Fed Circuit Watch: Who Let the Cat Out? Faulty USPTO Obviousness Analysis

103 commercial success fed circuit watch motivation to combine obviousness patent

On February 9, 2018, the Court of Appeals for the Federal Circuit handed down Polaris Indus., Inc. v. Arctic Cat, Inc.,[1] where a Fed Circuit panel criticized the invalidation of all 38 claims of Polaris’ patent as obvious under 35 U.S.C. §103 over different combinations of prior art based on the PTAB’s messy §103 analysis.

The facts are as follows.

Polaris Industries, Inc., owns U.S. Patent No., 8,596,405 (‘405), for “Side-by-Side ATV.”  The invention as described in the specification has two “laterally spaced apart seating surfaces,” and the ATV overall maintains a “low-center of gravity.”  The ‘405 patented invention has a wheelbase to seat height ratio of 6 to 1, ensuring a low center of gravity that provides for “improved ergonomics, handling, and space utilization.”[2]  The ‘405 patent has 38 claims.  All recite specific components within the ATV itself.  There are two independent claims.  Claim 1 recites:

1. An all-terrain vehicle including:

a frame, comprising a front frame portion, a mid frame portion and a rear frame portion;

a front suspension supported by the front frame portion;

at least two front wheels coupled to the front suspension;

a front axle assembly supported by the front frame portion and drivingly coupled to the front wheels;

a seating area supported by the mid frame portion, comprising side by side seats;

an engine supported by the rear frame portion, the engine positioned rearwardly of the seating area;

a transmission coupled to and extending rearwardly of the engine;

a rear suspension supported by the rear frame portion;

at least two rear wheels coupled to the rear suspension;

a rear axle assembly supported by the rear frame portion and drivingly coupled to the rear wheels;

a front drive shaft extending between the transmission and the front axle assembly for coupling the transmission to the front wheels; and

rear drive shaft extending between the transmission and the rear axle assembly for coupling the transmission to the rear wheels.[3]

(Emphasis added.)

The dependent claims of claim 1 – claims 2-33 and 35, specify certain spatial relationships between these components or recite further additional components.

The other independent claim, Claim 34, recites:

  1. An all-terrain vehicle comprising:

a frame, comprising a front frame portion, a mid frame portion and a rear frame portion;

a front suspension supported by the front frame portion;

at least two front wheels coupled to the front suspension;

a front axle assembly supported by the front frame portion and drivingly coupled to the front wheels;

a seating area supported by the mid frame portion, comprising side by side seats;

an engine supported by the rear frame portion, the engine positioned rearwardly of the seating area;

a transmission coupled to the engine, the transmission being completely rearward of the seating area;

a rear suspension supported by the rear frame portion;

at least two rear wheels coupled to the rear suspension;

a rear axle assembly supported by the rear frame portion rearward of the engine and drivingly coupled to the rear wheels;

a front drive shaft extending forward of the transmission for coupling the transmission to the front wheels via a front axle assembly; and

a rear drive shaft extending rearward of the transmission for coupling the transmission to the rear wheels via the rear axle assembly.

(Emphasis added.)

Its dependent claims, claims 35-38, recite further components and spatial relationships between these components, similar to Claim 1.  The differences between Claims 1 and 34 have been emphasized above, and specifically deal with different drive shaft and transmission positions.

Arctic Cat, Inc. is a competitor of Polaris, and filed IPRs in the PTAB alleging invalidation of the ‘405 patent under §103 based on a combination of U.S. Patent Nos. 7,658,258 (“Denney”), 5,327,989 (“Furuhashi”).  Essentially, Denney’s invention is an ATV and Furuhashi’s is a dune buggy.[4]

Denney’s ATV provides for two side-by-side passengers with a rearward engine compartment configured with an engine, power train, and transmission.  Also, Denney’s specification explains that “ATVs typically haver a short wheelbase which gives the ATV increased maneuverability and transportability over their counterpart recreational vehicles such as sandrails or a dune buggy.”  Further, by raising the occupancy area, the “center of gravity of the ATV is also raised,” which results in “higher center of gravity” but reduced “vehicle stability.”[5]  In order to overcome these issues, Denney’s invention focuses on a two-wheel drive system.[6]  Denney’s invention does not relate to front-wheel drive, nor does it does it disclose further limitations in claims 16-19 of the ‘405 patent.

Furuhashi’s invention is a four-wheeled dune buggy that holds one driver and no passengers.  The fuel tank and engine are located below the seat.  Denney and Furuhashi are relevant to the 1427 Decision.

Obviousness under 35 U.S.C. §103 is a question of law based on underlying facts, which includes the scope and content of the prior art and reasons to combine prior art.[7]  First, Polaris’ argued that the PTAB used improper claim construction to support a finding of obviousness.  Polaris’ second argument was that the PTAB failed to properly articulate a valid motivation to combine Denney and Furuhashi to arrive at the ‘405 patented invention.  Further, Polaris argued that the PTAB applied a “subjective preferences” analysis that is not within the Fed Circuit’s precedents.

The panel first examined the claims where it affirmed the finding of obviousness.

When determining a claim term, the courts must give the term its broadest reasonable interpretation (BRI) in light of the claim language and the specification.[8]  The panel, consisting of Judges Lourie, O’Malley, and Hughes, with Judge O’Malley writing the opinion, noted that Claim 15 recites the “protective panel” being “positioned between” the “pair of laterally spaced-apart seating surfaces,” and the engine.  Further, the panel noted that the spec, in one embodiment, has the shaft under the protective panel positioned “behind upper and lower seating surfaces.”[9]  The panel found nothing in the claims or the spec required the protective panel have any particular position relative to either seat.  Rather, the panel had to be between the seats and the engine and serve a protective function.  The panel held that Denney taught these aspects found in ‘405.  As such, claim 15 was determined to be obvious over Denney.

O’Malley’s opinion also noted that there was substantial evidence supporting the PTAB’s finding that a POSITA would have been motivated to put the Furuhashi front drive shaft beneath the Denney mounting plate and would have known to accomplish this modification.[10]  Therefore, the panel found dependent claim 16 as obvious over Denney.

Claims 1-14, 20-33, and 35 were then reviewed, based on a motivation to combine Denney with Furuhashi.  Polaris tried to attack this motivation to combine by stating that a POSITA would not have combined ATV and dune buggy references to arrive at the ‘405 invention.  However, the panel noted that both Denney and ‘405 were both directed to improvements in side-by-side ATVs, making them analogous art.[11]  Thus, the panel affirmed the finding that claims 1-14, 20-33, and 35 were obvious over Denney in light of Furuhashi.

The panel, however, diverged sharply from the PTAB’s analysis regarding claims 17-19 and 36-38.

We have never articulated a framework for analyzing whether claims would have been obvious that includes the phrase “subjective preference” or that permits a tribunal to wholly disregard the significance of prior art teachings based on such a characterization.  Nevertheless, the Board applied its “subjective preferences” analysis to reject Polaris’s argument that Denney’s stated desire for a low center of gravity “teaches away” from making modifications without conducting a proper teaching away analysis.[12]

O’Malley noted that the PTAB disregarded undisputed evidence that Polaris introduced in evaluating how a POSITA would have been motivated to modify Denney to find the limitations in claims 17-19.  O’Malley sharply criticized the PTAB’s “subjective preferences” analysis because it invited “distortion caused by hindsight bias.”[13]  This also leads to a fact-finder (hence, the PTAB) to discard proper evidence relevant to both “teaching away” and whether a POSITA had motivation to combine.  The undisputed fact in Denney, dealing with the higher center of gravity and making the ATV less stable, goes against what Denney’s invention has stated.  The panel vacated the obviousness finding against claims 17-19 and remanded for further analysis as to whether a POSITA would have been motivated to combine Denney and Furuhashi.

O’Malley also found the PTAB’s analysis of the commercial success relevant to claims 34, 36-38 to be deficient.  The PTAB did not consider Polaris’ evidence of commercial success tied directly to its ‘405 patent.[14]  The panel found that the PTAB erred when it declined to afford any weight to Polaris’ evidence.  As such, the panel remanded these claims back to PTAB for further analysis of the commercial success and its nexus between the ‘405 invention.

In summary, the Fed Circuit affirmed claims 1-16, 20-33, and 35 were unpatentable as obvious (for Arctic Cat), but vacated the obviousness findings as to claims 17-19, 34, and 36-38 (for Polaris, at least for now until remand is completed).

[1] 876 F.3d 1350 (Fed. Cir. 2018), aff’g-in-part, vacating-in-part and remanding Arctic Cat, Inc. v. Polaris Indus., Inc. (1427 Decision), No. IPR2014-01427, 2016 WL 498434 (P.T.A.B. Feb. 4, 2016) and Arctic Cat, Inc. v. Polaris Indus., Inc. (1428 Decision), No. IPR2014-01428, 2016 WL 49539 (P.T.A.B. Feb. 4, 2016).

[2] Polaris, supra (slip op. at 2-3).

[3] Id. (slip op. at 3-4).

[4] We only look at the appeal dealing with the 1427 Decision since it contains the bulk of the Fed Circuit’s §103 analysis, and therefore, only the Denney and Furuhashi references are relevant.

[5] Polaris, supra (slip op. at 5-6).

[6] Id. (slip op. at 6).

[7] Id. (slip op at 11) (citing Graham v. John Deere Co., 383 U.S. 1, 17-18 (1966)).  See also MPEP 2144(II) (“The strongest rationale for combining references is a recognition, expressly or impliedly in the prior art or drawn from a convincing line of reasoning based on established scientific principles or legal precedent, that some advantage or expected beneficial result would have been produced by their combination.”)

[8] Id. (slip op at 13) (citing Cuozzo Speed Techs., LLC v. Lee, ___U.S.___, 136 S. Ct. 2131, 2142-46 (2016)).

[9] Id.

[10] See MPEP 2143 (“The rationale to support a conclusion that the claim would have been obvious is that particular known technique was recognized as part of the ordinary capabilities of one skilled in the art [POSITA].  [A POSITA] would have been capable of applying this known technique to a known device (method or product) that was ready for improvement and the results would have been predictable to a POSITA.”)

[11] See MPEP 2141.01(a) and MPEP 2145(X).

[12] Id. (slip op. at 19).

[13] Id. (slip op. at 19-20) (citing KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 421 (2007)).

[14] Id. (slip op. at 25-26).  See also MPEP 2145 (“Office personnel should avoid giving evidence no weight, except in rare circumstances.  However, to be entitled substantial weight, the applicant should establish a nexus between the rebuttal evidence and the claimed invention, i.e., objective evidence of nonobviousness must be attributable to the claimed invention.”)