Federal Circuit Vacates PTAB Holding that Raytheon Patent is Non-Obvious

On December 23, the United States Court of Appeals for the Federal Circuit (CAFC) vacated and remanded a decision of the USPTO’s Patent Trial and Appeals Board (PTAB), holding that the PTAB’s conclusion that Raytheon Technology Corp.’s (Raytheon’s) patent was non-obvious lacked substantial evidence. See General Electric Company v. Raytheon Technologies Corporation. The CAFC also found that General Electric Company (GE) had alleged sufficient facts to establish that it was engaging in activity that created a substantial risk of future infringement, and therefore had standing to bring the appeal.

The Technology

Raytheon’s U.S. Patent Number 8,695,920 (the ‘920 patent) issued in 2014, titled “Gas Turbine Engine with Low Stage Count Low Pressure Turbine.” In particular, the ‘920 patent was directed to “an engine mounting configuration for the mounting of a turbofan gas turbine engine to an aircraft pylon.” In 2016, GE filed a petition for inter partes review of claims of the ‘920 patent asserting that the claims were unpatentable as obvious over a combination of non-patent publication references, i.e., Wendus and Moxon. In its written opinion, the PTAB found claims 10-14 to be non-obvious, noting that “high pressure turbines used in . . . gas turbine engines prior to the ’920 patent generally had either one stage or two stages,” making high-pressure turbine stage-count selection a “binary choice.” The PTAB explained that Moxon taught the advantages of a two-stage high-pressure turbine and “Wendus expressly considered at least some of the one-stage versus two-stage tradeoffs and specifically chose the one-stage option.” Thus, the PTAB found the express consideration in Wendus to be a teaching away from combination with Moxon. Alternatively, the PTAB noted that “the evidence presented in this proceeding as a whole does not persuasively demonstrate a motivation to modify” Wendus to “include [Moxon’s teaching of] a two-stage high pressure turbine.” GE appealed to the CAFC and Raytheon moved to dismiss the appeal for lack of standing.

Standing

Initially, the CAFC addressed Raytheon’s motion to dismiss for lack of standing. Raytheon argued that because it had never “sued or threatened to sue GE” for infringing the ’920 patent, and because GE “had never alleged that an engine exists that presents a concrete and substantial risk of infringing the ’920 patent,” GE lacked standing to appeal the Board’s decision. In addition, Raytheon asserted that GE’s allegations of a risk of infringement relied on events in the past or speculation about GE’s engineering and business choices in the future.

The CAFC noted that the standing dispute depended on whether GE alleged an “injury in fact.” Citing JTEKT Corp. v. GKN Auto. LTD., the CAFC explained that “to establish the requisite injury in an appeal from a final written decision in an inter partes review,” “[a]n appellant need not face ‘a specific threat of infringement litigation by the patentee,” rather ‘it is generally sufficient for the appellant to show that it has engaged in, is engaging in, or will likely engage in activity that would give rise to a possible infringement suit.’” The CAFC noted that GE made concrete plans for future activity by spending $10-12 million developing a geared turbofan and has established that the sale of such a geared engine would raise a substantial risk of an infringement suit. Thus, the CAFC agreed with GE that it had alleged facts that establish that it is engaged in conduct creating a substantial risk of infringement of the ‘920 patent and, therefore, had standing to bring the appeal.

Teaching Away

The CAFC then considered GE’s arguments that the PTAB erred in its holding of non-obviousness. In particular, GE argued that the PTAB erred by misreading Wendus and finding that it taught away from a two-stage high-pressure turbine. GE also argued that the PTAB “applied an overly rigorous requirement for motivation to combine the Wendus and Moxon references.”

The CAFC concluded that the PTAB “lacked substantial evidence for its finding that Wendus teaches away from using a two-stage high pressure turbine.” In particular, the CAFC noted that the PTAB’s conclusion that Wendus “expressly weigh[ed] the tradeoffs [between a onestage and two-stage turbine] and cho[se] the one-stage option” did not withstand scrutiny because Wendus did not ever “distinctly compares a one-stage high-pressure turbine and a two-stage high-pressure turbine.” Further, the CAFC explained that Wendus’s disclosure of the benefits of a one-stage high-pressure turbine design did not constitute a teaching away “from the two-stage high-pressure turbine design acknowledged to have better efficiency and thus to improve the fuel consumption.” The CAFC concluded that since Wendus did not “make a single negative statement about the use of a two-stage high-pressure turbine,” it did not “criticize, credit, or discourage the use of a two-stage high-pressure turbine” and, therefore, did not teach away from modifying Wendus to include an engine with a two-stage option.

Motivation to Combine

The court also noted that the PTAB lacked substantial evidence for its conclusion that GE did not establish a motivation to combine Wendus and Moxon. Citing KSR Int’l Co. v. Teleflex Inc., the CAFC explained that “any need or problem known in the field of endeavor at the time of invention and addressed by the patent can provide a reason for combining the elements in the manner claimed.” Thus, the CAFC noted that even if Wendus did disclose a “strong preference” for a one-stage turbine, the “Board does not adequately explain why an artisan more concerned with fuel efficiency rather than engine weight or cost would have credited this ‘strong preference’ for a one-stage turbine over the known fuel efficiency advantage that a two-stage turbine offers.” The CAFC cited Medichem v. Rolabo in stating that a “given course of action often has simultaneous advantages and disadvantages, and this does not necessarily obviate motivation to combine.” The CAFC concluded that “[u]nless the Board can show how Wendus teaches that a two-stage turbine would not lower mechanical stresses or improve fuel efficiency… the Board lacks substantial evidence for its conclusion that GE did not establish a motivation to combine Wendus and Moxon.”

Obviousness ‘As a Whole’

The court further concluded that the PTAB lacked substantial evidence for holding that GE did not establish the obviousness of claim 10 “as a whole.” In particular, the PTAB rejected GE’s argument because it did not provide motivation for why a person of ordinary skill in the art, when modifying Wendus to include a two-stage high-pressure turbine, would maintain the other claimed parameters of claim 10. Noting that the PTAB’s decision misunderstands the requirement to show obviousness as a whole, the CAFC explained that “the purpose of this requirement is to prevent a patent challenger from merely showing that all elements of the claim exist, without showing why an artisan might combine the elements.” The CAFC explained that the PTAB’s approach “unduly dissects prior art references into collections of individual elements, requiring a party showing obviousness to re-do the work already done in the prior art reference.”

Noting that it “does not matter that GE did not explain why an artisan would be motivated to use each element disclosed in Wendus,” the CAFC explained that the fact that “Wendus treats the claim parameters as desirable is enough motivation for an artisan to combine them with a two-stage turbine, as long as the artisan can make the combination with a reasonable expectation of success.” The CAFC found the PTAB’s conclusion that GE did not show the obviousness of claim 10 “as a whole” lacked substantial evidence. Thus, the CAFC vacated and remanded the case to the PTAB for further proceedings.