Federal Circuit Endorses District Court’s Prima Facie Approach to Obviousness on Summary Judgment

For several years now, the Federal Circuit has seemingly struggled to articulate the proper role of objective evidence of non-obviousness, often referred to as secondary considerations, in obviousness determinations. In accordance with the Supreme Court’s decision in Graham v. John Deere Co., 383 U.S. 1 (1966), the Federal Circuit requires that legal determinations of obviousness be based on factual inquiries regarding: (1) the scope and content of the prior art; (2) differences between the prior art and the claims at issue; (3) the level of ordinary skill in the pertinent art; and (4) any objective indicia of non-obviousness, such as commercial success, long-felt but unsolved need, failure of others, industry praise, unexpected results, and copying. On one hand, the Federal Circuit has appeared to reject a formal burden-shifting framework under the Graham factors, directing courts to consider all evidence relevant to obviousness or non-obviousness, and to consider it collectively, before reaching a conclusion of obviousness. See, e.g., In re Cyclobenzprine, 676 F.3d 1063, 1077-78 (Fed. Cir. 2012). On the other hand, the Federal Circuit also has held that, in particular cases, a patent owner’s objective evidence failed to overcome a prima facie case of obviousness based on the first three factors. See, e.g., Cubist Pharm., Inc. v. Hospira, Inc., 805 F.3d 1112, 1130 (Fed. Cir. 2015).

On September 7, 2017, in Intercontinental Great Brands LLC v. Kellogg North America Co., a 2-1 panel decision of the Federal Circuit again endorsed the latter approach, affirming a district court’s summary judgment of obviousness. Nos. 2015-2082, 2015-2084, majority slip op. at 1, 14-19 (Fed. Cir. Sept. 7, 2017). After analyzing the first three Graham factors, the district court concluded that the defendant had made a “strong prima facie showing of obviousness.” 118 F. Supp. 3d 1022, 1037-38 (N.D. Ill. 2015). In doing so, the district court also concluded that “[n]o reasonable jury could conclude that a person skilled in [the pertinent art] would not be motivated to combine” the prior art at issue—another often important factual inquiry to be addressed in determining obviousness. Id. at 1035. Only then did the district court turn to address the patent owner’s objective evidence of non-obviousness. Id. at 1041-42. Although the district court acknowledged the objective evidence presented by the patent owner was “strong,” it deemed the evidence insufficient to overcome the strong prima facie case of obviousness presented by the defendant and concluded that that the asserted claims were invalid as obvious in light of the prior art as a matter of law. Id. at 1042.

On appeal, the panel majority found no error in the district court’s analysis, reasoning that the district court “did not draw an ultimate conclusion regarding obviousness before considering the objective indicia.” Intercontinental, majority slip op. at 15. “The contrary is not shown,” the majority elaborated, “by the court’s not-uncommon choice of words when conducting the ultimate weighing [of the Graham factors], namely, that the objective indicia ‘do not overcome [the defendant’s] extremely strong prima facie showing.’” Id. The majority then further rejected the patent owner’s contention that “objective evidence must be evaluated before drawing a conclusion about whether a reasonable jury could find that a relevant skilled artisan had a motivation to combine the prior art, not merely before drawing the ultimate obviousness conclusion,” noting that the patent owner failed to cite any precedent requiring such a conclusion. Id. at 15-17. According to the majority opinion, the district court’s “way of structuring the analysis fulfills the requirement that the approach to determining obviousness be ‘expansive’ and ‘flexible.’” Id. at 18 (quoting KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 415 (2007)).

The majority next rejected any suggestion that the objective indicia accepted by the district court required a legal conclusion of non-obviousness if the majority agreed with the district court as to the prior art and motivation-to-combine elements of the analysis. Intercontinental, majority slip op. at 18-19. It also found no flaw in the district court’s finding that the record demonstrated a known problem in the art and therefore supported a motivation to combine, even though the defendant presented no expert testimony on the point. Id. at 19-20. The majority concluded that the technology claimed and described in the patent-at-issue was simple enough that no expert testimony was needed. Id. at 20. Finally, the majority concluded that, though the prior art at issue was before the United States Patent and Trademark Office (PTO), “this is not a case in which what the PTO concluded makes a difference,” reasoning that “[t]here is no specific PTO determination of nonobviousness based on the particular prior art now at issue” and that “a bare assumption, otherwise unexplained, that the PTO reached a different conclusion based on the prior art here at issue” could not create a triable issue given the facts of the case. Id. at 25. Accordingly, the majority affirmed.

In dissent, Judge Reyna called on the Federal Circuit to prohibit prima facie findings of obviousness prior to consideration of objective indicia of non-obviousness. Intercontinental, Nos. 2015-2082, 2015-2084, dissent slip op. at 1-2, 11, 13-14 (Fed. Cir. Sept. 7, 2017) (Reyna, J., dissenting-in-part). According to Judge Reyna, the Federal Circuit is sending “mixed messages” to the district courts—“endorsement of a prima facie framework on one hand but insistence to view the evidence as a whole on the other.” Id. at 8-9. In Judge Reyna’s view, this has led to district courts engaging in improper burden shifting and erroneously reaching legal conclusions on obviousness without properly considering all factual predicates. Id. at 8-14. Accordingly, Judge Reyna recommended that the district court be instructed to “abandon the prima facie framework and instead proceed in two steps: (1) consider all factual evidence, both favoring and disfavoring a finding of obviousness; and (2) make a legal conclusion of obviousness.” Id. at 11.

Absent rehearing, en banc review, or a decision from the Supreme Court, however, it appears that the prima facie approach to obviousness remains good law. Litigants and practitioners may want to consider fashioning their obviousness arguments accordingly, so as to take advantage of or effectively counter such an approach. But regardless of the way an obviousness analysis is structured, it is important to remember that objective evidence, when presented, still must be considered by the courts before an ultimate legal conclusion on the issue of obviousness can be reached.

Other Notable Decisions – Week Ending September 8, 2017

Lifetime Indus., Inc. v. Trim-Lok, Inc., No. 2017-1096 (Fed. Cir. Sept. 7, 2017) (precedential): In Lifetime, the Federal Circuit addressed the federal pleading standards for direct and indirect infringement. Regarding direct infringement, the Federal Circuit briefly commented on Form 18 of the Appendix of Forms to the Federal Rules of Civil Procedure, which provided a sample allegation of direct infringement before being abrogated by the Supreme Court in 2015. The Federal Circuit noted that it has “never recognized a distinction” between Form 18 and the Supreme Court’s Iqbal/Twombly pleading standards, and found it unnecessary to further address the issue because the patent owner’s direct infringement pleading was sufficient under either standard—the pleading identified “where the alleged infringement occurred,” “when it occurred,” “who performed the allegedly infringing act,” and “why” (in addition to other supporting facts). As to induced infringement, the Federal Circuit found that the patent owner’s allegations of knowledge of the patent, participation in direct infringement, and lack of infringement prior to knowledge of the patent were sufficient to give rise to a reasonable inference of intent. And as to contributory infringement, the Federal Circuit held that intent was not a required element and that the patent owner’s allegations of knowledge were sufficient.

Southwire Co. v. Cerro Wire LLC, No. 2016-2287 (Fed. Cir. Sept. 8, 2017) (precedential): In Southwire, the Federal Circuit found that the Patent Trial and Appeal Board erred in relying on inherency in making an obviousness determination. However, the Court concluded that the “error was harmless because . . . [the Board] made the necessary underlying factual findings to support an obviousness determination.” In particular, the Board found that “the claimed method simply applies the same process for the same purpose as disclosed in [the prior art].” The Federal Circuit also emphasized that, though the prior art did not disclose the exact performance characteristic recited in the claim, there was no evidence that the characteristic “would have been unexpected or unattainable from the process disclosed in [the prior art].” According to the Federal Circuit, there was “no indication” that the claimed characteristic was “anything other than mere quantification of the results of a known process.” Thus, after further concluding that “[s]ubstantial evidence supports the Board’s findings that [the patent owner’s] evidence lacked factual support, that its objective evidence lacked a nexus to the claimed invention, and that any long-felt need adduced from the evidence had already been met by [the prior art],” the Federal Circuit affirmed.

One thought on “Federal Circuit Endorses District Court’s Prima Facie Approach to Obviousness on Summary Judgment

  1. Pingback: Federal Circuit Affirms District Court Obviousness Determination and Routine-Experimentation Rationale | Federal Circuit Weekly

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