Patentee’s Teaching Away Argument Fails to Overcome Substantial Evidence of Unpatentability

An obviousness challenge can be overcome by showing the prior art teaches away from the claimed invention.  However, “teaching away” is a question of fact and thus subject to the substantial evidence standard in appeals from IPR decisions.  It is thus difficult to overcome a PTAB determination on this issue, as exemplified in Meiresonne v. Google, Inc., No. 2016-1755 (Fed. Cir. Mar. 7, 2017).

In Mereisonne, Google challenged four patent claims based on a two-reference obviousness argument.  The parties agreed that, together, the references taught every limitation of the claims.  The only issue on appeal was whether the secondary reference taught away from the claimed invention by criticizing an element of the invention.  The Federal Circuit affirmed the PTAB’s decision that it did not, finding substantial evidence supported the PTAB’s determination.

More particularly, the claims were directed to computer systems that users could use to identify suppliers of goods and services over the internet (basically, a directory).  The directory website included (1) a plurality of links to supplier websites, (2) a supplier description near the corresponding supplier link, (3) a title portion that describes the class of goods or services on the website, and (4) a rollover window that displays information about at least one of the suppliers corresponding to a link.

The rollover element was central to the dispute.  The prior art (Finseth) taught a visual index for a graphical search engine that provides “graphical output from search engine results or other URL lists.”  Finseth explained that many web directories included only cursory or cryptic text about the website in the results.  Finseth thus taught the use of thumbnail or other representational graphic information to accompany hyperlink results.  The primary reference, Hill, also explained that such abstract text was often “gibberish” and advocated visiting the actual site instead of relying on the abstract text accompanying the hyperlink.

The Federal Circuit agreed this criticism was not sufficient to teach away from the claimed rollover window (which corresponded to the prior art abstract test).  Despite the prior art’s criticisms, it did not that abstract text was useful in culling through results.  The Court also found that even if abstract text was often not useful, the prior art said that other links’ abstract text was useful.  Thus, the prior art did not sufficiently discourage the person of ordinary skill from following the path set out in the reference, and did not lead the person in a direction divergent from the path taken.

Federal Circuit Broadly Affirms PTAB’s Determinations on Analogous Art, Motivation to Combine References, and Obviousness of Claims

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The level of deference the Federal Circuit gives to the Board’s IPR decisions has been surprising to many practitioners, considering the Court’s reputation for reversing district court decisions.  The trend of deference to the Board continues, as illustrated in Unwired Planet, LLC v. Google Inc., 2015-1810, -1811, Nov. 15, 2016.

Unwired involved one patent, U.S. 7,024,205.  The Board nullified the patent twice over, finding the claims obvious in an IPR, and lacking written description in a CBM proceeding.  Unwired involved a consolidated appeal of both.  The Federal Circuit affirmed the Board’s obviousness finding, and thus did not reach the CBM decision.

The ‘205 patent involved a system and method for providing cell phone users with prioritized search results based either on the user’s location, or based on other criteria chosen by the network administrator (the point of the latter is to allow search providers to prioritize results based on whether, for example, a restaurant has paid to be listed).  More particularly, the patent claims a scheme wherein the search results list a further-away provider before listing a different, closer provider (called “farther-over-nearer ordering” in the opinion).

Google presented a variety of prior art including basic references on providing search results in an electronic setting and also a 1997 book by Galitz discussing principles for interface design, including various techniques for ordering text information and menus.  On appeal, Unwired presented 3 arguments:  (1) Galitz was non-analogous art; (2) the prior art does not teach farther-over-nearer ordering; and (3) there was inadequate motivation to combine Galitz with the other art.

The Federal Circuit rejected all three arguments.  As to non-analogous art, the Court first noted that the field of endeavor of a patent is not limited to the point of novelty, the narrowest conception of the field, or the particular focus within a given field.  Because both Galitz and the patent dealt, broadly speaking, with the field of interface design, the Court determined a person of ordinary skill would have looked to Galitz.

Second, as to the prior art’s alleged lack of teaching, the evidence was clear that the prior art sometimes would have returned results with farther-over-nearing ordering, even though that wasn’t necessarily the goal of that prior art.  Nonetheless, that was legally sufficient:  “We reject this argument because combinations of prior art that sometimes meet the claim elements are sufficient to show obviousness.”  Lastly, the Court found sufficient evidence (including in the form of expert testimony) to believe that a person of ordinary skill in the art would have combined the references.  Here too, the Court presented a relatively broad (and challenger-friendly) reading of the law:  “Google also argues that it does not need to show that there was a known problem with the prior art system in order to articulate the required rational underpinning for the proposed combination.  We agree.”  This final point is consistent with KSR, as the opposite position (that the problem need to have been known) would seem perilously close to the TSM test rejected in KSR.

The Federal Circuit’s deference to the Board, and challenger-friendly reading of the law, in IPR appeals continues to encourage parties to pursue their positions through IPR petitions.

PTAB Reversed Based on Non-Analogous Art Theory

34108250_sAlthough In re Natural Alternatives LLC (Fed. Cir. August 31, 2016) is not an IPR appeal, it should be of interest to those who care about IPRs and PGRs because it reflects a successful appeal from the Patent Trial & Appeal Board (PTAB) involving the fairly rare issue of non-analogous art.

Natural Alternatives (NA) owns US 6,080,330 (‘330), which claims compositions for deicing roads using less salt and fewer toxic chemicals than have traditionally been used for that purpose. NA licenses ‘330 to various manufacturers of road-deicing supplies. One of NA’s licensees decided to challenge the patent by filing a request for ex parte re-examination, which the PTO granted. Eventually the Examiner rejected all claims as obvious and the PTAB affirmed. NA appealed to the Federal Circuit (CAFC).

There were two “representative” limitations litigated before the PTAB and then the CAFC, and the key limitation in both claims was “desugared sugar beet molasses.” NA discovered that if you mix this particular molasses with any of a number of previously known deicing agents (mostly road salts), you enhance the salt’s deicing effectiveness, such that you get more deicing “bang” for the salt “buck.” This means that you can use less salt per winter, which is good because salt can corrode vehicles, pollute groundwater, etc. Before NA’s discovery, desugared sugar beet molasses was a waste product that was simply thrown away.

The crux of the PTO’s argument for prima facie obviousness was that PL 164018 (Zdzisław) disclosed an antifreeze containing sugar beet molasses (the parties disputed whether this molasses was desugared, but that point is not critical) and a prior art deicing agent (a class of alcohols). The principle difference between Zdzisław’s antifreeze and NA’s claimed composition are that NA’s claimed composition: (1) requires a particular ratio of molasses to deicing agent; and (2) at least some of NA’s claims require salt, not alcohol, as the deicing agent. The Examiner cited US 5,639,319 (Daly), which also used molasses and alcohol but in different ratios than used in Zdzisław. Daly uses the molasses/alcohol mix as a tire ballast (i.e., bulk weight loaded into a truck tire to make it more dense to improve driving on slick surfaces). Then the Examiner cited a study published in Public Works magazine to show that alcohol and road salt achieve essentially the same deicing effect. The PTAB considered that the range of molasses to alcohol ratios in Zdzisław and Daly—combined with the alleged interchangeability between alcohol and salt from Public Works—showed that it was nothing more than routine optimization to adjust the ratio of molasses and road salt to arrive at NA’s claimed deicing composition.

NA argued that it was not proper to combine antifreeze art (Zdzisław) and tire ballast art (Daly) because they are not analogous art fields. The PTAB took the position that both anti-freeze and tire ballast are things that you use in a car in the winter, and this made them part of the same general art field. The CAFC disagreed, citing In re Clay, 966 F.2d 656 (Fed. Cir. 1992). In Clay the PTO had argued that oil storage tanks and oil extraction rigs were all part of the same art field of “petroleum industry,” but the CAFC disagreed, holding that “petroleum industry” was too generic and abstract a way of framing the art fields in question. The panel in the present case similarly considered the things-you-do-to-a-car-in-winter view of analogous art to be too abstract. Because the PTO—which has the initial burden of establishing prima facie obviousness—had not offered a cogent explanation of why Zdzisław and Daly are analogous art, the CAFC held that prima facie obviousness was not established in the first instance, and therefore there was properly no rejection for NA to rebut. Therefore, the PTAB’s judgment was reversed.

“Substantial Evidence” Hurdle is Substantially Difficult to Overcome

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One of the less appreciated hurdles to a successful appeal of a Final Written Decision in an IPR proceeding is the “substantial evidence” standard of review the Federal Circuit applies to the Graham factors that underlie a determination of obviousness.  Although the ultimate determination of obviousness is a legal issue subject to de novo review, the underlying Graham factors are questions of fact, which receive the more deferential, substantial evidence standard of review.  In practice, the ultimate legal conclusion rises and falls with the Graham factors—particularly, whether the prior art teaches the claimed limitations (i.e., “the differences between the prior art and the claim at issue”).

The Federal Circuit’s August 9, 2016 opinion in In re: Warsaw Orthopedics illustrates the deferential nature of the substantial evidence standard.  According to the Federal Circuit, “substantial evidence” is “something less than the weight of the evidence more than a mere scintilla.”  In Warsaw, the claim limitation of interest was: “[i]nserting…a non-bone interbody intraspinal implant…, the length of said implant being sized to occupy substantially the full transverse width of the vertebral bodies of the two adjacent vertebrae, the length of said implant being greater than the depth of the disc space,…[and] the length of said implant being greater than the maximum height of said implant.”

The factual question was whether the prior art disclosed these limitations.  The prior art disclosed implants that were recessed within the vertebrae and which were substantially shorter than the full width of the vertebrae.  The PTAB nevertheless found it would have been obvious to one of ordinary skill that the prior art implant would be sized to conform to the disk space.  The Federal Circuit determined this was supported by substantial evidence, despite the fact that no expert testimony was referenced in the Federal Circuit opinion.  In doing so, the Federal Circuit indicates that an obviousness determination does not actually require each claimed limitation be met by the prior art, stating “To the extent that Warsaw argues the PTAB erred because it did not decide whether [the prior art] discloses dimensions that exactly meet the limitation ‘substantially the full transverse width’ in claims 1 and 17 of the ‘’97 patent, Warsaw misunderstands the governing law, see, e.g., Beckson Marine, Inc. v. NFM, Inc., 292 F.3d 718, 727 (Fed. Cir. 2002) (“[O]bviousness does not require the prior art to reach expressly each limitation exactly.”).

The Federal Circuit did, however, throw a bone to the patentee with respect to the PTAB’s cancellation of claim 17.  There, the Court agreed that the PTAB’s following explanation on one limitation did not sufficiently show its reasoning in reaching its decision:  “Jacobsen appears to disclose anchor wires (i.e., ‘elongated portions’) that are positions over adjacent vertebrae.’) (citing Figure 5).”  The reversal as to claim 17 may be a fleeting victory for the patentee, though, because the Federal Circuit remanded for further findings on the issue.

PTAB Reversed–Common Sense Improperly Used to Supply Missing Limitation in Obviousness Inquiry

10311096 - rejected stamp isolated on white backgroundIn a rare rebuke of the PTAB’s discretion, the Federal Circuit has outright reversed a finding of obviousness based on the Board’s misapplication of the law on the permissible use of “common sense” in an obviousness analysis.  The case, Arendi S.A.R.L. v. Apple Inc., Google Inc., and Motorola Mobility LLC (Aug. 10, 2016) involved a patent for providing coordination between a first computer program displaying a document and a second computer program for searching an external information source.  The invention allows a user to access and conduct a search using the second program while remaining in the first program; for example, a user using a data entry program can search a separate database for data in a certain field.  The limitation at issue was:  “performing a search using at least part of the first information as a search term in order to find the second information, of a specific type or types, associated with the search term in an information source external to the document, wherein the specific type or types of second information is dependent at least in part on the type or types of the first information.

The prior art involved a program that recognizes a phone number as a class of text.  The question on appeal was whether the Board erred in finding it would have been “common sense” to a person of ordinary skill in the art to search for the telephone number that is detected when the prior art’s “Add to address book” option is selected.

The Court found there was insufficient evidence to support such a resort to “common sense” here.  In doing so, the Court offered the reminder that when “common sense” is used to supply a missing limitation (as opposed to the more common use of providing a motivation to combine references), “it must…be supported by evidence and a reasoned explanation.”  Id. at 12. According to the Court, this was particularly so where, as here, the subject limitation was an important structural limitation that is not evidently and indisputably within the common knowledge of those skilled in the art.  In doing so, the Court distinguished precedent where “common sense” is used to supply a “peripheral” limitation in a claim.

In Arendi, the Court ultimately determined the challenger’s arguments were not specific enough to explain why the person of ordinary skill in the art would have found the subject limitation obvious.  As a result, the Court reversed the cancellation of the claims.

Federal Circuit Provides Ammunition to Patentees In Magnum Decision

cafc1Patent Owners gained a bit of a reprieve in the Federal Circuit’s recent decision in In Re Magnum Oil Tool Int’l, Ltd.decided on July 25, 2016. In several key respects, Patent Owners regained some footing in the otherwise daunting IPR process.

As an initial matter, in one of its first post-Cuozzo (Supreme Court edition) decisions, the Federal Circuit determined that, for issues that are central to the Board’s Final Written Decision, the Court is not prohibited by § 314(d) from reviewing those decisions just because they were also addressed in the Decision to Institute. The merits of a final written decision is reviewable, even though the issue was initially decided by the Board at the decision to institute stage. Id. at 12. In the context of the Magnum decision, this meant that the Court had jurisdiction to review all of Patent Owner’s arguments regarding the basis for the Board’s ultimate judgment of unpatentability, including rationale to combine references, even though the Board addressed those arguments in the decision to institute.

The key substantive issue in the case was whether the Board’s decision adequately established a prima facie basis of obviousness. Specifically, Patent Owner argued that no adequate motivation to combine the subject references was articulated. The issue stemmed from the fact that, in the petition, Petitioner put forth a detailed obviousness argument on one set of references (“Ground 1”), but took a more abbreviated approach with a second set of references (“Ground 2”), that “incorporated by reference” the motivation to combine from Ground 1.

In response, the PTO argued that when the Board institutes a ground, it necessarily finds that Petitioner has demonstrated a reasonable likelihood of success and that this finding operates to shift the burden of producing evidence of nonobviousness to Patent Owner. But, the Court rejected the PTO’s contention and clarified that the burden of persuasion is always on the Petitioner to prove unpatentability by preponderance and that burden never shifts to the patentee. The court reasoned that, due to the significant difference between the standards of proof at institution (likelihood of success) and at trial (preponderance), it is inappropriate to shift the burden to the patentee after institution to prove that the claims are patentable.

As to the ultimate conclusion of obviousness, the court concluded that, in light of Petitioner’s failure to explain why a skilled artisan would combine the Ground 2 references, the Board had no basis for its conclusion that Petitioner had met its burden of proving obviousness by preponderance under KSR.  The court emphasized that to satisfy its burden of proving obviousness, Petitioner cannot employ mere conclusory statements because such statements cannot satisfy Petitioner’s burden. Nonetheless, the PTO argued that the Board did not err in making an obviousness argument on behalf of Petitioner based on the Ground 2 references because this argument “could have been included in a properly drafted petition.” The court flatly rejected the PTO’s contention that the Board is free to adopt arguments on behalf of Petitioners that could have been but were not raised by the Petitioner during an IPR, noting again that Petitioner bears the burden of proof. The court acknowledged that the PTO has broad authority to establish procedures in IPR’s but clarified that the authority is not so broad to allow the PTO to raise, address, and decide patentability theories never presented by the Petitioner and not supported by record evidence. Instead, the court emphasized that the Board must base its decisions on arguments advanced by a party and to which the opposing party was given a chance to respond. Accordingly, the court held that the Board’s obviousness conclusion was not based on sufficient evidence since the Board relied on Petitioner’s conclusory statements and improperly argued on behalf of Petitioner why the Ground 2 references could be combined.

Lastly, the Court addressed the PTO’s argument that Patent Owner should have challenged the Board’s actions in the rehearing request. The court quickly disposed the PTO’s argument, stating that the plain language of 35 USC § 141(c) does not require a party dissatisfied with the Board’s final written decision to first raise the issue in a rehearing request before appealing the issue to the court.

In sum, Magnum is a ray of hope for Patent Owners that have become accustomed to most aspects of IPR practice being construed against them. The Court’s docket contains many upcoming cases that will allow us to learn whether this is an aberration, or a trend.

PTAB Reversed for Failing to Explain “Why” a Person of Skill Would Modify the Prior Art

Judge's BenchIt is no secret that patent owners have, on average, struggled at the PTAB over the last three and a half years.  Some practitioners say that a reason for this result is that the Board many times takes an aggressive approach in the assessment of “obviousness” under Section 103.  Yesterday, the Federal Circuit issued its decision in Black & Decker, Inc. v. Positec USA, Inc., which may signal a change in that tide.

Positec challenged Black & Decker’s US Patent No. 5,544,417, which is directed to a manner of mounting a motor in the housing of a string trimmer.  In particular, the ‘417 patent discloses the use of a “motor mounting plate” supported by the string trimmer’s housing such that the motor does not contact the interior surface of the housing.  The motor is fixedly secured to the motor mounting plate.

The Board upheld the validity of claims 7 and 10 directed to a vegetation string trimmer, but found that claims 16 and 17, directed to a method of assembling an outdoor power tool, were unpatentable under 35 USC Sec. 103 in view of Mack alone.

The Federal Circuit reversed the Board’s finding of obviousness, finding that it “is not sufficient” under Section 103 to merely find that a person skilled in the art “could have” or “would have known” to do something.  The Board must “explain why one of skill in the art would have adapted or replaced Mack’s motor mounting yoke to ensure that the motor did not move relative to the motor mounting structure.  The Board did not do so.”  (emphasis added).  “Our precedent requires that the Board explain a rationale why a person of ordinary skill would have modified Mack’s motor.”  Citing, Ball Aerosol & Specialty Container, Inc. v. Limited Brands, Inc. 555 F.3d 984, 993 (Fed. Cir. 2009).  The Federal Circuit further noted that Positec offered mere attorney argument, not evidence, to explain why a person of ordinary skill would have “fixedly secure[d]” the motor.

Perhaps this case will result in more rigorous analyses of the rationale for proposed combinations and/or modifications to prior art in the context of Section 103 assessments.  In any event, this case is a positive for patent owners.

*By way of disclaimer, Harness Dickey represented Black & Decker in the IPR and the Federal Circuit appeal

Federal Circuit Issues a Rare Reversal on Behalf of Patent Owner in IPR

cafc1Yesterday, the Federal Circuit decided five appeals from as many IPR’s filed by Patent Owner PPC Broadband involving claim construction issues, most of which were decided in PPC’s favor. In a first appeal (2015-1364) taken from IPR2013-00342, the court agreed with PPC and held that the Board’s construction of “reside around” was unreasonably broad because the Board selected the broadest of several dictionary definitions (in the immediate vicinity of; near) and disregarded the definition (encircle or surround) that was consistent with the context provided by the claims, the specification, and the patented technology. This holding can be particularly useful to Applicants during prosecution when Examiners applying BRI select the broadest dictionary definition of a claim term and ignore the definition that is consistent with Applicant’s use of the term. The court also rejected the Board’s conclusion that the claim term “reside around” should be interpreted to mean something other than “encircle or surround” since the claim preamble recited a different term “surrounded” than the claim term “reside around.” The court clarified that such differentiation is less applicable where, as here, the preamble merely sets forth the general nature of the claimed invention and is not used to limit the claim.

Nonetheless, Appellee-Petitioner Corning argued that the Board’s interpretation should be upheld because it covers many of PPC’s embodiments. PPC’s numerous claims of varying scope, disclosure of various embodiments, and consistent use of the term “around” in the patent came to PPC’s rescue. Citing these facts, the court rejected Corning’s argument that the broadest reasonable construction is the one that covers the most embodiments. Instead, the court emphasized that the BRI must be reasonable in light of the claims and specification and that the construction covering more embodiments than another does not render that construction reasonable.

In other consolidated appeals (2015-1361, 2015-1366, 2015-1368, and 2015-1369), while the court affirmed some and rejected some of the Board’s interpretations, the court offered guidance regarding objective considerations, particularly commercial success, which can help patent owner. PPC alleged, and presented multiple declarations in support, that its connectors are commercial embodiments of the claimed connectors. Corning did not dispute the allegation. Yet the Board found that PPC did not present persuasive evidence of commercial success. The court held that where, as here, the patentee has presented undisputed evidence that its product is the invention disclosed in the challenged claims, it is error for the Board to find to the contrary without further explanation, which was missing here. The court held that since the evidence shows that PPC’s connectors are the invention disclosed and claimed in the patent, it presumed that any commercial success of these products is due to the patented invention. The court noted that while such a presumption won’t apply in ex parte context, where the PTO cannot gather evidence supporting or refuting the patentee’s evidence of commercial success, it applies in contested proceedings like IPRs, where the petitioner has the means to rebut the patentee’s evidence.

“Obvious to Try” Rationale Insufficient to Institute IPR Trial Directed to Venlafaxine

5541491_sThe rate at which the Board denies inter partes review petitions has been climbing in recent months, and will be helped along by the Board’s denial of review in Neptune Generics v. Auspex Pharm., IPR2015-01313.  Neptune Generics filed a challenge to Auspex Pharmaceuticals’ patent no. 7,456,317, which covers a “deuterated form of venlafaxine, an inhibitor of monoamine neurotransmitters.”  The Board found the prior art did not teach the patented substitution of deuterium for hydrogen, nor that such a substitution would have been obvious to try, and thus denied review of all challenged claims.

The patent taught that the deuterated form is more stable (and thus has better pharmacokinetics and toxicity profiles) than normal venlafaxine.  Petitioner asserted that it would have been obvious to substitute deuterium (an isotope of hydrogen) for the hydrogen in venlafaxine.  Petitioner relied on two pieces of prior art:  Fogelman, showing the transformation of venlafaxine into its two major metabolites; and Miwa, showing a carbon-deuterium bond is stronger than a carbon-hydrogen.  Petitioner argued, with a supporting expert declaration, that a person of ordinary skill would have used Miwa’s teaching (not directed to venlafaxine) to modify venlafaxine because cleavage of hydrogen (via a hydroxyl group) is part of venlafaxine’s metabolism.  The Board found the record did not establish that a person of ordinary skill in the art would have been motivated to modify venlafaxine to change its metabolism, and, further, that the effect of the substitution explained by Miwa is unpredictable and varies depending on what compound it is applied to, and there was no specific teaching to modify venlafaxine in that way (or a reasonable expectation of success).  Further, Petitioner failed to show that switching deuterium for hydrogen would have been obvious to try, because there are over 124 million possible deuterated forms of venlafaxine, and no prior art teaching as to which should be used.

In the pharma space, “obvious to try” challenges are common. It is interesting to see the Board’s treatment of the issue here, and another IPR bullet dodged by a pharma patent owner.

PTAB Rejects Challenge to Onglyza® Patent

32481593_sThe lower burden of proof associated with inter partes reviews should make IPRs attractive to generic pharmaceutical companies, but even with that lower burden, success is not guaranteed, as illustrated by IPR2015-01340.  Mylan Pharmaceuticals challenged AstraZeneca’s patent RE44,186 on saxagliptin, the active ingredient in Onglyza® (used to treat type 2 diabetes).  Mylan’s petition argued the structure of the drug would have been obvious.  The Board disagreed, determining that the prior art did not provide sufficient motivation to modify the lead compound chosen by Mylan.  The Board denied review.

The Board started with the legal standard for this sort of issue:  “A determination of whether a new chemical compound would have been obvious over the prior art typically follows a two prong inquiry considering first, whether one of ordinary skill would have selected one or more lead compounds for further development and, second, whether the prior art would have supplied sufficient motivation to modify a lead compound to arrive at the compound claimed with a reasonable expectation of success.”

Here, the Board accepted Petitioner’s proposed lead compound, but found the record did not support the second prong of the test, modification of the lead compound to arrive at the claimed invention.  The Board analyzed the two aspects of the modification argument, stability and potency, and found both lacking.  As to stability, Petitioner argued that the person of ordinary skill would have been motivated to change one group on the lead compound to a more stable adamantyl group (as one would expect, the more stable group is also on the claimed compound).  The problem, though, was that the lead compound was noted for its stability, and the Board found the record was insufficient to establish a person of ordinary skill in the art would have been motivated to make it even more stable.  As to potency, Petitioner argued for a second substitution of a different group, which combined with the first substitution would yield the claimed compound.  The Board found the record failed to show that the proposed substitution would have been expected to increase potency.

The Board thus denied review.