ZUP, LLC v. Nash Manufacturing, Inc.

Docket No. 2017-1601

July 25, 2018

Brief summary: DC conclusion of obviousness affirmed (e.g., “a strong showing of obviousness may stand ‘even in the face of considerable evidence of secondary considerations’”).

Summary: ZUP appealed DC grant of summary judgment (SJ) to Nash invalidating claims 1 and 9 of ZUP’s US 8,292,681 relating to water recreation devices as obvious or not infringed. ZUP and Nash unsuccessfully negotiated for a partnership before litigation. ZUP alleged Nash’s “Versa board” infringes the ‘681 claims, and its complaint alleged contributory infringement, induced infringement, trade secret misappropriation under the Virginia Uniform Trade Secrets Act, and breach of contract. The DC agreed with Nash that the asserted claims are invalid for obviousness in view of combinations of several US patents. The FC panel reviewed the DC’s obviousness determination de novo (Memorylink, FC 2014) using the Graham factors (US 1966 (four factual inquiries); Intercont’l Great Brands, FC 2017 “whether one of skill in the art would have had a motivation to combine pieces of prior art in the way claimed by the patent is also a factual determination”). The FC considered “whether a person of ordinary skill in the at would have been motivated to combine the prior art references” and “whether the [DC] properly evaluated ZUP’s evidence of secondary considerations.” Under Plantronics (FC 2013), the FC panel explained that “[a] ‘motivation to combine may be found explicitly or implicitly in market forces; design incentives’ the ‘interrelated teachings of multiple patents’; ‘any need or problem known in the field of endeavor at the time of invention and addressed by the patent’; and the background knowledge, creativity, and common sense of the person of ordinary skill’”. The FC found that “[t]he record evidence supports the [DC’s] analysis” (“all the elements of the claimed invention existed in the prior art” and “one of ordinary skill in the art would have been motivated to combine the various elements from the prior art references”). ZUP unsuccessfully argued “that a person of ordinary skill in the art would have been focused on achieving rider stability in a predetermined position” but the FC panel found that “the evidence contradicts this assertion” (e.g., “ZUP even admits that achieving rider stability is an ‘age-old motivation in this field’”, “[s]uch stability was enhanced in the prior art through the same components employed in the ‘681 patent”). Thus, the FC found “no genuine dispute as to the existence of a motivation to combine” (“[a] person of ordinary skill is also a person of ordinary creativity, not an automaton”, FN2 citing KSR (US 2007)). Regarding secondary considerations, the FC panel explained that “[s]econdary considerations ‘help inoculate the obviousness analysis against hindsight’” (Mintz, FC 2012; Graham, US 1966; Rothman, FC 2009 (“a strong showing of obviousness may stand ‘even in the face of considerable evidence of secondary considerations’”)) but also found that, here, “ZUP’s minimal evidence of secondary considerations” (evidence of long-felt need by Nash’s enthusiastic description of ZUP’s board (Geo. M. Martin, FC 2010 (‘[w]here the differences…are as minimal as they are here, it cannot be said that any long-felt needs was unsolved”); “even less compelling evidence of copying”) “does not create a genuine dispute of fact sufficient to withstand” the DC’s grant of SJ (Novo Nordisk, FC 2013 (“the burden of persuasion remains with the challenger” but “a patentee bears the burden of production with respect to evidence of secondary considerations”). Thus, the FC panel affirmed the DC’s obviousness conclusion and did not reach infringement. Judge Newman argued the majority incorrectly only considered three of the four Graham factors, and the secondary considerations factor “only in rebuttal” (contrary to Apple, FC 2016).

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