What’s Zup? Water Board Patent Obvious; Secondary Considerations Too Weak to Show Otherwise

In Zup, LLC v. Nash Manufacturing, Inc., [2017-1601] (July 25, 2018), the Federal Circuit affirmed the district court’s judgment that claims 1 and 9 of U.S. Patent No. 8,292,681 on a water recreational board and a method of riding such a board were invalid for obviousness.

Zup and Nash had discussions about a potential joint manufacturing venture for the ZUP Board, and when they fell through, and Nash
brought the accused product to market.  Zup sued Nash, and the district court granted Nash’s motion for summary judgment of invalidity.  The parties agreed on the content of the prior art, and level of skill, but disagreed on whether a person of ordinary skill in the art would have been motivated to combine the prior art references in the way claimed in the patent, and whether the district court properly evaluated Zup’s
evidence of secondary considerations.

The Federal Circuit said that a “motivation to combine may be found explicitly or implicitly in market forces; design incentives; the ‘interrelated teachings of multiple patents’; ‘any need or problem
known in the field of endeavor at the time of invention and addressed by the patent’; and the background knowledge, creativity, and common sense of the person of ordinary skill.”  The district court explained that the ’681 patent identified known elements in the prior art that aided in rider stability while engaging a water recreational device and simply combined them in one apparatus and method.  The district court said that one of ordinary skill in the art would have been motivated to combine the various elements from the prior art references, noting that such motivation would have stemmed from a desire to aid in rider stability, to allow a wide variety of users to enjoy the device, and to aid users in maneuvering between positions on a water board — all
motivations that were “a driving force throughout the prior art and have been shared by many inventors in the water recreational device industry.

The Federal Circuit found that the record supported the district court’s analysis.  The Federal Circuit observed that helping riders switch between riding positions had long been a goal of the prior art, citing various portions of the references of record.  The Federal Circuit pointed out that Zup admitted that achieving rider stability is an “age-old motivation in this field,” and found that such stability was enhanced in the prior art through the same components employed in the ’681 patent: tow hooks, handles, foot bindings, and other similar features.

In the face of significant evidence regarding the consistent desire for riders to change positions while riding water recreational boards (and the need to maintain stability while doing so), and given that the elements of the ’681 patent were used in the prior art for this very purpose, the Federal Circuit said there was no genuine dispute as to the existence of a motivation to combine the references.

The Federal Circuit further found that Zup’s minimal evidence of secondary considerations does not create a genuine dispute of fact
sufficient to withstand summary judgment on the question of obviousness.  The Federal Circuit rejected ZUP’s contention that the district court improperly shifted the burden to prove non-obviousness to Zup because Nash introduced no evidence as to secondary
considerations, yet Zup still lost, noting that “any concerns regarding improper burden allocation can be quickly dismissed. The Federal Circuit said that the burden of persuasion remains with the challenger during litigation because every issued patent is entitled to a  presumption of validity. However, while the burden of persuasion remains with the challenger, a patentee bears the burden of production with respect to evidence of secondary considerations of nonobviousness.  The Federal Circuit said that it is clear that the district
court kept the ultimate burden of persuasion on the patent challenger throughout the obviousness analysis. Any argument that the district court improperly shifted the burden is therefore without merit.

On the issue of secondary considerations the Federal Circuit said that where the differences between the prior art and the claimed invention are minimal, it cannot be said that any long-felt need was unsolved.  The Federal Circuit further found that the record evidence indicates that the claimed invention was not the first to achieve the goal of helping users maneuver between positions on a water recreational board.

The Federal Circuit rejected the arguments of copying, noting that Nash’s instructions suggest a configuration that is different from Zup’s product, dispelling any inference of copying.

The Federal Circuit concluded that the weak evidence of secondary
considerations presented here simply cannot overcome the strong showing of obviousness, quoting “a claimed invention represents no more than the predictable use of prior art elements according to
established functions, as here, evidence of secondary indicia are frequently deemed inadequate to establish non-obviousness.”

Patent Owner Has Burden to Prove Marking Once Infringer Identifies Unmarked Products

In Arctic Cat Inc. v. Bombardier Recreational Products Inc., [2017-1475] (December 8, 2017), the Federal Circuit affirme the district court’s denial
of judgment as a matter of law as to obviousness, the
jury’s royalty rate, willfulness, treble damages, and award of an ongoing
royalty to Arctic Cat, but vacated the court’s denial of judgment as a matter of law as to marking and remand for further consideration limited to that issue.

The case involved U.S. Patent Nos. 6,568,969 and 6,793,545 directed to thrust steering systems for personal watercraft.  At trial, the jury found both patents not invalid, awarded a royalty for past infringement of $102.54 per unit, and based upon the jury’s finding of willful infringement, the district court trebled damages.  The district court also awarded an ongoing royalty of $205.08 per unit.

On the obviousness finding the Federal Circuit said that it presumes the jury found that an ordinarily skilled artisan would not have been motivated to combine the prior art as appellant proposed, and that if
such a fact finding is supported by substantial evidence, it cannot not reverse it. The Federal Circuit noted that appellant devoted much of its argument to re-litigating its case and its evidence rather than addressing the evidence that could have supported the jury’s finding of no motivation to combine. The Federal Circuit said that it does not reweigh the evidence and reach its own factual determination regarding motivation. The question on appeal is only whether substantial
evidence supports the jury’s presumed finding, and the Federal Circuit found substantial evidence did support the finding.

As to objective indicia of non-obviousness, the patent owner argued the claimed invention received industry praise and satisfied a long-felt need. The Federal Circuit again presumed the jury found in favor of patentee, and the Federal Circuit cannot reverse these presumed findings if they are supported by substantial evidence, which the Federal Circuit found they were.

As to the marking issue,  the Federal Circuit said that the patent owner patentee bears the burden of pleading and proving it complied with § 287(a)’s marking requirement, because if a patentee who makes, sells, offers for sale, or imports the patented articles has not given notice of its right”by marking the articles pursuant to the marking statute, it is not entitled to damages before the date of actual notice.  A patentee’s licensees must also comply with §287, because the statute extends to persons making or selling any patented article for or under the patentee.  The Federal Circuit add that recognizing that it may be difficult for a patentee to ensure his licensees’ compliance with the
marking provisions, its has held that where third parties are involved, courts may consider whether the patentee made reasonable efforts to ensure compliance with the marking requirements.

In the present case, the patent owner Arctic Cat licensed patents to Honda, and the agreement specifically stated Honda “shall have no obligation or requirement to mark” its licensed products.  However, While Honda sold products in the U.S. without marking them, Arctic Cat contended they were not covered by the patent and thus should not have been marked.

Arctic Cat and Bombardier disputed whether the products Honda sold were patented articles that were required to be marked, as well as who had the burden of proof.  There was a split in the Circuits on the burden of proof, which the Federal Circuit resolved by holding that an alleged infringer who challenges the patentee’s compliance with § 287 bears an initial burden of production to articulate the products it believes are unmarked “patented articles” subject to § 287. The Federal Circuit said that this was a low bar, and that the alleged infringer need only put the
patentee on notice that it or its authorized licensees sold specific unmarked products which the alleged infringer believes practice the patent. The Federal Circuit said that the alleged infringer’s burden is a burden of production, not one of persuasion or proof.  The Federal Circuit said that  once the alleged infringer meets its burden of production, however, the patentee bears the burden to prove the products identified do not practice the patented invention.

The Federal Circuit declined to determine the minimum showing
needed to meet the initial burden of production, but found that it was satisfied.  The Federal Circuit did say that alleged infringer need not produce claim charts to meet its initial burden of identifying products, because it is the patentee who bears the burden of proving that it satisfied the marking requirements and thus the patentee who would have to prove that the unmarked products identified by the infringer do not fall within the patent claims. The Federal Circuit concluded that the district court erred in placing this burden upon BRP and vacated and remanded on the issue of marking.

On the pre-judgment and post-judgment royalty rates, the Federal Circuit found no error, noting that a difference in the rates may be justified by the change in the parties’ legal relationship and other factors.  Finally the Federal Circuit affirmed the district court on the issue of willfulness and enhanced damages.

 

 

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,

It was Error Not to Consider Secondary Considerations, But They Wouldn’t Have Made a Difference

In ClassCo, Inc. v. Apple, Inc., [2015-1853] (September 22, 2016), the Federal Circuit affirmed a PTAB decision affirming an Examiner’s rejection of claims to a call-screening
system that verbally announces a caller’s identity before the call is connected.as obvious under 35 USC 103.

The Federal Circuit rejected the reexam applicant’s that the combination of references was inconsistent with KSR, noting:

Contrary to ClassCo’s argument, KSR does not require that a combination only unite old elements without changing their respective functions. KSR, 550 U.S. at 416. Instead, KSR teaches that “[a] person of ordinary skill is also a person of ordinary creativity, not an automaton.” Id. at 421. And it explains that the ordinary artisan recognizes “that familiar items may have obvious uses beyond their primary purposes, and in many cases a person of ordinary skill will be able to fit the teachings of multiple patents together like pieces of a puzzle.” Id. at 420. The rationale of KSR does not support ClassCo’s theory that a person of ordinary skill can only perform combinations of a puzzle element A with a perfectly fitting puzzle element B.

The Federal Circuit concluded that the Board properly applied a flexible approach mandated by KSR.

The Federal Circuit did find that the Board erred in dismissing some of the objective evidence of non-obviousness, noting that it has previously explained that “when secondary considerations are present, though they are not always dispositive,
it is error not to consider them.”  The Federal Circuit said that a determination of whether a patent claim is invalid as obvious under § 103 requires consideration of all four Graham factors, and it is error to reach a conclusion of obviousness until all those factors are considered.

However, the Federal Circuit found that the Board correctly determined that much of the evidence deserved no weight because it did not have a nexus to the merits of the claimed invention.  However as to some of the evidence there was a nexus.  The Federal Circuit explained that nexus depends on whether the claims are commensurate in scope with the secondary considerations.  The Federal Circuit noted that dependent claims contained the touted features, and that it was reasonable to assume that the underlying independent claim includes these features.  Even though the indepdent claims encompassed other embodiments as well, the Federal Circuit further noted that it has not required a patentee to produce objective evidence of nonobviousness for every potential embodiment of the claim. A patent applicant ‘need not sell every conceivable embodiment of the claims in order to rely upon objective
indicia of nonobviousness.

However, despite finding error in the Board’s according no weight to the evidence of secondary considerations, the Federal Circuit found no error in the Board’s ultimate conclusion of obviousness.  The Federal Circuit said that the value that the evidence of secondary consideratons possesses in establishing nonobviousness is “not strong” in comparison to the findings and evidence regarding the prior art under the first three
Graham factors.