Federal Circuit Affirms PTAB’s Substitution-Based Obviousness Decision Related to Refrigerant Mixture
On February 24, 2021, the Court of Appeals for the Federal Circuit (CAFC) issued an opinion affirming the obviousness decision of the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB). Daikin Indus., LTD v. The Chemours Co. FC, LLC, __ F.3d __ (Fed. Cir. Feb. 24, 2021). The CAFC found that the petition for inter partes review (IPR) properly set forth a substitution-based theory of obviousness and that the PTAB’s substitution analysis was supported by substantial evidence.
The challenged ’123 patent is directed to a chemical composition, generally used in refrigeration systems, comprised of mixtures of hydrofluorocarbons (HFCs), hydrofluoroolefins (HFOs), and one or more of a (i) chlorofluorocarbon (CFC), (ii) hydrochlorofluorocarbon (HCFC), (iii) chloromethane (HCC), and/or (iv) 3,3,3-trifluoropropyne (TFP). According to the ’123 patent, using mixtures comprised primarily of HFCs and HFOs is preferred because they have lower environmental and global warming impacts, as compared to other primarily chlorine-based compounds. However, using mixtures of HFCs and HFOs have a drawback: their “lubrication performance” is lower than those of the primarily chlorine-based compounds. The ’123 patent purports to solve the lubrication-performance issue by adding one or more of TFP, CFC, HCFC, and/or HCC to the HFC/HFO mixture, and includes test results showing a relative enhanced lubricity in the form of decreased abrasion loss of between seven to ten percent and an increased baking load of six to seven percent.
Petitioner-Appellee filed a petition for IPR alleging that the claims of the ’123 patent are obvious over the following combination of prior art references “Van Horn” and “Collier” in view of a 2014 Air Conditioning, Heating, and Refrigeration Institute (AHRI) Standard. Because there was no material dispute that Van Horn and Collier collectively disclose all of the elements of the challenged claims, the PTAB’s obviousness analysis focused on whether a skilled artisan would have recognized Collier’s preferred HFO-1234yf embodiment, containing small amounts of HCC-40 and/or CFC-115, as a substitute for the HFO-1234yf in Van Horn’s mixture, and whether any unexpected increases in lubricity related to the claimed invention should be accorded substantial weight in the obviousness inquiry. The PTAB ultimately issued a final written decision finding the challenged claims obvious.
On appeal, Patent Owner-Appellant argued, as a threshold matter, that the PTAB violated the Administrative Procedure Act by relying on a “substitution theory”—i.e., substituting Collier’s HFO-1234yf for Van Horn’s—that was not advanced in the IPR petition. The CAFC summarily rejected this argument, pointing to language in the IPR petition that, while concise, put Patent Owner-Appellant on notice of Petitioner-Appellee’s substitution-based obviousness theory.
As to the merits, Patent Owner-Appellant contested, inter alia, the PTAB’s findings that (1) a skilled artisan would have considered Collier’s HFO-1234yf a reasonable substitute for Van Horn’s and (2) that its purported objective indicia of nonobviounsess—specifically, the ’123 patent’s alleged unexpected results—was insufficient to overcome the evidence of obviousness.
Obviousness is a question of law with underlying factual findings relating to the scope and content of the prior art, the differences between the prior art and the claims, the level of ordinary skill in the pertinent art, the presence or absence of a motivation to combine or modify the prior art with a reasonable expectation of success, and any objective indicia of non-obviousness. “[W]hen a patent claims a structure already known in the prior art that is altered by the mere substitution of one element for another known in the field, the combination must do more than yield a predictable result.” KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 416 (2007). Stated differently, “when a patent simply arranges old elements with each performing the same function it had been known to perform and yields no more than one would expect from such an arrangement, the combination is obvious.” Id. at 417 (internal quotation marks omitted).
With respect to Patent Owner-Appellant’s first argument, the CAFC pointed out that: (1) Patent Owner-Appellant admitted that the proposed substitution would lead to predictable changes in the environmental, safety, and reliability properties of Van Horn’s mixture; (2) the resulting lubricity increases in the claimed compositions were expected; and (3) a skilled artisan would have regarded any effect on the system performance as trivial. In doing so, the CAFC explained that the Board thoroughly addressed Patent Owner-Appellant’s arguments as to the proposed substitution, and properly rejected them after weighing the competing evidence (including competing expert testimony as to safety and reliability concerns of the proposed mixture).
With respect to Patent Owner-Appellant’s second argument, the CAFC credited the PTAB’s finding that the test results set forth in the ’123 patent, which purportedly showed “an unexpected increase in lubricity,” were not commensurate with the full scope of the claimed invention. For example, the CAFC noted that the Board correctly pointed out that each comparison test disclosed in the ’123 patent involved mixtures comprising only 0.5 mass percent of the third component, but the claims permit the third component to comprise nearly all of the mixture. Moreover, the CAFC credited the Board’s finding that the lubricity increases from the addition of chlorine-containing compounds were expected, and that Patent Owner-Appellant failed to submit any evidence that the magnitude of any increase was unexpected. Accordingly, the CAFC found that the PTAB’s factual findings related to Patent Owner-Appellant’s argument as to unexpected results were supported by substantial evidence, and therefore affirmed the PTAB’s obviousness finding.