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Federal Circuit Revives Polaris’ Claims After PTAB’s Obviousness Analysis Veers Off Course

On February 9, 2018, in vacating and remanding parts of an obviousness decision, the Federal Circuit found that the Patent Trial and Appeal Board (“PTAB” or “the Board”) erred in parts of its analysis of motivation, teaching away, and commercial success in cancelling all claims of Polaris’ U.S. Pat. No. 8,596,405 (“the ’405 patent”) in Polaris Indus., Inc. v. Arctic Cat, Inc. Polaris appealed, alleging various errors in claim construction, analysis of motivation and teaching away, and consideration of commercial success.

Rival all-terrain vehicle (ATV) maker Artic Cat has been involved in proceedings against Polaris in federal district courts as well as in inter partes review (“IPR”) proceedings.  The PTAB found all thirty-eight claims of the ’405 patent unpatentable as obvious in IPR2014-01427 (“1427 decision”) over one set of prior art references, but not unpatentable over another set of references in IPR2014-01428 (“1428 decision”). The Federal Circuit affirmed the PTAB’s findings in part and vacated the PTAB’s obviousness determination as to claims 17–19, 34, and 36–38, and remanded for further proceedings.

Polaris attacked the 1427 decision on three grounds. First, it argued that the obviousness finding for claims 15–19 was predicated on an improper claim construction or was too cursory. Second, it argued that the Board relied on impermissible hindsight in combining features of the prior art references, failing to articulate a valid motivation to combine these references, and applying a “subjective preferences” analysis that finds no basis in Federal Circuit precedent.   Finally, it contended that the Board erred in rejecting the undisputed evidence that Polaris introduced regarding the commercial success of its RZR vehicles that purportedly embody claims 34 and 36–38.

The Federal Circuit rejected Polaris’ first set of attacks, finding both that the PTAB’s broadest reasonable interpretation of claim terms was consistent with the specification and the testimony of Arctic Cat’s expert, which the Board credited, and that the Board’s obviousness reasoning with regard to claims 15-19 was sufficient given that it was at least commensurate with Polaris’ presentation of its non-obviousness arguments.

PTAB Erred in Failing to Properly Consider Motivation and Teaching Away Evidence

Polaris’ second set of attacks highlighted inadequacies in the PTAB’s analysis for several reasons.  The Federal Circuit explained that the Board (1) failed to consider Polaris’ uncontested evidence that skilled artisans would not have been motivated to place a fuel tank under Denney’s seats; and (2) applied a legal analysis that not only finds no support in the caselaw, but also runs contrary to the concept of teaching away.

With regard to the first point, the Federal Circuit pointed out that while Polaris introduced undisputed evidence that placing a fuel tank underneath one of Denney’s seats would have required significantly raising the occupancy area, which would have been contrary to Denney’s teaching that doing so would raise the center of gravity of the ATV resulting in decreased vehicle stability and increased risk of rollovers, the PTAB failed to analyze whether Denney “teaches away” from claims 17-19.

With regard to the second point, the Federal Circuit explained that rather than evaluating the teaching away arguments, the PTAB erred in finding that “one of ordinary skill has the ability to weigh the various benefits and disadvantages based on subjective preferences in an analysis largely unrelated to obviousness.”  The Court emphasized that it has never articulated a “subjective preferences” analysis or permitted a tribunal to wholly disregard the significance of prior art teachings based on such a characterization.  Thus, the Federal Circuit found that the PTAB erred in not conducting a proper analysis of whether Denney’s stated desire for a low center of gravity “teaches away” from making modifications that would raise the ATV’s center of gravity for three reasons:

  1. By completely disregarding certain teachings as ill-defined “subjective preferences,” the Board’s approach invited the “distortion caused by hindsight bias” into the fold.
  2. The Board focused on what a skilled artisan would have been able to do, rather than what a skilled artisan would have been motivated to do at the time of the invention.
  3. The Board’s analysis encouraged the fact-finder to outright discard evidence relevant both to “teaching away” and to whether skilled artisans would have been motivated to combine references.

The Federal Circuit explained that even if a reference is not found to teach away, its statements regarding preferences are relevant to a finding regarding whether a skilled artisan would be motivated to combine that reference with another reference.  Further, the Court noted that the PTAB compounded its errors by transforming Polaris’ argument that “[t]here are many other potential locations for a gas tank in an ATV” into an admission that it would have been obvious to place a fuel tank underneath one of the two seats in Denney and failed to consider that “[m]erely stating that a particular placement of an element is a design choice does not make it obvious.” Cutsforth, Inc. v. MotivePower, Inc., 636 F. App’x 575, 578 (Fed. Cir. 2016).  Instead, the Board must explain why a person of ordinary skill in the art “would have selected these components for combination in the manner claimed.” In re Kotzab, 217 F.3d 1365, 1371 (Fed. Cir. 2000).  Thus, the Federal Circuit vacated the findings of obviousness for claims 17-19 and ordered the PTAB on remand to “analyze whether Denney ‘teaches away’ from claims 17–19 under the framework that our caselaw has articulated.”

PTAB Erred in Failing to Properly Consider Commercial Success Evidence

With regard to claims 34 and 36-38, the Federal Circuit found that the PTAB erroneously dismissed evidence of commercial success on grounds that it was “conclusory.”  The Court explained that Polaris’ expert testified that he had reviewed the ’405 patent and all claims recited therein, reviewed the RZR vehicles and literature (e.g., parts catalogs and parts drawings) associated therewith, construed the claim terms recited in the claims as one of ordinary skill in the art would understand them, and compared the RZR vehicles to the claims,  determining, based on his inspection, analysis, and study, that a list of eight RZR vehicles embody each element recited in claims 34 and 36–38 of the ’405 patent.  Arctic Cat presented no contrary evidence.

Despite this undisputed testimony, the Board rejected the evidence in its entirety as “conclusory.”  The Federal Circuit explained that its case law does not require a patentee and its expert to go further than Polaris did here to demonstrate that its commercial products are the inventions disclosed in the challenged claims where the proffered evidence is not rebutted and the technology is relatively simple.  The Federal Circuit rejected the implication that either a “limitation-by-limitation analysis” or “documentary evidence” is required.  Citing to its explanation in PPC Broadband, Inc. v. Corning Optical Communications RF, LLC, 815 F.3d 734, 745-747 (Fed. Cir. 2016), the Court reiterated how the Board should treat undisputed evidence from a patentee that its product is the invention disclosed in the challenged claims:

When the patentee has presented undisputed evidence that its product is the invention disclosed in the challenged claims, it is error for the Board to find to the contrary without further explanation. There was no such explanation here. The Board in its opinions did not explain why the SignalTight connectors fail to embody the claimed features, or what claimed features in particular are missing from the SignalTight connectors. Nor does Corning justify this finding on appeal. Substantial evidence does not support the Board’s finding on this point.

Because the Board failed to point to any claim limitation that was missing in the RZR vehicles, the Court found the PTAB’s analysis to be erroneous.