Thursday, July 26, 2018

Judge Newman's dissent in Zup v. Nash: how do secondary considerations fit into obviousness analysis?

The outcome was affirmance of invalidity:

Appellant ZUP, LLC (“ZUP”) appeals the decision of
the United States District Court for the Eastern District
of Virginia, which granted summary judgment in favor of
Appellee Nash Manufacturing, Inc. (“Nash”). The district
court invalidated claims 1 and 9 of U.S. Patent
No. 8,292,681 (“the ’681 patent”) as obvious and, in the
alternative, held that Nash does not infringe claim 9. We
affirm the district court’s holding that claims 1 and 9 are
invalid as obvious and do not reach the infringement

Judge Newman began her dissent:

A wakeboard is not a complicated device, but its enjoyment
in water sports has long challenged weak and
inexperienced riders attempting to stand up on a fastmoving
board while bouncing on wake.1 Sportsman Glen
Duff knew the problem and, after four years of experimentation,
he devised a wakeboard that facilitated usage
regardless of a rider’s strength or athleticism. He obtained
U.S. Patent No. 8,292,681 (“the ’681 Patent”),
assigned to ZUP, LLC. Mr. Duff exhibited his “ZUP
Board” at the Surf Expo, a trade show for the water sports
industry. Thereafter ZUP and Keith Parten, President
and CEO of Nash Manufacturing, Inc. (“Nash”), a leading
producer of water sports equipment including wakeboards,
discussed a possible commercial arrangement.
Parten told Duff: “You have a great product by the way!”
Maj. Op. at 14. However, commercial discussions broke
down, and soon thereafter Nash introduced a similar
wakeboard, the “Versa Board,” the product that is
charged with infringement.

The district court granted summary judgment of patent
invalidity, and alternatively summary judgment of
non-infringement. There was no trial. My colleagues
affirm the judgment of invalidity, and do not reach infringement.
These rulings, however, were rendered on
incorrect application of the law of obviousness and without
regard to the principles of summary judgment.

Judge Newman noted:

Summary judgment of patent invalidity requires that
all reasonable factual allegations are resolved in favor of
the non-movant, Teleflex, Inc. v. Ficosa N. Am. Corp., 299
F.3d 1313, 1323 (Fed. Cir. 2002) (citing Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)), and that
when so resolved, there is clear and convincing evidence
that the patented invention would have been obvious to a
person of ordinary skill. Microsoft Corp. v. i4i Ltd. P’ship,
564 U.S. 91, 95 (2011). The district court strayed from
these long-recognized rules.
Although the prior art is close, the novelty of the ’681
Patent’s wakeboard is not disputed. On the issue of
obviousness, my colleagues apply an incorrect analysis of
the standard factual considerations, as set forth in Graham
v. John Deere Co., 383 U.S. 1 (1966). The four Graham
factors are: (1) the scope and content of the prior art;
(2) the differences between the claims and the prior art;
(3) the level of ordinary skill in the field of the invention;
and (4) objective considerations of obviousness. Id. at 17–
18; see also KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398,
399 (2007) (reaffirming the four Graham factors).
My colleagues hold that only three of the four Graham
factors are considered in order to establish a prima facie
case of obviousness, and that the fourth Graham factor is
applied only in rebuttal, whereby the fourth factor must
be of sufficient weight to outweigh and thereby rebut the
first three factors. Maj. Op. at 15. However, as stated in
Apple Inc. v. Samsung Electronics Co., 839 F.3d 1034,
1048 (Fed. Cir. 2016) (en banc), “determination of whether
a patent claim is invalid as obvious under § 103 requires
consideration of all four Graham factors, and it is error to
reach a conclusion of obviousness until all those factors
are considered.”


The requirement that the secondary considerations
“overcome” the conclusion based on the first three factors
is incorrect, for the obviousness determination must be
based on the invention as a whole including the evidence
of all four Graham factors. It is incorrect to convert the
fourth Graham factor into “rebuttal,” requiring it to
outweigh the other three factors. Consideration of the
objective indicia “is not just a cumulative or confirmatory
part of the obviousness calculus, but constitutes independent
evidence of nonobviousness.” Ortho-McNeil
Pharm., Inc. v. Mylan Labs., Inc., 520 F.3d 1358, 1365
(Fed. Cir. 2008). This evidence must be considered together
with the other evidence, and not separated out and
required to outweigh or rebut the other factors. All of the
factors must be considered in connection with proving
invalidity by clear and convincing evidence. Apple Inc. v.
Samsung Elecs. Co., 839 F.3d 1034, 1048 (Fed. Cir. 2016)
(en banc).

On the proper analysis, summary judgment of obviousness
was improperly granted. See Surowitz v. Hilton
Hotels Corp., 383 U.S. 363, 373 (1966) (“The basic purpose
of the Federal Rules is to administer justice through fair
trials, not through summary dismissals as necessary as
they may be on occasion.”).


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