On appeal from a Patent Trial and Appeal Board (PTAB) finding of non-obviousness, the US Court of Appeals for the Federal Circuit found that a petitioner could not raise an “entirely new rationale” for combining two references in an obviousness inquiry in its reply. Henny Penny Corporation v. Frymaster LLC, Case No. 18-1596 (Fed. Cir. Sept. 12, 2019) (Lourie, J).

Frymaster owns a patent directed to a system for measuring the state of cooking oil degradation in a deep fryer. During frying, cooking oil gradually degrades and loses its cooking capacity, generating impurities called total polar materials (TPMs). The patent claims at issue required a TPM sensor to be positioned within an adapter located between the drain and return pipes to measure an electrical property that is indicative of TPMs.

Henny Penny (HPC) filed a petition for inter partes review (IPR) against Frymaster’s patent, asserting that certain claims of the patent were obvious in view of two prior art references, Kauffman and Iwaguchi. In its petition, HPC asserted that Kauffman taught all of the limitations of the claims at issue except a TPM sensor in the structural layout of a deep fryer. Specifically, Kauffman taught an apparatus for detecting undesirable properties in “used oils, lubricants, and fluids” with an electrode positioned between the drain and return lines connected to a fluid reservoir, but did not specifically identify TPM as a property to be measured. Iwaguchi taught measurement of TPMs in a deep fryer, but required diverting the oil to a separate detection vessel comprising a TPM sensor. This diversion process cooled the oil, preventing degradation of the sensor and improving its functionality. In its petition, HPC argued that a person of ordinary skill would have been motivated to adapt the TPM sensor of Iwaguchi into the system described in Kauffman.

After the PTAB instituted HPC’s petition, Frymaster argued that integrating Iwaguchi’s temperature-sensitive TPM probe into Kauffman would not yield a predictable outcome. In response, HPC modified its obviousness theory in its reply, arguing that Kauffman’s sensor alone would have been capable of monitoring TPMs, and that Iwaguchi only taught the desirability of observing TPMs to gauge oil quality. Frymaster objected to HPC’s reply argument as a new theory that was not presented in the petition.

In its final written decision, the PTAB disregarded HPC’s new obviousness theory, focusing only on the original obviousness argument. The PTAB found that a person of ordinary skill in the art would not have been motivated to integrate Iwaguchi’s TPM sensor into Kauffman’s system because Iwaguchi taught cooling the oil before taking the TPM measurement, and adding a diversion and cooling loop to Kauffman would add additional complexity and inefficiencies. The PTAB also found that evidence of secondary considerations supported non-obviousness because Frymaster had won industry praise from two industry organizations and one customer. Accordingly, the PTAB held that the instituted claims were not unpatentable. HPC appealed.

On appeal, HPC argued that the PTAB procedurally erred by too narrowly construing the obviousness theories raised in the petition, and that the PTAB also erred in its conclusion of non-obviousness. The Federal Circuit rejected both arguments.

The Federal Circuit found that the PTAB did not err by holding HPC to the obviousness theory presented in the petition. While the new obviousness theory relied on the same two references, HPC had admitted at the oral hearing that the theory presented in the reply was not in the original petition. The Court noted that because of the expedited nature of IPR proceedings, it is of the utmost importance that petitioners adhere to the requirement that the initial petition identify with particularity the evidence that supports the challenges to each claim. As a result, an IPR petitioner cannot raise entirely new arguments in its reply.

The Federal Circuit also upheld the PTAB’s non-obviousness finding. The Court found that Kauffman’s system did not contemplate cooling the oil, and that following Iwaguchi’s method of diverting and cooling the oil in Kauffman’s system would introduce “additional plumbing and complexity” and lead to “decreased efficiency.” In light of these trade-offs, the Court found that substantial evidence supported the PTAB’s finding that there would have been no motivation to combine the two references. The Court also found that the PTAB’s analysis of Frymaster’s evidence of secondary considerations involving industry praise was not erroneous because the patent claims were commensurate in scope with Frymaster’s product and the evidence of praise was generally directed to the claimed invention as a whole as well as to the integrated TPM sensor.

Practice Note: When filing an IPR petition, it is essential not only to identify each prior art reference being asserted, but also to assert every rationale for combining any prior art references