Federal Circuit Reverses PTAB for not Properly Considering Expert Testimony of Commercial Success

By Condo Roccia Koptiw LLP // March 8th, 2018

In Polaris Indus., Inc. v. Arctic Cat, Inc., the Federal Circuit reversed in part the PTAB’s holding that claims were obvious because the PTAB failed to properly credit testimony on the secondary factors of nonobviousness.  2018 U.S. App. LEXIS 3168 (Fed. Cir. 2018).  The Federal Circuit affirmed the unpatentability of certain claims, but found error in the PTAB’s analysis of independent claim 34 and its dependent claims 36-38.  The asserted patents claimed all-terrain vehicles (ATVs) having at least two seats arranged side-by-side.

The patent owner submitted expert testimony that the inventions of claims 34 and 36-38 was commercially successful including testimony that the claims covered commercial products that have over $1.5 billion in sales since 2007.  The petitioner did not rebut this evidence and submitted no contrary expert evidence.  Despite this evidentiary record, the PTAB declined to accord substantive weight to the commercial success evidence.  On appeal, the patent owner argued that it was entitled to a presumption of a nexus between the claimed invention and the commercial success because the claimed invention was coextensive with the products.

The Federal Circuit agreed with the Patent Owner reasoning that “we presume that such a nexus applies for objective indicia when the patentee shows that the asserted objective evidence is tied to a specific product and that product ‘embodies the claimed features, and is coextensive with them.’”   The Federal Circuit further explained that this presumption cannot be rebutted with mere argument; the petitioner must submit rebuttal evidence.  For example, the petitioner may submit evidence that there is no nexus because the sales due to other factors.  Based on these principals, the Federal Circuit held that the PTAB erred in not crediting the patent owner’s testimony and presuming a nexus between the claimed inventions and the commercial sales.

Based on this recent decision, a patent owner should consider submitting IPR evidence of commercial success supported by expert testimony comparing the claims to the sold devices, sales, and a nexus between the claims and the sales.  In addition, IPR petitioners should not rely on the art alone and should submit rebuttal secondary factor evidence, such as reasons other the claimed invention for the sales, contrary sales evidence, and that the claims do not cover the sold products.

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