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Patent Defenses May Get Trickier After Federal Circuit Ruling

Dec. 24, 2019, 5:01 PM

Companies may have a tough time relying on the commercial success of a patented product to fend off challenges under a recent Federal Circuit opinion, according to lawyers watching the case.

The decision in Fox Factory Inc. v. SRAM LLC by the U.S. Court of Appeals for the Federal Circuit may create headaches for companies trying to argue their patent doesn’t cover an obvious invention, the attorneys said.

The court said the Patent Trial and Appeal Board used an improper standard when evaluating evidence of secondary considerations in challenges to a bicycle chainring patent. The ruling raises the bar for companies defending patents to show the required connection between such evidence and the patent claims.

The Dec. 18 ruling may make what already was an uphill battle for patent owners at the PTAB even harder, attorneys say.

“Secondary considerations rarely prevail at the PTAB,” said Nathan Speed, a shareholder at Wolf Greenfield & Sacks PC who focuses on complex patent litigation and post-grant matters. “It’s probably going to be even less likely to occur now because of this heightened burden.”

Connection Hard To Prove

Secondary considerations include factors such as praise for an invention, commercial success of a product, or the invention satisfying a long-standing need. Federal courts and the PTAB consider such evidence when analyzing whether the invention was obvious.

It’s difficult for patent owners relying on secondary considerations to show that commercial success or praise of a product are attributable to patented features. That connection, or nexus, is required for the evidence to be given substantial weight.

The Federal Circuit considered when it is appropriate to assume a nexus exists. That’s a significant question, attorneys said, because patent owners given the benefit of such an assumption have an initial head start over challengers, who have to disprove the nexus.

“It’s hard to prove the nexus to begin with,” said Glenn Forbis, a Harness Dickey and Pierce PLC principal who has represented plaintiffs and defendants in IP cases. “If you’re able to rely upon the presumption, it makes a huge difference.”

The Federal Circuit, which was reviewing challenges Fox Factory brought against a patent covering aspects of SRAM’s X-Sync bicycle chainring, held there can be a presumption of nexus only when the product is “essentially the claimed invention.”

But it’s uncommon for the product and for evidence such as commercial success or the demonstrated need for an invention to be as “fine-grained” as the patent’s claims, Wayne Stacy, a partner at Baker Botts LLP who litigates high-stakes technology cases, said.

“The Federal Circuit tried to make clear they weren’t establishing a bright-line rule,” Stacy said.“But they didn’t leave many ways for a patent owner to grab that presumption anymore.”

The court vacated PTAB decisions upholding SRAM’s patent, finding the board wrongly presumed nexus between the X-Sync and certain patent claims. The court said the chainring includes important features not described in the patent.

New Battleground

Kenneth Weatherwax, a managing partner at Lowenstein & Weatherwax LLP, said the case was one of the rare ones in which the PTAB relied on secondary considerations to find a patent isn’t obvious.

“The timing is unfortunate because there had been an uptick, I think, in board decisions looking favorably at secondary considerations,” Weatherwax said.

The Federal Circuit acknowledged in its decision that there is rarely a perfect correlation between a product and the patented invention. The court said presuming nexus may be appropriate when the unclaimed features are “insignificant.”

SRAM acknowledged in its case that certain unclaimed features were critical to the X-Sync. It may not be as straightforward in other cases, according to attorneys who predicted the question of whether a particular feature is insignificant will become a battleground.

“It’s going to be very muddy in other cases,” Forbis said.

Speed said the heightened requirements may force patent owners to introduce more evidence and explain how unclaimed features are not important. This can create its own issues at the PTAB, where parties’ submissions are subject to tight word limits.

“Conversely, it gives petitioners an easier time to poke holes in your evidence of secondary considerations,” Speed said.

The case is: FOX Factory Inc. v. SRAM LLC, Fed. Cir., No. 18-2025, opinion 12/18/19

To contact the reporter on this story: Matthew Bultman at mbultman@correspondent.bloomberglaw.com

To contact the editor responsible for this story: Keith Perine at kperine@bloomberglaw.com

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