Federal Circuit Reverses PTAB Finding Of Patentability
On Monday, September 17, 2018, the Court of Appeals for the Federal Circuit (CAFC) issued an opinion reversing a final written decision by the Patent Trial and Appeal Board (PTAB) and finding the patent claims that had been challenged by inter partes review (IPR) to be unpatentable for obviousness. E.I. du Pont de Nemours & Co. v. Synvina C.V., —F.3d—, (Fed. Cir. September 17, 2018). The CAFC first ruled that the patent challenger had standing to appeal, and then on the merits determined that the PTAB had applied the wrong legal standard for obviousness, and therefore reversed.
An IPR is an administrative procedure by which one can challenge the validity of an issued patent. The patent challenger files a petition in the Patent Office, the patent owner may respond, and the Patent Trial and Appeal Board (PTAB) decides whether to institute an IPR. If an IPR is instituted, the PTAB ultimately issues a written decision finding the challenged claims either patentable or unpatentable.
There is no standing requirement for a patent challenger to request an IPR. However, there is a case-or-controversy standing requirement for an unsuccessful challenger to appeal a final written decision by the PTAB. In this case, the patent owner had never charged the patent challenger with infringement. The patent owner argued that therefore there was no case or controversy involving the challenger.
In this case, in the course of the appeal the challenger had submitted affidavits indicating that it was building a plant to perform the chemical process that was the subject of the patent, and specifying the chemical and physical conditions under which the plant would operate. And at oral argument, the challenger stated that the plant was in operation. The CAFC found that “these facts demonstrate that the chemical company, an avowed competitor of patent owner, has taken and plans to take action that would implicate” the patent, and that the evidence “indicates that [the company] is engaged or will likely engage in an activity that would give rise to a possible infringement suit.” Thus, the CAFC concluded, the case-or-controversy standard was met. The CAFC also noted that the patent owner had alleged copying in the course of the IPR and had rebuffed a request from the challenger for a covenant not to sue, and found that these facts “further confirm that [the company’s] risk of liability is not conjectural or hypothetical.”
When it reached the merits, the CAFC determined that the PTAB had wrongly failed to apply a burden-shifting rule applicable to issues of patent obviousness. In this case, the challenged patent claims were directed to a chemical process carried out within, e.g., certain ranges of temperature and pressure, but the “prior art as a whole . . . taught the claimed reaction, as well as conditions either identical to or overlapping with those of” the challenged claims. Generally, the burden of proof on obviousness issues rests on the patent challenger. However, the CAFC found that long-established law is that in situations of overlapping ranges, the patent owner bears a burden to prove non-obviousness.
The PTAB had considered the issue and found that the CAFC’s decisions in In re Magnum Oil Tools Int’l, Ltd., 829 F.3d 1364, 1375 (Fed. Cir. 2016), and Dynamic Drinkware, LLC v. National Graphics, Inc., 800 F.3d 1375, 1378 (Fed. Cir. 2015), suggested that the burden-shifting rule does not apply in IPR proceedings. The CAFC disagreed, finding that the burden-shifting rule—that is, “where there is a range disclosed in the prior art, and the claimed invention falls within that range, the burden of production falls upon the patentee to come forward with evidence” of non-obviousness—applies in IPR proceedings just as it does in other situations. The CAFC went on to consider the record, found that the patent owner had failed to produce such evidence, and reversed the PTAB, finding the challenged claims unpatentable for obviousness.