Jury Instructions and Objective Indicia of Nonobviousness: Federal Circuit Grants New Trial in Inline Plastics v. Lacerta

In a recent decision, the Federal Circuit vacated a judgment of invalidity and remanded for a new trial, holding that the district court’s jury instruction on objective indicia of nonobviousness constituted prejudicial legal error. The case, Inline Plastics Corp. v. Lacerta Group, LLC, No. 2022-1954 (Fed. Cir. Mar. 27, 2024), involved patents relating to tamper-resistant and tamper-evident food containers.

Role of Jury Instructions and Objective Indicia

In American civil litigation, jury instructions are the set of legal rules and guidelines provided to the jury by the trial judge before the jury begins deliberations. These instructions explain the relevant law, legal standards, and how the jury should apply the law to the facts of the case when reaching a verdict. The judge’s role is to ensure the jury instructions accurately reflect the applicable law — while still being delivered in a digestible form that does not unduly confuse the jury or direct the jury’s deliberation.  Attorneys from each side will typically propose specific instructions and object to those they believe are incorrect or incomplete.

At the close of trial, jury instructions are typically given orally by the judge and can also be provided to the jury in writing for reference during deliberations. After the verdict, if the losing party believes the jury instructions were legally erroneous or prejudicial, they may raise this issue on appeal, so long as objections were raised sufficient to preserve the issue for appeal. Appellate courts review the legal accuracy of jury instructions de novo and will order a new trial if they find the instructions were erroneous and the error was prejudicial. An instructional error that is deemed “harmless” in light of the evidence and other instructions will stand.  Although appealing on jury instructions is a somewhat roundabout way of challenging an outcome, the de novo review potential often provides more hope than a direct challenge to the verdict itself.

A jury is typically seen as a “fact finder” – empaneled to decide disputed issues of material fact.  On the other hand, the judge is a “law giver” – providing the jury with the legal framework for deciding an issue and also determining that the jury’s verdict fits within the law.  Obviousness though is quirky – although it is a question of law, it requires determination of substantial underlying factual issues. In reality, the fact/law questions are so hard to disambiguate that we should call obviousness a mixed question of fact and law. Because of the major factual element (and because of tradition), the question of obviousness is typically given to a jury to decide.

Courts typically consider various factors in the obviousness analysis, known a the Graham Factors. See Graham v. John Deere Co., 383 U.S. 1 (1966).  The majority of these factors are associated with what might be termed the “prima facie” obviousness case that focuses on directly comparing the most relevant prior art against the invention as claimed.  In addition to rebutting this direct evidence, the patentee is also permitted to present additional objective indicia of nonobviousness such as commercial success, long-felt but unsolved needs, failure of others, copying, unexpected results, praise by others, and licensing.  These external signs of success “may often be the most probative and cogent evidence in the record” and, if presented by the patentee, must be considered by the fact finder. Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530 (Fed. Cir. 1983).

Background on the Case

Inline Plastics sued Lacerta for infringement of several patents relating to tamper-resistant/evident containers and methods of making such containers using thermoformed plastic. The containers include structural features, such as an upwardly projecting bead surrounding the cover, that impede access and make tampering physically difficult and evident. U.S. Pat. Nos. 7,118,003; 7,073,680; 9,630,756; 8,795,580; and 9,527,640.

The district court construed several key claim terms. It then granted Inline summary judgment of infringement on a subset of claims, while a jury found the remaining asserted claims not infringed and found all asserted claims invalid. Inline Plastics Corp. v. Lacerta Group, Inc., 560 F. Supp. 3d 424 (D. Mass. 2021) (summary judgment).

At trial, Inline presented evidence on several objective indicia of nonobviousness, including industry praise, copying, and licensing of its patented products. However, in its jury instruction, the district court mentioned only commercial success and long-felt need, omitting the other indicia for which Inline had presented evidence. On appeal, Inline argued that the erroneous jury instruction, in light of the evidence presented, was prejudicial legal error warranting a new trial on invalidity. The Federal Circuit agreed.

The Federal Circuit’s Opinion

In an opinion by Judge Taranto, the Federal Circuit held that “the jury instruction on the objective indicia of nonobviousness constituted prejudicial legal error, so the invalidity judgment must be set aside.”

The court explained that Inline had presented material evidence at trial relating to industry praise, copying, and licensing – in addition to commercial success and long-felt need. This evidence “called for an instruction, if properly requested, on the objective indicia to which the evidence pertains, so that the jury could assess its weight as objective indicia and—where the jury was asked for the bottom-line answer on obviousness—in relation to the prima facie case.”

Inline had properly preserved its objection to the instruction with both a pre- and post- verdict motion. And the Federal Circuit determined the error was not harmless, as it could not say a proper instruction “would have made no difference to a reasonable jury regarding invalidity.”

As part of its analysis, the Federal Circuit noted that the defendant’s prima facie case of obviousness was “not so strong that we are prepared to say that a reasonable jury [if properly instructed] had to find all asserted claims invalid for obviousness.” The analysis here implies that – at times – the prior art will be so good that it overwhelms any competing evidence of secondary conditions. I.e., if the evidence presenting a prima facie case of obviousness is overwhelming, an appellate court might conclude that a jury instruction omitting some objective indicia was harmless error.

At oral arguments, the patentee’s counsel David Silva argued that:

Those factors [where we provided evidence but that were not mentioned in the jury instructions] are awards from an industry, or evidence of copying. And I think they’re very meaningful. And I think a jury, if not instructed to take those into consideration, wouldn’t have inherently looked to those, right? They’re looking to what the judge specifically listed. And so that’s why I think they’re particularly meaningful.

The court also noted that “criteria for giving weight, in the obviousness inquiry, differ among the objective indicia, even when some of the same facts bear on different indicia.” For instance, industry praise, copying, and licensing may convey explicit or implicit information about how competitors viewed the merits of the invention, potentially even before market introduction. In contrast, commercial success and long-felt need may depend more on post-introduction market reactions over a longer period.

Peter Menell’s Patent Case Management Judicial Guide published by the Federal Judicial Center includes a set of model jury instructions related to obviousness. On the topic of secondary considerations, the guide walks through potential considerations and indicates that the judge should include only those that are relevant to the facts presented in the case:

• Were products covered by the claim commercially successful due to the
  merits of the claimed invention rather than due to advertising, promotion, salesmanship, or features of the product other than those found in
  the claim?
• Was there long felt need for a solution to the problem facing the inventors, which was satisfied by the claimed invention?
• Did others try, but fail, to solve the problem solved by the claimed invention?
• Did others copy the claimed invention?
• Did the claimed invention achieve unexpectedly superior results over the closest prior art?
• Did others in the field, or [the Defendant] praise the claimed invention
  or express surprise at the making of the claimed invention?
• Did others accept licenses under [abbreviated patent number] patent because of the merits of the claimed invention?

Answering all, or some, of these questions “yes” may suggest that the claim was not obvious. Answering all, or some, of these questions “no” may suggest that the claims would have been obvious. These factors are relevant only if there is a connection, or nexus, between the factor and the invention covered by the patent claims. Even if you conclude that some of the above indicators have been established, those factors should be considered along with all the other evidence in the case in determining whether [the defendant] has proven that the claimed invention would have been obvious.

For its part, the defendant in the case, Lacerta, argued primarily that Inline had not properly preserved its objection to the jury instruction on appeal. However, the Federal Circuit rejected this argument. The court pointed out that Inline had requested an instruction on objective indicia that included industry praise, copying, and licensing, and these factors were part of the court’s draft instructions. Moreover, when the pertinent portions of the draft instructions were not read to the jury, “Inline timely objected ‘to the Court’s elimination of several of the secondary considerations of nonobviousness from the instructions’ after the instructions were read and before deliberations.” Thus, the Federal Circuit found that Inline had taken the necessary steps to preserve its challenge to the jury instructions for appeal.

The bottom line here is that a court’s failure to properly instruct the jury on all pertinent objective indicia can constitute prejudicial legal error requiring a new trial. On remand, the district court will need to empanel a new jury to decide the issue of obviousness.

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Claim 1 of U.S. Patent No. 7,118,003:

A tamper-resistant/evident container comprising:

a) a plastic, transparent cover portion including an outwardly extending peripheral flange;

b) a base portion including an upper peripheral edge forming at least in part an upwardly projecting bead extending substantially about the perimeter of the base portion and configured to render the outwardly extending flange of the cover portion relatively inaccessible when the container is closed; and

c) a tamper evident bridge connecting the cover portion to the base portion.