Last Week in the Federal Circuit (July 19-23): Considering Secondary Considerations

Keniece Gray and Maryrose McLaughlin, Morrison & Foerster summer associates, co-authored this post.

As expected, the Senate has voted to confirm Tiffany Cunningham as the Federal Circuit’s newest judge. This makes history, giving the Federal Circuit its first ever Black judge and bringing the Court to gender parity for the first time. Below we provide our usual weekly statistics and our case of the week—our highly subjective selection based on whatever case piqued our interest.

Precedential opinions: 2

Non-precedential opinions: 6

Rule 36: 8 

Longest pending case from argument: Chemours Company FC, LLC v. Daikin Industries, Ltd., No. 20-1289 (225 days)

Shortest pending case from argument (non-Rule 36): In re: Kirilichin, No. 21-1168 (14 days) 

Case of the week: Chemours Company FC, LLC v. Daikin Industries, Ltd., No. 20-1289 

Panel: Judges Newman, Dyk, and Reyna, with Judge Reyna writing for the majority and Judge Dyk concurring in part and dissenting in part 

You should read this case if: you have a matter involving objective indicia of nonobviousness (otherwise known as “secondary considerations”) 

In our case of the week, the Federal Circuit addressed objective indicia of nonobviousness, holding that the Board misapprehended three separate points of law.

This week’s case is about a polymer that insulates communication cables. This polymer is unique because it can be extruded at high speeds without compromising on coating quality. Chemours Company owns two patents for this polymer, which Chemours sells commercially. Daikin Industries petitioned for inter partes review, challenging the claims as obvious. The Board agreed. 

In holding the claims obvious, the Board rejected Chemours’ attempt to show objective indicia of nonobviousness. Chemours asserted that its patented invention had commercial success. But the Board found an “insufficient nexus” between the claimed invention and its commercial success, faulted Chemours for failing to provide market share data, and discounted commercial success because Chemours’ patents were blocking patents. 

On appeal, the Federal Circuit identified three legal errors in that analysis. First, the Court rejected the Board’s nexus analysis. The Board had found no nexus between the claims and the product’s commercial success because the product’s key properties all appeared in the prior art. But those features appeared in separate prior art references, while the claimed invention combined them. The Federal Circuit agreed with Chemours that the Board improperly considered nonobviousness of individual elements rather than the invention as a whole. The Court held that in these circumstances—“where the invention is a unique combination of three interdependent properties”—“the separate disclosure of individual limitations” in the prior art “does not negate a nexus.” 

Second, the Court held that sales data alone could be enough to show commercial success. The Board had held that Chemours’ gross sales figures were inadequate absent market share data. But the Federal Circuit held that “market share data, though potentially useful, is not required.”

Finally, the Court reversed the Board’s reliance on the blocking patents doctrine. The Board had reasoned that Chemours’ patent was a blocking patent, meaning it blocked later inventions from entering the market. Typically, when a blocking patent discourages later inventions from competing, courts hold that commercial success is a weaker indicator of nonobviousness, because the success could be attributable to the absence of competitors rather than to nonobviousness. The Board applied that doctrine here, determining that the existence of Chemours’ patent “would have precluded others from freely entering the market.” But the Court held that the Board incorrectly used the blocking patent doctrine. The Court held that “the challenged patent, which covers the claimed invention at issue, cannot act as a blocking patent,” and therefore the doctrine was inapplicable.

For those reasons, the Court held the Board erred in its consideration of objective indicia of nonobviousness. The panel separately held—in a portion of its opinion that drew a dissent from Judge Dyk—that the Board’s obviousness analysis was unsupported by substantial evidence. Thus, the Court reversed the Board’s determination that Chemours’ claims was unpatentable as obvious.