U.S. Patent Trial and Appeal Board Decisions: Secondary Considerations of Non-Obviousness—Worthy Argument or Lost Cause?

This article is the first in a series that will explore  how the U.S. Patent Trial and Appeal Board (“PTAB”) is handling various aspects of the new post-grant procedures created by the America Invents Act of 2011 (“AIA”). This article discusses how the PTAB has dealt with arguments regarding secondary considerations of non-obviousness. To date, the PTAB has begun to formulate a strict but still-evolving standard for how and when it will consider secondary considerations evidence when determining whether to grant or deny a petition for an inter partes review (“IPR”) or a covered business method patent (“CBM”) challenge under the AIA. Because review of secondary considerations is mandatory in district court evaluation of obviousness, it has not been a surprise to see secondary considerations arise in IPR and CBM challenges. See Plantronics, Inc. v. Aliph, Inc., 724 F.3d 1343, 1355 (Fed. Cir. 2013).

This article is based on a search of over 4200 PTAB decisions, orders, and notices issued by the PTAB through February 14, 2014. In thirteen of these decisions, the PTAB analyzed arguments about secondary considerations in deciding whether to grant a petition to institute a proceeding. Those thirteen decisions form the basis for this article. Parties on both sides have found success—at least in part— on their secondary considerations argument. Notable is Omron Oilfield & Marine, Inc. v. MD/Totco, a Division of Varco, L.P., IPR2013-00265, Paper No. 11 (PTAB, Oct. 31, 2013). In that case, the PTAB concluded that the petitioner had created a prima facie case of obviousness. Id. at 12. The patent owner, however, produced evidence showing that a product previously found to infringe some of the claims at issue achieved a 50% market share. Id. at 15. The patent owner also produced evidence showing a nexus between the commercial success and the product described and claimed in the patent. Id. The evidence included advertising touting the inventive features of the product and testimony about customers’ appreciation of those features. In light of the evidence, the PTAB concluded that the patent owner had overcome petitioner’s prima facie showing of obviousness, and rejected the petition. Id.

So far, Omron is the only proceeding where the PTAB has found patent owner’s arguments regarding secondary considerations sufficient to overcome a prima facie showing of obviousness. The PTAB has, however, found that arguments regarding secondary considerations — or lack thereof — bolster a showing of obviousness, and thus support the granting of a petition. Apotex Inc. v, Alcon Pharmaceuticals Ltd., IPR2013-00012, Paper No. 43 at 19 (PTAB, Mar. 19, 2013) (petitioner’s arguments that the claimed results were not unexpected supporting petition’s grant). See also IPR2013-00015, paper 35 at 21-22.

But, when faced with complex secondary considerations arguments, the PTAB has shown that it prefers to delayed resolving the issue until trial. See Amneal Pharmaceuticals, LLC v. Supernus Pharmaceuticals, Inc., IPR2013-00368, Paper No. 8 at 12-13 (PTAB, Dec. 17, 2013). In Amneal, both parties produced detailed arguments regarding secondary considerations. Granting the petition over the patent owner’s arguments, the PTAB explained that “detailed consideration of [patent owner’s] secondary consideration evidence may not be undertaken until [petitioner] has had an opportunity to test it.” Id. at 12-13.

Parties who fail to present detailed arguments about secondary considerations (like those offered by both sides in Amneal), will likely see their arguments rejected by the PTAB. For example, it was insufficient to state that a party “will be able to show evidence of secondary considerations.” Ranbaxy Laboratories Ltd. v. Vertex Pharmaceuticals Incorporated, IPR2013-00024, Paper No. 16 at 16 (PTAB, March 5, 2013). Merely pointing to the existence of arguments made elsewhere also proved to be insufficient. Palo Alto Networks, Inc. v. Juniper Networks, Inc., IPR2013-00369, Paper No. 16 at 27-28 (PTAB, Dec. 19, 2013) (pointing to arguments made in concurrent litigation); Redline Detection, LLC v. Star EnviroTech, Inc., IPR2013-00106, Paper No. 17 at 21 (PTAB, Jul. 1, 2013) (pointing to arguments made in a prior reexamination).

Arguments that fail to make a showing of one or more elements are equally unavailing. In one case, a patent owner argued commercial success and long-felt need in only 9 citation-less lines, without citing to any expert declarations. The Scotts Company LLC v. Encap, LLC, IPR2013-00110,  Paper No. 9 at 25 (PTAB, Apr. 15, 2013). The PTAB rejected the arguments. Id., Paper No. 12 at 16 (Jul. 3, 2013). And merely asserting the successful licensing of a family of 6 patents is insufficient as well. See Wireless Science, LLC v. Wireless Science, LLC, IPR2013-00033, Paper No. 21 at 22 (PTAB, Mar. 25, 2013). Instead, the patent owner needed to show how the patent-at-issue was responsible for the alleged success and explain whether “the licensing program was successful either because of the merits of the claimed invention or because they were entered into as business decisions to avoid litigation or other economic reasons.” Id.

Similarly, in another case, the PTAB found that the patent owner neglected to tie its arguments about secondary considerations to specific patent claims. Ariosa Diagnostics v. Isis Innovation, IPR2012-00022, Paper No. 24 at 37 (PTAB, Mar. 19, 2013). As a result, the PTAB concluded that the patent owner was unable to establish a nexus, and granted the petition. Id. Likewise, in Motorola Solutions, Inc. v. Mobile Scanning Technologies, LLC, Paper No. 28 at 35-36 (PTAB, Apr. 29, 2013), the PTAB said that the patent owner did not provide evidence of either nexus or market share to support its argument of commercial success.

Nor are expert opinions alone enough to fill the gap. In Vestcom International Inc. v. Price Heneveld LLP, IPR2013-00031, the petitioner filed two expert declarations. However, both were written before the subject patent issued, and although they supplied some sales data, they did not explicitly address the challenged claims. Id., Exhibit 1017 at 1-5, Exhibit 1018 at 2-3.  The PTAB found that the two declarations were insufficient to establish a nexus, noting further the petitioner failed to address “advertising, promotion, or other factors that may contribute to the commercial success.” Id., Paper No. 22 at 26 (PTAB, Apr. 1, 2013).

Perhaps Macauto U.S.A. v. BOS GmbH & Co. KG, IPR2012-00004 (PTAB, Jan. 24, 2013), best illustrates the strictness with which the PTAB evaluates secondary considerations arguments in the pre-trial stage. There the petitioner was aware of the patent owner’s commercial success argument raised in a prior reexamination. Id. Paper No. 18 at 19. Even though the petitioner entirely failed to address the previously-raised argument, the PTAB did not fault the petitioner and instead concluded that the patent owner had failed to establish a nexus. Id. (“While such [arguments by petitioner] might be helpful in determining obvious they are nevertheless not always a prerequisite.” (Citation omitted)).

Conclusion

The post-grant procedures established by AIA have created an emerging jurisprudence. The PTAB decisions to-date show that the PTAB sets a high standard for secondary considerations of non-obviousness arguments.  To defeat a petition, a patent holder’s evidence must be detailed and must satisfy the required proofs for the appropriate secondary consideration—and must be largely unrefuted. Otherwise, the petition will likely be granted and the determination of sufficient secondary considerations of non-obviousness must await trial. Understanding the interplay between the PTAB’s evolving jurisprudence and the facts of a case will better set expectations for probable success when making or challenging an IPR or CBM petition.

Bryan J. Vogel is a trial lawyer and partner in the New York office of Robins, Kaplan, Miller & Ciresi L.L.P. He is a registered patent attorney with a background in chemical engineering. He helps clients in litigation and arbitration and provides legal counsel in a broad range of industries, including life sciences, emerging technologies, polymer and chemical arts, telecommunications, software, consumer products, electronics, and media and entertainment. Mr. Vogel’s full bio can be found at http://www.rkmc.com/lawyers/bryan-vogel, and he can be reached at bjvogel@rkmc.com or 212.980.7400.

Miles A. Finn also contributed to this article.  He is a trial lawyer and associate in the New York office of Robins, Kaplan, Miller & Ciresi L.L.P. He has a Ph.D. in physics, and before becoming a lawyer worked for 15 years as a medical device and software engineer. He is a registered patent attorney. He has litigated in the areas of internet and software, and medical, electronic, electromechanical and semiconductor devices.  Dr. Finn’s full bio can be found at  http://www.rkmc.com/lawyers/miles-finn, and he can be reached at mafinn@rkmc.com or 212.980.7400.

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