“Major breakthrough” technology combined with known, but disfavored, prior art is appropriate for obviousness rejection—commercial success insufficient to rebut rejection

In re: Cree, Inc., No. 2015-1365 (Fed. Cir. Mar. 21, 2016)

The Federal Circuit upheld a Patent Trial and Appeal Board (PTAB) determination that a patent on a method of creating LED white light was invalid as obvious. The claims were directed to the production of white light through the “down-conversion” of blue light from a LED. The prior art disclosed the down-conversion of blue light but it was disfavored due to loss of light energy and brightness. A major breakthrough was made by Nakamura for blue LED technology, and the court confirmed the PTAB finding that a person of ordinary skill in the art would realize that Nakamura’s brighter blue LED would be suitable to produce white light when combined with other LED art.

The patentee appealed, claiming that the PTAB improperly discounted the patentee’s secondary evidence of non-obviousness, including industry praise, licensing, and commercial success.

The Federal Circuit agreed with the PTAB that the patentee failed to establish a clear nexus with the invention as claimed and the secondary evidence. The patentee’s evidence of industry praise was “self-serving statements from researchers about their own work [and] do not have the same reliability.” The patentee’s evidence of licensing did not show that the licenses were based on the merits of the patent. The Federal Circuit requires “affirmative evidence of nexus where the evidence of commercial success presented is a license, because it is often cheaper to take licenses than to defend infringement suits.” PTAB cross-licenses or licenses intended are not necessarily based on the merits.

Finally, an expert declaration merely repeating, in conclusory fashion, that there is a nexus between the success of the patentee’s product and the claimed invention is insufficient. The evidence failed to show that the commercial success was caused by the subject matter of the patent as distinct from the prior art.

A copy of the opinion can be found here.