A Change in Language from IPR Petition to Written Decision May Not Result in A Change in Theory of Motivation to Combine
WHDA Blogging Team | September 25, 2019
Arthrex, Inc. v. Smith & Nephew, Corp.
August 21, 2019
Dyk, Chen, Opinion written by Stoll
Summary
The CAFC affirmed the Board’s decision that claims 10 and 11 of Patent ‘541 were obvious over Gordon in view of West and that the IPR proceeding was constitutional. The CAFC held that minor variations in wording, from the IPR Petition to the written Final Decision, do not violate the Administrative Procedure Act (APA). Further, the CAFC rejected Arthrex’s argument to reconsider evidence that was contrary to the Board’s decision since there was sufficient evidence to support the Board’s findings of obviousness by the preponderance of evidence standard.
Details
Arthrex’s Patent No. 8,821,541 (hereinafter “Patent ’541”) is directed towards a surgical suture anchor that reattaches soft tissue to bone. A feature of the suture anchor of Patent ‘541 is that the “fully threaded suture anchor’ includes ‘an eyelet shield that is molded into the distal part of the biodegradable suture anchor’”, wherein the eyelet shield is an integrated rigid support that strengthen the suture to the soft tissue. Id. at 2 and 3. The specification discloses that “because the support is molded into the anchor structure (as opposed to being a separate component), it ‘provides greater security to prevent pull-out of the suture.’ Id at col 5 ll. 52-56.” Id. at 3. Figure 5 of Patent ‘541 illustrates an embodiment of the suture anchor (component 1), wherein component 9 is the eyelet shield (integral rigid support) and component 3 is the body wherein helical threading is formed.
Claims 10 and 11 of Patent ‘541 are herein enclosed (emphasis added to the claim terms at issue in the dispute)
10. A suture anchor assembly comprising:
an anchor body including a longitudinal axis, a proximal end, a distal end, and a central passage extending along the longitudinal axis from an opening at the proximal end of the anchor body through a portion of a length of the anchor body, wherein the opening is a first suture opening, the anchor body including a second suture opening disposed distal of the first suture opening, and a third suture opening disposed distal of the second suture opening, wherein a helical thread defines a perimeter at least around the proximal end of the anchor body;
a rigid support extending across the central passage, the rigid support having a first portion and a second portion spaced from the first portion, the first portion branching from a first wall portion of the anchor body and the second portion branching from a second wall portion of the anchor body, wherein the third suture opening is disposed distal of the rigid support;
at least one suture strand having a suture length threaded into the central passage, supported by the rigid support, and threaded past the proximal end of the anchor body, wherein at least a portion of the at least one suture strand is disposed in the central passage between the rigid support and the opening at the proximal end, and the at least one suture strand is disposed in the first suture opening, the second suture opening, and the third suture opening; and
a driver including a shaft having a shaft length, wherein the shaft engages the anchor body, and the suture length of the at least one suture strand is greater than the shaft length of the shaft.
11. A suture anchor assembly comprising:
an anchor body including a distal end, a proximal end having an opening, a central longitudinal axis, a first wall portion, a second wall portion spaced opposite to the first wall portion, and a suture passage beginning at the proximal end of the anchor body, wherein the suture passage extends about the central longitudinal axis, and the suture passage extends from the opening located at the proximal end of the anchor body and at least partially along a length of the anchor body, wherein the opening is a first suture opening that is encircled by a perimeter of the anchor body, a second suture opening extends through a portion of the anchor body, and a third suture opening extends through the anchor body, wherein the third suture opening is disposed distal of the second suture opening;
a rigid support integral with the anchor body to define a single-piece component, wherein the rigid support extends across the suture passage and has a first portion and a second portion spaced from the first portion, the first portion branching from the first wall portion of the anchor body and the second portion branching from the second wall portion of the anchor body, and the rigid support is spaced axially away from the opening at the proximal end along the central longitudinal axis; and
at least one suture strand threaded into the suture passage, supported by the rigid support, and having ends that extend past the proximal end of the anchor body, and the at least one suture strand is disposed in the first suture opening, the second suture opening, and the third suture opening.
Smith & Nephew (hereinafter “Smith”) initiated an inter partes review of claims 10 and 11 of Patent ‘541. Smith alleged that claims 10 and 11 of Patent ‘541 were invalid as obvious over Gordon (U.S. Patent Application Publication No. 2006/0271060) in view of West (U.S. Patent No. 7,322,978) and alleged that claim 11 was anticipated by Curtis (U.S. Patent No. 5,464,427) (The discussion regarding Curtis (U.S. Patent No. 5,464,427) is not herein included). Smith argued that Gordon disclosed all the features claimed except for the rigid support. Gordon disclosed “a bone anchor in which a suture loops about a pulley 182 positioned within the anchor body. Figure 23 illustrates the pully 182 held in place in holes 184a, b.” Id. at 5 and 6.
Figure 23 of Gordon
Smith acknowledged that the pulley of Gordon was not “integral with the anchor body to define a single-piece component”, a feature recited in claim 11 of Patent ‘541. Smith cited West to allege obviousness of this feature. West also disclosed a bone anchor wherein one or more pins are fixed within the bore of the anchor body. In West, “to manufacture the bone anchor, ‘anchor body 12 and posts 23 can be cast and formed in a die. Alternatively anchor body 12 can be cast or formed and post 23a and 23b inserted later.’” Id. at 7.
Figure 1 of West
Smith argued that it would have been obvious to a skilled artisan to form the bone anchor of Gordon by the casting process of West to thereby create a rigid support integral with the anchor body to define a single piece component, as recited in claim 11 of Patent ‘541. Smith’s expert testified that the casting process of West would “minimize the materials used in the anchor, thus facilitating regulatory approval, and would reduce the likelihood of the pulley separating from the anchor body.” Id. at 7. Smith asserted that the casting process of West was well-known in the art and that such a manufacturing process “would have been a simple design choice.” Id. at 7. Arthrex argued that a skilled artisan would not have been motivated to modify Gordon in view of West. The Board agreed with Smith that the claims were unpatentable. Arthrex filed an appeal.
Arthrex appealed the Board’s decision that Smith proved unpatentability of claims 10 and 11 in view of Gordon and West, on both a procedurally and a substantively basis, and the constitutionality of the IPR proceeding. The CAFC found that Arthrex’s procedural rights were not violated; that the Decision by the Board was supported by substantial evidence and the application of IPR to Patent ‘541 was constitutional.
IPR proceedings are formal administrative adjudications subject to the procedural requirements of the APA. See, e.g., Dell Inc. v. Acceleron, LLC, 818 F.3d 1293, 1298 (Fed. Cir. 2016); Belden, 805 F.3d at 1080. One of these requirements is that “‘an agency may not change theories in midstream without giving respondents reasonable notice of the change’ and ‘the opportunity to present argument under the new theory.’” Belden, 805 F.3d at 1080 (quoting Rodale Press, Inc. v. FTC, 407 F.2d 1252, 1256–57 (D.C. Cir. 1968)); see also 5 U.S.C. § 554(b)(3). Nor may the Board craft new grounds of unpatentability not advanced by the petitioner. See In re NuVasive, Inc., 841 F.3d 966, 971–72 (Fed. Cir. 2016); In re Magnum Oil Tools Int’l, Ltd., 829 F.3d 1364, 1381 (Fed. Cir. 2016).
Id. at 9.
Arthrex argued that the Board’s decision relied on a new theory of motivation to combine. Arthrex argued that the new theory violated their procedural rights by depriving them an opportunity to respond to said new theory. Arthrex argued that the Board’s reasoning differed from the Smith Petition by describing the casting method of West as “preferred.” The CAFC held that while the language used by the Board did differ from the Petition, said deviation did not introduce a new issue or theory as to the reason for combining Gordon and West. West disclosed “an ‘anchor body 12 and posts 23 can be cast and formed in a die. Alternatively anchor body 12 can be cast or formed and posts 23a and 23b inserted later’.” Id. at 10. The Smith Petition asserted that “a person of ordinary skill would have had ‘several reasons’ to combine West and Gordon, including that the casting process disclosed by West was a ‘well-known technique [whose use] would have been a simple design choice’.” (emphasis added) Id. at 10. In the written decision by the Board, the Board characterized West as disclosing two manufacturing methods, wherein the casting method was the “primary” and “preferred” method, and thus, a skilled artisan would have “applied West’s casting method to Gordon because choosing the ‘preferred option’ presented by West ‘would have been an obvious choice of the designer’.” Id. at 11. The CAFC noted that while the Board’s language of “preferred” differed from the language of the Petition, i.e. “well-known”, “accepted” and “simple”, the Board nonetheless relied upon the same disclosure of West as the Petition, the same proposed combination of the references and ruled on the same theory of obviousness, as presented in the Petition. “[t]he mere fact that the Board did not use the exact language of the petition in the final written decision does not mean it changed theories in a manner inconsistent with the APA and our case law…. the Board had cited the same disclosure as the petition and the parties had disputed the meaning of that disclosure throughout the trial. Id. As a result, the petition provided the patent owner with notice and an opportunity to address the portions of the reference relied on by the Board, and we found no APA violation.” Id. at 11.
Next, Arthrex argued that even if the Board’s decision was procedurally proper, an error was made by finding Smith had established a motivation to combine the cited art by a preponderance of the evidence. The CAFC held that there was sufficient substantial evidence to support the Board’s finding that a skilled artisan would be motivated to use the casting method of West to form the anchor of Gordon. First, the Board noted West’s disclosure of two methods of making a rigid support. Second, the wording by West suggested that casting was the preferred method. Third, Smith’s experts testified that the casting method would likely produce a stronger anchor, which in turn would be more likely to be granted regulatory approval. Also, casting would decrease manufacturing cost, produce an anchor that is less likely to interfere with x-rays and would reduce stress concentrations on the anchor. The CAFC agreed with Arthrex that there was some evidence that contradicts the Board’s decision, such as Arthrex’s expert’s testimony. However, “the presence of evidence supporting the opposite outcome does not preclude substantial evidence from supporting the Board’s fact finding. See, e.g., Falkner v. Inglis, 448 F.3d 1357, 1364 (Fed. Cir. 2006)”. Id. at 14. The CAFC refused to “reweight the evidence.” Id. at 14.
Lastly, the CAFC addressed Arthrex’s argument that an IPR is unconstitutional when applied retroactively to a pre-AIA patent. Since this argument was first presented on appeal, the CAFC could have chosen not to address it. However, exercising its discretion, the CAFC held that an IPR proceeding against Patent ‘541 was constitutional. Patent ‘541 was filed prior to the passage of the AIA, but was issued almost three years after the passage of the AIA and almost two years after the first IPR proceedings, on September 2, 2014. “As the Supreme Court has explained, ‘the legal regime governing a particular patent ‘depend[s] on the law as it stood at the emanation of the patent, together with such changes as have since been made.’” Eldred v. Ashcroft, 537 U.S. 186, 203 (2003) (quoting McClurg v. Kingsland, 42 U.S. 202, 206 (1843)). Accordingly, application of IPR to Arthrex’s patent cannot be characterized as retroactive.” Id. at 18. The CAFC further explained that even if Patent ‘541 issued prior to the AIA, an IPR would have been constitutional. “[t]he difference between IPRs and the district court and Patent Office proceedings that existed prior to the AIA are not so significant as to ‘create a constitutional issue’ when IPR is applied to pre-AIA patents.” Id. at 18.
Takeaway
- Slight changes in language does not create a new theory of motivation to combine.
- However, a new theory of motivation to combine
may exist when:
- the Board
creates a new theory of obviousness by mixing arguments from two different
grounds of obviousness presented in a Petition.
- In re Magnum Oil Tools Int’l, Ltd., 829 F.3d 1364, 1372–73, 1377 (Fed. Cir. 2016).
- the claim construction by the Board varies
significantly from the uncontested construction announced in an institution
decision.
- SAS Institute v. ComplementSoft, LLC, 825 F.3d 1341, 1351 (Fed. Cir. 2016).
- the Board
relies upon a portion of the prior art, as an essential part of its obviousness
finding, that is different from the portions of the prior art cited in the
Petition.
- In re NuVasive, Inc., 841 F.3d 966, 971 (Fed. Cir. 2016).
- the Board
creates a new theory of obviousness by mixing arguments from two different
grounds of obviousness presented in a Petition.
Examples and procedures in the specification may provide necessary objective boundaries for a term of degree in the claims
WHDA Blogging Team | September 18, 2019
Guangdong Alison Hi-Tech Co., v. ITC, Aspen Aerogels, Inc. (intervenor)
August 27, 2019
Wallach, Hughes, and Stoll (Opinion author).
Summary
The ALJ at ITC held, later affirmed by the Commission, that the claims of U.S. Patent No. 7,078,359 were not invalid due to indefinites and anticipation and were infringed by Alison’s importation of the accused products. The Federal Circuit affirmed the validity determination.
Details
The ‘359 patent, titled “Aerogel Composite with Fibrous Batting,” is directed to an improvement in aerogel composite products. Specifically, the ‘359 patent specifically discloses an aerogel composite that uses a lofty batting to reinforce the aerogel in a way that maintains or improves the thermal properties of the aerogel while providing a highly flexible, drapeable form. The ‘359 patent is an improvement over prior aerogel composites, which suffer from low flexibility, low durability, and degraded thermal performance. Independent claim 1 of the ‘359 patent is:
1. A composite article to serve as a flexible, durable, light-weight insulation product, said article comprising a lofty fibrous batting sheet and a continuous aerogel through said batting.
Regarding the indefinites, the ALJ and the Commission rejected the Alison’ indefinite argument arguing that the phrase “lofty fibrous batting” in claim 1 is indefinite. The Federal circuit affirmed based on the “reasonable certainty” indefiniteness standard. Specifically, as set forth in Nautilus, Inc. v. Biosig Instruments, Inc., a patent’s claims are definite if the claims, viewed in light of the specification and prosecution history, inform those skilled in the art about the scope of the invention with reasonable certainty. A patentee need not define his invention with mathematical precision in order to comply with the definiteness requirement. Patents with claims involving terms of degree must provide objective boundaries for those of skill in the art in the context of the invention. Intrinsic evidence such as the claims, figures, written description, or prosecution history of a patent can provide the necessary objective boundaries. In this case, the Federal Circuit acknowledges that the phrase “lofty … batting” is a term of degree. However, the Federal Circuit held that the written description of the ‘359 patent provides objective boundaries for the term. The ‘359 patent specification first expressly defines “lofty … batting” as “a fibrous material that shows the properties of bulk and some resilience (with or without full bulk recovery).” The specification explains that “bulk” refers to the air or openness created by the web of fibers in a lofty batting. It further explains that a batting is “sufficiently resilient” if it “can be compressed to remove the air (bulk) yet spring back to substantially its original size and shape.” Furthermore, the specification details functional characteristics of a “lofty … batting.” Furthermore, the specification provides specific examples of commercial products that can qualify as a lofty batting, and a detailed discussion of seven examples of aerogel composites manufactured in accordance with the claimed invention, along with corresponding test results. Furthermore, during the prosecution, in the Statement of Reasons for allowance, the examiner distinguished the prior art based on the phrase “lofty fibrous batting.” Thus, the Federal Circuit categorize this case in the same class as previous cases like Sonix and Enzo, where examples and procedures in the written description provided sufficient guidance and points of comparison to render claim terms not indefinite.
The Federal Circuit also specifically rejected several Alison’ arguments in support of its indefiniteness challenge. First, Alison argued that the ‘359 patent provides no objective boundary between “some resilience,” which would infringe, and “little to no resilience,” which would not. In other words, in Alison’ view, the ‘359 patent fails to disclose precisely how much resilience is enough to satisfy the claim. The Federal Circuit dismissed this argument by holding that Alison was seeking a level of numerical precision beyond that required when using a term of degree. Next, Alison argued that the ‘359 patent offers two independent approaches, a thermal properties’ approach and a compressibility and resilience approach, to assess loftiness, without indicating which approach to use. The Federal Circuit dismissed this argument by holding that Alison has not provided any evidence that the different methods of measurement described in the ‘359 patent lead to different results. Lastly, Alison argued that the Commission’s indefiniteness analysis is irreconcilable contradiction with its claim construction. The ALJ provided a single reason for holding the claim term not indefinite because the specification states that “a lofty batting is sufficiently resilient if after compression for a few seconds it will return to at least 70% of its original thickness.” Yet, in construing the term, the ALJ declined to limit “lofty … batting” to this specific example of “resilience” in the specification, namely, “it will return to at least 70% of its original thickness.” The Federal Circuit dismissed this argument by holding that examples in the specification may be used to inform those skilled in the art of the scope of the invention with reasonable certainty, thus demonstrating that the term is not indefinite, without being directly construed into the claim.
Regarding the anticipation, Alison uses the same reference Ramamurthi, which was considered by the patent examiner during prosecution and later by the Board in denying Alison’s IPR petition. One of Alison’s argument is that Ramamurthi recites “glass wool” as a preferred fiber, which should be synonymous with the “fiber glass” expressly identified as a lofty batting by the ‘359 patent. However, the Commission rejected Alison’s anticipation argument based on Aspen’s detailed expert testimony, which demonstrated that “fiberglass” and “glass wool” each describe broad categories of materials that are not inherently “lofty.” the Federal Circuit held that the Commission’s determination is supported by substantial evidence, and rejected to reweight the evidence.
In conclusion, the Federal Circuit affirmed that the claims of the ‘359 patent are valid.
Take away
- In drafting specification, the drafter should provide some detailed examples of the invention, which can provide sufficient guidance and points of comparison to render certain claims terms definite.
- In defining claims terms in the specification, numerical precision is not necessarily needed to satisfy the definiteness requirement.
No obviousness where hindsight argument relied upon “cherry-picked” data
WHDA Blogging Team | September 11, 2019
Sanofi-Aventis et al. v. Dr. Reddy’s Laboratories et al.
August 14, 2019
Lourie, Moore, Taranto. Opinion by Lourie
Summary
The CAFC upheld the nonobviousness of claims where the lead compound was known, but no cited art would have motivated the skilled artisan to arrive at the claimed compound. The claimed compound was a specific modification of the lead compound, and no analogous modification was found in the art. The CAFC rejected “cherry-picked” data which formed a “convoluted” obviousness argument, and stated that there is no per se rule that a compound is obvious where there is only a small change from a lead compound.
Details
Technical background
Sanofi owns U.S. Patent Nos. 5,847,170 and 8,927,592, which claim cabazitaxel (commercially known as Jevtana) and methods of use thereof. This drug is used to treat drug-resistant prostate cancers. Cabazitaxel is only the third taxane drug to obtain FDA approval, since the first being in 1992. Cabazitaxel is similar to docetaxel (approved in 1996) as shown below:
Rather than hydroxyl groups at the C7 and C10 positions, Cabazitaxel has methoxy groups.
Procedural background
The Defendants filed an ANDA alleging that the ‘592 and ‘170 patents are invalid as being obvious. While the district court case arising out of the ANDA litigation was pending, the PTAB instituted an IPR of the ‘592 patent. The PTAB found some claims 1-5 and 7-30 of the ‘592 patent unpatentable as being obvious and denied Sanofi’s motion to amend. Sanofi appealed the denial of the motion to amend (this has been remanded to PTAB in another CAFC case from earlier in 2019), but did not appeal the invalidity decision with respect to claims 7, 11, 14-16 and 26. Sanofi filed a statutory disclaimer with respect to these claims.
Back at the district court, even though the statutory disclaimer had been filed and the district court was notified, the court held that a case or controversy still existed with respect to the disclaimed claims, and held that they were obvious. The court also held that claims 1 and 2 of the ‘170 patent were not invalid as being obvious. Sanofi appealed the district court’s conclusion that a case or controversy exists with respect to the claims of the ‘592 patent, and some of the defendants appealed the district court’s decision regarding the lack of obviousness of claims 1 and 2 of the ‘170 patent.[1]
District Court
The defendants argued that cabazitaxel would have been obvious in view of docetaxel as a lead compound. The district court based its conclusion of non-obviousness on seven witnesses and 17 prior art references. The court found that a person skilled in the art would have been motivated to use docetaxel as a lead compound, but would not have been motivated to replace the C7 and C10 hydroxyl groups with methoxy groups to arrive at cabazitaxel.
The defendants alleged that it would have been obvious to modify docetaxel by increasing lipophilicity, in order to interfere with a protein called Pgp, which is involved in drug resistance. The defendants cited to two references, Hait and Lampidis.
In Hait, the authors studied phenothiazines, not taxanes. They showed that by increasing lipophilicity, the cancer cell would be more sensitive to the drug. However, this related to a different class of drugs, which are structurally very different from taxanes. Also, Hait only disclosed hypothetical binding models with respect to Pgp.
In Lampidis, the authors found that increasing the lipophilicity of a positively charged dye caused accumulation in drug resistant cells. But, Lampidis also never disclosed taxanes. Further, taxanes do not have a positive charge, unlike the dye of Lampidis.
Next, the district court considered a reference (Commercon) that identified the C2’, C3’, C7, C9 and C10 positions of paclitaxel as “flexible” and suitable for modification, in combination several other references regarding the activity of taxane analogs. Cumulatively, the district court found that the defendants had “cherry-picked” data from the references. The district court was persuaded by Sanofi’s expert who explained that taxane modifications had been considered at positions C2, C4, C5, C7, C8, C9, C10, C11, C12, C13, C14, C2’ and C3’, but that it would not have been obvious to modify just C7 and C10 to be methoxy groups.
The district court also found secondary considerations. Despite significant efforts by others, cabazitaxel was only the third taxane to get FDA approval. Furthermore, Jevtana achieved significant commercial success.
CAFC
At the CAFC, the defendants argued that that the district court erred, and that one skilled in the art (1) would have been motivated to modify docetaxel to decrease Pgp-related drug resistance, (2) knew that this could be done by increasing lipophilicity at the C7 and C10 positions, and (3) knew that the methoxy substitutions were the most conservative modifications.
However, the CAFC agreed with Sanofi that this obviousness theory is based on hindsight and said that it is “convoluted.” First, the CAFC indicated that Hait and Lampidis would not have provided a reason to make docetaxel more lipophilic, for the same reasons as the district court. But, even if there was a reason to make docetaxel more lipophilic, the cited art was highly varied in its suggested modifications of the lead compound. No single reference taught any type of simultaneous change at the C7 and C10 positions, and certainly not methoxy substitutions.
As to the Commercon reference, the defendants argued that C7, C9 and C10 are taught to be flexible, but that C3’ and C2’ were “crucial.” However, the text of the reference itself stated that C3’ is flexible and C2’ can be modified under certain conditions.
Finally, the defendants argued that even though no reference shows only the C7 and C10 methoxy substitutions, this would have been obvious because they are known to be small, conservative changes that increase lipophilicity. They pointed to a methylthiomethoxy substitution as also suggesting a methoxy substitution. The CAFC refuted this as hindsight, since there was no evidence that these two types of substitutions would behave similarly.
The defendants also argued that where there are a small number of changes to try, it is obvious to make a single change to a lead compound, particularly where the change is known to have desirable properties. Again, there was no showing of beneficial properties from methoxy substitutions of C7 and C10 in a taxane. The CAFC also stated that small changes are not prima facie obvious.
Finally, the CAFC found no clear error with the secondary considerations and affirmed the district court analysis of non-obviousness of the claims.
Takeaway
-If an obviousness argument relies on data that can be fairly characterized as “cherry picked,” odds are it is an unsuccessful hindsight argument.
-There
is no per se rule that a “small change” from a lead compound results in a
conclusion of obviousness.
[1] This decision also includes an extensive discussion of why the district court did not have authority to hold that there is a case or controversy regarding disclaimed claims. Discussion of that issue is omitted here.
Don’t raise issues for the first time before the CAFC unless it falls into one of the limited exceptions: the CAFC affirms the stylized letter “H” mark to be confusingly similar
WHDA Blogging Team | September 3, 2019
Hylete LLC v. Hybrid Athletics, LLC
August 1, 2019
Moore, Reyna, Wallach (Opinion by Reyna)
Summary
On appeal, Hylete LLC (“Hylete”) argued, for the first time, that the Board erred in its analysis by failing to compare its stylized “H” mark with “composite common law mark” of the Hybrid Athletics, LLC (“Hybrid”), comprising of the stylized letter “H” appearing above the phrase “Hybrid Athletics” and several dots underneath. By not presenting the argument during the opposition proceedings or at the request for reconsideration, the CAFC held that Hylete waived its argument, and upheld the decision of the Board.
Details
Hylete LLC applied to register a design mark for a stylized letter “H” in International Class 25 for “[a]thletic apparel, namely, shirts, pants, shorts, jackets, footwear, hats and caps.” Upon examination, the mark was approved for publication, and the mark published for opposition in the Trademark Official Gazette on June 18, 2013. After filing an extension of time to oppose, on October 16, 2013, Hybrid Athletics, LLC filed a Notice of Opposition on the grounds of likelihood of confusion with its mark under Section 2(d) of the Lanham Act. Hylete and Hybrid’s marks are as shown below:
Hybrid pleaded ownership in Application No. 86/000,809 for its design mark of a stylized “H” in connection with “conducting fitness classes; health club services, namely, providing instruction and equipment in the field of physical exercise; personal fitness training services and consultancy; physical fitness instruction” in International Class 41. Hybrid also pleaded common law rights arising from its use of the mark on “athletic apparel, including shirts, hats, shorts and socks” since August 1, 2008. The following images were submitted by Hybrid as evidence to show the use of the mark on athletic apparel:
All of the images showed the stylized “H” mark appearing above the phrase “Hybrid Athletics” and several dots underneath the phrase.
Hylete’s argument before the Board focused on the two stylized “H” designs having a different appearance, with each mark having its own distinct commercial impression. On December 15, 2016, the Board issued a final decision, sustaining Hybrid’s opposition, concluding that Hylete’s mark is likely to cause confusion with Hybrid’s mark. Hylete filed a request for reconsideration of the Board’s final decision, including an argument that “[t]here was no record evidence demonstrating that consumers would view [Hylete’s] mark as a stylized H” as a part of its commercial impression argument. The Board found that this argument is contrary to Hylete’s own characterization of the mark in its brief, as well as the testimony of its CEO, which admitted that both logos were Hs. The Board rejected Hylete’s argument and denied the request for rehearing. Hylete appealed the decision of the Board to the CAFC.
On appeal, Hylete argued that the Board erred in its analysis by failing to compare Hylete’s stylized “H” mark with Hybrid’s “composite common law mark,” comprising of the stylized letter “H” appearing above the phrase “Hybrid Athletics” and several dots underneath, as shown below:
In its appeal brief, Hylete stated as follows: “this appeal may be summarized into a single question: is Hylete’s mark sufficiently similar to [Hybrid’s] composite common law mark to be likely to cause confusion on the part of the ordinary consumer as to the source of the clothing items sold under those marks?”
In response, Hybrid stated that the “composite common law mark” arguments were never raised before the Board and are therefore waived.
The CAFC considers arguments made for the first time on appeal under the following limited circumstances:
- When new legislation is passed while an appeal is pending;
- When there is a change in the jurisprudence of the reviewing court or the Supreme Court after consideration of the case by the lower court;
- Even if the parties did not argue and the court below did not decide, when appellate court applies the correct law, if an issue is properly before the court; and
- Where a party appeared pro se.
Hylete did not dispute that the argument was not raised before the Board. Instead, Hylete contended that the argument has not been waived, because the Board “sua sponte” raised the issue of Hybrid’s common law rights in its final decision. The CAFC disagreed, stating that Hylete’s failure to raise the argument in the request for reconsideration negates its contention.
As Hylete could have raised the issue of Hybrid’s “composite common law mark” in the opposition proceedings or in the request for reconsideration, but did not do so, and as none of the exceptional circumstances in which the CAFC considers arguments made for the first time on appeals applies, the CAFC held that the issues raised by Hylete on appeal have been waived.
As the only issues Hylete raised on appeal concerned Hybrid’s “composite common law mark,” the CAFC affirmed the decision of the Board.
Takeaway
- Raise all possible arguments prior to appeal.
- It seems that the record before the Board lacked evidence that the letter H is conceptually weak or diluted in the context of the goods or in general – perhaps more evidence before the Board would have helped Hylete in this case. At the same time, perhaps presenting such evidence is not desirable to Hylete, as that would be an admission that its own mark is weak.
