Opinion ID: 771387
Heading Depth: 3
Heading Rank: 1

Heading: Application of the Graham Factors

Text: 18 Our precedent clearly establishes that the district court must make Graham findings before invalidating a patent for obviousness. See Jones v. Hardy, 727 F.2d 1524, 1529, 220 USPQ 1021, 1025 (Fed. Cir. 1984) (Graham was cited but its guidance was not applied, resulting in the application of hindsight and speculation.);Custom Accessories, Inc. v. Jeffrey-Allan Indus., Inc., 807 F.2d 955, 961, 1 USPQ2d 1196, 1200 (Fed. Cir. 1986) ([W]hen significant legal errors are reflected in the opinion, . . . which themselves shed doubt of the district court's use of Graham, the need for findings becomes greater and their absence rises to the level of error.). In Loctite Corp. v. Ultraseal Ltd., 781 F.2d 861, 228 USPQ 90 (Fed. Cir. 1985), overruled on other grounds by Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 46 USPQ2d 1097 (Fed. Cir. 1998), we said: 19 In patent cases, the need for express Graham findings takes on an especially significant role because of an occasional tendency of district courts to depart from the Graham test, and from the statutory standard of unobviousness that it helps determine, to the tempting but forbidden zone of hindsight. Thus, we must be convinced from the opinion that the district court actually applied Graham and must be presented with enough express and necessarily implied findings to know the basis of the trial court's opinion. 20 Id. at 873, 228 USPQ at 98 (internal citation omitted). The necessity of Graham findings is especially important where the invention is less technologically complex, as is the case here. See In re Dembiczak, 175 F.3d 994, 999, 50 USPQ2d 1614, 1617 (Fed. Cir. 1999), abrogated on other grounds by In re Gartside, 203 F.3d 1305, 53 USPQ2d 1769 (Fed. Cir. 2000). In such a case, the danger increases that the very ease with which the invention can be understood may prompt one 'to fall victim to the insidious effect of a hindsight syndrome wherein that which only the inventor taught is used against its teacher.' Id. (internal citation omitted). The fact that the district court does not mentionGraham is not dispositive, as it is not reversible error if the required factual determinations were actually made and it is clear that they were considered while applying the proper legal standard of obviousness. Specialty Composites v. Cabot Corp., 845 F.2d 981, 990, 6 USPQ2d 1601, 1607 (Fed. Cir. 1988); see also Loctite, 781 F.2d at 873, 228 USPQ at 98. 21 The district court's failure to base its obviousness inquiry on the explicit findings relating to the Graham factors can require that the judgment be vacated and the case remanded for those findings to be made. In Custom Accessories, we said: 22 If, on review of a determination of obviousness, an appellant shows that the district court incorrectly applied the law, we will not reverse (i.e., hold that defendant below failed to prove obviousness) unless appellant also convinces us that a proper application of the law to the facts of record would change the result. Sometimes, however, an appellant will convince us that the law was incorrectly applied, but there are inadequate findings by the district court to enable us to determine independently whether defendant below did or did not prove that the invention would have been obvious . . . In such circumstances, rather than find material facts ourselves, we must remand to allow the district court to do so. 23 Custom Accessories, 807 F.2d at 963, 1 USPQ at 1202; see also Jones, 727 F.2d at 1531, 220 USPQ at 1027 (Where the evidence is conflicting or credibility determinations are required, the judgment should be vacated rather than reversed, and the case should be remanded for further proceedings.); Loctite, 781 F.2d at 875, 228 USPQ at 97 (vacating and remanding due to failure to make Graham findings); Bausch & Lomb, Inc. v. Barnes-Hind/Hydrocurve, Inc., 796 F.2d 443, 446, 230 USPQ 416, 418 (Fed. Cir. 1986) (vacating trial court opinion and remanding due to absence of Graham findings); Greenwood v. Hattori Seiko Co. Ltd., 900 F.2d 238, 241, 14 USPQ2d 1474, 1474 (Fed. Cir. 1990) (vacating summary judgment of obviousness because district court failed to undertake the required Graham analysis). 24 1.Scope and Content of the Prior Art/Differences Between the Claimed Invention and the Prior Art 25 The district court erred in failing to make clear and particular findings as to why the Gregory patents and the Fuller and Rupiper method are within the appropriate scope of the prior art in determining the obviousness of the '368 and '107 patents. The scope of the prior art includes art that is reasonably pertinent to the particular problem with which the invention was involved. Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 1535, 218 USPQ 871, 876 (Fed. Cir. 1983). In order to prevent a hindsight-based obviousness analysis, we have clearly established that the relevant inquiry for determining the scope and content of the prior art is whether there is a reason, suggestion, or motivation in the prior art or elsewhere that would have led one of ordinary skill in the art to combine the references. See, e.g., In re Rouffet, 149 F.3d 1350, 1359, 47 USPQ2d 1453, 1459 (Fed. Cir. 1998) ([T]he Board must identify specifically . . . the reasons one of ordinary skill in the art would have been motivated to select the references and to combine them to render the claimed invention obvious.); In re Dembiczak, 175 F.3d at 999, 50 USPQ2d at 1617 (Our case law makes clear that the best defense against the subtle but powerful attraction of a hindsight-based obviousness analysis is rigorous application of the requirement for a showing of the teaching or motivation to combine prior art references.). Determining whether there is a suggestion or motivation to modify a prior art reference is one aspect of determining the scope and content of the prior art, a fact question subsidiary to the ultimate conclusion of obviousness. Sibia Neurosciences, Inc. v. Cadus Pharma. Corp., 225 F.3d 1349, 1356, 55 USPQ2d 1927, 1931 (Fed. Cir. 2000); Tec Air, Inc. v. Denso Mfg., Inc., 192 F.3d 1353, 1359, 52 USPQ2d 1294, 1298 (Fed. Cir. 1999) (stating that the factual underpinnings of obviousness include whether a reference provides a motivation to combine its teachings with those of another reference). 26 The district court concluded that it would have been obvious to combine screw anchors and metal brackets, because the need for a bracket was apparent. Because there is a general rule that combination claims can consist of combinations of old elements as well as new elements, Clearstream Wastewater Sys. v. Hydro-Action, Inc., 206 F.3d 1440, 1446, 54 USPQ2d 1185, 1189-90 (Fed. Cir. 2000), [t]he notion . . . that combination claims can be declared invalid merely upon finding similar elements in separate prior patents would necessarily destroy virtually all patents and cannot be the law under the statute, § 103. Panduit Corp. v. Dennison Mfg. Co., 810 F.2d 1561, 1575, 1 USPQ2d 1593, 1603 (Fed. Cir. 1987); Arkie Lures, Inc. v. Gene Larew Tackle, Inc., 119 F.3d 953, 957, 43 USPQ2d 1294, 1297 (Fed. Cir. 1997) (It is insufficient to establish obviousness that the separate elements of the invention existed in the prior art, absent some teaching or suggestion, in the prior art, to combine the elements.). The test is not whether one device can be an appropriate substitute for another. SeeHybritech Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1383, 231 USPQ 81, 93 (Fed. Cir. 1986) (Focusing on the obviousness of substitutions and differences instead of on the invention as a whole, as the district court did in frequently describing the claimed invention as the mere substitution of monoclonal for polyclonal antibodies in a sandwich assay, was a legally improper way to simplify the difficult determination of obviousness.). The district court must make specific findings establishing why it was apparent to use the screw anchor of the Fuller and Rupiper method in combination with the metal bracket as used in the Gregory patents. 27 Our court has provided a great deal of guidance on what kind of factual findings the district court may make in determining a reason, suggestion, or motivation to combine. The reason, suggestion, or motivation to combine may be found explicitly or implicitly: 1) in the prior art references themselves; 2) in the knowledge of those of ordinary skill in the art that certain references, or disclosures in those references, are of special interest or importance in the field; or 3) from the nature of the problem to be solved, leading inventors to look to references relating to possible solutions to that problem. Pro-Mold & Tool Co. v. Great Lake Plastics, Inc., 75 F.3d 1568, 1572, 37 USPQ2d 1626, 1630 (Fed. Cir. 1996) (internal citations omitted); In re Rouffet, 149 F.3d at 1357, 47 USPQ2d at 1458. While the references need not expressly teach that the disclosure contained therein should be combined with another, see Motorola, Inc. v. Interdigital Tech. Corp., 121 F.3d 1461, 1472, 43 USPQ2d 1481, 1489 (Fed. Cir. 1997), the showing of combinability must be clear and particular. In re Dembiczak, 175 F.3d at 999, 50 USPQ2d at 1617. 28 There was a great deal of evidence presented to the district court that the Chance method represented an improvement over the prior art. According to the '368 patent, the Chance method is an improvement over the prior art because the Chance method is easy to install, low cost, and readily installable from the outside of a house or other structure. '368 patent, col. 2, ll. 3-9. Chance also offered testimony that in its method, there is immediate verification of successful stabilization, because the appropriate resistance is mathematically calculated. In the Fuller and Rupiper and Gregory methods, the user cannot always determine whether installation occurred successfully. There was also evidence before the district court that the Fuller and Rupiper and Gregory methods may solve different problems. The Fuller and Rupiper method is found to be useful in California, because the use of concrete is especially important in underpinning foundations in settings with a high degree of seismic activity. 29 From the district court's opinion, we are unable to determine whether the district court evaluated this evidence in its obviousness analysis. Evidence which suggests that the combination of two references would suggest the resulting improvement is one way in which to demonstrate a reason, suggestion, or motivation to combine. See In re Sernaker, 702 F.2d 989, 994, 217 USPQ 1, 5 (Fed. Cir. 1983) (stating that the district court could also determine whether the prior art offers a motivation to combine based on whether a combination of the teachings of all or any of the references would have suggested (expressly or by implication) the possibility of achieving further improvement by combining such teachings along the line of the invention in suit); Hybritech, 802 F.2d at 1380, 231 USPQ at 91 (At most, these articles are invitations to try . . . but do not suggest how that end might be accomplished.). The district court made no finding on whether the Chance method represented an improvement over the prior art. If there was an improvement, it may or may not be true that any resulting improvement was due to the fact that there was evidence in the prior art, in the knowledge of those of ordinary skill in the art, or in the nature of the problem that would have suggested a reason, suggestion, or motivation that combination of the screw anchor with a metal bracket would have led to an improvement. 30 The district court further made no findings as to why the field of foundation underpinning would include references to both the Fuller and Rupiper and the Gregory methods, despite evidence of differences. Specifically, there were no findings on whether there was a disadvantage to the prior systems, such that the nature of the problem would have motivated a person of ordinary skill to combine the prior art references. Indeed, that the elements noted by the court lay about in the prior art available for years to all skilled workers, without, as the court found, suggesting anything like the claimed inventions, is itself evidence of nonobviousness. Panduit, 810 F.2d at 1577, 1 USPQ2d at 1605. 2.Level of Ordinary Skill in the Art 31 The district court defined the person of ordinary skill in the art to be someone skilled in the art of foundation underpinnings. The determination of the level of ordinary skill in the art is an integral part of the Graham analysis. See Custom Accessories, 807 F.2d. at 962, 1 USPQ2d at 1201 (Without [a determination of the level of ordinary skill in the art], a district court cannot properly assess obviousness because the critical question is whether a claimed invention would have been obvious at the time it was made to one with ordinary skill in the art.) (internal citation omitted). Factors that may be considered in determining the ordinary level of skill in the art include: 1) the types of problems encountered in the art; 2) the prior art solutions to those problems; 3) the rapidity with which innovations are made; 4) the sophistication of the technology; and 5) the educational level of active workers in the field. See id. at 962, 1 USPQ2d at 1201 (citing Envtl. Designs, Ltd. v. Union Oil Co., 713 F.2d 693, 697, 218 USPQ 865, 868-69 (Fed. Cir. 1983)). Not all such factors may be present in every case, and one or more of them may predominate. Id. Some of our cases indicate that the failure to make explicit findings on the level of ordinary skill is not always reversible error. See, e.g.,Kloster Speedsteel AB v. Crucible Inc., 793 F.2d 1565, 1574, 230 USPQ 81, 86 (Fed. Cir. 1986); Union Carbide Corp. v. American Can Co., 724 F.2d 1567, 1573, 220 USPQ 584, 589 (Fed. Cir. 1984); Chore-Time Equip., Inc. v. Cumberland Corp., 713 F.2d 774, 779 n.2, 218 USPQ 673, 676 n.2 (Fed. Cir. 1983). However, as we noted in Custom Accessories, in those cases, it was not shown that the failure to make a finding or an incorrect finding on level of skill influenced the ultimate conclusion under section 103 and, hence, constituted reversible error. Custom Accessories, 807 F.2d at 963, 1 USPQ2d at 1201. 32 It is disputed whether Ruiz and Fasteel offered clear and convincing evidence that others of ordinary skill in the art would have thought the Chance inventions obvious. Robert Jones, a distributor for Chance, testified that he first used a metal bracket with a screw anchor in a tie-back or lateral retention in October or November 1989. However, Jones also testified that he possessed greater than ordinary skill in the art, since he had been building and designing steel load transfer hardware for over thirty years. Without a more specific finding of what the level of ordinary skill in the art is, the district court cannot adequately determine whether Jones' testimony would support a finding of obviousness. 33 Accordingly, on remand, while we do not reverse or vacate solely because of a failure to make the level of skill finding, we do consider the district court's failure to make that and other Graham findings as evidence that Graham was not in fact applied. Id. 3.Secondary Considerations 34 The district court erred in failing to consider, or at least to discuss, evidence of secondary considerations. Our precedents clearly hold that secondary considerations, when present, must be considered in determining obviousness. See, e.g., Loctite, 781 F.2d at 873, 228 USPQ at 98 ([S]econdary considerations . . . , when present, must be considered.); Simmons Fastener Corp. v. Ill. Tool Works, Inc., 739 F.2d 1573, 1575, 222 USPQ 744, 746 (Fed. Cir. 1984) (Only after all evidence of nonobviousness has been considered can a conclusion on obviousness be reached.); Ashland Oil, Inc. v. Delta Resin & Refractories, Inc., 776 F.2d 281, 306, 227 USPQ 657, 662 (Fed. Cir. 1985) (Just as it is legal error for a district court to fail to consider relevant evidence going to secondary considerations, it may be legal error for a district court to presuppose that all evidence relating to secondary considerations, when considered with the other Graham indicia relating to the obviousness/nonobviousness issue, cannot be of sufficient probative value to elevate the subject matter of the claimed invention to the level of patentable invention.). Indeed, in Stratoflex, we said: 35 [E]vidence of secondary considerations may often be the most probative and cogent evidence in the record. It may often establish that an invention appearing to have been obvious in light of the prior art was not. It is to be considered as part of all the evidence, not just when the decisionmaker remains in doubt after reviewing the art. 36 Stratoflex, 713 F.2d at 1538, 218 USPQ at 879. Such evidence may be sufficient to overcome a prima facie case of obviousness. In re Beattie, 974 F.2d 1309, 1313, 24 USPQ2d 1040, 1043 (Fed. Cir. 1992); see also Sibia, 225 F.2d at 1358, 55 USPQ2d at 1933 ([T]he mere existence of . . . licenses [i.e., secondary considerations] is insufficient to overcome the conclusion of obviousness, as based on the express teachings in the prior art that would have motivated one of ordinary skill to modify . . . cells to be used with unknown compounds.). Our precedents also establish that failure to cite secondary considerations, alone, is not reversible error. See Brown & Williamson v. Phillip Morris, 229 F.3d 1120, 1131 (Fed. Cir. 2000) (stating that failure of the district court to consider certain objective evidence of nonobviousness was harmless error, because it cannot overcome the strong evidence of nonobviousness). 37 In the present case, Chance presented testimony that the Chance method enjoyed success with those in the underpinning industry. The number of dealers using the Chance method rose from 34 in 1991 to 209 in 1999. This increase in dealers contributed to a 20% annual increase in Chance's sales, compared to a 5.5% annual growth rate in the construction materials industry as a whole. Chance presented further evidence that dealers attributed an increase in business to the Chance method. Installers switched from competing methods, and testified as to a nexus between their commercial success and their use of the Chance underpinning method. Chance also presented testimony that Rupiper, one of the inventors of the prior art, had expressed skepticism that Chance's prototype model offered advantages over the concrete haunch method. [P]roceeding contrary to the accepted wisdom . . . is 'strong evidence of unobviousness.' In re Hedges, 783 F.2d 1038, 1041, 228 USPQ 685, 687 (Fed. Cir. 1986) (citing W.L. Gore & Assoc., Inc. v. Garlock, Inc., 721 F.2d 1540, 1552, 220 USPQ 303, 312 (Fed. Cir. 1983)). 38 From the district court opinion, we are unable to determine whether the district court considered these factors, and found them insufficient to rebut a strong prima facie case of obviousness, or whether the district court failed to consider them at all in its obviousness calculus. See In re Beattie, 974 F.2d at 1313, 24 USPQ2d at 1043. Nor can we tell whether the judge made implicit findings after hearing testimony. Accordingly, we urge the district court to make findings as to: 1) whether secondary considerations rebut a prima facie case of obviousness; and 2) if the evidence of secondary considerations is probative, whether there is a nexus between the claimed invention and commercial success. See Simmons, 739 F.2d at 1575, 222 USPQ at 746 (A nexus between the merits of the claimed invention and evidence of secondary considerations is required in order for the evidence to be given substantial weight in an obviousness decision.).