SCOTUS Denies Petition to Review CAFC Precedent on Justification for Primary Reference Selection

The U.S. Supreme Court on Monday, March 18, denied a petition filed by patent owner Jodi A. Schwendimann asking the Court to review a decision of the U.S. Court of Appeals for the Federal Circuit (CAFC) that affirmed a Patent Trial and Appeal Board (PTAB) determination that Schwendimann’s patents were obvious. The petition specifically asked the Court to review the CAFC’s holding that Schwendimann’s argument that “justification for selection of a primary reference is a necessary step to guard against hindsight bias for the motivation to combine references” was unsupported by Federal Circuit case law.

The CAFC’s precedential decision was issued on Friday, October 6, 2023, affirming the PTAB’s finding that a number of claims to patents for an image transfer process owned by Schwendimann were obvious in view of the prior art. The court in particular held:

“We have made clear that ‘where the relevant factual inquiries underlying an obviousness determination are otherwise clear,’ characterizing references ‘as ‘primary’ and ‘secondary’ is merely a matter of presentation with no legal significance.”

Schwendimann’s Supreme Court petition, filed January 9, 2024, said the Federal Circuit’s decision “contravened its own established precedent.” According to the petition, the CAFC has stated that “a tribunal finding a patent claim obvious based on a combination of prior art references must articulate a reason that a skilled artisan would select the primary prior art reference (as well as the secondary references).” The petition cited to cases including WBIP, LLC v. Kohler Co., 829 F.3d 1317, 1337 (Fed. Cir. 2016) and Yeda Rsch. v. Mylan Pharms. Inc., 906 F.3d 1031, 1044–45 (Fed. Cir. 2018) as evidence of this and noted that it is “undisputed that the Board in this case did not articulate a reason for selecting” the primary art reference at issue. The analysis outlined in these two cases is “an essential tool to ensure that litigants and courts follow the Supreme Court’s guidance from KSR Int’l Co. v. Teleflex Inc., where the Supreme Court explained that ‘[a] factfinder should be aware, of course, of the distortion caused by hindsight bias and must be cautious of arguments reliant upon ex post reasoning,’” added the petition.

By ignoring this precedent, the Federal Circuit not only contradicted its own holdings but also contradicted the High Court’s decision in KSR because it ultimately “invalidated the claims as obvious even though there was no articulated reason for why a skilled artisan would look to [the primary reference] at all, let alone select [it] as the primary reference,” wrote Schwendimann. Furthermore, the PTAB found that a different combination of prior art, in which a different reference was selected as the primary reference, did not render the claims obvious but still did not articulate what the distinction between the two different combinations was. The petition continued: “This failure violates KSR, Yeda, and WBIC because there is no articulation of why a skilled artisan would lead with [the primary reference at issue]. The only reason to do so is because of the claims, which is exactly the ex post facto reasoning prohibited by the Supreme Court in KSR.”

Schwendimann ultimately argued that the Federal Circuit’s decision created “uncertainty and confusion regarding whether litigants – seeking to invalidate a patent claim as obvious based upon a combination of prior art references – must articulate some rationale for plucking the particular references out of the sea of prior art (WBIP), including articulating some rationale for selecting the primary prior art reference (Yeda) and articulating some reason – other than hindsight reasoning – for combining the known elements in the fashion claimed by the patent at issue (KSR).” Schwendimann argued the decision is a symptom “of the PTAB straying from the established law on obviousness, resulting in invalidation of patents that should survive” and said the petition presented the Court with an opportunity to clarify obviousness law and put the PTAB back on track.

In 2020, Schwendimann won a case at the CAFC on some of the same patents against Arkwright Advanced Coating, Inc. when the court affirmed a district court finding that Schwendimann was entitled to pursue infringement claims despite the patent assignment being improperly recorded at the time the infringement action was filed.

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