This decision addresses the PTAB’s secondary considerations analysis in an IPR Final Written Decision.

Background

Appellant Yita sought inter partes review of two patents sharing a specification, both of which are directed to the vehicle floor tray. In one IPR, the Board determined that claims of one patent (the ’186 patent) were not unpatentable for obviousness. The Board determined that there was a motivation to combine and reasonable expectation of success in combining the prior art references to arrive at the claimed inventions but rejected Yita’s obviousness challenge because Appellee MacNeil’s secondary-considerations evidence was compelling and indicative of non-obviousness. 

In the other IPR (involving the ’834 patent), the Board found certain claims unpatentable for obviousness and found unpersuasive MacNeil’s secondary-considerations evidence, which Yita had argued without dispute from MacNeil was identical to the secondary-considerations evidence in the IPR involving the ’186 patent. The Board found that this evidence focused on features not recited in these claims. Regarding the other challenged claims, the Board rejected Yita’s challenge at the prima-facie stage of analysis, finding that a particular limitation was not disclosed by any of the asserted prior art references. In relying on that finding to hold the prima-facie case unpersuasive (making secondary considerations immaterial for these claims), the Board declined to consider an argument that Yita raised in a footnote in its Reply brief, finding that argument outside the scope of a proper reply. 

Yita appealed both Final Written Decisions, arguing with respect to the first IPR that the Board made a results-determinative legal error regarding MacNeil’s secondary-considerations evidence in rejecting Yita’s obviousness challenge, and with respect to the second IPR that the Board abused its discretion by not considering its foot-note argument. 

On appeal, the Federal Circuit sided with Yita on its first argument but rejected Yita’s second argument.

Issues

1. Did the Board err in its decision regarding MacNeil’s secondary-consideration evidence in rejecting Yita’s challenge to the claims of the ’186 patent?

2. Was there abuse of discretion in the Board’s decision not to consider the new foot-note argument Yita made?

Holdings

1. The Board legally erred in its secondary considerations analysis.

2. There was no abuse of discretion in the Board’s decision.

Reasoning

The decision first sets forth the legal standard regarding obviousness, including secondary considerations. Namely, that secondary considerations include whether the claimed invention has been commercially successful, whether it solved a long-felt but unsolved need in the art, and whether the relevant industry praised it. To be relevant, secondary considerations must have a legally and factually sufficient connection (nexus) to the claimed invention. A nexus is presumed when a commercial product (if relevantly successful, for example) is the invention disclosed and claimed in the patent. 

Regarding issue (1), the Federal Circuit found that the Board’s finding of a nexus rested on legal errors, and once those errors are corrected, the finding is not supported by substantial evidence. First, the Board stated that its finding regarding Rabbe’s (one of the three prior art references Yita relied on) disclosure does not establish that close conformance (a key feature recited by the challenged patent) was “well-known,” as Yita contended. The Federal Circuit explained, however, that its case law makes clear that objective evidence of non-obviousness lacks a nexus if it exclusively relates to a feature that was “known in the prior art”—not necessarily well-known. Where prior art teaches a feature and a relevant artisan would have been motivated to use it in combination with other prior-art teachings with a reasonable expectation of success to arrive at the claimed invention—as the Board found below—a secondary consideration related exclusively to that feature does not logically undermine the inference from those premises that the claimed invention would have been obvious from the full body of prior art just because the feature was not well-known. 

Second, the Board, citing WBIP, LLC v. Kohler Co., 829 F.3d 1317 (Fed. Cir. 2016), stated that the Federal Circuit instructs that it is the claimed combination as a whole that serves as a nexus for objective evidence; proof of nexus is not limited to only when objective evidence is tied to the supposedly new feature(s). But in the present appeal the Federal Circuit explained that in WBIP it recognized that secondary-consideration evidence may be linked to an individual element of the claimed invention or to the inventive combination of known elements in the prior art. The Federal Circuit further explained that it was for the latter circumstance, which was the circumstance present in WBIP, that it, in WBIP, made the point relied on by the Board below. But that rationale is applicable only when no single feature (but only the combination) is responsible for the second consideration and a secondary consideration that is exclusively related to a single feature that is in the prior art has no force. Here the Federal Circuit found, the Board’s finding that MacNeil’s secondary-consideration evidence “relate[d] entirely” to the close-conformance limitation disclosed in the prior art compels the conclusion that MacNeil’s secondary-consideration evidence is irrelevant to obviousness. Further, the Federal Circuit noted that the Board’s finding that the WeatherTech floor tray is coextensive with the claimed invention does not alter the result because the coextensiveness inquiry bears only on the presumption of nexus; it does not decide the overall nexus question. And the presumption inquiry compares only the claim with the commercial product. It does not involve the connection between the commercial product and prior art, which governs the final nexus question and here is the decisive problem for MacNeil.

In sum, the secondary-consideration evidence was the only Graham factor that the Board deemed to weigh in favor of non-obviousness. For the reasons explained, the finding of secondary considerations lacks substantial-evidence support under the proper legal standard. 

Regarding issue (2), the Federal Circuit concluded that there was no abuse of discretion in the Board’s decision because Yita could have presented its reply argument in its Petition but chose not to, and the patent owner’s response did not justify the new argument in reply. In particular, the Federal Circuit analogized Yita’s argument to the one addressed in the Federal Circuit’s decision in Intelligent Bio-Systems—where the petitioner argued in the petition that the prior art disclosed a claim limitation but then in its reply brief argued that the reference would be modified to disclose the limitation. The modification argument, the Federal Circuit explained, is meaningfully distinct from the argument in the petition, which focused only on what the reference discloses. Further, Yita was unable to identify where in the Patent Owner Response MacNeil made an argument about what a relevant artisan would have found obvious to modify in the prior art reference. Thus, the Federal Circuit held that Yita’s argument was not justified and therefore the Board did not abuse its discretion.