Case: 22-1846 Document: 38 Page: 1 Filed: 09/14/2023
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`NOTE: This disposition is nonprecedential.
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`United States Court of Appeals
`for the Federal Circuit
`______________________
`
`PHILIP MORRIS PRODUCTS S.A.,
`Appellant
`
`v.
`
`RAI STRATEGIC HOLDINGS, INC.,
`Appellee
`______________________
`
`2022-1846
`______________________
`
`Appeal from the United States Patent and Trademark
`Office, Patent Trial and Appeal Board in No. IPR2020-
`01602.
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`______________________
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`Decided: September 14, 2023
`______________________
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`GABRIEL K. BELL, Latham & Watkins LLP, Washing-
`ton, DC, argued for appellant. Also represented by
`MAXIMILIAN A. GRANT, JONATHAN M. STRANG, DAVID
`ZUCKER; TAKASHI OKUDA, New York, NY; GREGORY
`SOBOLSKI, San Francisco, CA.
`
` GREGORY A. CASTANIAS, Jones Day, Washington, DC,
`argued for appellee. Also represented by AMELIA A.
`DEGORY; ROBERT BREETZ, DAVID B. COCHRAN, KENNETH
`
`

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`Case: 22-1846 Document: 38 Page: 2 Filed: 09/14/2023
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`2
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`PHILIP MORRIS PRODUCTS S.A. v.
`RAI STRATEGIC HOLDINGS, INC.
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`LUCHESI, DAVID MICHAEL MAIORANA, Cleveland, OH;
`JOSHUA R. NIGHTINGALE, Pittsburgh, PA.
`______________________
`
`Before CHEN, STOLL, and CUNNINGHAM, Circuit Judges.
`CHEN, Circuit Judge.
`Philip Morris Products, S.A. (Philip Morris) appeals an
`inter partes review (IPR) final written decision of the Pa-
`tent Trial and Appeal Board determining Philip Morris did
`not meet its burden of proving certain claims of U.S. Patent
`No. 9,901,123 (’123 patent) unpatentable under 35
`U.S.C. § 103. See Philip Morris Prods., S.A. v. RAI Strate-
`gic Holdings, Inc., No. IPR2020-01602, 2022 WL 1022576
`(P.T.A.B. Mar. 30, 2022) (Board Decision). Contrary to
`Philip Morris’s arguments, the Board’s decision in this case
`did not contradict its findings in a prior Board decision, nor
`did the Board legally err in its motivation to combine anal-
`ysis. Because substantial evidence otherwise supports the
`Board’s findings, we affirm.
`BACKGROUND
`The ’123 patent, assigned to RAI Strategic Holdings,
`Inc. (Reynolds), generally relates to tobacco smoking de-
`vices, including electronic cigarettes. ’123 patent col 4
`ll. 42–45, col. 5 ll. 7–10. In 2016, before the present IPR
`proceeding for the ’123 patent was initiated, R.J. Reynolds
`Vapor Company (Reynolds VC), a sister corporation of
`Reynolds, filed an IPR petition against another company’s
`electronic cigarette patent, U.S. Patent No. 8,365,742 (’742
`patent), challenging several claims over a combination of
`Hon1 and Whittemore.2 Specifically, Reynolds VC argued
`that a skilled artisan would have replaced Hon’s heating
`element with Whittemore’s wick and heating wire. The
`
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`1 Chinese Patent No. CN 2719043.
`2 U.S. Patent No. 2,057,353.
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`Case: 22-1846 Document: 38 Page: 3 Filed: 09/14/2023
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`PHILIP MORRIS PRODUCTS S.A. v.
`RAI STRATEGIC HOLDINGS, INC.
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`3
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`Board disagreed and upheld the claims, concluding that
`Reynolds VC had failed to show Hon’s heating efficiency
`needed improvement. The Board also found that a compar-
`atively more plausible substitution would have been to re-
`place Hon’s entire atomizer, as opposed to Reynolds VC’s
`proposal to replace only Hon’s heating element.
`In the present case, Philip Morris filed an IPR petition
`against several claims of Reynolds’s ’123 patent. While
`Philip Morris’s petition, like Reynolds VC’s above-de-
`scribed IPR, argued that a skilled artisan would have been
`motivated to combine Hon and Whittemore, Philip Morris
`proposed a different combination of these references, by re-
`placing Hon’s entire atomizer with Whittemore’s wick and
`heating wire. The Board, however, found unpersuasive
`Philip Morris’s argument that a skilled artisan would have
`been motivated to simplify Hon in the manner Phillip Mor-
`ris proposed.
`Philip Morris timely appealed the Board’s decision to
`this court, arguing that the decision was arbitrary and ca-
`pricious because (1) it contradicts the reasoning in the ’742
`patent IPR decision, (2) there was legal error in the Board’s
`motivation to combine analysis, and (3) the decision was
`otherwise not supported by substantial evidence. We have
`jurisdiction under 28 U.S.C. § 1295(a)(4)(A).
`DISCUSSION
`As to Philip Morris’s first argument, we see no contra-
`diction between the Board’s analysis of Hon and Whitte-
`more and its earlier decision on the ’742 patent. In the
`prior IPR, the issue before the Board was whether a skilled
`artisan would have replaced Hon’s heating element with
`Whittemore’s wick and heating wire. The patent owner’s
`overarching argument there was that a skilled artisan
`would not have combined Hon and Whittemore at all. See
`J.A. 2801 (patent owner arguing that Hon and Whittemore
`“have different modes of operation, and in at least some
`ways, Hon[] is more thermally efficient.”). In this context,
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`Case: 22-1846 Document: 38 Page: 4 Filed: 09/14/2023
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`PHILIP MORRIS PRODUCTS S.A. v.
`RAI STRATEGIC HOLDINGS, INC.
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`we view the Board in that case as agreeing with the patent
`owner’s expert testimony that a more plausible “simple
`substitution,” compared to the petitioner’s proposed substi-
`tution, would be to replace Hon’s entire atomizer (because
`replacing only Hon’s heating element would lead to a re-
`dundant design). See J.A. 2806–07. But the Board there
`did not go so far as to find that replacing Hon’s entire at-
`omizer with Whittemore’s wick and heating wire would
`have been an obvious simple substitution under KSR Inter-
`national Co. v. Teleflex, Inc., 550 U.S. 398 (2007). Moreo-
`ver, that particular combination theory was not before the
`Board in the prior IPR, as no party made that argument.
`In re Magnum Oil Tools Int’l, Ltd., 829 F. 3d 1364, 1381
`(Fed. Cir. 2016) (holding that the PTO does not have au-
`thority to “raise, address, and decide unpatentability theo-
`ries never presented by the petitioner”).
`In contrast, in the presently appealed IPR, the issue
`before the Board was whether a skilled artisan would have
`replaced Hon’s entire atomizer with Whittemore’s wick and
`heating wire. The Board thus analyzed a different combi-
`nation theory, with expert testimony3 specifically directed
`to this combination. Because the Board did not conclude in
`the prior IPR that replacing Hon’s atomizer would have
`been obvious, it was not arbitrary and capricious for the
`Board to conclude that Philip Morris did not meet its bur-
`den here.
`
`
`3 We similarly find no abuse of discretion by the
`Board in relying on Reynolds’s expert in the presently ap-
`pealed IPR. Even considering the statements made by
`Reynolds VC’s expert in the prior IPR, it is evident that
`each expert was testifying about a distinct modification of
`Hon (i.e., replacing Hon’s heating element versus replacing
`Hon’s entire atomizer), and thus the respective expert
`statements must be understood to be referring to the spe-
`cific combination at issue.
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`Case: 22-1846 Document: 38 Page: 5 Filed: 09/14/2023
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`PHILIP MORRIS PRODUCTS S.A. v.
`RAI STRATEGIC HOLDINGS, INC.
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`5
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`Philip Morris also argues, separate and apart from the
`prior IPR decision, the Board’s finding of no motivation to
`combine Hon and Whittemore is based on legal error and
`the decision otherwise lacks substantial evidence. We dis-
`agree. Philip Morris claims the Board allegedly required it
`to prove that its proposed combination was superior to
`other prior art combinations. We do not think that is a fair
`reading of the Board’s decision. Philip Morris argued to the
`Board that a skilled artisan would be motivated to first re-
`move Hon’s piezoelectric element, a simplification Hon
`teaches. But Philip Morris further asserted that once the
`piezoelectric element was removed, there would be diffi-
`culty in forming an aerosol and thus a skilled artisan would
`further “simplify” Hon by removing Hon’s entire atomizer
`and replacing it with Whittemore’s wick and heater. Since
`the proposed combination was based on a purported sim-
`plification of Hon beyond what Hon itself teaches, we inter-
`pret the Board’s statement that “Petitioner does not show
`persuasively that replacing Hon’s atomizer with Whitte-
`more’s wick and heater would have simplified the device as
`compared with the modifications Hon expressly teaches” as
`determining Philip Morris had not proven the obviousness
`theory that it had advanced. Board Decision, 2022 WL
`1022576, at *12. We do not view the Board’s statement as
`a rejection of the combination merely because Hon itself
`teaches other simplifications distinct from the proposed
`combination.
`We also conclude that substantial evidence supports
`the Board’s decision to reject Philip Morris’s proposed com-
`bination, because the Board reasonably relied on expert
`testimony and its own analysis of the R.J. Reynolds To-
`bacco Co. (RJR) teardown report.4 Specifically, the Board
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`4 The RJR teardown report documents a disassem-
`bling of a Ruyan device, which is an implementation of
`Hon.
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`Case: 22-1846 Document: 38 Page: 6 Filed: 09/14/2023
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`PHILIP MORRIS PRODUCTS S.A. v.
`RAI STRATEGIC HOLDINGS, INC.
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`relied on expert testimony to find that Hon’s heater pro-
`duces more aerosol at a higher efficiency while using less
`power than Whittemore’s wick and heater design, and
`found that nothing in the RJR teardown report supports a
`view that the Ruyan device (an implementation of Hon)
`failed to produce sufficient aerosol that would warrant re-
`placement of the atomizer. See Board Decision, 2022 WL
`1022576, at *12–14. This is substantial evidence. To the
`extent Philip Morris argues that the Board failed to con-
`sider record evidence of the alleged cost and simplicity of
`Whittemore’s wick and heater or testimony regarding rea-
`sonable expectation of success, we do not believe the Board
`erred in dismissing these arguments as conclusory and
`lacking factual substantiation.
`We have considered Philip Morris’s remaining argu-
`ments and find them unpersuasive. For the foregoing rea-
`sons, we affirm.
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`AFFIRMED
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