The Federal Circuit Tries to Set the Record Straight on Obviousness

Dystar Textilfarben GMBH & Co Deutschland KG v. C.H. Patrick, Co., et al. (06-1088) - October 3, 2006

The process of dyeing textile materials with catalytically hydrogenated leuco indigo traditionally has involved six steps: (1) reducing indigo to its leuco form in solution; (2) stabilizing the leuco indigo solution, usually in paste or powder form; (3) creating a preparation tank in which the dried leuco indigo is re-converted to solution form; (4) adding the solution to the dyebath; (5) dipping; and (6) skying. Dystar's US Patent 5,586,992 ("the '992 patent") improved upon the prior art by eliminating steps two and three of the traditional process: stabilizing the leuco indigo solution into a paste or powder form, and then reconstituting the solution in a preparation tank. Instead, it allowed a dyer to pour prereduced indigo solution directly into a dyebath and commence dyeing immediately.

After a jury trial, the '992 patent was held valid and infringed by C.H. Patrick. Damages were assessed at $90,000. C.H. Patrick appealed, arguing that the jury and the lower court improperly analyzed the teaching-suggestion-motivation (TSM) contained in three prior art references that would have rendered the '992 patent obvious. Because the jury did not make explicit factual findings in the form of answers to written interrogatories or special verdicts, the court discerned the jury's implied factual findings by interpreting the evidence consistently with the verdict and drawing all reasonable inferences in DyStar's favor.

The parties disagreed over the relevance of the cited prior art, which the court found tantamount to a disagreement over the level of ordinary skill in the art. DyStar asserted that the prior art was not analogous, because a person of ordinary skill in the art would not be aware of these references. In other words, DyStar argued that no knowledge of chemistry is required in the relevant technical field. Evidence submitted to the jury showed that two potential levels of ordinary skill existed: (1) that of a dyer (described as someone with "a high school degree" who is "able to read and write") and (2) a dyeing process designer (i.e., a person creating the dye processes). While the court acknowledged the jury's finding that a lower level of skill was involved, the nature of the problems to be solved in the '992 patent compelled the court to conclude that a higher level of skill was needed to appreciate the teaching in the patent:

[s]ubstantial evidence does not support the jury's finding that a person of ordinary skill is a dyer with no knowledge of chemistry. Indeed, that factual finding is inconsistent with the '992 patent's very purpose. The technical problem that the process of the '992 patent and the prior art cited by Bann sought to solve is precisely the same: an improved process for dyeing textile materials with indigo. This process includes several discrete subcomponents—e.g., indigo reduction and dyebath preparation—and an ordinary artisan would be concerned with all of them. To beneficially practice the dyeing process claimed in the '992 patent, the ordinary artisan must have a higher-level perspective, as he must first decide whether it is more efficient to reduce indigo in-house or purchase prereduced indigo and, if prereduced, must then decide whether solid or solution form is preferable . . . the jury's implicit finding of a mere dyer cannot withstand scrutiny on JMOL.

The court also addressed the suggestion test, which prompted a few choice words from the bench on "commentators" that allege that the Federal Circuit "weakened" the obviousness standard:

In contrast to the characterization of some commentators, the suggestion test is not a rigid categorical rule. The motivation need not be found in the references sought to be combined, but may be found in any number of sources, including common knowledge, the prior art as a whole, or the nature of the problem itself.

DyStar's argument misreads this court's cases and misdescribes our suggestion test, echoing notions put forth recently by various commentators and accepted in major reports. A 2003 report by the Federal Trade Commission, for example, quoted testimony of certain witnesses that this court requires "specific and definitive [prior] art references with clear motivation of how to combine those references" and requires the PTO to find "the glue expressly leading you all the way [to obviousness]" and "connect the dots . . . very, very clearly." Fed. Trade Comm'n, To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy ch. 4, at 11 (2003). Similarly, a 2004 report by the National Academy of Sciences summarized views of a few commentators that "standards of patentability—especially the non-obviousness standard—have become too lax as a result of court decisions" by the Federal Circuit, leading to the deterioration of patent quality. Nat'l Research Council, A Patent System for the 21st Century 3 (Stephen A. Merrill et al. eds., 2004) . . .

Seeking to support their assertions about Federal Circuit caselaw, these few commentators have quoted isolated statements from three of our precedents [In re Dembiczak, In re Lee, and Ruiz v. A.B. Chance Co.] . . . Despite containing arguably imprecise language in these statements, quoted out of context, each of the above-cited cases correctly applies the suggestion test and by no means requires an explicit teaching to combine to be found in a particular prior art reference.

It is difficult to see how our suggestion test could be seen as rigid and categorical given the myriad cases over several decades in which panels of this court have applied the suggestion test flexibly. Obviousness is a complicated subject requiring sophisticated analysis, and no single case lays out all facets of the legal test.

After rebutting the critics, the Federal Circuit went through a slew of cases and pointed out how the Federal Circuit has remained consistent with the Graham requirements (and, in a footnote, acknowledged the upcoming KSR v. Teleflex Supreme Court case), and concluded that the suggestion test has always been (and always will be?) a "flexible test":

Our suggestion test is in actuality quite flexible and not only permits, but requires, consideration of common knowledge and common sense. See, e.g., In re Kotzab, 217 F.3d 1365, 1369 (Fed. Cir. 2000) ("A critical step in analyzing the patentability of claims pursuant to section 103(a) is casting the mind back to the time of invention, to consider the thinking of one of ordinary skill in the art, guided only by the prior art references and the then-accepted wisdom in the field."); Motorola, 121 F.3d at 1472 ("[T]he suggestion to combine may come from the prior art, as filtered through the knowledge of one skilled in the art."); Bozek, 416 F.2d at 1390 ("Having established that this knowledge was in the art, the examiner could then properly rely, as put forth by the solicitor, on a conclusion of obviousness 'from common knowledge and common sense of the person of ordinary skill in the art without any specific hint or suggestion in a particular reference.'").

Indeed, we have repeatedly held that an implicit motivation to combine exists not only when a suggestion may be gleaned from the prior art as a whole, but when the "improvement" is technology-independent and the combination of references results in a product or process that is more desirable, for example because it is stronger, cheaper, cleaner, faster, lighter, smaller, more durable, or more efficient. Because the desire to enhance commercial opportunities by improving a product or process is universal—and even common-sensical—we have held that there exists in these situations a motivation to combine prior art references even absent any hint of suggestion in the references themselves. In such situations, the proper question is whether the ordinary artisan possesses knowledge and skills rendering him capable of combining the prior art references.

Although this court customarily discusses a motivation to combine as part of the first Graham factor, the scope and content of the prior art, see SIBIA Neurosciences, 225 F.3d at 1356, motivation to combine is also inextricably linked to the level of ordinary skill. If, as is usually the case, no prior art reference contains an express suggestion to combine references, then the level of ordinary skill will often predetermine whether an implicit suggestion exists. Persons of varying degrees of skill not only possess varying bases of knowledge, they also possess varying levels of imagination and ingenuity in the relevant field, particularly with respect to problem-solving abilities. If the level of skill is low, for example that of a mere dyer, as DyStar has suggested, then it may be rational to assume that such an artisan would not think to combine references absent explicit direction in a prior art reference. If, however, as we have held as a matter of law, the level of skill is that of a dyeing process designer, then one can assume comfortably that such an artisan will draw ideas from chemistry and systems engineering—without being told to do so.

All claims were invalidated for obviousness.

REVERSED

- A huge case worthy of a close read.