7, 2017), the Federal Circuit affirmed summary judgment that Kraft’s U.S. Patent No. 6,918,532 was invalid for obviousness, but was not unenforceable for inequitable conduct.

The district court found that the absence of a “convenient opening and reclosing arrangement” was a “known problem” for cookie packaging and that the prior art resealable, tray-included packaging for foods offered a skilled artisan a solution to the problem simply by replacing the existing “tray” with a “frame” i.e., a tray with higher sides.  The court considered the simple and clear teachings of the art, the importance of common
sense and ordinary creativity, and the conclusory character of Kraft’s expert’s assertions of nonobviousness.  the court concluded that Kraft’s evidence of objective indicia, though substantial, was not entitled to much weight in the ultimate legal assessment of obviousness.  On the issue of inequitable conduct, the court found that Kellogg had not presented evidence that could meet the standard for intent to deceive established in Therasense,

The Federal Circuit said that Kraft’s arguments that the district court treated the objective indicia as an “afterthought,” “writing off the patent before turning to objective indicia,” and “repeatedly not[ing] its finding of obviousness before considering the objective indicia,” mischaracterized the district court’s reasoning, finding that the district court drew its conclusion of obviousness only after, not before, considering the objective indicia.

The Federal Circuit held that the district court did not draw an ultimate conclusion of obviousness before considering the objective indicia, the . The contrary is not shown by the court’s “not uncommon” choice of words when conducting the ultimate weighing, namely, that the objective indicia “do not overcome Kellogg’s extremely strong prima facie showing.”

The Federal Circuit rejected Kraft’s argument that objective indicia must be considered before drawing a conclusion about whether a person of ordinary skill had motivation to combine the prior art, finding that the staged consideration undertaken by the district court, and reflected in its cases, makes sense within the motivation-to-combine framework.

The Federal Circuit also rejected Kraft’s argument that the district court failed to provide “explicit and clear reasoning providing some rational
underpinning” for its invocation of common sense in its motivation-to-combine analysis.  The Federal Circuit said that the court relied on the record demonstrating the “known problem” of an insufficiently “convenient opening and reclosing arrangement” for cookie packaging and the suggestion in the prior art that it was useful for a variety of items.

The Federal Circuit also found that that the “enhanced burden” when the prior art relied upon for invalidation was previously considered by the USPTO “provides no basis for a different result.”  First the Federal Circuit noted that there is no specific PTO determination of nonobviousness based on the particular prior art now at issue. Second, the Federal Circuit found the showing of obviousness to be sufficiently strong that no PTO contrary determination could alter the conclusion about summary
judgment.

On the cross-appeal of the finding of no inequitable conduct, the Federal Circuit no reversible error in the district court’s conclusion that Kellogg’s evidence was insufficient to permit a finding of the intent required for inequitable conduct based on Kraft’s reexamination arguments.  Kellogg alleged that an item in the prior art considered by the Board during reexamination contained a misprint, and that Kraft committed inequitable conduct by not so informing the Board. This sentence containing the misprint was material, because it resulted in the Board’s reversing the reexamination Examiner.  However, the Federal Circuit said that Kellogg also had to prove that  Kraft, in what it did not say about the sentence
that was the focus of the Board’s attention, had a “specific intent to mislead or deceive the PTO.”

The Federal Circuit said that the intent requirement is demanding, and citing Therasense said that the evidence must be “sufficient to require a finding of deceitful intent in the light of all the circumstances”; deceptive intent “must be the single most reasonable inference able to be drawn from the evidence”; and “when there are multiple reasonable inferences that may be drawn, intent to deceive cannot be found.”

The Board noted that there was no evidence of whether or not Kraft actually believed it was a misprint, just Kellogg’s argument of what Kraft had to have believed.  The Federal Circuit said that without more evidence of Kraft’s belief, one reasonable inference on the record—especially given Kellogg’s burden of persuasion—is that Kraft did not
believe that there was a misprint.

The district court’s obviousness analysis, approved by the Federal Circuit, relied upon the identification of the problem to be solved in the Background.  Prosecutors need to be careful in drafting the background section, so that it does not make the invention seem like the logical (and thus obvious) solution to the problem that perhaps only the inventor had the insight to identify in advance.

 

Not Every Instance of an Agency Reaching Inconsistent Outcomes in Similar, Related Cases will Necessarily be Erroneous

In Vicor Corp. v. Synqor, Inc., [2016-2283] (August 30, 2017) the Federal Circuit affirmed in part, vacated in part, and remanded the Board’s decisions in two reexaminations, one in which the Board found that certain claims of U.S. Patent No. 8,023,290 are patentable; and one in which the Board found certain claims of U.S. Patent No. 7,272,021 unpatentable as anticipated or obvious.

The Federal Circuit found that despite sharing a common panel and having opinions issued on the same date, the decisions in the respective reexaminations contain inconsistent findings on identical issues and on essentially the same record. With respect to the ‘290 patent reexamination, the Federal Circuit said that the
Board improperly analyzed the obviousness arguments under only one of the four Graham factors when it looked exclusively at the objective evidence, without considering the remaining factors and the relative strength of the factors. The Federal Circuit further said that the Board reached inconsistent conclusions as to the evidentiary weight to be given to the secondary considerations evidence presented in the respective reexaminations of the ’290 and ’021 patents, without any explanation to justify such inconsistency.

The Federal Circuit said that the Board’s legal error with respect to the ‘290 patent is underscored by its opinion issued on the same day in the related reexamination of the ’021 patent, where the Board applied all four Graham factors in the ’021’s reexamination and stated that “[t]he Federal Circuit has determined that only after considering the four Graham criteria together can the decision maker make the legal determination of whether the invention is nonobvious.”

The Federal Circuit said that in the ’290’s reexamination, the Board found the objective
evidence to be so persuasive that it approved of the examiner’s decision to withdraw rejections without analyzing the remaining Graham factors and without considering
Federal Circuit decisions on related claims.  In the ’021’s reexamination, however, the Board determined that the objective evidence principally related to features of the
claims that were found to be anticipated in other cases and, therefore, found that there was no nexus between the objective evidence and the claims of the ’021 patent. The Federal Circuit concluded that Board’s decisions do not evince any explanation or justification for these inconsistent findings, given the similarity between the claims at issue in the respective reexaminations.

The Federal Circuit said that not every instance of an agency reaching inconsistent outcomes in similar, related cases will necessarily be erroneous, but concluded that the inconsistent application of the Graham factors in two cases reaching different results, required that the cases be vacated and remanded,

Routine Optimization Cannot Make Invention Obvious Without A Reasonable Expectation for Success

In In re Stepan Co., [2016-1811] (August 25, 2017), the Federal Circuit vacated the PTAB’s affirmance of the Examiner’s rejection of claims 1–31 of U.S. Patent Application No. 12/456,567 on herbicidal formulations containing glyphosate salt with a surfactant system.

The Examiner found that the prior art contained the preferred surfactants, and further taught glycols as an optional ingredient, and concluded that “it is routine optimization to select and adjust the surfactants to the undisclosed range.  The Board affirmed.

The Federal Circuit began with the premise that an obviousness determination requires finding both “that a skilled artisan would have been motivated to combine  the teachings of the prior art . . . and that the skilled
artisan would have had a reasonable expectation of success in doing so.” The Federal Circuit said that the Board failed to explain why it would have been “routine optimization” to select and adjust the claimed surfactants and achieve the claimed results.  The Federal Circuit said that an  agency tribunal must make findings of relevant facts, and present its reasoning in sufficient detail that the court may conduct meaningful review of the agency action, and that relying on routine optimization falls short of this standard.  Specifically, the Federal Circuit said the Board did not explain “why it
would have been routine optimization to arrive at the claimed invention.”

The Federal Circuit said that just like cases where the Board has characterized the invention as “intuitive” or “common sense,” the Board must provide some rational underpinning explaining why a person of ordinary skill in the art would have arrived at the claimed invention
through routine optimization.

The Federal Circuit also noted the absence of a reasonable expectation of success.   The Federal Circuit said that to have a reasonable expectation of success, one must be motivated to do more than merely to vary all parameters or try each of numerous possible choices until one possibly arrived at a successful result.

Finally the Federal Circuit said the Board improperly placed the burden of proving patentability on the applicant.  The claim required the composition have a “cloud point above 70°” and it was the USPTO’s burden to show that achieving this would have been obvious to a person of ordinary skill
in the art.

The Board’s decision was vacated, and the application remanded for further examination.

 

You Need Standing to Appeal and IPR Decision, But Not to Participate in the Appeal

In Personal Audio, LLC v. Electronic Frontier Foundation, [2016-1123] (August 7, 2017), the Federal Circuit affirmed the PTAB’s determination in an IPR that claims 31-35 of U.S. Patent No. 8,112,504, related to a system and apparatus for storing and distributing episodic media files, were unpatentable.

The Federal Circuit first addressed whether the Electronic Frontier Foundation had standing to participate in the appeal after  Consumer Watchdog v. Wisconsin Alumni Research Foundation, 753 F.3d 1258 (Fed. Cir. 2014), where the Federal Circuit held that a challenger who was not a competitor did not have Article III standing to appeal a PTAB determination of patentability.

However the Federal Circuit concluded that because Personal Audio had standing to appeal the invalidation of its patent claims, the Electronic Frontier Foundation did not need Article III standing to merely participate in the proceeding in which the appellant had standing.

On the merits, the Federal Circuit rejected Personal Audio’s objections to the Board’s claim construction, and affirmed the Board’s decision that the claims were anticipated or obvious.

Can Unexpected Results Make the Obvious Non-Obvious?

In Honeywell, Int’l Inc. v. Mexichem Amanco Holdings S.A., [16-1996] (August 1, 2017). the Federal Circuit vacated the USTPO’s reexamination decision invalidating claims 1–26, 31–37, 46–49, 58, 59, 61–68, 70–75, 80, and 81 of U.S. Patent 7,534,366 on a refrigerant and lubricant composition for air conditioning systems.  The Federal Circuit found that the Board erred by improperly relying on inherency to find obviousness and in its analysis of motivation to combine the references.

First, the Board erred in relying on inherency to dismiss evidence showing unpredictability in the art.   The use of inherency in the context of obviousness must be carefully circumscribed because that which may be inherent is not necessarily known and that which is unknown cannot be obvious.  What is important regarding properties that may be inherent, but unknown, is whether they are unexpected. All properties of a composition are inherent in that composition, but unexpected properties may cause what may appear to be an obvious composition to be nonobvious.  The Board, in dismissing properties of the claimed invention as merely inherent, without further consideration as to unpredictability and unexpectedness, erred as a matter of law.

Second, the Board erred in dismissing evidence of unpredictability in the art when it stated that one of ordinary skill would no more have expected failure than success in combining the references, and thus concluded that the person of ordinary skill would be led to routine testing, which would have eventually led to the claimed combination.  The Federal Circuit found that this put the burden on the patent owner to show that a person of ordinary skill in the art would have expected failure.  The Federal Circuit said that instead the the burden is on the Office to show that one of ordinary skill would have had a motivation to combine the references with a reasonable expectation of success.

The use of unexpected results to show non-obviousness is a curious aspect of patent law.  If it truly is obvious to modify a reference, or combine two or more references, then the fact that the obvious modification or obvious combination results in something unexpected, should not change the determination of obviousness, While we might feel like rewarding someone who provides unexpected results, by giving them a patent for doing what is obvious is not what the patent laws prescribe.  In Honeywell, however, the non-obviousness did not hinge on unexpected results, but on the unpredictability of the art.

The Federal Circuit also agreed that the Board improperly relied upon a new ground of rejection, resurrecting a reference cited by the requesters, but not relied upon by the Examiner.

Reasonable Expectation of Success, Not Absolute Predictability, is All that is Required for Obviousness

In Soft Gel Techs., Inc. v. Jarrow Formulas, Inc., [16-1814](July 26, 2017), the Federal Circuit affirmed the PTAB decision review inter partes reexamination, that claims in U.S. Patent Nos. 8,124,072, 8,105,583, and 8,147,826, directed to CoQ10 in solvents known as monoterpenes, were invalid for obviousness.

In trying to resurrect its claims, Soft Gel pointed to a later article reflecting follow up research, the necessity of which, it argued showed that earlier references did not make the claimed invention obvious.  The Federal Circuit called Soft Gel out, stating that  that it argued showed that Soft Gel was applying an incorrect legal standard for obviousness, requiring “absolute predictability” rather than simply “a reasonable expectation of
success.”  The Federal Circuit said:

A supplemental study does not imply lack of awareness of the likely result; rather, studies are frequently conducted to confirm what is suspected to be true. An incentive to conduct a confirmatory study frequently exists even when one has every reason to expect success.

 

Unexpected Results of an Obvious Process are Non-obvious

In Millennium Pharmaceuticals, Inc., v. Sandoz Inc., [2015-2066, 2016-1008, 2016-1009, 2016-1010, 2016-1109, 2016-1110, 2016-1283, 2016-1762] (July 17, 2017), the Federal Circuit reversed the district court, finding that invalidity was not established.

 At issue was the validity of U.S. Patent No. 6,713,446 for treatment
of oncology disease, sold under the name Velcade®.    The district court held that the claims were obvious because they were the inherent result of an allegedly obvious process, namely lyophilizing bortezomib in the presence of the bulking agent mannitol, even though nothing the prior art
taught or suggested that the claimed new compound would be formed, or taught or suggested making the claimed new compound by any method, or taught or suggested that this new compound would have the properties of stability, solubility, and dissociability that it exhibited.

The Federal Circuit framed the issue as “whether a person of ordinary skill, seeking to remedy the known instability and insolubility
and to produce an efficacious formulation of bortezomib,
would obviously produce the D-mannitol ester of bortezomib,
a previously unknown compound.”  Finding that the prior art contains no teaching or suggestion of this new compound, or that it would form during lyophilization, the Federal Circuit concluded that the invention was not obvious.

While conceding the truth of Sandoz’ argument that (1) lyophilization was generally known in formulating pharmaceutical products; (2) bulking agents were known for use in lyophilization; and (3) that mannitol was a known bulking agent, the Federal Circuit nonetheless found that the prior art does not teach or suggest that lyophilization of bortezomib in the presence of mannitol  would produce a chemical reaction and form a new chemical compound, or provide a reason to make this specific
new chemical compound, or that this new compound would solve the previously intractable problems of bortezomib formulation.

In the end, this is a triumph of “unexpected results” over what it technically obvious, or at least what is the inherent result of what is technically obvious.  The Federal Circuit suggested otherwise, noting that “[a] result is obvious when it is ‘the natural result flowing from the operation as taught,’ or a ‘property that is necessarily present’ when applying a process disclosed in the prior art,” and finding that Sandoz “failed to show that it was obvious to use mannitol to make an ester during lyophilization, or that the ester would solve the problems experienced with bortezomib.  The Federal Circuit’s analysis seems to put more weight on the obviousness of the unexpected results, than the obviousness of the process that resulted in unexpected results.

While it seems right to reward someone who solves a “previously intractable problem,”  it throws a kink into the obvious analysis to evaluate the obviousness of the unexpected results of an obvious process (which by definition are not obvious), rather than the obviousness of the process itself.