Judges Newman and Lourie express differences on obviousness in Stepan case

The background technology:



The ’567 application is directed to herbicidal formulations containing glyphosate salt with a surfactant system. Surfactants can enhance glyphosate’s effectiveness as an herbicide by providing better adherence to leaves, thereby enhancing penetration. According to the specification, “[t]he present invention is based on the unexpected discovery that surfactant systems comprising dialkoxylated alkylamine, water miscible solubilizer and amine oxide allow for formulation of ultra-high loaded (‘high-strength’) glyphosate salt concentrates possessing high or no cloud points.” J.A. 29 ¶ 13. A cloud point is the temperature at which a solution becomes cloudy due to the surfactants becoming insoluble and separating into layers. Cloudiness can be avoided if the cloud point is higher than the solution’s temperature or if the solution is cooled before adding the surfactant. The specification explains that because glyphosate salt is created at about 75ºC, it is advantageous to formulate glyphosate with a surfactant system exhibiting a high cloud point to “obviate the necessity of waiting for the temperature of the glyphosate salt reaction product to cool down.” J.A. 27–28 ¶ 7. Surfactant systems with high cloud points or no cloud point, in which the solution never becomes cloudy, allow for quicker formulation of glyphosate concentrates and thus quicker delivery to the market. Id.



The CAFC found fault with the PTAB decision, in part for PTAB's failing to adequately articulate its reasoning:

The Board found Stepan failed to provide evidence that it would not have been routine optimization for a skilled artisan to select and adjust the claimed surfactants to achieve a cloud point above at least 70ºC “since Pallas teaches the surfactant component comprises any combination of surfactants” and “teaches the ideal cloud point should be above 60[ºC].” J.A. 8–9. It rejected evidence in Pallas that certain surfactant combinations failed the cloud point test at 60ºC because it concluded that these failures did not involve the claimed surfactants. J.A. 9. It found Stepan failed to establish the criticality of its claimed range of surfactants, showing neither that a 70ºC cloud point was unexpectedly good nor that the prior art was silent on the connection between optimizing surfactants and cloud point. J.A. 10. Because the Board failed to adequately articulate its reasoning, erroneously rejected relevant evidence of nonobviousness, and improperly shifted to Stepan the burden of proving patentability, we vacate the Board’s decision that claims 1–31 of the ’567 application would have been obvious.



The CAFC found PTAB's merely stating a conclusion was unsatisfactory:


The Board failed to explain why it would have been “routine optimization” to select and adjust the claimed surfactants and achieve a cloud point above at least 70ºC. See J.A. 8–9. “The agency tribunal must make findings of relevant facts, and present its reasoning in sufficient detail that the court may conduct meaningful review of the agency action.” In re Lee, 277 F.3d 1338, 1346 (Fed. Cir. 2002). Stating that a person of ordinary skill in the art would have arrived at the claimed invention through routine optimization falls short of this standard. Missing from the Board’s analysis is an explanation as to why it would have been routine optimization to arrive at the claimed invention.




There was an allusion to "common sense":



Similar to cases in which the Board found claimed inventions would have been “intuitive” or “common sense,” the Board must provide some rational underpinning explaining why a person of ordinary skill in
the art would have arrived at the claimed invention through routine optimization. See, e.g., Van Os, 844 F.3d at 1361 (“Absent some articulated rationale, a finding that a combination of prior art would have been ‘common sense’ or ‘intuitive’ is no different than merely stating the combination ‘would have been obvious.’”); Arendi S.A.R.L. v. Apple Inc., 832 F.3d 1355, 1362 (Fed. Cir. 2016) (“[R]eferences to ‘common sense’ . . . cannot be used as a wholesale substitute for reasoned analysis and evidentiary support . . . .”). Absent some additional reasoning, the Board’s finding that a skilled artisan would have arrived at the claimed invention through routine optimization is insufficient to support a conclusion of obviousness.



As to PTAB invoking "routine experimentation":



This evidence could be relevant to whether there would have been a motivation to combine the claimed surfactants with a reasonable expectation of achieving a cloud point above at least 70ºC. The Board, however, did not make any of these findings. We “may not accept appellate counsel’s post hoc rationalization for agency action.” Lee, 277 F.3d at 1345 (quoting Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962)). We
leave it to the Board to assess these arguments on remand



As to "reasonable expectation of success":


“[T]o have a reasonable expectation of success, one must be motivated to do more than merely to vary all parameters or try each of numerous possible choices until one possibly arrived at a successful result.” Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1365 (Fed. Cir. 2007) (quoting Medichem, S.A. v. Rolabo, S.L., 437 F.3d 1157, 1165 (Fed. Cir. 2006)). Reciting Pallas’ teachings that “any combination” of surfactants may be used and that a cloud point above 60ºC is desired fails to illuminate why a skilled artisan would have selected the claimed combination of surfactants and reasonably expected a cloud point above at least 70ºC.



There was a problem of burden:



Lastly, the Board erred when it shifted the burden of proving patentability to Stepan. The PTO bears the burden of establishing a prima facie case of obviousness. In re Deuel, 51 F.3d 1552, 1557 (Fed. Cir. 1995). “Only if this burden is met does the burden of coming forward with rebuttal argument or evidence shift to the applicant.” Id. In holding that Stepan had not met its burden, the Board cited case law in which the patentee claimed a range within the prior art and had to rebut a prima facie case of obviousness by showing criticality of its claimed range. See J.A. 10. This line of case law does not apply here for two reasons. First, for the reasons discussed above, the Board did not establish a prima facie case of obviousness because it failed to adequately articulate its reasoning. See In re Kahn, 441 F.3d 977, 986 (Fed. Cir. 2006) (“[T]o establish a prima facie case of obviousness based on a combination of elements disclosed in the prior art, the Board must articulate the basis on which it concludes that it would have been obvious to make the claimed invention.”). Second, Stepan’s ’567 application does not merely claim a range of surfactants that is within or overlaps with the range of surfactant systems taught by Pallas. The claimed surfactant system contains four elements. The first three elements describe the surfactants, and their respective ranges, that comprise the surfactant system. The fourth element limits the combination of those surfactants to only those combinations that produce a cloud point above at least 70ºC or no cloud point at all. The cloud point thus limits and defines the scope of what surfactant combinations satisfy the claimed composition. It therefore may be that not all compositions that contain the claimed combination and range of surfactants fall within the claims. As an element of the composition claims, it was the PTO’s—not Stepan’s—burden to show that achieving a cloud point above 70ºC would have been obvious to a person of ordinary skill in the art. To the extent the Board shifted the burden to Stepan to show the criticality of the cloud point element, the Board erred.




Judge Lourie dissented:



The majority focuses its decision on the 70ºC cloud point and points to the failure of examples in Pallas to recite a cloud point above at least 70ºC. But a 70ºC cloud point is not a component of this composition claim; it is a result, or a property.

(...)

But discovery of a new property or result does not make a claim to what is essentially disclosed by the prior art nonobvious


On reasonable expectation of success:



Moreover, the majority focuses on the lack of a reasonable expectation of success in making any modification to Pallas to achieve the invention of claim 1, including the 70ºC or more cloud point result. Even if reasonable expectation of success is a proper test in such a situation, what is the success for which there must be a reasonable expectation? Where, as here, there is a single prior art reference, there does not need to be a finding of reasonable expectation of success for those skilled in a particular art to make conventional modifications to the prior art and look for improvements in some parameter. See In re Ethicon, Inc., 844 F.3d 1344, 1351 (Fed. Cir. 2017) (“The normal desire of artisans to improve upon what is already generally known can provide the motivation to optimize variables such as the percentage of a known polymer for use in a known device.”). Such improvements may be nonobvious and patentable, but they must be claimed as such, constrained by what it takes to achieve that unexpected and desirable result. But that is not the situation here.


AND, of interest,


While the majority faults the Board for not explaining itself adequately, based on reasoning with which I do not disagree, the rejection of the claims based on a reference we can plainly see, and which nearly anticipates the claims, does not in my view justify overturning the Board.