The US Court of Appeals for the Federal Circuit affirmed an obviousness decision by the Patent Trial & Appeal Board, explaining that nothing requires a petitioner to identify a prior art reference as a “primary reference” in an obviousness challenge. Schwendimann v. Neenah, Inc., Case Nos. 22-1333; -1334; -1427; -1432 (Fed. Cir. Oct. 6, 2023) (Prost, Clevenger, Cunningham, JJ.)
Jodi Schwendimann filed lawsuits accusing Neenah of infringing several patents related to transfer sheets and methods for transferring images onto dark fabrics. Neenah filed several petitions for inter partes review (IPR) challenging various claims based on obviousness. The Board instituted the IPR challenges.
Schwendimann’s patents addressed a method for ensuring that dark images could be seen when transferred onto dark fabrics. Multilayer image transfer sheets were known in the prior art, teaching a two-step process to first apply a light background onto dark fabric and then apply the dark image on top. Schwendimann’s claims described a single-step solution, incorporating a white background, possibly of titanium dioxide, into the image transfer sheet so that a white background and dark image could be applied simultaneously onto a dark fabric.
All of the IPR petitions cited Kronzer as a prior art reference. Kronzer described multilayered image transfer sheets with varying configurations, although it lacked white pigment in a layer to transfer an image onto dark fabric. Another prior art reference, Oez, taught the use of a white pigment, such as titanium dioxide, in multilayered image transfer sheets. Schwendimann did not dispute that Kronzer and Oez taught or suggested all limitations recited in the challenged claims. Instead, she argued that there was no motivation for a skilled artisan to combine the references or to expect that such combination would yield a reasonable expectation of success. The Board considered and addressed each argument, relying on Neenah and Schwendimann’s experts’ testimony and the complementary and compatible nature of the references. The Board found the challenged claims obvious over Kronzer in view of Oez. Schwendimann appealed.
Schwendimann argued that substantial evidence did not support the Board’s findings that a skilled artisan would have been motivated to combine Kronzer and Oez and would have had a reasonable expectation of success in making the proposed combination. The Federal Circuit explained that substantial evidence means “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion” and considered these two arguments together.
The Federal Circuit found that Schwendimann failed to show that the Board’s findings were not supported by “substantial evidence.” Like the Board, the Federal Circuit used both expert witnesses’ testimonies to explain that the references shared a common goal of improving image transfer characteristics. The Court found that Schwendimann’s arguments that Oez taught away from the proposed combination failed because Oez’s disclosure did not discourage a skilled artisan from using white pigment identified in the challenged patents or lead the skilled artisan in a direction divergent from the path taken in the challenged patents. Her argument that adding titanium dioxide into Kronzer’s transfer sheets could cause unpredictable chemical reactions and interfere with the transfer process, citing to witness testimony and Kronzer’s “failures” described in examples, failed to convince the Court because these failed trials did not include the transfer sheets with pigments. Lastly, Schwendimann’s argument that a skilled artisan would not have reasonable expectation of success because the resulting transfer sheet would need significant re-engineering to account for Kronzer’s peel-last application method (versus Oez’s peel-first method) received a similar reaction from the Court as it did at the Board. The Court noted that “a skilled artisan is also a person of ordinary creativity, not an automaton, and does not abandon common sense when considering the combination of references.”
Schwendimann’s third argument was that Neenah and the Board were required to explain why Kronzer was the primary reference as a necessary step to guard against hindsight bias for the motivation to combine references. Neenah responded that Schwendimann forfeited this argument by failing to present it to the Board. The Federal Circuit disagreed with Schwendimann that her admitted failure was irrelevant because it was indirectly preserved in three ways. First, the Court explained that this argument was not preserved in her written arguments to the Board that a skilled artisan would not have considered Kronzer at all. Whether Kronzer was analogous art was not the same argument as whether Neenah insufficiently explained why Kronzer was the appropriate primary reference. Second, the Court explained that this argument was not preserved in discussions during oral argument at the Board where Schwendimann contended that starting with Kronzer instead of Oez was counterintuitive. At the Board, Neenah argued that the law did not recognize a necessity to provide a basis for starting with one reference as “primary” but provided a motivation to combine argument that the Board agreed with in its decision. Third, the Court explained that this “primary reference” argument was not preserved in a footnote in the Board’s decision. The Court described the argument as a “red herring,” as it was not Schwendimann’s primary reference argument. The Court decided that Schwendimann forfeited this argument for appeal because she failed to cite any exceptional circumstance warranting consideration of her primary reference argument.
Nevertheless, the Federal Circuit addressed Schwendimann’s argument and concluded that it had no basis in law. Citing the Manual of Patent Examining Procedure (MPEP) and several past decisions, the Court explained that “where the relevant factual inquiries underlying an obviousness determination are otherwise clear,” characterizing references “as ‘primary’ and ‘secondary’ is merely a matter of presentation with no legal significance.” In any event, the Court noted that styling an obviousness challenge as based on “Kronzer in view of Oez,” as the Board did, means that the challenge is based on Kronzer being modified by Oez to reach the claimed invention.