CAFC Says PTAB Erred in Analyses of Nexus and Objective Indicia of Nonobviousness

In a precedential decision issued today, the U.S. Court of Appeals for the Federal Circuit (CAFC) vacated and remanded a Patent Trial and Appeal Board (PTAB) ruling that found all claims of a Volvo Penta patent unpatentable as obvious. The court found that the PTAB erred in its analysis of nexus between the claims and evidence of secondary considerations, as well as in its weighing of the objective indicia of nonobviousness.

Volvo Penta owns U.S. Patent 9,630,692, which is directed to a tractor-type stern drive for a boat and was marketed as the Forward Drive beginning in 2015. Brunswick Corporation launched its own product in 2020 that embodied the ‘692 patent and simultaneously petitioned the PTAB for inter partes review (IPR) of the patent. Brunswick said the patent was anticipated or obvious based on several prior art references, including a 1952 patent (Kiekhaefer) assigned to Brunswick and a 1989 patent (Brandt) assigned to Volvo Penta.

Volvo Penta argued there was no motivation to combine and provided evidence six objective indicia of nonobviousness that it said overcame any prima facie case of obviousness: “copying, industry praise, commercial success, skepticism, failure of others, and long-felt but unsolved need.”

The PTAB ultimately found a motivation to combine, lack of nexus, and that “Brunswick’s ‘strong evidence of obviousness outweighs [Volvo Penta’s] objective evidence of nonobviousness.’” The Board therefore found the challenged claims obvious. In the appeal to the CAFC, the U.S. Patent and Trademark Office (USPTO) intervened after Brunswick waived its oral argument time because it had settled its dispute with Volvo Penta. The USPTO defended the Board’s decision by adopting Brunswick’s arguments rather than submitting new briefs.

Volvo Penta argued to the CAFC that 1) the Board’s finding of motivation to combine was not supported by substantial evidence, (2) that the Board erred in its determination that there was no nexus, and (3) that the Board erred in its consideration of Volvo Penta’s objective evidence of secondary considerations of nonobviousness.

PTAB Got it Right on Motivation to Combine

The CAFC disagreed on the first point but agreed with Volvo Penta on the other two. While the Board properly evaluated the evidence of motivation to combine, it did err in relying on the testimony of a Volvo Penta employee because he was not a person of ordinary skill in the art. However, that reliance “does not deprive the Board’s finding of motivation to combine as being supported by substantial evidence,” said the CAFC.

Nexus

Turning to nexus, the court explained that Volvo Penta’s arguments on coextensiveness in its Patent Owner Response were not sufficient to establish a presumption of nexus, but that the PTAB’s finding that Volvo Penta “had not shown a nexus between its objective evidence of secondary considerations and the claimed invention” was not supported by substantial evidence. The CAFC explained:

“Indeed, the undisputed evidence, as the Board found, shows that boat manufacturers strongly desired Volvo Penta’s Forward Drive and were urging Brunswick to bring a forward drive to market. The Board went on to find that Brunswick’s development of the Bravo Four S was ‘akin to ‘copying,’ and that its ‘own internal documents indicate that the Forward Drive product guided [Brunswick] to design the Bravo Four S in the first place.’ Conf. J.A. 1297. There is therefore a nexus between the unique features of the claimed invention, a tractor-type stern drive, and the evidence of secondary considerations.”

While the USPTO asserted at oral argument that “to the extent Volvo Penta identified these claim elements as unique characteristics of the claimed invention, they already existed in the prior art,” the court noted that the PTAB did not rely on that argument in its decision and, citing In re Applied Materials, Inc., 692 F.3d 1289, 1294 (Fed. Cir. 2012), the court could therefore not adopt it as a basis to affirm.

Additionally, the court clarified that “a nexus analysis need not be limited to a discussion of only novel features” and that “[i]t is instead important to consider ‘the invention as a whole,’ rather than on a ‘limitation-by-limitation’ basis.”

Insufficient Explanation for ‘Some Weight’ Findings

As to objective indicia of nonobviousness, the CAFC said the PTAB’s weighing of Volvo Penta’s evidence of secondary considerations was “overly vague and ambiguous.” For example, the Board’s conclusion that the record supported a finding of copying but that this factor should only be afforded “some weight” was not clear, said the court. “[A]lhough copying is not alone dispositive of nonobviousness, we have usually considered a determination of copying to be ‘strong evidence of nonobviousness,’” said the CAFC. The Board’s decision to only give this factor “some weight” was therefore not supported by substantial evidence.

The PTAB similarly only afforded the evidence of commercial success and industry praise “some weight,” which the court found ambiguous because the Board did not sufficiently explain its reasoning for that finding on each factor. And the evaluation of long-felt but unresolved need was also not sufficient and the Board ignored portions of two articles presented by Volvo Penta demonstrating long-felt need and market demand over the last decade.

Passage of Time

Finally, the court found that the PTAB “inexplicably” dismissed the relevance of the passage of time since the prior art. “[W]hen, as here, evidence demonstrates that there was a market demand for at least the prior decade, the fact that Brunswick itself owned one of the asserted references for almost fifty years yet did not develop the claimed invention should not be overlooked,” said the court.

Ultimately, the Board failed to sufficiently explain why Brunswick’s “strong evidence of obviousness outweighs Patent Owner’s objective evidence of nonobviousness” and the CAFC therefore vacated the decision and remanded for reconsideration consistent with the court’s opinion.