CAFC Reverses PTAB Obviousness Finding, Clarifying Concepts of ‘Teaching Away’ and ‘Commercial Success’

By La'Cee Conley
July 23, 2021

“The court held that the Board did not adequately ‘grapple’ with why a skilled artisan would find it obvious to increase Kaulbach’s melt flow rate to the claimed range while retaining its critical ‘very narrow molecular-weight distribution.’”

obvious - https://depositphotos.com/10042948/stock-illustration-red-boxing-glove-conceptual-vector.htmlThe United States Court of Appeals for the Federal Circuit (CAFC) yesterday concluded that the Patent Trial and Appeal Board’s (PTAB’s) decision finding certain claims of Chemours’ patents obvious was not supported by substantial evidence and that the Board erred in its analysis of objective indicia of nonobviousness. As such, the CAFC reversed the decisions.

The appeal derived from Daikin Industries Ltd. v. Chemours Co. FC, LLC, No. IPR2018-00992 (P.T.A.B. Nov. 12, 2019), and Daikin Industries Ltd. v. Chemours Co. FC, LLC, No. IPR2018-00993 (P.T.A.B. Nov. 12, 2019). Daikin Industries Ltd. and Daikin America, Inc. (collectively, “Daikin”) filed a petition at the Board requesting an inter partes review of claims 1–7 of U.S. Patent No. 7,122,609 (the “’609 patent”). Daikin also filed a petition requesting an inter partes review of claims 3 and 4 of U.S. Patent No. 8,076,431 (the “’431 patent”).

The ’609 patent relates to a unique polymer for insulating communication cables formed by pulling wires through melted polymer to coat and insulate the wires, a process known as “extrusion.” Specifically, Chemours’s patents relate to a polymer with unique properties such that it can be formed at high extrusion speeds while still producing a high-quality coating on the communication cables. The Board found all challenged claims of the ’609 patent and the ’431 patent to be unpatentable as obvious in view of U.S. Patent No. 6,541,588 (“Kaulbach”).

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Arthrex Argument

Chemours first argued that the Board’s decisions violated the Appointments Clause because they were both issued on November 12, 2019, which was after the CAFC’s decision in Arthrex, but before the court’s mandate was issued. However, Chemours withdrew its request based on the Supreme Court’s decision in Arthrex, and thus the court declined to vacate and remand on that basis.

Not Enough Grappling

Chemours next argued that Daikin did not meet its burden of proof because it failed to show that a person of ordinary skill in the art (POSA) would modify Kaulbach’s polymer to achieve the claimed invention. The court found that the Board’s obviousness findings were not supported by substantial evidence, adding that, “[a]lthough the Board may rely on other prior art to inform itself of the state of the art at the time of the invention, the scope of the relevant prior art is that which is ‘reasonably pertinent to the particular problem with which the inventor was involved.’”

Further, the CAFC found that Kaulbach necessarily teaches away from the claimed invention and  the Board relied on teachings from other references that were not concerned with the particular problems Kaulbach sought to solve. In other words, the court held that the Board did not adequately “grapple” with why a skilled artisan would find it obvious to increase Kaulbach’s melt flow rate to the claimed range while retaining its critical “very narrow molecular-weight distribution.”

As such, the court held that the Board relied on an inadequate evidentiary basis and failed to articulate a satisfactory explanation based on substantial evidence for why a POSA would have been motivated to increase Kaulbach’s melt flow rate to the claimed range, when doing so would necessarily involve altering the inventive concept of a narrow molecular weight distribution polymer.

Objective Indicia Analysis Under Fire

Chemours argued that the Board legally erred in its analysis of objective indicia of nonobviousness finding an insufficient nexus between the claimed invention and FEP 9494, Chemours’s commercial polymer, and its requirement of market share evidence to show commercial success.

In particular, Chemours argued that the Board improperly rejected an extensive showing of commercial success by finding no nexus on a limitation-by-limitation basis, rather than the invention as a whole. Second, Chemours argued the Board improperly required Chemours to proffer market share data to show commercial success. The Board found no nexus between the claimed invention and the alleged commercial success because Kaulbach disclosed all features except for the claimed melt flow rate. The court found that, contrary to the Board’s decision, “the separate disclosure of individual limitations, where the invention is a unique combination of three interdependent properties, does not negate a nexus,” and also held that the Board “erred in its analysis that gross sales figures, absent market share data, ‘are inadequate to establish commercial success.’”

Misapplication of ‘Blocking Patents’ Doctrine

Finally, Chemours contended that the Board erred when it found that the asserted patents were “blocking patents,” which blocked others from entering the relevant market. The CAFC found that the Board erred by misapplying the “blocking patents” doctrine to the challenged patents themselves. A blocking patent is one that is in place before the claimed invention because “such a blocking patent may deter non-owners and non-licensees from investing the resources needed to make, develop, and market such a later, ‘blocked’ invention.’” However, the challenged patent, which covers the claimed invention at issue, cannot act as a blocking patent, said the court.

Judge Dyk partially dissented, arguing that the majority’s conclusion that Kaulbach teaches away from the claimed invention “is contrary to our precedent and that the Board properly rejected the teaching away theory.”

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The Author

La'Cee Conley

La'Cee Conley is an experienced international intellectual property attorney and owner of Conley Consulting & Portfolio Advisors. After earning Bachelor degrees in physical chemistry and in neuroscience, she earned her Juris Doctor and Master of Law at Drake University, specializing in international intellectual property and international law. She completed her Master of Business Administration at Iowa State University. She currently specializes in patents, trademarks, and copyrights around the world relating to chemical, nanochemical, small molecule, biological, neurological, pharmaceutical, oil & gas, and general mechanical applications.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 14 Comments comments. Join the discussion.

  1. Anon July 23, 2021 12:54 pm

    There is some tension here with “relied on teachings from other references that were not concerned with the particular problems Kaulbach sought to solve.” and KSR.

    While what Kaulbach may have been after – while important for Kaulbach, holds less weight for the application of anything Kaulbach teaches when combined with other items – to attempt to resolve other issues.

    The pertinent question to ask as to problems are being sought to be solved is NOT geared to the problem directly facing Kaulbach. Kaulbach is not (itself) under the focal point of analysis for ITS teachings to being obvious or not.

    It is not even the problem that Chemours sets out to be solved that should be the problem at focus.

    Rather, the Court in KSR pretty much opened wide the door to whose (or what) problem could be the focal point.

    In KSR, the Court did not focus on Asano. Instead they focused on Smith (as solving Rixon).

    The Circuit first erred in holding that courts and patent examiners should look only to the problem the patentee was trying to solve. Under the correct analysis, any need or problem known in the field and addressed by the patent can provide a reason for combining the elements in the manner claimed. Second, the appeals court erred in assuming that a person of ordinary skill in the art attempting to solve a problem will be led only to those prior art elements designed to solve the same problem. The court wrongly concluded that because Asano’s primary purpose was solving the constant ratio problem, an inventor considering how to put a sensor on an adjustable pedal would have no reason to consider putting it on the Asano pedal.

  2. ipguy July 23, 2021 2:54 pm

    We need detailed bios of all PTAB judges, with all PTAB decisions searchable by name of each judge. Once a Notice of Appeal is filed, PTAB judges should automatically be assigned to the appeal, and the appellants notified which judges are assigned to their appeal. That way, appellants can save themselves time and trouble by drafting a brief that takes into account how that judge has previously flubbed the law.

  3. Pro Say July 23, 2021 6:18 pm

    ipguy: “appellants can save themselves time and trouble by drafting a brief that takes into account how that judge has previously flubbed the law.”

    Harrumph! We don’t need no stinking law (or facts, either)!

    The law and facts are for suckers.

    (You’d think inventors and patent owners would know that by now.)

    p.s. Has anyone seen where I put that bonus the Office paid me for all those patents and applications I trashed? Only 154 shoppin’ days till Christmas, dontcha know!

    — Your Friendly Neighborhood Death Squad

  4. Anon July 23, 2021 6:38 pm

    ipguy has an excellent point: being aware of which set of APJs has been slated to the case would be helpful.

  5. MaxDrei July 24, 2021 8:53 am

    At #1, anon makes a point that I find very interesting, namely, how to fix the relevant “problem”.

    Below is a Link to a Paper that explains how it is done at the EPO. Queezily prescriptive, one might think, but wait: “quality” lies in consistency, doesn’t it, and the EPO approach is nothing if not consistent.

    Otherwise at the Federal Circuit, where it seems, the court unfortunately is inclined to split 2:1.

    http://justpatentlaw.blogspot.com/2021/07/summertime-reading-modern-problem.html

  6. Moderate Centrist Independent July 24, 2021 4:45 pm

    Examiners always seem to punt secondary considerations to the PTAB and the PTAB doesn’t seem to understand secondary considerations.

  7. Anon July 24, 2021 5:10 pm

    The idea that “quality = consistency (alone)” is woefully inadequate — for ANY discipline.

    Being consistently wrong cannot be thought of as being of quality.

    (This is not a comment as to the the nature of another Sovereign, but rather to the nature of MaxDrie’s comment)

  8. PTO-indentured July 25, 2021 10:46 am

    A running ‘flubbed-quotient’ of each so-called ‘judge’ updated after each appeal, might also be helpful / telling, and/or bonus-driven / corrupted.

    I am still waiting to see what happens to a review of the much more numerous unconstitutional invalidations, thus far way out-of-reach to a miserly only-forward looking ’30-day after decision’ hurdle.

  9. Max Drei July 26, 2021 3:09 am

    If we think of patents as a product coming off the end of a production line, then consistency along the line contributes to the “quality” of the product, whether it be an IC chip, a tool for endoscopic surgery or a paper clip.

    But how legitimate is it, to suggest that consistency is part of “quality” when it comes to a system of patents? How desirable (or necessary) is it, that the PTO and the courts are consistent in what they do?

    And, anon, with your thought about being consistently wrong, how much quality is added into the patent system by the Doctrine of Binding Precedent, if we factor in the circumstance that the Supreme Court goes and gets it wrong?

  10. Anon July 26, 2021 7:04 am

    Without binding precedent, you lose all consistency and can even go from “getting it right TO getting it wrong.

    Your antipathy towards binding precedent remains one of the most bizarre “Euro” effects that you exhibit, MaxDrei.

    Given the amount of time that you spend on US law blogs, one might think that you would have acclimated yourself enough to the choices of this Sovereign to recognize the stronger points of stare decisis by now.

    This only reinforces the notion that you are but a shill for the EPO Uber Alles factions.

  11. Max Drei July 26, 2021 8:07 am

    You state that without binding precedent you lose all consistency. But that can’t be right can it? By Darwinian evolution of the 1973 EPC over 40+ years, not binding precedent, but with more than a thousand final decisions on patentability each year, the established case law of the EPO has arrived at an extremely high level of consistency.

    There are two ways to get to the “fittest”, most intellectually robust and resilient legal line. One is through the occasional binding decisions of a Supreme Court populated by the best and brightest legal minds of their generation, which learned decisions all the lower courts must obey.

    The other is the way it is done in civil law jurisdictions, such as the EPO.

    If you doubt which body of eligibility/patentability case law, USA or EPC-land, has more quality, just ask those who make huge investment decisions based on the FTO opinions they are given.

  12. Anon July 26, 2021 10:18 am

    MaxDrei,

    I have repeatedly pointed out the error of your siupposed logic of “Darwinian evolution” as you have no force of evolution without binding precedent.

    What ‘looks good today” (en mass or otherwise) can — at a whim — NOT look good tomorrow. There NEED BE NO rhyme or reason.

    Without a driver at law, you are left to the shifting whims of popular opinion.

    Now, do NOT make the mistake of thinking that the state of law with binding precedent (our abysmal Supreme Court dabbling in patent law) is a necessary indicator of the viability of stare decises.

    It is NOT precisely because the Supreme Court dabbling in patent law is broken.

    All you have to do is follow my views on THAT topic to understand why (but that would take a mind ‘willing to understand’).

  13. MaxDrei July 26, 2021 2:01 pm

    Your statement, anon, that absent a Doctrine of Binding Precedent there can be no evolution of the law is contradicted by all of the world’s sovereign jurisdictions that do not practise English common law.

    https://en.wikipedia.org/wiki/Precedent

    What experience do you personally have of legal practice in a civil law jurisdiction. The answer, it seems, is none. Not that this ignorance deters you from dismissing its jurisprudence as incapable of development.

    And I have no idea what you mean by this paragraph:

    “It is NOT precisely because the Supreme Court dabbling in patent law is broken.”

    of your #12 above.

  14. Anon July 26, 2021 6:09 pm

    Your own link betrays you, as what you advocate is most definitely NOT:

    and observance of precedent is the mechanism by which that goal is attained. The principle by which judges are bound to precedents is known as stare decisis

    As to what you choose to not understand (in your attempt to impugn the actions of the US Supreme Court) — as i directly noted, you would need to have a mind willing to understand.

    You — the shill that you are — just do not possess such.

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