Federal Circuit Review - Issue 284

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284-1. The Federal Circuit Finds Standing for Appeal Based on Risk of Infringement; Vacates Board Determination that Raytheon Claims are Nonobvious

The Federal Circuit recently vacated and remanded a Patent Trial and Appeal Board (the Board) decision finding a Raytheon patent related to turbine engines nonobvious. The Court first found that General Electric Company (GE) had standing to appeal based on a "substantial risk of infringement." In doing so, the Court found GE had cured its deficient standing in a prior appeal related to the turbine engines. Further, the Court vacated and remanded the decision of nonobviousness, finding the Board decision lacked substantial evidence of "teaching away" and lack of "motivation to combine." See GE v. Raytheon Techs. Corp., No. 2019-1319, 2020 U.S. App. LEXIS 40438 (Fed. Cir. Dec. 23, 2020) (Before Lourie, Reyna, and Hughes, Circuit Judges) (Opinion for the Court, Hughes, Circuit Judge). For the related case, see GE v. United Techs. Corp., No. 2017-2497, 2019 U.S. App. LEXIS 20405 (Fed. Cir. July 10, 2019).

Raytheon is the owner of U.S. Patent No. 8,695,920 (the '920 patent), which is related to turbine engines for airplanes and, in particular, a geared-fan turbine engine. Of particular interest to the case was claim 9, which states in relevant parts:

9. A method of designing a gas turbine engine comprising:

...

providing a first spool along said engine centerline axis within said core nacelle to drive said gear train, said first spool includes a first turbine section including be-tween three–six (3–6) stages, and a first compressor section;

providing a second spool along said engine centerline axis within said core nacelle, said second spool includes a second turbine section including at least two (2) stages and a second compressor section....

(Emphasis added). Claim 10, also of importance as it was challenged in an Inter Partes Review (IPR), depends from claim 9 and adds that "said first turbine section defines a pressure ratio that is greater than about five (5.0)." In December 2016, GE petitioned for IPR of certain claims of the patent. After Raytheon disclaimed claim 9, claims 10-14 remained for the Board's review.

At the IPR proceeding, GE asserted that the '920 patent claims were obvious in view of primary reference article Wendus in view of secondary reference article Moxon. The Wendus article disclosed each element of claims 10–14 "except that it teaches a one-stage high-pressure turbine instead of the ‘at-least-two-stage' high-pressure turbine taught in" the claims. Moxon describes that "a move to one instead of two HP turbine stages is thought unlikely, although designs have been carried out and demonstrations have been run," therefore enforcing the concept that (1) a two-stage turbine is preferred and (2) the two-stage turbine is known.

The Board agreed that the references, if combined, would teach each element of the claims. However, the Board found that Wendus taught away from a two-stage turbine with high- and low-pressure stages. Further, the Board found that, even if Wendus did not teach away, an artisan would not be motivated to combine the references when viewed "as a whole." Accordingly, the Board found the claims to be nonobvious, and GE appealed.

The Court first addressed GE's standing to appeal the case. Raytheon argued that GE's assertion that there was a "risk of infringement" was speculative and thus had no concrete injury. Raytheon noted that it had never approached GE about potential infringement of the '920 patent. The arguments were substantially the same as in the prior appeal related to turbine engines in GE v. United Techs. Corp., No. 2017-2497, 2019 U.S. App. LEXIS 20405 (Fed. Cir. July 10, 2019).

In the prior appeal, GE sought to rely on three theories of standing: "(1) competitive harm; (2) economic losses; and (3) estoppel under 35 U.S.C. § 315(e)." The Court found that all three theories were overly speculative or, in the case of the statute, not enough alone to create standing for appeal from the Board. In the present case, however, GE was able to provide more specific evidence of a more particularize and concrete risk of infringement. "When an appellant 'relies on potential infringement liability as a basis for injury in fact, but is not currently engaging in infringing activity, it must establish that it has concrete plans for future activity that creates a substantial risk of future infringement or would likely cause the patentee to assert a claim of infringement.'"

In particular, GE had evidence that it had spent $10–12 million developing a turbine fan that could potentially infringe the patent. GE evidenced that the particular design was its "preferred" design, and the company "has offered this preferred geared turbofan design to Airbus in response to a request for information Airbus dispatched for its next-generation narrow body aircraft." GE even submitted the plans for the engine to Airbus for the bid, and included no other design. To the Court, these specific allegations, including (1) specific monetary amounts to design the potentially infringing product, (2) a preference for the potentially infringing product over others, and (3) a specific bid to sell the potentially infringing product, cured GE's prior lack-of-standing.

After concluding GE had standing to appeal, the Court turned to the merits of the case, or whether the Board erred in finding the '920 patent claims nonobvious in view of Wendus and Moxon. The Court first addressed whether Wendus taught away from the two-stage high-pressure turbine, otherwise described in Moxon. "[A] reference does not teach away ‘if it merely expresses a general preference for an alternative invention but does not "criticize, discredit, or otherwise discourage" investigation into the invention claimed.'" (Quoting Polaris Indus., Inc. v. Arctic Cat, Inc., 882 F.3d 1056 (Fed. Cir. 2018)). The Court found no evidence of criticism in the Wendus article related to "the use of a two-stage turbine for weight or cost reasons" or other reasons found by the Board. For example, there was no discussion of fuel efficiency preferences in Wendus or the like. Further, "Wendus does not make a single negative statement about the use of a two-stage high-pressure turbine; therefore, Wendus does not criticize, credit, or discourage the use of a two-stage high-pressure turbine." Accordingly, the Court found that Wendus does not teach away from the design.

The Court then turned to the motivation to combine the references. The Court referred to the Board's discussion of a "strong preference" to the single-phase design, which was also used in the discussion of the teaching away analysis. The Court found that nothing in Wendus described this "strong preference."

Finally, the Court turned to the Board's finding that, "as a whole," the claims were nonobvious. The Board originally held that GE failed to show that the two references, read as a whole, rendered the claims obvious. The Court, however, held that "Wendus meets all the elements of claim 10 except for the two-stage high-pressure turbine, which Moxon discloses." To this end, the references as a whole, can render the claims obvious.

In so holding, the Court found that the Board lacked substantial evidence for deciding the challenged claims were not unpatentable as obvious, and the Court vacated and remanded to the Board.

When arguing that a party to an IPR has standing to appeal based on risk of infringement, factors that may be helpful include: (1) specific monetary amounts to design the potentially infringing products, (2) a preference for the potentially infringing products over others, and (3) a specific bid to sell the potentially infringing products.

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