Failure to Give Jury Instruction on Objective Indicia After Evidence Was Presented Was Error Requiring a New Trial

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.

Mmm, Mmm, Obvious

In Campbell Soup Company v. Gamon Plus, Inc., [2020-2344, 2021-1019](August 19, 2021), the Federal Circuit reversed the PTAB determination that U.S. Design Patent Nos. D612,646 and D621,645 would not have been obvious.

The ’646 and ’645 patents, which each claim “[t]he ornamental design for a gravity
feed dispenser display, as shown and described. The ‘646 patent has one figure:

U.S. Patent No. D612646, Fig. 1

Most of the features in the drawings are shown in dashed lines meaning that they are not part of the claimed design. In the ‘646 patent, the only parts claimed, were athe label area, the can stops, and one of the cans:

The ‘645 patent similarly excludes most of the drawing, except the label area and the cylindrical object in the display.

Linz, discloses a similar dislay rack. that has a similar display area and stops:

Linz, U.S. Patent No. D405,622

After buying $31 million of display racks from Gamon, Campbell’s began buying similar displays from Trinity, which caused Gamon to sue Campbells. Campbells petitioned for inter partes review of Gamon’s patents. The Board held that Appellants had failed to prove unpatentability, finding that Linz is not similar
enough to the claimed designs to constitute a proper primary reference.
The Federal Circuit vacated and remanded, reasoning that the “ever-so-slight differences” the Board identified between Linz and the claimed designs did not
support its finding that Linz is not a proper primary reference. On remand, the Board again help that the patents had not been shown to be obvious. The Board reasoned Abbate was not a proper primary reference, and while Linz was a proper primary references, the claimed designs would not have been obvious over Linz alone or in combination with other references. The Board acknowledged that Linz had the same overall visual appearance as the claimed designs, but objective indicia nonobviousness, namely: commercial success, Campbell praise for the design, and the copying of the design.

On this second trip to the Federal Circuit the Federal Circuit agreed that Linz creatd the same overall visual appearance as the claimed designs. However, as to objective indicia, the Federal Circuit found that the Board erred in presuming a nexus between any commercial success and the claimed designs. The Board found that the unclaimed portions of the desings were insignificant to the ornamental design, but the Federal Circuit held that: “[i]n determining coextensiveness, the question is not whether unclaimed features are insignificant to a product’s ornamental design. The question is instead whether unclaimed features are
“insignificant,” period. The Federal Circuit explained that the purpose of the coextensiveness requirement is to ensure that nexus is presumed only when the
product “is the invention disclosed and claimed. The Federal Circuit said by limiting its analysis to ornamental significance, the Board simply did not answer the relevant
question: whether the commercial produtc “is the invention.”

Under the correct legal standard, substantial evidence does not support the Board’s finding of coextensiveness, the Federal Circuit finding that at most, the claims cover only a small portion of the commercial product: its label area, cylindrical object, and stops. Thus it was improper to presume a nexus between the claimed invention and the commercial success, and it was up to Gamon to establish a nexus, which it failed to do.

The Board found nexus from the success and praise for the label area, but the Federal Circuit pointed out, this was not new. To establish nexus, Gamon needed to present evidence that the commercial success and praise of the commercial product derived from those “unique characteristics.” The evidence of commerical success presented was tied only to the label area, which was old. The Federal Circuit rejected testimony of the inventor tying the commercial success to the label area, noting that it was both self-serving and unssupported by any other evidence. Furthermore the Federal Circuit rejected the Boards view that in design patent cases, objective indicia need not be linked to the claimed design’s unique characteristics.

The Federal Circuit also relied upon evidence of copying as establishing non-obviousness, saying that even if there were copying, that alone did not overcome the strong evidence if obviousness.

Weighing all of the Graham factors, including (1) the Board’s finding that, from the perspective of a designer of ordinary skill, Linz creates the same overall visual impression as the claimed designs and (2) copying by Trinity of the claimed designs’ unique characteristics, the Federal Circuit concluded that the claimed designs would have been obvious over Linz.

It is not Obvious to Ignore the Teachings of the Prior Art

In Chemours Company FC, LLC v. Daikin Industries, LTD., [2020-1289, 2020-1290] (July 22, 2021), the Federal Circuit concluded that the Board’s decision on obviousness is not supported by substantial evidence and that the Board erred in its analysis of objective indicia of nonobviousness, and reversed.

U.S. Patent No. 7,122,609 relates to a unique polymer for insulating communication cables formed by pulling wires through melted polymer to coat and insulate the wires, a process
known as “extrusion.”

Chemours argues that the Board’s final written decision on obviousness is erroneous because its factual findings on motivation to combine were unsupported by substantial evidence, and specifically that Daikin did not meet its burden of proof because it failed to show that a person of ordinary skill in the art would modify the polymer of the prior art reference to achieve the claimed invention. However the reference also taught that a narrow distribution of molecular weights was important, while the claimed invention did not use the narrow distribution of molecular weights.

The Federal CIrcuit found that Board’s obviousness findings are not supported by substantial evidence. The Federal Circuit said the Board appears to have ignored the express disclosure in the reference that teaches away from the claimed invention and relied on teachings from other references that were not concerned with the particular problems the reference sought to solve. More specifically, the Board did not explain why one would be motivated to increase the melt flow rate to the claimed range, when doing so would necessarily involve altering the inventive concept of a narrow molecular weight distribution polymer. The Federal Circuit cited Trivascular, Inc. v. Samuels, 812 F.3d 1056, 1068 (Fed. Cir. 2016) where it found no motivation to modify the prior art where doing so “would destroy the basic objective” of the prior art).

The Federal Circuit found that this was particularly true in light of the fact that the reference appears to teach away from broadening molecular weight distribution and the known methods for increasing melt flow rate. The Federal Circuit said that the Board relied on an inadequate evidentiary basis and failed to articulate a satisfactory explanation that is based on substantial evidence for why one would have been motivated to modify the reference.

The Federal Circuit also agreed that the Board erred in its analysis of objective indicia. The Board found no nexus between the claimed invention and the alleged commercial success because all the features were disclosed in the prior art. The Federal Circuit instructed that contrary to the Board’s decision, the separate disclosure of individual limitations, where the invention is a unique combination of three interdependent properties, does not negate a nexus, explaining that concluding otherwise would mean that nexus could never exist where the claimed invention is a unique combination of known elements from the prior art.

The Federal Circuit also agreed that the Board erred in its demand that market share evidence is necessary to sustain a finding of commercial success. Chemours contended that sales data
alone should be enough for commercial success, and the Federal Circuit agreed. The Federal Circuit said that market share data, though potentially useful, is not required to show commercial success. While the Board was entitled to weigh evidence and find, if appropriate, that Chemours’s gross sales data were insufficient to show commercial success without market
share data, the Board, erred in its analysis that gross sales figures, absent market share data, “are inadequate to establish commercial success.”

Lastly, the Federal Circuit agreed that the Board erred when it found that the patents in suit were blocking patents. A blocking patent is an earlier patent that prevents practice of a later invention—the invention of the patent-in-dispute. The Board concluded that the evidence proffered to establish commercial success was weak because the patent-in-suit blocked others
from entering the market. The Federal Circuit said that the challenged patent, which covers the claimed invention at issue, cannot act as a blocking patent.

Patent Owner’s Praise for Other Inventions Destroyed Presumption of Nexus between Commercial Product and Claims

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.

Federal Circuit Loosens the Iron Grip on Evidence of Copying

In Liqwd v L’Oreal USA Inc., [2018-2152](October 17/30, 2019), the Federal Circuit vacated and remanded the PTAB’s final written decision that cetain claims of U.S. Patent No. 9,498,419 directed to forulations and methods of keratin treatment are unpatentable as obvious.

During the PGR Liqwd presented evidence that L’Oreal had used Liqwd’s confidential information and copied Liqwd’s patented invention as an objective indicia of non-obviousness. However, the Board concluded that the copying involved was legally irrelevant, because it was not evidence of copying a specific product, citing Iron Grip Barbell Co. v. USA Sports, Inc., 392 F.3d 1317, 1325 (Fed. Cir. 2004), and thus was not “copying of the type that is relevant to the question of obviousness.”

Objective indicia are essential safeguards that protect against hindsight bias, and thus are a fundamental part of the overall § 103 obviousness inquiry. The Federal Circuit said that It is well established that copying by a competitor is a relevant consideration in the objective indicia analysis, as such copying may be evidence that the patented invention is nonobvious. However copying requires duplication of features of the patentee’s work based on access to that work, lest all infringement be mistakenly treated as copying. Evidence of copying may include internal documents, direct evidence such as photos of patented features or disassembly of products, or access and similarity to a patented product.

The Federal Circuit conceded that in Iron Grip Barbell, it stated that “copying requires the replication of a specific product,” but explained that it was simply stating that something more than showing similarity between the accused product and the patent was needed. The Federal Circuit pointed that that access to the patent, or access to articles about a patented invention have been sufficient to establish copying, in the absence of a specific product to be copied. What the Federal Circuit meant was “copying requires duplication of features of the patentee’s work based on access to that work, lest all infringement be mistakenly treated as copying” and that the relevant inquiry was whether there was evidence of copying efforts.

The Federal Circuit concluded that the evidence presented by Liqwd shows more than merely a competing product that arguably falls within the scope of a patent. Determining that this evidence is relevant does not implicate the concern with avoiding every infringement suit turning into a confirmation of the nonobviousness of a patent. The Federal Circuit said that because this evidence of actual copying efforts was relevant, the Board erred by disregarding it. The Federal Circuit vacated the Board’s obviousness determination and remanded the case for the Board to consider this evidence in its obviousness analysis.

Objective Indicia Supported PTAB’s Finding of Non-Obviousness

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.

Blocking Patent Can Explain Long-Felt But Unmet Need, Reducing Importance of Objective Indicia of Nonobviousness

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.

Just Because Seldom was Heard a Discouraging Word Did Not Mean The Invention Was Obvious

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.

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.