Patentee found not entitled presumption of nexus for secondary considerations. FOX v. SRAM

After a patent is granted, if a member of the public discovers prior art which would render a patented invention obvious, that member of the public can request an inter partes review of the patent. Inter partes review is a trial proceeding conducted at the Patent Trial and Appeal Board to review the patentability of one or more claims in a patent only on a ground that could be raised under §§ 102 or 103. When a petitioner requests an inter partes review, they may submit several grounds to justify the inter partes review. Each ground must cite evidence and explain how the evidence is relevant. The evidence that can be submitted is limited to patents or printed publications which would qualify under §§ 102 or 103 and expert testimony to explain those publications. Institution of an inter partes review is not automatic, a petitioner must demonstrate a likelihood they would prevail with respect to at least one claim challenged.

Obviousness is a question of law based on underlying findings of fact. Those underlying findings of fact include: (1) “the scope and content of the prior art,” (2) “differences between the prior art and the claims at issue,” (3) “the level of ordinary skill in the pertinent art,” and (4) the presence of evidence of secondary considerations, such “as commercial success, long felt but unsolved needs, failure of others,” and unexpected results. The evidence of secondary considerations must have a ‘nexus’ to the claims, i.e., there must be a legally and factually sufficient connection between the evidence and the patented invention. The patent owner has the burden of proof to demonstrate nexus exists. However, a patent owner is entitled to a rebuttable presumption of secondary consideration when a commercially successful product is the patented invention. Determining when a patent owner has met its burden of proof can be confusing. Therefore it is helpful to review case law to clear up that confusion.

FOX FACTORY, INC. v. SRAM, LLC, 2018-2024, 2018-2025 (C.A.F.C. 2019) is a case that touches on secondary considerations that a court considers when determining whether a patent is obvious.

SRAM owns U.S. Patent No. 9,182,027 and U.S. Patent 9,291,250, which claim an improved gear system for bicycles. The gear system uses alternating narrow and wide tooth tips on the gear, which allegedly improves chain retention because the narrow and wide teeth better fit inside the inner and outer chain links, respectively. The patents also claim offsetting the location of the gear teeth either toward or way from body of the bicycle. Combined the claimed features create an improved gear system that better holds the bicycle chain. SRAM sells its patented gear system using the trade name X-Sync.

FOX filed two petitions collectively requesting inter partes review of claims 1–26 of the ’027 patent. FOX asserted that SRAM’s patents were obvious based on the combination of Japanese Utility Model No. S56- 42489 (“JP-Shimano”) and U.S. Patent No. 5,285,701 (“Parachinni”).

The Patent Trial and Appeal Board found that the prior art references asserted by FOX disclose all the limitations of the ’027 patent’s independent claims and that a skilled artisan would have been motivated to combine the asserted prior art. Despite these findings concluded, based on its analysis of secondary considerations, that FOX had not shown that the challenged claims would have been obvious.

FOX appealed the Boards decision to the Court of Appeals for the Federal Circuit on the grounds that the Board applied the wrong standard for determining whether SRAM was entitled to a presumption of nexus between the challenged claims and SRAM’s evidence of secondary considerations.

The Federal Circuit found that the Board erroneously presumed nexus between the evidence of secondary considerations and the independent claims of the ‘027 Patent. The Federal Circuit noted that there are one or more features not claimed by the ’027 patent that materially impact the functionality of the X-Sync products. In that case the patent owner is not entitled to a presumption of nexus. The Federal Circuit remanded the case to the Board to reevaluate the evidence of secondary considerations with the burden of proving nexus placed on the correct party.

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