Federal Circuit Upholds the Board’s Invalidation of Southwire Patent

Southwire Co. v. Cerro Wire LLC, No. 2016-2287, (Fed. Cir. Sep. 8, 2017) (Before Lourie, Moore, and Hughes, J.) (Opinion for the court, Lourie, J.).

Southwire’s patent was directed to a method of manufacturing an electric cable that incorporates a lubricant into the outer sheath, which reduces the pulling force required to install the cable. The Patent Trial and Appeal Board invalidated the patent as obvious during inter partes reexamination and the Federal Circuit affirmed.

Southwire’s appeal challenged the Board’s reliance on inherency. At issue was whether the prior art disclosed that the claimed pulling force be reduced by “at least about…30%.” The Board found that the invention was obvious, including this limitation, because “where the claimed and prior art products are produced by identical or substantially identical processes, a prima facie case of either anticipation of obviousness has been established.” The Court found that the Board did not provide an adequate explanation for finding that the “30%” limitation was inherent in the reference, as a predicate for its holding of obviousness. Nevertheless, the Board “made the necessary underlying factual findings to support an obviousness determination.”  Specifically, the reference disclosed the same process for manufacturing electric cables, the steps did not differ in any material way, and there were no unexpected results. The Court also pointed to precedent that shifts the burden to the patentee. “[W]here all process limitations are expressly disclosed by the prior art reference, except for the functionally expressed limitation at issue, the PTO can require an applicant to prove that the subject matter shown to be in the prior art does not possess the characteristic relied on.”  The Court also agreed with the Board’s rejection of Southwire’s objective evidence of nonobviousness because of, inter alia, the lack of a nexus to the claimed invention.

Where all process steps are expressly disclosed by a prior art reference, except for a functional limitation, the Patentee may need to rebut a presumption that the function is inherent. The PTAB’s conclusion of obviousness may be affirmed, when based upon substantial evidence, despite a harmless failure to fully explain the reasoning behind a finding of inherency.

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Robert Schaffer is an intellectual property partner at Troutman Sanders. Bob applies more than 30 years of experience to IP counseling and litigation. His work includes patent procurement, strategic planning and transactional advice, due diligence investigations, district court patent cases, and Federal Circuit appeals. He regularly handles complex and high-profile domestic and international patent portfolios, intellectual property agreements and licensing, IP evaluations for collaborations, mergers, and acquisitions. In disputed court cases Bob’s work includes representing and counseling client in ANDA litigations, complex patent infringement cases and appeals, and multidistrict and international cases. In disputed Patent Office matters his work includes representing and counseling clients in interferences, reexaminations, reissues, post-grant proceedings, and in European Oppositions. For more information and to contact Bob please visit his profile page at the Troutman Sanders website.

Robert Schaffer

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