Obviousness is where the rubber meets the road in terms of patentability, and it seems that the state of the law of obviousness is anything but clear. It has always been difficult to explain the law of obviousness to inventors, business executives and law students alike. Since the United States Supreme Court issued its decision in KSR v. Teleflex, it has become even more difficult to provide a simple, coherent articulation of the law of obviousness that is at all intellectually satisfying. That is in no small part due to the fact that the determination about whether an invention is obvious is now completely subjective.
If you look at the Federal Circuit cases, it seems that there is a lot of post hoc reasoning that simply justifies a conclusion already formed. De novo review of all the facts allows the Federal Circuit to be a super-panel that can simply supplant its own beliefs for the considered beliefs of patent examiners, the Board, a District Court Judge or even a jury. While conceptually it may seem like a good idea to have a fresh look by a reviewing court, this fresh look at all things leads to no predictability, and obviousness law in utter disarray.
Take for example Soverain Software v. Newegg. In the initial appeal, Newegg appealed claim 34 of U.S. Patent No. 5,715,314. The only problem was that claim 34 was not asserted. Newegg lost on claim 35, which was not appealed. The Federal Circuit panel invalidated claim 34, which was not asserted, because it was obvious. The decision was substantively problematic because the patent claims in question were granted in the first instance, were upheld twice in reexamination despite being challenged with substantially the same prior art, and the patents were found valid and infringed by a jury. More problematic was the procedural mix-up, which was not fixed even when brought to the attention of the Federal Circuit.
On a petition for rehearing, it was pointed out to the Federal Circuit that claim 34 was not asserted and that claim 35, which was not appealed by Newegg, was the critical claim. Inexplicably, the Federal Circuit, per Judge Newman, went to great lengths to explain that claim 35 was not addressed or discussed much, if at all, on appeal. Of course, that makes all the sense in the world since Newegg appealed the wrong claim and Soverain was simply responding to the appeal. Nevertheless, Judge Newman wrote:
On the appeal, the parties again focused their presentations and argument solely on claim 34. Newegg’s brief stated that Soverain “asserted” claim 34, and also that claim 34 is “representative of the shopping cart claims.” Newegg Br. 6. Soverain neither objected to nor corrected this recitation. The parties cited the evidentiary record, discussed the prior art (primarily the CompuServe Mall system) and argued the district court’s decision to remove the question of obviousness from the jury. Claim 35 was not briefed on this appeal, and was not mentioned in the argument of the appeal. Soverain’s brief stated that claim 35 was in suit, but did not discuss the specific limitation in that claim, while extensively discussing the limitations of claim 34. At oral argument the parties argued claim 34, and did not mention claim 35. This court treated claim 34 as “representative” of the shopping cart claims in suit, and held claim 34 invalid on the ground of obviousness.
Judge Newman then pointed out that when a dependent claim is not separately argued, it rises or falls together with the independent claim, citing Gardner v. TEC Sys., Inc., 725 F.2d 1338, 1350 (Fed. Cir. 1984) (en banc) (“Gardner has not argued the validity of the remaining claims in suit, claims 3, 4, and 8, apart from the validity of claim 1, from which they depend. We cannot discern for ourselves any independent basis for their validity. We therefore affirm the holding of invalidity of these claims as well.”)
Of course this just creates a nightmare. Not only did Soverain lose a claim not asserted, not only did Newegg’s fail to appeal the claim on which they lost, but Judge Newman placed the burden on Soverain to demonstrate that claim 35 was patentable. This fundamental shift of the burden comes as the result of Judge Newman saying that because claim 34 was invalidated and because claim 35 was not separately argued by the plaintiff, it was lost. So if this convoluted process is to be followed by the Federal Circuit moving forward, it means that a losing defendant can appeal any claim in the patent that they think they can invalidate and then by proxy invalidate a dependent claim not appealed or mentioned simply by attacking the independent claim. How ridiculous is that?
Not only is the law of obviousness a mess, not only is the Federal Circuit’s infatuation with de novo review a real concern, but now patent owners have to affirmatively prove that dependent claims not appealed are valid despite the presumption of validity they are supposed to be entitled to receive.
Tags: CAFC, Federal Circuit, Judge Newman, Newegg, obvious, obviousness, patent, patents, Soveraign Software
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