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Appeals Court ‘Chips Away’ High Court’s Pliant Obviousness Take

May 11, 2022, 9:32 AM

Patent challengers have a new tool in their arsenal to attack a patent as obvious after the Federal Circuit reined in one argument some patent owners have used to fend off challenges.

The U.S. Court of Appeals for the Federal Circuit limited the weight given to general industry skepticism in analyses of whether a patent should be invalidated as obvious in a recent ruling in favor of Johnson & Johnson’s Auris Health Inc. That skepticism on its own isn’t enough to prove that an expert in the art wouldn’t have been motivated to combine earlier inventions into a new one—which would make the patent obvious—a split three-judge panel found.

After more than a decade of the Federal Circuit heeding the high court’s guidance in KSR Int’l Co. v. Teleflex Inc. not to apply a narrow calculus to obviousness, the new decision reflects a more rigid approach that conflicts with Supreme Court precedent, some attorneys say.

Judge Jimmie V. Reyna authored a dissent cautioning the majority from adopting an inflexible rule, but the court’s decision to designate the opinion as precedential could lead challengers to use the opinion to their advantage, said Christopher A. Cotropia, director of the University of Richmond School of Law’s Intellectual Property Institute.

“The likelihood of traction is higher now because we’ve got something decided,” Cotropia said. “If I’m a challenger of patents, I’m going to use this a lot to take every motivation argument and say, that’s all secondary considerations.”

Expansive and Flexible

In KSR, the Federal Circuit ruled that the district court failed to apply its test for obviousness strictly enough, reversing the lower court’s finding that the patent at issue was obvious. Under the Federal Circuit’s test at the time, evidence needed to point to specific understandings or principles that would have motivated an expert in the field with no knowledge of the invention to combine the prior art. But the Supreme Court disagreed.

The appeals court test treated the obviousness question in a “narrow, rigid manner,” inconsistent with the Patent Act or Supreme Court precedent, the high court ruled in KSR.

The Supreme Court’s ruling, though, created a challenge for the Federal Circuit: balancing a flexible standard for obviousness against providing direction to district courts and the Patent and Trial Appeal Board to ensure that decisions are consistent.

“District courts need some framework, some guidance so that it’s not all completely random,” said Polk Wagner, an intellectual property law professor at the University of Pennsylvania. “What has been happening since KSR, is the Federal Circuit has been struggling to provide the frameworks and principles to the lower courts and PTAB on the obviousness inquiry without running afoul of KSR.”

‘A Scalpel Rather Than an Axe’

Judge Reyna wrote in his dissent that the majority in Auris Health Inc. v. Intuitive Surgical Operations had “no authority” for its assertion that the court could never support a finding of no motivation to combine based on industry skepticism. The opinion “appears, in tension, at minimum, with the central thrust of KSR,” Reyna said.

Auris Health centered on a twist to the motivation to combine factor, as the majority said the patent owner bears the burden of proving a patent is valid because there was lack of motivation to combine, rather than a challenger having to show that an expert in the field would have been motivated to combine earlier inventions, Megan La Belle, an intellectual property and procedure professor at Catholic University’s Columbus School of Law, said.

“What’s interesting is now it seems like, arguably, you could read this and say it’s imposing some sort of new requirement,” La Belle said.

The Federal Circuit isn’t taking a large departure from KSR, though Auris Health is “definitely a step away from what we learned from KSR and its progeny,” Peter M. Jay, a partner at Wenderoth, Lind & Ponack LLP, said.

The court in general has strayed away from making any bright-line rules on obviousness, Jay said, adding that the focus on one aspect of the analysis is so fact-specific that it just “chips away” at KSR.

“It’s kind of ironic that it’s a surgical case,” Jay said. “What they’re doing here is they’re chiseling away at KSR with a scalpel rather than an axe. It’s focused on one particular issue.”

This decision might be used “to further cabin typical arguments” by patentees that their invention is not obvious, Cotropia said. Skepticism is highly linked to a common argument that prior inventions don’t obviously lead to the invention, and this opinion restricts what can be used to make that argument, he added.

Auris Health may conflict with other opinions that cautioned judges and the PTAB to take into account secondary considerations, like motivation to combine, Cotropia said.

“This knocks it down a peg in a sense of saying this was evidence, but you put it in the wrong bucket,” he said. “That rings contrary to other case law where the court has said it’s as crucial as anything else.”

To contact the reporter on this story: Samantha Handler in Washington at shandler@bloombergindustry.com

To contact the editors responsible for this story: Adam M. Taylor at ataylor@bgov.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com