Chemours Company FC, LLC v. Darkin Industries, Ltd. (Fed. Cir. 2021)

McDonnell Boehnen Hulbert & Berghoff LLP

McDonnell Boehnen Hulbert & Berghoff LLP

The Federal Circuit, and the Court of Customs and Patent Appeals before it, generally reviewed decisions by the Patent and Trademark Office under the same standard applied to district court decisions, whether the factual basis for the decision was "clearly erroneous" (questions of law were, and are, decided de novo), acting as a check on the administrative agency's interpretations of its precedent and Congress's statutory mandates.  That changed when the Supreme Court decided, in Dickinson v. Zurko (1999), pursuant to the provisions of the Administrative Procedures Act (5 U.S.C. §§ 551 et seq.) and specifically 5 U.S.C. § 706, that factual determinations should be upheld if supported by substantial evidence.  This change in standard of review became even more important after enactment of the post-grant review procedures in the Leahy-Smith America Invents Act, and in particular the inter partes review (IPR) provisions (35 U.S.C. §§ 311 et seq.) with regard to obviousness determinations under 35 U.S.C. § 103.  This is because while obviousness is a legal determination, it is based on factual determinations that have been much more likely to pass muster under substantial evidence review and has led the Federal Circuit generally to affirm decisions by the Patent Trial and Appeal Board (PTAB) on that basis.  Not so in Chemours Company FC, LLC v. Darkin Industries, Ltd., decided last week, which showed perhaps the limits of deference the Court is willing to entertain in reviewing PTAB obviousness determinations.

The case arose over Darkin's challenge of two Chemour patents, U.S. Patent Nos. 7,122,609 and 8,076,431.  The technology was directed to extrusion coating of communications cables involving pulling said cables through melted polymers for form insulation.  Chemour's patents disclosed "a polymer with unique properties such that it can be formed at high extrusion speeds while still producing a high-quality coating on the communication cables" and specifically performing extrusion at 30±3g/10 min characterized as "a high melt flow rate."  The opinion recites Claim 1 of the '609 patent as being representative:

1.  A partially-crystalline copolymer comprising tetrafluoroethylene, hexafluoropropylene in an amount corresponding to a hexafluoropropylene index (HFPl) of from about 2.8 to 5.3, said copolymer being polymerized and isolated in the absence of added alkali metal salt, having a melt flow rate of within the range of about 30±3 g/10 min, and having no more than about 50 unstable endgroups/106 carbon atoms.

The Board found all claims in both patents to be obvious over the disclosure of U.S. Patent No 6,541,588.  The basis for the determination was that the '588 patent teaches that cables can be insulated at speeds similar to the range recited in the '609 patent claims (in one example being 24 g/10 min, which is close to the lower limit of Chemour's range, 27 g/10 min).  Significantly, the '588 patent also teaches that it is important to maintain "a very narrow molecular weight distribution" in the polymer (which in a footnote the Court explains means "[a] polymer with a narrower molecular weight distribution has more polymer chains that are of similar lengths, while a broad molecular weight distribution fluorinated ethylene propylene ("FEP") has more variation in polymer chain lengths").  The Board found that "a skilled artisan would have been motivated to increase the melt flow rate of [the '588 patent]'s preferred embodiment to within the claimed range in order to coat wires faster."  Notwithstanding the narrow range teaching regarding polymer molecular weight in the '588 patent, the Board further found that "it is not clear on this fully developed record why the skilled artisan would have been motivated to maintain such a narrow molecular weight distribution when seeking to achieve even higher coating speeds" and that the '588 patent specification "lacked specificity" regarding the metes and bounds of "narrow" and "broad" molecular weight ranges.  This was enough for the Board to opine that "this purported discovery would not have prevented the skilled artisan, at the time of the invention of the '609 patent, from considering other techniques—such as broadening the polymer's molecular weight distribution—to achieve higher coating speeds . . . ."  Based on these factual determinations, the PTAB held the claims in the '609 and '431 patents were obvious, and Chemour appealed.

The Federal Circuit reversed, in an opinion by Judge Reyna joined by Judge Newman; Judge Dyk concurred with majority that the Board's decision was erroneous but not with reversal of the judgment.  The majority's opinion was based on its conclusion that while it was permissible for the Board "to inform itself of the state of the art at the time of the invention," "the Board appears to have ignored the express disclosure in [the '588 patent] that teaches away from the claimed invention and relied on teachings from other references that were not concerned with the particular problems  [the '588 patent] sought to solve.  In other words, the Board did not adequately grapple with why a skilled artisan would find it obvious to increase [the '588 patent]'s melt flow rate to the claimed range while retaining its critical "very narrow molecular-weight distribution."  Regarding the motivation to increase the melt flow rate to be within the range recited in the '609 and '431 patents, the opinion states the Board did not support with substantial evidence "why a POSA would be motivated to increase [the '588 patent]'s melt flow rate to the claimed range, when doing so would necessarily involve altering the inventive concept of a narrow molecular weight distribution polymer."  The majority perceived that the '588 patent taught away from broadening the molecular weight range to achieve the higher melt flow rates.  The '588 patent itself recited "numerous examples of processing techniques that are typically used to increase melt flow rate, which [the '588 patent] cautions should not be used due to the risk of obtaining a broader molecular weight distribution" (emphasis in opinion).  The majority agreed with Chemour that "the Board needed competent proof showing a skilled artisan would have been motivated to, and reasonably expected to be able to, increase the melt flow rate of [the '588 patent]'s polymer to the claimed range when all known methods for doing so would go against [the '588 patent]'s invention by broadening molecular weight distribution" which in the majority's view it did not.

The majority also opined on the Board's erroneous application of the objective indicia of non-obviousness; Judge Dyk joined his brethren in this portion of the opinion.  The issue involved the commercial success flavor of objective non-obviousness, where the panel held the Board erred for finding an insufficient nexus between said success and the patents at issue.  Chemour's argument on appeal on this issue was twofold: first, that the PTAB found no nexus on a limitation-by-limitation basis, and that the Board required Chemour to show market share data to establish commercial success.  The panel agreed with Chemour's first argument, stating that "the separate disclosure of individual limitations, where the invention is a unique combination of three interdependent properties, does not negate a nexus" because "[c]oncluding otherwise would mean that nexus could never exist where the claimed invention is a unique combination of known elements from the prior art," citing WBIP, LLC v. Kohler Co., 829 F.3d 1317, 1332 (Fed. Cir. 2016).  With regard to Chemour's market data argument, the panel agreed that a showing of "significant sales in the relevant market" of a product "disclosed and claimed in the patent" provides a presumption "that the commercial success is due to the patented invention," citing J.T. Eaton & Co. v. Atl. Paste & Glue Co., 106 F.3d 1563, 1571 (Fed. Cir. 1997).  Market share data, "though potentially useful," is not required to satisfy the standard of commercial success according to the Court.

Finally, the panel assessed Chemour's argument that the PTAB erred in its finding that the patents-at-issue were so-called "blocking patents" that would have prevented competitors from entering the relevant market (and thus provide an alternative explanation for the purported commercial success; (see "Acorda Therapeutics, Inc. v. Roxane Laboratories, Inc. (Fed. Cir. 2018)").  The panel held that the Board erred in its determination, stating without analysis or explanation that the challenged patent, which covers the claimed invention at issue, cannot act as a blocking patent.

As a side note, the panel declined to consider Chemour's argument that the Board's decision was in violation of the Appointments Clause, after the Supreme Court's decision in U.S. v. Arthrex.

The basis for Judge Dyk's partial dissent was his disagreement with his colleagues that the '588 patent "taught away" from the claimed invention.  Specifically, the Judge thought the polymer disclosed in the '588 patent was "nearly identical" to the polymer recited in the patents-at-issue.  The only difference in Judge Dyk's apprehension of the claimed invention with the '588 patent is the extrusion rate, which is similar between the challenged claims and the reference.  In his view, the '588 patent disclosed that even though "a narrow molecular weight distribution performs better" it also acknowledged "the feasibility of using a broad molecular weight distribution to create polymers for high speed extrusion coating of wires."  This, in the Judge's opinion, was not a teaching away and "[t]he majority's approach impermissibly expands the teaching away doctrine such that it encompasses a reference's mere preference for a particular alternative."  Judge Dyk also believes that the distinction between narrow and broad molecular weight ranges was insufficiently disclosed in the '588 patent to support the majority's opinion.  Accordingly, Judge Dyk would remand for a determination of obviousness in view of the proper consideration of the secondary indicia as set forth in the majority opinion.

Chemours Company FC, LLC v. Darkin Industries, Ltd. (Fed. Cir. 2021)
Panel: Circuit Judges Newman, Dyk, and Reyna
Opinion by Circuit Judge Reyna; opinion concurring in part and dissenting in part by Circuit Judge Dyk

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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