In academic settings, objective indicia of non-obviousness are sometimes presented as a common way of rebutting contentions that a claimed invention is obvious. These indicia, set forth in Graham v. John Deere Co. and reiterated in KSR Int'l Co. v. Teleflex, Inc., include commercial success, long felt but unsolved needs, unexpected results, copying by others, industry praise, and failure of others. While aesthetically pleasing from a procedural point of view, secondary considerations are notoriously difficult to successfully apply outside of law school exams.
This difficulty is largely due to the requirements that: (1) the evidence actually exists, (2) the patentee is able to locate this evidence, and (3) the patentee can establish a nexus between the evidence and the claimed invention. A commercial success rebuttal might involve providing sales or market share figures for a product before and after a patented new feature is released, where the latter is notably higher than the former, as well as support for the notion that this commercial success is actually a result of the patented new feature. Industry reviews or expert testimony might be required. And still, this evidence can be rebutted with further evidence that the commercial success was actually caused by other forces than what is claimed.
Intuitively, this all makes sense. If one is going to argue that a claimed invention is non-obvious because it was commercially successful, the product or service that enjoyed this commercial success should have done so due to the innovative features of the claims. Commercial success cannot be used in this fashion when it was caused by some extraneous factor, such as a major competitor leaving the market or going out of business.
Having said all of that, it is fairly rare for a patentee to win on a commercial success argument. Recent inter partes review (IPR) final written decisions from the PTAB show how easy it is for commercial success arguments to fail. Samsung Electronics Co., Ltd v. Cellect, LLC, No. 2020-00475 (PTAB Aug. 17, 2021) (patent owner's licensing of a product, where the patent owner's contentions do not specify which entities took a license to the patent or for what reason the licenses were taken, does not establish a nexus); Microsoft Corp. and HP Inc. v. Synkloud Technologies, LLC, No. 2020-00316 (PTAB Jun. 14, 2021) (patent owner's claim chart between the claimed invention and allegedly successful products was too high level and non-specific to establish a nexus); Red Diamond, Inc. v. Southern Visions, LLP, 2019-01671 (PTAB Mar. 31, 2021) (patent owner did not establish commercial success merely by providing sales data and contending that its market share was "high").
Successful rebuttals require specific allegations regarding both the nexus and the commercial success, which often have to be backed up by sales / market data and explained in one or more expert declarations. Due to the time and cost of preparing such evidence, these allegations are rarely made before USPTO examiners.
Commercial success arguments remain a trap for the unwary. Nonetheless, two recent Federal Circuit decisions that came down on two consecutive days add a little color to the landscape.
In Chemours Company FC, LLC v. Daikan Industries, Ltd, patent owner Chemours appealed a PTAB decision finding its claims obvious over its allegations of commercial success. The Court described the relevant law as:
In general, evidence supporting objective indicia of nonobviousness must be shown to have a nexus to the claimed invention. In the obviousness analysis, the claimed invention is, admittedly, a combination of elements that were known individually in the prior art. Evidence of commercial success, therefore, can be linked to an inventive combination of known elements to show a sufficient nexus.
The PTAB, focusing on individual claim limitations, found that Chemours failed to establish a nexus on this basis. The Court disagreed, however, stating that "the separate disclosure of individual limitations, where the invention is a unique combination of three interdependent properties, does not negate a nexus," and that "[c]oncluding otherwise would mean that nexus could never exist where the claimed invention is a unique combination of known elements from the prior art."
Chemours also argued that the PTAB improperly required market share data to establish a finding of commercial success, where sales data alone could be sufficient. The Court agreed here as well, observing that:
When a patentee can demonstrate commercial success, usually shown by significant sales in a relevant market, and that the successful product is the invention disclosed and claimed in the patent, it is presumed that the commercial success is due to the patented invention. However, market share data, though potentially useful, is not required to show commercial success.
This holding does not contradict that of Red Diamond above, as the PTAB "is certainly entitled to weigh evidence and find, if appropriate, that Chemours's gross sales data were insufficient to show commercial success without market share data." Consequently, the Court reversed the PTAB's decision regarding commercial success.
In Oren Techs., LLC v Proppant Express Investments LLC, patent holder Oren also appealed a PTAB decision finding its claims obvious over its allegations of commercial success. Regarding the procedural requirements of establishing a nexus, the Court wrote:
For objective evidence of secondary considerations to be accorded substantial weight, its proponent must establish a nexus between the evidence and the merits of the claimed invention. That is, objective evidence of non-obviousness must be commensurate in scope with the claims which the evidence is offered to support. There can be a presumption of nexus for objective considerations when the patentee shows that the asserted objective evidence is tied to a specific product and that product is the invention disclosed and claimed in the patent. The presumption can apply even when the product has additional, unclaimed features. Once established, this presumption of nexus is rebuttable with evidence showing the objective evidence is due to extraneous factors other than the patented invention.
Oren provided a mapping of its commercial product to the claims of its patent, and this mapping was sufficient to conclude that the product was what was being claimed. Proppant argued that a broader version of the product with more features was responsible for any commercial success. This argument was enough for the PTAB to conclude that the commercial success was primarily a result of the non-claimed features.
The Court disagreed, however, stating that the PTAB ignored evidence that the claimed features were also an important factor driving the commercial success of the broader product. Oren provided licensing data and market analysis evidence that this was the case. Since "it is not necessary that the patented invention be solely responsible for the commercial success, in order for this factor to be given weight appropriate to the evidence, along with other pertinent factors," the Court remanded the case to the PTAB for further consideration of the evidence.
