CAFC Faults PTAB Nexus Presumption

A proper obviousness analysis under Graham v. John Deere analyzes four factors: (1) the scope and content of the prior art; (2) the differences between the prior art and the patent claims; (3) the level of ordinary skill in the art; and (4) secondary considerations or “objective indicia” of non-obviousness. Yet, objective indicia arguments are relatively uncommon in the predictable arts. And even when they are advanced, the argument is rarely effective. This is because establishing a nexus between a patent claim and such amorphous concepts as “commercial success” (the most commonly advanced form of indicia) is a far more complex undertaking than most practitioners appreciate.

A patentee is entitled to a rebuttable presumption of nexus between its asserted objective indicia and a patent claim if the patentee shows that the indicia is tied to a specific product and that the product is the invention disclosed and claimed. Earlier this week, the Federal Circuit analyzed how close a claim needs to be to the purported “invention” to qualify for the presumption of nexus.

In FOX Factory, Inc. v. SRAM, LLC the Court considered the correspondence between claims to a bicycle chain arrangement. On appeal FOX contended that the Board applied the wrong standard for determining whether a presumption of nexus between the challenged claims and Patent Owner’s evidence of secondary considerations. In reversing the Board, the Court explained (here):

" As first recognized in Demaco Corp. v. F. Von Langsdorff Licensing Ltd., a patentee is entitled to a rebuttable presumption of nexus between the asserted evidence of secondary considerations and a patent claim if the patentee shows that the asserted evidence is tied to a specific product and that the product “is the invention disclosed and claimed.” . . . [¶] . . . [W]e have never held that the existence of one or more unclaimed features, standing alone, means nexus may not be presumed. Indeed, there is rarely a perfect correspondence between the claimed invention and the product. . . . Thus, if the unclaimed features amount to nothing more than additional insignificant features, presuming nexus may nevertheless be appropriate.

Although we do not require the patentee to prove perfect correspondence to meet the coextensiveness requirement, what we do require is that the patentee demonstrate that the product is essentially the claimed invention. While coextensiveness is an issue of fact that should ordinarily be decided by the fact finder in the first instance, no reasonable fact finder could conclude, under the proper standard, that the [products] are coextensive with the patent claims. It is undisputed that the [products] include unclaimed features that the patentee describes as “critical” . . . and that go to the “heart” of another one of [Patent Owner’s}patents. In light of the patentee’s own assertions about the significance of the unclaimed features, no reasonable fact finder could conclude that these features are insignificant. . . . A patent claim is not coextensive with a product that includes a “critical” unclaimed feature that is claimed by a different patent and that materially impacts the product’s functionality . . . [¶] . . . [W]e cannot say that the [products] chainrings are the invention claimed by the independent claims. Accordingly, the Board erred in presuming nexus between the independent claims of the ’027 patent and secondary considerations evidence pertaining to [Patent Owner’s Products].

The Court then went on to highlight the danger of applying a presumption in families of patents where the secondary indicia evidence is the same but the claim sets are directed to different inventions.

While the case provides important guidance on such product/nexus showings, it is important to realize these presumptions even where appropriate are often times easily rebuttable by a petitioner. In the typical scenario Patent Owners submit a claim chart to a product, and then point to mere sales figures for commercial success. But, absent any meaningful analysis of the product market, such as evidence of growing market share, marketing spend, consumer demand to the invention as compared to other factors, etc., such half-hearted showings routinely fail.

Scott A. McKeown is an author of the Patents Post Grant