International In-house Counsel Journal
`Vol. 8 No. 32 Summer 2015 1
`
`Assessing Commercial Success at the
`U.S. Patent Trial and Appeal Board
`
`JOHN JAROSZ
`Managing Principal Analysis Group Inc. USA
`
`ROBERT L. VIGIL
`Principal Analysis Group Inc. USA
`
`INTRODUCTION
`
`U.S. patents increasingly are challenged on validity grounds through inter partes reviews
`the U.S. Patent Trial and Appeal Board PTAB or board. In fact
`from September
`at
`been over 3000 inter partes review IPR
`2012 through June 30 2015 there have
`petitions filed by petitioners.2 Filings per month have
`increased from an average of 28
`petitions in 2012 to 58 in 2013 to 125 in 2014 to 144 so far in 2015.3
`
`owners
`
`raise a commercial
`
`success
`
`defense
`
`to such
`
`Many patent
`in response
`the success of products embodying the challenged patent
`challenges. They argue that
`the patented invention must not have been obvious. Had the invention
`been
`proves that
`obvious the argument goes the products embodying the patented invention would not
`If the invention was obvious
`success that they in fact did.
`have enjoyed the marketplace
`someone else would have introduced a product
`incorporating the patented features earlier.
`Patent owners rarely have been successful at the PTAB in invoking this defense.
`June 2015
`in IPR proceedings
`through
`final written decisions
`considered
`commercial success
`as a potential defense to patentability the patent owner prevailed
`the patent owner
`failed in proving non-obviousness
`only twice.4 In all other cases
`through a showing of commercial success.
`
`In 82
`
`that
`
`federal district courts have shown proving commercial
`As decades of litigation in U.S.
`success often depends on the effective presentation of economic evidence. Litigants in
`PTAB proceedings
`are beginning to learn those lessons many patent owners are learning
`the hard way.
`
`at the PTAB. It will show the kinds
`This article examines commercial success evaluations
`and how such evidence has
`of economic evidence that are relevant
`to such evaluations
`failed to be used and presented by patent owners arguing commercial success. Much
`guidance comes directly from PTAB decisions. Other guidance
`comes from federal
`district court opinions.
`
`1 The Patent Trial and Appeal Board PTAB was formed on September 16 2012 under
`Invents Act AIA. The PTAB was established to facilitate
`the new post-grant
`and inter partes review processes
`outlined by the AIA with those processes replacing the inter parses reexamination
`procedure. See Eric S. Walters and
`Colette R. Verkuil Patent Litigation Strategy The Impact of the America Invents Act and the New Post-Grant Patent
`
`the Leahy-Smith
`
`America
`
`Procedures http//niedia.mofo.com/files/Uploads/Images/120307-Patent-Litigation-Strategy.pdf
`
`at page 1.
`
`2
`
`s
`
`http//www.uspto.gov/sites/default/files/documents/2015-06-30%20PTAB.pdf
`
`viewed Aug. 20 2015.
`
`http//wwwuspto.gov/sites/default/files/documents/2015-06-30%20PTAB.pdf
`LLC v. Star Envirotech Inc. Case IPR2013-00106
`a Redline Detection
`Paper 66 Intri-Plex Technologies
`MMI Holdings LTD. v. Saint-Gobain Performance Plastics Rencol Limited Case IPR2014-00309
`
`Paper 83.
`
`viewed Aug. 20 2015.
`
`Inc.
`
`International
`
`In-house Counsel Journal
`
`ISSN 1754-0607 print/ISSN 1754-0607 online
`
`InnoPharma EX1054
`
`IPR2015-00902
`
`IPR2015-00903
`
`

`
`2
`
`John Jarosz
`
`Robert L. Vigil
`
`1. BACKGROUND
`
`the differences between the
`
`A. Legal Framework
`A patent claim is unpatentable under 35 U.S.C.
`103a if
`claimed subject matter and the prior art are such that
`the subject matter as a whole
`would have been obvious at the time the invention was made to a person having ordinary
`to which said subject matter pertains . The question of obviousness
`in the art
`skill
`resolved on the basis of several underlying factual determinations including 1 the scope
`and content of the prior art 2 any differences between the claimed subject matter and the
`in the art and 4 secondary considerations.6
`prior art 3 the level of skill
`include commercial success
`long-felt but unsolved
`Secondary
`and praise.
`Secondary
`copying
`failure of others
`unexpected
`results
`licensing
`considerations
`are not just a confirmatory part of the obviousness calculus but constitute
`independent evidence of non-obviousness.8 Evidence regarding secondary considerations
`just when the decision maker
`the evidence
`must be considered as part of all
`not
`doubt after reviewing the prior art.9
`
`considerations
`
`is
`
`needs
`
`is in
`
`That
`
`An assessment of commercial success entails a two-part analysis. First the patent owner
`must establish that
`the products that embody the invention have been successful
`in the
`is there must be proof of marketplace
`success. Second the patent
`marketplace.1
`owner must show that
`success was driven by the advantages of the
`the marketplace
`is there must be proof of a causal nexus. The law presumes
`claimed invention. That
`that an invention would have been commercialized earlier
`in response to economic
`the idea had been obvious
`to persons skilled in the art.1 Proof of
`commercial success overcomes this presumption.
`
`incentives
`
`if
`
`B. PTAB Reviews
`From the PTABs inception
`on September 16 2012 through June 30 2015 there were
`one or more patent claims.13 Of these 415 have gone to
`3160 IPR petitions challenging
`trial and resulted in final written decisions.
`In 351 of these petitions the board found
`In the remaining 64 trials the board found
`some or all of the claims to be unpatentable.
`that no instituted claims were unpatentable.
`In other words the patent owner
`has
`prevailed against all of the challenged claims in only 15 percent of written decisions.
`
`that
`
`Of the cases
`a consideration
`reached a final written decision 82
`commercial success as a potential defense to patentability. The patent owner prevailed in
`In Redline Detection LLC v. Star Envirotech Inc.
`only two of them.
`the board found
`that the petitioner had not demonstrated adequately that
`issue were rendered
`the claims at
`
`involved
`
`of
`
`5 KSR Intl Co. v. Teleflex Inc. 550 U.S. 398 406 2007.
`6 Graham et al. v. John Deere Co. of Kansas City et al. 383 U.S. 1 17-18 1966.
`See e.g. KSR 550 U.S. at 406 In re Soni 54 F.3d 746 Fed. Cir. 1995 Graham 383 U.S. at 17 Leapfrog
`Inc. v. Fisher-Price Inc. 485 F.3d 1157 1162 Fed. Cir. 2007.
`Enters.
`8 Leo Pharm. Prods. Ltd. v. Rea 726 F.3d 1346 1358 Fed. Cir. 2013.
`9 Transocean Offshore Deepwater Drilling Inc. v. Maersk Drilling USA Inc. 699 F.3d 1340 1349 Fed. Cir.
`2012.
`In re GPAC Inc. 57 F.3d 1573 1580 Fed. Cir. 1995 Demaco Corp. v. F. Von Langsdorff Licensing Ltd.
`International Trade Comn 598 F.3d 1294 1310-11 Fed.
`851 F.2d 1387 1392 Fed. Cir. 1988 Crocs Inc. v.
`Cir. 2010.
`Co. Inc. v. Teva Pharms. USA Inc. 395 F.3d 1364
`1 See e.g. Merck
`Inc. 463 F.3d 1299 1311-12 Fed. Cir. 2006 In re GPAC
`1376 Fed. Cir. 2005 Ormco Corp. v. Align Tech.
`Inc. 57 F.3d at 1580 Fed. Cir. 1995 In re Ben Huang 100 F.3d 135 140 Fed. Cir. 1996.
`USA Inc. 395 F.3d 1364 1376-77 Fed. Cir. 2005.
`12 Merck
`Co. Inc. v. Teva Pharmaceuticals
`viewed Aug. 20 2015.
`
`10
`
`13
`
`http//www.uspto.gov/sites/default/files/documents/2015-06-30%20PTAB.pdf
`
`Page 2
`
`

`
`Patents
`
`3
`
`non-obviousness
`
`obvious14 As a result the board did not deem it necessary to reach the merits of the
`patent owners secondary
`including commercial success.
`consideration
`In
`arguments
`Inc. et al. v. Saint-Gobain Performance Plastics Rencol Limited
`Intri-Plex Technologies
`the commercial
`the board found
`in favor of
`evidence weighed
`success
`issue achieved
`of the invention.15 It
`found that
`the flared tolerance rings at
`own admissions
`the dominant position in the relevant market and the petitioners
`the commercial
`strong evidence
`constituted
`success
`to customer
`that
`is attributable
`demand for the patented features. 16
`
`that
`
`Notwithstanding these two opinions patent owners have failed in over 95 percent of the
`commercial
`Sometimes it
`written decisions
`consider
`because
`of
`success.
`In fact
`this was cited explicitly in 28 of the
`inadequate proof of marketplace
`decisions. Sometimes it
`is because of inadequate proof of causal nexus. This was cited
`explicitly in 80 of the decisions. Often it
`is because of inadequate proof of both.
`
`that
`
`is
`
`success.
`
`2. PROVING COMMERCIAL SUCCESS
`
`Success
`
`A. Marketplace
`The first
`step in assessing commercial
`the product
`is evaluating whether
`success
`products that embody the invention have been successful
`in the marketplace. Neither the
`a clear and clean definition of success. A finding of
`law nor economics
`provides
`be the most successful product
`in a
`the product
`success does not appear to require that
`If that were the case then very few
`in time.
`given business or at any particular point
`products would be viewed as successes and very few patent owners would prevail
`in a
`showing of commercial success. Success appears to be an inquiry that
`is subject
`rule of reason.
`
`or
`
`to a
`
`line includes
`
`the features of claims 1 and 17 of the
`
`the
`
`a commercial
`the
`inquiry requires an identification of
`In the first
`success
`instance
`product or products that embody the patent.17 For patents with apparatus claims such an
`inquiry can be fairly straightforward. For patents with method claims such an inquiry can
`be somewhat more challenging.
`Though identification of practicing products may seem
`obvious it can be and has been overlooked by litigants at the PTAB. For example in
`Nephew Inc. v. Convatec Technologies
`Inc. the board wrote
`Smith
`the testimony of .. which purports to show that
`We have
`considered
`AQUACELR Ag product
`..
`981 patent.
`the manufacturing process
`provides
`AQUACELR Ag products
`evidence
`the products
`as supporting
`using the steps recited in the claims. Upon cross-examination ..
`manufactured
`testified that she has no technical knowledge of the patents and could not confirm
`in the AQUACELR Ag line were covered by the
`whether
`specific products
`patent. .. Considering we have no evidence of
`the 981
`claims of
`the
`manufacturing process for any of the products in the AQUACELR Ag product
`line we have no means to assess whether any of the products are covered by the
`claims of the 981 patent.18
`
`..
`
`no details of
`
`that
`
`for
`
`are
`
`14 Redline Detection LLC v. Star Envirotech Inc. Case IPR2013-00106 Paper 66.
`151ntri-Plex Technologies Inc. and MMI Holdings LTD. v. Saint-Gobain Performance Plastics Rencol Limited
`IPR2014-00309 Paper 83.
`
`16
`
`Intri-Plex Technologies
`
`Inc.
`
`and MMI Holdings
`Limited IPR2014-00309 Paper 83 at 54-57.
`
`LTD.
`
`v. Saint-Gobain Performance
`
`Plastics Rencol
`
`Sometimes these are products
`sold by the patent owner. Sometimes these are products
`Sometimes these are products sold by third parties.
`Nephew Inc. v. Convatec
`Inc. Case IPR2013-00097 Paper 90 internal citations
`18 Smith
`Technologies
`omitted. See also The Scotts Company LLC v. Encap LLC Case IPR2013-00110 Paper 79 Cardiocom LLC
`
`sold by the petitioner.
`
`Page 3
`
`

`
`4
`
`John Jarosz
`
`Robert L. Vigil
`
`typically is outside the
`a particular patent
`a product
`Determining whether
`the PTAB those
`and at
`domain of an economist.
`In both federal
`court
`determinations most often are made by technical experts and/or company personnel who
`have knowledge and training in the art. Their opinions
`frequently are presented through
`filed reports or declarations.
`
`practices
`
`district
`
`The next step in the marketplace
`inquiry is an evaluation of the success of the
`success
`in absolute terms. Depending on the product and available data this
`practicing products
`financial performance metrics 1
`is often done by identifying one or more of several
`shipped 3 revenues
`received 4 profits earned
`sold 2 volumes
`and 5
`units
`prescriptions written. Evidence regarding product success in absolute terms can often be
`records and third party market
`obtained from a companys internal
`research
`financial
`
`reports.
`
`in context
`
`is insufficient
`
`quite significant
`
`It
`
`The final and probably most important
`success
`inquiry is an
`step in the marketplace
`evaluation of the success of the practicing products in relative terms. As both the Court of
`the Federal Circuit Federal Circuit and the PTAB have written
`for
`Appeals
`repeatedly merely identifying the level of financial success without putting that success
`to establish commercial success.19 Revenues of $10 may be
`is much less likely to be
`lemonade stand.
`for a neighborhood
`In Nichia Corporation v. Emcore Corporation
`the board
`
`significant
`wrote
`
`for Apple Inc.
`
`one of the named inventor of the 215 patent also testifies that the contact of
`..
`into hundreds of thousands of LEDs that were sold.
`claim 1 was incorporated
`However ... testimony is not sufficient to support nonobviousness of claim 1
`because ... testimony does not establish adequately that the sales of hundreds of
`thousands of LEDs constitutes commercial success when considered in relation to
`overall market share. .. does not provide any data pertaining to overall market
`share and there is no indication that LED sales number represents a substantial
`quantity in the overall market share.20
`
`Patent owners frequently have given inadequate attention to this step of the marketplace
`In 20 of the PTAB decisions
`involving a discussion of commercial
`success
`inquiry.
`the patent owner did not even attempt
`success the board wrote that
`to present
`information.
`In 11 of the decisions the board found the presentation
`success
`
`relative
`
`to be
`
`unpersuasive.
`
`in context successful patent owners often have
`To put
`identified
`financial performance
`the set of products with which the patented products compete. Though a formal relevant
`in a large number of matters
`market definition may not be feasible or even necessary
`
`Inc.
`
`v. The
`
`v. Robert Bosch Healthcare Systems Inc. Case IPR2013-00431 Paper 67 Conopco Inc. dba Unilever
`Procter Gamble Company Case IPR2013-00505 Paper 69.
`v. Cutsforth Inc. Case IPR2013-00274 Paper 31 and Cardiocom LLC v.
`19 See e.g. Motivepower
`Systems Inc. Case IPR2013-00468 nl Paper 72. See also In re Baxter Travenol
`Robert Bosch Healthcare
`Labs 952 F.2d 388 392 Fed. Cir. 1991 In re Ben Huang 100 F.3d 135 Fed. Cir.1996 and In re Applied
`Materials Inc. 692 F.3d 1289 Fed. Cir. 2012.
`20 Nichia Corporation v. Emcore Corporation Case IPR2012-00005 internal citations omitted.
`See also
`Baxter Healthcare Corp. et al. v. Millenium Biologix LLC Case 1PR2013-00582 Paper 48 Vibrant Media
`Incorporated v. General Electric Company Case IPR2013-00172 Paper 50 Motivepower
`Inc. v. Cutsforth
`Inc. Case IPR2013-00274 Paper 31 Tandus Flooring Inc. v.
`Interface Inc. Case IPR2013-00333 Paper 67
`Cardiocom LLC v. Robert Bosch Healthcare Systems Inc. Case IPR20 1 3-00468 nl Paper 72 Toyota Motor
`Corp. v. Leroy G. Hagenbuch Case IPR2013-00483 Paper 37 St. Jude Medical
`et al. v. The Board of Regents
`Case IPR2013-00041 Corning Optical Communications RF LLC v. PPC
`of the University of Michigan
`Broadband Inc. Case IPR2013-00340 Paper 79.
`
`Page 4
`
`

`
`Patents
`
`5
`
`assessed and identified
`patent owners mostly in federal district court have successfully
`areas. Sometimes
`these competing
`competing
`across relevant
`products
`geographic
`lines of the company selling the patented product such as
`products include other product
`include somewhat
`competing
`prior generation products. Other times these
`products
`similar products sold by third parties.
`
`often can be obtained
`Evidence
`about
`the relevant
`set of competing
`products
`as a companys
`company market business and strategic plans
`external
`as well
`marketing and promotional materials. Relevant evidence also can be found in third party
`market
`important observations
`are obtained through
`In many cases
`research reports.
`interviews with company marketing personnel and customers purchasing the patented
`products and are contained in filed declarations from them.
`
`from
`
`is identified successful patent owners have compared
`Once the baseline for comparison
`the financial performance of the patented products with that of other products. Typically
`by reporting the market share captured by the products
`that
`this is accomplished
`that share is significant depends upon several
`embody the claimed invention. Whether
`factors including the number of competing
`products and the timing of a products entry
`the more competitors in the marketplace the harder it
`into the business. All else equal
`to break into the business and the more significant a given market share may be versus
`what
`the more established
`it may appear
`to be. Further all else equal
`a products
`it can be for a new product
`to enter and gain
`have been the more difficult
`competitors
`traction in the business and the more significant a given market share may be versus
`what
`it may appear to be.
`
`is
`
`B. Causal Nexus
`
`The second step in evaluating commercial success
`there is a causal
`is assessing whether
`success of the products embodying the patent and the
`nexus between the marketplace
`advantages of the claimed invention. Neither the law nor economics provides a clear and
`clean definition of causal nexus. A finding of causal nexus does not appear to require
`that the product be the only reason for a products success. Not only is that rarely if ever
`in a showing of commercial success
`the case but very few patent owners would prevail
`if
`this was required. Causal nexus appears to be an inquiry that
`to a rule of
`reason.
`
`is subject
`
`In the first
`
`instance
`
`a causal nexus inquiry typically requires an identification of the
`successful patent
`enabled by the invention.21 Specifically
`features/advantages
`specific
`owners show how the features/advantages
`of the patent extend beyond that which was
`in the prior art .2 In some situations the features/advantages
`are co-extensive with
`taught
`In most situations that
`is not the case.
`the product
`
`itself.
`
`is not something that an economist
`Determining the features/advantages of the patent
`can
`do alone. Technical experts and/or company personnel who have knowledge and training
`an examination of the claims of the patent
`in the art can be quite useful
`in undertaking
`and comparing those claims with the prior art. Their opinions are often best presented
`through filed reports or declarations.
`
`An economist
`
`can
`
`be useful
`
`marketplace
`
`knowledge
`
`That
`
`in translating those technical
`features/advantages
`into
`is though most purchasers often will have little
`features/advantages.
`features including those covered by a
`about or interest
`in technical product
`
`21 See e.g. Nuvasive Inc. v. Warsaw Orthopedic Inc. Case IPR2013-00206 Paper 65.
`Inc. v. South Alabama Medical Science
`22 See e.g. Gnosis S.P.A. Gnosis Bioresearch S.A. and Gnosis U.S.A.
`Foundation Case IPR2013-00116 Paper 68 Covidien LP v. Ethicon Endo-Surgery Inc. Case IPR2013-00209
`Paper No. 29 Tandus Flooring Inc. v.
`Interface Inc. Case IPR2013-00333 Paper 67. See also In re Kao et al.
`639 F.3d 1057 Fed. Cir. 2011 and Ormco Corp. v. Align Tech.
`Inc. 463 F.3d 1299 Fed. Cir. 2006.
`
`Page 5
`
`

`
`6
`
`John Jarosz
`
`Robert L. Vigil
`
`patented invention economic testimony can be useful
`in determining whether any of the
`result in attributes that purchasers care about such as ease
`technical
`features/advantages
`of use product weight storage capability or safety.
`
`Evaluation of causal nexus also requires an assessment of the relative importance to the
`Successful patent owners have shown
`marketplace of the patents features/advantages.23
`made significant
`court
`these features/advantages
`mostly in federal
`contributions toward increased sales higher prices or lower costs for products that have
`embodied the patented technology.
`In so doing these patent owners have shown that
`the
`led to higher profits than the patent owner otherwise would have realized without
`patent
`the patent.
`
`district
`
`that
`
`In 5 of the PTAB decisions the board wrote that
`the patent owner did not even attempt
`In 14 of the PTAB decisions the board
`identify the advantages of the patent at
`to show a causal nexus. And in 66 of the
`wrote that the patent owner did not even attempt
`decisions the board found the presentation of causal nexus to be unpersuasive.
`
`issue.
`
`to
`
`The commercial success of any product usually depends on contributions from a whole
`host of sources. Some of those sources are features and capabilities of the product
`and
`features such
`Others are non-product
`as product pricing promotional activities
`manufacturer brand name and reputation. Establishing causal nexus entails an assessment
`to the success
`of the relative significance of the features/advantages enabled by the patent
`of the patented product separate from all of the other contributors of value.24 Though
`In Permobil Inc.
`v. Pride Mobility Products
`often quite difficult
`the inquiry is critical.
`Corporation for example the board explained
`
`itself.
`
`because 1 Patent Owners
`Patent Owner also asserts commercial
`success
`estimated share of the market increased following the introduction of the product
`its Q6 Series wheelchair and 2 sales of the Q6 series
`of the 598 patent
`sales of Patent Owners previous high-pivot
`product. Petitioner
`outpaced
`contends that Patent Owner provides
`insufficient evidence of a nexus between
`the claimed inventions low front- arm pivot and its purported commercial
`success. We agree that Patent Owner does not provide persuasive evidence that
`the company-wide increase in market share is attributable to the patented feature
`of the Q6 Series wheelchair.
`Patent Owner also does not provide persuasive
`the commercial
`the Q6 Series wheelchairs
`was
`success of
`evidence
`the Q6
`The evidence shows only that
`to the patented invention.
`from 2005 onward. The
`Series wheelchairs
`outsold the Jazzy series wheelchairs
`the Q600 outsold the Jazzy 1121
`from 2005 onward and that
`the
`facts that
`Q6000 outsold the Jazzy 1122 1400 and 1402 combined from 2006 onward do
`sufficiently that customers were buying the Q600 and Q6000
`not establish
`because of their low-pivot.25
`
`that
`
`attributable
`
`Identifying the contribution of broad features generally related to the patent often is not
`is there is a need to assess the specific benefits flowing from the specific
`enough. That
`
`23
`
`According to the Federal Circuit commercial
`
`in the obviousness
`there is
`success is relevant
`context only if
`of the claimed invention - as opposed to the
`the sales were a direct result of the unique characteristics
`In re Ben Huang 100
`factors unrelated to the quality of the patented subject matter.
`
`and commercial
`
`proof that
`economic
`
`F.3d at 140.
`
`24 See e.g. Tokai Corp. v. Easton Enters. 632 F.3d 1358 Fed. Cir. 2011.
`25 Permobil Inc. v. Pride Mobility Products Corporation Case IPR2013-00407 Paper
`53 internal citations
`omitted. See also Cardiocom LLC v. Robert Bosch Healthcare Systems Inc. Case IPR20 1 3-0043 1 Paper 67
`Toyota Motor Corp. v. Leroy G. Hagenbuch Case IPR2013-00483 Paper 37 Conopco Inc. dba Unilever v.
`Gamble Company Case IPR2013-00505 Paper 69 Medtronic
`The Procter
`v. Nuvasive
`Inc. Case
`IPR2013-00506 Paper No. 47 Microsoft Corporation v. Enfish LLC Case IPR2013-00559.
`
`Inc.
`
`Page 6
`
`

`
`Patents
`
`7
`
`claimed invention.
`
`is that
`
`it
`
`Suppose that
`improves the
`the benefit of a given patent
`that also increase
`If there are other
`speed of a laptop computer.
`processor
`technologies
`is important to identify how much of the speed improvements seen in
`processor speed it
`the product are due to the patent at
`is the
`issue as opposed to the other technologies.
`contribution of the incremental speed improvement enabled by the patent
`is relevant
`that
`to the commercial success inquiry.
`
`It
`
`in a number of PTAB decisions is the consideration of the
`Moreover
`and important
`features and capabilities of the product as well as the non-product
`characteristics of
`other
`the manufacturer. Perhaps setting the bar somewhat higher than it has been set in many
`federal district court cases the PTAB often has found it necessary for the patent owner
`to
`show that
`largely owing to these other often commercial and
`the products success
`is not
`economic factors. For example the board in Kyocera Corporation et al.
`LLC wrote
`
`v. Softview
`
`Internet
`
`Although Patent Owner
`comments
`lauding the
`browsing
`cites
`including a statement made in
`capabilities of the iPhone and Android devices
`the iPhones
`the Wall Street Journal
`game changing feature is its Safari
`that
`the iPhones implementation of the Safari browser was just one of its
`browser
`many features. Patent Owner does not address the numerous other
`features cited
`as a phone Apples
`to the iPhone
`device
`including its
`use
`important
`as
`iPod media player we ever made
`the iPhone is the best
`representation that
`and its e-mail capability. Patent Owner also has not established that
`the subject
`matter of the 926 claims rather than Apples extensive distribution network
`and
`marketing presence are the reason the iPhone and similar devices have been a
`success. The same is true of Android based devices.
`to the declaration
`In contrast
`of ..
`science expert with knowledge of computer
`a computer
`technologies
`Petitioners expert ..
`an expert on marketing and consumer behavior
`the success of such devices can be attributed to numerous factors including
`that
`the web browser in the iPhone was
`product promotion price and place and that
`important features contributing to its success. Thus the
`just one of the several
`objective indicia cited by Patent Owner do not overcome the case of obviousness
`established by Petitioner by a preponderance of the evidence.26
`
`states
`
`from a
`Evidence
`about
`can be obtained
`of product
`the relative importance
`features
`number of sources including the companys market business and strategic plans as well
`as the companys external marketing and promotional materials. This evidence also is
`contained in third party market research reports and news articles.
`Important observations
`often are obtained through interviews with company marketing personnel and customers
`from
`from them. Finally statements and surveys
`and contained
`in filed declarations
`customers and potential customers can also be quite useful.
`
`multi-faceted
`
`These types of evidence do not always provide direct evidence of the relative importance
`is especially true in situations involving assessments of
`of a particular patent. That
`is less true in simpler product settings like those
`products like smartphones.
`testimony can and should weave
`Nonetheless economic
`
`involving pharmaceuticals.
`
`It
`
`26
`
`Kyocera Corporation et al. v. Softview LLC Case IPR2013-00004 at 50-52internal
`citations omitted. See
`also Toyota Motor Corp. v. Leroy G. Hagenbuch Case IPR2013-00638 Paper 42 Apple Inc. v. Sightsound
`Technologies LLC Case CBM2013-00020
`Paper 105 St. Jude Medical et al. v. The Board of Regents of the
`v. Merck
`University of Michigan Case IPR2013-00041 Gnosis S.p.A. et al.
`Cie Case IPR2013-00117
`Paper 71 PCT International
`Inc. v. Amphenol Corporation Case IPR2013-00229 Paper 30 Corning Optical
`Communications RF LLC v. PPC Broadband Inc. Case IPR2013-00340 Paper 79. Covidien LP v. Ethicon
`Endo-surgery Inc. Case IPR2013-00209 Paper No. 29 LKQ Corporation v. Clearlamp LLC Case
`
`IPR2013-00020.
`
`Page 7
`
`

`
`8
`
`John Jarosz
`
`Robert L. Vigil
`
`the technical and marketplace information to draw supportable inferences about
`together
`Sometimes those inferences
`can be
`of the patented invention.
`the relative significance
`bolstered by evidence gathered from other secondary considerations such as industry
`At other
`praise licenses and copying some of which is patent-specific.
`times those
`inferences can be bolstered by consideration of revealed preferences. That
`is a potential
`infringers actions to enter a particular business though not dispositive may provide
`some evidence as to the likely commercial success of both the product and the patent.
`
`3. CONCLUSION
`The number of IPR reviews requested at the PTAB is significant and increasing. One part
`of the response offered by many patent owners to IPR petitions challenging the validity
`a commercial success defense. This defense argues that
`the
`of their patents involves
`the patented inventions
`success of products embodying the challenged patents proves that
`the PTAB however
`must not have been obvious. At
`patent owners
`rarely have
`succeeded with this defense.
`
`There is much room for improvement in the evaluation and presentation of commercial
`success evidence at the PTAB with many lessons to be learned from U.S.
`federal district
`In short products that practice the patent must be shown to be marketplace
`court cases.
`in both absolute and relative terms. And the success must be shown to be
`taught by the patent.
`in large part by the tangible features/advantages
`caused
`Presumptions of success or causality will not rule the day.
`
`successes
`
`John Jarosz a Managing Principal with Analysis Group and Director of the firms
`Washington D.C. office is an economist who specializes in applied microeconomics
`and
`industrial organization. He has provided
`across a wide range of
`strategy consultation
`testimony in hundreds of depositions trials and hearings.
`industries and delivered expert
`His focus is on matters involving intellectual property licensing commercial damages
`and antitrust. A frequent author and lecturer on the economics of intellectual property
`protection Mr. Jarosz is the editor of Eckstroms Licensing in Foreign and Domestic
`Operations The Forms and Substance of Licensing and his articles and papers have been
`Law Review the Federal Circuit Bar Journal
`published in the Stanford Technology
`Nouvelles
`the Journal of Business
`Journal of
`the Licensing Executives
`Society
`Valuation and the Journal of the Patent and Trademark Office Society. Among other
`things Mr.
`the Licensing
`at various meetings of
`Jarosz
`has given
`presentations
`Executives Society and the Association of University Technology Managers and has
`taught classes at Georgetown University Law Center Columbia Business School and the
`U.S. Patent and Trademark Office. Mr. Jarosz holds an M.A. and was a Ph.D. candidate
`from the University of
`in economics
`from Washington University in St. Louis a J.D.
`in economics and organizational communication from Creighton
`Wisconsin and a B.A.
`
`les
`
`University.
`
`is a Principal of Analysis Group Inc. Dr. Vigil specializes
`Robert L. Vigil
`in the
`litigation matters. His work
`application of economics and finance to complex commercial
`in intellectual property and
`includes the estimation of damages and unjust enrichment
`breach of contract cases the evaluation of patented drug products commercial success
`in
`connection with generic manufacturers Abbreviated New Drug Application submissions
`to obtain early market entry and the analysis of
`issues related to the granting of
`injunctions such as irreparable harm and causal nexus. Dr. Vigil has also
`permanent
`industry remedy and bonding on cases before the
`analyzed issues related to domestic
`International Trade Commission. He has served as an expert witness on litigation matters
`in a variety of industries including pharmaceuticals medical devices consumer products
`telecommunications computer hardware and software and electronics.
`In non-litigation
`
`Page 8
`
`

`
`Patents
`
`9
`
`matters he has assisted clients
`license
`in valuing intellectual property for sale or
`identifying and evaluating potential partners for licensing acquisition or divestiture of
`assets and analyzing the impact of generic entry on prices and market shares of brand
`name pharmaceutical
`products. Vigil holds a B.A. Pepperdine University and a Ph.D.
`in
`Economics University of Maryland.
`
`The authors frequently provide economic analysis and testimony in litigation arbitration
`and regulatory proceedings. This article reflects their current
`thoughts not necessarily the
`thoughts of their firm.
`We would like to thank Greg Weiss Mattie Wheeler and Katie Lin for their valuable
`research assistance.
`
`Analysis Group has provided expertise in economics finance health care analytics and
`strategy to top law firms Fortune 500 companies global health care corporations and
`government agencies. Our work is grounded in a collaborative
`approach that allows us to
`ideas from leading academic and industry experts with our
`effectively integrate the best
`more than 600 professionals.
`As a result our clients
`receive
`thoughtful
`pragmatic
`solutions to their most challenging business and litigation problems. Through our work in
`thousands of cases across multiple industries we have become one of
`the largest
`economics
`firms in North America with 11 offices
`in the United States
`consulting
`Canada and China.
`
`Page 9