Federal Circuit Vacates PTAB’s Obviousness Finding For Failure To Consider Evidence Of Copying
On October 30, 2019, the Court of Appeals for the Federal Circuit (CAFC) issued an opinion vacating a decision of the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB) that Liqwd, Inc.’s patent claims are unpatentable as obvious. Liqwd, Inc. v. L'Oreal USA, Inc., __ F.3d __ (Fed. Cir. Oct. 30, 2019). The CAFC ruled that the PTAB erred in concluding that evidence of copying the patented invention was legally irrelevant.
A claimed invention is unpatentable as obvious if the differences between it and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the pertinent art. 35 U.S.C. § 103(a). Under the test for obviousness detailed in Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 17-18, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966), courts must consider any objective evidence of nonobviousness, including, e.g., industry skepticism, long-felt industry need, commercial success, and copying. Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc., 617 F.3d 1296, 1302-03 (Fed. Cir. 2010).
On January 31, 2017, L’Oreal filed a petition with the PTAB for post-grant review of a Liqwd patent directed to formulations and methods of repairing or strengthening hair, skin, or nails. The formulations contain polyfunctional compounds referred to as “active agents” that may be maleic acid, salts thereof, or other compounds. In a final written decision, the PTAB found the challenged patent claims invalid as obvious in view of cited prior art that taught or suggested the claimed methods.
The PTAB considered arguments and evidence related to objective indicia to be insufficient to establish non-obviousness. With respect to copying, the PTAB found that L’Oreal would not have developed products using maleic acid without having access to Liqwd’s confidential information. Despite that factual finding, the Board determined that this evidence of copying was irrelevant as a matter of law, because Liqwd had not shown that L’Oreal copied a specific product.
Liqwd appealed—arguing that the PTAB erred by requiring a showing that L’Oreal copied a specific product embodying the claimed invention.
The CAFC began its analysis by emphasizing that objective indicia constitute a fundamental part of the overall § 103 obviousness inquiry and may often be the most probative evidence of non-obviousness. The CAFC further noted that copying by a competitor is a well-established and relevant consideration in the objective indicia analysis.
Next, the CAFC considered its decision in Iron Grip Barbell Co. v. USA Sports, Inc., 392 F.3d 1317, 1325 (Fed. Cir. 2004), a case relied on by L’Oreal. That case, according to the CAFC, emphasized that a competing product that arguably falls within the scope of a patent is not necessarily evidence of copying. Otherwise, every infringement suit would automatically confirm the non-obviousness of the patent. The CAFC noted that, in cases following Iron Grip Barbell, the question of legal relevancy was determined by whether there was actual evidence of copying efforts as opposed to mere allegations regarding similarities between the accused product and a patent; the focus was not on whether the copying efforts involved a “specific product,” as the PTAB had concluded.
The CAFC next affirmed the PTAB’s factual finding that L’Oreal used maleic acid because of L’Oreal’s access to Liqwd’s confidential information obtained during a May 2015 meeting at which L’Oreal was provided with a copy of the then-confidential patent application that disclosed the patented methods. Because this evidence of actual copying efforts is relevant to the objective indicia of obviousness analysis, the CAFC vacated and remanded the PTAB’s obviousness determination.