Back in January 2002, when this author was near the beginning of his patent law career, the Federal Circuit handed down the In re Sang-Su Lee case.  Among other things, this case provided patent practitioners with support for challenging examiners that failed to identify the evidence on which they were relying.  Before then, the Patent Office would occasionally use the "common knowledge and common sense" of a person of ordinary skill in the art to support obviousness rejections, especially with regard to combining prior art references.  Of course, without any actual evidence provided, it was very difficult to respond to any such rejection.  In re Sang-Su Lee provided the necessary relief:  "The Board cannot rely on conclusory statements when dealing with particular combinations of prior art and specific claims, but must set forth the rationale on which it relies."  Fourteen years later, in Cutsforth Inc. v. MotivePower, Inc., the Federal Circuit told the Patent Trial and Appeal Board that it had the same obligation to provide a thorough explanation of its reasoning when it issues Final Written Decisions.  "When the Board determines that modifications and combinations of the prior art render a claimed invention obvious, the Board must fully explain why a person of ordinary skill in the art would find such changes obvious."  Because the Board did not do so in this case, the decision was vacated and remanded.     

The case stems from an inter partes review of U.S. Patent No. 7,990,018, owned by Cutsforth, Inc.  The technology at issue involved brush holder assemblies that allowed a current to pass from a stationary device to a moving contact.  The stationary device could be a brush made of conductive material, with a brush holder that would allow a continuous contact with the moving conductive surface to generate an electrical current.  The claimed assembly allowed for easier removal, allowing brush replacement during operation.  MotivePower filed five IPR petitions directed to the '018 patent and related patents, all of which were instituted.  Ultimately, no challenged claim survived (either through voluntary cancellation or a finding of unpatentability by the Board).  Three of the five decisions were appealed, and were consolidated for purposes of oral argument.  This opinion, however, only appears to address the IPR directed to the '018 patent.

The challenged claims of the '018 patent were found to be obvious in view of three prior art references, Bissett, Ohmstedt, and Kartman.  The Board began its analysis of independent claim 1 by reiterating the assertions of the petitioner:

Concerning independent claim 1, Petitioner contends that Bissett discloses a brush holder component (brush assembly 12) adapted for removably mounting to the mounting block (dovetails 18) by providing a channel for receiving a portion of the mounting block (dovetails 18). Pet. 16 (citing Ex. 1005, 1:61–2:1, Figs. 3–4). Furthermore, Petitioner argues that it would have been obvious to adapt the brush holder (brush assembly 12) of Bissett to include the brush catch of Ohmstedt, whereby divergent portion 23 of Ohmstedt would extend downward from the Bissett channel such that teeth 25 of Ohmstedt engage the Bissett brush 24. Pet. 10 (citing Ex. 1003, 1:14–18, 28–50; Ex. 1005, Fig. 4). Accordingly, Petitioner argues that the brush catch of Ohmstedt (divergent portion 23 and teeth 25) has a first position preventing sliding movement of a brush and a second position permitting sliding movement of a brush. Pet. 16 (Ex. 1003, 2:5–49, 3:8–12, Figs. 1, 2). Additionally, Petitioner argues that it would have been obvious to include the Ohmstedt brush release (ramps 59) in a position to engage the brush catch below the mounting structure (dovetails 18). Pet. 10–11, 17 (citing Ex. 1003, 2:15–17, 39–43, Fig. 2). The Petitioner also argues that it would have been obvious to adapt the mounting block of Bissett (dovetails 18) with the mounting block of Kartman. Pet. 11–12 (citing Ex. 1004, 4:19–22 and Ex. 1005, 1:63–64). More particularly, Petitioner proposes that the "T" shaped channel in Bissett may be modified to incorporate the elongated mounting block structure of Kartman (detachable connecting means 42), which also is configured to slidably engage a "T" shaped channel. Pet. 12–13 (citing Ex. 1004, 4:19–22, Fig. 3; Ex. 1005, 1:63–64, Fig. 4).

IPR2013-00274, Final Written Decision at pp. 19-20.  After the Board explained how the patent owner responded, it rejected these arguments stating that it was "not persuaded by Patent Owner's argument[s]" or assertions.  But nowhere in the decision did the Board explain its reasoning why the claims were obviousness in the first place, nor did it explicitly adopt the Patent Owner's allegations as its own.        

For claims 5 and 8, which ultimately depended from claim 1, the additional elements of a spring and a movable portion were recited.  The Board found that the prior art also recited such features, even if not necessarily on the mounting block.  Instead, the Board explained that the specific placement of the claimed spring and movable portion are matters of "design choice."  No other reasons were provided by the Board as to why these modifications were obvious, or why a person of ordinary skill in the art would have been motivated to make them.

The Federal Circuit held, in much the same was as it did earlier in In re Sang-Su Lee, that the reasoning for the rejection/cancelation must be articulated.  Otherwise, the patent owner would be at a loss as to how to mount a competent appeal, and the Federal Circuit would be unable to conduct a meaningful review.  Especially for obviousness determinations, "the Board must explain why a person of ordinary skill in the art would modify the prior art references to create the claimed invention."  In the present case, the Court found that the Board merely restated the arguments of the petitioner without accepting them for itself.  The decision therefore read as though the Board assumed the combination was obvious, and that the Patent Owner had failed to establish the claims were non-obvious.  This, of course, essentially amounts to a burden shift, requiring the Patent Owner to show why it was entitled to a patent rather than requiring than requiring the petitioner to establish by a preponderance of the evidence why the claims were obvious.

With regard to the "design choice" argument posited by the Board, the Federal Circuit explained that even if the particular placement of the element was a design choice, it did not necessarily render the placement obvious.  Instead, there must be some reason why a person of skill in the art would have made the particular design choice.  The Board did not provide this reason.

This case might appear as a win for patent owners, and indeed the Board will certainly be more careful in articulating its reasoning in future final written decisions.  However, on remand, it is conceivable that the Board could merely modify the final written decision to add that it adopted all of the reasoning of the petitioner as its own.  And, realistically going forward, if the Board thinks that a particular claim is obvious, it will likely be able to provide some reasoning sufficient to satisfy the holding in this case.  Therefore, even if at first blush this case seems to be a panacea for patent owners, it is unlikely that it will have the same impact for practitioners that the In re Sang-Su Lee case did back in 2002.

Cutsforth Inc. v. MotivePower, Inc. (Fed. Cir. 2016)
Nonprecedential disposition
Panel: Chief Judge prost and Circuit Judges Clevenger and Moore
Opinion by Circuit Judge Clevenger