Fresh From the Bench: Precedential Patent Cases From the Federal Circuit
In Honeywell v. Mexichem the Circuit vacates a Board determination of obviousness, ruling that the Board improperly relied on inherency, appeared to shift the burden of nonobviousness to the patentee, and violated the APA by relying on a new ground of rejection as a basis for dismissing Honeywell’s evidence of unexpected results.
Any additional cases decided Friday will be included in next week’s report.
Honeywell Intl. Inc. v. Mexichem Amanco Holding, Fed. Cir. Case 2016-1996 (August 1, 2017)
The Circuit vacates and remands a determination of obviousness in two merged inter partes reexaminations involving patents directed to fluids used in air conditioning systems.
The Board affirmed the Examiner’s rejection of many of the claims of the ’366 patent as obvious. On appeal, Honeywell argues that the Board erred in (1) finding a motivation to combine the references with a reasonable expectation of success, (2) rejecting Honeywell’s objective evidence, and (3) relying on a new ground of rejection when it relied on Omure, without giving Honeywell notice and opportunity to respond.
The panel first concludes that the Board committed legal error by improperly relying on inherency to find obviousness and in its analysis of motivation to combine the references. Early in its analysis, the Board rejected Honeywell’s argument concerning unexpected results and its argument that the unpredictability of the art weighs against finding a motivation to combine the references with a reasonable expectation of success. Yet, when the Examiner used similar reasoning in responding to Honeywell’s evidence of secondary considerations, the Board rejected that reasoning, acknowledging that inherent properties must be considered if they demonstrate unexpected and nonobvious results.
The panel notes that the use of inherency in the context of obviousness must be carefully circumscribed because “that which may be inherent is not necessarily known” and that which is unknown cannot be obvious. Thus, in dismissing properties of the claimed invention as merely inherent, without further consideration as to unpredictability and unexpectedness, the panel finds that the Board erred as a matter of law.
The panel also holds that the Board erred in dismissing Honeywell’s evidence of unpredictability in the art when it stated that one of ordinary skill would no more have expected failure than success in combining the references. The Board made what amounts to a finding that one of ordinary skill would not have had a reasonable expectation of success in combining HFO-1234yf with PAG lubricants, but then seemed to make a burden-shifting argument that Honeywell did not persuasively establish that one of ordinary skill would have expected failure. The Board rejected Honeywell’s evidence, concluding that, because there would have been no reasonable expectation of success, one of ordinary skill would have arrived at the claimed combination by mere routine testing.
The opinion notes that the Board made what amounts to a finding that one of ordinary skill would not have expected success, because Honeywell’s evidence persuasively established the “overall unpredictability” in the art, but then glossed over that finding with a “routine testing” rationale because Honeywell did not persuasively prove an expectation of failure. That is reverse reasoning. Unpredictability of results equates more with nonobviousness rather than obviousness, whereas that which is predictable is more likely to be obvious. Thus, reasoning that one would no more have expected failure than success is not a valid ground for holding an invention to have been obvious. Even when presenting evidence of unexpected results to “rebut” an Examiner’s prima facie case for obviousness, a patent owner need not demonstrate that one of ordinary skill would have expected failure—rather, the patent owner need only establish that the results would have been unexpected to one of ordinary skill at the time of invention, or “much greater than would have been predicted.”
With Judge Wallach dissenting, a majority of the panel rules that the Board violated the Administrative Procedure Act by relying on a new ground of rejection when it raised a patent to Omure as a basis for dismissing Honeywell’s evidence of unexpected results. The Board need not “recite and agree with the examiner’s rejection in haec verba” to avoid issuing a new ground of rejection, when the Board “relies on new facts and rationales not previously raised to the applicant by the examiner.”
Here, during its analysis of Honeywell’s evidence of secondary considerations, the Board expressly stated that it disagreed with the Examiner’s treatment of that evidence. Accordingly, the Board rejected the Examiner’s conclusions regarding the evidence of unexpected results and instead relied on Omure to find the evidence unpersuasive. As in prior cases where the Circuit has found a new ground of rejection, the Board’s findings regarding Omure here were completely new and the Board did more than merely elaborate on the examiner’s findings with more detail.