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

The 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”).

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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Author: almoond
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