Source: https://www.schwabe.com/newsroom-publications-14662
Timestamp: 2019-04-26 07:56:12+00:00

Document:
While the Samsung v. Apple reversal was the big news this week, there were also two precedential Federal Circuit decisions. In Asetek, the Circuit affirmed validity, infringement and damages but in a surprising ruling opposed by Chief Judge Prost, remanded the grant of an overly broad injunction without lifting the injunction. The panel vacated and remanded a determination of obviousness in NuVasive because the Board did not adequately explain the bases for its finding. This is the second case in the past month involving a NuVasive/Medtronic dispute in which a decision by the Board has been vacated because the Board failed to follow correct procedures in making its rulings.
In Asetek, the Circuit affirms validity, infringement and damages but in a surprising ruling opposed by Chief Judge Prost, remands the grant of an overly broad injunction without lifting the injunction. The panel vacates and remands a determination of obviousness in NuVasivebecause the Board did not adequately explain the bases for its finding. This is the second case in the past month involving a NuVasive/Medtronic dispute in which a decision by the Board has been vacated because the Board failed to follow correct procedures in making its rulings.
Asetek v. CMI – In this action involving computer cooling systems, the full panel affirms determinations of non-invalidity, infringement and damages. The majority remands the injunction so the district court can evaluate whether the injunction is overly broad as to products provided by the supplier Cooler Master to its customer CMI that do not abet an infringement by CMI. Chief Judge Prost dissents as to the remand, arguing that that portion of the injunction should be vacated.
Appellants argued that there can be no infringement because the alleged “heat exchanging ‎interfaces” in the accused products are not ‎‎“removably ‎attached” or “removably coupled” to reservoirs. This follows, according to appellants, because removing the heat exchanging interfaces would render the products nonfunctional. But because the parties elected to ‎provide ‎the jury only with the claim language itself, without any claim construction, the only issue is whether there is substantial evidence to support the jury’s ‎application of the ‎jury instruction. The panel finds such substantial evidence here.
The panel also rejects appellants’ argument that Cooler Master’s earlier dismissal from the case with prejudice precludes an injunction against Cooler Master. The panel bases this ruling on the fact that a party who sues a tortfeasor is ordinarily not ‎barred by a prior judgment from seeking relief for ‎tortious action by the same tortfeasor that ‎occurs subsequent to the original action. The ‎rationale is simple: claim preclusion requires a ‎party to ‎assert all claims that the party could have ‎asserted in the earlier lawsuit; and a party cannot assert claims ‎based on tortious conduct that had not ‎occurred at ‎that time.
Finally, the panel indicates that the injunction appears to be overly broad insofar as the injunction reaches Cooler Master’s ‎sale, importation, etc., other than conduct ‎that abets a new violation ‎by CMI, the only party adjudicated liable for infringement.‎ However, the majority is reluctant to disturb the status quo, which has existed for a year, so does not think it is appropriate to vacate the injunction. As noted above, Judge Prost disagrees with that part of the decision.
NuVasive– The Circuit vacates and remands an IPR determination of obviousness as to a spinal fusion implant since the Board did not adequately explain the bases for its determination of obviousness.
The Board determined that claim 1 would have been obvious over a ‎combination of Baccelli and the product literature. But the Board failed to explain why a PHOSITA would have been motivated to modify ‎either of the literature references in light of Baccelli. The majority of the Board’s analysis was limited to summaries of the parties’ arguments. The Board stated “we are not persuaded by NuVasive’s ‎argument, because the question is whether it would have been obvious to a PHOSITA to combine the ‎cited references, and not whether any specific implants on the market contain a radiopaque marker in a ‎central region.” In addition, the Board invoked the high level of skill in the art when it agreed with ‎Medtronic’s assertion that NuVasive’s argument “vastly underestimates the ordinary skill of surgeons in ‎this field.” However, the Board never actually made an explanation-supported finding that the evidence ‎affirmatively proved that the PHOSITA would have sought this additional information from the other reference.‎ Medtronic’s arguments amount to ‎nothing more than conclusory statements that a PHOSITA would have been motivated to combine the ‎prior art references to obtain additional information.
In April 2015, the district court entered its findings of ‎fact and conclusions of law on matters the parties ‎had reserved to it. The court ‎concluded that CMI failed to prove that the ’362 and ’764 ‎patents were invalid for obviousness, lack of written description, or indefiniteness. In September 2015, the ‎district court denied CMI’s motions for judgment as a ‎matter of law or a new trial on infringement and damages ‎as well as for a new trial on obviousness. The district court also granted Asetek’s ‎motion for an injunction against CMI and Cooler ‎Master, the latter not then a party. CMI and Cooler Master appeal.
‎Nor has CMI shown, as it suggests, that the use of ‎Asetek’s per-unit profit in the royalty analysis makes lost-‎profits damages no longer worth pursuing by patent ‎owners. There are obvious reasons for some patent owners to pursue lost profits. In some circumstances, e.g., ‎where the patent owner is a strong economic monopolist, ‎proof of lost sales caused by the infringement and the ‎profits on those lost sales (as well as loss of profits from ‎sales made at prices lowered by the infringement) may be ‎less uncertain than proof of a reasonable royalty under ‎the standards applicable to the latter. And a lost-profit ‎award can be higher. A hypothetical-negotiation analysis ‎for a royalty considers not only the patent owner’s interests, but also the other side of the negotiation table under ‎the particular conditions of the hypothetical negotiation. ‎A lost-profits analysis is different, because as a general matter, the ‎patent owner is entitled to be made whole, upon proper ‎proof, for its loss of profits caused by the infringement, ‎without discounting for the rational interests limiting ‎willingness to pay on the infringer’s side.
NuVasive is the assignee of the ’156 patent, which is directed to a spinal fusion implant of non-bone construction releasably coupled to an insertion instrument dimensioned to introduce the spinal fusion implant into any of a variety of spinal target sites. In response to Medtronic’s petition, the PTAB instituted inter partes review and in a final written decision concluded that the instituted claims would have been obvious over an SVS-PR brochure, a Telamon brochure, a Telamon guide, and a U.S. patent application to Baccelli.
As an initial matter, the court must consider whether the SVS-PR brochure and Telamon references were publicly accessible such that they qualify as printed publications pursuant to 35 U.S.C. § ‎§‎ 311(b) and 102. But we first must determine whether NuVasive preserved its public accessibility arguments for appeal. While the court retains case-by-case discretion over whether to apply waiver, we have held that a party waives an argument that it failed to present to the PTAB because it deprives the court of the benefit of the PTAB’s informed judgment.
[PTAB Judge]: I take it you no longer are disputing the public availability of the Telamon references?
[NuVasive’s Attorney]: That is correct, we’re leaving that issue aside. We’re focusing entirely on the obviousness to modify these markers in the medial plane. We’re not abandoning the other arguments in our Patent Owner response, specifically with the dependent claims, we’re just not addressing them right now because they’re already addressed.
So, we’re going to assume that these are prior art . . . .
NuVasive abandoned its challenge to the public accessibility determination even though the PTAB had warned NuVasive that this would result in waiver. Because NuVasive no longer contested the public accessibility of the prior art references, the PTAB did not address this issue in the Final Written Decision. As a result, we do not have the benefit of the PTAB’s informed judgment on the public accessibility issue, and NuVasive waived its arguments on this issue.
Two distinct yet related principles are relevant to our review. First, the PTAB must make the necessary findings and have an adequate evidentiary basis for its findings. Second, the PTAB must examine the relevant data and articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made. This explanation enables the court to exercise its duty to review the PTAB’s decisions to assess whether those decisions are “arbitrary, capricious, an abuse of discretion, or . . . unsupported by substantial evidence . . . .” 5 U.S.C. § 706(2)(A)–(E) (2012). We cannot exercise our duty of review unless we are advised of the considerations underlying the action under review. Indeed, the orderly functioning of the process of review requires that the grounds upon which the PTAB acted be clearly disclosed and adequately sustained. Although we do not require perfect explanations, we may affirm the PTAB’s findings “if we may reasonably discern that it followed a proper path, even if that path is less than perfectly clear.” Ariosa Diagnostics v. Verinata Health, Inc., 805 F.3d 1359 (Fed. Cir. 2015).
The relevant principles apply with equal force to the PTAB’s motivation to combine analysis. Our precedent dictates that the PTAB must make a finding of a motivation to combine when it is disputed. See KSR (stating that the PTAB’s motivation to combine “analysis should be made explicit.”). Although identifying a motivation to combine “need not become a rigid and mandatory formula,” KSR, the PTAB must articulate a reason why a PHOSITA would combine the prior art references.
Our recent decisions demonstrate that the PTAB knows how to meet this burden. We have, however, identified some insufficient articulations of motivation to combine. First, “conclusory statements” alone are insufficient and, instead, the finding must be supported by a “reasoned explanation.” In re Lee, 277 F.3d‎ ‎1338 (Fed. Cir. 2002). Second, it is not adequate to summarize and reject arguments without explaining why the PTAB accepts the prevailing argument. See Cutsforth, Inc. v. MotivePower, Inc., 636 F. App’x 575 (Fed. Cir. 2016). Third, although reliance on common sense may be appropriate in some circumstances, see KSR (“Rigid preventative rules that deny factfinders recourse to common sense . . . are neither necessary under our case law nor consistent with it.”), the PTAB cannot rely solely on common knowledge or common sense to support its findings, see Arendi S.A.R.L. v. Apple Inc., 832 F.3d 1355 (Fed. Cir. 2016) (“References to ‘common sense’ . . . cannot be used as a wholesale substitute for reasoned analysis and evidentiary support . . . .”).
With these principles in mind, we turn to the PTAB’s findings regarding motivation to combine. Here, the PTAB acknowledged that the key issue was “whether it would have been obvious to a PHOSITA to combine the cited references,” and then found that independent claim 1 would have been obvious over a combination of Baccelli and either the SVS-PR brochure or the Telamon references. In reaching this conclusion, the PTAB failed to explain the reason why a PHOSITA would have been motivated to modify either the SVS-PR or Telamon implants, in light of Baccelli, to place radiopaque markers “proximate to said medial plane” (i.e., near the middle of the implant), as the ’156 patent teaches. The majority of the PTAB’s analysis was limited to summaries of the parties’ arguments, as the USPTO acknowledged during oral argument. The PTAB began by summarizing Medtronic’s and NuVasive’s arguments on whether the “additional information” that could be obtained from placing radiopaque markers near the middle of the implant would benefit a PHOSITA. The PTAB stated “we are not persuaded by NuVasive’s argument, because the question is whether it would have been obvious to a PHOSITA to combine the cited references, and not whether any specific implants on the market contain a radiopaque marker in a central region.” In addition, the PTAB invoked the high level of skill in the art when it “agreed” with Medtronic’s assertion that “the addition of markers along the medial plane would not confuse” a PHOSITA and found that NuVasive’s argument “vastly underestimates the ordinary skill of surgeons in this field.” However, the PTAB never actually made an explanation-supported finding that the evidence affirmatively proved that the PHOSITA would have sought this additional information.
The PTAB avers that it “effectively” adopted Medtronic’s arguments, but the PTAB neither expressly did so nor provided reasoned explanations for crediting the arguments. Medtronic’s arguments amount to nothing more than conclusory statements that a PHOSITA would have been motivated to combine the prior art references to obtain additional information. In its summary of Medtronic’s arguments, the PTAB never articulated why the additional information would benefit a PHOSITA when implanting a posterior lumbar interbody fusion implant, such as the implants disclosed by the SVS-PR brochure and the Telamon references. It also failed to explain the type of additional information a PHOSITA would obtain or how the PHOSITA would use that information.
In sum, the PTAB failed to articulate a reason why the PHOSITA would have been motivated to modify the SVS-PR or Telamon implants, in light of Baccelli, to obtain this additional information. Because we cannot “reasonably discern” the PTAB’s reasoning as to motivation to combine, judicial review cannot “meaningfully be achieved.” Therefore, the PTAB’s decision is vacated and the case remanded for additional PTAB findings and explanations regarding the PHOSITA’s motivation to combine the prior art references.

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