Petition for En Banc Review Asks Federal Circuit for Clarity on Single Reference Obviousness

Plano, TX-based patent owner American Vehicular Sciences LLC recently filed a petition for rehearing en banc with the Court of Appeals for the Federal Circuit. The petition relates to its appeal of inter partes review (IPR) proceedings conducted at the Patent Trial and Appeal Board (PTAB), which initiated as the result of a petition filed by Unified Patents. In the petition for rehearing, American Vehicular Sciences argues that the original panel’s Rule 36 affirmation of the PTAB’s decision runs contrary to precedent set by a series of Federal Circuit cases, thus requiring consideration by the full appellate court to maintain uniformity in its decisions. The focus of the appeal is the need for clarity with respect to hopelessly irreconcilable caselaw on the issue of single reference obviousness. 

Rule 36

Why the Federal Circuit affirmed the PTAB is a mystery. A Rule 36 affirmance provides no reasoning or rationale, instead simply stating in one line: “AFFIRMED. See Fed. Cir. R. 36.” The judges on the original panel were Chief Judge Sharon Prost, and Circuit Judges Pauline Newman and Jimmie Reyna.

Rule 36, by its express terms, is only appropriate to affirm an agency decision (i.e., decision of the PTAB) when a written opinion would not have precedential value and the decision of an administrative agency warrants affirmance under the standard of review in the statute authorizing the petition for review. It seems relatively clear that the use of Rule 36 to affirm PTAB decisions that have invalidated claims (i.e., taken rights away from the patent owner) is inappropriate under the explicit terms of Rule 36. A decision of the PTAB to invalidate one or more claims unquestionably carries precedential value because the claim(s) are lost and cannot be enforced against anyone moving forward, and a decision of the Federal Circuit affirming such PTAB decision precedential PTAB decision.

Ironically, a win by the patent owner could be ratified by the Federal Circuit under Rule 36 because a win by the patent owner does not carry any precedential value. If a challenger prevails one or more claims are lost, period. If the patent owner prevails the patent owner only prevails against the party who brought the challenge and those in privy with those who brought the challenge, which means the patent claim(s) can be challenged again and again. We have seen precisely this happen — witness Finjan, for example.

American Vehicular Sciences argues that the Rule 36 affirmance without opinion doesn’t detract from the need for en banc review. The Rule 36 affirmance in this particular case shows that the Federal Circuit has chosen to not issue an opinion even when presented with a conflict in its own precedents, the petition argues, which results in examiners, PTAB judges and district court judges making obviousness decisions without proper guidance.

Single Reference Obviousness

Indeed, the focus of American Vehicular Sciences’ petition is that conflicting jurisprudence within the Federal Circuit on the issue of single-reference obviousness. “It is difficult if not impossible to reconcile these decisions to distill a unitary legal standard,” Greenspoon wrote.

Although the PTAB invalidated the patent-in-suit based on combinations of prior art presented by Unified Patents, the petitioner conceded a single reference modification theory before the Federal Circuit. Prior art asserted by Unified Patents did not disclose a side curtain airbag as claimed by American Vehicular Sciences’ patents so Unified Patents argued that the prior art it submitted provided motivation for the side curtain airbag because the prior art stated that passengers in the second row of seating should also be protected by an airbag. Because neither of the two prior art references offered by Unified Patents included a side curtain airbag even when viewed in combination, its argument was considered to be based on a single reference.

American Vehicular Sciences notes that various cases decided by the Federal Circuit in recent years have created a conflict in how single-reference obviousness theories are applied. In cases like 2016’s Arendi S.A.R.L. v. Apple et. al., the idea that a single reference could render an invention obvious was rejected. However, in cases such as 2009’s Perfect Web Technologies, Inc. v. InfoUSA, Inc., the Federal Circuit accepted arguments that a single reference could prove obviousness.

Those familiar with Arendi will, however, recall the Federal Circuit in that case carefully cabined Perfect Web. Writing for the panel in Arendi, Judge O’Malley recognized explained that Perfect Web did authorize the use of common sense to supply a missing claim limitation, but also pointed out that this was the only case where the Federal Circuit had ever allowed common sense to supply a missing claim limitation. O’Malley further explained that in Perfect Web that which was missing was “unusually simple and the technology particularly straightforward.” In fact, in Perfect Web, dealt with sending e-mail to an e-mail list, and the missing claim limitation was nothing more than merely repeating the step of resending e-mails in accordance with the claim. Thus, O’Malley explained that Perfect Web is properly considered a very rare exception to allowing common sense to supply a missing claim limitation, rather than the rule. Unfortunately, that is not how Perfect Web is understood by many who choose to simply ignore the holding of Arendi and act as if Arendi is the exception and Perfect Web is the rule, which is exactly backwards. See Misapplication of Obviousness.

The petition argues that the question on single-reference obviousness was correctly decided by the Federal Circuit in its 2014 decision in K/S HIMPP v. Hear-Wear Techs., LLC, which rejected the argument that requiring documentary evidence conflicted with U.S. Supreme Court precedence in KSR International Co. v. Teleflex Inc. (2007). In Hear-Wear, the Federal Circuit noted KSR’s criticism of “a rigid approach to determining obviousness based on the disclosures of individual prior art references that were already on the record,” and yet the appeals court upheld challenged patent claims despite an obviousness challenge involving “a conclusory assertion from a third party about general knowledge in the art without evidence on the record, particularly where it is an important structural limitation that is not evidently and indisputably within the common knowledge of those skilled in the art.”

Yet decisions from the Federal Circuit have created an irreconcilable split within the Federal Circuit itself regarding the proper approach to obviousness determinations, American Vehicular Sciences argues. Indeed, many commentators (ourselves included) have noticed that now more than ever on a variety of issues the outcome of a decision at the Federal Circuit is completely dependent on the panel assigned to the case. While that has been a criticism of the Federal Circuit for some time, it increasingly seems outcomes are arbitrary, capricious and wholly unpredictable— at least until you know who the judges are who will decide the case.

This irreconcilable split regarding obviousness is exemplified by the different decisions in Hear-Wear and 2006’s Ormco Corporation v. Align Technology, Inc., in which a conclusion based on general knowledge about packaging items in a way which is convenient for the consumer rendered obvious patent claims covering a particular way of packaging an orthodontic kit despite an absence of documentary information of the particular packaging configuration. The petition explains:

“Patent examiners, Board judges, litigants and the lower courts are now lost at sea when it comes to single-reference obviousness determinations. In a particular case, one cannot predict whether the obviousness decision will turn on the principles announced in Hear-Wear (i.e., forbidding reliance on uncorroborated basic knowledge or common sense to come up with core structural limitations in a claim) or in Ormco (i.e., inviting reliance on uncorroborated basic knowledge and wellknown practices). An en banc determination will resolve the conflict.”

Further, determining obviousness in a way that obviates the need for contemporaneous documentary evidence puts the Federal Circuit in conflict with the patentability standard established by the Supreme Court in 1966’s Graham v. John Deere Co., which clarified obviousness under Section 103 of the Patent Act. Graham, which was left intact by KSR, reinforced a framework for obviousness, which is evidentiary in nature and not speculative, and thus the invocation of basic knowledge to supply a claim limitation missing from the prior art to determine obviousness conflicts with Supreme Court case law as well.