By Dennis Crouch
The nexus requirement serves as a threshold that must be met before secondary indicia will be even considered as relevant to the obviousness inquiry. In its recent Volva Penta decision, the Federal Circuit found that the PTAB had (1) created too high of a burden to prove nexus and (2) been unduly dismissive of the patentee’s evidence of commercial success and copying. The case reinforces the notion that patentees should attempt to include some claims that are largely coexistive with its product line, especially in today’s world of likely copying. The case also serves as a reminder that product copying still caries significant weight in the obviousness analysis. Volvo Penta of the Americas, LLC v. Brunswick Corp., 22-1765, — F.4th — (Fed. Cir. August 24, 2022).
For several years, Volvo Penta has been selling a boat engine drive where the propellers are forward facing and thus tucked under the boat. The setup, known as a tractor-type stern drive, pulls the boat forward rather than traditional rear-facing propellers that push. The drive has been a commercial success, especially for boats with nearby swimmers because the forward facing propellers offer potential safety advantage.
In 2020, Brunswick launched a competing product under its Mercury brand and, on the same day as its product launch also filed an IPR petition challenging Volvo’s US Patent 9,630,692. The PTAB granted the petition and ultimately sided with the petitioner by holding that the claims would have been obvious based upon a combination of the prior art references. On appeal, however, the Federal Circuit has vacated and remanded–ordering the PTAB to take a fresh look at the secondary indicia of nonobviousness such as commercial success and copying.
Obviousness analysis primarily focuses on comparing the claimed invention against the prior art and using that consideration to guess whether the gap would have been obvious to fill at the time of the invention. But, the
Obviousness analysis primarily focuses on comparing the claimed invention against the prior art and using that consideration to guess whether the gap would have been obvious to fill at the time of the invention. But, the analysis should not end there. Secondary indicia of nonobviousness, also referred to as objective evidence, provide real-world, albeit indirect insights into the obviousness determination. Evidence of commercial success, long-felt but unsolved need, failure of others, industry praise, and copying can indicate that an invention was not obvious to those skilled in the art at the time, even if it appears so in hindsight. While secondary considerations do not control the obviousness conclusion, they must be considered as part of the totality of the evidence when presented by the patentee. At times, the objective evidence is considered the most probative and cogent evidence of nonobviousness.
In recent years, the courts and patent office have been restricting the use of objective evidence of nonobviousness by applying a tight nexus requirement. Before the evidence is given any consideration, the patentee must show a nexus between the invention as claimed and the objective evidence of nonobviousness. This nexus requirement is designed to ensure, for instance, that commercial success is due to qualities of the invention being patented rather than some other advance or perhaps simply marketing. Nexus can be established via a presumption when the evidence is tied to a product that embodies and is coextensive with the claims. Brown & Williamson Tobacco Corp. v. Philip Morris, Inc., 229 F.3d 1120 (Fed. Cir. 2000). Even without a presumption, nexus can be shown by tying the evidence to the “unique characteristics of the claimed invention.” Fox Factory, Inc. v. SRAM, LLC, 944 F.3d 1366 (Fed. Cir. 2019). The patent owner bears the burden of establishing nexus. WMS Gaming Inc. v. Int’l Game Tech., 184 F.3d 1339 (Fed. Cir. 1999). Nexus is not limited to only novel features, but considers the invention as a whole. Chemours Co. FC, LLC v. Daikin Indus., Ltd., 4 F.4th 1370 (Fed. Cir. 2021).
Here, the PTAB found that Volvo Penta was not entitled to a presumption of nexus between the claims and the objective evidence. It held that even though the Forward Drive and Bravo Four S embodied the claims, Volvo Penta did not provide sufficient arguments regarding coextensiveness. The PTAB also found that Volvo Penta did not otherwise demonstrate nexus by identifying the unique characteristics or merits of the claimed invention tied to the objective evidence presented.
On appeal, the Federal Circuit vacated. The court noted that Volvo Penta expressly argued the commercial success of the Forward Drive was tied to the “steerable tractor-type drive” recited in the claims. Volvo Penta cited internal Brunswick documents discussing the need to match the capabilities of the Forward Drive in developing the Bravo Four S. This demonstrated a nexus between the Pulling-type stern drive in the claims and the objective evidence. While Volvo Penta’s arguments on coextensiveness may have been fairly minimal, the court found them sufficient to show nexus by tying the evidence to the specific claimed feature of a tractor-type stern drive. The undisputed evidence showed boat manufacturers strongly desired this feature in Volvo Penta’s product. Thus, the Federal Circuit found Volvo Penta established the required nexus between the claims and objective evidence.
The Federal Circuit also determined the PTAB’s analysis and weighing of the objective evidence was deficient in several ways.
First, the court found the PTAB’s assignment of “some weight” or “very little weight” to the various secondary considerations was overly vague. This was problematic even if the individual weights were supported, because the PTAB provided no insight into its summation finding that collectively the evidence only “weighed somewhat” in favor of nonobviousness. As the court noted, it is unclear whether “some weight” has the same meaning across different factors.
Second, for certain factors like copying, the PTAB’s assignment of weight contradicted its own factual findings. The PTAB found evidence showing Brunswick copied the Forward Drive in developing its competing Bravo Four S product. However, despite noting that copying is usually considered “strong evidence” of nonobviousness, the PTAB only gave copying “some weight.” This seeming inconsistency was not explained by the PTAB in its final written decision.
Third, the PTAB dismissed or overlooked aspects of the evidence related to long-felt need, praising comments, and commercial success, and the appellate panel found that those potential gaps might have altered the weight designation. On these points, the court cited cases focusing on the PTAB’s duty to explain and support its factual and legal conclusions. See, e.g., Pers. Web Techs., LLC v. Apple, Inc., 848 F.3d 987 (Fed. Cir. 2017) (remanding in view of the Board’s failure to “sufficiently explain and support [its] conclusions”); In re Nuvasive, Inc., 842 F.3d 1376 (Fed. Cir. 2016)(same).
The Federal Circuit’s decision in Volvo Penta provides important guidance for patent applicants and owners seeking to overcome obviousness challenges. It reemphasizes potentially important role that objective evidence plays in the obviousness determination, and shows that the nexus requirement should not be applied overly restrictively. While patentees must establish nexus, a limited amount of support tying the objective evidence to the claimed invention as a whole can be sufficient. The court also makes clear that the PTAB must fully and fairly consider all relevant objective evidence, avoid ambiguous weighing, and sufficiently explain any dismissal or discounting of probative evidence. Vague labels like “some weight” are unhelpful. Findings that contradict the evidence, like affording copying only minimal weight, will draw enhanced scrutiny.
Professor Crouch, can you see a path to getting Senator Hawley to champion patent reform? It is the proven Constitutional solution to breaking up monopolies through free market competition, which is a primary concern of his. I’d really like to work with you on this.
Senator Hawley the seditionist l i a r who is a stain on the country and should be hanging from his neck right now? LOL, go for it.
[B]reaking up monopolies through free market competition… is a primary concern of [Sen. Hawley’s].
Oh, you sweet summer child…
+1
The patent office ought not to revoke previously approved patents for obviousness, it’s too subjective. In IPR obviousness challenges it is impossible to predict whether or not the USPTO will uphold the patent. So we can’t invest in innovations that cannot reliably be protected from being copied. Increasingly U.S. patents are being used to protect incumbents rather than spur competition and commercialization of new technologies.
In this particular appeal the inventor prevailed, but it took several years and cost millions of dollars, and they are just as likely to lose again in remand. They will be much less likely to invest in technology that can be copied or mimicked by their competitors. Instead they will invest in marketing and industrial design like so many other industries have done.
Just so that I am clear, you are suggesting that IPRs should be limited to novelty challenges? That is an interesting idea, and not self-evidently a bad idea. The whole point of IPRs is that they are supposed to be limited to issues susceptible of a clean resolution in an one year time limit.
The big counter-argument that I can see is that the PTAB is routinely affirmed on appeal, even in its obviousness judgments. That would indicate that it is not actually so hard to adjudicate these issues in a one year time limit. Still, it is a worthy proposal for Congress to consider.
The USPTO is full of perverse incentives. There’s an incentive to eventually allow patents, so filing and examination fees keep coming in. There’s an incentive to extend examination with RCEs, and have early rejections that seem like little more than finding art with a similar keyword search. There’s an incentive to encourage IPRs and their fees, that undo the spurious (and not-so-spurious) patents allowed by the earlier perverse incentives. The system is so broken that it’s quite discouraging. Small companies are seeing less and less value in pursuing patents that cost the better part of $100k but are worth nothing at the first hint of being challenged.
Thanks David, you have several points there and one that I would comment upon (as I was rather vocal on this point — while the AIA was still being developed in Congress), is that it have a post grant “warranty” mechanism (as the ability to drag granted patents back into the USPTO for ease of dispatching was basically sold as), that had ZERO actual quality mechanism to the front end process was about as asinine as one could stumble upon.
Anyone with any real world experience dealing with work product could see how the lack of any meaningful tie from post grant into the examination process makes the “sold as quality” to be utter B$.
“A federal jury in Waco, Texas, agreed Thursday with ProFrac Holding (NASDAQ:ACDC) that its Clean Fleet technology does not work in the same way as Halliburton’s (NYSE:HAL) patented electric fracking technology, and that two of three Halliburton patents at issue were invalid.”
[I.e., even in a court viewed as the most pro-patent of all, patents granted by the PTO can still get invalidated and found not infringed by the jury – not the PTO.]
As Greg is want to say, “anecdote is not evidence.”
It is no surprise that Paul picks up his pom-poms and tries to denigrate the fact that the AIA’s post-grant mechanisms are a F R A U D against how they were sold.
The USPTO is full of perverse incentives… There’s an incentive to encourage IPRs and their fees, that undo the spurious (and not-so-spurious) patents allowed by the earlier perverse incentives.
Strongly agree! There should be a rule that the USPTO must reimburse to the patentee who loses an IPR the net present value of all fees collected on the affected patents during prosecution and post-grant.
Right now, the fee-maximizing strategy is to do a sloppy job examining, so as to collect (1) prosecution fees, (2) maintenance annuities, and (3) fees to invalidate the wrongly-granted claims post-grant. The financial arrangements should not be structured to incentivize sloppiness.
“must reimburse to the patentee who loses an IPR the net present value of all fees collected on the affected patents during prosecution…”
Throw in reasonable expectation value (a FranchisEE should expect no less from a FranchisOR) and you are getting close. Throw in as well cost of defense (back in the [political] administrative agency of the executive branch), and we can sit down at the table for a discussion.
Ideally, of course, we would have some type of “warranty-feedback” into the examination process regardless of any reimbursement for takings.
What worldly filter blocks this?
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August 25, 2023 at 6:04 am
“My Captain does not answer, his 1ups are pa1e and still,
My f@ther does not feel my arm, he has no pu1se nor will,
“My Captain does not answer, his lips are pale and still,
My father does not feel my arm, he has no pulse nor will,”
What does any of this have to do with Diversity(R), the most important thing in the patent world, so important that no one is allowed to comment on the pieces on this blog about Diversity(R)?
Since it’s well known that everything that’s old is new again, there seems to be a temporal issue with obviousness as well.
Since our legal fiction of PHOSITA has superpowers to read all published material and view all public displays or sales, should we assume that they may also time-travel, and bring forth concepts that may have slid from modern practice, perhaps in more distant arts?
Tractor propulsion was known. Moving dangerous blades away from swimmers was a known problem. Boats have been pulled by tractor props before…BUT….this seems like a perfect example what the patent system is for- nobody was doing it, Volvo thought they could do it, so applied for patents and went about it.
Mercury saw it, saw that some people wanted it, and copied it, despite it being patented, because they had not thought to do it themselves. Would Volvo have gone forward anyway, without a patent? Maybe, but at some point, why have a patent system at all if this kind of situation can’t be reasonably covered?
Time travel not needed – the legal notion here simply does not adhere to your colloquial view of “distant time.”
There is no “that went out of style” caveat.
“Boats have been pulled by tractor props before”
You don’t say.
“Would Volvo have gone forward anyway, without a patent? Maybe”
“First to market” is thought to provide an advantage on its own. If a monopoly is deemed necessary for every “new” product, maybe there is a larger issue with the business environment that should be addressed outside of the patent system.
It is unclear what you mean by “deemed necessary.”
Patents are — and always have been — a choice.
As a choice, “necessary” has always been in the eye of the beholder.
Perhaps this is tied to your (apparent) lack of understanding that a patent is a negative right. You do appear to think that having a patent has some type of “must make” attribute.
[T]he Federal Circuit found that the PTAB had… been unduly dismissive of the patentee’s evidence of commercial success and copying. The case… serves as a reminder that product copying still caries significant weight in the obviousness analysis.
Very true. Evidence of copying typically carries more weight than commercial success evidence.
The problem with copying is that if copying occurs after the “original” product appears on the market and is selling, then the nexus between the supposed non-obviousness of the original product and the allegedly copied product is non-existent. It’s standard practice for businesses to look around and see what’s selling and then jump into the fray with their own product. That practice has nothing to do with “non-obviousness”, long felt needs or anything patent related. It’s “trend mongering” and nothing more.
A few thoughts:
1. Copying shows interest and demand for the patented invention. Someone expending the time and resources to copy an invention indicates they think there is value in what the patent covers. This speaks to the invention addressing a problem or need in the field.
2. Copying suggests the copier could not come up with or easily improve upon the invention independently. Rather than designing their own solution, the copier took the patent owner’s path. This indicates the claimed invention was not obvious to those skilled in the art.
3. Evidence of copying shows potential disbelief or skepticism. If the invention was obvious, the copier likely would have already implemented the solution rather than wait to copy it. Their copying evidences that they did not think of it or consider it obvious beforehand.
4. Copying shows the market associating the copied features with the patent owner’s commercial success. And, commercial success is often used as an indicator of non-obviousness.
The first three examples would seem like evidence of non-obviousness if the copying occurred before the “original” product was commercially successful. For example, engineers in company B seeing a prototype or on-sale item from company A and recognizing “Hey these folks are onto something.”
But number 4 has an inherent nexus issue because of course companies copy the commercial successes of others (provided they can undercut the competitor in some manner, e.g., leveraging some advantage in manufacturing or access to raw materials, goodwill, etc). I don’t deny that some consumers are attracted to “nifty” and/or actually inventive things but it seems like most successful products out there are successful for reasons that have nothing to do with patent-worthiness and everything to do with advertising and “created need”. It’d be interesting to see some actual consumer data on this point, for instance looking at ten of the top selling new-to-market products (within a few different categories) in a given time frame and seeing what (if any) patents were filed upon or obtained relating to those products.
“if the copying occurred before the “original” product was commercially successful.”
Nonsensical.
Lots of inventive things actually do not equate to commercial success (for a variety of reasons).
A business will not — need not copy items that merely may result in commercial success.
The far more logical path is to first see commercial success and then evaluate the differences – and then copy those differences, which directly then lead to Prof Crouch’s comments.
+1 to Dennis.
One note that is telling is that I have client that don’t mind picture claims as one set of claims because what people do is take their product and copy it verbatim. They send the product to a factory in Taiwan and just say copy it. No engineering needed.
“long-felt but unsolved need”
Nobody in the history of boating could figure out where to put a propeller other than having it hang out beyond the rear perimeter of the boat? Until this discovery … ten years ago or something like that?
Somehow I’m skeptical.
I haven’t looked at the claims or the prosecution history so I don’t know what else is in there. The problem with commercial success is that it’s incredibly common for companies to create commercially successful products that are completely non-inventive. It’s called “marketing.”
Beyond some obvious but appealing “feature” of the product, commercial success often flows from (1) unclaimed details in the design that appeal to consumer (e.g., ease of install, repair, etc) and (2) pricing.
Until this motor came out, there were two (and only two) locations where the prop of a motor had been located – positioned off the stern (an outboard or an inboard/outboard ) or directly under the center of the boat (an inboard). When this configuration was released, it was completely different. It immediately eliminated a significant safety issue for swimmers and skiers for when the prop was positioned out past the stern of the boat. Having been a boater (owned and operated power boats) for over 40 years, this was definitely unique. It was an immediate topic of discussion among boaters, and I don’t recall anyone even suggesting that this was anything but novel and unique. The only question was performance – would it have the same capabilities as the other two configurations.
Thank you Dvan,
Your post contains an important, albeit implicit and subtle, aspect of patent law that many (in their colloquial) view errantly as a requirement: that innovation must beor provide “better.”
While this may be seen as desired, this is not – nor ever has been – a legal requirement.
Quite in fact, as those that have studied innovation well recognize, MANY items of innovation will at first present a regression from existing art.
I suspect it’s the boaters who were wondering about performance, not the patent folks. To a potential boat owner, knowing whether/how quickly it can get a couple of skiiers out of the water is a big deal.
And in a real court boaters and experts would have given testimony before a citizen jury that would have been instructed that patents are presumed valid because government agencies ordinarily do their job correctly.
All that is turned upside down at the USPTO/PTAB.
It should be pointed out that the legal presumption (BOTH presence and degree) was expressly left in the statute even as the rest of the AIA was passed.
As you intonate, this particular stick of personal property is an extremely important stick in the bundle of property rights of a granted patent (hauled back into the administrative agency of the ((political)) executive branch or not).
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