7 Obviousness May Soon Return To High Court
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Obviousness May Soon Return To High Court

Authored by Derek F. Dahlgren and Spencer J. Johnson for Law360

June 16, 2017

Last October the Federal Circuit issued a surprising (in more ways than one) en banc decision in the Apple/Samsung smartphone wars. While we have previously covered this decision in some detail regarding its break from the Federal Circuit’s usual en banc practice, the procedural and substantive issues regarding the decision are again in the spotlight, as Apple Inc. recently filed a response in opposition to Samsung Electronics Co. Ltd.’s petition for a writ of certiorari to the U.S. Supreme Court.

From those who have publicly commented on the case, consensus is building that the Supreme Court should grant the petition to hear Samsung’s appeal. For example, one author of this article, Derek Dahlgren, recently participated in a panel discussion hosted by Public Knowledge, a consumer advocacy organization, where he was joined by others interested in how the case would be decided, including representatives from the tech industry and those representing other consumer interests. Throughout the discussion it became clear that there was interest in this case and its potentially broad impacts to the law, innovation and industry. One panelist, Ellen Schrantz of the Internet Association, noted during the discussion that, “Given the speed which with the marketplace is moving and the complex issues across circuits and courts on obviousness as well as the very strange procedural history here of there not even being a briefing ahead of the en banc decision, this really is prime for Supreme Court consideration.”

To touch briefly on some the issues created by the en banc decision, the questions presented to the Supreme Court in Samsung’s petition include such basic and far-reaching concepts in patent law as the law of obviousness, the issuance of injunctions for patent infringement, and evidentiary standards for proving patent infringement.

While the importance of these concepts should be clear to those with any familiarity with patent law, their importance has also been made apparent by those in public interest, industry and academia, as four amicus briefs have been filed with the Supreme Court, all in support of granting the petition for certiorari. While the briefs have different perspectives and focuses, certain general concerns are shared across them: Three of the four are concerned with obviousness, and three of the four are concerned with injunctions. To put those four briefs in context, the Samsung v. Apple design patent case decided by the Supreme Court at the beginning of this year received six amicus briefs in support of the petition, yet ultimately had nearly 30 briefs in total presenting their positions on the issues at stake in that case.

The importance of these issues to patent law, especially that of obviousness, was also noted by some of the dissents to the en banc holding. For example, Judge Timothy Dyk noted that obviousness is the most commonly litigated invalidity issue, with its importance reflected in the 38 amicus briefs filed in KSR v. Teleflex, a recent Supreme Court case on obviousness.

The dissenting judges shared a position that this case did not warrant en banc review. Some of their concerns were procedural, and these concerns were amplified given the importance of the legal concepts affected by the en banc majority’s decision. The procedural concerns begin with an assumption that en banc review is intended to be rare and reserved for exceptional or important cases. Judge Jimmie Reyna, for example, stated that en banc review is generally disfavored, and noted that this en banc review neither maintained uniformity of court decisions nor involved a question of exceptional importance, but instead seemed to focus on reversing the outcome of the earlier panel’s decision.

Even if en banc review were appropriate, the dissenting judges indicated that greater input from those who would be effected by a decision was warranted, with Chief Judge Sharon Prost noting, for example that “the en banc court would certainly have benefitted from our normal practice of” briefing, argument, and amici briefs. Judge Dyk discussed this additional briefing and argument as the norm, his dissent noting that en banc cases almost uniformly are decided following “further briefing from the parties, amici, or the government” (citing 36 out of 39 en banc cases in 10 years having supplemental briefing or argument). These norms may be even more important here, where such fundamental patent law concepts as obviousness are involved. In fact, Judge Dyk’s dissent began by stating that this was the first obviousness case taken en banc in 26 years, and expressed concern that the case was decided without further briefing or argument despite the “significant and immediate impact” the decision would have “on the future resolution of obviousness issues.” Instead, interested parties were provided neither the opportunity to be heard, or even bare notice that the Federal Circuit intended to take the case en banc.

Outside of the merits of challenging the Federal Circuit’s position on obviousness, all of the above discussion goes to the importance of the decision as perceived by the dissenting judges of the Federal Circuit and by parties potentially affected by the decision. While the procedural irregularities alone may not demand Supreme Court review, an issue of patent law as fundamental as obviousness likely does, particularly as this was the first obviousness case in decades addressed en banc, and arguably altered the obviousness analysis beyond the bounds permitted by Supreme Court precedent.

Moving to the substance of the conflict between the parties at this stage, the issue that has received the most attention from the amici briefs and the most pages from the parties is how the en banc court applied the obviousness analysis. Specific issues discussed in the petition (points made in the petition, dissents or amicus briefs are largely in alignment for those topics they discuss) include the application of the appropriate legal standard for obviousness — including the interplay between issues of law and fact, and how the field of endeavor should be applied for analogous art — and the weight given to, and analysis of, secondary considerations of nonobviousness.

Beginning with the identification of the appropriate legal standard for obviousness, unlike the characterization of Samsung’s argument in Apple’s response, the argument actually presented in Samsung’s petition does not claim that the majority cited the incorrect rule or quoted the wrong case in presenting the standard for obviousness. Instead, the thrust of the argument is that, while the rule may be that obviousness is a question of law based on underlying facts, the en banc opinion has expanded the “underlying facts” to the point of having effectively turned the inquiry into a factual issue for the jury. Although the factual considerations underlying the determination of obviousness may be broad, KSR emphasized that the ultimate judgement still must be a legal determination. Here, the erosion of this ultimate judgment as a matter of law is achieved by giving deference to factual findings that not only actually occurred in the court below, but also by presuming factual findings from a black-box jury verdict based on questions that may not have been appropriately before the jury, at least according to Judge Dyk. Judge Dyk stated that it would be inconsistent with KSR, for example, to hold that the sufficiency of the motivation to combine references is a jury question when “the content of the prior art, the scope of the patent claim, and the level of ordinary skill in the art are not in material dispute” and “there is no indication that the combination of the relevant prior art does more than yield a predictable result.” As such, enough issues were deemed to be issues of fact, including issues which were not explicitly decided in the record or appropriately before a fact-finder, that the en banc opinion essentially narrowed the scope of possible legal determinations regarding obviousness to the point where judicial review of “black box” jury verdicts is no longer an issue of law.

Apple’s brief in opposition argues that this approach is not in conflict with Supreme Court and other prior opinions, and that it is not evidence of varying approaches taken by the Federal Circuit with regard to obviousness, but that the Federal Circuit is instead merely applying the same approach to different circumstances. Apple criticizes Samsung’s citation of cases meant to support its point, but in doing so appears to overlook that in this very case the vigorous dissent of Judge Dyk discusses “the profound changes in the law of obviousness that the majority creates,” and that Chief Judge Prost notes that parts of the majority opinion involve “a new approach that neither we nor the Supreme Court has sanctioned.” For Apple to argue that the Federal Circuit’s approach is consistent with all its past cases, whether or not cited by Samsung in its brief, seems thin given the characterization by members of the Federal Circuit that this very case deals with new law.

Apple maintained its position that the en banc opinion was merely an application of existing law to the facts of this case through its brief. For example, where Samsung argued, acknowledging the dissents of Judges Dyk and Prost, that the en banc court had improperly dismissed a prior art combination as involving art from different fields of endeavor despite a lack of substantial evidence on which such a distinction could be made, Apple responded that the en banc court had only held that the jury could have reasonably found a lack of motivation to combine the references.

Apple’s argument is based partially on the en banc court not categorically basing its decision on the references being in different fields, and partially on the jury’s ability to reject Samsung’s evidence, which Apple characterized as being Samsung’s “expert’s conclusory testimony” that there would be a motivation to combine the references. As such, according to Apple, there was no conflict between this decision and existing law. This, again, overlooks the explicit rejection of such a position by Chief Judge Prost, who noted that by the end of the trial Samsung had presented evidence that the references should be combined, and Apple’s expert had not given an explanation as to why there would be no motivation. Further, reviewing the majority opinion shows that the bulk of Apple’s argument against a motivation to combine on appeal and at the trial level was based on, for example, one reference being to a smartphone, and the other being to a wall-mounted touchscreen, or to one reference being to spelling correction, and the other to word completion. When these distinctions are repeated throughout the majority’s analysis, an explicit statement that the combination is rejected because of the difference in fields, such as what Apple appears to suggest is needed, is not required to determine that improper weight was given to such distinctions.

Moving on to the next major area in obviousness addressed by the parties, Apple argues that the emphasis placed on secondary considerations of nonobviousness by the en banc majority is proper, as the Supreme Court “has long directed that secondary considerations may play a pivotal role in the obviousness analysis.” While it may be correct that cases such as Graham and KSR have invited inquiry into these factors, secondary considerations are typically only case determinative either where the issue of obviousness is a close call, or where there is truly compelling evidence of secondary considerations. Chief Judge Prost, for example, notes that the Federal Circuit has only once found compelling evidence of secondary considerations to outweigh strong evidence of obviousness. To argue that such considerations are “pivotal” as Apple does veers toward a suggestion that even clearly obvious patents could be preserved if only they were associated with a successful enough product.

The problems that this approach presents are compounded when such considerations are applied to the obviousness analysis even without a clear demonstration of the nexus between, for example, commercial success and the actual claimed invention. Apple argues that the Federal Circuit properly required a nexus, and that a nexus was established between the secondary considerations and its inventions. This may be partially correct for some of the claimed secondary considerations, but certainly not for all of them. For the factor of industry praise and copying, the en banc majority cites several Samsung internal documents where the Apple feature is known and acknowledged as having benefits over alternatives. However, this arguably is the only secondary consideration information which for which a nexus is actually drawn to the invention. Other “evidence” for industry praise includes a video where an audience cheers for Steve Jobs using the swipe to unlock feature at an Apple event. This is as much, if not more, attributable to Jobs’ strengths in marketing his products as it is to any praise for a specific invention.

For other secondary considerations such as commercial success, there is no dispute that the iPhone as a product has been a successful. However, the evidence presented to support a nexus to the inventions in this case includes a survey that did not study smartphones. The majority and the dissents disagree as to whether this distinction prevents a determination that a feature valuable in a tablet would also be valuable in a smartphone, but the surveys, according to Judge Dyk, were more fundamentally flawed in that they did not in any way target the difference between the invention at hand and the existing prior art. Rather, the surveys more generally discussed features which were already known in the prior art, such as a slide to unlock feature or a text autocorrect function.

As such, unlike the Transocean case cited by Chief Judge Prost, where a compelling “seven types of secondary considerations supported nonobviousness,” this case instead aligns with the caution presented in Transocean, where it was noted that few cases have such extensive evidence to overcome a prima facie case of obviousness. It is clear the approach of the majority presents potential consequences where crowds cheering at a marketing event or surveys that show the value of features already known in the prior art are given weight to overcome what might otherwise be an obvious patent being properly invalidated. Such a position will make it more difficult to show obviousness for patents that never should have issued. An issued patent already holds a presumption of validity. If a challenger is able to overcome this presumption with clear and convincing evidence of obviousness, commercial success or praise for a product which is not explicitly linked to the incremental innovation of the patent should not raise that bar even further.

Beyond the instant case, the en banc court’s decision could impact the patent field greatly. Interpreting more of the obviousness analysis as questions of fact and inferring decisions of fact in black-box jury verdicts will insulate the ultimate determination of obviousness from being truly reviewed de novo. This risks less consistency between district courts and greater unpredictability for those parties relying on the court system to resolve intellectual property disputes. Further, courts and the U.S. Patent and Trademark Office may be forced to accept less-than-firm evidence of nonobviousness if secondary considerations are not required to have a close nexus to the innovation claimed in a patent. This could lead to lower quality patents being issued and withstanding challenges, with all the associated increased costs and burdens — to innovators, courts, industry and consumers — that implies.

Whether obviousness will return to the Supreme Court remains to be seen. But between procedural issues in the lower court’s decision, an internal division in the court as to how to address these fundamental standards, and the potential far-reaching implications of letting such a decision stand, should the court decide to take up the case on review, it would certainly be able to find sufficient justification to do so.

This article was originally published in Law360's Expert Analysis section on June 16, 2017. To read the article on Law360's site, please visit: https://www.law360.com/articles/935776/obviousness-may-soon-return-to-high-court.