Federal Circuit Criticizes PTAB for Failing to Properly Weigh Objective Evidence of Non-Obviousness

By Tom Engellenner
The Federal Circuit Court of Appeals again vacated a Patent Trial and Appeal Board (PTAB) panel decision for failing to properly evaluate “objective evidence of non-obviousness” and remanded the case for determinations consistent with its opinion. Specifically, the Fed. Cir. panel faulted the PTAB’s analysis Patent Owner’s objective evidence of unexpected results and further found that Board had applied a “legally erroneous” standard by placing the burden on the patent owner to show that one skilled in the art would have expected “failure.”  (See, Honeywell International v. Mexichem Amanco (Fed. Cir.  No. 2016-1996, August 1, 2017).

The case involved an appeal to the PTAB of one of the last inter partes re-examinations to be rendered before the new America Invents Act (AIA) went into effect and provided new proceedings for challenging patents.  Nonetheless, the standards for evaluation of objective evidence of non-obviousness are equally applicable to inter partes review (IPR) and post grant review (PGR) proceedings.  And this case can be seem as yet another volley in the Federal Circuit’s ongoing criticism of how the PTAB has treated objective evidence of non-obviousness in many of its decisions.

The patents at issues involved a novel combination of an environmentally-friendly HFO hydroflurocarbon: 1,1,1,12-tetrafluorpropene (HFO-1234yf) and a polyalkylene glycol (PAG). The Patent Owner, Honeywell International, had argued that HFO compounds were known to be reactive and unstable and, hence, were considered a disfavored class of refrigerants.  Similarly, PAGs were known to hygroscopic and likewise unstable.  Honeywell submitted evidence showing that one of ordinary skill in the art would have expected the combination to result in peroxide formation and degradation of the refrigerant.  Honeywell further showed that the combination did not degrade and was in fact superior to similar refrigerants combined with PAG.

The Federal Circuit panel appeared particularly vexed by the logic of the PTAB reasoning on the obviousness issue:

[T]he Board erred in dismissing Honeywell’s evidence of unpredictability in the art when it stated that one of ordinary skill would no more have expected failure than success in combining the references. The Board made what amounts to a finding that one of ordinary skill would not have had a reasonable expectation of success in combining HFO-1234yf with PAG lubricants, but then seemed to make a burden-shifting argument that Honeywell did not persuasively establish that one of ordinary skill would have expected failure. . . . . The Board rejected Honeywell’s evidence, concluding that, because there would have been no reasonable expectation of success, one of ordinary skill would have arrived at the claimed combination by mere “routine testing.” . . . Thus, the Board seems to have determined that, because stability in the art was entirely unpredictable, one of ordinary skill would have made no predictions at all, but rather would have expected to undertake efforts to find an optimal combination and thus that “routine testing” would have led the skilled artisan to the claimed combination. Id.

In an inter partes reexamination involving obviousness, the standard is not whether the patent owner can persuasively show that one of ordinary skill would have expected failure. Rather, the burden is on the Examiner to show that one of ordinary skill would have had a motivation to combine the references with a reasonable expectation.

The Court of Appeals for the Federal Circuit has now criticized the PTAB several times now for not properly evaluating objective evidence of non-obviousness in inter partes review and/or reexamination proceedings.  For example, In PPC Broadband v. Corning Optical (Fed. Cir. 2015-1364) the Federal Circuit found that the PTAB erred in rejecting the Patent Owner’s commercial success evidence.  The Petitioner had failed to argue that the successful product did not embody the claimed invention and the Board erred in reaching that conclusion on its own.

In ClassCo v. Apple, Fed. Cir. 2015-1853 (September 2016), the Fed. Cir. nixed a stringent “nexus” requirement erected by early PTAB decisions. (These early decisions had suggested that it was not enough that a commercial product embodying the invention be successful, the Patent Owner had to prove that the success was due exclusively to the patented feature.)  In a precedential decision in the ClassCo class, the Federal Circuit made it clear that a nexus exists between the claimed invention and the objective evidence whenever the evidence is reasonably commensurate with the scope of the claims.  “[W]e have consistently held that a patent applicant ‘need not sell every conceivable embodiment of the claims in order to rely upon evidence of [objective indicia of nonobviousness].”

Posted in America Invents Act, Anticipation/Obvious, Court of Appeals Fed Circuit, Final PTAB Decision, Inter Partes Review, Post Grant Review, PTAB Procedure, Reexamination, USPTO | Tagged , , , , , | Leave a comment

CAFC Finds Another PTAB Claim Construction Unreasonable and Again Reverses an Invalidity Holding

By Reza Mollaaghababa
In an inter partes review (IPR) proceeding, the meaning of terms used in challenged claims of an unexpired patent are given their broadest reasonable interpretation in light of the claim language and the specification. The Court of Appeals for the Federal Circuit (CAFC) recently reversed the Board’s interpretation of a claim term in an IPR proceeding (IPR2015-00460) in which Samsung had challenged the validity of certain claims of U.S. Patent No. 6,146,997 of Home Semiconductor Corp. (“Home”) because it found that Board had adopted a claim construction “without regard to the context” in which the term was used in the claims and the specification. In a decision written by Judge Lourie last month, the Federal Circuit panel found that the PTAB had adopted an erroneous interpretation and reversed the decision stating that the PTAB’s finding of invalidity based by anticipation of claim 2 was “not supported by substantial evidence.” (See, Home Electronics v. Samsung Electronics, CAFC Decision No. 2016-2215, July 25, 2017).

The ’997 Patent concerned “a simplified method for forming a self-aligned contact hole,” in which a conductive plug can be formed to electrically connect the semiconductor device to other circuit elements. Independent claim 1 of the ‘997 Patent recites a method of forming a self-aligned contact hole in a semiconductor substrate having a gate electrode and a diffusion region by

forming a conformal layer of etch barrier material overlying the substrate surface including the diffusion region and the upper surface and the sidewalls of the gate electrode,

forming an insulating layer overlying the barrier layer, etching an opening through the insulating layer self-aligned and borderless to the diffusion region by using the barrier layer as an etch stop, and

anisotropically etching the barrier layer underneath the opening, thereby exposing the diffusion region and simultaneously forming a spacer of the etch barrier material on the sidewall of the gate electrode.

Claim 2 of the ‘997 Patent, which depends on claim 1, further recites “forming an oxide layer over the diffusion region and on the sidewalls of the gate electrode by thermal oxidation prior to forming the barrier layer.”

The construction of the phrase “forming an oxide layer over the diffusion region” was at issue in this proceeding. The Patent Owner, Home, argued that this phrase should mean “forming an oxide layer covering the diffusion region,” while the Petitioner, Samsung, argued that the broadest reasonable construction of this phrase is “forming an oxide layer above the diffusion region.” Samsung argued that construing “over” as “covering” was too narrow a reading for a person of ordinary skill in the art. The Board adopted Samsung’s proposed construction for this term and hence held that claims 2 and 9-14 of the ‘997 Patent were anticipated by U.S. Patent No. 6,277,720 (“Doshi”).

The CAFC held that the Board’s construction of “over” as meaning “above” is unreasonable in light of the claim language and the specification. The CAFC noted that “[i]n adopting the ‘full breadth’ of the term as advocated by Samsung, the Board focused on the word ‘above,’ rather than the claim term ‘over.’ That was error.” The CAFC further emphasized that “[e]ven when giving the claim term the broadest reasonable interpretation, the Board cannot construe the claims ‘so broadly that its constructions are unreasonable under general claim construction principles.’”

The CAFC reasoned that the language at issue “is not simply ‘over,’ but is ‘forming an oxide layer over the diffusion region,” and the use of the term ‘over’ in ‘forming an oxide layer over the diffusion region’ connotes more than an insignificant or incidental vertical overlap between the oxide layer and the diffusion region. Although ‘over’ and ‘above’ can be interchangeable in certain contexts, they are not coextensive here, and the full scope of ‘above,’ which is not a claim term, cannot be adopted to give meaning to the actual claim term ‘over’ if that adoption would result in an unreasonable interpretation of the claim term in the context.” Continue reading

Posted in America Invents Act, Anticipation/Obvious, BRI Standard, Broadest Reasonable Interpretation, Claim Construction, Court of Appeals Fed Circuit, Federal Circuit, Final PTAB Decision, Inter Partes Review, PTAB Procedure, Trial Tactics, USPTO | Tagged , , , , , , , | Leave a comment

PTAB Can Rely on New Evidence Introduced by Petitioner in its Reply

By Tom Engellenner
In a decision last month, the Court of Appeals for the Federal Circuit gave petitioners in AIA proceedings yet another weapon to invalidate patents – by affirming a Patent Trial and Appeal Board (PTAB) decision that relied, at least in part, on new evidence introduced by the petitioner in its reply brief. (Genzyme Therapeutic Products LP v. BioMarin Pharmaceutical Inc., Fed. Cir. No. 15-1720).

Writing for a three-judge Fed. Cir. panel, Judge William C. Bryson said it should be expected that petitioners will introduce new evidence during the course of an Inter Partes Review (IPR) proceeding. Judge Bryson dismissed the notion that the record of an IPR is essentially closed following the PTAB’s institution decision.

“There is no requirement either in the board’s regulations, in the [Administrative Procedures Act] or as a matter of due process for the institution decision to anticipate and set forth every legal or factual issue that might arise in the course of the trial,” according to Judge Bryson.

Genzyme had argued that it was impermissible for the PTAB to relied on different evidence than the evidence relied upon in the institution decision.

“Genzyme’s argument that the institution decision must refer to every bit of evidence that is relied on by the board in its final written decision reflects a misunderstanding of the role of the institution decision in inter partes review proceedings before the board,” said the judge.

The opinion draws a distinction between new grounds for invalidity and new evidence that supports the grounds on which the trial was initiated.   According to Judge Bryson, if the PTAB decision is based on the same grounds, due process is satisfied as long as the opposing party is notified and given a chance to respond. Continue reading

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AIA On-Sale Bar Applies to Publicized Sales, Even When Knowledge of Sale Did Not Disclose the Underlying Invention

By Reza Mollaaghababa
The Court of Appeals for the Federal Circuit (CAFC) recently construed the on-sale bar provision of 35 U.S.C. 102(a) in a way that will make it easier for petitioners to challenge third party patents. While in an inter-partes review proceeding, a petitioner can rely only on prior art patents and printed publications to challenge the validity of one or more claims of a third-party patent, in a post-grant review proceeding, a petitioner can raise any statutory ground of invalidity including the on-sale bar provision of 35 U.S.C. 102(a).  This statutory provision, as modified by America Invents Act (AIA), bars patenting a claimed invention if the “claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed inventions.”

Prior to the enactment of AIA, it was well established that the sale of a claimed invention more than one year from the effective filing date of a patent application, even if the sale did not involve disclosing the underlying invention, would bar patenting the invention. However, the change in the wording of this statutory provision introduced by AIA, and particularly, the use of the phrase “otherwise available to the public” immediately following “on sale” created ambiguity about whether a sale of a claimed invention without disclosing the underlying invention would trigger the on-sale bar provision.

Recently, in the case of Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., the CAFC cleared up this ambiguity and held that the on-sale bar provision of 35 USC 102(a) applies to the sale of a claimed invention even if the sale did not involve disclosing the underlying invention.  This decision can provide yet another tool for challenging patents in a post-grant proceeding.    Continue reading

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IPR Estoppel Provisions May Not Be That Scary After All

By Yue (Joy) Wang
IPR petitioners wary of the statutory estoppel under 35 U.S.C. § 315(e)(2) may have reason to be cautiously optimistic.   Judge Sue Robinson of the Federal District Court of Delaware recently held that Toshiba is not estopped from presenting invalidity grounds at trial that it did not raise in an earlier IPR.  Intellectual Ventures I LLC v. Toshiba Corp. No. 1:13-cv-00453, D.I. 559 & 574 (D. Del. December 19, 2016 & January 11, 2017).

35 U.S.C. § 315(e)(2) reads in relevant part:

The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a) . . . may not assert . . . in a civil action arising in whole or in part under section 1338 of title 28 . . . that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.

In her opinion, Judge Robison noted that the Federal Circuit has interpreted Section 315(e)(2) very literally. “[E]stoppel applies to grounds for invalidity upon which the Board instated review in the IPR proceeding, whether or not the Board addresses those grounds in its final decision (‘instituted grounds’). . . . [T]here likewise can be no dispute that estoppel does not apply to invalidity grounds that were raised by a petitioner in an IPR, but rejected by the Board as instituted grounds (i.e., ‘noninstituted grounds’).” Intellectual Ventures I LLC v. Toshiba Corp. No. 1:13-cv-00453, D.I. 574 (D. Del. January 11, 2017).

As background, Intellectual Ventures sued Toshiba for infringement of claims 17 and 19 of the ’819 Patent in Delaware in 2013. Toshiba petitioned for IPR of the ’819 Patent in 2014. Toshiba prevailed in the IPR, with the PTAB invalidating claims 17 and 19 in a final written decision. Toshiba Corp. v. Intellectual Ventures II LLC, No. IPR2014-00418, Paper No. 28 (P.T.A.B. Aug. 7, 2015).

Before the Delaware court, Intellectual Ventures moved for summary judgment that Toshiba is estopped from raising one of its invalidity grounds at trial because the ground was based on publicly available prior art that could have been raised in Toshiba’s IPR petition. Intellectual Ventures I LLC v. Toshiba Corp., No. 1:13-cv-00453, D.I. 559 at p.26 (D. Del. December 19, 2016). Judge Robinson disagreed, citing Shaw Indus. Group, Inc. v. Automated Creel Systems. Id. In Shaw, the Federal Circuit held that Section 315(e)(2) does not estop a ground rejected by the PTAB at the institution stage because, since “[t]he IPR does not begin until it is instituted,” the petitioner “could [not] have reasonably raised – the [rejected] ground during the IPR.” 817 F.3d 1293, 1300 (Fed. Cir. 2016) (emphasis in original). Extending the Shaw logic, Judge Robinson found that Toshiba is not estopped from raising its invalidity ground that was not raised at all in IPR. No. 1:13-cv-00453, D.I. 559 at 27 (D. Del. December 19, 2016). But Judge Robinson expressed misgivings at this result, noting that “[a]lthough extending the [Shaw] logic to prior art references that were never presented to the PTAB at all (despite their public nature) confounds the very purpose of this parallel administrative proceeding, the court cannot divine a reasoned way around the Federal Circuit’s interpretation in Shaw.” Id. Continue reading

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