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
`at the U.S. Patent Trial and Appeal Board (“PTAB” or “board”).1 In fact, from September
`2012 through June 30, 2015, there have been over 3,000 inter partes review (“IPR”)
`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
`
`Many patent owners raise a “commercial success” defense in response to such
`challenges. They argue that the success of products embodying the challenged patent
`proves that the patented invention must not have been obvious. Had the invention been
`obvious, the argument goes, the products embodying the patented invention would not
`have enjoyed the marketplace success that they, in fact, did. If the invention was obvious,
`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. In 82
`final written decisions in IPR proceedings (through June 2015) that considered
`commercial success as a potential defense to patentability, the patent owner prevailed
`only twice.4 In all other cases, the patent owner failed in proving non-obviousness
`through a showing of commercial success.
`
`As decades of litigation in U.S. federal district courts have shown, proving commercial
`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.
`
`This article examines commercial success evaluations at the PTAB. It will show the kinds
`of economic evidence that are relevant to such evaluations and how such evidence has
`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 the Leahy-Smith America
`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 partes 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
`Procedures,” http://media.mofo.com/files/Uploads/Images/120307-Patent-Litigation-Strategy.pdf, at page 1.
`2 http://www.uspto.gov/sites/default/files/documents/2015-06-30%20PTAB.pdf (viewed Aug. 20, 2015).
`3 http://www.uspto.gov/sites/default/files/documents/2015-06-30%20PTAB.pdf (viewed Aug. 20, 2015).
`4 Redline Detection, LLC v. Star Envirotech, Inc., Case IPR2013-00106, Paper 66; Intri-Plex Technologies, Inc. &
`MMI Holdings, LTD. v. Saint-Gobain Performance Plastics Rencol Limited, Case IPR2014-00309, Paper 83.
`
`International In-house Counsel Journal
`
`ISSN 1754-0607 print/ISSN 1754-0607 online
`
`Regeneron Exhibit 1197.001
`Regeneron v. Novartis
`IPR2021-00816
`
`

`

`2
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`John Jarosz & Robert L. Vigil
`
`1. BACKGROUND
`
`A. Legal Framework
`A patent claim is unpatentable under 35 U.S.C. § 103(a) if the differences between the
`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
`skill in the art to which said subject matter pertains.5 The question of obviousness is
`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
`prior art; 3) the level of skill in the art; and 4) secondary considerations.6
`
`Secondary considerations include commercial success, long-felt but unsolved needs,
`failure of others, unexpected results, copying, licensing, and praise.7 Secondary
`considerations are not just a confirmatory part of the obviousness calculus, but constitute
`independent evidence of non-obviousness.8 Evidence regarding secondary considerations
`must be considered as part of all the evidence, not just when the decision maker is in
`doubt after reviewing the prior art.9
`
`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
`marketplace.10 That is, there must be proof of marketplace success. Second, the patent
`owner must show that the marketplace success was driven by the advantages of the
`claimed invention.11 That is, there must be proof of a causal nexus. The law presumes
`that an invention would have been commercialized earlier in response to economic
`incentives if the idea had been obvious to persons skilled in the art.12 Proof of
`commercial success overcomes this presumption.
`
`B. PTAB Reviews
`From the PTAB’s inception on September 16, 2012 through June 30, 2015, there were
`3,160 IPR petitions challenging one or more patent claims.13 Of these, 415 have gone to
`trial and resulted in final written decisions. In 351 of these petitions, the board found
`some or all of the claims to be unpatentable. In the remaining 64 trials, the board found
`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.
`
`Of the cases that reached a final written decision, 82 involved a consideration of
`commercial success as a potential defense to patentability. The patent owner prevailed in
`only two of them. In Redline Detection, LLC v. Star Envirotech, Inc., the board found
`that the petitioner had not demonstrated adequately that the claims at issue were rendered
`
`
`5 KSR Int'l 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).
`7 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
`Enters., Inc. v. Fisher-Price, Inc., 485 F.3d 1157, 1162 (Fed. Cir. 2007).
`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).
`10 In re GPAC Inc., 57 F.3d 1573, 1580 (Fed. Cir. 1995); Demaco Corp. v. F. Von Langsdorff Licensing Ltd.,
`851 F.2d 1387, 1392 (Fed. Cir. 1988); Crocs, Inc. v. International Trade Com'n, 598 F.3d 1294, 1310-11 (Fed.
`Cir. 2010).
`11 See, e.g., Merck & Co., Inc. v. Teva Pharms. USA, Inc., 395 F.3d 1364,
`1376 (Fed. Cir. 2005); Ormco Corp. v. Align Tech. Inc., 463 F.3d 1299, 1311-12 (Fed. Cir. 2006); In re GPAC
`Inc., 57 F.3d at 1580 (Fed. Cir. 1995); In re Ben Huang, 100 F.3d 135, 140 (Fed. Cir. 1996).
`12 Merck & Co., Inc. v. Teva Pharmaceuticals USA, Inc., 395 F.3d 1364, 1376-77 (Fed. Cir. 2005).
`13 http://www.uspto.gov/sites/default/files/documents/2015-06-30%20PTAB.pdf (viewed Aug. 20, 2015).
`
`
`Regeneron Exhibit 1197.002
`Regeneron v. Novartis
`IPR2021-00816
`
`

`

`
`
`Patents
`
`3
`
`obvious.14 As a result, the board did not deem it necessary to reach the merits of the
`patent owner’s secondary consideration arguments (including commercial success). In
`Intri-Plex Technologies, Inc. et al. v. Saint-Gobain Performance Plastics Rencol Limited,
`the board found that the commercial success evidence weighed in favor of non-
`obviousness of the invention.15 It found that the flared tolerance rings at issue “achieved
`the dominant position in the relevant market” and the petitioners’ own admissions
`constituted “strong evidence that the commercial success is attributable to customer
`demand for the patented features.”16
`
`Notwithstanding these two opinions, patent owners have failed in over 95 percent of the
`written decisions that consider commercial success. Sometimes, it is because of
`inadequate proof of marketplace success. (In fact, this was cited explicitly in 28 of the
`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.
`
`2. PROVING COMMERCIAL SUCCESS
`
`A. Marketplace Success
`The first step in assessing commercial success is evaluating whether the product or
`products that embody the invention have been successful in the marketplace. Neither the
`law nor economics provides a clear and clean definition of “success.” A finding of
`success does not appear to require that the product be the most successful product in a
`given business or at any particular point in time. If that were the case, then very few
`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 to a
`rule of reason.
`
`In the first instance, a commercial success inquiry requires an identification of the
`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
`Smith & Nephew, Inc. v. Convatec Technologies, Inc., the board wrote,
`
`We have considered the testimony of […], which purports to show that the
`AQUACEL(R) Ag product line includes the features of claims 1 and 17 of the
`‘981 patent. … […] provides no details of the manufacturing process for
`AQUACEL(R) Ag products as supporting evidence that the products are
`manufactured using the steps recited in the claims. Upon cross-examination, […]
`testified that she has no technical knowledge of the patents and could not confirm
`whether specific products in the AQUACEL(R) Ag line were covered by the
`claims of the '981 patent. […] Considering we have no evidence of the
`manufacturing process for any of the products in the AQUACEL(R) Ag product
`line, we have no means to assess whether any of the products are covered by the
`claims of the '981 patent.18
`
`
`14 Redline Detection, LLC v. Star Envirotech, Inc., Case IPR2013-00106, Paper 66.
`15Intri-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, LTD. v. Saint-Gobain Performance Plastics Rencol
`Limited, IPR2014-00309, Paper 83 at 54-57.
`17 Sometimes, these are products sold by the patent owner. Sometimes, these are products sold by the petitioner.
`Sometimes, these are products sold by third parties.
`18 Smith & Nephew, Inc. v. Convatec Technologies, Inc., Case IPR2013-00097, Paper 90 (internal citations
`omitted). See also, The Scotts Company LLC v. Encap, LLC, Case IPR2013-00110, Paper 79; Cardiocom, LLC
`
`
`Regeneron Exhibit 1197.003
`Regeneron v. Novartis
`IPR2021-00816
`
`

`

`4
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`John Jarosz & Robert L. Vigil
`
`Determining whether a product practices a particular patent typically is outside the
`domain of an economist. In both federal district court and at the PTAB, those
`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.
`
`The next step in the marketplace success inquiry is an evaluation of the success of the
`practicing products in absolute terms. Depending on the product and available data, this
`is often done by identifying one or more of several financial performance metrics: 1)
`units sold, 2) volumes shipped, 3) revenues received, 4) profits earned, and 5)
`prescriptions written. Evidence regarding product success, in absolute terms, can often be
`obtained from a company’s internal financial records and third party market research
`reports.
`
`The final, and probably most important, step in the marketplace success inquiry is an
`evaluation of the success of the practicing products in relative terms. As both the Court of
`Appeals for the Federal Circuit (“Federal Circuit”) and the PTAB have written
`repeatedly, merely identifying the level of financial success, without putting that success
`in context, is insufficient to establish commercial success.19 Revenues of $10 may be
`quite significant for a neighborhood lemonade stand. It is much less likely to be
`significant for Apple, Inc. In Nichia Corporation v. Emcore Corporation, the board
`wrote,
`
`[…], one of the named inventor of the ‘215 patent, also testifies that ‘the contact of
`claim 1 was incorporated into hundreds of thousands of LEDs that were sold.’
`However, […]’s testimony is not sufficient to support nonobviousness of claim 1,
`because […]'s 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
`success inquiry. In 20 of the PTAB decisions involving a discussion of commercial
`success, the board wrote that the patent owner did not even attempt to present relative
`success information. In 11 of the decisions, the board found the presentation to be
`unpersuasive.
`
`To put financial performance in context, successful patent owners often have identified
`the set of products with which the patented products compete. Though a formal “relevant
`market” definition may not be feasible, or even necessary, in a large number of matters,
`
`
`v. Robert Bosch Healthcare Systems, Inc., Case IPR2013-00431, Paper 67; Conopco, Inc. dba Unilever v. The
`Procter & Gamble Company, Case IPR2013-00505, Paper 69.
`19 See, e.g., Motivepower, Inc. v. Cutsforth, Inc., Case IPR2013-00274, Paper 31, and Cardiocom, LLC v.
`Robert Bosch Healthcare Systems, Inc., Case IPR2013-00468 n1, Paper 72. See also In re Baxter Travenol
`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 IPR2013-00582, 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 IPR2013-00468 n1, Paper 72; Toyota Motor
`Corp. v. Leroy G. Hagenbuch, Case IPR2013-00483, Paper 37; St. Jude Medical, et al. v. The Board of Regents
`of the University of Michigan, Case IPR2013-00041; Corning Optical Communications RF, LLC v. PPC
`Broadband, Inc. Case IPR2013-00340, Paper 79.
`
`
`Regeneron Exhibit 1197.004
`Regeneron v. Novartis
`IPR2021-00816
`
`

`

`
`
`Patents
`
`5
`
`patent owners (mostly in federal district court) have successfully assessed and identified
`competing products across relevant geographic areas. Sometimes these competing
`products include other product lines of the company selling the patented product (such as
`prior generation products). Other times, these competing products include somewhat
`similar products sold by third parties.
`
`Evidence about the relevant set of competing products often can be obtained from
`company market, business, and strategic plans, as well as a company’s external
`marketing and promotional materials. Relevant evidence also can be found in third party
`market research reports. In many cases, important observations are obtained through
`interviews with company marketing personnel and customers purchasing the patented
`products, and are contained in filed declarations from them.
`
`Once the baseline for comparison is identified, successful patent owners have compared
`the financial performance of the patented products with that of other products. Typically,
`this is accomplished by reporting the “market share” captured by the products that
`embody the claimed invention. Whether that “share” is significant depends upon several
`factors, including the number of competing products and the timing of a product’s entry
`into the business. All else equal, the more competitors in the marketplace, the harder it is
`to break into the business, and the more significant a given market share may be versus
`what it may appear to be. Further, all else equal, the more established a product’s
`competitors have been, the more difficult it can be for a new product to enter and gain
`traction in the business, and the more significant a given market share may be versus
`what it may appear to be.
`
`B. Causal Nexus
`The second step in evaluating commercial success is assessing whether there is a causal
`nexus between the marketplace success of the products embodying the patent and the
`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 product’s success. Not only is that rarely, if ever,
`the case, but very few patent owners would prevail in a showing of commercial success if
`this was required. “Causal nexus” appears to be an inquiry that is subject to a rule of
`reason.
`
`In the first instance, a causal nexus inquiry typically requires an identification of the
`specific features/advantages enabled by the invention.21 Specifically, successful patent
`owners show how the features/advantages of the patent extend beyond that which was
`taught in the prior art.22 In some situations, the features/advantages are co-extensive with
`the product itself. In most situations, that is not the case.
`
`Determining the features/advantages of the patent is not something that an economist can
`do alone. Technical experts and/or company personnel who have knowledge and training
`in the art can be quite useful in undertaking an examination of the claims of the patent
`and comparing those claims with the prior art. Their opinions are often best presented
`through filed reports or declarations.
`
`An economist can be useful in translating those technical features/advantages into
`marketplace features/advantages. That is, though most purchasers often will have little
`knowledge about or interest in technical product features (including those covered by a
`
`21 See, e.g., Nuvasive, Inc. v. Warsaw Orthopedic, Inc., Case IPR2013-00206, Paper 65.
`22 See, e.g., Gnosis S.P.A., Gnosis Bioresearch S.A., and Gnosis U.S.A., Inc. v. South Alabama Medical Science
`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).
`
`
`Regeneron Exhibit 1197.005
`Regeneron v. Novartis
`IPR2021-00816
`
`

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`6
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`John Jarosz & Robert L. Vigil
`
`patented invention), economic testimony can be useful in determining whether any of the
`technical features/advantages result in attributes that purchasers care about (such as ease
`of use, product weight, storage capability, or safety).
`
`Evaluation of causal nexus also requires an assessment of the relative importance to the
`marketplace of the patent’s features/advantages.23 Successful patent owners have shown
`(mostly in federal district court) that these features/advantages made significant
`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
`patent led to higher profits than the patent owner otherwise would have realized without
`the patent.
`
`In 5 of the PTAB decisions, the board wrote that the patent owner did not even attempt to
`identify the advantages of the patent at issue. In 14 of the PTAB decisions, the board
`wrote that the patent owner did not even attempt to show a causal nexus. And in 66 of the
`decisions, the board found the presentation of causal nexus to be unpersuasive.
`
`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 itself.
`Others are non-product features, such as product pricing, promotional activities, and
`manufacturer brand name and reputation. Establishing causal nexus entails an assessment
`of the relative significance of the features/advantages enabled by the patent to the success
`of the patented product, separate from all of the other contributors of value.24 Though
`often quite difficult, the inquiry is critical. In Permobil, Inc. v. Pride Mobility Products
`Corporation, for example, the board explained,
`
`Patent Owner also asserts commercial success because (1) Patent Owner's
`estimated share of the market increased following the introduction of the product
`of the ‘598 patent (its Q6 Series wheelchair); and (2) sales of the Q6 series
`outpaced sales of Patent Owner’s previous (high-pivot) product. Petitioner
`contends that Patent Owner provides insufficient evidence of a nexus between
`the claimed invention's 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
`evidence that the commercial success of the Q6 Series wheelchairs was
`attributable to the patented invention. The evidence shows only that the Q6
`Series wheelchairs outsold the Jazzy series wheelchairs from 2005 onward. The
`facts that the Q600 outsold the Jazzy 1121 from 2005 onward, and that the
`Q6000 outsold the Jazzy 1122, 1400, and 1402 combined from 2006 onward, do
`not establish sufficiently that customers were buying the Q600 and Q6000
`because of their low-pivot.25
`
`Identifying the contribution of broad features generally related to the patent often is not
`enough. That is, there is a need to assess the specific benefits flowing from the specific
`
`
`23 According to the Federal Circuit, “[commercial] success is relevant in the obviousness context only if there is
`proof that the sales were a direct result of the unique characteristics of the claimed invention – as opposed to the
`economic and commercial factors unrelated to the quality of the patented subject matter.” In re Ben Huang, 100
`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 IPR2013-00431, Paper 67;
`Toyota Motor Corp. v. Leroy G. Hagenbuch, Case IPR2013-00483, Paper 37; Conopco, Inc. dba Unilever v.
`The Procter & Gamble Company, Case IPR2013-00505, Paper 69; Medtronic, Inc. v. Nuvasive, Inc., Case
`IPR2013-00506, Paper No. 47; Microsoft Corporation v. Enfish LLC, Case IPR2013-00559.
`
`
`Regeneron Exhibit 1197.006
`Regeneron v. Novartis
`IPR2021-00816
`
`

`

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`Patents
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`7
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`claimed invention. Suppose that the benefit of a given patent is that it improves the
`processor speed of a laptop computer. If there are other technologies that also increase
`processor speed, it is important to identify how much of the speed improvements seen in
`the product are due to the patent at issue as opposed to the other technologies. It is the
`contribution of the incremental speed improvement enabled by the patent that is relevant
`to the commercial success inquiry.
`
`Moreover, and important in a number of PTAB decisions, is the consideration of the
`other features and capabilities of the product, as well as the non-product characteristics of
`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 the product’s success is not largely owing to these other (often commercial and
`economic) factors. For example, the board, in Kyocera Corporation et al. v. Softview
`LLC, wrote,
`
`the Internet browsing
`lauding
`Although Patent Owner cites comments
`capabilities of the iPhone and Android devices, including a statement made in
`the Wall Street Journal that the iPhone's game changing feature is its Safari
`browser, the iPhone's implementation of the Safari browser was just one of its
`many features. Patent Owner does not address the numerous other features cited
`as important to the iPhone device, including its use as a phone, Apple's
`representation that the iPhone is "the best iPod [media player] we ever made,"
`and its e-mail capability. Patent Owner also has not established that the subject
`matter of the '926 claims, rather than Apple's 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. In contrast to the declaration
`of […], a computer science expert with knowledge of computer technologies,
`Petitioner's expert […], an expert on marketing and consumer behavior, states
`that the success of such devices can be attributed to numerous factors, including
`product, promotion, price, and place, and that the web browser in the iPhone was
`just one of the several important features contributing to its success. Thus, the
`objective indicia cited by Patent Owner do not overcome the case of obviousness
`established by Petitioner by a preponderance of the evidence.26
`
`Evidence about the relative importance of product features can be obtained from a
`number of sources, including the company’s market, business, and strategic plans, as well
`as the company’s 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,
`and contained in filed declarations from them. Finally, statements and surveys from
`customers and potential customers can also be quite useful.
`
`These types of evidence do not always provide direct evidence of the relative importance
`of a particular patent. That is especially true in situations involving assessments of multi-
`faceted products, like smartphones. It is less true in simpler product settings, like those
`involving pharmaceuticals. Nonetheless, economic testimony can and should weave
`
`
`26 Kyocera Corporation et al. v. Softview LLC, Case IPR2013-00004 at 50-52(internal 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
`University of Michigan, Case IPR2013-00041; Gnosis S.p.A., et al. v. Merck & 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.
`
`
`Regeneron Exhibit 1197.007
`Regeneron v. Novartis
`IPR2021-00816
`
`

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`8
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`John Jarosz & Robert L. Vigil
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`together the technical and marketplace information to draw supportable inferences about
`the relative significance of the patented invention. Sometimes those inferences can be
`bolstered by evidence gathered from other secondary considerations, such as industry
`praise, licenses, and copying, some of which is patent-specific. At other times, those
`inferences can be bolstered by consideration of revealed preferences. That is, a potential
`infringer’s 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
`of their patents involves a commercial success defense. This defense argues that the
`success of products embodying the challenged patents proves that the patented inventions
`must not have been obvious. At the PTAB, however, 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
`court cases. In short, products that practice the patent must be shown to be marketplace
`successes in both absolute and relative terms. And the success must be shown to be
`caused, in large part, by the tangible features/advantages taught by the patent.
`Presumptions of success or causality will not rule the day.
`
`***
`
`John Jarosz, a Managing Principal with Analysis Group and Director of the firm's
`Washington, D.C. office, is an economist who specializes in applied microeconomics and
`industrial organization. He has provided strategy consultation across a wide range of
`industries and delivered expert testimony in hundreds of depositions, trials, and hearings.
`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 Eckstrom's Licensing in Foreign and Domestic
`Operations: The Forms and Substance of Licensing, and his articles and papers have been
`published in the Stanford Technology Law Review, the Federal Circuit Bar Journal, les
`Nouvelles: Journal of the Licensing Executives Society, the Journal of Business
`Valuation, and the Journal of the Patent and Trademark Office Society. Among other
`things, Mr. Jarosz has given presentations at various meetings of the Licensing
`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
`in economics from Washington University in St. Louis; a J.D. from the University of
`Wisconsin; and a B.A. in economics and organizational communication from Creighton
`University.
`
`Robert L. Vigil is a Principal of Analysis Group, Inc. Dr. Vigil specializes in the
`application of economics and finance to complex commercial litigation matters. His work
`includes the estimation of damages and unjust enrichment in intellectual property and
`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
`permanent injunctions, such as irreparable harm and causal nexus. Dr. Vigil has also
`analyzed issues related to domestic industry, remedy, and bonding on cases before the
`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
`
`
`
`Regeneron Exhibit 1197.008
`Regeneron v. Novartis
`IPR2021-00816
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`

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`Patents
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`9
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`matters, he has assisted clients