United States: Federal Circuit Reverses Course On Obviousness– Affirms Apple Victory In Smartphone Battle

In an unusual en banc decision rendered without requesting briefing from the parties, the United States, or interested amici curiae, the U.S. Court of Appeals for the Federal Circuit recently affirmed several rulings in favor of Apple Inc. in its ongoing smartphone patent war with Samsung. Apple Inc. v. Samsung Electronics Co., No. 2015-1171 (Fed. Cir. Oct. 7, 2016). The decision was unusually critical of an earlier decision by a panel of three Federal Circuit judges, who vigorously dissented from the en banc majority decision.

Background:

The case involves Apple's litigation against Samsung alleging infringement of claims in three patents: U.S. Patent No. 5,946,647, 8,046,721, and 8,074,172. The litigation also included other Apple patents and Samsung infringement counterclaims against Apple, none of which were relevant to the appeal. After the U.S. District Court for the Northern District of California ruled in favor of Apple on the three patents following a jury trial, a three-judge panel of the Federal Circuit reversed the rulings in February 2016. The panel ruled that the '647 patent was not infringed and the '721 and '172 patents were invalid as obvious.

En Banc Decision:

One unusual aspect of the case is the procedural posture of the court's en banc review. Apple filed a petition for rehearing en banc arguing, inter alia, that the panel improperly looked to information outside the record in construing the claims. The court granted rehearing, vacated the panel decision, and issued a new decision by the full court affirming the district court on the validity and infringement issues, all without requesting additional briefing or allowing the United States or other interested parties to participate. The three judges on the original panel – Chief Judge Prost and Circuit Judges Dyk and Reyna – each filed vigorous dissents.

In the majority opinion, Circuit Judge Moore stated that the court granted rehearing to reaffirm the limits of appellate review, including review of claim construction issues in light of Teva Pharms., Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015). Among other things, the majority noted that the panel decision had overturned "nearly a dozen jury fact findings including infringement, motivation to combine, the teachings of prior art references, commercial success, industry praise, copying, and long-felt need across three different patents. It did so despite the fact that some of these findings were not appealed and without ever mentioning the applicable substantial evidence standard of review." Slip op. at 5.

The majority opinion affirmed the district court findings that Samsung infringed the '647 patent.

The patent covers a system and method for detecting "structures," such as phone numbers, and linking them to actions or commands. The court ruled that the panel improperly overturned the district court's construction of a key term in the '647 patent claims, even though neither Apple nor Samsung had objected to the district court's construction and neither contested the issue on appeal. The majority criticized the panel for relying on extra-judicial evidence not in the record, including a treatise and a technical dictionary, in reviewing the district court's claim construction. It concluded that substantial trial evidence, including testimony from Apple's expert witness, supported the jury infringement verdict.

The majority decision also affirmed the district court ruling that the '721 and '172 patents were not invalid as obvious. The '721 patent covers Apple's "slide-to-lock" technology for using gestures to lock and unlock devices to prevent pocket-dialing and other accidental activations. The '172 patent claims a text entry system using word-level disambiguation to automatically correct keystroke errors. The majority opinion focused on the secondary evidence of nonobviousness that Apple presented at trial, including critical acclaim for the features in Apple's iPhone product, copying, and the commercial success of the products. It raised two fundamental issues with the panel's earlier opinion, which found that the patent claims were obvious based on a combination of prior art references. First, it reiterated that "What a prior art reference teaches and whether a skilled artisan would have been motivated to combine references are questions of fact." Slip op. at 28. As a result, the jury's findings on obviousness are entitled to deference, and the Federal Circuit review is limited to determining whether the findings are supported by substantial evidence:

Our job is not to review whether Samsung's losing position was also supported by substantial evidence or to weigh the relative strength of Samsung's evidence against Apple's evidence. We are limited to determining whether there was substantial evidence for the jury's findings, on the entirety of the record. And under the Ninth Circuit standard [applicable to denial of post-verdict motions for judgment as a matter of law], we cannot conclude that the evidence affords only one reasonable conclusion and that it is contrary to that of the jury.

Slip op. at 30-31. In addition, the majority noted that secondary evidence of nonobviousness, such as industry praise, copying, and commercial success, are an essential part of the Graham v. John Deere obviousness framework, and Apple's trial evidence on those points "tip[ped] the scales of patentability" in favor of Apple and providing substantial evidence supporting the jury verdict:

Even in cases in which a court concludes that a reasonable jury could have found some facts differently, the verdict must be sustained if it is supported by substantial evidence on the record that was before the jury. But as an appellate court, it is beyond our role to reweigh the evidence or consider what the record might have supported, or investigate potential arguments that were not meaningfully raised. Our review is limited to whether fact findings made and challenged on appeal are supported by substantial evidence in the record, and if so, whether those fact findings support the legal conclusion of obviousness.

Slip op. at 50.

The three judges forming the panel issuing the earlier decision reversing the trial court each filed a dissenting opinion. Chief Judge Prost argued that the majority misapplied the substantial evidence standard of review, contending that the record was devoid of evidence and that the majority effectively found substantial evidence where existed. She noted that, "In the majority's view, the existence of any evidence that could theoretically support a jury verdict would seem to end our substantial evidence review on appeal." Dissent at 2. Judge Prost also argued that the majority misapplied the Graham framework for analyzing obviousness by using secondary evidence of nonobviousness to support its conclusion that a person of ordinary skill in the art would not be motivated to combine prior art references:

It is unclear what analytical framework the majority has adopted in its analysis and whether this goes to the question of motivation to combine. We have only weighed the teachings of a prior art reference related to motivation to combine against each other in the teaching away context. Doing so as part of the ultimate legal question of obviousness, as the majority does now, is a new approach that neither we nor the Supreme Court has sanctioned. Given the majority's conclusion (with which I disagree) that there was no motivation to combine references in this case, there is no reason for the majority to go on to opine on the question of secondary considerations at all — that discussion is arguably dicta.

Dissent at 9 (citations and footnote omitted). Judge Prost argued that under Graham, Apple's evidence of secondary considerations was inadequate to overcome a strong prima facie conclusion of obviousness.

In his dissent, Judge Dyk pointed out that the majority decision apparently modified the analytical framework for determining obviousness in numerous ways. First, it "turns the legal question of obviousness into a factual issue for a jury to resolve, both as to the sufficiency of the motivation to combine and the significance to be given to secondary considerations." Dissent at 4. Second, Judge Dyk noted that the court "lower[ed] the bar for nonobviousness by refusing to take account of the trivial nature of the two claimed inventions," which had been found invalid in other countries. Third, Judge Dyk argued that that the majority misapplied the standard for obviousness by requiring specific evidence that a motivation to combine prior art references exists. He noted that the Supreme Court's decision in KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398 (2007) "held, contrary to the majority, that evidence of a specific motivation to combine is not required." Fourth, Judge Dyk argued that, again contrary to the KSR decision, the majority rejected prior art involving a different device (a wall-mounted touch panel) from the mobile device at issue. In KSR, the Supreme Court ruled that a person of ordinary skill in the art might apply an improvement known to work on one device to a similar device. Judge Dyk warned that, "The majority's approach will create significant opportunities to dismiss relevant prior art and find almost any patent nonobvious by narrowly defining the relevant technology. In this respect, the en banc decision will work a significant change on future cases in the district courts and the PTO." Dissent at 12. Finally, Judge Dyk argued that the majority misapplied any evidence of secondary considerations of nonobviousness, by failing to require an adequate nexus between the evidence and the patented technology. Judge Reyna wrote a dissenting opinion noting that en banc review was inappropriate. He noted that "En banc review is disfavored and granted only when necessary to secure or maintain uniformity of the court's decisions or when the proceeding involves a question of exceptional importance[,]" neither of which was present in this case.

Practical Significance:

The Federal Circuit's decision is significant for two reasons. First, it signals that the court may be continuing a trend towards deferring to district court decisions. The Supreme Court recently stressed district court discretion and appellate deference to that discretion in Teva and other cases. Halo Electronics, Inc. v. Pulse Electronics, Inc., No. 14-1513 (U.S. June 13, 2016) (decided with Stryker Corp. v. Zimmer, Inc., No. 14–1520); Octane Fitness, LLC v. ICON Health & Fitness Inc., 572 U. S. ___ (2014) (considering the award of attorney fees in "exceptional" cases under 35 U.S.C. § 285); Highmark Inc. v. Allcare Health Management System, Inc., 572 U. S. ___ (2014) (requiring appellate deference to district court rulings on attorney's fees). For an appellate court that historically has reversed district court decisions at a relatively high rate, this pattern of deference could have important strategic significance.

Second, the majority decision raises important issues concerning the application of the Graham obviousness analysis to a complex set of facts. Although secondary considerations of nonobviousness are an important part of the obviousness analysis, they traditionally have been consulted after a preliminary determination of obviousness, and only rarely overcome a strong case of prima facie obviousness. The Apple majority suggests that impressive evidence of commercial success or industry praise also may influence the question whether a combination or modification of the prior art is obvious.

The long-term impact of the Apple decision will depend on whether the Federal Circuit cites it for guidance in subsequent cases, or limits it to its specific facts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
 
Email Address
Company Name
Password
Confirm Password
Position
Industry
Mondaq Newsalert
Select Topics
Select Regions
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions