Federal Circuit Clarifies Nexus Requirement of Objective Indicia of Nonobviousness

In ClassCo, Inc. v. Apple, Inc., No. 15-1853 (Fed. Cir. Sept. 22, 2016), the Federal Circuit affirmed the Board’s finding that certain claims of ClassCo’s patent directed to improvements on “Caller ID” services were unpatentable under 35 U.S.C. § 103. During an inter partes reexamination of ClassCo’s patent, ClassCo presented the Board with evidence of objective indicia of nonobviousness, including industry praise and commercial success, but the Board afforded the evidence no weight, concluding that each had no nexus to the claimed invention because the evidence related to features disclosed in the prior art. While the Federal Circuit affirmed the Board’s ultimate obviousness determination, the Court held that the Board improperly dismissed ClassCo’s nonobviousness evidence.

The Federal Circuit clarified that “[e]ven though it was not dispositive evidence of nonobviousness, the Board should have given some weight and consideration to ClassCo’s evidence . . . . As we have explained, when secondary considerations are present, though they are not always dispositive, it is error not to consider them.” The Court further explained that under In re Huai-Hung Kao, 639 F.3d 1057, 1068 (Fed. Cir. 2011), for “objective evidence of secondary considerations to be accorded substantial weight, its proponent must establish a nexus between the evidence and the merits of the claimed invention.” The Court clarified that a nexus between the claimed invention and nonobviousness evidence exists where the evidence presented is reasonably commensurate with the scope of the claims, not where the merits of the claimed invention were readily available in the prior art.

The Court concluded that the Board “improperly dismissed some evidence of praise related to features that were not available in the prior art.” The Court held that such evidence should have been afforded some weight, as a nexus was present. Further, the Board’s analysis of ClassCo’s commercial success evidence, including sales volume and market share statistics, was improper. Where “the marketed product embodies the claimed features,” evidence of that product’s commercial success deserves some weight in the obviousness analysis, “and the Board’s blanket dismissal of it was in error.” However, after properly weighing ClassCo’s nonobviousness evidence in light of the other Graham factors, the Federal Circuit eventually affirmed the Board’s finding of obviousness.