Source: https://www.schwabe.com/newsroom-publications-14625
Timestamp: 2019-04-19 12:31:08+00:00

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The most interesting part of the opinion is the panel’s determination that the Board erred in dismissing some of ClassCo’s evidence of nonobviousness. ‎The panel first notes that it agrees with the Board that much of ClassCo’s evidence of praise deserved no weight because ‎it did not have a nexus to the merits of the claimed invention. While much of ClassCo’s evidence of praise focused on conventional ‎features in the prior art, the Board improperly dismissed some evidence of praise related to features that were not available in the prior ‎art.‎ It also improperly dismissed evidence because it found that the claims were not ‎commensurate in scope with the praised features. The opinion notes that the Circuit does not require a patentee to produce objective evidence of ‎nonobviousness for every potential embodiment of the claim. As such, the Board should have afforded ClassCo’s ‎evidence some weight, taking into account the degree of the connection between the features presented ‎in evidence and the elements recited in the claims.
WesternGeco v. ION – Like last week’s Stryker v. Zimmer decision, this case returns to the Circuit on vacatur and remand from the Supreme Court for further consideration in light of Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. __ (2016). In the present case, the district court had refused WesternGeco’s request for increased damages based on the strict Seagate standard then in place, but which has now been overruled in Halo.
Here, the jury found ION liable for $105.9 million in compensatory damages. However, in a prior decision the Circuit reduced that to $12.5 million, and that is the amount that on remand the district court is to consider enhancing, applying the Halo test for enhancement.
Judge Wallach dissents in part, agreeing with the majority in its application of Halo on the issue of enhanced damages, but continuing to disagree, as he did in the Circuit’s earlier decision, with the panel’s elimination of the $93.4 million portion of the jury’s award for lost profits resulting from foreign uses of the patented invention.
Yeda v. Abbott — Yeda appeals two decisions by the District Court for the District of Columbia—one decided in 2008 and the other in 2015. Both court decisions reviewed determinations by the Board of Patent Appeals and Interferences regarding Yeda’s assertion that the ’915 patent is invalid as anticipated. The ’915 patent’s invalidity turns on whether it benefits from the filing dates from either of two German patent applications—the ’072 application and the ’089 application. If it does, then the field of prior art narrows to exclude the anticipating reference. Whether the ’915 patent is entitled to benefit from the ’072 application’s filing date depends on whether the ’072 application provides adequate written description support for the invention claimed in the ’915 patent.
Under the doctrine of inherent disclosure, when a specification describes an invention that has certain undisclosed yet inherent properties, that specification serves as adequate written description to support a subsequent patent application that explicitly recites the invention’s inherent properties. The Circuit concluded that the ’072 application provides an adequate written description of the protein claimed in Abbott’s ’915 patent, and as such, the ’915 patent benefits from the priority date of the ’072 application. The Circuit affirmed the district court’s 2015 decision and dismissed Yeda’s appeal from the district court’s 2008 decision for lack of jurisdiction.
ClassCo appeals a decision of the PTAB in an IPR in which the Board affirmed the invalidation of claims ‎of ClassCo’s ’695 patent under ‎35 U.S.C. § 103.‎ ‎The ’695 patent explains that telephone companies previously had made identifying incoming calls possible through a subscriber service known as Caller ID. It describes previous Caller ID systems that visually displayed a caller’s name or number. The patent purportedly improves on these pre-existing systems by introducing a call-screening system that verbally announces a caller’s identity before the call is connected.
In affirming the examiner’s rejection, the Board ruled the claims obvious over a U.S. patent to Fujioka et al. in view of U.S. patent to Gulick et al. The Board found that Fujioka disclosed all but one of the elements of claims 2 and 14, including announcing a caller’s identity. The Board recognized that Fujioka did not, however, disclose using the same “audio transducer” (i.e., speaker) for announcing both a caller’s identity and telephone voice signals, as claim 2 requires. The Board looked to Gulick for that teaching. The Board also considered ClassCo’s evidence of objective indicia of nonobviousness, but concluded that the evidence merited no weight whatsoever in the obviousness inquiry because of a lack of nexus or because the features were unclaimed.
We agree with ClassCo that the Board erred in dismissing some of its evidence of nonobviousness. Even though it was not dispositive evidence of nonobviousness, the Board should have given some weight and consideration to ClassCo’s evidence of praise and commercial success. As we have explained, “a determination of whether a patent claim is invalid as obvious under § 103 requires consideration of all four Graham factors, and it is error to reach a conclusion of obviousness until all those factors are considered.” WBIP, LLC v. Kohler Co., 2016 WL 3902668, at *5 (Fed. Cir. July 19, 2016).
As the Board correctly explained, much of ClassCo’s evidence of praise focused on conventional features in the prior art. For example, ClassCo submitted news releases that praised its device’s “voice-capable caller ID unit,” but, as the Board correctly explained, the prior art, including Fujioka, disclosed “storing identification data and producing a voice announcement (i.e. audio corresponding to identification data of a caller).” The Board properly discounted this and other evidence relating to features that were in the prior art. But while the Board properly discounted some of ClassCo’s evidence, it improperly dismissed some evidence of praise related to features that were not available in the prior art.
For example, ClassCo presented an article from Teleconnect Magazine that praised ClassCo’s product for enabling a user to pick up a ringing telephone and hear a caller’s identification on the handset speaker before the line connects. By using a single speaker for both announcing a caller’s identity and the telephone call, ClassCo’s product enabled users to use an ordinary handset to both screen calls and take them. ClassCo also submitted several other articles describing benefits derived from the single-speaker feature. Neither party asserts that this single-speaker feature was readily available in the art, and the Board was wrong to dismiss it as such.
The Board also dismissed this evidence for a different reason: it found that the claims were not commensurate in scope with the praised features. We disagree. Both parties agree that the single-speaker embodiment falls within the scope of representative claims 2 and 14. Moreover, Apple admits that dependent claim 5 expressly recites the embodiment touted in the articles: picking up a telephone handset without answering a call so that the user can first hear a caller’s identification. Because claim 5 depends from claim 1, it is reasonable to infer that claim 1 includes the scope of claim 5.
While claims 2 and 14, which depend from claim 1, also encompass the praised embodiment, the Board found the evidence not commensurate in scope with these claims on the ground that they are too broad, encompassing other embodiments. But we do not require a patentee to produce objective evidence of nonobviousness for every potential embodiment of the claim. Rather, we have consistently held that a patent applicant need not sell every conceivable embodiment of the claims in order to rely upon evidence of objective indicia of nonobviousness. As such, the Board should have afforded ClassCo’s evidence some weight, taking into account the degree of the connection between the features presented in evidence and the elements recited in the claims. There is no hard-and-fast rule for this calculus, as “questions of nexus are highly fact-dependent and, as such are not resolvable by appellate-created categorical rules and hierarchies as to the relative weight or significance of proffered evidence.” WBIP. Here, because claims 2 and 14 are considerably broader than the particular features praised in the articles, it would be reasonable for the Board to assign this evidence little weight. But, contrary to the finding of the Board, the evidence is due at least some weight.
We also view the Board’s analysis of ClassCo’s evidence of commercial success as flawed. ClassCo presented testimony that its sales volumes and growth of market share were strong evidence of the commercial success of ClassCo products. According to testimony presented by ClassCo, the market for ClassCo’s products consisted of “all Caller ID devices,” including those that simply displayed Caller ID. “ClassCo’s share of that [$82,000,000] market was 0.8%.” The Board dismissed this testimony on the ground that “the market included ‘total number of units capable of audible announcement based on Caller ID’ but ClassCo does not demonstrate that the claims recite the system as ‘capable of audible announcement based on Caller ID.’” The Board’s analysis improperly focuses on the market instead of ClassCo’s product. Our cases require consideration of whether the marketed product embodies the claimed features. If a patent owner makes this showing, then a nexus is presumed and the burden shifts to the party asserting obviousness to present evidence to rebut the presumed nexus. ClassCo made that showing here; that was unrebutted. This evidence deserved some weight in the obviousness analysis, and the Board’s blanket dismissal of it was in error.
ClassCo also argues that the Board improperly dismissed evidence of a successful licensing program of the ’695 patent. ClassCo had presented testimony that it had licensed the patent to Philips in 1995. But the Board dismissed this evidence because it “did not find specific evidence demonstrating why ‘Philips took a license from ClassCo’ and what specific claim features caused Philips to take the alleged licenses, if any.” We find the Board’s conclusion on this issue to be supported by substantial evidence.
After weighing ClassCo’s evidence of nonobviousness in light of the other three Graham factors, we find no error in the Board’s ultimate conclusion of obviousness. The examiner and the Board correctly found that the combination of Fujioka and Gulick presents a strong showing that the claims at issue would have been obvious. While the Board erred in giving ClassCo’s evidence of nonobviousness no weight, we nonetheless agree that the value this evidence possesses in establishing nonobviousness is not strong in comparison to the findings and evidence regarding the prior art under the first three Graham factors. See Graham v. John Deere Co. of Kansas City, 383 U.S. 1 (1966) (holding that alleged secondary considerations of commercial success and long-felt need did not “tip the scales of patentability” where the invention “rested upon exceedingly small and quite non-technical mechanical differences in a device which was old in the art”).
The prior Circuit decision, vacated by the Supreme Court, addressed a patent infringement suit by WesternGeco against ION for infringement of four of WesternGeco’s patents. The jury found infringement and no invalidity as to all asserted claims and awarded WesternGeco $93.4 million in lost profits and a reasonable royalty of $12.5 million. The jury also found that ION’s infringement had been subjectively reckless under the “subjective” prong of the then-prevailing two-part test articulated in In re Seagate, LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc).
After trial, WesternGeco moved for enhanced damages for willful infringement under 35 U.S.C. § 284. ION moved for judgment as a matter of law (“JMOL”) of no willful infringement. The district court held that ION was not a willful infringer, meriting enhanced damages, finding that ION’s positions were reasonable and not objectively baseless and thus that the objective prong of Seagate had not been satisfied. Because the district court found no objective recklessness on the part of ION, it did not reach ION’s JMOL motion seeking to set aside the jury’s finding of subjective recklessness.
ION appealed to our court, asking us to reverse the award of lost profits. WesternGeco cross-appealed, challenging the refusal to award enhanced damages. We reversed the lost profits award, holding that WesternGeco was not entitled to lost profits resulting from foreign uses of its patented invention. We unanimously affirmed the denial of WesternGeco’s motion for enhanced damages, holding that ION’s noninfringement and invalidity defenses were not objectively unreasonable.
WesternGeco petitioned for certiorari, and requested that the petition be held in view of Halo Electronics, Inc. v. Pulse Electronics, Inc. and Stryker Corp. v. Zimmer, Inc., which involved the standard for enhanced damages. WesternGeco’s petition argued that if the result of Halo and Stryker is other than a complete affirmance and approval of Federal Circuit law, the Court should grant certiorari, vacate, and remand [“GVR”] for further consideration. The Supreme Court decided Halo and granted certiorari in this case, issuing its GVR order, remanding the case to us for further consideration in light of Halo. The Supreme Court’s Halo decision was solely concerned with the question of enhanced damages under 35 U.S.C. § 284 and does not affect other aspects of our earlier opinion. As such, we reinstate our earlier opinion except for the question of enhanced damages, which we now revisit.
After Halo, the objective reasonableness of the accused infringer’s positions can still be relevant for the district court to consider when exercising its discretion. Halo, quoting Octane Fitness, held that there is “‘no precise rule or formula’” to determine whether enhanced damages should be awarded and that district courts should generally “‘exercise their discretion in light of the considerations’ underlying the grant of that discretion.” Octane Fitness in turn held that, in determining whether to award attorney’s fees under § 285, a district court should “consider the totality of the circumstances.” In short, as the Supreme Court itself has said, district courts should exercise their discretion, “taking into account the particular circumstances of each case,” and consider all relevant factors in determining whether to award enhanced damages.
Here, in granting ION’s motion for JMOL of no willful infringement, the district court found that WesternGeco had not proved that ION’s defenses to infringement were objectively unreasonable and consequently concluded that the first, objective prong of the Seagate test had not been met. As Halo has rejected the Seagate rule that a patentee’s failure to establish the objective recklessness of the defendant’s infringement precludes a finding of willfulness, we vacate the determination of no willful infringement by ION.
The second issue that the district court must consider on remand, if the jury’s finding of willful infringement is sustained, is whether enhanced damages should be awarded. Halo emphasized that the question of enhanced damages under § 284 is one that must be left to the district court’s discretion. The district court, on remand, should consider whether ION’s infringement constituted an “egregious case of misconduct beyond typical infringement” meriting enhanced damages under § 284 and, if so, the appropriate extent of the enhancement.
Yeda appeals two decisions—one decided in 2008 and the other in 2015. Both district court decisions reviewed determinations by the Board of Patent Appeals and Interferences regarding Yeda’s assertion that the ’915 patent is invalid as anticipated.
The ’915 patent’s invalidity turns on whether it benefits from the filing dates from either of two German patent applications—the ’072 application and the ’089 application. If it does, then the field of prior art narrows to exclude the anticipating reference. Whether the ’915 patent is entitled to benefit from the ’072 application’s filing date depends on whether the ’072 application provides adequate written description support for the invention claimed in the ’915 patent. We affirm the district court’s 2015 decision that the ’915 patent is supported by the written description of the ’072 application.
In 1996, the Board declared an interference between Abbott’s ’915 patent and Yeda’s Application. The Board assigned Abbott the May 1990 filing date for the application that became the ’915 patent and held that the ’915 patent was invalid as anticipated by Engelmann. Abbott filed suit in district court seeking review of the Board’s final decision. In 2008, the court granted summary judgment for Abbott, holding that the ’089 patent inherently discloses the TBP-II protein and provides an adequate written description of the invention claimed in the ’915 application. The district court vacated the Board’s decision and remanded for further proceedings.
On remand, the Board reversed course. In 2010, the Board held that the ’072 application sufficiently disclosed TBP-II for the ’915 patent to benefit from the ’072 application’s May 1989 filing date. Yeda filed a district court action seeking review of the Board’s 2010 determination. In 2015, the district court affirmed the Board’s decision and granted Abbott summary judgment.
Yeda appeals the district court’s 2008 and 2015 decisions.
Yeda raises three arguments on appeal. First, Yeda challenges the legal standard applied by the district court to determine whether there was adequate written description support for the ’915 patent in the ’072 application. Second, Yeda argues that the prosecution history precludes Abbott from relying on inherent disclosure. Third, Yeda asserts that the district court erred in holding that the Board’s finding of adequate written description was supported by substantial evidence.
We first address the legal standard for written description support. Under the doctrine of inherent disclosure, when a specification describes an invention that has certain undisclosed yet inherent properties, that specification serves as adequate written description to support a subsequent patent application that explicitly recites the invention’s inherent properties. In this case, it is undisputed that TBP-II is the only protein with the same partial N-terminus sequence and additional traits disclosed in the ’072 application. Therefore, the ’072 application inherently discloses the remaining amino acids in the N-terminus sequence of TBP-II and serves as adequate written description support for the patent claiming TBP-II. It is not necessary for an application to disclose a protein’s complete N-terminus sequence in order to provide an adequate written description of that protein.
Yeda relies on two cases where we declined to find inherent disclosure to argue that the doctrine of inherent disclosure does not extend to this case: Hyatt v. Boone, 146 F.3d 1348 (Fed. Cir. 1998) and In re Wallach, 378 F.3d 1330 (Fed. Cir. 2004). However, neither Hyatt nor Wallach involved the situation present in this case, where it is undisputed that the invention described in an earlier application was the exact invention claimed by the later patent.
Yeda also argues that prosecution history belies Abbott’s reliance on inherent disclosure. Yeda notes that in “the context of priority determinations, the allegedly inherent limitation cannot be material to the patentability of the invention.” Yeda asserts that the amino acids missing from the ’072 application are material because Abbott relied upon their absence to distinguish the prior art during prosecution of the ’915 patent. The prosecution history, however, does not support Yeda’s argument.
Finally, we reject Yeda’s argument that the district court erred in finding that the Board’s conclusion that the ’072 application provides written description for the ’915 patent is supported by substantial evidence. As the district court noted, the Board’s decision rested on the facts that the ’072 application identified nine of the fifteen amino acids of the N-terminus sequences recited in the relevant claim, as well as several biological characteristics of the protein. The parties do not dispute that no known protein other than TBP-II matches these characteristics. The district court correctly found that the Board’s decision was supported by substantial evidence.
Because the ’072 application provides an adequate written description of the protein claimed in Abbott’s ’915 patent, the ’915 patent benefits from the priority date of the ’072 application. We affirm the district court’s 2015 decision. We dismiss Yeda’s appeal No. 2015-1663 from the district court’s 2008 decision for lack of jurisdiction, as it is now moot.

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