Judge Michel Implores Full CAFC to Fix ‘Fuzzy’ Rebuttable Presumption of Nexus Jurisprudence

Source: Zaxcom.com

On March 20, Zaxcom, Inc., the owner of U.S. Patent No. 9,336,307 for Engineering Emmy® and technical OSCAR award-winning wireless microphone technology, petitioned the U.S. Court of Appeals for the Federal Circuit (CAFC) for rehearing en banc after the court found its original patent claims unpatentable as obvious. Zaxcom argued that the CAFC’s precedent in Fox Factory, Inc. v. SRAM LLC, 944 F.3d 1366 (Fed. Cir. 2019), “confused the law” regarding a rebuttable presumption of nexus. Now, former CAFC Chief Judge, Paul Michel, has filed an amicus brief supporting Zaxcom and asking the full CAFC to resolve “unintentional confusion and conflict” in the court’s obviousness jurisprudence.

Zaxcom first appealed the PTAB’s decision on the original claims of the ‘307 patent in May of 2020, arguing that the PTAB misconstrued the claims and failed to properly consider evidence of industry praise. More on the background of the case is available here.

The CAFC ultimately agreed with the PTAB, however, determining that, given the PTAB’s construction, the Board had “ample evidence” to support its finding that claims 1-11 were obvious over the primary reference, “Strub”, when combined with two other prior art references, or that claims 12-14 were anticipated by Strub.

The PTAB’s Final Written Decision in the case was designated precedential in April 2020 for its holding that a nexus between the evidence and the merits of the claimed invention must be established in order for objective indicia of nonobviousness to be given substantial weight. The CAFC agreed with the PTAB’s determination in that decision that Zaxcom’s evidence of objective indicia like industry praise and long-felt need “lacked the nexus to the claimed invention required to alter a conclusion of obviousness that would be justified based on the prior-art analysis.”

Muddled and Fuzzy

Michel argues in his brief that the rebuttable presumption of nexus standard has become muddled and should remain “as straightforward as possible.” Quite simply, says Michel, the presumption should apply “once the patent owner establishes that the objective-indicia evidence relates to a commercial embodiment falling within the scope of the asserted claims.” That approach is supported by case law such as WBIP, LLC v. Kohler Co. 829 F.3d 1317, 1329 (Fed. Cir. 2016) and Ormco Corp. v. Align Technology, Inc., 463 F.3d 1299 (Fed. Cir. 2006), according to the brief. Further, the nexus-presumption usually applies “even when the product has additional, unclaimed features,” says the brief, citing PPC Broadband, Inc. v. Corning Optical Commc’ns RF, LLC 815 F.3d 734, 747 (Fed. Cir. 2016).

Cases like Fox Factory and Teva Pharms. Int’l GmbH v. Eli Lilly & Co., 8 F.4th 1349, 1362 (Fed. Cir. 2021) have unnecessarily complicated this established rule by imposing a requirement that “the fact finder…consider the unclaimed features of the stated products to determine their level of significance and their impact on the correspondence between the claim and the products.” The term “level of significance” is a “fuzzy factor” that leads to a complex technical analysis, when the all that is needed is the two-part test laid out in Demaco Corp. v. F. Von Langsdorff Licensing Ltd., 851 F.2d 1387, 1392–94 (Fed. Cir. 1988), i.e.: “A prima facie case of nexus is generally made out when the patentee shows both that there is commercial success, and that the thing (product or method) that is commercially successful is the invention disclosed and claimed in the patent.”

An accused infringer can then “rebut the presumption by showing that unclaimed features or factors, such as marketing, contributed to, e.g., the claimed product’s commercial success, industry praise, or other objective indicia of non-obviousness.”

Fox Factory further confused things by suggesting that the objective evidence must be “essentially” identical to the invention recited in the claim-at-issue, says Michel’s brief. The decision over-emphasized Demaco’s statement that the patentee must show the relevant “product ‘is the invention disclosed and claimed.’” The brief continues:

The phrase “product is the invention disclosed and claimed” cannot mean that the commercial product is exactly what is claimed (and nothing more or less). If that were the meaning, the presumption would rarely, if ever, apply—and only when the product is exactly what is claimed. Such a reading is unsupported by the purpose of the presumption and the cases applying the embodiment rule.

Ultimately, says the brief, the new standard created by Fox Factory and other cases “unfairly shifts the burden to the patent owner” by doing exactly what Demaco warned of, i.e., imposing “[a] requirement for proof of the negative of all imaginable contributing factors,” which “would be unfairly burdensome, and contrary to the ordinary rules of evidence.”

The Zaxcom case presents the court with a good opportunity to reestablish the proper test, since the industry praise received for the award-winning commercial embodiment of Zaxcom’s patented technology is precisely the kind of evidence “sufficient to establish the presumption of nexus for the objective considerations,” concludes Michel.