Published 15/01/2020 by CIONCA IP
On December 18, 2019, the United States Court of Appeals for the Federal Circuit made decision in FOX Factory, Inc. v. SRAM, LLC. On April 2, 2018, FOX Factory, Inc. (“FOX”) filed a petition for inter partes review with the Patent Trial and Appeal Board (“Board”) of a patent belonging to SRAM, LLC. The patent belonging to SRAM, LLC. is U.S. Patent No. 9,182,027 (“the ‘027 patent”), and generally covers an improved chainring structure that better maintains the chain, obviating the need for extraneous structures that improve chain retention. The independent claims of the ‘027 patent recite a chainring with alternating narrow and wide tooth tips and teeth offset (“outboard offsets”). FOX posited that claims 1-26 of the ‘027 patent were obvious in view of Japanese Utility Model No. S5642489 (“JP-Shimano”) in combination with U.S. Patent No. 5,285,701 (“Parachinni”). Upon review, the Board determined that JP-Shimano and Parachinni together disclose every limitation of the outboard offset independent claims and that a skilled artisan would have been motivated to combine the references. However, the Board determined that FOX had not shown that the challenged claims would have been obvious, based on the analysis of secondary considerations evidence pertaining to SRAM’s X-Sync products.
The Board determined that SRAM was entitled to a presumption of nexus between the challenged outboard offset claims and the secondary considerations evidence. The Board reasoned that SRAM’s secondary considerations evidence pertaining to a specific X-Sync product is only coextensive with the claims broadly covering that particular product. FOX argued that SRAM’s products are not coextensive with the claims because the products include numerous unclaimed features, and that the X-Sync products also embody the claims of additional patents that cover a different invention than the claims of the ‘027 patent. Upon weighing the evidence, the Board determined that FOX could not rebut the nexus presumption, and that FOX had not shown that the challenged claims would have been obvious. FOX appealed the Board’s obviousness decision. The Federal Circuit vacates the obviousness decision and remands the Board to reevaluate the import of the evidence of secondary considerations with the burden of proving nexus placed on SRAM.
Naturally, the Federal Circuit performed an analysis of all the Board’s final determinations, as described below:
1. Presumption of Nexus. In the appeal before the Federal Circuit, FOX argues that the Board erred in its determination that SRAM was entitled to a presumption of nexus between the challenged claims and SRAM’s evidence of secondary considerations. In short, a nexus exists if the commercial success of a product is limited to the features of the claimed invention, therefore making the product coextensive with the claims at issue. FOX and SRAM dispute whether the X-Sync chainrings are coextensive with the independent claims. Although it is not required that the patentee proves perfect correspondence to meet the coextensiveness requirement, it is required that the patentee demonstrates the product is essentially the claimed invention. As such, no reasonable fact finder could conclude, under proper standard, that the X-Sync chainrings are coextensive with the patent claims. Because the X-Sync chainrings include critical unclaimed features (e.g., 80% gap filling), the patent claim is not coextensive with the product. The Federal Circuit concludes that because the independent claims do not include the critical features, it cannot say that the X-Sync chainrings are the invention claimed. Accordingly, the Federal Circuit holds that the Board erred in presuming nexus between the independent claims of the ‘027 patent and secondary considerations evidence pertaining to SRAM’s X-Sync chainrings.
The Federal Circuit finds SRAM’s counterarguments unpersuasive. According to SRAM, the coextensiveness requirement is met if the patent claim broadly covers the product that is the subject of the secondary considerations evidence. However, in this particular case, because there are features not claimed by the ‘027 patent that materially impact the functionality of the X-Sync products, nexus may not be presumed.
2. Remand. In response to FOX’s appeal, separate from the issue of nexus, SRAM briefly contends that substantial evidence does not support the Board’s conclusions that a skilled artisan would have been motivated to combine the prior art references. The Federal Circuit affirms the Board’s determination of motivation based on JP-Shimano and Parachinni and declarations submitted by FOX’s expert.
In its appeal, FOX also raises a SAS-based (decision made in SAS Institute v. Iancu) remand request, that is, that the Board review all grounds of unpatentability raised by FOX, rather than just two of the eight grounds the Board originally reviewed. SRAM argues that FOX waived its right to a remand pursuant to SAS because FOX did not raise its SAS objection before the Board. However, SAS issued after the Board’s final written decision, and the Federal Circuit does not require filing a request for reconsideration to preserve a SAS-based remand. FOX therefore did not waive its right to a remand, according to the Federal Circuit. Thus, the Federal Circuit remands the Board to consider all remaining non-instituted grounds of unpatentability.
For the reasons above, the Federal Circuit vacates the Board’s obviousness decision and remands the case to the Board and allows SRAM the opportunity to prove nexus between the challenged independent claims and the evidence of secondary considerations. More specifically, SRAM will bear the burden of proving that the evidence of secondary considerations is attributable to the claimed combination, as opposed to the unclaimed features. The Federal Circuit also affirms the Board’s determination that a skilled artisan would have been motivated to combine the references.
It is important to realize and understand the implications of the decision made in FOX Factory, Inc. v. SRAM, LLC. The Federal Circuit determined that the Board erred in its presumption of nexus between the challenged independent claims of the ‘027 patent and the X-Sync product. SRAM and the Board took the position that the coextensiveness requirement for a nexus to exist is met so long as the patent broadly covers the subject of the secondary considerations evidence. Such a position would suggest that the coextensiveness requirement rests entirely on minor variations in claim drafting. The Federal Circuit holds that resting the coextensiveness inquiry on nothing more than minor variations in patent claim language would turn the inquiry into one of form over substance. Thus, nexus can only be presumed where the evidence of secondary considerations is tied to a specific product that is the invention disclosed and claimed in a patent.
Full FOX Factory, Inc. v. SRAM, LLC decision can be read here: http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/18-2024.Opinion.12-18-2019.pdf
Disclaimer: The views and opinions expressed throughout this blog are the views and opinions of the individual author(s) and/or contributor(s) and do not necessarily reflect the views and opinions of our firm, CIONCA IP Law. P.C.
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