OBJECTIVE EVIDENCE OF NON-OBVIOUSNESS OUTWEIGHS WEAK MOTIVATION TO COMBINE
Author: Hui Wauters
In Fox Factory Holding Corp. v. SRAM, LLC, Case No. IPR2016-01876 (April 2, 2018), the Patent Trial and Appeal Board (PTAB) found that Patent Owner’s extremely strong overall showing of objective indicia of non-obviousness overcomes Petitioner’s, at best, weak motivation to combine the references. Patent Owner has made a strong overall showing of objective indicia of non-obviousness, including industry praise, skepticism, and long felt need for all challenged claims 7–12 and 20–26, and a strong showing on commercial success for claims 11, 12, 25 and 26. Weighing all four Graham factors, the PTAB found that Petitioner has not shown, by a preponderance of the evidence, that the challenged claims would have been obvious over the combination of Hattan (US 3,375,022) and JP-Shimano (JP S56-442489).
The subject U.S. Patent No. 9,182,027 relates to a solitary chainring for use with a conventional chain in a bicycle drivetrain system that includes a bicycle crank.
Combining/Modifying Prior Art Elements
Petitioner argued that a person of ordinary skill in the art “would have known that it is critical to the operation of a bicycle for a bicycle chain to remain engaged with the bicycle chainring.” Petitioner contended that a person of ordinary skill in the art would have modified the offset-teeth sprocket wheel/deflector of Hattan, to include the alternating narrow and wide teeth of JP-Shimano, in order to “improve chain engagement and retention to the maximum extent possible, particularly for a solitary front chainring such as in Hattan.” Decision p. 14.
Patent Owner argued that Petitioner’s rationale does not make sense, because Hattan already purports to solve completely the problem of chain retention for all operating conditions and that the combination of Hattan and JP-Shimano would have rendered Hattan unsatisfactory for its intended purpose. Decision pp. 15-16.
The PTAB were not persuaded that modifying Hattan in view of JP-Shimano would render Hattan unsuitable for its intended use, but the PTAB did find that the potential for problems in the operation of Hattan resulting from such combination weighs against the combination. The PTAB determined that Petitioner has only shown, at best, that the evidence weighs slightly in favor of making the above modification of Hattan in view of JP-Shimano. Decision p. 22.
Patent Owner puts forth evidence (including articles, photographs and experts’ Declarations, etc.) of commercial success, licensing, copying, praise by others, and long-felt, unresolved need.
To be accorded substantial weight, there must be a nexus between the merits of the claimed invention and the evidence of secondary considerations. There is a “presumption of a nexus” when a product is “coextensive” with a patent claim. Decision p. 23.
In this regard, Petitioner argued that the patent owner’s chainring is not coextensive with the claimed invention because the Patent Owner’s chainring includes “hundreds of features” not claimed in the ’027 patent, many of which are instead claimed by other Patent Owner’s patents. Decision pp. 24-25.
However, according to the PTAB, “Unclaimed features do not prevent the presumption of a nexus, but they may be the basis for rebutting the presumption. To do so, a person challenging patent validity must show that the commercial success, or other objective evidence of non-obviousness, was due to ‘extraneous factors’ including ‘additional unclaimed features.’ ” Decision p. 25.
Having reviewed Patent Owner’s evidence, the PTAB found that the patent owner’s evidence supporting secondary considerations of non-obviousness had sufficient nexus to the challenged claims. Decision p. 34.
As to commercial success, the PTAB found that Patent Owner has presented extensive evidence that its chainrings have achieved significant sales volumes, have achieved large sales growth, have grown to a majority of their chainring sales, and have allowed them to grow from a small share to a significant share of the single chainring market. Decision pp. 35-36.
As to industry praise and skepticism, the PTAB found that Patent Owner has presented extensive evidence of industry praise and awards that its chainring products have received and that Patent Owner has made a significant showing of skepticism within the industry towards the effectiveness of the chainring regarding chain retention as provided by the challenged claims. Decision pp. 40-41.
As to long-felt need, the PTAB found that Patent Owner has shown strong evidence that a long-felt need existed in the bicycle industry for improved chain retention that did not increase the known problems of complexity, weight, and/or drivetrain friction. Decision p. 44.
As to licensing, the PTAB found that licenses explicitly mentioning the ‘027 patent and not entered into to settle litigation are entitled to some weight. Decision p. 47.
As to copying, the PTAB found that Patent Owner has shown some copying of its chainring product, which is covered by the ’027 patent, and thus this evidence of copying overall is entitled to some weight. Decision p. 51.
In conclusion, the PTAB found that the case of obviousness here is easily outweighed by the strong objective evidence of non-obviousness. Decision p. 52.
Hui Chen Wauters
Mrs. Wauters is a member of firm’s chemical/pharmaceutical practice group. Her experience includes client counseling, and preparation and prosecution of patent applications pertaining to chemical matters, materials science, pharmaceuticals and medical devices. Hui is fluent in Mandarin Chinese.
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PTAB Holds that a Merger Completed After the filing of Petition Can Create a Real Party-in-Interest Relationship
In Cisco Systems v. Hewlett Packard Enterprise Company, IPR2017-01933, Paper 9 (PTAB 2018) (Decision Denying Institution of Review), the Patent Trial and Appeal Board (“the Board”) held that a merger between Cisco and another company called Springboard that was completed after Cisco filed a petition for inter partes review (IPR) created a real party in interest relationship, and subsequently denied institution of the IPR.
On September 15, 2015, Hewlett Packard (HP) served Springpath with a complaint for patent infringement. On September 14, 2016, one day before the statutory deadline set forth in 35 U.S.C. § 315(b), Springpath filed a petition for IPR.
Cisco Systems filed a petition for IPR against HP on August 11, 2017, after Springpath had already filed for IPR. Subsequently, Cisco announced its intent to acquire Springpath on August 21, 2017, and completed the acquisition of Springpath on September 22, 2017, more than one month after Cisco’s petition had been filed.
The Board found that Springpath was a real party in interest, and that Cisco was merely acting as a proxy for Springpath. The PTAB then denied institution of the IPR for the following reasons. First, Cisco never disclosed the ongoing merger with Springpath in its petition or via updated mandatory disclosures. Although the merger was not yet complete at the time Cisco’s petition was filed, the Board found that Cisco should have advised the Board of the ongoing acquisition as well as the completion of the acquisition.
Second, the Board also found that Cisco could not provide any specific reasons why Cisco wanted to file for IPR independently of Springpath. Although Cisco stated that it filed the petition “for its own reasons,” the Board found this argument to be conclusory and unpersuasive. Also, since Cisco was not a party to the district court litigation, Cisco had no clear reason to file for IPR. Thus the Board concluded that Cisco was merely acting as a proxy for Springpath, which was barred under §315(b) from filing for IPR.
Cisco Systems v. Hewlett Packard Enterprise Company departs from previous Board decisions in two ways. First, prior Board decisions have heavily relied on the control factor to determine who is or is not a real party in interest. The control factor asks the question: does the party alleged to be a real party in interest have control over the petitioner, for the purpose of the IPR? In Cisco Systems, the petitioner was Cisco, a large publically-traded company, and the alleged real party in interest was Springpath, a much smaller company that Cisco acquired for $320 million. Presumably, Springpath was not exercising any control over Cisco. Instead, the Board’s decision hinged on whether Cisco was acting as a proxy for Springpath, regardless of the level of control Springpath had over Cisco.
Secondly, the Board’s decision in Cisco Systems might be construed as being inconsistent with the Board’s prior case of Synopsys v. Mentor Graphics Corp, IPR2012-00042, Paper 60 (PTAB 2014). In Synopsys, the Board held that it is “only privity relationships up until the time a petition is filed that matter; any later-acquired privies are irrelevant.” Paper 60 at 12.
In Synopsys v. Mentor, the patent owner Mentor Graphics had previously settled a patent infringement lawsuit with a company called EVE in 2006. Id. at 11-16. The petitioner Synopsys filed a petition on September 26, 2012, and subsequently Synopsys entered into an agreement to acquire EVE on September 27, 2012, one day after the petition was filed. Id. at 11-16. The Board held that the petition was not barred because there was neither a real party in interest relationship nor a privity relationship between Synopsys and EVE at the time the petition was filed, citing to 37 C.F.R. § 42.101(b). Id. at 11-16.
Accordingly, if the holding from Synopsys had been applied to the case of Cisco Systems, the result in Cisco Systems might have been quite different, because Cisco’s merger with Springpath was completed after Cisco filed a petition for IPR.
However, in Synopsys, Synopsys had an ongoing patent licensing dispute with Mentor Graphics prior to filing the IPR, and Synopsys therefore had a clear reason to file the IPR before acquiring EVE. See Mentor Graphics Corp. v. EVE-USA, 851 F.3d 1275, 1280-81 (Fed. Cir. 2017). In contrast, in Cisco Systems, Cisco could not explain why it had filed the IPR, and therefore the Board seemed to infer that Cisco’s reason for filing the IPR was to act as a proxy for Springpath, thus indicating that the real party in interest was Springpath, not Cisco.
Arun A. Shome
Email: firstname.lastname@example.orgArun Shome is an associate in the firm’s Electrical/Mechanical Group. He practices in all areas of patent law, including the preparation and prosecution of patent applications. He has experience across a broad range of technologies, such as implantable medical devices, automotive braking systems, valves, electronic cigarettes, manufacturing systems, and electrical motors.
Mr. Shome previously served as a Patent Examiner at the United States Patent and Trademark Office, where he examined medical device patent applications. He also has experience conducting prior art searches for patentability, invalidity, and freedom to operate purposes.