February 2011
Court Affirms Finding of Obviousness Where Elements of Claims Are Found in Combination of Prior Art References
| Judges: Newman (dissenting), Lourie (author), Bryson |
| [Appealed from C.D. Cal., Judge Phillips] |
In Tokai Corp. v. Easton Enterprises, Inc., Nos. 10-1057, -1116 (Fed. Cir. Jan. 31, 2011), the Federal Circuit affirmed the district court’s grant of SJ of invalidity for obviousness in favor of Easton Enterprises, Inc. (d.b.a. Easton Sales) and Fun Line Industries, Inc. (collectively “Easton”). In view of its holding, the Federal Circuit did not consider Easton’s cross-appeal of the district court’s claim construction order and order excluding Easton’s supplemental invalidity contentions.
Tokai Corp., Scripto-Tokai, Inc., and Calico Brands, Inc. (collectively “Tokai”) own three patents directed to safety utility lighters having extended lighting rods, such as those used for lighting barbeque grills: U.S. Patent Nos. 5,697,775 (“the ’775 patent”); 5,897,308 (“the ’308 patent”); and 6,093,017 (“the ’017 patent”). The patents claim utility lighters with automatic child-safety mechanisms for preventing accidental ignition. Easton competes with Tokai in the market for safety utility lighters.
Tokai sued Easton for infringement of the asserted patents. Easton counterclaimed for invalidity. After the district court’s claim construction ruling, Easton stipulated that its accused utility lighters infringe all but one of the asserted claims. The parties then filed cross-motions for SJ on the issue of obviousness of the asserted patents. In opposition to Easton’s motion, Tokai submitted two expert declarations: the “Jones declaration” and the “Sung declaration.” The district court declined to consider either declaration on the ground that Tokai failed to submit written reports from Jones and Sung during expert discovery as required by Fed. R. Civ. P. 26(a)(2)(B). The district court determined that there was no genuine issue of material fact as to the obviousness of the asserted claims and granted Easton’s motion for SJ of invalidity. Tokai appealed the district court’s invalidity ruling. Easton cross-appealed the claim construction order and an order granting Tokai’s motion to strike Easton’s supplemental invalidity contentions.
On appeal, the Federal Circuit first considered whether the district court improperly excluded the Jones and Sung declarations pursuant to Fed. R. Civ. P. 37(c)(1). Tokai argued that Sung, as an employee of Tokai, was exempt from the written report requirements of Rule 26(a)(2)(B). Tokai also argued that its failure to submit written reports for both Jones and Sung should be excused because the invalidity portions of Easton’s expert reports had been “effectively gutted” by the district court’s exclusion of particular prior art references on which Easton’s expert relied. Easton argued that it was prejudiced by its inability to depose Jones and Sung on the subject matter of their declarations and that the two declarations were wholly conclusory, and, therefore, their exclusion—even if an abuse of discretion—was harmless.
“[T]he undisputed facts in this case—including the state of the prior art, the simplicity and availability of the components making up the claimed invention, and an explicit need in the prior art for safer utility lighters—compel a conclusion of obviousness as to the subject matter of each of the asserted claims.” Slip op. at 21.
Applying Ninth Circuit law, the Federal Circuit held that the district court did not abuse its discretion in excluding the declarations. The Court noted that Tokai failed to introduce evidence indicating that Sung qualified for the employee-expert exception. The Court further explained that even if Sung were a Tokai employee, Tokai failed to introduce evidence indicating that his duties did not regularly involve giving expert testimony. The Court also found Tokai’s assertion that it was justified in not submitting written expert reports to be without merit. The Court concluded that Tokai’s failure to adhere to the requirements of Rule 26(a)(2)(B) was neither harmless nor substantially justified and emphasized that the Court has previously cautioned litigants of the pitfalls of playing fast and loose with the rules of discovery. The Federal Circuit further held that, even assuming the district court abused its discretion by excluding the Sung declaration, the error was harmless, as the declaration was conclusory and did not raise a genuine issue of material fact.
Turning to the district court’s grant of SJ of invalidity, the Federal Circuit first found that the district court correctly determined that there was no enhanced burden of overcoming the statutory presumption of validity because the PTO did not consider all of the prior art supporting Easton’s validity challenge. Next, the Court found that there was no genuine issue of material fact concerning the scope and content of the prior art. The parties agreed that the prior art disclosed a utility lighter with a safety device, in which the safety device must be manually reset to the locking position after each use. In addition, the prior art disclosed a cigarette lighter with a safety device that automatically resets after each use. With the exception of claims 10 and 13 of the ’308 patent, there was no dispute that a combination of prior art references disclosed every element of the asserted claims. With respect to claims 10 and 13 of the ’308 patent, the only difference between the claims and the prior art was the intended position of the thumb and finger for operating the lighter. The Court also concluded that there was no genuine issue of material fact as to the appropriate level of skill in the art, as the district court found that the asserted claims would have been obvious to the less sophisticated artisan.
The Court next addressed secondary indicia of nonobviousness, including Tokai’s evidence of commercial success and copying. With regard to commercial success, the Court found that Tokai failed to show that its commercial success was due to anything disclosed in the patents-in-suit that was not available in the prior art. In particular, Tokai failed to show a nexus between its sales data and its utility lighters’ automatic-locking features. The Court determined that, even if a nexus had been shown, the evidence of commercial success would not have carried sufficient weight to override the strong prima facie showing of obviousness. The Court further agreed with the district court that Tokai’s asserted evidence of copying, viz. Easton’s stipulation of infringement, was unpersuasive. The Court explained that copying requires evidence of efforts to replicate a specific product and that a stipulation of infringement alone is not probative evidence of copying.
The Federal Circuit concluded that the undisputed facts of the case—including the state of the prior art, the simplicity and availability of the components making up the claimed invention, and an explicit need in the prior art for safer utility lighters—compelled a conclusion of obviousness.
Judge Newman dissented, explaining that the majority should have reversed the district court’s grant of SJ of invalidity for obviousness. According to Judge Newman, the district court improperly used hindsight in its analysis. In addition, Judge Newman would have credited Tokai’s evidence of commercial success as she believed that Tokai demonstrated a prima facie case of nexus because it showed both commercial success and that its product was covered by the claims of the asserted patents. Judge Newman would also have given some weight to Tokai’s asserted evidence of copying. Thus, Judge Newman found genuine issues of material fact bearing on obviousness. Moreover, Judge Newman believed that the district court wrongly excluded the Sung declaration, as Tokai stated in connection with the SJ proceeding that Mr. Sung was an employee exempt from the Rule 26(a)(2)(B) report requirement. Finally, Judge Newman did not find the exclusion of the Sung declaration to be harmless error.
