Case No. 2011-1555 (Prost, Moore, Wallach)
Formidable prima facie cases of obviousness can resist all but the strongest showing of secondary considerations. Transocean returns to the Federal Circuit to illustrate that sometimes a sheer volume of objective indicia of nonobviousness will meet this showing. Although it worked out for the patentee here, the overall lesson from this and the previous post is that secondary considerations require exceptionally demanding showings to overturn solid obviousness arguments.
Transocean asserted US Patents 6,047,781; 6,085,851; and 6,068,069 directed to boring and pipe advancing systems for offshore drilling against competitor Maersk. The patents at issue claimed a dual drill string configuration – essentially running two drill assembly operations from one derrick. Through the previous appeal and remand, the district court had found claims like these prima facie obvious:
A multi-activity drilling assembly operable to be supported from a position above the surface of a body of water for conducting drilling operations to the seabed and into the bed of the body of water, said multi-activity drilling assembly including:
a drilling superstructure operable to be mounted upon a drilling deck for simultaneously supporting drilling operations for a well and operations auxiliary to drilling operations for the well;
a first tubular advancing station connected to said drilling superstructure for advancing tubular members to the seabed and into the bed of body of water;
a second tubular advancing station connected to said drilling superstructure for advancing tubular members simultaneously with said first tubular advancing station to the seabed and into the body of water to the seabed; and
an assembly positioned adjacent to said first and second tubular advancing stations operable to transfer tubular assemblies between said first tubular advancing station and said second tubular advancing station to facilitate simultaneous drilling operations auxiliary to said drilling operations, wherein drilling activity can be conducted for the well from said drilling superstructure by said first or second tubular advancing stations and auxiliary drilling activity can be simultaneously conducted for the well from said drilling superstructure by the other of said first or second tubular advancing stations.
This claim was fairly easily obvious over a UK patent application to Horn and a US Patent to Lund – Horn disclosed everything except the transfer assembly, Lund disclosed the transfer assembly (for parallel hoists instead of advancing stations), and then Horn again explicitly recommended linking its two advancing stations. This prima facie obviousness was established in Transocean I. On remand, the jury found, however, that seven different types of objective evidence of nonobviousness outweighed this prima facie case and declined to invalidate the patents as obvious. The district court set aside these verdicts, noting that the same patent had been rejected as lacking inventiveness in the EPO and finding that the secondary consideration evidence was more properly probative of Transocean’s litigious nature.
On appeal, the Federal Circuit disagreed, holding that Transocean had presented sufficient indicia of nonobviousness that was tied to the claims, such that the jury was reasonable in its nonobviousness conclusion. The court first suggested that the district court erred in dismissing secondary considerations without adequate procedural consideration:
As we have repeatedly held, “evidence rising out of the so-called ‘secondary considerations’ must always when present be considered en route to a determination of obviousness.” Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 1538 (Fed. Cir. 1983). Objective evidence of nonobviousness is an important component of the obviousness inquiry because “evidence of secondary considerations may often be the most probative and cogent evidence in the record. It may often establish that an invention appearing to have been obvious in light of the prior art was not.” Id. This objective evidence must be “considered as part of all the evidence, not just when the decisionmaker remains in doubt after reviewing the art.” Id. At 1538-39.
The court then addressed each individual showing in turn. Starting with commercial success, Transocean showed a 12% premium for dual drill line rigs. Transocean also linked this success to the claim scope, showing contracts that reduced the premium to 2% should the claimed dual activity be unavailable, as well as customers specifically insisting on dual activity rigs. In finding this to be good evidence of commercial success, the court specifically refuted Maersk’s argument that rejection of a similar patent in the EPO had any bearing on secondary considerations.
On industry praise, the court looked at papers by competitors and Offshore Magazine that described dual activity derricks typified by the claims at issue as critical to enhanced efficiency. The magazine also labeled dual-activity drillships as a key technology in the history of offshore drilling, recognizing efficiency gained by working two drill rigs simultaneously on a single bore. The court found this to be “an impressive accolade.”
The court also credited the jury’s finding of copying a reasonable indicia of nonobviousness. Maersk had internal documents that specifically targeted Transocean’s dual activity vessels having the patented feature for incorporation. Further documents showed that Maersk was aware that Transocean had patented the dual drill string capability but decided to adopt the same because they believed the patents to be invalid.
The evidence of industry skepticism was weaker but nonetheless could support a jury finding. Specifically, Transocean had testimony from two inventors that several industry actors were concerned with the workability of simultaneous drill string work on a single rig due to clashing of the strings. Other evidence, including one by an author of the Horn prior art, dismissed such clashing.
As for licensing, Transocean presented evidence of several licenses on dual-activity rigs. This was where Maersk argued that litigation threats were driving these licenses, not any particularly special feature of the claimed dual activity rig. The court did not buy Maersk’s argument, noting that the licenses’ value exceeded the likely costs of litigation and that several companies had approached Transocean for a license without any threat of litigation being made.
Finally, on long-felt need, Transocean showed that drilling efficiency, particularly in construction of the drill string, had been a long-felt goal of the offshore drilling industry that the claimed dual-activity rig solved. Two inventors on the asserted patents testified that other methods of increasing drill string construction efficiency had failed. The court found this factor too was a reasonable indicia of nonobviousness.
These manifold showings were sufficient to overcome even the dead-on prima facie case of obviousness in this instance. The court, however, framed this conclusion in language that was not altogether flattering for the power of secondary considerations of nonobviousness:
Few cases present such extensive objective evidence of nonobviousness, and thus we have rarely held that objective evidence is sufficient to overcome a prima facie case of obviousness. But see Tec Air, Inc. v. Denso Mfg. Mich. Inc., 192 F.3d 1353, 1361 (Fed. Cir. 1999) (“Alternatively, even assuming that [the accused infringer] established a prima facie case of obviousness, [the patentee] presented sufficient objective evidence of nonobviousness to rebut it.”).
This, however, is precisely the sort of case where the objective evidence “establish[es] that an invention appearing to have been obvious in light of the prior art was not.” Stratoflex, 713 F.2d at 1538. The jury found that seven distinct objective factors support nonobviousness and, as discussed above, these findings are all supported by substantial evidence. Weighing this objective evidence along with all the other evidence relevant to obviousness, we conclude that Maersk failed to prove by clear and convincing evidence that the asserted claims would have been obvious.
Invalidity under obviousness reversed. The court also reversed an invalidity finding due to non-enablement, a noninfringement finding, and a grant of a new trial, which are not addressed further here.
Lessons: Transocean II is a decent example of how it can take a mountain of evidence of secondary considerations to effectively counter a rock solid prima facie case of obviousness. If going up against prior art that clearly discloses each claim element and suggests a simple combination to meet the claim, secondary considerations of nonobviousness have the potential to work if you can show several of them like Transocean did. Proving only a couple of indicia will probably not work unless the showings are truly stellar (e.g., several recognized experts saying the claimed combo flatly won’t work, universal industry acclaim, capture of a dominant market share, etc.) In any case, validity deciders want to see a nexus between claimed inventive aspects and any proffered evidence of secondary considerations of nonobviousness. Indeed, the Transocean panel at each factor pointed out that such a nexus existed and the evidence of secondary considerations did not apply to the prior art.
Also bear in mind that Transocean was in a favorable procedural position here, having received a special jury verdict on each factor. Thus, the court was looking for only substantial evidence to uphold the findings on secondary considerations. A more difficult standard would have been encountered on summary judgment or on appeal from the USPTO. That being said, some of the showings in Transocean – especially commercial success, licenses, and industry praise – I think would have held up under any standard. These are things to keep in mind if looking at Transocean like a yardstick to determine if your secondary considerations measure up.
Lastly, there may be a lesson in here for clearance and competitor-monitoring practices. The Transocean panel discussed the copying evidence as particularly relevant because Maersk’s internal conversations showed they knew of Transocean’s asserted patents and sought to appropriate claimed features from the same, reasoning that the patents were invalid. I think Maersk would have done much better to instead address the prior art supporting the prima facie case, and to phrase their adopted dual-activity feature as simply an obvious variation on the prior art, while remaining silent on Transocean’s holdings. This may have instead looked like evidence of obviousness, where distinct industry actors come to a same conclusion over the prior art. This also reaffirms that it’s generally not a good idea to identify a competitor’s products and intellectual property as targets for appropriation, regardless of what your stance may be on the merits of these things. Keep competitor identifications to design-around discussions.
Comment: While I think the court’s holding here is correct, I wasn’t bowled over by a couple of the secondary consideration showings. The long-felt need for increased assembly efficiency felt particularly hollow. Isn’t efficiency in any task going to be an eternally-felt need? Moreover, wouldn’t duplicating parts (two drill strings instead of one!) be very much expected to result in the efficiency gains shown here? The evidence of skepticism/failure of others was similarly weak. Also, several parts of the secondary showings relied on opinion testimony from the Transocean inventors themselves. The jury is entitled to credit testimony as they see fit, but this seems like pretty subjective evidence on what are supposed to be “objective indicia.” I don’t think any or all of this was enough to change any outcome, but I also don’t think the secondary considerations here were an unassailable lineup of evidence all compelling a single result.
Also, to follow up on my tease from the previous post… Agrizap was also authored by Judge Moore and had an identical procedural posture to Transocean. Both dealt with strong prima facie cases of obviousness. Agrizap also involved several secondary showings – commercial success, copying, and long-felt need – but nonetheless laconically concluded that “[i]n this case, the objective evidence of nonobviousness simply cannot overcome such a strong prima facie case of obviousness.” In Transocean, however, the opinion engages in a comparatively loquacious exposition on the evidence and about how secondary considerations must always be considered and how even a seemingly obvious invention over the prior art can nonetheless become patenable via strong secondary consideration showings. Perhaps the difference between these two cases is purely a function of the differing amounts of evidence shown in each? Or perhaps the summary dismissal approach in Agrizap is not one that we can expect to see continued in the future?