N OTE : This disposition is nonprecedential. 

# United States **Court of Appeals**  **for the Federal Circuit**

______________________ PHILIP MORRIS PRODUCTS S.A., Appellant

v.

RAI STRATEGIC HOLDINGS, INC., Appellee

______________________

2022

- 1846

______________________ Appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in No. IPR2020

- 01602.

______________________
Decided: September 14, 2023

______________________
G ABRIEL K. B ELL , Latham & Watkins LLP, Washington, DC, argued for appellant. Also represented by M AXIMILIAN A. G RANT , J ONATHAN M. S TRANG , D AVID Z UCKER ; T AKASHI O KUDA , New York, NY; G REGORY S OBOLSKI , San Francisco, CA.

G REG ORY A. C ASTANIAS , Jones Day, Washington, DC, argued for appellee. Also represented by A MELIA A. D E G ORY ; R OBERT B REETZ , D AVID B. C OCHRAN , K ENNETH Case: 22-1846 Document: 38 Page: 1 Filed: 09/14/2023PHILIP MORRIS PRODUCTS S

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L UCHESI , D AVID M ICHAEL M AIORANA , Cleveland, OH; J OSHUA R. N IGHTINGALE , Pittsburgh, PA.

______________________
Before C HEN , S TOLL , and C UNNINGHAM , Circuit Judges

. C HEN , Circuit Judge

. Philip Morris Products, S.A. (Philip Morris) appeals a n inter partes review (IPR) final written decision of the Patent Trial and Appeal Board determining Phili p Morris did not meet its burden of proving cert ain claims of U.S. Patent No. 9,901,123 (’123 patent) unpatentable under 35 U.S.C. § 103

. See Philip Morris Prods

. , S.A. v. RAI Strategic Holdings, Inc.

, No. IPR2020

- 01602
, 2022 WL 1022576 (P.T.A.B. Mar. 30, 2022) ( Board Decision )

. Contrary to Philip Morris’s arguments, the Board ’s decision in this case did not contradict its findings in a prior Board decision , nor did the Board legally err in its motivation to combine analysis

. Because substantial evide nce otherwise support s the Board’s findings , we affirm

. B ACKGROUND The ’123 patent , assigned to RAI Strategic Holdings, Inc. (Reynolds), generally relates to tobacco smoking devices, including electronic cigarettes. ’123 patent col 4 ll. 42

– 45 , col. 5 ll. 7– 10

. In 2016, before the present IPR proceeding for the ’123 patent w as initiated, R.J. Reynolds Vapor Company (Reynolds VC ) , a sister corporation of Reynolds, filed a n IPR petition against an other company’s elec tronic cigarette patent, U.S. Patent No. 8,365,742 (’742 patent ), challeng ing several claims over a combination of Hon 1 and Whittemore. 2 Specifically, Reynolds VC argued that a skilled artisan would have replac ed Hon’s heating element with Whittemore’s wick and heating wir e. The

1 Chinese Patent No. CN 2719043

. 2 U.S. Patent No. 2,057,353. Case: 22-1846 Document: 38 Page: 2 Filed: 09/14/2023PHILIP MORRIS PRODUCTS S

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Board disagreed and upheld the claims, concluding that Reynolds VC had failed to sho w Hon’s heating efficiency needed improvement. The Board also found that a comparatively more plausible substitution would have been to replace Hon’s entire atomizer

, as opposed to Reynolds VC’s proposal to replace only Hon’s heating element.
In the present case, Ph ilip Morris filed an IPR petition against several claims of Reynolds’s ’123 patent

. While Philip Morris’s petition, like Re ynolds VC’s above

- described IPR, argued that a skilled artisan would have been motivated to combine Hon and Whittemore, Philip Morris proposed a different combination of these references, by replacing Hon’s entire atomizer with Whittemore’s wick and heatin g wire. The Board , however, found unpersuasive Philip Morris’s argument that a skilled artisan would have been motivated to simplif y Hon in the manner Phillip Morris proposed

. Philip Morris timely appealed the Board’s decision to this court , arguing that the decision was arbitrary and capricious because (1) it contradict s the reasoning in the ’742 patent IPR decision

, (2) there was legal error in the Board’s motivation to combine analysis, and (3) the decision was otherwise not supported by substantial evidence

. We have jurisdiction under 28 U.S.C. § 1295(a)(4)(A).

D ISCUSSION
As to Philip Morris’s first argument, we see no contradiction between the Board ’s analysis of Hon and Whittemore and it s earlier decision on the ’742 patent

. In the prior IPR

, the issue before the Board was whether a skilled artisan would have replaced Hon’s heating element with Whittemore’s wick and heating wire

. The patent owner ’s overarching argument there was that a skilled artisan would not have combined Hon and Whittemore at all. See J.A. 2801 ( paten t owner arguing that Hon and Whittemore “have different modes of operation, and in at least some ways, Hon[] is more thermally efficient.”)

. In this conte xt, Case: 22-1846 Document: 38 Page: 3 Filed: 09/14/2023PHILIP MORRIS PRODUCTS S

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we view the Board in that case as agreeing with the patent owner’s expert testimony that a more plausible “simple substitution ,” compared to the petitioner’s proposed substitution, would be to replace Hon’s entire atomizer (because replacing only Hon’s heating element would le a d to a redundant design)

. See J.A. 2806

– 07

. But t he Board there did not go so far as to find that replacing Hon’s entire atomizer with Whittemore’s wick and heating wire would have been a n obvious simple substitution under KSR International Co. v. Teleflex

, Inc. , 550 U.S. 398 (2007)

. Moreover, that particular combination theory was not before the Board in the prior IPR , as no party made that argument

. In re Magnum Oil Tools Int’l, Ltd. , 829 F. 3d 1364, 1381 (Fed. C i r. 2016 ) (holding that the PTO does not have authority to “raise, address, and decide unpatentability theories never presented by the petitioner ”).
In contrast, in the presently appealed IPR, the issue before the Board was whether a skilled artisan would have replaced Hon’s entire atomizer with Whittemore’s wick and heating wire. The Board thus analyzed a different combination theory , with expert testimony 3 specifically directed
to this combination. Because the Board did not con clude in the prior IPR that replacing Hon’s atomizer would have been obvious

, it was not arbitrary and capricious for the Board to conclude that Philip Morris did not meet its burden her e

.

3 We similarly find no abuse of discretion by theBoard in relying on Reynolds’s expert in the presently appealed IPR. Even considering the statements made by Reynolds VC’s expert in the prior IPR, it is evident that each expert was testifying about a disti nct modification of Hon (i.e., replacing Hon’s heating element versus replacing Hon’s entire atomizer ), and thus the respective expertstatements must be understood to be referring to the specific combination at issue. Case: 22-1846 Document: 38 Page: 4 Filed: 09/14/2023PHILIP MORRIS PRODUCTS S

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Philip Morris also argues

, separate and apart from the prior IPR decision, the Board’s finding of no motivation to combine Hon and Whittemor e is based on legal error and the decision otherwise lacks substantial evidence

. We disagree. P hilip Morris claims the Board allegedly requir ed it to prove that its proposed combination was superior to other prior art combinations

. We do not think that is a fair reading of the Board’s decision. Philip Morris argued to the Board that a skilled ar tisan would be motivated to first remove Hon’s piezoelectric element , a simplification Hon teaches. But Philip Morris further asserted that once the piezoelectric element was remove d, there would be difficulty in forming an aerosol and thus a skilled artisan would further “ simplify ” Hon by remov ing Ho n’s entire atomizer and replacing it with Whittemore’s wick and heater

. Since the proposed combination was based on a purported simplification of Hon beyond what H on itself teaches, we interpret the Board’s statement that “Petitioner does not show

persu asively that replacing Hon’s atomizer with Whittemore’s wick and heater would have simplified the device as compared with the modifications Hon expressly teaches” as determining Philip Morr is had not proven the obviousness theory that it had advanced

. Board Decision , 2022 WL 1022576, at *1 2

. We do not view the Board’s statement as a rejection of the combinatio n merely because Hon itself teaches other simplifications distinct from the proposed combination.

We also conclude that substantial evidence su pports the Board’s decision to reject Philip Morris’s proposed combination

, because the Board reasonably relied on expert testimony and its own analysis of the R.J. Reynolds Tobacco Co . ( RJR ) teardown report

. 4 Specifically, the Board

4 The RJR teardown report docu ments a disassembling of a Ruyan device, which is an implementation of Hon. Case: 22-1846 Document: 38 Page: 5 Filed: 09/14/2023PHILIP MORRIS PRODUCTS S

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relied on expert testimony to find that Hon’s heater produces more aerosol at a higher efficiency while using less power than Whittemore’s wick and heater design, and found that nothing in the RJR teardown report supports a view that the Ruyan device ( an implementat ion of Hon ) failed to produce sufficient aerosol that would warrant replacement of the atomizer

. See Board Decision , 2022 WL 1022576 , at * 12

– 14

. This is substantial evidence. To the
extent Philip Morris argues that the Board failed to consider record ev idence of the alleged cost and simplicity ofWhittemore’s wick and heater or testimony regarding reasonable expectation of success, we do not believe the Board erred in dismissing these arguments as conclusory and lacking factual substantiation.

We h ave considered Philip Morris’s remaining arguments and find them unpersuasive. For the foregoing reasons, we affirm

. AFFIRMED Case: 22-1846 Document: 38 Page: 6 Filed: 09/14/2023