The Federal Circuit Supports the PTAB in Casting a Wider Obviousness Net

The Federal Circuit recently affirmed the Patent Trial and Appeal Board’s (“the PTAB” or “the Board”) decision invalidating Outdry Technologies Corp.’s (“Outdry”) patent.[1] In doing so, the Federal Circuit elaborated on the expansive and flexible standard for establishing the required motivation for combining prior art references in an obviousness analysis.[2]  The court clarified that the motivation to combine does not have to be rooted in solving the problem set forth in the challenged patent.  In addition, the court found that it is permissible for the Board to expressly adopt and rely on one of the parties’ arguments as its own, as long as the Board adequately explains why the reasoning is sound.

Background

Outdry’s U.S. Patent No. 6,855,171 (“the ‘171 patent”) is directed to methods of waterproofing leather by directly pressing a semi-permeable membrane to the internal surface of the leather via a dotted glue pattern, where the dotted pattern has a particular dot density or the dots have a specified size.

The Board found that the primary prior art reference disclosed all the elements of the claims except for the density and sizes of the glue dots.[3] The Board relied on two secondary references for the disclosure of the density and sizes of the glue dots. The secondary references were directed to adhering a waterproof, vapor permeable membrane to fabric, and socks having a water impermeable and vapor permeable membrane attached to the inner surface of an outer knitted sock.[4]  The Board determined that a person of ordinary skill in the art would have been motivated to combine the references because “Petitioner . . . provided a rational underpinning for combining the disclosures [of the references], which provide guidance for the density and size of adhesive dots to adhere a semi-permeable membrane to a porous layer.”[5] Thus, the Board determined that the challenged claims of the ‘171 patent are unpatentable.

At the Federal Circuit, Outdry argued that the Board relied solely on the petitioner’s argument to find a motivation to combine the references, and that the Board failed to articulate its own reasoning why a person of ordinary skill in the art would have been motivated to combine the references to solve the problem identified in the ‘171 patent. Outdry asserted that the court’s post-KSR precedent requires that the Board find that a person of ordinary skill in the art would have been specifically motivated to solve the problem addressed by the ‘171 patent.[6]  The Federal Circuit was not persuaded by Outdry’s arguments.

Motivation to Combine

The Federal Circuit held that the “motivation supported by the record and found by the Board need not be the same motivation articulated in the patent for making the claimed combination.”[7] The court stated that “the Board was not required to limit its motivation to combine inquiry to the problem faced by the inventor of the ‘171 patent,” because “the Supreme Court expressly rejected this argument in KSR.”[8] Furthermore, the court opined, “[n]either KSR nor our post-KSR precedent limits the motivation to combine inquiry in this manner.”[9] “Any motivation to combine references, whether articulated in the references themselves or supported by evidence of the knowledge of a skilled artisan, is sufficient to combine those references to arrive at the claimed invention.”[10]

Based on this decision, it appears that any reasoning articulated by a petitioner and supported by evidence may be sufficient to establish a motivation to combine references to arrive at a claimed invention.  The rationale for combining references articulated by the petitioner need not be based on the same problem being solved by the patentee. This is in contrast to other jurisdictions around the world, such as Europe, where the inventive step analysis focuses on a “problem-and-solution approach” and the “objective technical problem” being solved by the patentee is highly relevant to such analysis.

The Federal Circuit’s reasoning seems to support what many view as a prevailing trend in the United States towards a broader and more flexible (some may argue nebulous and undefined) methodology for determining obviousness. One must wonder, however, whether this approach will facilitate, unintended or not, more hindsight-based analyses.  If the fact finder is not limited to looking at the problem being solved by the patentee, guarding against the influence of hindsight bias in piecing together prior art references may become increasingly more difficult.

The PTAB Can Adopt a Party’s Arguments

Although the Federal Circuit has criticized the PTAB in the past for adopting a party’s position without adequately explaining its findings, the court made clear in this case that the Board can rely upon, indeed even “recite” and “expressly adopt,” a party’s position as its own where the Board has “engaged in reasoned decisionmaking and sufficiently articulated its analysis in its opinion.”[11] The court explained that the Board is permitted to credit a party’s position as part of the Board’s explanation of its factual findings because it only needs to “explain why it accepts the prevailing argument.”[12] Here, the “Board sufficiently explained why it found that [the petitioner’s] arguments supported finding a motivation to combine.”[13]

While allowing the Board to adopt and rely on a party’s position in its final decision may result in more timely resolution of cases, it raises concerns over whether the Board adequately considered the different arguments and made its decision based on the panel’s own reasoning and logic.  The role of an adjudicative body is to independently and impartially decide a case, but if that body expressly adopts and recites one of the party’s arguments, it may cast doubt on whether the adjudicative body has performed its appointed duty and whether the parties have received a fair and complete trial.  On the other hand, a patent owner in an AIA trial is entitled to notice of, and a fair opportunity to respond to, grounds of challenge asserted by the petitioner.[14]  When the Board expressly adopts the petitioner’s rationale for combining references, the Board increases the likelihood that its final written decision will not be overturned based on a failure to provide the patent owner with sufficient notice of such rationale.  Adopting the petitioner’s rationale can be a safe harbor against future due process challenges.

Conclusion

The PTAB and the Federal Circuit are casting a wide net when it comes to combining references in an obviousness challenge. The rationale for combining references articulated by the petitioner need not be based on the same problem that is addressed by the challenged patent.  While not intended, this approach may result in increased hindsight bias creeping into the obviousness determination.

The Federal Circuit also blessed the PTAB’s adoption, even recitation, of a party’s position as its own, so long as the Board provides sound reasoning for the adoption. Such practice should motivate both petitioners and patent owners to provide comprehensive, well-reasoned, and heavily supported arguments (e.g., citations to documentary and testimonial evidence) in the hopes that the Board adopts the party’s position for its decision.  While such a practice may result in desired efficiencies, the Board must ensure that each party is given a fair trial and that the panel fully considered the issues to reach the final outcome.

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[1] Geox S.P.A. v. Outdry Techs. Corp., IPR2014-01244, Paper 27 (PTAB Dec. 18, 2015).

[2] Outdry Techs. Corp. v. Geox S.P.A., 2017 WL 2603139 (Fed. Cir. 2017).

[3] Geox S.P.A. v. Outdry Techs. Corp., IPR2014-01244, Paper 27 at 15.

[4] Id.

[5] Id.

[6] Outdry Techs, 2017 WL 2603139 at *3.

[7] Id. at *4.

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] Id. (citing Icon Health & Fitness, Inc. v. Strava Inc., 849 F.3d 1034, 1047 (Fed. Cir. 2017)).

[13] Id.

[14] See, e.g., Dell Inc. v. Acceleron, LLC, 818 F.3d 1293, 1301 (Fed. Cir. 2016).

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