by Dennis Crouch
Daikin Industries v. Chemours Co. (Supreme Court 2022).
Daikin’s IPR was successful, and the PTAB concluded that challenged claims of the Chemours patents were obvious. US Patent Nos. 7,122,609 and 8,076,431. On appeal though, the Federal Circuit reversed — holding that the prior art “teaches away from the claimed invention” and that the Board also relied on non-analogous prior art. Now Daikin has taken its case to the Supreme Court with a really smart petition focusing on the procedural divide between law and fact in the administrative law context. The basic argument here is that the Federal Circuit grounded its decision on factual questions never expressly considered by the agency (the PTAB); but the proper procedure in that situation is a remand for agency determination of the facts rather than reversal.
Question presented:
May a federal appellate court, consistent with the Administrative Procedure Act and the principles of separation of powers embedded within that Act, reverse an administrative agency’s decision on a factual ground not addressed by the agency, without a remand to that agency?
Petition. The petition here is supported by Judge Dyk’s dissent in the case where he argued that the majority opinion was “nothing less than appellate factfinding.”
The petition here goes on argue that the court’s approach here is part of the Federal Circuit’s modus operandi.
The Federal Circuit’s brand of aggressive judicial review, which casts aside basic principles of deference to administrative adjudication, was on full display in this case. Regrettably, it has long been embedded in the Federal Circuit’s practices, and its roots go even farther back than that. . . . This absence of deference to factfinders, even expert agencies, has been a hallmark of Federal Circuit review since that court’s creation. . . . To this day, the Federal Circuit remains isolated from the mainstream of administrative law. Scholars have noted that court’s “exceptional control” over the patent agency, and have labeled this phenomenon with terms such as “patent exceptionalism” and “Federal Circuit exceptionalism.” See, e.g., Peter Lee, The Supreme Assimilation of Patent Law, 114 Mich. L. Rev. 1413, 1415, 1452 (2016); Robin Feldman, Ending Patent Exceptionalism and Structuring the Rule of Reason: The Supreme Court Opens the Door for Both, 15 Minn. J.L. Sci. & Tech. 61 (2014); Paul R. Gugliuzza, The Federal Circuit as a Federal Court, 54 Wm. Mary L. Rev. 1791, 1818 (2013) (“The Federal Circuit gives minimal deference to PTO fact-finding.”).
There are a number of Supreme Court cases on point, but the key quote is below:
It is a ‘foundational principle of administrative law’ that judicial review of agency action is limited to ‘the grounds that the agency invoked when it took the action.’”
Dep’t Homeland Sec. v. Regents of Univ. of Cal., 140 S. Ct. 1891 (2020) (quoting Michigan v. EPA, 576 U.S. 743, 758 (2015)).
This cert. petition seems like a dead bang loser. The petition does not raise novel legal issues, identify any split among the circuits, or advocate for any change or clarification of existing law. The Petition boils down to the assertion that the CAFC did not follow the APA in a particular case, which even if true, generally would not warrant Supreme Court review. The Supreme Court generally will not agree to hear a civil case simply to correct a one-off mistake by a lower court.
The argument about impermissible “fact-finding” is also a little muddled. The gist of the Petition is that the CAFC improperly relied on “teaching away” to reject the obviousness combination, and this was improper because “teaching away” was not argued as a distinct anti-obviousness theory before the PTAB (and in fact, the patentee apparently told the PTAB it wasn’t relying on teaching away). If a response is requested, I expect the respondent will simply argue that the casual references to “teaching away” in the panel decision were just shorthand (and perhaps imprecise) labels for the broader issue of whether the challenger proffered a sufficient motivation to combine the references, in light of express statements in the primary reference, which was litigated before the PTAB.
For a petition like this to even have a chance of traction at the Supreme Court, they’d need to show a clear and unambiguous instance of the CAFC making findings on an issue never addressed by the PTAB. But unfortunately for the petitioner, there’s a fuzzy line between arguing for a technical “teaching away” (which was not argued before the PTAB), and arguing more generally that statements in a primary reference demonstrate the insufficiency of the proffered motivation to combine (which was argued before the PTAB). The panel majority also relied on the supposed lack of analogousness of the additional references in the combination, which makes the record even more fuzzy. And all of that fuzziness makes it even harder to show the type of impermissible fact finding by the Court of Appeals that would warrant the Court taking up a case which, as noted, does not appear to raise any novel or unique legal issues.
“ the patentee apparently told the PTAB it wasn’t relying on teaching away”
That’s because there was no “teaching away” as that term has been defined by the CAFC’s own precedential cases.
+1
Nice analysis.
+1. Fuzzy = denial.
The petition’s well put together. The core of the argument appears to be the assertion that “teaching away” is a separate, distinct factual argument that the patentee disavowed but that the FedCir majority reached anyway.
If the respondent files a response, I suspect they’ll dispute the premise. They’ll say it’s not separate, wasn’t disavowed, and that this case is really about burdens of proof and how to read the Kaulbach reference. Petitioner bears the burden of proof of obviousness. The PTAB found it was met, based in part on its reading of the Kaulbach reference. The FedCir majority reviewed the PTAB’s factual findings for substantial evidence, and reversed, as the PTAB’s reading of Kaubach is (in the majority’s view) unsupportable. The majority looked at each of the PTAB’s reasons, and explained its disagreement. The majority added “[t]his is particularly true in light of the fact that the Kaulbach reference appears to teach away ….,” but that’s not really appellate factfinding so much as reviewing and disagreeing with the PTAB’s reading of Kaulbach. That’s conventional substantial-evidence review and what courts do all the time when they review agency factfinding.
The rehearing opp. disputes that the petitioner actually disavowed “teaching away.”
This appears to be the decision the petition is challenging. Judge Dyk’s dissent is reasonable, but his disagreement on this particular point appears to be case-specific. The petitioners do a good job of taking a punchy phrase from the dissent (“nothing less than appellate factfinding”) and spinning a larger issue out of it.
link to scholar.google.com
This will get the court’s attention, but I’ll be surprised if they do more than call for a response.
Nice analysis, thanks.
An admirable effort to make lemonade from lemons, but I would expect as much from the folks at Jones Day.
Let’s be real. There is lots of fact finding in Scotus opinions. They regularly make findings of fact and feel it is the right of an appellant court to make findings of fact when necessary to get the desired outcome.
They don’t care.
Another case pointing out the anomaly that is the existence of the PTAB itself and this outlier of this dual Art III and Executive Department jurisdiction created by Oil States. When the TPAB starts taking notice of Art III decisions that has resolved issue of fact via comity – always a one way street – then they can be a position to complain about CAFC fact finding that contradicts TPAB fact finding.
Flagrant alliteration in your title 🙂
Bobbie Buckley,
Awful alliteration as an affront (to) all…?
affecting all
+1
>There are a number of Supreme Court cases on point, but the key quote is below:
>It is a ‘foundational principle of administrative law’ that judicial review of agency action is limited to ‘the grounds that the agency invoked when it took the action.’”
Yes but at what level? The grounds was the claims were invalid.
But, let’s be real, about 25% of the CAFC I read involve fact finding by the CAFC.
Again, Dennis doesn’t bother to say who’s on the panel. Here the majority was Newman and Reyna. It’s an established rule at the CAFC that if Dyk says one thing and Newman says another, Newman is right, even if she’s in the minority. Which means that, given SCOTUS’s abysmal track record in patent cases, they may take up this case and remand.
A colleague of mine likes to say, “If Newman is wrong, I ain’t never wanna be right!”
Your colleague sounds like a mental case.
Can you add anything other than your feelings and your empty ad hominem, Malcolm?
“nothing less than appellate factfinding.”
Yet it’s O.K. to do so when they pull out of their bag o’ tricks . . . their own alleged abstract idea(s) . . . that neither the PTO, court, nor an infringer ever alleged?
Including in those cases where they pull out multiple, never-alleged abstract ideas . . . even though SCOTUS was clear that no more than one could be alleged in the Alice / Mayo analysis.
Hypocrisy.
Plain and simple.
Why do you continue with that misbegotten trope of “one” abstract idea?
It’s beyond odd and has zero actual legal standing.
“Why do you continue with that misbegotten trope of ‘one’ abstract idea?”
Oh, well . . . I don’t know. Maybe because SCOTUS instructed tribunals to identify ONE abstract idea applicable to ALL the claims (just as they did in Alice):
“Held: Because the claims are drawn to a patent-ineligible abstract idea,
they are not patent eligible under §101.”
“(b) Using this framework, the Court must first determine whether
the claims at issue are directed to a patent-ineligible concept.”
“1) The claims at issue are directed to a patent-ineligible concept:
the abstract idea of intermediated settlement.”
“It follows from these cases, and Bilski in particular, that the
claims at issue are directed to an abstract idea. On their face, they
are drawn to the concept of intermediated settlement”
“(2) Turning to the second step of Mayo’s framework: The method
claims, which merely require generic computer implementation, fail
to transform that abstract idea in to a patent-eligible invention.”
“(ii) Here, the representative method claim does no more than
simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer.”
“a” – “an” – “the” – “that” all mean and refer to one.
If multiple abstract ideas were O.K., SCOTUS would have said so.
They. Did. Not.
The fact that the CAFC, some courts, the PTAB, and Patent Office, and infringers play willy-nilly by regularly asserting multiple abstract ideas against the same claims is contrary to what SCOTUS instructed (and contrary to what they did in Alice) and is one of the reasons all of patent law has indeed been swallowed.
Ask yourself this: If not one, just how may abstract ideas are too many?
Are you O.K. with two? How ’bout three? If three, why not four? Five’s certainly a nice-sounding number.
My friend, I do grow weary having to repeatedly point this out to you.
Time to get on board with the truth.
“ “a” – “an” – “the” – “that” all mean and refer to one. If multiple abstract ideas were O.K., SCOTUS would have said so.”
This is among the stupidest things I have ever read on this blog and that’s saying something.
I find immense amusement at Malcolm expressing his feelings over the notion of singular/plural, as I recall schooling him on a matter of statutory interpretation in which he was espousing exactly Pro Say’s errant view.
Pro Say, you are simply not correct and are attempting to read colloquially that which must be read legally.
I “get” the pro se angle that you like to represent, but at times your insistence on what terms mean in a legal sense are just brutal.
Sorry, but non responsive, my anonymous friend.
Is there or is there not a limit? Yes or no.
Support your answer.
Thanks.
It is responsive as it is directly on point as to how to understand use of a singular when plural is NOT distinguished.
That you may not recognize the legal responsiveness is not an indicator of the absence of the legal responsiveness – merely that your level of pro se is being exhibited.
Non sequitur.
One is one is one.
There’s no colloquialism here.
Again; had SCOTUS wanted more than one to be acceptable, they could have — would have — said so.
Not a non sequitur, as singular and plural have direct implications to each other in legal readings.
Again – you are only showing your lack of legal acumen (being pro se).
You seek a distinction already covered per a legal understanding. You lack that understanding (even after you have been appraised), so this is nothing more than purposeful ig n0r ance on your part.
That’s just not a good look.
One last try my friend, worded a bit differently:
Under whatever rubric you want to hang your hat on, is there any limit to the number of abstract ideas which may be asserted against a given set of — or even one — claim?
Thanks Pro Say (for at least trying),
To your, “Under whatever rubric you want to hang your hat on, is there any limit to the number of abstract ideas which may be asserted against a given set of — or even one — claim?”
Let’s try a thought experiment:
What does “AN idea” mean?
Is “an idea” strictly limited to one element? Or may “an idea” be composed of multiple elements?
In Alice (for example), the idea most definitely was composed of multiple elements.
Are we on the same page still?
If we now accept that “AN” idea may be composed of multiple elements, how can we NOT then take each element and ‘think’ of that element separately, and — in direct effect — take each element as its OWN idea?
Thus, to answer your immediate point here, AN idea is and must be multiply divisible.
Or, to use another example:
I have an idea of walking my dog around the block, and to the park to the left as opposed to the new development of a row of new houses to the right.
How many ideas or in that one idea?
..
.
With a bit of a pause, one consideration for you (with my recognizing that this is a bit of a detour, but does provide a patent law perspective) is the fact of the matter (in patent law) in that “single means claims” are NOT allowed, as they collapse ONLY to a “single means” (you may equate that to a single idea) WITHOUT any differentiating substance. This type of thing BECOMES the ‘claimed result’ as opposed to an actual means to get to the result.
Thanks for the thoughtful response.
So are you saying then, that under Alice, it’s O.K. to allege that a set of claims are “directed to” more than one abstract idea?
I am saying that Alice itself is not dispositive you what it means in regards to a singular/plural situation in addition to the nature of “idea” is immediately fragmentable such that it makes not logical sense to attempt to force a legal view to be strictly singular.
Support your “rebuttal.”
The PTAB engages in fact finding all the time. They don’t rely on just the record before them when they make new rejections. They go out of their way to save the examiner’s rejections but won’t go the same distance to find a reason to reverse a rejection.
No fact findin’?! Shoot! We don’t need no restriction on dat!
With love,
Your Friendly Neighborhood Death Squad.
(p.s. Please keep those headstones a comin’!)
The PTAB engages in fact finding all the time.
Amen brother. The PTAB oftentimes just ditches what the examiner writes and essentially acts as a Super Examiner – re-examining the application.
They go out of their way to save the examiner’s rejections but won’t go the same distance to find a reason to reverse a rejection.
This as well. Actually, they’ll got out of their way to ignore Appellants’ arguments.
While the Federal Circuit is bad, it doesn’t hold a candle to the PTAB when it comes to administrative incompetence.
The PTAB engages in fact finding all the time.
I should hope so. The PTAB is supposed to engage in fact finding. They would remiss in their duties if they were not making findings of fact. The PTAB’s role is analogous to a district court’s, not to a court of appeal. They are the definitive finders of fact for the administrative record, should the case need to go to an actual court of appeal.
The PTAB is supposed to engage in fact finding.
I suggest you read Ex parte Frye. The Board’s role is one of review — weighing evidence and argument.
If the Board presents findings of fact that are new to the proceedings, then the Board should designate a new grounds of rejection.
The PTAB’s role is analogous to a district court’s, not to a court of appeal.
No. The Examiner’s job is analogous that of a district court.
However, I will concede that the PTAB’s job differs depending upon whether it is ex parte appeal or IPR. Much of my experience with the PTAB is in ex parte proceedings.
“will concede that the PTAB’s job differs depending upon whether it is ex parte appeal or IPR.”
I am curious as to how you think the job differs between these functions.
In ex parte appeals, the PTAB views their job as affirming rejections or coming up with new rejections to keep patents from being issued.
In IPRs, the PTAB views their job as invalidating issued patents.
That’s how they differ.
Oh, yea. +1
Not going to quibble over that distinction.
Lol – that’s the same effect merely through the (non-PTAB controlled) starting point.
I took his comment to be that there was something substantively different under the PTAB’s control.
I am curious as to how you think the job differs between these functions.
The PTAB is the Patent Trial and Appeal Board. The Trial aspect goes to IPRs where the Appeal aspect goes to ex parte proceedings. Certainly, there is overlap between the two, but I see the APJs seeing their roles differently. In an ex parte proceedings, the Examiner has supposedly made the findings of fact and presented claim constructions and the Board is reviewing those. However, in an IPR, it is the APJs that are making the findings of fact and construing the claims.
The filter really needs to chill…
Your comment is awaiting moderation.
February 21, 2022 at 3:40 pm
Not sure about that — the petitioner’s role and the examiner’s role are the ones that are “parallel.”
The PTAB’s role is reacting to those parallel’s (and nowhere are they supposed to be “super-examiners”).
Not to mention a whole different statute for IPRs, and a whole different set of PTO Rules for Trials vis a vis ex parte appeals.
A nice clean “Question Presented” on a legal question of broad general legal interest [for once]. And, only seeking to replace a Fed. Cir. reversal with a remand back to the agency, which would not even require the Court to dig into any messy patent law issues.
What a surprise, Mr. “objective” anti-patent holder cheerleader weighs in…
Paul, your comment struck me immediately as persuasive. What is SCOTUS for, if not to set the lower courts straight. And here it can answer an important question of “broad general legal interest” for all litigants, with minimal consumption of its precious resources.
I seem to remember an era in which the Fed Ct and the Supreme Court were supposed to be at loggerheads over many issues. If that mindset is still today alive and kicking, what an opportunity this is for the senior court again to school the judges of the lower court. From the point of view of the Supreme Court, what’s not to like?
Yay! Patticake and MaxDrie is struck.
Judge Dyk. If he was in my high school back in the 70s with that last name, he would have gone through H—l. My, have times have changed. Come to think of it, maybe he did go through h—l in grade school , making him the miserable old git that he is now.
Judge Dyk never met a patent he didn’t like to invalidate
well (fire-hose) trained, eh?
Supreme Court (self-descriptive) quote: The only valid patent is one that has not yet appeared before us.
Hint: prior to the Congress awakening and SMACK-DOWN of the Supreme Court in the Act of 1952.
Goose and Gander effect (or is the concern here only that in this instance, the Court reversed for the patentee)?
Is the notion of a judicial finding of fact off the table (was the fact so egregiously missed, that having notice of the fact, that the application of law could lead but to one conclusion, and thus remand would not be a reasonable course of action)?
Would NOT mind (at all) if SOME notice of separation of powers were to be recognized, but would mind very much if the separation of powers violations that work against patent holders proceeded as if nothing happened, as if ‘water under the bridge’ meant nothing, as such would be an even more egregious example of the ill-suited “Ends justify the Means.”
Hm, a case where the CAFC stretches its authority to help out a patentee? One does not see too many of those? I wonder if that does not make this a more tempting cert.? Probably still no cert., but it does make me nervous.
Would the fact that the cert is only asking for a remand back to the PTAB, rather than a reversal of the Fed. Cir. decision, make it slightly more appealing?
As far as I am concerned, it is never appealing for the SCOTUS to take cert. on a patent case. Sholem Aleichem, in his short story “Tevye the Dairyman,” has a rabbi pronounce a blessing on the Czar—“May the Lord bless and keep the Czar… far away from us!” This is how I feel about the SCOTUS.
Do I remember it right, that the progression of three curses (of inceasing severity) wished upon an opponent are, in China:
1. May you live in interesting times
2. May you come to the attention of the authorities; and
3. May you get what you wish for.
Daikin should know.
I wonder if you catch the drift here that Greg and Paul are of opposite minds (and your patticake above places you opposite of Greg here)?
Your cloying politeness is thus obfuscatory.
MM, why are you even in this profession, as it is clear that you hate patent law. Were you abused as a child, and this is your way to take it out on world?
His cognitive dissonance has long been noted.
What is perhaps more odd are those who find themselves “in agreement,” or even worse, “enjoy” what Malcolm presents.
I guess that there will always be
H
A
T
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R
S
link to youtu.be (Taylor Swift version)
I do dislike Taylor Swift songs, so I’ll pass on the link.
lol – understood.
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