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See Here: No Standing Based on Vague Future Plans or Adverse Priority Findings

by | Nov 16, 2023 |

The US Court of Appeals for the Federal Circuit dismissed an appeal from a final written decision in an inter partes review (IPR) proceeding, finding that the petitioner lacked standing because it suffered no injury in fact. Allgenesis Biotherapeutics Inc. v. Cloudbreak Therapeutics, LLC, Case No. 22-1706 (Fed. Cir. Nov. 7, 2023) (Moore, Stoll, Cunningham, JJ.)

Allgenesis Biotherapeutics filed an IPR petition challenging a patent owned by Cloudbreak Therapeutics. The challenged patent discloses compositions and methods for treating the eye condition pterygium. During the IPR proceeding, Cloudbreak disclaimed all but two of the claims. The Patent Trial & Appeal Board issued a final written decision finding that Allgenesis failed to show that the remaining two claims were unpatentable. As part of its decision, the Board made a priority decision that a Patent Cooperation Treaty (PCT) application belonging to Allgenesis was not prior art to Cloudbreak’s patent. Allgenesis appealed.

Article III of the US Constitution limits the Federal Circuit’s jurisdiction to adjudication of “cases” or “controversies,” which means the appellant must have (1) suffered an injury in fact (2) that is fairly traceable to the challenged conduct of the defendant and (3) likely to be redressed by a favorable judicial decision.

Allgenesis attempted to establish Article III standing based on two separate arguments. First, Allgenesis argued that it had standing based on potential infringement liability. To support that argument, Allgenesis offered a declaration by its vice president of finance that included information about a Phase II trial completed three years prior and a related 2020 publication. That declaration, however, did not identify any specific plan to conduct a Phase III trial or to seek US Food and Drug Administration (FDA) approval, and instead only contained generic statements that the project was not abandoned. While Allgenesis’s briefing and oral argument included statements that it planned to engage in a Phase III trial, the Federal Circuit determined that there was no record support for this claim. The Court found that the evidence before it did not constitute the necessary concrete plans to convey standing to appeal the final written decision. Allgenesis also attempted to rely on its own failed attempts at seeking a settlement from Cloudbreak, but the Court concluded that this was insufficient to show a substantial risk of infringement.

Allgenesis’s second argument was that the Board’s priority decision created an injury in fact. Allgenesis argued that the Board’s determination about the priority date of Cloudbreak’s patent affected Allgenesis’s patent rights because it would have a preclusive effect on Allgenesis’s pending applications. The Federal Circuit was unpersuaded and explained that collateral estoppel does not attach to a non-appeal priority decision from an IPR decision. To the extent that an examiner did reach the same conclusion as the Board, Allgenesis would be free to appeal that decision.

Practice Note: For Board petitioners seeking to establish standing to appeal unfavorable final written decisions, it is necessary to develop sufficient support to show standing in fact. For life sciences companies working in drug development, declarations [...]

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Status Quo Has Few Defenders at PREVAIL Act Senate Subcommittee Hearing

by and | Nov 16, 2023 | ,

On November 8, 2023, the US Senate Judiciary Subcommittee on Intellectual Property heard testimony from four witnesses on the proposed Promoting and Respecting Economically Vital American Innovation Leadership (PREVAIL) Act. Although the PREVAIL Act includes several provisions regarding transparency and independence, its thrust is its dramatic alteration of Patent Trial & Appeal Board post-grant review (PGR) and inter partes review (IPR) proceedings, including their relationship to co-pending district court litigation, with the goal of incentivizing innovation by reducing costs and making such challenges less likely to be successful.

We previously reported on the provisions of the proposed PREVAIL Act when it was introduced. The biggest changes under consideration include the introduction of a standing requirement, a heightened burden of proof from preponderance-of-the-evidence to clear-and-convincing evidence, a stronger estoppel to thwart costly and unnecessary co-pending actions in court and at the Board, and the separation of the Board’s institution and decision-making functions.

Three witnesses spoke in favor of the PREVAIL Act before the subcommittee, emphasizing that the Board failed to live up to the purposes and intentions of the America Invents Act (AIA). These witnesses were Representative Lamar Smith, a co-sponsor of the AIA; Michelle Armond, co-founder of the law firm Armond Wilson LLP and a practitioner before the Board; and Joseph Kiani, founder of Masimo Industries.

Smith testified that Congress enacted the AIA because it recognized the potential for Board proceedings to be abused, and according to Smith, that is exactly what has happened. Each of the three witnesses testified that well-funded litigants have exploited Board procedures to overwhelm small businesses by forcing them into expensive duplicative proceedings in multiple forums. For example, Kiani posited that the Board posed an existential threat to startups, attributing findings of invalidity against his company’s patents to the AIA’s invalidation-friendly procedures.

Armond explained to the subcommittee how the PREVAIL Act would streamline Board proceedings and harmonize them with district court and International Trade Commission (ITC) litigation. According to Armond, in the wake of the AIA, both the Board and district courts have failed to offer uniform standards for deciding whether to stay a proceeding in their forum pending resolution of a parallel proceeding in the other. The PREVAIL Act would resolve this problem by requiring litigants to select only one forum in which they may raise their invalidity arguments. Armond argued that using the same clear-and-convincing-evidence standard in Board review proceedings and other litigation would harmonize the Board with district courts and the ITC by ensuring that different forums reach the same invalidity decision.

Joseph Matal, former US Patent & Trademark Office interim director and acting solicitor, and current principal of Clear IP, LLC, was the lone dissenting witness at the hearing. According to Matal, the PREVAIL Act’s proposal to require a clear-and-convincing-evidence standard in Board review proceedings is misguided because Board judges possess the requisite agency expertise to second-guess patent examination decisions. Additionally, Board judges often have more time to evaluate the patents and more information than the examiner. According to Matal, [...]

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PTO Director Requests Input on Patent Trial & Appeal Board Decision Regarding Duty of Candor

by | Nov 9, 2023 |

On May 3, 2023, the Patent Trial & Appeal Board granted a motion for sanctions brought by Spectrum Solutions LLC against Longhorn Vaccines & Diagnostics LLC.[1] The resulting sanctions order canceled five Longhorn patents. The Board found that Longhorn failed to meet its duty of candor by selectively and improperly withholding material results inconsistent with its patentability arguments directed to the canceled claims covering chemical compositions, collection systems and methods for biological specimen collection, including preserving biological samples, killing pathogens and preventing nucleic acid degradation. Now, US Patent & Trademark Office (PTO) Director Katherine Vidal has initiated sua sponte review of the Board’s sanctions order.

In her order issued October 27, 2023, the Director authorized further briefing by both parties, as well as amicus curiae briefs in response to the Board’s decision and analysis for the Director’s review. The Director particularly seeks input on the following issues in the context of situations where relevant factual evidence has been withheld during an America Invents Act proceeding:

  • Which PTO regulations are implicated? Do such regulations include 37 C.F.R. § 1.56?
  • Is it an appropriate sanction for the Board to deem the claims unpatentable in its written decision? Is such a sanction proportionate to the harm caused by the party, taking into account the integrity of the patent system?
  • What other sanctions are appropriate, either in addition to or in place of applying adverse judgment in a final written decision to deem claims unpatentable?

Amicus briefs (of no more than 20 pages) limited to the issues and questions identified above should be submitted to Director_PTABDecision_Review@uspto.gov no later than four weeks after the October 27, 2023, entry date of the order.

For further details, see Order (Paper 133) in each of the listed IPR proceedings.

________________________________________________________________________________

[1] See IPR2021-00847 (US 8,084,443), IPR2021-00850 (US 8,293,467), IPR2021-00854 (US 8,669,20), IPR2021-00857 (US 9,212,399) and IPR2021-00860 (US 9,683,256).



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Statements in Unrelated Application Don’t Narrow Claim Term

by | Nov 9, 2023 |

The US Court of Appeals for the Federal Circuit vacated a stipulated judgment of noninfringement in a patent infringement dispute after construing a disputed claim term, taking a more literal approach than the district court based on the meanings of the individual words of the claim language. Malvern Panalytical Inc. v. TA Instruments-Waters LLC, Case No. 22-1439 (Fed. Cir. Nov. 1, 2023) (Prost, Hughes, Cunningham, JJ.)

The dispute involved a suit brought by Malvern against TA Instruments-Waters and Waters Technologies Corporation (collectively, Waters) alleging infringement of two patents. Both asserted patents disclose microcalorimeters for measuring the amount of energy absorbed or released during a chemical reaction between two compounds and include independent claims directed to “a micro titration calorimetry system” having several elements, including an automatic pipette assembly that is guided into at least two positions via another component—namely, the disputed “pipette guiding mechanism.”

The pre-grant publication of a commonly assigned but unrelated patent was cited during the prosecution of an unrelated Malvern patent because the examiner understood the disclosure of that patent to recite an automated pipette guiding mechanism. The applicant initially tried to rebut the rejections by arguing that the disclosure of that patent recited a “purely passive [pipette] guiding mechanism.” However, after the examiner found the arguments unpersuasive, the applicant simply changed course and argued that the cited reference was not prior art because the publication and unrelated patent had a common assignee.

Malvern then requested supplemental examination of the now asserted patent under 35 U.S.C. § 257. In connection with the supplemental examination, Malvern filed an information disclosure statement (IDS) that included 154 documents, seven of which were office actions from the prosecution of the unrelated patent. Malvern did not describe or characterize the office actions in any way.

Turning back to the litigation, during claim construction proceedings, Malvern argued that “pipette guiding mechanism” should mean a “mechanism that guides the pipette assembly” while Waters argued that it should mean a “mechanism that manually guides the pipette assembly.” The district court concluded that the term “pipette guiding mechanism” was a coined term because Malvern presented no evidence that a “pipette guiding mechanism” was known or readily understandable to a person of ordinary skill in the art. Based on that determination, the district court relied on intrinsic evidence to determine the objective boundaries of the term.

The district court found that the statement made during the prosecution of the unrelated patent was relevant to the claim construction because the asserted and unrelated patents were assigned to Malvern. The district court also considered these statements as having been incorporated into the intrinsic record of the asserted patent because it concluded that Malvern agreed to incorporate the statements when it cited the office actions filed during supplemental examination of the asserted patent. Malvern appealed.

The Federal Circuit explained that it was appropriate to construe the term “pipette guiding mechanism” by looking into the individual meanings of the words “pipette,” “guiding” and “mechanism.” The Court indicated that when the patentee [...]

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Say Goodbye: Argument Not Presented in IPR Petition Is Waived

by | Nov 2, 2023 |

In a split decision, the US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board patentability determination, finding that the challenger’s appeal arguments were not raised in its inter partes review (IPR) petitions and were therefore waived. Netflix, Inc. v. DivX, LLC, Case Nos. 22-1203; -1204 (Fed. Cir. Oct. 25, 2023) (Linn, Chen, JJ.) (Dyk, J., dissenting).

DivX owns two patents directed to media streaming technologies. In media streaming, content (such as a movie) is typically stored as separate “streams” suitable for different device capabilities. A playback device must be able to select the appropriate media file from the available streams. To accomplish this selection, the challenged patents discuss a method for automatically generating top-level index files that describe the location and content of container files having streams of media. In particular, an independent claim in each of the patents recites a method comprising “receiving” a request for content, “retrieving” a list of assets associated with the content, “filtering” the list of assets using device capability, “generating . . . a top level index file describing each asset in the filtered list of assets” and “sending the top level index file” to the playback device.

Netflix challenged the two patents in two separate IPR proceedings based on two combinations of prior art references: Pyle and Marusi, and Lewis and Marusi. The Board issued lengthy final written decisions for both petitions, closely analyzing the arguments and evidence presented by Netflix and DivX. The Board determined that Netflix failed to meet its burden of showing that the challenged claims were unpatentable. Netflix appealed.

At the outset, the Federal Circuit noted that “Netflix’s appeal does not challenge any of the Board’s substantive analysis.” It instead makes a purely procedural argument, accusing the Board of “falling down on the job by failing to address several arguments purportedly raised in Netflix’s petitions.” One such argument that the Court identified related to the “filtering” claim element. The Court, the Board and Netflix all agreed that Netflix had advanced an argument that Pyle teaches the filtering element based on Pyle’s selection of a preexisting manifest. Netflix, however, argued on appeal that it also had advanced an argument that Pyle teaches the filtering element based on Pyle’s creation of a new manifest. The Board found that this argument was not presented in Netflix’s petition, and the Federal Circuit agreed. At the Federal Circuit, Netflix identified various block quotes in its petition that purported to support the argument. However, the Court found that “nothing in the quoted language itself signals to a reader that an optimized new manifest equates to ‘filtering the list of assets.’” Furthermore, “the petition made it quite clear Netflix was focused on Pyle’s pre-existing manifest . . . Netflix thus showed it knew how to put forward a clear mapping of Pyle to the filtering limitation, but never connected Pyle’s new manifest to that limitation.”

Judge Dyk dissented. In his opinion, Netflix had not failed to advance the “new manifest” [...]

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No Money, Mo’ Problems: Speculative Damages Award Cannot Stand

by | Oct 26, 2023 |

The US Court of Appeals for the Federal Circuit upheld a district court’s claim construction and jury instructions but reversed a premature judgment as a matter of law (JMOL) on obviousness and an imprecise damages award. Cyntec Company, Ltd. v. Chilisin Electronics. Corp., Case No. 22-1873 (Fed. Cir. Oct. 16, 2023) (Moore, Stoll, Cunningham, JJ)

Cyntec sued Chilisin for willful infringement of two patents related to molded chokes, which are component parts in batteries and power supplies. Four events at trial led to this appeal. First, the district court construed the disputed “by means of” term by its plain meaning but also instructed the jury that when a result occurs “by means of” a factor, that factor “has an impact on”—but may not be the “only potential cause” of—the result. Second, Chilisin presented invalidity evidence, arguing that the asserted claims were obvious by one prior art reference in light of another.

Before Chilisin could cross-examine Cyntec’s rebuttal expert, the district court granted Cyntec’s JMOL, finding the patents not obvious. In the third event that led to the appeal, Cyntec presented a market-share lost profits theory of damages based on expert testimony. Chilisin unsuccessfully moved to exclude the testimony as being speculative and unreliable. The jury awarded more than $1.8 million in damages and the district court subsequently granted enhanced damages totaling more than $5.5 million. As for the fourth event, Chilisin unsuccessfully moved for JMOL and a new trial on multiple issues. Chilisin then appealed.

The Federal Circuit reviewed three issues on appeal:

  1. The nonobviousness JMOL
  2. The infringement findings
  3. The damages award.

Starting with nonobviousness, the Federal Circuit reversed the JMOL and remanded. While obviousness is ultimately a legal question, it relies on “numerous underlying factual findings,” including the scope/content/differences of prior art, the skill level of a person of ordinary skill in the art and objective indicia of nonobviousness such as commercial success. The Court found Chilisin had presented enough evidence to allow a jury to find the asserted claims obvious in light of the two prior art references presented. The Federal Circuit also analyzed the district court’s reasoning regarding the prior art and found that its “conclusions are either insufficient to support JMOL or unsupported by the evidence.” Thus, it was improper to withhold a partial fact issue from the jury.

Next, the Federal Circuit analyzed the infringement issue, dividing the analysis into the district court’s claim construction and jury instructions, and the jury’s infringement finding. Chilisin argued that the disputed term “by means of” should signal but-for causation, meaning the factor must cause the result. The Court agreed that this was one possible reading, but because the claim language did not read “by exclusive/primary means” or something similar, the disputed term could also encompass “mere contribution.” The Federal Circuit cited to the specification in support of its claim interpretation and ultimately upheld the district court’s claim construction and the consistent jury instructions. The Court rejected Chilisin’s argument that there was insufficient evidence of infringement, concluding [...]

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Downloaded: No Relief From Stipulated Claim Construction

by | Oct 26, 2023 |

The US Court of Appeals for the Federal Circuit ruled that a claim interpretation that flows naturally from the parties’ stipulated claim construction is binding on the parties even if the interpretation reads preferred embodiments out of the claims. Finjan LLC v. SonicWall, Inc., Case No. 22-1048 (Fed. Cir. Oct. 13, 2023) (Reyna, Cunningham, JJ.) (Bryson, J., dissenting).

In 2017, Finjan sued SonicWall for infringing several of Finjan’s patents related to cybersecurity technology systems that identify malicious material in downloadable content and programming code. The asserted patents included claims directed to ways to protect network-connectable devices from undesirable downloadable operations. During claim construction, the parties stipulated that a “downloadable” should be construed as “an executable application program, which is downloaded from a source computer and run on the destination computer.”

SonicWall moved for summary judgment, arguing that it did not infringe the patents because the accused devices received and inspected supposed “downloadables” as unextracted packets, which do not constitute executable files under the stipulated claim construction. The district court granted partial summary judgment in favor of SonicWall, finding that Finjan failed to offer evidence that “the accused […] products ‘ever possess a reassembled file or executable application.’” Finjan appealed.

Finjan argued that the district court’s ruling was incorrect because it impermissibly grafted additional requirements onto the stipulated claim construction, and that the district court’s interpretation was inconsistent with claim language found in other parts of the asserted patents. The Federal Circuit rejected these arguments, noting that the district court’s infringement ruling followed directly from the parties’ stipulated definition of the term “downloadables.” Under the stipulated claim construction and in accordance with Finjan’s own expert’s interpretation of the meaning of “executable,” a device “that merely receives and forwards packets without reassembling their contents does not receive a downloadable . . . because that device does not receive an executable application program.” The Court emphasized that Finjan could not challenge its earlier claim construction stipulation. Further, the Court noted that the stipulated definition of “downloadables” was derived verbatim from the specifications of two of the asserted patents.

Judge Bryson dissented for two reasons. First, he noted that the district court’s interpretation of the claims would read preferred embodiments out of the patent and effectively eviscerate from the patent’s scope any device that screens content from the internet. Second, Judge Bryson found that elsewhere in the asserted patents’ specifications it was clear that the meaning of “downloadables” used by the district court was incorrect. Contrary to the majority, Judge Bryson did not find the stipulated claim construction dispositive because Finjan merely challenged the meaning of the word “executable” within the stipulated claim construction, rather than the contents of the stipulation itself.

Practice Note: This decision offers a few helpful lessons for practitioners. First, it is important to write claims in language that is both expansive enough to encompass all intended embodiments but precise enough to survive invalidity challenges. By carefully selecting specific but broad language, and writing claims more accurately, patentees may avoid semantic noninfringement arguments. [...]

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Go With the Flow: “A” Still Means “One or More”

by | Oct 26, 2023 |

The US Court of Appeals for the Federal Circuit reversed a claim construction that was adopted during an inter partes review (IPR) because the Patent Trial & Appeal Board erred in construing the contested limitation as limited to a single sample rather than including the possibility of plural samples. ABS Global, Inc. v. Cytonome/ST, LLC, Case No. 22-1761 (Fed. Cir. Oct. 19, 2023) (Reyna, Taranto, Stark, JJ.)

ABS and Genus plc (collectively, ABS) filed a petition to institute an IPR on a patent owned by Cytonome. The patent claims microfluidic devices for particle (e.g., cells, molecules and other particles of interest) processing. The claimed devices exploit the principles of laminar flow to hydrodynamically focus particles at a certain point along the flow path for inspection or other purposes. The claimed devices are capable of hydrodynamically focusing the flow of a particle-containing fluid (the sample fluid) by abutting the sample fluid on more than one side with a fluid that does not contain particles (the sheath fluid). Generally, the faster the sheath fluid flows relative to the sample fluid the more the sample fluid’s corresponding cross-section is compressed. Figure 3A of the patent is an example of how the claimed devices use sheath fluid (SF) to focus a sample fluid (S) along a channel (CL):

ABS’s petition argued that the challenged claims were anticipated or obvious at least in view of a prior publication that taught devices with a split sample stream. The Board disagreed, construing the challenged patent claims as directed to a single sample stream and concluding that ABS failed to demonstrate why those of ordinary skill—in view of the art cited in ABS’s petition—would have modified the prior art split sample stream into the claimed single sample stream. ABS appealed.

The Federal Circuit found that the Board erred in construing the challenged claims. In construing the independent claim as being limited to a single sample stream, the Board focused on two limitations: “an inlet configured to receive a sample stream” and “a fluid focusing region configured to focus the sample stream….” In limiting the claim to a single sample stream, the Board relied on the definite article preceding the second recitation of “sample stream” and noted that a plural-allowing interpretation would be inconsistent with a dependent claim that further requires the focusing fluid to be “introduced into the flow channel symmetrically with respect to a centerline of the sample stream.”

The Federal Circuit reversed the Board’s claim construction, concluding that the dependent claim was not inconsistent with a plural-streams interpretation for the independent claim and that the Board committed two errors in construing both claims. First, the Board did not properly apply what the Court refers to as the “general rule,” which is applicable to open-ended “comprising” claims that recite “a” or “an” before a noun. The Court explained that such a limitation should be construed to mean one or more unless context sufficiently indicates otherwise. Second, [...]

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Decoding Algorithms: Structural Sufficiency for Means-Plus-Function Claim Judged From Skilled Artisan’s Perspective

by | Oct 19, 2023 |

The US Court of Appeals for the Federal Circuit reiterated that in the context of construing computer-implemented means-plus-function limitations, if the specification discloses some arguable algorithm, even if a party contends that the algorithm is inadequate, the sufficiency of the purportedly-adequate structure disclosed in the specification must be evaluated in light of the knowledge possessed by a skilled artisan. Sisvel International S. A. v. Sierra Wireless, Inc., Case No. 22-1493 (Fed. Cir. Oct. 6, 2023) (Moore, Clevenger, Chen, JJ.)

Sisvel owns a patent directed to methods of channel coding when transmitting data in radio systems. The patent uses techniques called “link adaptation” and “incremental redundancy,” which are alleged to provide improvement over prior channel coding techniques. Sierra filed a petition for inter partes review (IPR) challenging certain claims as obvious over the Chen reference by itself and challenging those and other claims as obvious over the combination of the Chen and Eriksson references or the combination of the Chen and GSM references. The Patent Trial & Appeal Board found that some challenged claims were obvious based on Chen alone and that other claims were patentable over the proposed combination of references. Both parties appealed.

Sisvel appealed the Board’s unpatentability finding, arguing that Chen failed to disclose a second puncturing pattern. Sisvel also argued that the Board did not provide a sufficiently detailed explanation to support its finding that Chen disclosed the claimed “combining” limitation and ignored Sisvel’s rebuttal arguments. The Federal Circuit disagreed with Sisvel on both counts and affirmed the Board’s determination. Regarding the second puncturing pattern, the Court found that the independent claim required a “first puncturing pattern” and a “second puncturing pattern,” and that Chen expressly described that its coded transmissions are “generated by using punctured codes” and that “[p]uncturing reduces the number of code symbols to be retransmitted.” Therefore, the Court found that substantial evidence supported the Board’s finding that Chen taught a second puncturing pattern. Regarding the “combining” limitation, the Court affirmed the Board’s decision and concluded that Chen’s disclosure of “accumulating the code symbols from the transmitted and retransmitted coded data blocks,” also referred to in Chen as “interleaving,” taught the “combining” limitation. Overall, the Court determined that the Board’s analysis was sufficiently detailed, adequately addressed Sisvel’s related arguments and was supported by substantial evidence.

Sierra appealed the patentability finding, arguing that the Board’s finding that a skilled artisan would not have been motivated to combine Chen and the GSM references was not supported by substantial evidence. Sierra also argued that the Board erroneously found insufficient corresponding structure in the specification for the term “means for detecting.” The Federal Circuit concluded that substantial evidence supported the Board’s finding of a lack of motivation to combine Chen and the GSM references, but that the Board erred in analyzing the “means for detecting” limitation. Regarding motivation to combine, the Court explained that although an IPR petitioner has a low burden of explaining why a skilled artisan would have been motivated to combine various references to form [...]

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A Matter of Style: No Need to Select “Primary” Reference in Obviousness Challenge

by | Oct 19, 2023 |

The US Court of Appeals for the Federal Circuit affirmed an obviousness decision by the Patent Trial & Appeal Board, explaining that nothing requires a petitioner to identify a prior art reference as a “primary reference” in an obviousness challenge. Schwendimann v. Neenah, Inc., Case Nos. 22-1333; -1334; -1427; -1432 (Fed. Cir. Oct. 6, 2023) (Prost, Clevenger, Cunningham, JJ.)

Jodi Schwendimann filed lawsuits accusing Neenah of infringing several patents related to transfer sheets and methods for transferring images onto dark fabrics. Neenah filed several petitions for inter partes review (IPR) challenging various claims based on obviousness. The Board instituted the IPR challenges.

Schwendimann’s patents addressed a method for ensuring that dark images could be seen when transferred onto dark fabrics. Multilayer image transfer sheets were known in the prior art, teaching a two-step process to first apply a light background onto dark fabric and then apply the dark image on top. Schwendimann’s claims described a single-step solution, incorporating a white background, possibly of titanium dioxide, into the image transfer sheet so that a white background and dark image could be applied simultaneously onto a dark fabric.

All of the IPR petitions cited Kronzer as a prior art reference. Kronzer described multilayered image transfer sheets with varying configurations, although it lacked white pigment in a layer to transfer an image onto dark fabric. Another prior art reference, Oez, taught the use of a white pigment, such as titanium dioxide, in multilayered image transfer sheets. Schwendimann did not dispute that Kronzer and Oez taught or suggested all limitations recited in the challenged claims. Instead, she argued that there was no motivation for a skilled artisan to combine the references or to expect that such combination would yield a reasonable expectation of success. The Board considered and addressed each argument, relying on Neenah and Schwendimann’s experts’ testimony and the complementary and compatible nature of the references. The Board found the challenged claims obvious over Kronzer in view of Oez. Schwendimann appealed.

Schwendimann argued that substantial evidence did not support the Board’s findings that a skilled artisan would have been motivated to combine Kronzer and Oez and would have had a reasonable expectation of success in making the proposed combination. The Federal Circuit explained that substantial evidence means “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion” and considered these two arguments together.

The Federal Circuit found that Schwendimann failed to show that the Board’s findings were not supported by “substantial evidence.” Like the Board, the Federal Circuit used both expert witnesses’ testimonies to explain that the references shared a common goal of improving image transfer characteristics. The Court found that Schwendimann’s arguments that Oez taught away from the proposed combination failed because Oez’s disclosure did not discourage a skilled artisan from using white pigment identified in the challenged patents or lead the skilled artisan in a direction divergent from the path taken in the challenged patents. Her argument that adding titanium dioxide into Kronzer’s transfer sheets could [...]

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