In Nidec v. Zhongshan, the entire panel affirms a determination of obviousness but two judges question whether § 315(c) of the AIA was improperly used to permit joinder as to a second Zhongshan petition filed after the one-year deadline of § 315(b) had passed. In their concurring opinion, the two judges also question the PTO practice of expanding a panel to five judges when the Director is not happy with a decision. In Stepan, because the Board failed to adequately articulate its reasoning, erroneously rejected relevant evidence of nonobviousness, and improperly shifted to Stepan the burden of proving patentability, a split panel vacates the Board’s decision that the claims would have been obvious.
Thanks to my colleague Mike Cofield for his help with this week’s report.
Nidec Motor Corp. v. Zhongshan Broad Ocean Motor Co. Ltd., Fed. Cir. Case 2016-2321 (August 22, 2017)
The Circuit affirms an IPR holding of obviousness of a patent directed to a controller used in HVAC systems. In a concurring opinion, two Circuit judges question the appropriateness of the Board permitting joinder of a petition filed after the expiration of the one-year period in which petitions must be filed, and the Board’s practice of expanding a panel to five judges. Here, a three-judge panel ruled the joinder inappropriate, but the Board’s chief judge expanded the panel, which then voted to allow joinder.
Before turning to validity, the panel affirms the Board’s construction of “control signals” to encompass an “on/off signal.” The specification supports this “broadest reasonable interpretation,” as does the doctrine of claim differentiation. Specifically, the “control signals” limitation recited in the independent claim encompasses other signals in additional to the specific control signals recited in dependent claim 20, given that dependent claims must further limit independent claims.
The asserted combination of Bessler and Kocybik is to incorporate “sinewave commutation” as taught by Kocybik into Bessler HVAC system. Regarding Nidec’s arguments that Bessler teaches away from the asserted combination, the panel finds that there is nothing in Bessler to “criticize, discredit, or otherwise discourage” the use of sinewave commutation in HVAC systems.
The most interesting part of this decision is in the non-binding concurring opinion in which Judges Dyk and Wallach question the joinder of a second petition filed by Zhongshan more than one year after the filing of its initial petition. The AIA provides that an IPR may not be instituted if the petition is filed more than one year after the filing of a complaint against the petitioner or its privy. 35 U.S.C. § 315(b). This section does not apply to requests for joinder under § 315(c), which Judges Dyk and Wallach suggest was designed only to permit a new party to join a proceeding, rather than to allow a time-barred petitioner to add new issues through joinder of a second petition.
The concurrence also expresses concern about the PTO’s practice of expanding administrative panels to “secure and maintain uniformity of the Board’s decisions.” Here, after a three-member panel denied Zhongshan’s request for joinder, Zhongshan requested rehearing by an expanded panel. The chief judge of the Board, acting on behalf of the Director, expanded the panel from three to five members, and the reconstituted panel set aside the earlier decision. According to the concurrence: “While we recognize the importance of achieving uniformity in PTO decisions, we question whether the practice of expanding panels where the PTO is dissatisfied with a panel’s earlier decision is the appropriate mechanism of achieving the desired uniformity.” But, as with the joinder issue, they indicate that this issue does not need to be resolved here in order to affirm the Board’s decision.
In Re Stepan Company, Fed. Cir. Case 2016-1811 (August 25, 2017)
In a split decision the Circuit vacates and remands a Board determination of obviousness of a patent application directed to herbicidal formulations containing glyphosate salt with a surfactant system.
The Board found Stepan failed to provide evidence that it would not have been routine optimization for a skilled artisan to select and adjust the claimed surfactants to achieve a cloud point above at least 70ºC “since the Pallas reference teaches the surfactant component comprises any combination of surfactants” and “teaches the ideal cloud point should be above 60ºC.” It rejected evidence in Pallas that certain surfactant combinations failed the cloud point test at 60ºC because it concluded that these failures did not involve the claimed surfactants. It found Stepan failed to establish the criticality of its claimed range of surfactants, showing neither that a 70ºC cloud point was unexpectedly good nor that the prior art was silent on the connection between optimizing surfactants and cloud point. Because the Board failed to adequately articulate its reasoning, erroneously rejected relevant evidence of nonobviousness, and improperly shifted to Stepan the burden of proving patentability, the majority vacates the Board’s decision that the claims would have been obvious.
Citing to its recent Van Os and Arendi decisions in which the Board found claimed inventions would have been “intuitive” or “common sense,” the majority notes that the Board must provide some rational underpinning explaining why a person of ordinary skill in the art would have arrived at the claimed invention through routine optimization. Absent some additional reasoning, the Board’s finding that a skilled artisan would have arrived at the claimed invention through routine optimization is insufficient to support a conclusion of obviousness.
Lastly, the majority holds that the Board erred when it shifted the burden of proving patentability to Stepan. The PTO bears the burden of establishing a prima facie case of obviousness. Only if this burden is met does the burden of coming forward with rebuttal argument or evidence shift to the applicant. In holding that Stepan had not met its burden, the Board cited case law in which the patentee claimed a range within the prior art and had to rebut a prima facie case of obviousness by showing criticality of its claimed range. This line of case law does not apply here for two reasons. First, for the reasons discussed above, the Board did not establish a prima facie case of obviousness because it failed to adequately articulate its reasoning. Second, Stepan’s application does not merely claim a range of surfactants that is within or overlaps with the range of surfactant systems taught by Pallas. The claimed surfactant system contains four elements. The first three elements describe the surfactants, and their respective ranges, that comprise the surfactant system. The fourth element limits the combination of those surfactants to only those combinations that produce a cloud point above at least 70ºC or no cloud point at all. It therefore may be that not all compositions that contain the claimed combination and range of surfactants fall within the claims. As an element of the composition claims, it was the PTO’s—not Stepan’s—burden to show that achieving a cloud point above 70ºC would have been obvious to a person of ordinary skill in the art. To the extent the Board shifted the burden to Stepan to show the criticality of the cloud point element, the majority rules that the Board erred.
In his dissent, Judge Lourie agrees that the Board should have explained itself more fully, but because the bases for the obviousness rejection were readily apparent, he would affirm the Board decision since the reference “nearly anticipates the claim.”