“PTAB petitioners must adhere to the requirement that the petition identify evidence that supports the grounds for the challenge to each claim, and a petitioner may not raise a new rationale for obviousness in a reply.”
The U.S. Court of Appeals for the Federal Circuit (CAFC) decided an appeal by Henny Penny Corporation (HPC) on September 12 involving HPC’s inter partes review (IPR) petition of U.S. Patent 8,497,691 (the ‘691 patent) at the U.S. Patent and Trademark Office’s (USPTO’s) Patent Trial and Appeal Board (PTAB). The PTAB held that claims 1-3, 5-12, 17-21, and 23 of the ‘691 patent were patentable as nonobvious. The CAFC affirmed this finding.
Frymaster’s Cooking Oil System
When cooking oil degrades during frying it loses its cooking capacity, producing impurities called total polar materials (TPMs). The ‘691 patent owned by Frymaster LLC (Frymaster) describes a system for measuring cooking oil degradation with a TPM sensor, in which the system notifies the user to change the cooking oil when TPMs are too high. Claim 1 describes two characteristics of the sensor: 1) the sensor is positioned within an adapter located between drain and return pipes that circulate oil between the fryer pot and the sensor; and 2) the sensor measures an electrical property that is indicative of TPMs as the cooking oil flows past the sensor and returned to the fryer pot.
PTAB Finds Value in ‘691 Patent
HPC, a competitor of Frymaster, petitioned for IPR of the ‘691 patent and the PTAB held that the claims were patentable and were not obvious. In its appeal, HPC argued that the PTAB abused its discretion in disregarding certain HPC arguments about how to incorporate a TPM sensor into a deep fryer. It also argued that the PTAB erred in concluding that the deep fryer system claimed in the ‘691 patent was not obvious.
In its petition to the PTAB, HPC asserted the Kauffman patent (U.S. Patent 5,071,527) and the Japanese patent application “Iwaguchi” (Publication No. 2005-55198) as prior art to the ‘691 patent. Kauffman claims a system for analyzing used oil and fluid analysis in deep fryers, engines, and gear boxes, by using a conductivity and current-measuring electrode positioned between drain and return lines connected to a fluid reservoir. The measurements taken are used to monitor oxidation, antioxidant depletion, contamination, and buildup. However, measurement of TPMs is not covered under Kauffman. Iwaguchi does disclose measurement of TPMs to monitor oil degradation in deep fryers, noting that measurement of TPMs is standard to determine freshness in European countries. The Iwaguchi apparatus cools the cooking oil before detecting TPMs to prevent degradation, relieve heat stress on the sensor, etc. It does this by diverting oil through a heat dissipator to another detection vessel.
HPC asserted that Kauffman disclosed each claimed limitation of the ‘691 patent except for the TPM sensor as well as the structural layout of the fryer pot system. It also asserted that TPM measuring sensors were prior art to the ‘691 patent, and one easily and obviously could have adapted the Kauffman system to replace the analyzer with the processor and/or sensor as taught by Iwaguchi. In reply to Frymaster’s arguments against this notion, HPC also argued that Kauffman’s sensor alone was capable of measuring TPMs even though the patent did not teach this, relying on an admission by Frymaster’s expert as to this capability. Because this theory of unpatentability was impermissibly raised for the first time upon reply, the PTAB held that its argument that the Kauffman sensor could be used to detect TPMs would be disregarded, as it was a different theory than the one raised in the petition.
Moving to the original argument raised in the petition, the PTAB found that a person of ordinary skill in the art would not have been motivated to integrate Iwaguchi’s TPM sensor into the Kauffman system. Iwaguchi relied on a cooling system to relieve heat stress on the TPM detector and reduce the capacity of the conversion table, which is different than the system claimed in the ‘691 patent which does not cool the oil. The board found that adding the cooling loop to Kauffman would have created an inefficient and overly complex system, thus creating a disadvantageous system of measuring TPMs opposed to the other oil quality parameters monitored in Kauffman. Additionally, Frymaster’s invention received two industry awards and a customer award which the PTAB found to weigh in favor of patentability as nonobvious.
CAFC Limits Review, Affirms PTAB
The CAFC reviewed the appeal in line with Consol. Edison Co. v. NLRB, which states that a finding is supported by substantial evidence if a reasonable mind might accept the evidence as adequate to support the finding. In considering the PTAB’s decision to disregard certain HPC arguments as improper, the CAFC considered whether the decision was 1) clearly unreasonable, arbitrary, or fanciful; 2) based on an erroneous conclusion of law; 3) rested on clearly erroneous fact finding; or 4) involved a record that contains no evidence on which the board could rationally base its decision. The CAFC found that due to the expedited nature of IPR proceedings, petitioners must adhere to the requirement that the petition identify evidence that supports the grounds for the challenge to each claim, and a petitioner may not raise a new rationale for obviousness in a reply. Therefore, it held that the PTAB did not abuse its discretion in holding HPC to its original obviousness theory.
In response to HPC’s argument that the PTAB mistakenly found no motivation to combine the Iwaguchi TPM sensor with the Kauffman system, the court found that the PTAB’s decision was consistent with the principle that prior art must be considered for all its teachings and not selectively. In this consideration, the court found that the PTAB correctly determined that combining the references would have created a system that was overly complex and inefficient.
Novel Combination of Prior Art Satisfies the Industry Praise Nexus
In regard to HPC’s argument that the PTAB incorrectly considered secondary considerations such as industry praise as evidence of nonobviousness, the court relied on Stratoflex, Inc. v. Aeroquip Corp.. Stratoflex held that evidence of secondary considerations may often be the most probative and cogent evidence in the record, as long as there is a legal and factually sufficient connection to the claims being challenged. HPC argued that this nexus does not exist because the deep fryer with an integrated TPM system being praised was already taught in Iwaguchi, and the CAFC agreed that the praise must be directed to what was not known in the prior art to be a successful secondary consideration. However, the court argued that “what was not known in the prior art” may also include the novel combination of known individual elements, as what Frymaster did with its invention. The CAFC held that because the PTAB found claim 1 to be commensurate in scope with Frymaster’s invention, that industry praise was directed to this product as a whole, and that the praise was directed to the claimed integrated TPM sensor, the PTAB did not err in giving weight to the praise as evidence of nonobviousness of the invention.
Ultimately, the CAFC assessed that the evidence presented supported the PTAB’s finding that there was no motivation to combine the Kauffman patent and Iwaguchi teachings, and additionally, the court found that the PTAB’s consideration of secondary considerations was proper in supporting a finding of nonobviousness. Therefore, the CAFC affirmed the finding of nonobviousness regarding the ‘691 patent.