Court Opinion

ID: 9839840
Source: CourtListenerOpinion
Date Created: 2023-09-14 15:01:47.6656+00
Date Added: 2024-06-11T09:41:35.337453
License: Public Domain

Case: 22-1846    Document: 38    Page: 1   Filed: 09/14/2023

        NOTE: This disposition is nonprecedential.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
                  ______________________

     GABRIEL K. BELL, Latham & Watkins LLP, Washing-
 ton, DC, argued for appellant. Also represented by
 MAXIMILIAN A. GRANT, JONATHAN M. STRANG, DAVID
 ZUCKER; TAKASHI OKUDA, New York, NY; GREGORY
 SOBOLSKI, San Francisco, CA.

    GREGORY A. CASTANIAS, Jones Day, Washington, DC,
 argued for appellee. Also represented by AMELIA A.
 DEGORY; ROBERT BREETZ, DAVID B. COCHRAN, KENNETH
Case: 22-1846     Document: 38     Page: 2    Filed: 09/14/2023

 2                              PHILIP MORRIS PRODUCTS S.A. v.
                                 RAI STRATEGIC HOLDINGS, INC.

 LUCHESI, DAVID MICHAEL MAIORANA, Cleveland, OH;
 JOSHUA R. NIGHTINGALE, Pittsburgh, PA.
                ______________________

     Before CHEN, STOLL, and CUNNINGHAM, Circuit Judges.
 CHEN, Circuit Judge.
     Philip Morris Products, S.A. (Philip Morris) appeals an
 inter partes review (IPR) final written decision of the Pa-
 tent Trial and Appeal Board determining Philip Morris did
 not meet its burden of proving certain 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 Strate-
 gic 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 anal-
 ysis. Because substantial evidence otherwise supports the
 Board’s findings, we affirm.
                        BACKGROUND
      The ’123 patent, assigned to RAI Strategic Holdings,
 Inc. (Reynolds), generally relates to tobacco smoking de-
 vices, 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 was initiated, R.J. Reynolds
 Vapor Company (Reynolds VC), a sister corporation of
 Reynolds, filed an IPR petition against another company’s
 electronic cigarette patent, U.S. Patent No. 8,365,742 (’742
 patent), challenging several claims over a combination of
 Hon 1 and Whittemore. 2 Specifically, Reynolds VC argued
 that a skilled artisan would have replaced Hon’s heating
 element with Whittemore’s wick and heating wire. The

       1   Chinese Patent No. CN 2719043.
       2   U.S. Patent No. 2,057,353.
Case: 22-1846    Document: 38      Page: 3    Filed: 09/14/2023

 PHILIP MORRIS PRODUCTS S.A. v.                             3
 RAI STRATEGIC HOLDINGS, INC.

 Board disagreed and upheld the claims, concluding that
 Reynolds VC had failed to show Hon’s heating efficiency
 needed improvement. The Board also found that a compar-
 atively more plausible substitution would have been to re-
 place Hon’s entire atomizer, as opposed to Reynolds VC’s
 proposal to replace only Hon’s heating element.
      In the present case, Philip Morris filed an IPR petition
 against several claims of Reynolds’s ’123 patent. While
 Philip Morris’s petition, like Reynolds VC’s above-de-
 scribed 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 re-
 placing Hon’s entire atomizer with Whittemore’s wick and
 heating wire. The Board, however, found unpersuasive
 Philip Morris’s argument that a skilled artisan would have
 been motivated to simplify Hon in the manner Phillip Mor-
 ris proposed.
     Philip Morris timely appealed the Board’s decision to
 this court, arguing that the decision was arbitrary and ca-
 pricious because (1) it contradicts 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).
                         DISCUSSION
     As to Philip Morris’s first argument, we see no contra-
 diction between the Board’s analysis of Hon and Whitte-
 more and its 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 (patent owner arguing that Hon and Whittemore
 “have different modes of operation, and in at least some
 ways, Hon[] is more thermally efficient.”). In this context,
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 4                             PHILIP MORRIS PRODUCTS S.A. v.
                                RAI STRATEGIC HOLDINGS, INC.

 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 substi-
 tution, would be to replace Hon’s entire atomizer (because
 replacing only Hon’s heating element would lead to a re-
 dundant design). See J.A. 2806–07. But the Board there
 did not go so far as to find that replacing Hon’s entire at-
 omizer with Whittemore’s wick and heating wire would
 have been an obvious simple substitution under KSR Inter-
 national Co. v. Teleflex, Inc., 550 U.S. 398 (2007). Moreo-
 ver, 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. Cir. 2016) (holding that the PTO does not have au-
 thority to “raise, address, and decide unpatentability theo-
 ries 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 combi-
 nation theory, with expert testimony 3 specifically directed
 to this combination. Because the Board did not conclude 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 bur-
 den here.

     3    We similarly find no abuse of discretion by the
 Board in relying on Reynolds’s expert in the presently ap-
 pealed 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 distinct modification of
 Hon (i.e., replacing Hon’s heating element versus replacing
 Hon’s entire atomizer), and thus the respective expert
 statements must be understood to be referring to the spe-
 cific combination at issue.
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 RAI STRATEGIC HOLDINGS, INC.

      Philip Morris also argues, separate and apart from the
 prior IPR decision, the Board’s finding of no motivation to
 combine Hon and Whittemore is based on legal error and
 the decision otherwise lacks substantial evidence. We dis-
 agree. Philip Morris claims the Board allegedly required 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 artisan would be motivated to first re-
 move Hon’s piezoelectric element, a simplification Hon
 teaches. But Philip Morris further asserted that once the
 piezoelectric element was removed, there would be diffi-
 culty in forming an aerosol and thus a skilled artisan would
 further “simplify” Hon by removing Hon’s entire atomizer
 and replacing it with Whittemore’s wick and heater. Since
 the proposed combination was based on a purported sim-
 plification of Hon beyond what Hon itself teaches, we inter-
 pret the Board’s statement that “Petitioner does not show
 persuasively that replacing Hon’s atomizer with Whitte-
 more’s wick and heater would have simplified the device as
 compared with the modifications Hon expressly teaches” as
 determining Philip Morris had not proven the obviousness
 theory that it had advanced. Board Decision, 2022 WL
 1022576, at *12. We do not view the Board’s statement as
 a rejection of the combination merely because Hon itself
 teaches other simplifications distinct from the proposed
 combination.
     We also conclude that substantial evidence supports
 the Board’s decision to reject Philip Morris’s proposed com-
 bination, because the Board reasonably relied on expert
 testimony and its own analysis of the R.J. Reynolds To-
 bacco Co. (RJR) teardown report. 4 Specifically, the Board

     4   The RJR teardown report documents a disassem-
 bling of a Ruyan device, which is an implementation of
 Hon.
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 6                            PHILIP MORRIS PRODUCTS S.A. v.
                               RAI STRATEGIC HOLDINGS, INC.

 relied on expert testimony to find that Hon’s heater pro-
 duces 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 implementation of Hon)
 failed to produce sufficient aerosol that would warrant re-
 placement 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 con-
 sider record evidence of the alleged cost and simplicity of
 Whittemore’s wick and heater or testimony regarding rea-
 sonable expectation of success, we do not believe the Board
 erred in dismissing these arguments as conclusory and
 lacking factual substantiation.
    We have considered Philip Morris’s remaining argu-
 ments and find them unpersuasive. For the foregoing rea-
 sons, we affirm.
                       AFFIRMED