The Federal Circuit Court of Appeals again vacated a Patent Trial and Appeal Board (PTAB) panel decision for failing to properly evaluate “objective evidence of non-obviousness” and remanded the case for determinations consistent with its opinion. Specifically, the Fed. Cir. panel faulted the PTAB’s analysis Patent Owner’s objective evidence of unexpected results and further found that Board had applied a “legally erroneous” standard by placing the burden on the patent owner to show that one skilled in the art would have expected “failure.” (See, Honeywell International v. Mexichem Amanco (Fed. Cir. No. 2016-1996, August 1, 2017).
The case involved an appeal to the PTAB of one of the last inter partes re-examinations to be rendered before the new America Invents Act (AIA) went into effect and provided new proceedings for challenging patents. Nonetheless, the standards for evaluation of objective evidence of non-obviousness are equally applicable to inter partes review (IPR) and post grant review (PGR) proceedings. And this case can be seem as yet another volley in the Federal Circuit’s ongoing criticism of how the PTAB has treated objective evidence of non-obviousness in many of its decisions.
The patents at issues involved a novel combination of an environmentally-friendly HFO hydroflurocarbon: 1,1,1,12-tetrafluorpropene (HFO-1234yf) and a polyalkylene glycol (PAG). The Patent Owner, Honeywell International, had argued that HFO compounds were known to be reactive and unstable and, hence, were considered a disfavored class of refrigerants. Similarly, PAGs were known to hygroscopic and likewise unstable. Honeywell submitted evidence showing that one of ordinary skill in the art would have expected the combination to result in peroxide formation and degradation of the refrigerant. Honeywell further showed that the combination did not degrade and was in fact superior to similar refrigerants combined with PAG.
The Federal Circuit panel appeared particularly vexed by the logic of the PTAB reasoning on the obviousness issue:
[T]he Board erred in dismissing Honeywell’s evidence of unpredictability in the art when it stated that one of ordinary skill would no more have expected failure than success in combining the references. The Board made what amounts to a finding that one of ordinary skill would not have had a reasonable expectation of success in combining HFO-1234yf with PAG lubricants, but then seemed to make a burden-shifting argument that Honeywell did not persuasively establish that one of ordinary skill would have expected failure. . . . . The Board rejected Honeywell’s evidence, concluding that, because there would have been no reasonable expectation of success, one of ordinary skill would have arrived at the claimed combination by mere “routine testing.” . . . Thus, the Board seems to have determined that, because stability in the art was entirely unpredictable, one of ordinary skill would have made no predictions at all, but rather would have expected to undertake efforts to find an optimal combination and thus that “routine testing” would have led the skilled artisan to the claimed combination. Id.
In an inter partes reexamination involving obviousness, the standard is not whether the patent owner can persuasively show that one of ordinary skill would have expected failure. Rather, the burden is on the Examiner to show that one of ordinary skill would have had a motivation to combine the references with a reasonable expectation.
The Court of Appeals for the Federal Circuit has now criticized the PTAB several times now for not properly evaluating objective evidence of non-obviousness in inter partes review and/or reexamination proceedings. For example, In PPC Broadband v. Corning Optical (Fed. Cir. 2015-1364) the Federal Circuit found that the PTAB erred in rejecting the Patent Owner’s commercial success evidence. The Petitioner had failed to argue that the successful product did not embody the claimed invention and the Board erred in reaching that conclusion on its own.
In ClassCo v. Apple, Fed. Cir. 2015-1853 (September 2016), the Fed. Cir. nixed a stringent “nexus” requirement erected by early PTAB decisions. (These early decisions had suggested that it was not enough that a commercial product embodying the invention be successful, the Patent Owner had to prove that the success was due exclusively to the patented feature.) In a precedential decision in the ClassCo class, the Federal Circuit made it clear that a nexus exists between the claimed invention and the objective evidence whenever the evidence is reasonably commensurate with the scope of the claims. “[W]e have consistently held that a patent applicant ‘need not sell every conceivable embodiment of the claims in order to rely upon evidence of [objective indicia of nonobviousness].”