All Claim Elements Were Known in the Prior Art

Apparently the Patent Trial and Appeal Board ("PTAB", "the Board") loves obviousness. In 2015, near two-thirds of claims instituted for inter partes review ("IPR") were based on obviousness grounds,[1] as illustrated in Chart 1.

                     Chart 1

While an IPR petition may exist based on either anticipation or obviousness, 35 United states of americaC. § 311(b), petitioners pursue obviousness at a much higher rate. And, the institution rate for claims based on grounds of anticipation (46 percent) is lower compared to obviousness (54 percent), as shown in Chart 2. This is dissimilar commune court patent litigation, where a finding of obviousness occurs infrequently.

                        Chart ii

Although the principles of obviousness are the same as in district court litigation, it is instructive to examine their application by the PTAB given the volume of cases decided in the by 3 years since inception of IPR nether the America Invents Act. Two critical lessons emerge from this assay:

• Lesson 1: Don't stretch an anticipation argument, where an obviousness argument would suffice.
• Lesson ii: The PTAB'due south obviousness assay is exacting.

Obviousness Principles

The Patent Deed prescribes that claims are non patentable where "the differences between the subject matter sought to be patented and the prior fine art are such that the subject affair equally a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains." 35 United states of americaC. § 103. The guiding principles for an obviousness analysis are found in well-established precedent, and are articulated in seminal cases such as Graham and KSR,

The Graham Factors

Under Graham, obviousness must be assessed on the basis of factual inquiries regarding (i) the scope and content of the prior fine art, (ii) differences between the claimed subject matter and the prior art, (iii) the level of skill in the art, and (iv) objective evidence of nonobviousness. Graham 5. John Deere Co. of Kansas City, 383 U.Southward. 1, 17–18 (1966).

Prior Fine art Must Be Meaningfully Addressed. The PTAB has made clear that, to be successful, petitioners must "meaningfully" accost the offset two Graham factors: (i) the scope and content of the prior art, and (2) whatever differences between the claimed field of study matter and the prior art. Google Inc. v. EveryMD.com LLC, IPR2014-00347, Paper 9, skid op. at 23–25 (May 22, 2014). In Google, for instance, the PTAB acknowledged that the petitioner provided summaries of the prior art references, and merits charts containing quotations and citations from those references. Id. But the petitioner failed, according to the PTAB, to specify sufficiently where each element of the claim is constitute and explain the significance of the quotations and citations. Id. The PTAB refused to have the burden to "sift through the information" to make such a determination and denied institution. Id.

Level of Ordinary Skill in the Fine art. The level of ordinary skill in the art may be established by factors such every bit:

"(one) educational level of the inventor; ( two) type of problems encountered in the art; (3) prior fine art solutions to those problems; (4) rapidity with which innovations are made; (five) composure of the engineering; and (half-dozen) educational level of agile workers in the field."Intri-Plex Techs., Inc. v. Saint-Gobain Performance Plastics Rencol Ltd., IPR2014-00309, Paper 83, sideslip op. at 34, north. 17 (PTAB Mar. 23, 2014).

To exist persuasive before the PTAB, parties should provide detailed support for their positions. See Oracle Corp. v. Thought, Inc., IPR2014-00119, Newspaper 45, skid op. at 23 (April. 23, 2015) (declining to "explain[ ] sufficiently why a graduate degree would be necessary").

Pedagogy and Work Feel May be Insufficient . It is not uncommon that educational level and piece of work experience are the only disputed factors. But it may be a fault to focus on these factors to the exclusion of all others.

The PTAB has observed that "specifying the level of ordinary skill in terms of an bookish degree in a field of study and the number of years of practical working experience is by and large unhelpful, as a practical matter, considering it does not convey whether one with ordinary skill in the art would have been aware of anything specific or particular." Samsung Electronics Co. Ltd. v. Rembrandt Wireless Techs., LP, IPR2014-00518, Paper 47, slip op. at 17 (Sep. 17, 2015). Appropriately, patent owners and petitioners should consider presenting "bear witness regarding what a person of ordinary skill in the art would have known." Digital Marry, Inc. v. Utility Assocs., Inc., IPR2014-00725, Newspaper 29, sideslip op. at 9 (PTAB Nov. 16, 2015).

Skill Level Reflected past Prior Art . "The level of ordinary skill in the art unremarkably is evidenced by the references themselves." Autel U.S. Inc. v. Bosch Motorcar. Serv. Solutions LLC, IPR2014-00183, Paper 59, slip op. at 11 (May 5, 2015). In Autel, for case, the Lath relied on specific examples from a prior art reference in making a detailed finding of the level of ordinary skill. Autel, IPR2014-00183, slip op. at fourteen­–15 (finding level of ordinary skill included familiarity with sure tools and sensors used during vehicle service by an automotive technician); see also Intri-Plex Techs., Inc. five. Saint-Gobain Performance Plastics Rencol Ltd., IPR2014-00309, Paper 83, slip op. at 34 (Mar. 23, 2014) (finding level of ordinary skill, based on prior art, included familiarity with "the utilise of tolerance rings in conjunction with actuator bearing cartridges").

In fact, the Federal Circuit recently remanded a case where the Lath failed to consider a reference as evidence of ordinary skill in the art. Ariosa Diagnostics v. Verinata Health, Inc., 2015 U.S. App. LEXIS 19847 (Fed. Cir. November. 16, 2015). The Federal Circuit emphasized that "[a]rt tin can legitimately serve to document the cognition that skilled artisans would bring to bear in reading the prior art identified equally producing obviousness." Id. at *15. Thus, even if a petitioner fails to land the level of skill in the art or provide support for its position, the Lath may still rely on the references themselves to make that decision. Primera Tech., Inc. five. Automatic Mfg. Sys., Inc., IPR IPR2013-00196, Paper 52, slip op. at viii–nine (Aug. 29, 2014) (citing Okajima five. Bourdeau, 261 F.3d 1350, 1355 (Fed. Cir. 2001)); Redline Detection, LLC v. Star Envirotech, Inc., IPR2013-00106, Paper 66 (Jun. 30, 2014).

Secondary Considerations. Patent owners should seek objective evidence supporting a determination that the claimed invention was not obvious. "However, such a determination requires the finding of a nexus to establish that the evidence relied upon traces its footing to a novel element in the merits and non to something in the prior fine art." BioMarin Pharm. Inc. v. Genzyme Therapeutic Prods. LP, IPR2013-00537, Paper 79, skid op. at 22 (Feb. 23, 2015).

Kickoff, "mere attorney argument" will not substitute for objective bear witness. Johnson Controls, Inc. v. Wildcat Licensing WI, LLC, IPR2014-00305, Paper 45, slip op. at 28, n. iii (June 22, 2015). Second, patent owners must establish the required nexus between the evidence and the invention. Smith & Nephew, Inc. five. ConvaTec Techs., Inc., Newspaper 87, sideslip op. at 44–45 (May 29, 2014) ("In order to establish a proper nexus, the patent owner must offer proof that the sales were a direct outcome of the unique characteristics of the claimed invention—as opposed to other economic and commercial factors unrelated to the quality of the patented subject matter."). Third, the cases illustrate that support must exist provided to establish the prove. Ebay, Inc. 5. Paid, Inc., CBM2014-00125, slip op. at 43 (PTAB Sep. 16, 2015) (Paper 37) ("Patent Owner has not provided evidence of the market share … to support its claim of commercial success."); see also Oracle Corp. v. Thought, Inc., IPR2014-00117, Paper 44, slip op. at 25–26 (Apr. 23, 2015) (finding "no evidence of record as to how these awards were given … [or] whether these awards were well-known or respected in the industry.")

Merely when properly supported, objective prove can provide a powerful independent basis for nonobviousness. In Intri-Plex Techs., Inc. v. Saint-Gobain Functioning Plastics Rencol Ltd., the PTAB establish that the Patent Owner's evidence of commercial success alone outweighed the other iii Graham factors. IPR2014-00309, Paper 83, slip op. at 46 (Mar. 23, 2014). The PTAB constitute that sales of the patented invention were meaning and that the patent owner held a dominant position in the market. Id.

Motivation to Combine

The PTAB scrutinizes petitions for conspicuously stated reasons to combine references.  "An invention 'equanimous of several elements is not proved obvious but past demonstrating that each of its elements was, independently, known in the prior art.'" Volkswagen Grp. of Am., Inc. v. Velocity Patent LLC, IPR2015-00276, Paper 8, sideslip op. at 10 (PTAB Jun. 1, 2015) (quoting KSR Int'fifty Co. v. Teleflex, Inc., 550 U.S. 398, 418 (2007). "A political party that petitions the Board for a determination of obviousness must show that 'a skilled artisan would have been motivated to combine the teachings of the prior art references to achieve the claimed invention, and that the skilled artisan would have had a reasonable expectation of success in doing so.'" Apotex Inc. v. Wyeth LLC, IPR2014-00115, Paper 94, slip op. at xi (Apr. 20, 2015) (quoting Procter & Gamble Co. v. Teva Pharms. USA, Inc., 566 F.3d 989, 994 (Fed. Cir. 2009)).

A reason to combine may exist found explicitly or implicitly in marketplace forces; design incentives; the "interrelated teachings of multiple patents"; "whatsoever need or problem known in the field of endeavor at the time of invention and addressed by the patent"; and the background knowledge, creativity, and common sense of the person of ordinary skill.

Ericsson, Inc. 5. Intellectual Ventures I LLC, IPR2014-00527, Paper 41, slip op. at 27–28 (May xviii, 2015).

A mutual fault earlier the PTAB is declining to "include articulated reasoning with some rational underpinning to support the legal conclusion of obviousness." Volkswagen, IPR2015-00276, skid op. at eleven. In Volkswagen, for example, the petitioner provided only "conclusory assertions by counsel, unsupported past testimony of an expert witness." Id. at 11–thirteen. To prevail, however, the analysis must be explicit every bit to why one skilled in the art would "combine the elements in the way the claimed new invention does." Id. at eleven.

Similarly, in Shopkick, Inc. v. Novitaz, Inc., the petitioner failed to provide a meaningful analysis and relied on the fact that the cited references were analogous art and shared common design incentives with the patent nether review. IPR2015-00279, Paper 7, sideslip op. at 26–30 (May 29, 2015). In denying establishment, the PTAB explained that "conclusory labels do not substitute for a fact-based analysis … establishing what is existence modified and why, based on the differences between the prior fine art and the claimed invention, it would have been obvious to a person of ordinary skill to make the modification." Id. at xxx.

Lower Brunt of Proof

In district court litigation, invalidity must be shown by articulate and convincing evidence. In contrast, a lower "preponderance of bear witness" is required in an IPR considering the PTAB determines patentability, non validity. 35 U.Due south.C. § 316(due east). Furthermore, a deferential "substantial bear witness" standard of review applies to the PTAB's factual findings in an obvious inquiry. Merck & Cie v. Gnosis S.p.A., 2015 U.S. App. LEXIS 21927, at *seven (Fed. Cir. Dec. 17, 2015). In a shut case, the lower burden of proof combined with the deferential appellate review standard may result in invalidating a patent that would have remained valid in district court litigation. Id. at *29 (Newman, J., dissenting) ("The substantial evidence standard determines whether the decision could reasonably take been made, not whether it was correctly made."). Thus, patent owners must take even more seriously the demand to build the strongest instance possible in proceedings before the PTAB.

Obviousness Insights and Tips

Obviousness-Related Reasons to Deny Trial Institution

The insights and tips presented herein are based on a review of 27 decisions denying institution on grounds of obviousness during the month of September 2015.

Reasons for denial generally fall into two categories—either bones mistakes or special issues. Failure to show that a combination includes all elements or limitations of the challenged claim is ane basic mistake; insufficient evidence of a reason to combine is another.

Examples of special issues include improperly relying on an inherent holding in the prior art or on a patent from the same family every bit the challenged patent, attempting to present a nonprinted publication as admitted prior art, and submitting an unhelpful practiced declaration.

Basic Mistakes. Well-nigh obviousness-based denials to institute an IPR autumn into the category of basic mistakes. Out of 27 reviewed denials on the ground of obviousness, 22 (or 81 percent) were due to either (i) missing elements and limitations , or (ii) bereft argument for a combination , i.e., non meeting the "articulated reasoning with some rational underpinning" standard.

Missing Elements and Limitation southward . Twelve denials cited the Petitioner's failure to assert a combination of prior art references that would include all elements or limitations of the challenged claim. Several lessons tin can be drawn from a review of these decisions not to institute.

The petition must specifically identify where the cited prior fine art references disembalm each and every element of the claim. Information technology's not enough to identify the main structural elements of the claim. The particular relationship between the elements, if recited by the claim, must   exist present in the references. For example, in Microsoft Corp. 5. Global Touch Solutions, LLC, the PTAB agreed a publication disclosed "detecting user proximity and user contact," just found the petitioner failed to "distinguish[] between proximity and physical contact events" as the claim required. IPR2015-01024, Newspaper xi, slip op. at vii (September   23, 2015) (accent in original).

Petitioners need to review the prior art publications to ensure that they do not contradict   the desired construction of the claim terms. In Apple Inc. v. Virnetx Inc., the petitioner argued that "[t]he HOSTENT is a network address" which was "contrary to [the publications] merely disclosure related to HOSTENT." IPR2015-00813, Paper viii, sip op. at 8 (September 16, 2015) (emphasis in original). The petitioner must provide an caption for an unfavorable disclosure in the prior fine art regarding what a person of skill would empathize. Kapsch Trafficcom IVHS INC. v. Neology, Inc., IPR2015-00823, Paper 11, slip op. at 23 (September fourteen, 2015).

In life sciences cases, petitioners must specifically place how a clinical trial establishes the claimed limitation. Come across, eastward.yard., Coalition For Affordable Drugs V LLC, Petitioner, five. Biogen MA Inc., IPR2015-01136, Newspaper 23, slip op. at xi (September 2, 2015) (the PTAB unable to observe a reasonable likelihood that a trial taught that "DMF was known to exist useful in treating MS.").

Bereft argument for a combination . Ten petitions were denied during September 2015 due to an insufficient argument for a combination. As discussed to a higher place, the test for making a proper combination argument is "articulated reasoning with some rational underpinning."

The two virtually important issues are ones familiar to patent prosecutors: dealing with "education away" references, and offering but a cursory "obvious to effort" statement. In TRW Automotive U.S. LLC five. Magna Electronics, Inc., the petitioner failed to explain "why a forrard-facing photographic camera orientation" would have improved a prior art system and failed to show that a "POSA would have had a adept reason to change the rearward-facing orientation." IPR2015-00951, Paper eight, slip op. at 15, 17 (September 17, 2015) (emphasis in original). Another common result is improper retrospect, where prior art references expect combinable merely through a prism of noesis gleaned from a new invention. asterImage 3D, Inc. v. RealD Inc., IPR2015-00877, Newspaper 8, slip op. at 21–22 September 9, 2015).

A combination of references is sometimes achieved by substituting an chemical element from one prior fine art reference with another element from some other reference. Such statement must be supported with an explanation that the resulting combination will nonetheless be operational.

Apotex Inc. v. Wyeth LLC, IPR2015-00873, Newspaper 8, sideslip op. at 11-12 (September 16, 2015) ("Petitioner does not provide adequate bear witness or caption why a person having ordinary skill in the fine art reasonably would have expected that the substitution of     tigecycline for minocycline in the CN '550 compositions would have resulted in a stabilized tigecycline composition.").

Finally, a combination may exist improper if the chemical element added from the 2d reference is already nowadays (or, more often, its functionality is already present) in the offset reference. TRW Automotive U.S. LLC 5. Magna Electronics, Inc., IPR2015-00972, Newspaper 9, skid op. at 15, 17 (September 16, 2015) (finding no reason to combine where "the photographic camera in [the '094 patent] already is mounted to the windshield using a bracket and does non require the direct optical coupling provided by the fastening device in [the '633 patent]"). See as well Stryker Corp. 5. Karl Storz Endoscopy America, Inc., IPR2015-00764, Paper 13, slip op. at 13 (September 2, 2015) ("[West]due east neglect to meet, and Petitioner does not fairly explicate, why it would exist obvious to add a translator to redundantly perform the function that Petitioner maintains is performed by the interconnect devices and network reckoner located within the surgical network.").

Special Issues Requiring Attention to Details. Other obviousness related issues are not as easily categorized as those discussed in a higher place. The only common lesson that tin be drawn from the examples analyzed below, all based on decisions issued in September 2015, is that petitioners must pay strict attention to item.

Five decisions dealt with petitions not falling in the "bones mistakes" category. In two (both by the same petitioner, against the same patent), the problem was an improper reliance on applicant admitted prior fine art ("AAPA"). In some other, an inherent property of a compound was not sufficiently shown. In yet some other, the petitioner failed to show that a patent from the same family as a patent they were attacking was prior art. Finally, testimony of ane petitioner's own adept contradicted the petitioner'southward statement

• Reliance on Inherent Property . The problem with unsubstantiated reliance on an inherent belongings of a composition can exist viewed as a subset of the "not all elements" mistake. In chemical arts, information technology is well known that "[p]roducts of identical chemic composition cannot have mutually exclusive properties." In re Spada, 911 F.2d 705, 709, (Fed. Cir. 1990). Without establishing the identity of the compositions, all the same, a conclusion of identical backdrop fails. In Ferrum Ferro Upper-case letter, LLC five. Allergan Sales, LLC, the Lath ended that "[p]etitioner [did] not establish sufficiently that the 'without loss of efficacy' limitation is an inherent property or a necessary event of administering the composition." IPR2015-00858, Paper 10, slip op. at ten (September 21, 2015).
• Reliance on Applicant Admitted Prior Fine art . Applicant admitted prior fine art tin can be a very stiff indication of obviousness. In the context of an IPR petition, still, information technology's important to remember that a review may exist instituted "only on the ground of prior art consisting of patents or printed publications." 35 The statesC. § 311(b). Information technology is not advisable to cite to more recent declarations of patent owner's experts in back up of an argument for AAPA, even when such declarations describe prior art publications. If the printed publications on which experts rely are not themselves asserted as prior art references in the petition, the Lath will not give weight to the proficient declarations. Kingbright Electronics Co. Ltd. v. Cree, Inc., IPR2015-00744, Paper viii, slip. op. at 5-6 (September ix, 2015) (finding that "applicant statements in the specification directly asserting that certain technology is prior art" and "afterwards-dated statements of experts and inventors on behalf of the applicant/Patent Possessor in other proceedings" are not an allowable ground to constitute).
• Reliance on a Patent From the Same Family unit as Prior Art . Before a petitioner tin rely on a reference as part of a combination for obviousness, they demand to found that the reference is prior art. This simple statement becomes tricky when the reference in question is a patent from the aforementioned family equally the patent that is a field of study of the petition. The test is whether the prior patent satisfies the written clarification requirement with respect to the accused claim of the patent in the petition. TRW Automotive U.S. LLC v. Magna Electronics, Inc., IPR2015-00972, Newspaper 9, slip op. at 6 (September xvi, 2015).
• Getting Hurt by Your Own Expert . Oftentimes, petitioners rely on practiced testimony to support their argument. In such cases, testimony must non comprise any statements that may be held against the petitioner. Otherwise, the Board is certain to latch on to such inconsistent statements. Medtronic five. Mark A. Barry, IPR2015-00782, Newspaper half-dozen, slip op. at 17 (September nine, 2015) ("[I]n view of [petitioner's expert's] other testimony touting the ability of a surgeon to grasp each of the handles simultaneously and apply force appropriately, we are non persuaded by Petitioner's argument concerning the combination of the '349 Patent with the [prior art reference].").

Obviousness Considerations Cited in Terminal Written Decisions

For patent owners, the best chance to defeat a basis of unpatentability is at the trial establishment stage, where roughly half of all claims are denied. Subsequently establishment, chances for patentability diminish significantly, because the PTAB has already decided that it is more probable than not that the petitioner will prevail.[2] Characteristically, out of 63 Final Written Decisions in September 2015, 58 decisions (92 percent) establish at least some claims unpatentable, and simply five decisions (8 percentage) found all challenged claims patentable.[iii]

In ane determination finding claims patentable, the Board explained that the proposed combination of elements amounted to impermissible hindsight. Endo Pharmaceuticals Inc. 5. Depomed, Inc., IPR2014-00654, Paper 69, slip. op. at 27 (September 21, 2015). In some other petition by the same petitioner against the aforementioned patent possessor, the Lath did not agree that the prior art references were combinable. Endo Pharmaceuticals Inc. 5. Depomed, Inc., IPR2014-00656, Paper 66, sideslip. op. at 25 (September 21, 2015). In even so another, the Lath did non find a sufficient reason to combine the references. Edmund Optics, Inc. v. Semrock, Inc., IPR2014-00599, Newspaper 72, slip op. at 46 (September 16, 2015).

As expected, at this belatedly stage of the IPR proceedings, it is unlikely that the PTAB will find any elements or limitations missing outright. In the pocket-size number of cases where trial is instituted, notwithstanding none of the claims are found unpatentable by the Board, the well-nigh typical reason seems to be that the combination itself is scrutinized more at the establishment stage, typically due to arguments presented in a Patent Possessor's response.

Conclusion

The PTAB mostly applies the obviousness rules in IPR proceedings in a similar manner to the United States Patent and Trademark Office during patent application examination. The "all elements rule," Graham factors, no hindsight, and other such rules of obviousness are familiar to patent prosecution practitioners and litigators alike.

Petitioners should plan out the grounds in the petition thoroughly, equally there will be limited opportunity to bolster arguments made in the initial petition. This entails focusing on obviousness, explicitly identifying all elements and limitations of each claim in the asserted prior art publications, and clearly explaining the reasons for a combination.

Patent owners should be proactive with filing both a preliminary response before the decision on establishment, and a detailed response if a trial is instituted. A preliminary response should attempt to place at least one element or a limitation not expressly pointed out by a petitioner. A response at the trial stage should focus more than on the weaknesses in combining the references. Patent owners would be well-advised to seek out objective evidence of nonobviousness as well.

Lawyer Contacts

For further information, delight contact your principal Firm representative or one of the lawyers listed beneath. General email messages may be sent using our "Contact Us" course, which tin can be plant at www.jonesday.com/contactus/.

David B. Cochran
Cleveland
+i.216.586.7029
dcochran@jonesday.com

Joseph K. Beauchamp
Houston
+1.832.239.3835
jbeauchamp@jonesday.com

Thomas Westward. Ritchie
Chicago
+one.312.269.4003
twritchie@jonesday.com

Yury Kalish
Washington
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ykalish@jonesday.com

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[1] Docket Navigator, PTAB Institutions (through Dec. 31, 2015).

[2] Since the beginning of the IPR proceedings, the claims for which the trial has been instituted were found unpatentable in about lxxx percent of the cases. Docket Navigator, PTAB Institutions (equally of December. 31, 2015).

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