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July 28, 2015Newsletter

Secondary Considerations Before the Board

A Newsletter for Inter Partes Proceedings at the PTAB – July 2015

This article has been featured in Law360's Expert Analysis section as "A Review Of PTAB Cases Involving Secondary Considerations."


The Patent Trial and Appeal Board has been reviewing patents through AIA trial proceedings for almost three years, long enough for trends to emerge from the Board’s developing jurisprudence. Among those trends, it is now clear that the Board has taken a very strict approach to assessing objective indicia of nonobviousness, also known as secondary considerations.

This article provides a survey of Board decisions involving secondary considerations. To summarize, patent owners have so far experienced little success arguing secondary considerations in IPR and CBM proceedings, almost invariably failing to meet the Board’s exacting standards for establishing a nexus between the alleged secondary considerations and the claims at issue. Going forward, patent owners might increase their chances of success by focusing their efforts more directly on the nexus requirement, including more extensive development of nexus evidence and fuller, more rigorous arguments linking that evidence to the claimed invention.

Secondary Considerations in General

In recent years, the Federal Circuit has reemphasized the importance of secondary considerations to the obviousness analysis. Secondary considerations—which include factors such as long-felt need, failure of others, unexpected results, commercial success, copying, licensing, and industry praise—provide “powerful tools for courts faced with the difficult task of avoiding subconscious reliance on hindsight.”[1] In effect, secondary considerations offer objective information on the actual state of the art at the time of the invention, providing an important check on the backward-looking obviousness analysis. As such, the Federal Circuit has mandated that secondary considerations “cannot be overlooked or be relegated to ‘secondary status.’”[2] A fact finder therefore “must withhold judgment on an obviousness challenge until it considers all relevant evidence, including that relating to objective considerations.”[3]

Accordingly, evidence of secondary considerations, where presented, must be weighed against evidence indicating obviousness. To be afforded significant weight, however, evidence of secondary considerations must satisfy two requirements. First, secondary considerations must be reasonably commensurate with the scope of the claims. For example, where one embodiment of a claim has been shown to exhibit unexpected results, there must be some showing that other embodiments falling within the claim will behave in a similar manner. Second, there must be a nexus between the evidence of secondary considerations and the claimed invention—in other words, the secondary consideration must actually result from novel features of the claim. Evidence of commercial success, for example, driven by unclaimed features of a product or aspects that existed in the prior art will not meet the nexus requirement.[4]

The Numbers: Secondary Considerations Before the Board

To evaluate the use of secondary considerations in trial proceedings before the Board, we surveyed institution decisions and final written decisions in IPR and CBM proceedings through June 2015 that have used the terms “secondary considerations” or “objective indicia.” We examined each decision identified in our search to determine whether the Board made a substantive ruling on secondary considerations, and if so, whether the patent owner succeeded in arguments based on such evidence. The results of our analysis are summarized below.

Total Institution and Final Written Decisions  3,010
Decisions Mentioning Secondary Considerations 343
Secondary Considerations Substantively Considered                                       162 
    Institution  53 
    Final Written Decision 109 
Patent Owner Successes
    Institution 
    Final Written Decision

Of the 3,010 institution decisions and final written decisions surveyed, 343 (or approximately 11%) mentioned secondary considerations, and 162 (approximately 5%) included substantive discussion of patentability arguments based on secondary considerations. We identified only two cases in which a patent owner prevailed based on a showing of secondary considerations. In Omron Oilfield & Marine Inc. v. MD/TOTCO, IPR2013-00265, Paper No. 11 (PTAB Oct. 31, 2013), the Board denied institution due to the patent owner’s showing of commercial success, and in Intri-Plex Technologies, Inc. v. Saint-Gobain Performance Plastics Rencol Ltd., IPR2014-00309, Paper No. 83 (PTAB Mar. 23, 2014), the Board upheld the challenged claims despite prima facie obviousness based on evidence of commercial success and copying. It is striking that patent owners have prevailed only twice by raising evidence of secondary considerations in nearly three years of AIA trials.[5]

Given the prevalence of obviousness grounds in Board proceedings and the core role of secondary considerations in the obviousness framework, the fact that only about 5% of the Board’s decisions have addressed the issue indicates that secondary considerations may represent an underutilized tool for patent owners. On the other hand, patent owners’ woeful success rate relying on secondary considerations suggests that the Board may be a particularly difficult forum for such arguments—indeed, the Board has taken the position that “secondary considerations of nonobviousness simply cannot overcome a strong prima facie case of nonobviousness.”[6] On balance, even though such arguments may be challenging, the numbers suggest at least some room for improvement in patent owners’ presentation of secondary considerations before the Board. We present below several practical observations regarding the use of secondary considerations in Board proceedings.

The Board Strictly Enforces the Nexus Requirement

The ultimate burden of proof in establishing unpatentability before the Board always lies with the petitioner.[7] As to secondary considerations, however, the patent owner bears the burden of production.[8] In addition, all evidence of secondary considerations must have a demonstrated nexus to the claims to be considered probative of nonobviousness,[9] and the burden of establishing a nexus with the claimed invention also lies with the patent owner.[10]

In almost every instance, the Board’s decisions rejecting evidence of secondary considerations have focused on insufficient nexus showings. Patent owners have often failed to introduce any nexus evidence or argued a nexus based on unclaimed subject matter.[11] Secondary considerations have also been rejected where the alleged nexus was drawn to features of a claim that also appeared in the prior art.[12] In addition, some recurring nexus deficiencies are specific to certain secondary considerations: for example, gross sales information is insufficient to establish commercial success without evidence that the sales are significant in the relevant market,[13] and proof of copying requires evidence showing efforts by others to replicate a specific product that embodies the claims.[14] To avoid such pitfalls, patent owners relying on secondary considerations should make developing targeted nexus evidence a primary focus from the start of discovery.

In addition to presenting evidence tailored to satisfy every aspect of the nexus requirement, patent owners should also take care to present such evidence to the Board through clear and careful argument. The Board has emphasized that nexus arguments should be made express in a patent owner’s response—the briefing must contain sufficient detail for the Board to identify and understand the specifics of the patent owner’s arguments and how they relate to the supporting evidence.[15] Simply referring to arguments developed elsewhere, such as in an expert declaration[16] or in other proceedings[17] will not suffice.

Secondary Considerations at the Petition Stage

Although successes using secondary considerations before the Board have been rare, it is noteworthy that one occurred at the petition stage. In Omron Oilfield, evidence of commercial success convinced the Board to deny a petition for inter partes review, despite prior art that was otherwise sufficient to justify the legal conclusion of obviousness.[18] While Omron Oilfield remains a singular example,[19] it nonetheless highlights the considerable upside to presenting secondary considerations evidence in the preliminary response, when available.

“When available,” however, is a significant caveat at the preliminary response stage. Typically, a patent owner would need to rely on expert testimony to explain evidence relating to secondary considerations. Under the rules of practice, however, a patent owner is prohibited from presenting new testimony created specifically for its preliminary response.[20] Thus, a preliminary response ordinarily can present testimonial evidence to establish secondary considerations or support nexus contentions only if the patent owner already possessed that evidence before the Board proceeding.

In Omron Oilfield, the patent owner relied on evidence of secondary considerations during prior reexamination and litigation proceedings and was therefore allowed to file preexisting testimonial evidence in its preliminary response.[21] In particular, the patent owner submitted trial testimony from its expert witness in related litigation to establish a nexus between the claimed invention and evidence of commercial success, which had previously been used during reexamination. In crediting that evidence as persuasive, the Board noted that the petition’s failure to rebut the patent owner’s evidence “serves to bolster the case for commercial success.” Apparently, the petitioner was aware of the patent owner’s evidence of commercial success but chose not to address that evidence in its petition. Notably, the Board has declined to penalize petitioners in other cases for failing to anticipate and address secondary considerations in the petition.[22]

In other cases, the Board has refused to consider testimonial evidence that had been newly prepared and submitted with a preliminary response, stating that such evidence can be resubmitted with the patent owner’s response during trial.[23] Recently, however, the Board even appeared to reject prior trial testimony regarding secondary considerations because “at the time of the filing of the present Petition, [there was] no evidence of secondary indicia of non-obviousness in the record of this proceeding.”[24] It is unclear how evidence of secondary considerations would ever be present in the record when the petition is filed, and that holding would appear to contradict both Omron Oilfield and the Board’s prior interpretation of § 42.107(c). If that view nonetheless persists at the Board, it would seem to represent an almost total roadblock to using secondary considerations at the preliminary response stage.

More fundamentally, in some cases the Board has indicated a general preference for addressing secondary considerations during trial rather than at the petition stage.[25] Thus, even if a patent owner is able to marshal compelling evidence of secondary considerations for submission with a preliminary response, the Board may still grant the petition and elect to revisit that evidence during trial.

Despite the obstacles described above, patent owners with evidence of secondary considerations at their disposal should consider using it at the preliminary response stage. The demonstrated possibility of defeating the petition without trial, however small, provides a substantial incentive for doing so. Furthermore, even if the Board institutes trial, any effort and expense associated with presenting secondary considerations in the preliminary response will likely have value when preparing the subsequent patent owner’s response.

Conclusions

In sum, patent owners arguing secondary considerations before the Board face an uphill battle, both at the petition stage and during trial. Secondary considerations nevertheless remain a viable strategic option that should be considered, for even the isolated successes to date demonstrate that secondary considerations can prove dispositive in an appropriate case.

This Newsletter is a publication of Michael Best & Friedrich LLP and is intended to provide clients and friends with information on recent legal -developments. This Newsletter should not be construed as legal advice or an opinion on specific situations. For further information, feel free to contact the authors or other members of the firm. We welcome your comments and suggestions regarding this publication. © 2015 Michael Best & Friedrich LLP. All rights reserved.


 

[1] Mintz v. Dietz & Watson, Inc., 679 F.3d 1372, 1378 (Fed. Cir. 2012).

[2] Plantronics, Inc. v. Aliph, Inc., 724 F.3d 1343, 1355 (Fed. Cir. 2013).

[3] In re Cyclobenzaprine Hydrochloride Extended-Release Capsule Patent Litig., 676 F.3d 1063, 1079 (Fed. Cir. 2012) (emphases added).

[4] See In re Kao, 639 F.3d 1057, 1068 (Fed. Cir. 2011).

[5] In four other final written decisions, all of which were related cases involving the same parties and essentially the same evidence of secondary considerations, the Board concluded that the patent owner had failed to establish secondary considerations based on long-felt need, failure of others, and commercial success but had succeeded in establishing sufficient evidence of copying to indicate non-obviousness. The Board concluded, however, that the evidence of copying did not outweigh the countervailing evidence of obviousness in its ultimate determinations of unpatentability. Corning Optical Comm’cns RF, LLC v. PPC Broadband, Inc., IPR2013-00340, Paper No. 79, at 39-50 (PTAB Nov. 21, 2014); IPR2013-00345, Paper No. 76 (PTAB Nov. 21, 2014); IPR2013-000346, Paper No. 76 (PTAB Nov. 21, 2014); IPR2013-00347, Paper No. 77 (PTAB Nov. 21, 2014).

[6] LKQ Corp. v. Clearlamp, LLC, IPR2013-00020, Paper No. 73 at 26 (PTAB Mar. 27, 2014) (quoting Wyers v. Master Lock Co., 616 F.3d 1231, 1246 (Fed. Cir. 2010) (alterations omitted).

[7] 35 U.S.C. §§ 316(e), 326(e).

[8] E.g., Medtronic, Inc. v. NuVasive, Inc., IPR2014-00087, Paper No. 44 at 21 (PTAB Apr. 3, 2015).

[9] E.g., Gnosis SPA v. S. Ala. Med. Sci. Found., IPR2013-00116, Paper No. 68 at 38-39 (PTAB June 20, 2014).

[10] CaptionCall LLC v. Ultratec, Inc., IPR2013-00540, Paper No. 78, at 50 (PTAB Mar. 3, 2015).

[11] E.g., NuVasive, Inc. v. Warsaw Orthopedic, Inc., IPR2013-00206, Paper No. 65 at 26 (PTAB July 10, 2014); Zodiac Pool Sys. v. Aqua Prods., Inc., IPR2013-00159, Paper No. 71 at 35-36 (PTAB Aug. 22, 2014).

[12] Nichia Corp. v. Emcore Corp., IPR2012-00005, Paper No. 68 at 45(PTAB Feb. 11, 2014).

[13] Acco Brands Corp. v. Fellowes, Inc., IPR2013-00566, Paper No. 37 at 25 (PTAB Feb. 12, 2015); Zodiac Pool Sys. v. Aqua Prods., Inc., IPR2013-00159, Paper No. 71 at 37-38 (PTAB Aug. 22, 2014).

[14] Medtronic, Inc. v. NuVasive, Inc., IPR2014-00087, Paper No. 44 at 33-34 (PTAB Apr. 3, 2015).

[15] See Conopco, Inc. v. Proctor & Gamble Co., IPR2013-00505, Paper No. 69 at 27 (PTAB Feb. 10, 2015) (“We will not play archaeologist with the record to discover evidentiary support for bare attorney argument made in such a response.”); Medtronic, Inc. v. NuVasive, Inc., IPR2014-00087, Paper No. 44 at 22-24 (PTAB Apr. 3, 2015) (stating that the Board was “unable to discern, from such general evidence, how Patent Owner is mapping features of the XLIF to the claims”).

[16] Conopco, Inc. v. Proctor & Gamble Co., IPR2013-00505, Paper No. 69 at 27 (PTAB Feb. 10, 2015) (“We decline to consider, moreover, information presented in a supporting declaration, but not discussed sufficiently in Patent Owner’s Response.”).

[17] Palo Alto Networks, Inc. v. Juniper Networks, Inc., IPR2013-00369, Paper No. 16 at 27-28 (PTAB Dec. 19, 2013) (reference to arguments made in district court); Redline Detection, LLC v. Star EnviroTech, Inc., IPR2013-00106, Paper No. 17 at 21 (PTAB July 1, 2013) (reference to arguments made in reexamination).

[18] Omron Oilfield & Marine Inc. v. MD/TOTCO, IPR2013-00265, Paper No. 11, at 14-15 (PTAB Oct. 31, 2013)

[19] After we completed our survey, the Board issued an institution decision in which it denied institution on some, but not all, challenged claims based on evidence of unexpected results presented in the patent owner’s preliminary response. Lupin Ltd. v. Vertex Pharm. Inc., IPR2015-00405, Paper No. 13 at 18-23 (PTAB July 9, 2015). There, the Board credited the patent owner’s showing of secondary considerations but found a nexus with only the subset of claims drawn to a specific drug. Because the patent owner’s evidence was not commensurate in scope with the broadest, more generic challenged claims, the Board still granted the petition in part.

[20] Under 37 C.F.R. § 42.107(c), “a preliminary response may not present new testimony evidence beyond that already of record, except as authorized by the Board.” The Board has explained that “new testimony evidence” means evidence created specifically for the Board proceeding at issue. Anova Food, LLC v. Sandau and Kowalski, IPR2013-00114, Paper No. 11 at 3 (PTAB June 25, 2013).

[21] See Omron Oilfield & Marine, Inc. v. MD/TOTCO, IPR2013-00265 at 14-15 (PTAB Oct. 31, 2013).

[22] GTNX, Inc. v. Inttra, Inc., CBM2014-00075, Paper No. 8, at 21-22 (PTAB Aug. 12, 2014); Petroleum Geo-Services Inc. v. WesternGeco LLC, IPR2014-01477, Paper No. 18 at 32 (PTAB Mar. 17, 2015).

[23] Product Miniature, Inc. v. POP Displays USA, LLC, IPR2015-00266, Paper No. 7 at 22 (PTAB Apr. 28, 2015); C&D Zodiac, Inc. v. B/E Aerospace, Inc., IPR2014-00727, Paper No. 15 at 18 (PTAB Oct. 29, 2014).

[24] Petroleum Geo-Services Inc. v. WesternGeco LLC, IPR2014-01477, Paper No. 18 at 32 (PTAB Mar. 17, 2015) (emphasis added).

[25] Crocs, Inc. v. Polliwalks, Inc., IPR2014-00424, Paper No. 8 at 16 (PTAB Aug. 20, 2014) (“We reiterate . . . that such secondary considerations are better considered in the context of a trial when the ultimate determination of obviousness is made.”); GTNX, Inc. v. Inttra, Inc., CBM2014-00074, Paper No. 9 at 29 (PTAB Aug. 12, 2014).

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