Fresh From the Bench: Precedential Patent Cases From the Federal Circuit
By Pete Heuser
In MAG Aerospace the panel affirms the application of the doctrine of assignee estoppel, preventing the employer of one of the named inventors from challenging the validity of the patents-in-suit. In Shaw, the panel cites the Federal Circuit decision in Cuozzo for its ruling that the IPR institution decision is not appealable, which the panel notes might soon be changed by the Supreme Court. The opinion also discusses the troublesome "redundancy doctrine" in which the Board refuses to institute IPRs on grounds that it feels are redundant of other grounds of institution.
In the past few weeks a number of new readers have asked to be included in these mailings. To review our process for the new readers, we provide a short summary of every precedential patent case, with a "read more" link. Hitting that link takes the reader to the opinion itself, edited to 20-30% of its original length so the reader can see what the court actually said, without having to wade through a 20-30 page opinion. We do that by providing summarizing headings, and by removing repetition analysis, detailed explanation of the technology at issue, and portions of the opinion that are not overly interesting or critical to the decision.
MAG Aerospace Industries, Inc. v. B/E Aerospace, Inc., Fed. Cir. Case 2015-1370, -1426 (March 23, 2016)
MAG sued B/E for infringement of three patents directed to vacuum toilets commonly found on commercial aircraft. The district court granted summary judgment of noninfringement on all patents, from which MAG appeals. The court also ruled that assignor estoppel barred B/E from arguing that the asserted patents are invalid, and B/E cross-appeals from that ruling. We affirm both rulings.
The patents-in-suit describe technology that facilitates maintenance and service of vacuum toilets and minimizes vehicle downtime through the use of toilet components that are "line replaceable units" ("LRUs")—single modules that are easily replaced in the field. The '054 patent describes a vacuum toilet that includes a toilet bowl that is "toollessly inserted into and removed from the installed position independent of the frame," and thus can be easily and quickly replaced. The '055 patent requires two LRUs: (1) a waste receptacle, and (2) a "valve set" that includes "at least two of the discharge valve, rinse fluid valve, and flush control unit." The '942 patent discloses a modular vacuum toilet in which the bowl is supported on top of a support frame by an "out-turned flange" around the opening of the toilet bowl.
The district court construed several terms of the patents. From the '054 patent, "toollessly" was construed to mean "without the use of any tools." From the '055 patent, "line replaceable unit" was construed to mean "a single module targeted for easy replacement in the field." Finally, from the '942 patent, the court construed "an out-turned flange supported by the top of the support structure" to mean an "outside rim or edge turned away from the sidewall, transferring loads to the top of the support structure."
Summary Judgment of Noninfringement Is Affirmed
In granting B/E's motion, the district court held: (1) the toilet bowls in B/E's toilets cannot be "toollessly" replaced; (2) the "valve set" in B/E's vacuum toilets is not an LRU; and (3) B/E's toilet bowl does not include an "out-turned flange supported by the top of the support structure."
The '054 Patent
MAG argues that the court erred in ruling that B/E's toilet bowl cannot be replaced "toollessly." MAG points to B/E's technical documents and the testimony of B/E's former Director of Sales, Paul Neary, which it says show that B/E's toilet bowls can be replaced either manually or with the use of a coin.
MAG is incorrect. There is no dispute that B/E's toilet bowl is attached to its frame with two screws. The record evidence showed that to release the screws and remove the bowl, some kind of tool is necessary. In fact, MAG presented no evidence that the screw fasteners could be turned using only one's hands (e.g., using a fingernail). B/E points out that every fact witness who was asked testified that a tool, such as a coin or a screwdriver, is necessary to release the screws. The B/E documents on which MAG relies do not create a genuine issue of material fact on this point. Instead, as the court properly determined, those promotional and non-technical documents were simply "using a definition of ‘tools' that excludes coins." The unrebutted evidence shows that the reference to "without tools" was a typographical error. Moreover, MAG's reliance on an out-of-context snippet of Neary's testimony is unpersuasive. When he was asked more directly about whether the toilet bowl could be removed manually, he stated that a tool (like a coin) is required. The district court previously determined that a coin is a tool and, because MAG is not challenging that construction, the court did not err in granting summary judgment of noninfringement.
The '055 Patent
MAG next argues that the court erred in granting summary judgment of noninfringement of the '055 patent on the basis that the "valve set" in the accused B/E toilets is not an LRU. The district court previously construed LRU to be "a single module targeted for easy replacement in the field." MAG says that the "discharge valve" and the "flush control unit" comprise the valve set in B/E's toilets. The question is thus whether the discharge valve and the flush control unit together act as a "single module targeted for easy replacement in the field." B/E presented significant evidence that the discharge valve and the flush control unit are removed separately. Indeed, B/E's maintenance manuals do not provide instructions for removing and replacing the discharge valve and the flush control unit as a single module. Thus, the district court properly concluded that there was no genuine material dispute as to whether the discharge valve and the flush control unit operated as a single module targeted for easy replacement. The grant of summary judgment of noninfringement of the '055 patent was thus correct.
The '942 Patent
MAG contends that the court erred in granting summary judgment of noninfringement of the '942 patent, arguing that the court incorrectly found that B/E's toilets do not have the claimed "outturned flange." The court previously construed "outturned flange supported by the top of the support structure" to mean "outside rim or edge turned away from the sidewall, transferring loads to the top of the support structure." Again, MAG does not challenge this construction, but instead argues that the court applied a different construction at summary judgment and that, under the proper construction, there is a genuine material dispute as to whether B/E's toilets infringe.
MAG identified two structures that it claims are outturned flanges on B/E's toilet bowl: (1) a first edge located at the base of the vertical columns on the sidewall of B/E's toilet bowl (called "ribs"); and (2) a second edge located within a groove machined into these vertical columns. MAG's expert testified that the identified edges contact and transfer loads to the top of the support structure of the B/E toilet. As the court concluded, however, neither edge meets the out-turned flange limitation of the '942 patent. The "first edge" identified by MAG is merely the bottom of the vertical columns and not a flange. As to the CAD drawing, there is no evidence that it represented the actual product marketed and sold. Instead, B/E provided evidence that its toilet contains a gap of approximately 1/8th of an inch between the vertical column and the frame; thus, the "first edge" does not actually touch the top of the support structure and cannot transfer load to the top of the support structure.
As for the second edge, it is merely a slot within the vertical columns and not an "outside rim or edge turned away from the side wall" as required by the claim construction. Thus, the second edge also does not meet the claimed limitation.
Because the court properly determined there were no genuine issues of material fact as to infringement of any of the asserted patents, we affirm the grant of summary judgment of noninfringement.
The District Court Did Not Abuse Its Discretion in Ruling that Assignor Estoppel Applies
Assignor estoppel is an equitable remedy that prohibits an assignor of a patent, or one in privity with an assignor, from attacking the validity of that patent when he is sued for infringement by the assignee. Privity, like the doctrine of assignor estoppel itself, is determined upon a balance of the equities. As we said in Shamrock Techs., Inc. v. Med. Sterilization, Inc., 903 F.2d 789 (Fed. Cir. 1990):
If an inventor assigns his invention to his employer company A and leaves to join company B, whether company B is in privity and thus bound by the doctrine will depend on the equities dictated by the relationship between the inventor and company B in light of the act of infringement. The closer that relationship, the more the equities will favor applying the doctrine to company B.
Here, one of the inventors of the patents-in-suit, Mark Pondelick, now works for B/E. Mr. Pondelick assigned the patents to his former employer, who in turn assigned them to MAG. The district court concluded that Mr. Pondelick was in privity with B/E and thus that assignor estoppel applies to bar B/E from attacking the validity of the patents. The district court did not clearly err in its determination.
The district court analyzed a number of factors identified in Shamrock Technologies to determine whether a finding of privity was appropriate: (1) the assignor's leadership role at the new employer; (2) the assignor's ownership stake in the defendant company; (3) whether the defendant company changed course from manufacturing non-infringing goods to infringing activity after the inventor was hired; (4) the assignor's role in the infringing activities; (5) whether the inventor was hired to start the infringing operations; (6) whether the decision to manufacture the infringing product was made partly by the inventor; (7) whether the defendant company began manufacturing the accused product shortly after hiring the assignor; and (8) whether the inventor was in charge of the infringing operation.
Based on the foregoing, we cannot say that the court abused its discretion in finding that assignor estoppel applies, so we affirm the ruling that B/E is barred from arguing that the patents are invalid.
Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., Fed. Cir. Case 2015-1116, -1119 (March 23, 2016)
Shaw appeals the PTAB's final written decision in consolidated IPRs of ACS's '360 patent. Shaw also petitions for writ of mandamus. We affirm-in-part, vacate-in-part, remand, and deny Shaw's petition.
The '360 patent relates to "creels" for supplying stranded materials to a manufacturing process. ACS sued Shaw for infringement but voluntarily dismissed the suit without prejudice. Within one year of service of the complaint, see 35 U.S.C. § 315(b), Shaw petitioned for IPR of all of the claims. Shaw proposed fifteen grounds of rejection, most of which were directed to so-called noninterposing claims. There were only three grounds directed at the so-called interposing claims: (1) ground 3, alleging that all of the interposing claims would have been obvious over Munnekehoff in view of Ligon; (2) ground 8, alleging that all of the interposing claims would have been obvious over Barmag in view of Lion; and (3) ground 11, alleging that all of the interposing claims were anticipated by Payne. The Board instituted IPR on all claims except claim 4. It did not, however, institute IPR on all fifteen grounds argued by Shaw. With regard to the interposing claims, the Board instituted IPR on the grounds that these claims would have been obvious over Munnekehoff or Barmag in view of Ligon. The Board denied Shaw's petition on the Payne-based ground. The Board explained that the Payne-based ground was "denied as redundant in light of its determination that there is a reasonable likelihood that the challenged claims are unpatentable based on the grounds of unpatentability on which we institute an inter partes review." (citing 37 C.F.R. § 42.108).
Over one year after service of the complaint, Shaw filed a second petition, requesting IPR of claim 4. The Board instituted IPR based on two of the six grounds proposed by Shaw—alleged obviousness over Munnekehoff in view of Bluhm (ground 3) and alleged obviousness over Barmag in view of Bluhm (ground 6). It denied the other grounds, exercising "its discretion under 37 C.F.R. § 42.108 to institute an IPR based solely on the asserted grounds directed to combinations with Bluhm and deny the remaining grounds as redundant." It rejected ACS's argument that 35 U.S.C. § 315(b) precluded it from instituting IPR. It determined that because ACS had voluntarily dismissed the suit without prejudice, it "nullified the effect of the alleged service of the complaint on Petitioner."
The Board consolidated the IPRs and concluded in a final written decision that Shaw (1) had not shown by a preponderance of the evidence that the interposing claims were unpatentable based on the instituted grounds, and (2) had shown by a preponderance of the evidence that the noninterposing claims (including claim 4) were unpatentable based on the instituted grounds. Both parties appealed.
The Circuit Lacks Jurisdiction to Review the Refusal to Institute on the Payne-based Ground or as to Its Decision Not to Consider the Payne-based Ground in a Final Written Decision
Under 28 U.S.C. § 1295(a)(4), we have jurisdiction to review the Board's final written decisions in IPRs. We lack jurisdiction, however, to review the Board's decisions instituting or denying IPR, whether the Board has issued a final written decision. In re Cuozzo Speed Techs., LLC, 793 F.3d 1268 (Fed. Cir. 2015), cert. granted. Shaw argues we have jurisdiction to review the Board's final written decision, including its decision not to consider the Payne-based ground as redundant. It argues that § 314(d) is inapplicable because it is not seeking review of the Board's institution decision, but rather asking us to review the Board's authority in deeming a subset of asserted grounds redundant of instituted grounds. It argues that whether the Board can deem grounds redundant is not a decision whether to institute.
We disagree. As we recently explained, Congress authorized the PTO to prescribe regulations regarding institution and governance of IPRs. Harmonic Inc. v. Avid Tech., Inc., 2016 WL 798192 (Fed. Cir. Mar. 1, 2016). The PTO exercised this authority in promulgating 37 C.F.R. § 42.108, which allows the Board to institute IPR on only some of the challenged claims and to institute IPR of a given claim based on only some of the proposed grounds.
Here, Shaw proposed three grounds of unpatentability for the interposing claims: the Payne-based anticipation ground and two other multiple-reference obviousness grounds. The Board did not consider the substance of the Payne reference or compare it to the art cited in the other two proposed grounds. It made no specific findings that the three grounds overlapped with one another or involved overlapping arguments. It did not order Shaw to either choose which ground to maintain or show that the grounds were not, in fact, redundant. Instead, the Board merely denied IPR of the claims based on the Payne-based ground, writing without making any specific findings that the ground was "redundant" of the other two grounds. We cannot say we agree with the PTO's handling of Shaw's petition. We also cannot say that the PTO's decision made the proceeding more efficient, particularly given that the Payne-based ground was alleged anticipation by a single reference while the two instituted grounds were alleged obviousness over combinations of references. We have no authority, however, to review the Board's decision to institute IPR on some but not all grounds. "Denial of a ground is a Board decision not to institute inter partes review on that ground." 37 C.F.R. § 42.108(b). We thus lack jurisdiction to review the Board's refusal to institute IPR on the Payne-based ground, as well as its decision not to consider the Payne-based ground in a final written decision.
Mandamus Is Not Appropriate Here
Shaw alternatively petitions for a writ of mandamus instructing the PTO to reevaluate its redundancy decision and to institute IPR based on the Payne-based ground. A writ of mandamus is a "drastic and extraordinary remedy" that can only be used in "exceptional circumstances amounting to a judicial usurpation of power or a clear abuse of discretion." Cheney v. U.S. Dist. Court for D.C., 542 U.S. 367 (2004). A writ requires (1) that the petitioner have no other adequate means to attain the desired relief, (2) that the petitioner have a "clear and indisputable" right to the writ, and (3) that the issuing court, in the exercise of its discretion, be satisfied that the writ is appropriate under the circumstances. Id.
Shaw argues that these three conditions are satisfied. The argument is predicated on Shaw's concern that the statutory estoppel provisions would prevent it from raising the Payne-based ground in future proceedings under 35 U.S.C. § 315(e). The PTO argues that Shaw's statutory interpretation of the estoppel provision is incorrect because the denied ground never became part of the IPR. We agree with the PTO that § 315(e) would not estop Shaw from bringing its Payne-based arguments in either the PTO or the district courts. Both parts of § 315(e) create estoppel for arguments "on any ground that the petitioner raised or reasonably could have raised during that inter partes review." Shaw raised its Payne-based ground in its petition for IPR. But the PTO denied the petition as to that ground, thus no IPR was instituted on that ground. The IPR does not begin until it is instituted. Thus, Shaw did not raise—nor could it have reasonably raised—the Payne-based ground during the IPR. The plain language of the statute prohibits the application of estoppel under these circumstances. In light of our construction of the statute, mandamus is not warranted. Thus, we deny Shaw's petition for writ of mandamus.
The opinion now turns to Shaw's challenges to the Board's decision that the interposing claims would not have been obvious over Munnekehoff or Barmag in view of Ligon. Because there is nothing unusual about this analysis, this summary will move to ACS's Cross-Appeal.
The Circuit Has No Jurisdiction to Review ACS's Cross-Appeal as to § 315(b)
ACS challenges the Board's decision that the second IPR was not barred pursuant to 35 U.S.C. § 315(b), which provides that an IPR may not be instituted if the petition "is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent." It argues that we have jurisdiction to review the decision because it is not challenging the Board's institution decision but rather the Board's interpretation of § 315(b).
Our court recently faced a similar challenge in Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015). We held that we lack jurisdiction to review "the Board's determination to initiate IPR proceedings based on its assessment of the time-bar of § 315(b), even if such assessment is reconsidered during the merits phase of proceedings and restated as part of the Board's final written decision." (citing 35 U.S.C. § 314(d)). We noted that a "narrow exception to the bar on judicial review exists for claims that the agency exceeded the scope of its delegated authority or violated a clear statutory mandate." Id. Section 315(b) keys the time bar at issue to the service of the patent infringement complaint. The Board decided that ACS's voluntary dismissal of the suit without prejudice "nullified the effect of the service of the complaint." The Board reasoned that we consistently have interpreted the effect of dismissals without prejudice as leaving the parties as though the action had never been brought. Thus, the Board concluded that Shaw's petition was not time barred.
It is true we have held in other cases that dismissals without prejudice leave the parties as though the action had never been brought. While these cases did not address § 315(b) or whether service of a complaint can be nullified, based on Achates, we lack jurisdiction to review this aspect of the Board's decision. We note that the Supreme Court's decision to grant certiorari as to the second question in Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 890 (2016) may affect this court's holding regarding the reviewability of the decision to institute in Achates. As of now, we are constrained by our precedent.
Judge Reyna's Concurring Opinion
I fully join the panel opinion. I write separately on the Board's application of the so-called "Redundancy Doctrine." The Board's improper, conclusory statements declining to implement IPR on grounds it found to be "redundant" leave me deeply concerned about the broader impact that the Redundancy Doctrine may have on the integrity of the patent system. The Board should, at a minimum, provide a reasoned basis how or why grounds are "redundant." The PTO claims the Board's statement here refers to efficiency concerns, but in failing to clearly articulate the basis of its decision, the Board's final written decision fails to satisfy its obligations under the APA. Regardless of the reviewability of that decision, the lack of a reasoned basis deprives future tribunals of the necessary basis to determine whether estoppel should apply. The PTO has lost sight of its obligation to consider the effect of its implementation of the IPR process on the integrity of the patent system as a whole. 35 U.S.C. § 316(b).
Comment: Under 35 U.S.C. § 315(e)(2), "the petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision . . . may not assert either in a civil action . . . or in a proceeding before the International Trade Commission . . . that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review." Because institution decisions are not (at least for now) appealable, Judge Reyna argues convincingly that the Board must clearly articulate why an invalidity contention is redundant. While the majority opinion says there will be no estoppel if the prior art at issue was not at least part of the basis for institution of the IPR, if a ground of rejection truly is redundant, then perhaps future challenge on that ground should in fact be barred. As noted by Judge Reyna, the Board's analysis as to why the ground is redundant would be invaluable to a court considering this issue.
In re Cree, Inc., Fed. Cir. Case 2015-1365 (March 21, 2016)
Cree's '175 patent is directed to the production of white light through "down-conversion" of blue light from light-emitting diodes ("LEDs"). Down-conversion is the process in which high-energy (shorter wavelength) light is absorbed and then reemitted as lower energy (longer wavelength) light. By choosing the particular absorbing material, light at a desired wavelength (and thus a desired color) can be produced.
The examiner rejected claims added during reexamination as obvious based on various combinations of Pinnow, Stevenson and Nakamura. Claim 118 is representative. It recites:
A light-emission device, comprising a single-die, two-lead gallium nitride based semiconductor blue light-emitting diode emitting radiation; and a recipient down-converting luminophoric medium for down-converting the radiation emitted by the light-emitting diode, to a polychromatic white light, wherein the luminophoric medium is dispersed in a polymer that is on or about the single-die, two lead gallium nitride based semiconductor blue light-emitting diode.
Pinnow teaches that a blue argon-ion laser can produce white light by down-conversion of short wavelength laser light to combinations of longer wavelength light emitted by various phosphors. Pinnow explains that a necessary condition for achieving a true white is that the illuminating laser beam have a wavelength of approximately 4,950 A, which is in the blue to violet range of the visible spectrum.
Stevenson's LED emits light in the violet region of the spectrum and may be converted to lower frequencies (lower energy) with good conversion efficiency using phosphors. Stevenson notes that with the "use of different phosphors, all the primary colors may be developed from this same basic device."
Finally, Nakamura discloses a gallium nitride LED that emits blue light. The Nakamura LED was much brighter than other similar LEDs previously developed, and it was widely recognized as a major breakthrough, earning Dr. Nakamura the 2014 Nobel Prize in Physics.
Based on those references, the examiner rejected the claims and the Board upheld the rejection. The Board agreed with the examiner's reasoning, incorporating 109 pages of the examiner's answer into its own opinion. In the Board's view the invention was "nothing more than a new application of a high-power, high-brightness blue LED developed by Dr. Nakamura in late 1993." The Board found that the new application was predictable in view of the state of the art in LEDs, the market demand for white light devices, the finite number of identified means to convert light from LEDs into white light, and the advantages of using the down-conversion approach.
Cree Misconstrues the Word "Known" from the Board's Opinion
On appeal, Cree first argues that the Board erred by assuming that it was "known" in the prior art to make white light from a monochromatic LED through down-conversion. Cree infers that the Board's use of the word "known" indicates that the Board erroneously concluded that a single reference disclosed down-conversion from blue LED light to white light. We do not read the Board's use of the term "known" in that fashion. Instead, the Board's statement that down-conversion was a known approach for creating white light from an LED is best understood to mean that persons of skill in the art were aware that down-conversion could be used to make white light out of blue light, regardless of the source of the light.
The Board found that Pinnow teaches a down-conversion process for creating white light that would work with blue light of any source, including the blue LEDs disclosed in Nakamura. That was a reasonable conclusion to draw from Pinnow. Therefore, the Board was correct when it said that it was "known" to create white light from LEDs using down-conversion.
The Board Did Not Misread Cree's Expert Declarations
Cree next argues that the Board reached its conclusion that down-conversion was "known" by misreading the declarations of Cree's experts. We agree that Cree's experts testified that down-conversion from blue LED to white light was a known, but disfavored, option prior to the availability of high intensity blue LEDs such as Nakamura's. Because it was reasonable for the Board to draw the conclusion from expert testimony that down-conversion was a known solution for generating white light from a blue LED, the Board's decision is supported by substantial evidence. Where two different, inconsistent conclusions may reasonably be drawn from the evidence in record, an agency's decision to favor one conclusion over the other is the epitome of a decision that must be sustained upon review for substantial evidence.
The Board Properly Found a Motivation to Combine Without Using Hindsight
Cree argues that "neither the Examiner nor the Board articulated any rational motivation for why a skilled artisan would have combined the teachings of Pinnow—which discloses the projection of a large, high-powered, gas laser beam through a modulator and a deflector and onto a phosphor screen to display a white image—with the teachings of Stevenson and Nakamura, which disclose violet and blue LEDs."
Contrary to Cree's contention, the Board provided a sufficient, non-hindsight reason to combine the references. The Board found that a person of ordinary skill in the art would realize that Nakamura (a brighter LED) would be an upgrade over the LED of Stevenson for use with down-conversion and that the Nakamura LED would therefore be suitable to produce white light based on the teachings of Pinnow. The availability of the high-powered Nakamura LED thus provided the motivation to combine Stevenson's use of LEDs to create primary colors with Pinnow's use of a short-wavelength light source to create white light. " * * * While the exact same phosphor mixture as used in fluorescent bulbs might not be used with a GaN-based LED of Stevenson or Nakamura, it certainly is factual evidence that those of skill in the art have sufficient understanding of the scientific and engineering principles to choose phosphors for a broadband, UV-to-blue primary radiation source." The examiner and the Board thus based the rejection on sufficient evidence that a person of ordinary skill in the art would have had a reason to combine the references.
The Board Properly Rejected Cree's Secondary Evidence of Nonobviousness
Cree also argues that the Board improperly rejected Cree's secondary evidence of nonobviousness. Cree points to three categories of secondary evidence that, according to Cree, the Board improperly discounted: evidence of industry praise; evidence of licensing; and evidence of the commercial success of white LED products. The Board analyzed each of the alleged secondary considerations and concluded that the evidence of secondary considerations "does not outweigh the strong evidence of obviousness."
Press Releases Originating from a Researcher's Own Work Have Little Credibility
Cree first points to two press releases from the Fraunhoffer Institute and contends that those press releases support the inference of nonobviousness. The Board, however, found the press releases unpersuasive as secondary evidence because the praise was directed to the Fraunhoffer Institute's own work, not the work of the inventors of the '175 patent.
We agree with the Board's treatment of this evidence. While praise in the industry for a patented invention, and specifically praise from a competitor, tends to indicate that the invention was not obvious, self-serving statements from researchers about their own work do not have the same reliability.
Cree's Evidence of Licensing Is Not Shown to Be Based on the Merits of the Claimed Invention
Cree next points to evidence of licensing. The Board found the evidence of licensing unpersuasive for failing to show a nexus to the '175 patent. Our cases require affirmative evidence of nexus where the evidence of commercial success presented is a license, because it is often cheaper to take licenses than to defend infringement suits. Cree has provided press releases evidencing that it has entered into licensing transactions, but has not shown that the licenses were based on the merits of the '175 patent.
Cree Failed to Show a Sufficient Nexus Between Commercial Success and the Claimed Invention
The final piece of secondary evidence on which Cree relies is evidence of commercial success. Cree put forward evidence in the form of a declaration by Dr. Brandes, who presented sales figures showing the growth of the white LED market and stated that in his opinion there is a nexus between the sales figures and the '175 patent. We agree with the Board that Dr. Brandes' declaration merely repeats, in conclusory fashion, that there is a nexus between the success of white LEDs and the claimed invention. In a portion of the examiner's answer that was adopted by the Board, the examiner found that the commercial success of white LEDs "cannot be due to simply making a single-die semiconductor LED that emits white light," because if that were so, "then the commercialization could have started back in 1973." Instead, the examiner found, "it appears that Wetzel, Redwing, and Stringfellow all acknowledge the invention of a GaN LED with sufficiently high light output, somewhere in the UV to blue region of the spectrum was the thing that made the down-converting device of Stevenson . . . commercially successful."