CAFC Affirms Invalidation of Water Recreation Device Patent Over Newman Dissent

ZUP, LLC v. Nash Mfg., No. 2017-1601, 2018 (Fed. Cir. July 25, 2018) (Before Prost, C.J., Newman, and Lourie, J.) (Opinion for the court, Prost, C.J.) (Dissenting opinion, Newman, J.)

ZUP and Nash are competitors in the water recreation device industry.  ZUP sells the “ZUP Board,” which is covered by the patent-at-issue. The product is designed to assist riders who have difficulty transitioning out of the water into a standing position while being towed by a motorboat.

Prior to their dispute, ZUP and Nash discussed a potential joint manufacturing venture for the ZUP Board. Nash signed a confidentiality agreement. After negotiations fell through, Nash began selling the accused product.

Nash’s product is similar to the ZUP Board.  However, the ZUP Board includes handles and foot bindings on the board. Nash’s product includes several holes on the top surface that allow a user to attach handles or foot bindings in various configurations.  Further, Nash warns users against having handles attached to its board while standing.

ZUP filed suit, alleging contributory infringement and induced infringement of the patent-at-issue, trade secret misappropriation under Virginia law, and breach of contract.  Nash counterclaimed, seeking declaratory judgment as to non-infringement and invalidity.

The district court granted Nash’s summary judgment motion as to invalidity, finding both independent claims invalid in view of various pieces of prior art.  The district court further granted Nash’s summary judgment with respect to non-infringement of one of the two independent claims.

On appeal, the Court reviewed whether a person of ordinary skill in the art (POSA) would have been motivated to combine the prior art references in the way recited by the claims and whether the district court properly evaluated ZUP’s evidence of secondary considerations.

Regarding motivation to combine, the Court noted that the district court found all elements of the claimed invention to exist in the prior art and that the patent-at-issue merely identified known elements in the prior art that aid in rider stability and simply combined them in a single apparatus and method.  Further, the district court found that motivation to combine would have stemmed from a desire “to aid in rider stability, to allow a wide variety of users to enjoy the device, and to aid users in maneuvering between positions on a water board,” all of which are driving forces throughout the prior art.

Despite ZUP’s argument that a POSA would have been focused on achieving rider stability in a predetermined position rather than transitioning between positions, the Court found that “[h]elping riders switch between riding positions had long been a goal of the prior art,” and the only evidence to the contrary was the testimony of ZUP’s expert.  Accordingly, the Court affirmed the district court’s opinion, finding no genuine dispute as to the existence of a motivation to combine.

Regarding the analysis of secondary considerations, the Court found that “ZUP’s minimal evidence of secondary considerations does not create a genuine dispute of fact.”  On appeal, ZUP focused on two considerations: long-felt but unresolved need and commercial success.  The Court found that because the differences between the prior art and the claimed invention are minimal, it cannot be said that any long-felt need was unsolved.  Further, the Court found that prior art devices also achieved the goal of helping users maneuver between positions on a water recreational board.  As to copying, the Court noted that, for Nash’s board to resemble the claimed invention, a user would need to ignore Nash’s instructions on how to use the boards—instructions specifically discouraging users from keeping handles attached to the board while standing.

Further, in contrast to ZUP’s contention that the district court improperly shifted the burden to prove non-obviousness, the Court found that the district court correctly kept the ultimate burden of persuasion on the patent challenger throughout the obviousness inquiry and required the patentee to bear the burden of production only with respect to evidence of secondary considerations of non-obviousness.

Judge Newman dissented, finding that the majority applied an incorrect analysis of the obviousness factors set forth in Graham v. John Deere Co., 383 U.S. 1 (1966).  Judge Newman found that the majority improperly required only the first three Graham factors to establish a purported prima facie case of unpatentability and applied the fourth Graham factor, evidence of secondary considerations, only in rebuttal, requiring the fourth Graham factor to be of sufficient weight to outweigh and thereby rebut the first three factors.  According to Judge Newman, the fourth Graham factor is particularly valuable in guarding against judicial hindsight, of which the majority’s decision is “a textbook example.”

In her view, the prior art provides no suggestion to make the specific modifications made by the patent-at-issue, and the only source of those modifications is judicial hindsight.  Judge Newman would have found that the patent at issue’s “realignment of known elements in a crowded field, achieving benefits not previously achieved, weighs against obviousness,” and “[o]n the proper analysis, summary judgment of obvious was improperly granted.”

Take Away

Prior art references aiming to overcome problems similar to those addressed by a patent can support a motivation to combine invalidating references, and for evidence of a long-felt but unresolved to be considered, the long-felt need must be solved by an invention that is more than minimally different from the prior art.