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Federal Circuit Ignores Jury Finding of Non-Obviousness


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: August 21, 2014 @ 10:17 am
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Judge Ray Chen, the voice of reason in dissent.

As I was reading recent Federal Circuit decisions I initially skipped right past I/P Engine, Inc. v. AOL, Inc. (CAFC, August 15, 2014). After all, this decision was non-precedential, so how important could it really be? But the Federal Circuit seems to have a peculiar definition of “non-precedential” these days.

In this case the jury found that the asserted claims were infringed, the jury found that the asserted claims remained non-obvious because the defendants’ evidence did not establish obviousness with clear and convincing evidence, and the plaintiff won a verdict of over $30 million with an ongoing royalty rate of 3.5%. The district court judge reviewed the jury determinations, particularly with respect to obviousness, and found that the jury was correct. The Federal Circuit, in their infinite wisdom, disagreed and found the asserted claims obvious. To do so the majority provided no deference to the factual determinations of the jury.

In a most bizarre “per curiam” decision, there was an opinion of the Court, a concurring opinion by Judge Mayer, and a dissent by Judge Chen. The term “per curiam” generally means that no Judge takes credit for the decision, and they seem to frequently arise in short, unanimous decisions. But if Chen and Mayer wrote separate opinions it would seem that Judge Wallach had to write the majority opinion. So why label it “per curiam”? Furthermore, the decision was hardly unanimous. This is like no other per curiam decision I’ve ever seen.

And how could this decision possibly be non-precedential when the claims asserted have been declared invalid? What exactly does a non-precedential opinion that strikes down claims that were previously upheld at trial actually mean? This all seems bizarre even when viewed in light of the increasingly unusual decisions of the Federal Circuit.

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From the Beginning

I/P Engine, Inc. brought an action against AOL Inc., Google Inc., IAC Search & Media, Inc., Gannett Company, Inc., and Target Corporation (collectively, the “Defendants”) alleging infringement of U.S. Patent Nos. 6,314,420 (the “’420 patent”) and 6,775,664 (the “’664 patent”). The ’420 and ’664 patents both claim priority to the same parent patent, U.S. Patent No. 5,867,799. They relate to a method for filtering Internet search results that utilizes both content-based and collaborative filtering. The asserted patents describe a system “wherein a search engine operates with collaborative and content-based filtering to provide better search responses to user queries.” The asserted claims describe a filter system that combines content and collaborative data in filtering each “informon”—or information item—for relevance to a user’s query.

During a twelve-day trial, the Defendants continually argued that the claims of the ’420 and ’664 patents were invalid because they were obvious. In particular, they argued that U.S. Patent No. 6,006,222 (“Culliss”) anticipated the asserted claims, and that those claims were obvious in view of: (1) U.S. Patent No. 6,202,058 (“Rose”); (2) Yezdezard Z. Lashkari, Feature Guided Automated Collaborative Filtering (July 25, 1995) (M.S. thesis, Massachusetts Institute of Technology) (“WebHound”); and (3) Marko Balabanovic & Yoav Sho- ham, Content-Based, Collaborative Recommendation, 40 Comms. of the ACM 66 (1997). The Federal Circuit majority factually determined that these references, individually and collectively, taught the dvantages of combining content-based and collaborative filtering.

I/P Engine made many arguments, all of which where rather abruptly dispatched by the Federal Circuit majority. They did, however, acknowledge that the prior art collectively disclosed content-based filtering in response to a query, but argued that the prior art did not show or suggest using content and collaborative data together in filtering items for relevance to a query. The Federal Circuit majority acknowledged that the prior art did not include filtering items for relevance based upon a query, but still found the asserted claims obvious because “common sense of a skilled artisan would likewise have suggested retaining the query for use in the filtering process.”

 

The Obviousness Determination

The Defendants argued that I/P Engine’s claimed invention was obvious as a matter of law because it simply combines content-based and collaborative filtering, which are two information filtering methods that were well-known in the art. The Defendants further asserted that the prior art contained explicit statements describing the advantages of combining these two filtering techniques, and that it would have been obvious to include a user’s query in the filtering process.

The catch, however, is that the jury found that the prior art did not disclose all of the elements of the asserted claims. The majority (i.e., Judges Wallach and Mayer) acknowledged this truth but dismissed the troublesome factoid by pointing out that the jury “never determined whether it would have been obvious to one skilled in the art to bridge any differences between the prior art and the claimed invention.” In other words, as far as Judge Wallach and Mayer are concerned it is unnecessary to have all of the elements of the invention within the prior art in order to support an obviousness rejection as long as the missing elements are common sense.

This extraordinary expansion of what it means to be obvious is troublesome not only because it appears in a non-precedential opinion, but because taken to its logical extreme it would mean that everything is obvious. By not requiring all elements of the claimed invention to be found somewhere within the prior art the obviousness inquiry is untethered by objective standards. It allows the decision maker after the fact to merely conclude that it would have been common sense at the critical time to add the missing element. But if it really would have been common sense how could it be that the element was missing from the prior art? Surely it must have been found somewhere — anywhere — unless of course you were really just substituting after the fact, hindsight reasoning to cobble together an inappropriate obviousness rejection, which is what happened here.

Simply stated, I see no justifiable and intellectually honest way to rely on common sense while still having the obviousness inquiry being an objective test. The minute we allow common sense the obviousness inquiry becomes subjective, non-repeatable and wholly dependent on the predisposition of the decision maker. And if it is really is so easy and such “common sense” then there should be something somewhere that the element can be found. If it cannot be found then we should ask why that is, not assume it to be common sense. This is particularly worrisome here where the jury made a contradictory determination and there was evidence submitted that what the Judges Wallach and Mayer found to be common sense was not, in fact, commonly understood by those of skill in the art at the critical time in 1998.

Ignoring the jury determination that not every element was present within the prior art is also troublesome because it presumes that the jury did not consider whether one of skill in the art would bridge the gap between the prior art and common sense. How could the Federal Circuit know that? Presumably Judges Wallach and Mayer were not present in the courtroom when the trial was ongoing, they did not confer with the district court judge who reviewed the jury verdict, nor were they members of the jury or at all present during deliberations. How can they know what the jury did and did not consider? Are they coming to that conclusion simply because the jury form wasn’t as detailed as they would have liked it to be? If that is the case then the patentee plaintiff should prevail because the burden is ostensibly supposed to be on the Defendants. This is the problem with ignoring a jury verdict on appeal when there is ample evidence to support the factual findings in what is a mixed question of FACT and law. The Federal Circuit merely interjects its own decision for that of the jury, which is not the way our system is supposed to work.

Furthermore, Judges Wallach and Mayer can say that “no reasonable jury could conclude [that the claims were non-obvious],” but the truth of the matter is that their conclusion is manifestly absurd. Not only did the jury conclude that the claims were non-obvious, but so did the district court judge and so did another Federal Circuit Judge, Judge Chen. That being the case it is preposterous to say that no one could conclude that the claims asserted were non-obvious.

 

Judge Chen Dissents

In dissent Judge Chen explained that it was his opinion that the majority failed to provide sufficient deference to the jury’s factual determinations relating to non-obviousness. Chen also explained that it was his opinion that the majority’s reliance on “common sense to bridge the gap between the prior art and the claims is unsupported by sufficient evidence and reasoning.”

Judge Chen’s dissent takes a classical approach to the question of obviousness, which is to say that he acknowledged the reality that obviousness is supposed to be a mixed question of fact and law, and that the reviewing appellate court is supposed to tread lightly and not usurp the decision making process from the jury. In other words, Chen’s opinion counsels judicial restraint with respect to factual determinations. That is, of course, the way appellate courts are supposed to treat judicial review of fact based decisions by a jury.

Judge Chen points out that “I/P Engine’s expert testified that a person of skill in the art in 1998 would not have ‘appreciated the advantages of tight integration’ of search systems and profile systems, particularly with regard to the ‘relevance to the query.'” That alone should draw the determination of the majority into question. Remember, the majority said that no reasonable jury could have possibly determined that the claims asserted were non-obvious. But it is the right of the jury to accept or reject whatever testimony they want. What a jury cannot do, however, is rely on things not entered into evidence to support their decision. But in this case there was evidence by which a jury could have easily, and very reasonably, determined that the asserted claims were non-obvious to a person of skill in the art at the critical moment in 1998.

Judge Chen was also not thrilled with the use of common sense to bridge the gap, so to speak, which really means use of common sense to insert missing elements not found within the prior art. On this point Chen found the evidence submitted by the Defendants to be insufficient to allow the majority to reach a conclusion that the asserted claims were obvious. Chen explained:

The expert’s “sitting there” explanation tells us nothing about whether one of skill in the art in 1998 would have been struck by common sense to modify collaborative filtering systems so as to incorporate search queries. All prior art references are “just sitting there” in the metaphorical sense. What is needed—and what is missing from the cited testimony—is some explanation of why one would use the query as the asserted claims do.

Judge Chen would go on to say:

What is disputed is whether the prior art taught the query’s “overall relevance” to collaborative filtering. To bridge the gap, we must identify a non-circular reason that would have prompted a person of skill in the art to appreciate the relevance of the query to collaborative data.

The gap in the prior art references here is unlike gaps we have encountered in other cases—cited by the majority—where we have found patents obvious for merely adding “the Internet” or “a web browser” to a well-known prior art reference. In those cases, we observed that skilled artisans had already performed the same type of combination with similar elements.

In this case, the majority does not identify analogous “routine” combinations that would render obvious the patents’ incorporation of the search query into a collaborative filtering system. The asserted patents did not merely combine information technology with “the Internet.” Rather, the patents combined elements from two known information filtering systems. The patents took the query data (input for a content system) and mixed it with collaborative data (input for a profile-based system). What was claimed was the combination of elements of two evolving systems in the field of information science, not a combination of a known process and a web browser.

(citations omitted).

 

Judge Mayer Love Alice

In his concurringing opinion Judge Mayer explained that he would have disposed of the case on patent eligibility grounds under the Supreme Court’s recent precedent in Alice v. CLS Bank. Mayer explained: “Because the claims asserted…  disclose no new technology, but instead simply recite the use of a generic computer to implement a well-known and widely-practiced technique for organizing information, they fall outside the ambit of 35 U.S.C. § 101.” Thus, Judge Mayer never would have gotten to the question of whether the claims are obvious.

 

Conclusion 

This is just another example of the Federal Circuit substituting its own decision for that of the decision maker at the district court level. It is one thing when the Federal Circuit ignores the factual findings of a district court judge, but an entirely different matter when facts found by a jury are ignored. Our system is set up to accept the factual findings of juries unless they are clearly wrong. Here the determination could not be clearly wrong because there was evidence that supported the jury determination.

Sadly, the Federal Circuit, or at least some panels, no longer operate as an appellate court. The Federal Circuit operates as a super-trial court, particularly with respect to obviousness. This is extraordinarily problematic given that the Supreme Court has shown no interested in taking even egregious obviousness decisions for appellate review. See Supreme Court Refuses Sovereign v. Newegg.

Many casually interested in patents believe the Federal Circuit should be abolished because the court is overly pro-patent. Those days when the Federal Circuit was pro-patent seem long gone. The court is horribly fractured, decisions are completely panel dependent, factual determinations are given no deference, and many on the court are skeptical of patents. Those who dislike patents should be celebrating the Federal Circuit, which is further proof that they really don’t understand the system that they are trying to dismantle, but that is another topic for another day.

 

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Posted in: Federal Circuit, Gene Quinn, Government, IP News, IPWatchdog.com Articles, Patentability, Patents

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

12 comments
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  1. As the adage goes, “common sense” is neither common, nor makes much sense” (if abused, as apparently done here).

    As to the ways of the court, we have lost our sense of propriety, and as many have noted, this loss is not constrained to the CAFC. Verily, one can point to the highest Court in the land, note the waywardness and remark that any lower court transgressions appear to be merely the lower court following the lead of the higher Court.

    Sadly, I do not know the remedy for this disease.

  2. Everyone-

    It was pointed out to me on Twitter that I failed to mention that these patents had survived reexamination, which is true. The Federal Circuit fluffed that off at one point in the decision because the art that Wallach and Mayer combined for the obviousness rejection was considered under 102 in reexam.

    This is just another case like Sovereign v. Newegg. Multiple reexams, a jury award for infringement, jury confirms valid claims, district court judge agrees with jury award and non-obviousness determination in JMOL and 1 out of 3 Federal circuit judges finds the claims valid. The only two decision makers to find the claims invalid were Wallach and Mayer and they have the audacity to say no reasonable juror could find the asserted claims valid. Insulting! Everyone except for them found them valid. Seems like no reasonable person could find the claims invalid if you ask me.

  3. Good ol’ Judge Mayer (footnote 2), “Importantly, claims do not meet the demands of section 101 simply because they recite the use of computers or other technology. Instead, the inventive concept itself must be new technology…” This was what Flook said which was corrected in Diehr and was never resurrected. For all those who say this is now the standard, please point out in Alice, Mayo, or Bilski where it says that the claim must be dissected into new and old elements and the new elements must be new technology. Mayer’s test throws out ALL software patents without some new physical hardware in the claim. To raise such BS sua sponte is shocking. I don’t like Wallach but at least he didn’t join in Mayer’s sua sponte nonsense.

    Mayer is 73 and on senior status. I suppose he can still remain senior status and make his $200,000 a year as long as he wants, right?

  4. “Many casually interested in patents believe the Federal Circuit should be abolished because the court is overly pro-patent.”

    I finally have to agree with abolishing the Fed Circuit. But because it is anti-patent, not pro-patent. The current Fed Circuit is a kangaroo court. Completely worthless in my opinion. As Gene writes, “decisions are completely panel dependent.” Why even spend the huge $$ to litigate in the Fed Circuit any more? Both sides should just agree to flip a coin. Or at least withdraw the case the day of oral arguments when you finally get to see your panel. Once you know the panel, you will know how the case will end up. Forget about the facts.

  5. Gene,

    This decision is an abomination and wrong on some many levels. Why does Mayer even bring up 101? I listened to the oral arguments and that issue never came up once. Is the CAFC now issuing some kind of guidance/advisory opinions to future litigants? Moreover, why did the opinion even mention the plaintiff’s status as a non-practicing entity or the trial judge’s remarks about the plaintiff’s “dilatory nature of the suit”? What relevance does that have?

    Question for you: The CAFC dismisses the reexam on the basis that the prior art was asserted under 102. Doesn’t, however, the PTO also have to make a 103 determination based upon the prior art? It would seem unusual that the PTO would have all of the prior art in front of it during the reexam that would render the patent invalid but decline to make a 103 finding solely because only 102 was asserted as the grounds to invalidate the patent.

    One nit: Your article states that Judge Mayer discussed Alice in his dissent; he concurred.

    Finally, I read yesterday that I/P Engine is going to file a motion for rehearing en banc. Hope the motion gets granted but I’m not holding my breath.

    Bemused

  6. Bemused-

    Thanks. I had it right in a couple spots at the start of the article, but then called it a dissent later on. I’ve updated the article to reflect that Mayer’s opinion was indeed a concurring opinion.

    -Gene

  7. Patent leather-

    I believe judges can stay on senior status as long as they are alive if they want. The money really isn’t why they stay though. As I understand it for most of them they would get a very nice retirement and the extra money they make is in no way worth the extra work it takes even for a Judge with senior status. Further, Judges on senior status cannot hear en banc cases unless they were on the panel from which the appeal came. They also lose law clerks, and I believe they have prime offices taken from them, although they do get to keep an office. I think many go senior status because they want to stay involved, albeit in a reduced capacity.

  8. In saying that no reasonable jury could have found that which the jury found, what the majority has done is call the jury (you know — real, live human beings who actually heard and viewed all the evidence and testimony live and in person) UNREASONABLE.

    So what the heck is an “unreasonable” jury?

    Do we need an objective test for what constitutes a reasonable jury?

    Thank goodness for Judge Chen. Looks like he’s willing to treat inventors and patent holders fairly after all.

  9. Obvious instance of how corruption works from the top down. When princes of the corporatocracy, such as Google, influence the scales of justice we see some judges will bend a knee. The jury’s verdict in the district court version saw the obvious theft of intellectual property. I likened it to someone stealing your car, slapping their logo on it, adding racing wheels, suspension, and performance tuning then taking it to the track. Though it wears a Google badge, the VIN still has Lange’s code in it.

    The musing of the court system in this case plainly placated theft in my opinion.

  10. As I have said on previous occasions, it is instructive to consider whether what was “Common Sense” to Thomas Paine would have appeared in the same light to George III or Lord North.

  11. I think the reason the decision was non-precedential is because there doesn’t seem to have been any agreement anywhere among the circuit judges as to the legal reasoning behind the decision. I think the entire opinion has to be taken as dicta. Wallach decided the patent was invalid because the jury was only entitled to deference on the facts it considered, and he substituted his own fact-finding about obvious and common sense to fill in the gaps. Mayer decided the patent was invalid because it doesn’t cover patentable subject matter under 101 and the entire discussion of obviousness or jury fact-finding was moot. Chen decided the patent was valid because the jury found factually that some elements of the invention were not found in the prior art, and that a judgement of non-obviousness was therefore supportable. A decision was only produced in this case because two of the three completely different lines of legal reasoning reached the same endpoint. This case appears to be an excellent demonstration of the complete inability of the court system to make any sense of the lines of precedent for either 101 or 103.

  12. Is anyone considering writing an Amicus Brief in support of VRINGO in ipengine, inc. vs. aol? There is no justice in this decision.

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