IP Law Daily PTAB’s invalidation of lubricant patent claims vacated due to inconsistent reasoning
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Tuesday, August 1, 2017

PTAB’s invalidation of lubricant patent claims vacated due to inconsistent reasoning

By Thomas Long, J.D.

A Patent Trial and Appeal Board decision affirming an inter partes reexamination that invalidated, on obviousness grounds, 55 claims of a patent directed to a lubricant used in air conditioning equipment has been vacated by the U.S. Court of Appeals for the Federal Circuit. The Board applied internally inconsistent and legally erroneous reasoning in concluding that skilled artisans would have a motivation to combine prior art substances despite evidence that the results of those combinations were, at the time the patent application was filed, unpredictable. The Board also improperly relied on a new ground of rejection in its analysis of the patent owner’s evidence of unexpected results, without giving the patent owner the requisite notice of this ground (Honeywell International Inc. v. Mexichem Amanco Holding S.A. De C.V., August 1, 2017, Lourie, A.).

Honeywell International Inc. owned U.S. Patent No. 7,534,366 ("the ’366 patent"), which was directed to the use of 1,1,1,2-tetrafluoropropene ("HFO-1234yf")—an unsaturated hydrofluorocarbon ("HFC") compound—and a polyalkylene glycol ("PAG") lubricant in heat transfer systems, such as air conditioning equipment. Mexichem Amanco Holding S.A. De C.V. and Daikin Industries, Ltd. (together, "Mexichem") filed requests for inter partes reexamination of the ’366 patent, which the USPTO granted and merged into a consolidated proceeding. The examiner rejected claims 1–26, 31–37, 46–49, 58, 59, 61–68, 70–75, 80, and 81 of the ’366 patent as obvious over Japanese Patent H04-110388 ("Inagaki") in combination with either: (1) U.S. Patent 4,755,316 ("Magid"); (2) Acura Service Bulletin No. 92-027 ("Acura") and "Patentee’s Admissions"1; or (3) U.S. Patent 6,783,691 ("Bivens"). The examiner found that Inagaki expressly disclosed HFO-1234yf and that each of the other references taught the use of PAG lubricants with HFC refrigerants. Therefore, the examiner determined that the claims would have been obvious at the time of invention.

Honeywell appealed to the Board, arguing that Inagaki did not teach the use of HFO-1234yf with any particular lubricant, much less a PAG lubricant, and that such a combination would not have been obvious to one of ordinary skill in the art. Honeywell also argued that Magid, Acura, and Bivens used "HFC" to refer only to saturated HFC refrigerants, not unsaturated (i.e., HFO) refrigerants. Honeywell presented evidence to the Board that HFO refrigerants were disfavored at the time of invention because they were known to be reactive and unstable, and that PAG lubricants were also understood to be unstable because they were hygroscopic (that is, they tended to absorb moisture from the surrounding environment). Therefore, a skilled artisan would not have been motivated to combine the substances, according to Honeywell. Honeywell also contended that secondary considerations indicated that the claims were nonobvious. The Board was not persuaded by Honeywell’s arguments and affirmed the examiner’s rejection of the claims as obvious. Honeywell appealed to the Federal Circuit.

Motivation to combine. Honeywell argued that the Board had improperly relied on hindsight to find that one of ordinary skill would have had a reasonable expectation of success in combining HFO-1234yf with PAG lubricants. Honeywell provided evidence showing that, although HFO refrigerants were known to be unstable, HFO-1234yf was unexpectedly stable in combination with PAGs. Other evidence revealed the unexpected miscibility of the claimed combination. According to Honeywell, the Board also improperly disregarded the unexpected miscibility of the substances as an "inherent property" of the refrigerant.

The court agreed that the Board committed legal error by improperly relying on inherency to find obviousness and in its analysis of motivation to combine the references. The Board applied inconsistent reasoning, the court said. Early in its analysis, the Board rejected Honeywell’s argument concerning unexpected results, finding that the claimed combination’s stability/miscibility was an inherent property of HFO-1234yf and thus could not confer patentable weight to the composition. However, when the examiner used similar reasoning in responding to Honeywell’s evidence of secondary considerations, the Board rejected that reasoning, acknowledging that inherent properties must be considered if they demonstrated unexpected and nonobvious results. In the court’s view, the Board had erred in relying on inherency to dismiss evidence showing unpredictability in the art—evidence which it later acknowledged did persuasively demonstrate unpredictability—in order to reject Honeywell’s argument that one of ordinary skill would not have been motivated to combine the references. Cautioning that the use of inherency in an obviousness analysis must be carefully circumscribed, the court explained, "[t]hat which may be inherent is not necessarily known," and that which is unknown cannot be obvious. The important point was not that the properties were inherent, but that they were unexpected.

In addition, the Board erred in dismissing Honeywell’s evidence of unpredictability in the art when it stated that one of ordinary skill would no more have expected failure than success in combining the references, the court held. This amounted to a finding that one of ordinary skill would not have had a reasonable expectation of success in combining HFO-1234yf with PAG lubricants, but then the Board essentially shifted the burden to Honeywell to persuasively establish that one of ordinary skill would have expected failure. According to the court, the Board seemed to reason that one of ordinary skill would have made no predictions at all, but rather would have expected to undertake efforts to find an optimal combination, and thus that "routine testing" would have led the skilled artisan to the claimed combination. "In an inter partes reexamination involving obviousness, the standard is not whether the patent owner can persuasively show that one of ordinary skill would have expected failure," the court stated. "Rather, the burden is on the Examiner to show that one of ordinary skill would have had a motivation to combine the references with a reasonable expectation of success." The Board had engaged in "reverse reasoning" to arrive at its obviousness conclusion, which was error.

Because the Board’s analysis was legally erroneous in its consideration of inherency, in concluding that unpredictability indicated obviousness, and in rejecting Honeywell’s objective evidence, the Board’s decision was vacated and the case was remanded for further proceedings.

New ground of rejection. Honeywell also argued that the Board had relied on a new ground of rejection when it raised a Japanese patent ("Omure") as a basis for dismissing Honeywell’s evidence of unexpected results. During reexamination, Mexichem Amanco and Daikin mentioned Omure and proposed a rejection based on it, but the examiner never addressed those comments or entered the proposed rejection. The Board, though, in its review of Honeywell’s evidence of unexpected results, relied on Omure as evidence that, although a skilled artisan would not have expected success in combining the substances, one would also not have expected failure. The court agreed that the Board had erred in relying on Omure without providing Honeywell with the requisite notice of this ground for rejection. The Board’s decision therefore was vacated and remanded with instructions to designate its rejection as a new ground of rejection, if it intends to continue relying on Omure in evaluating Honeywell’s appeal.

Dissenting opinion. Circuit Judge Evan J. Wallach dissented in part. Judge Wallach agreed with the majority’s decision to vacate and remand the Board’s decision, but he disagreed with the majority’s conclusion that the Board had relied on a new ground of rejection when it raised Omure as a basis for dismissing Honeywell’s evidence of unexpected results.

The case is No. 2016-1996.

Attorneys: Gregg F. Locascio (Kirkland & Ellis LLP) for Honeywell International Inc. Joseph A. Kromholz (Ryan, Kromholz & Manion, SC) for Mexichem Amanco Holding S.A. De C.V. Anthony F. Lo Cicero (Amster, Rothstein & Ebenstein LLP) for Daikin Industries, Ltd.

Companies: Honeywell International Inc.; Mexichem Amanco Holding S.A. De C.V.; Daikin Industries, Ltd.

MainStory: TopStory Patent FedCirNews

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