PTAB Discovery of Secondary Considerations of Non-obviousness: How to Get Necessary Prior Authorization

The fourth (and final) in a series, this article continues the discussion of how the U.S. Patent Trial and Appeal Board (“PTAB”) is approaching secondary considerations of non-obviousness in inter partes review (“IPR”) and covered business method patent (“CBM”) decision-making. This article provides further insight into how the PTAB handles secondary consideration arguments, specifically, in its final written decisions.

This article is based on a search of the PTAB’s final written decisions from our firm’s proprietary in-house database of PTAB decisions, orders, and notices. In at least twenty of these decisions, the PTAB analyzed arguments about secondary considerations in deciding whether the claims at issue were obvious. Those twenty decisions form the basis for this article. Not one patent owner in our sample found success with its secondary considerations arguments.

Nexus

The most common reason the PTAB rejected a patent owner’s secondary considerations arguments is for failure to establish a nexus between the claimed subject matter and the objective indicia argued by the patent owner. For example, in Smith & Nephew, Inc. v. Convatec Technologies, Inc., IPR2013-00097, Paper No. 90, at 44-51 (PTAB May 29, 2014), the PTAB concluded that the patent owner failed to show a nexus between the claimed invention and its evidence of commercial success, industrial acclaim and long-felt but unmet need. The claims at issue were directed to methods of enhancing the photostability of silver in antimicrobial materials for use in wound dressing and medical devices. The patent owner argued that its own product, AQUACEL Ag, has been commercially successful. In support of this argument, it submitted testimony that AQUACEL Ag is manufactured using the methods claimed in the patent-at-issue and that the reason for commercial success is as follows:

[Patent owner’s] success with AQUACEL® Ag products came about because it created a new commercial opportunity that was not realized previously in the wound dressing field. Although silverised wound dressings, including [petitioner’s] product, were previously available, the market was not established. It was only with the introduction of AQUACEL Ag products and its unique features that customers expanded the market and purchased these products. AQUACEL Ag products created a commercially viable opportunity for this segment, doubling the size of the market in the US within just two years and taking dominant share in under a year from launch.

Id. at 46. The PTAB did not find this testimony persuasive, concluding that the patent owner has not shown that the sales of AQUACEL Ag are a result of the claimed invention. The PTAB explained:

[Patent owner] provides no supporting evidence that the features recited in the claims of the ’981 patent are responsible for the success of the commercial AQUACEL® Ag products. [Patent owner] provides no details of the manufacturing process for AQUACEL® Ag products as supporting evidence that the products are manufactured using the steps recited in the claims. Upon cross-examination, [patent owner’s witness] Ms. Adams testified that she has no technical knowledge of the patents and could not confirm whether specific products in the AQUACEL® Ag line were covered by the claims of the ’981 patent. Considering we have no evidence of the manufacturing process for any of the products in the AQUACEL® Ag product line, we have no means to assess whether any of the products are covered by the claims of the ’981 patent.

Id. at 46-47.

As to industrial acclaim, the patent owner presented evidence that it received praise as an innovator in the field and that AQUACEL Ag has received praise for its effectiveness in many studies and publications. This was not enough. The PTAB explained that the patent owner had failed to explain how such praise is directed to any particular feature of the method recited in the claims.

Finally, as to long-felt but unmet need, the patent owner described the advantages of AQUACEL Ag over a traditional silver sulfadiazine (SSD) ointment. The PTAB was not persuaded. Among other things, the patent owner had failed to show that the long-felt and unmet need is solved by the particular steps recited in the patent claims.

So far, Smith & Nephew has set the stage for a trend of similar rejections of a patent owner’s secondary considerations arguments. In at least eighteen other final written decisions to-date, the PTAB has used similar rationale set out in Smith & Nephew to reject such arguments. See, e.g., Gnosis S.p.A. v. South Alabama Medical Science Foundation, IPR2013-00116, Paper No. 68, at 32-42 (PTAB June 20, 2014) (rejecting objective evidence of commercial success, licensing, copying, long-felt need, unrecognized problem, unexpected results, skepticism, and praise, all due to patent owner’s failure to “identify what novel elements in the claims under review anchor its objective evidence”; “[A] showing of nexus … involves establishing that novel elements in the claim, not prior-art elements, account for the objective evidence put forward to show nonobviousness.”).

Unexpected Results / Long-Felt But Unresolved Need

In addition to nexus, the PTAB has relied on other grounds for rejecting secondary considerations arguments. A patent owner that fails to perform a comparison with the closest prior art will likely see the PTAB reject its arguments regarding unexpected results / long-felt but unresolved need. For example, in Illumina, Inc. v. The Trustees of Columbia University in the City of New York, IPR2012-00006, Paper No. 128, at 28-39 (PTAB March 6, 2014), the PTAB found the patent owner’s arguments unpersuasive on this point. The claims at issue were directed to sequencing DNA. The patent owner’s expert testified that sequencing with the claimed nucleotides is unexpectedly better than pyrosequencing. The PTAB concluded, however, that pyrosequencing is not the closest prior art. Rather, one of the references relied upon for finding obviousness was deemed to be closer prior art, and the patent owner’s failure to analyze this art doomed its claim of unexpected results / long-felt but unresolved need. See id. at 29-33; see also, e.g., Micron Tech., Inc. v. The Board of Trustees of the University of Illinois, IPR2013-00008, Paper No. 59, at 20 (PTAB March 10, 2014).

Commercial Success

A patent owner that fails to compare total sales figures to meaningful comparative data will also likely see the PTAB reject its arguments regarding commercial success. For example, in St. Jude Medical, Cardiology Division, Inc. v. The Board of Regents of the University of Michigan, IPR2013-00041, Paper No. 69, at 23-30 (PTAB May 1, 2014), the PTAB rejected the patent owner’s commercial success arguments on this basis. The claims at issue were directed to methods of exposing collageneous biomaterial to an alcohol, in order to inhibit in vivo calcification. The patent owner argued that the petitioner’s products—bioprosthetic heart valves manufactured allegedly using the patent process—have enjoyed commercial success shown by sales of these products in excess of $300 million.

The only sales data cited by patent owner, however, compared the pricing and sales of one of the petitioner’s treated products to the pricing and sales of one of the petitioner’s untreated products. The PTAB was not persuaded by this comparison. The PTAB explained:

Comparative product sales within a company … cannot provide the evidence of commercial success that could be obtained by comparing competing products marketed by different companies. The relative pricing and sales of [petitioner’s treated and untreated] products may be due to marketing choices by [petitioner], as opposed to any commercial success of the products themselves.

Id. at 26.

Copying

A patent owner that fails to demonstrate evidence of efforts to replicate a specific product or process that falls within the scope of the claims at issue will likely see the PTAB reject its copying claim. For example, in LKQ Corp. v. Clearlamp, LLC, IPR2013-00020, Paper No. 73, at 25-30 (PTAB March 27, 2014), the PTAB rejected patent owner’s copying claim for this reason. The claims at issue were directed to a method for refurbishing lamp surfaces of a vehicle. The patent owner provided testimony regarding various meetings that occurred between the inventors and representatives of the petitioner, where aspects of the claimed method were discussed. The PTAB concluded, however, that the testimony failed to show that petitioner was afforded complete access to the entirety of the inventors’ method; nor was it apparent from the evidence that the petitioner undertook to replicate the inventors’ particular method. In the end, the PTAB reasoned that the petitioner could simply have been practicing the teachings of the prior art. See id. at 28; see also, e.g., Smith & Nephew, IPR2013-00097, Paper No. 90, at 50-51.

Conclusion

The post-grant procedures established by AIA have created an emerging jurisprudence as to how final written decisions weigh secondary considerations of non-obviousness. The PTAB decisions to-date show that the PTAB sets a high standard. Understanding the interplay between the PTAB’s evolving jurisprudence and the facts of a case will better set expectations for probable success when making or challenging secondary considerations arguments.