In Inline Plastics Corp. v. Lacerta Group, LLC, [2022-1954, 2022-2295] (Fed. Cir. 2024), the Federal Circuit affirmed the judgment of non-infringement, but vacated the jury determination of invalidity because of an error in jury instructions on the objective indicia of nonobviousness.

The case involved U.S. Patent Nos. 7,118,003; 7,073,680; 9,630,756; 8,795,580; and 9,527,640, which describe and claim tamper resistant and tamper evident containers,

On the invalidity issue, the Federal Circuit rejected the argument that the references were “cumulative” of PTO-considered references, pointing out that Inline cites no authority that
precludes a successful obviousness challenge that rests on PTO-considered references.

The Federal Circuit also rejected the argument that there was no legally sufficient evidence of the motivation to combine references. The Federal Circuit said that it has consistently stated that a court or examiner may find a motivation to combine prior art references
in the nature of the problem to be solved” and that “[t]his form of motivation to combine evidence is particularly relevant with simpler mechanical technologies. Further, the Federal Circuit it has recognized that some cases involve technologies and prior art that are simple enough that no expert testimony is needed” regarding a motivation to combine.

Finally, the Federal Circuit rejected Inline’s argument that Lacerta’s challenge must fail because it did not rebut or even address Inline’s objective- indicia evidence. The Court said that is has never held that the challenger must present its own testimony on objective indicia or else the patentee’s evidence must be credited, much less must be credited as dispositive of the obviousness issue.

As to the jury instruction on objective-indicia, the Federal Circuit agreed that the instruction was legal error. The Federal Circuit noted that Inline presented evidence of industry praise for its products, as well as evidence for additional objective indicia, such as copying and licensing. The Court said that this evidence, taken together, called for an instruction, if properly requested, on the objective indicia to which the evidence pertains, so that the jury
could assess its weight as objective indicia and—where the jury was asked for the bottom-line answer on obviousness— in relation to the prima facie case. However, the district court
did not give such an instruction.

The error in the objective-indicia instruction here was not harmless (whether under Federal Circuit or First Circuit law). We cannot say that a proper instruction would have made no difference to a reasonable jury regarding invalidity.

In Fox Factory , Inc. v. SRAM, LLC, [2018-2024, 2018-2025] (December 18, 2019), the Federal Circuit vacated and remanded that the district court’s determination that claims 1–6 and 13–19 of U.S. Patent No. 9,182,027 was not obvious based on its analysis of secondary considerations. The independent claims of the ’027 patent—claims 1, 7, 13, and 20—recite a bicycle chainring with alternating narrow and wide tooth tips and teeth offset from the center of the chainring.

The Board determined that SRAM was entitled to a presumption of nexus between the challenged outboard offset claims and secondary considerations evidence pertaining to SRAM’s X-Sync products, subject to two limitations. First, the Board stated that evidence of secondary considerations “specifically directed” to either an inboard or outboard offset X-Sync product is only entitled to a presumption of nexus with the claims reciting the same type of offset. Second, the Board explained that the presumption of nexus only applies when a product is “coextensive” with a patent claim.

On appeal, FOX contended that the Board applied the wrong standard for determining whether SRAM was entitled to a presumption of nexus between the challenged claims and SRAM’s evidence of secondary considerations, and the Federal Circuit agreed.

In order to accord substantial weight to secondary considerations in an obviousness analysis, the evidence of secondary considerations must have a “nexus” to the claims, i.e., there must be a legally and factually sufficient connection’ between the evidence and the patented invention. The Federal Circuit noted that the patentee bears the burden of showing that a nexus exists. To determine whether the patentee has met that burden, the consideration is the correspondence between the objective evidence and the claim scope.

A patentee is entitled to a rebuttable presumption of nexus between the asserted evidence of secondary considerations and a patent claim if the patentee shows that the asserted evidence is tied to a specific product and that the product is the invention disclosed and claimed. Conversely, when the thing that is commercially successful is not coextensive with the patented invention—for example, if the patented invention is only a component of a commercially successful machine or process, the patentee is not entitled to a presumption of nexus.

The existence of one or more unclaimed features, standing alone, does not mean that nexus may not be presumed. There is rarely a perfect correspondence between the claimed invention and the product. The purpose of the coextensiveness requirement is to ensure that nexus is only presumed when the product tied to the evidence of secondary considerations is the invention disclosed and claimed. If the unclaimed features amount to nothing more than additional insignificant features, presuming nexus may nevertheless be appropriate.

The Federal Circuit explained that the degree of correspondence between a product and a patent claim falls along a spectrum. At one end of the spectrum lies perfect or near perfect correspondence. At the other end lies no or very little correspondence, such as where the patented invention is only a component of a commercially successful machine or process.

In the instant case the Federal Circuit concluded that no reasonable fact finder could conclude, under the proper standard, that the X-Sync chainrings are coextensive with the ‘027 patent claims. The Federal Circuit noted that the chainrings include unclaimed features that the patentee describes as “critical” to the product’s ability to “better retain the chain under many conditions” and that go to the “heart” of another one of Patent Owner’s patents. The Federal Circuit said that In light of the patentee’s own assertions about the significance of the unclaimed features, no reasonable fact finder could conclude that these features are insignificant.

Because it could not say that the X-Sync chainrings are the invention claimed by the independent claims, the Board erred in presuming nexus between the independent claims of the ’027 patent and secondary considerations evidence pertaining to the X-Sync chainrings. Because the Board erroneously presumed nexus between the evidence of secondary considerations and the independent claims, the Federal Circuit vacated the Board’s non-obviousness determination and remanded for further proceedings. On remand, the Federal Circuit said that the Patent Owner will have the opportunity to prove the nexus between the challenged independent claims and the evidence of secondary considerations.

In Henny Penny Corporation v. Frymaster LLC, [2018-1596] (September 12, 2019), the Federal Circuit affirmed the PTAB determination that claims 1–3, 5–12, 17–21, and 23 of U.S. Patent 8,497,691 were not unpatentable as obvious.

The ‘691 Patent relates to deep fryers, and in particular to TPM sensors that detect accumulating impurities in the cooking oil, and alert the operator when to change oil.

Henny Penny originally argued the claims were the obvious result of replacing the Kauffman analyzer with the Iwaguchi sensor. However, Henny Penny changed its position arguing that Kauffman’s analyzer could simply be modified. The Board refused to consider this impermissible new theory of unpatentability raised for the first time on reply.

As to Henny Penny’s original argument the Board found that the disadvantages from the proposed modification out-weighed the uncertain benefits of the modification. The Board further found that evidence of secondary considerations supported nonobviousness. Frymaster sub-mitted evidence that it marketed a product called the “Oil Quality Sensor” (“OQS”) that won praise from two industry organizations and one customer. The Board also determined that each award specifically praised the TPM sensor in the OQS. While the Board recognized that the individual claim elements were in the prior art, it found that the praise was directed to the claimed combination as a whole. Accordingly, the Board found that the two industry awards weighed in favor of patentability, as did, to a lesser extent, the customer award.

The Federal Circuit found that the Board did not abuse its discretion by holding Henny penny to the obviousness theory in its petition. Because of the expedited nature of IPR proceedings, it is of the utmost importance that petitioners in the IPR proceedings adhere to the requirement that the initial petition identify “with particularity” the ‘evidence that supports the grounds for the challenge to each claim. Accordingly, an IPR petitioner may not raise in reply an entirely new rationale for why a claim would have been obvious.

As to the original obviousness contention, the Federal Circuit noted that the benefits, both lost and gained, should be weighed against one another, and found that the Board’s analysis was consistent with these principles. As to the secondary considerations supporting non-obviousness, the Federal Circuit rejected Henny Penny’s argument that there was no nexus between the evidence and the claimed invention. The Federal Circuit agreed that the identified objective indicia must be directed to what was not known in the prior art, and what was not known in the prior art may well be the novel combination or arrangement of known individual elements.

The Federal Circuit concluded that substantial evidence supported the Board’s determination of non-obviousness.

In Acorda therapeutics, Inc. v. Roxane Laboratories, Inc., [2017-2078, 2017-2134] (September 10, 2018), the Federal Circuit affirmed the judgment that the asserted claims of U.S. Patent Nos. 8,007,826; No. 8,663,685; No. 8,354,437; and No. 8,440,703, were invalid, and dismissed the cross-appeal regarding U.S. Patent No. 5,540,938, which expired while the appeal was pending, as moot.  The patents all relate to improvement of the gait of persons with multiple sclerosis.

Acorda made three arguments on appeal against the determination of obviousness:
First, that the district court erred in finding that a person of skill would have had a
motivation to combine the prior art to arrive at the Acorda invention and a reasonable expectation of success in doing so. Second, that the district court erred in findng that the limitations relating to pharmacokinetics are inherent in the claimed invention and therefore obvious. Third, that the court improperly applied a categorical rule that a blocking patent negates any findings in favor of Acorda on the objective indicia of commercial success, failure of others, and long felt but unmet need.

Regarding the motivation to combine, Acorda argued that the prior art teaches away from the invention, but the Federal Circuit found that the prior art supported a motivation to combine with a reasonable expectation of success, and that the district did not clearly err in finding that a person of skill would look to the claimed lower doses rather than
higher ones.  Regarding Accorda’s arguments against the inherency of the pharmokinetic limitations, the Federal Circuit said that the court invoked the principle that an obvious formulation cannot become nonobvious simply by administering it to a patient and claiming the resulting serum concentrations, and concluded that the pharmacokinetic limitation could not alter the obviousness analysis.   The Federal Circuit found that the Acorda had not pointed to any evidence to contradict the district court’s assumption.

Finally, regarding the argument that the district court improperly applied a categorical rule that the existence of a blocking negated objective evidence of non-obviousness, the Federal Circuit explained that a blocking patent can diminish the possible rewards from a non-owner’s or non-licensee’s investment activity aimed at an invention whose commercial exploitation would be infringing, therefore reducing incentives for
innovations in the blocked space by non-owners and nonlicensees of the blocking patent. The Federal Circuit said that such a blocking patent therefore can be evidence that can discount the significance of evidence that nobody but the blocking patent’s
owners or licensees arrived at, developed, and marketed the invention covered by the later patent at issue in litigation. However, the the magnitude of the diminution in incentive in any context—in particular, whether it was great enough to have actually deterred activity that otherwise would have occurred—is “a fact-specific inquiry.”  The Federal Circuit concluded that in a particular case, a court may ultimately be left, for its evaluation, with the solid premise of diminished incentives, plus some evidence  (possibly weak or ambiguous) about the significance of the deterrence, together with a background sense of the general realities in the area at issue that can affect the
weight to be given to the evidence in the specific case.  Against this background, the Federal Circuit examined the district court’s consideration of objective indicia.  The Federal Circuit found no clear error in the district court’s discounting evidence of long-felt, unmet need, in view of the evidence of blocking.

In Orexo AB v. Actavis Elizabeth LLC [2017-1333](September 10, 2018), the Federal Circuit reversed the district court’s determination that the challenged claims of U.S. Patent No. 8,940,330 were invalid for obviousness.

The invention related to pills for treating opiod addition, that were less susceptible to misuse, where the active ingredient, buprenorphine, was adhered to carrier particles of citric acid.  The district court relied upon a patent disclosing the use of citric acid to reduce the pH of an orally dissolvable film.  However the Federal Circuit found taht the claimed structure was achieved solely upon the hindsight knowledge of the
structure and benefits described in the ’330 Patent.

Orexo argued that citric acid is nowhere used or listed or suggested as a carrier particle in the prior art, and at oral argument Actavis conceded that no reference teaches using citric acid as a carrier particle, or that citric acid should be used as a carrier particle.  The district court finding that a person of ordinary skill in the art would not have excluded citric acid, was not the same as a teaching or suggestion to use citric acid. The Federal Circuit observed that the mere fact that the prior art could be so modified would not have made the modification obvious unless the prior art suggested the desirability of the modification. The Federal Circuit said that the record does not contain clear and convincing evidence of a teaching or suggestion to use citric acid particles as a carrier for this opioid product in substitution therapy, or that the actual beneficial results would be obtained.

In response to the district court’s observation that “there is nothing in the prior art which would have discouraged a person of ordinary skill from following the path set out in the various references,” the Federal Circuit said that “no reference or combination of references proposes the path of the ’330 Patent.”

The district court erred in discounting objective indicia of nonobviousness, and concluded that obviousness had not been established by clear and convincing evidence.

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.