Board’s Obvious Analysis Improperly Relied Upon Hindsight

In Polaris Industries, Inc. v, Arctic Cat, Inc., [2016-1807, 2016-2280] (February 9, 2018), the Federal Circuit affirmed in part, vacated in part, and remanded the PTAB’s determination in an IPR that claims of U.S. Patent No. 8,596,405 were invalid, and affirmed the PTAB’s determination is a separate IPR that the claims of the same patent were not invalid.

After being sued for infringing claims of the ’405 patent, Arctic Cat filed two petitions for inter partes review, challenging the patentability of claims 1–38 as obvious in view of combinations of certain prior
art references, including Denney, Furuhashi, and Hickey.  In one petition, Arctic Cat argued that all relevant claims were obvious in view of the combination of Denney and Furuhashi, and in the other that all of the claims were obvious in view of Hickey and at least one other reference.

Polaris attacked the invalidation of the claims on three grounds: First, that the Board’s obvious analysis was predicated on an improper claim
construction or was too cursory. Second, that the Board relied on impermissible hindsight in combining the prior art, failing to articulate a valid motivation to combine these references and applying a “subjective preferences” analysis that finds no basis in this court’s precedents. Third, it contends that the Board erred in rejecting the undisputed evidence that Polaris introduced regarding the commercial success.

On the first grounds, the Federal Circuit rejected Polaris’ claim construction, noting that claims are given their broadest reasonable interpretation, and finding Polaris’ construction too restrictive.  Regarding Polaris’ argument about the cursory nature of the Board’s analysis, the Federal Circuit noted that although the Board’s reasoning could have been more thorough, it did not find fault in the Board’s arguably limited treatment of Polaris’s arguments where the Board’s treatment “was at least commensurate with Polaris’s presentation of this issue.

On the issue of hindsight, the Federal Circuit agreed with Polaris, the Board failed to analyze whether the prior art taught away from the claim limitations.  The Federal Circuit noted that the Board said that “one of ordinary skill has the ability to weigh the various benefits  and disadvantages based on subjective preferences in an analysis largely unrelated to obviousness,” and said that it has never articulated a framework for analyzing whether claims would have been obvious that includes the phrase “subjective preference” or that permits a tribunal
to wholly disregard the significance of prior art teachings based on such a characterization.  The Federal Circuit identified three problems with the Board’s “subjective preference” analysis: First, by completely disregarding certain teachings as ill defined “subjective preferences,” the Board’s approach invited the “distortion caused by hindsight bias” into the fold.  The Federal Circuit also noted that the Board improperly focused on what a skilled artisan would have been able to do, rather than what a skilled artisan would have been motivated to do at the time of the
invention.  Finally, the Federal Circuit found that the Board’s analysis encourages the fact-finder to outright discard evidence relevant both to “teaching away” and to whether skilled artisans would have been
motivated to combine references.

Finally, the Federal Circuit agreed that the Board erred when it declined to accord substantive weight to the Polaris’ undisputed evidence that its product is the invention disclosed in certain claims because it characterized the Polaris’ evidence as “conclusory,” noting that Artic Cat presented no contrary evidence.  The Federal Circuit said that the Board must assess the import of this evidence after presuming
that a nexus between the claims and the commercial success exists, unless and until that presumption is adequately rebutted.

 

 

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.

 

 

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.

 

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.

 

Just Because the Board Didn’t Say It; Doesn’t Mean that the Board Didn’t Think It

In Novartis AG v. Torrent Pharmaceuticals Limited, [2016-1352] (April 12, 2017), the Federal Circuit affirmed the PTAB’s determination that the challenged claims of U.S. Patent No. 8,324,283, and Novaritis’ proposed substitute claims, were unpatentable as obvious.

On appeal, Novaritis that it was denied due process under the APA when the the Board used a reference that it rejected as being anticipatory in the institution decision, as additional evidence of the reason to combine.

The Federal Circuit noted that under the APA, and an agency
may not change theories in midstream without giving respondents reasonable notice of the change and ‘the opportunity to present argument under the new theory.  The Federal Circuit disagreed that the Board ruled the reference out of the case entirely in the Institution Decision.  Th Federal Circuit said that the Board merely used the reference to reinforce its finding of obviousness, and that the Board’s discussion of the reference in the Final Written Decision was not inconsistent with its review of the reference in the Institution Decision.  The Federal Circuit further noted that the parties debated the reference at length throughout the proceeding and in the same context that it was discussed by the Board in the Final Written
Decision.  The Federal Circuit concluded that it is quite clear that
Novartis had more than sufficient notice and opportunity to be heard the reference’s potential relevance, and in fact actively and repeatedly attempted to distinguish the reference to defeat the very argument relied on by the Board in the Final Written Decision.

Novartis also argued that the Board further erred in its motivation to combine analysis because it failed to read the prior art as a whole and overlooked critical evidence of the combination’s known disadvantages.  Where the prior art contains apparently conflicting teachings (i.e., where some references teach the combination and others teach away from it) each reference must be considered for its
power to suggest solutions to an artisan of ordinary skill, considering the degree to which one reference might accurately discredit another.  The Federal Circuit noted that the Board expressly discussed the negative properties in the Final Written Decision, and noted that, despite this potentially discouraging characteristic, it was still commonly used.  In the end, the Federal Circuit was not persuaded that Novartis presented its arguments in such a way that it would be appropriate to find fault in the Board’s arguably limited treatment of those arguments in the Final Written Decision.

Although the prior art must be considered as a whole and the disadvantages of a reference must be considered in addition to the benefits, there is no requirement that the Board expressly discuss each and every negative and positive piece of evidence lurking in the record to evaluate a cursory argument. Given that the Board cited to the relevant pages of Novartis’ Patent Owner Response, we find no reason to assume the Board failed to consider the cited negatives simply because they were not recited at length in the Board’s Final Written Decision.

With respect of objective indicia of non-obviousness,  the Board rejected Novaritis argument of unexpected results because it was not commensurate with the scope of the claims.  On appeal Novaritis argued that the evidence nonetheless applied to the narrower dependent claims, but the Federal Circuit found that Novaritis did not separately argue the dependent claims, and therefore waived the argument.

Novaritis further argued that the invention enjoyed commercial success, industry praise, and met a long-felt but previously unsolved need.  For objective indicia evidence to be accorded substantial weight, a nexus must exist between the evidence and the merits of the claimed invention.  Where the objective indicia actually results from something other than what is both claimed and novel in the claim, there is no nexus to the merits of the claimed invention.  The Federal Circuit agreed that Novartis’ proffered evidence is not probative of the
nonobviousness inquiry, because other products were known with the same feature, even though had not yet been approved by the FDA.