As we’ve previously reported, patent owners have had little success arguing secondary considerations of non-obviousness during inter partes review. Underscoring the challenge that patent owners face, the Federal Circuit recently affirmed a PTAB obviousness determination despite finding that it had erred in its consideration of the patent owner’s evidence regarding objective indicia of non-obviousness.

Background

The patents at issue in South Alabama Medical Science Foundation v. Gnosis S.p.A.claim methods and a composition related to “administering the ‘natural’ stereoisomer of 5-methyl-tetrahydrofolic acid (L-5-MTHF) and other vitamins to treat symptoms associated with folate deficiency.” Slip Op. at 2. The Federal Circuit first determined that substantial evidence supported the Board’s determination that all claims were obvious in view of two prior art references. The court made similar determinations in a companion case, Merck & Cie v. Gnosis S.p.A., which it decided concurrently, and which we previously reported.

Commercial Success and Industry Praise

The court then considered whether the PTAB properly evaluated SAMSF’s objective evidence of non-obviousness. SAMSF first argued that the commercial success of several drugs weighed against a finding of obviousness. The court decided that the Board had properly rejected this evidence as lacking sufficient nexus to the claimed invention because “the commercial success of these products was inadequately linked to the claimed methods and composition—which call for L-5-MTHF or another reduced folate and any number of vitamins other than ascorbic acid—as opposed to the specific formulations in these products.” Slip Op. at 5-6. The court clarified that the patent owner need not “produce evidence of commercial success for every potential embodiment of the claims,” but here, “SAMSF had not provided any ‘adequate basis to support the conclusion that other embodiments falling within the claim will behave in the same manner.’” Slip Op. at 6 (quoting PTAB decision, citing In re Huai-Hung Kao, 639 F.3d 1057, 1068 (Fed. Cir. 2011)).

Likewise, with respect to SAMSF’s evidence of industry praise, the court upheld the Board’s analysis finding a lack of nexus because the “praise was particularly directed to the use of L-5-MTHF, an element already known in the prior art.” Slip Op. at 6.

Licensing

With respect to evidence of licensing, however, the court concluded “that the Board erred in assessing SAMSF’s licensing evidence.” Slip Op. at 7. The Board discounted SAMSF’s licensing evidence “because SAMSF failed to show a nexus between the claimed inventions” and the licensed products. But according to the Federal Circuit, “the relevant inquiry is whether there is a nexus between the patent and the licensing activity itself, such that the factfinder can infer that the licensing ‘arose out of recognition and acceptance of the subject matter claimed’ in the patent.” Slip Op. at 7 (quoting In re GPAC Inc., 57 F.3d 1573, 1580 (Fed. Cir. 1995)).

The Federal Circuit nevertheless affirmed, finding the Board’s error to be “harmless.”

But despite finding this error in the Board’s analysis, the Federal Circuit nevertheless affirmed, finding the Board’s error to be “harmless.” Slip Op. at 8. Because the Board had properly rejected the remaining evidence of secondary considerations, the Federal Circuit found that the evidence of licensing alone could “not overcome the strong evidence of obviousness found in the prior art and the expert testimony.” Slip Op. at 8.