Patent Watch: Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc.

by BakerHostetler
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[W]e have rarely held that objective evidence is sufficient to overcome a prima facie case of obviousness [but in certain cases] the objective evidence "establish[es] that an invention appearing to have been obvious in light of the prior art was not."

On November 15, 2012, in Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc., the U.S. Court of Appeals for the Federal Circuit (Prost, Moore,* Wallach) reversed the district court's judgment of law that U.S. Patents No. 6,047,781, No. 6,085,851 and No. 6,068,069, which related to an offshore drilling device, were invalid for obviousness and lack of enablement, notwithstanding the jury verdict. The Federal Circuit stated:

[Transocean I] establishes as law of the case that Horn and Lund teach every limitation of the asserted claims and provide a motivation to combine their respective teachings. It was thus erroneous for the district court to permit the jury to engage in fact finding regarding whether Lund and Horn disclose all of the claim elements. The establishment of a prima facie case, however, is not a conclusion on the ultimate issue of obviousness. By definition, the existence of a prima facie case simply means that the party challenging a patent has presented evidence "sufficient to establish a fact or raise a presumption [of obviousness] unless disproved or rebutted." The prima facie inquiry is based on the first three Graham factors -- the scope and content of the prior art, the differences between the prior art and the claims, and the level of ordinary skill in the art -- which the Supreme Court described as the background against which the obviousness or nonobviousness of the subject matter is determined. A party is also free to introduce evidence relevant to the fourth Graham factor, objective evidence of nonobviousness, which may be sufficient to disprove or rebut a prima facie case of obviousness.

As we have repeatedly held, "evidence rising out of the so-called 'secondary considerations' must always when present be considered en route to a determination of obviousness." Objective evidence of nonobviousness is an important component of the obviousness inquiry because "evidence of secondary considerations may often be the most probative and cogent evidence in the record. It may often establish that an invention appearing to have been obvious in light of the prior art was not." This objective evidence must be "considered as part of all the evidence, not just when the decisionmaker remains in doubt after reviewing the art." Thus, in order to determine obviousness, the decisionmaker must be able to consider all four Graham factors. Although we held in Transocean I that Maersk presented a prima facie case of obviousness, it was not error to allow the jury to consider the strength of that prima facie case in making the ultimate determination of obviousness. When the ultimate question of obviousness is put to the jury, the jury must be able to review all of the evidence of obviousness. Hence it was not error for the court to allow the jury to weigh the strength of the prima facie case together with the objective evidence in order to reach a conclusion on the ultimate question of obviousness.

On remand, the jury made express findings on seven types of objective evidence of nonobviousness: commercial success, industry praise, unexpected results, copying, industry skepticism, licensing, and long-felt but unsolved need. The jury found that each of these considerations supported the nonobviousness of Transocean's claims. In granting Maersk's motion for JMOL of obviousness, however, the district court concluded that the record evidence fails to support these findings. We disagree.

Transocean presented sufficient evidence of both commercial success and nexus to the features of the claimed invention. It showed, for example, that its dual-activity drilling rigs commanded a market premium over single-activity rigs. Transocean points to two contracts it signed on the same day with Anadarko Petroleum Corporation, one for a dual-activity drilling rig and one for a single-activity rig. Transocean charged a roughly 12% premium for the dual-activity rig. Transocean introduced other contracts that provided for reduced daily rates if the dual-activity feature on the rig was not available. . . . From this evidence, a reasonable jury could conclude that Transocean's dual-activity rigs have been a commercial success and that this success has a nexus to the features claimed in the patents. We thus conclude that substantial evidence supports the jury's finding that commercial success weighs in favor of nonobviousness.

Transocean presented numerous documents showing industry praise for the unexpected increase in drilling efficiency made possible using Transocean's patented dual-activity technology. . . . This is substantial evidence from which the jury could reasonably conclude that Transocean's claimed dual-activity apparatus produced unexpected efficiency gains and that this benefit garnered praise in the drilling industry. Transocean's evidence also links both the industry praise and the unexpected efficiency gains directly to the claimed dual-activity feature. . . . We conclude that the district court erred by determining that the jury lacked substantial evidence to find that industry praise and unexpected results support nonobviousness.

This evidence shows that Maersk was aware of Transocean's patents and its drillships embodying the patents while Maersk designed its accused rig. The evidence also shows that Maersk decided to incorporate the claimed dual-activity feature anyway because it believed Transocean's patents were invalid over the prior art. Moreover, Maersk's internal document expressly ties its copying to the novel "dual-activity" features of Transocean's invention, which it distinguishes from the "dual drilling" taught in the prior art. This is substantial evidence that supports the jury's finding of copying.

Transocean proffered testimony regarding skepticism by two named inventors of the patents-in-suit, Mr. Scott and Mr. Herrmann. They testified that even though they personally did not believe clashing was a concern, industry experts and Transocean's customers were skeptical of the claimed dual-activity feature due to fears of clashing. . . . This evidence is sufficient for a reasonable jury to conclude that members of the drilling industry were skeptical of Transocean's dual-activity rigs. . . . We thus conclude that the district court erred by rejecting the jury's finding that skepticism supports nonobviousness.

Transocean also offered testimony that at least three companies licensed its dual-activity drilling patents despite being under no threat of litigation. . . . We conclude that Transocean presented sufficient evidence for the jury to find that Transocean's licensing supports nonobviousness. . . . Transocean presented evidence at trial that its dual-activity technology satisfied a long-felt need for greater drilling efficiency. Transocean proffered testimony by two of the named inventors that the drilling industry had been operating in deepwater since the 1970s. . . . Two of the named inventors testified that, prior to the claimed invention, the industry had been searching for ways to increase efficiency by building sections of drill string "offline," out of the path of the well conducting the drilling. These efforts were unsuccessful, however, and left an unsolved need for an efficient method of building the long drill strings needed for deepwater drilling without interrupting operations on the drilling well. We conclude that substantial evidence supports the jury's finding that long-felt but unsolved need supports nonobviousness.

Few cases present such extensive objective evidence of nonobviousness, and thus we have rarely held that objective evidence is sufficient to overcome a prima facie case of obviousness. This, however, is precisely the sort of case where the objective evidence "establish[es] that an invention appearing to have been obvious in light of the prior art was not." The jury found that seven distinct objective factors support nonobviousness and, as discussed above, these findings are all supported by substantial evidence. Weighing this objective evidence along with all the other evidence relevant to obviousness, we conclude that Maersk failed to prove by clear and convincing evidence that the asserted claims would have been obvious. We therefore reverse the district court's grant of JMOL of obviousness.

If you have questions about the material presented above, please contact Dr. Lawrence M. Sung ( lsung@bakerlaw.com or 202.861.1537) or any member of our Intellectual Property Team.

See information regarding BakerHostetler's Patent Litigation and IP Prosecution and Portfolio Management practices.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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