Honeywell International Inc. v. Mexichem Amanco Holding S.A. DE C.V.
865 F.3d 1348 (Fed. Cir. 2017)
Authored by Grace Coller
Statement of Facts: Honeywell International Inc. (“Honeywell”) owns the ’366 patent, which uses both a 1,1,1,2-tetrafluoropropene (“HFO-1234yf”, an HFC compound) refrigerant and a polyalkylene glycol (“PAG”) lubricant in its heat transferring systems, such as air conditioners.
Mexichem Amanco Holding S.A. DE C.V. (“Mexichem Amanco”) and Daikin Industries (“Daikin”) (together, “Mexichem”) filed requests for inter partes re-examination of the ’366 patent from the Patent Trial and Appeal Board (“PTAB”). The PTAB consolidated the requests into a single proceeding.
The PTAB found that parts of the ’366 patent were not obvious over Japanese Patent H04-110388 (“Inagaki”). Its Examiner found that Inagaki expressly discloses HFO-1234yf. Additionally, the Examiner found that the secondary references provided—Magid, Acura/Patentee’s Admissions, and Bivens—merely teaches the use of PAG lubricants with HFC refrigerants. Therefore, the Examiner said that the claims would have been “obvious over the cited prior art at the time of invention.” Honeywell International Inc. v. Mexichem Amanco Holding S.A. DE C.V., 865 F.3d 1348, 1351 (Fed. Cir. 2017).
Honeywell appealed to the PTAB, claiming that Inagaki does not teach the use of HFO-1234yf refrigerant with any particular lubricant, let alone the PAG lubricant, and that it teaches the HFO refrigerant to be combined with “immiscible lubricants, such as those commonly employed in the prior art.” Id. (emphasis in original). Honeywell also claimed that at the time of its invention, HFO refrigerants were disfavored and known to be unstable and reactive; and PAG lubricants were known to be hygroscopic and therefore unstable as well. Therefore, because they were both considered to be unstable, ordinary skill in the art “would not have been led by Inagaki to combine HFO-1234yf . . . with a PAG lubricant.” Id. Secondary evidence submitted by Honeywell included: unexpected stability of HFO-1234yf with PAG over other similar lubricants; longstanding need for environmentally-favorable compositions; and skepticism over whether such environmentally-favorable compounds existed.
The PTAB agreed with its Examiner and rejected some claims of the ’366 patent as obvious. It found first that PAGs were known lubricants for HFC refrigerants, as evidenced by Magid, Acura/Patentee’s Admissions, and Bivens. So, because Inagaki teaches that known HFC refrigerants are compatible with known lubricants, it would have been obvious to combine HFC-1234yf with PAG.
Second, PTAB rejected Honeywell’s argument that the combination would not have been obvious due to its unexpected stability. The PTAB said that HFO-1234yf’s stability when combined with PAG is an “‘inherent propert[y] of an otherwise known refrigerant’ that could not confer patentable weight to the claimed mixture.” Id. at 1352 (emphasis in original). It also rejected this argument in light of JP H5-85970A (“Omure”), which states that a different unsaturated propene HFO compound has relatively superior stability in PAG. Therefore, the PTAB reasoned that, “although Honeywell’s evidence persuasively shows the unpredictability of ‘how various refrigerants would have reacted with various lubricants,’” Omure says that one of ordinary skill in the art would no more have expected failure than success with respect to the stability of HFOs and PAGs. Id. at 1353. In other words, one of ordinary shill would have eventually come up with the combination through mere routine testing.
Lastly, the PTAB said there was a lack of nexus between Honeywell’s secondary evidence and its claimed composition.
Procedural History: Honeywell timely appealed to the Federal Circuit the PTAB’s decision that the claim was obvious.
Specifically, Honeywell argued that the PTAB erred in “(1) finding a motivation to combine the references with a reasonable expectation of success, (2) rejecting Honeywell’s objective evidence, and (3) relying on a new ground of rejection when it relied on Omure, without giving Honeywell notice and opportunity to respond.” Id. at 1353.
Questions Presented: Whether the claim of Honeywell’s ’366 Patent would have been obvious over the cited prior art at the time of invention.
Specifically, whether the PTAB erred in (1) finding a motivation to combine the references with a reasonable expectation of success, (2) rejecting Honeywell’s objective evidence, and (3) relying on a new ground of rejection when it relied on Omure, without giving Honeywell notice and opportunity to respond.
Holding: The Federal Circuit vacated and remanded the case, finding that the PTAB erred in its analysis and, therefore, its decision.
Reasoning: As to the first question presented, the Federal Circuit found that the PTAB “committed legal error by improperly relying on inherency to find obviousness and in its analysis of motivation to combine the references.” Id. at 1354. The Federal Circuit reasoned that the PTAB originally dismissed Honeywell’s evidence regarding unpredictability and unexpected properties of the claimed combination by saying they were inherent and not of patentable weight. However, the PTAB then relied on that same evidence, conceding that it persuasively established “overall unpredictability” in the art. But then the PTAB dismissed the claim because the claimed combination’s stability unpredictability would have led to routine testing which would have led to the claimed combination’s obvious discovery.
As to the second question presented, the Federal Circuit found that the PTAB erred in dismissing Honeywell’s objective evidence of unpredictability in the art. Specifically, the PTAB erred in reasoning that one of ordinary skill would no more have expected failure than success in combining HFO-1234yf and PAG. The PTAB’s reasoning was that “one of ordinary skill would not have expected success, because Honeywell’s evidence persuasively established the “overall unpredictability” in the art, but then glossed over that finding with a “routine testing” rationale because Honeywell did not persuasively prove an expectation of failure.” Id. at 1356 (emphasis in original). The Federal Circuit then held that saying one would no more have expected failure than success is not a valid reason for finding an invention to be obvious.
Finally, as to the third question presented, the Federal Circuit agreed that the PTAB relied on a new ground of rejection in its reliance on Omure, because the Examiner did not mention or rely on it in his findings and, therefore, Honeywell did not have notice and opportunity to respond to it. The PTAB rejected the Examiner’s conclusions about evidence of unexpected results and instead used Omure to hold the evidence to be unpersuasive. Therefore, the Federal Circuit held that this was a new ground of rejection and, thus, the decision must to be vacated and remanded so that Honeywell may have adequate notice and opportunity to respond to it.
Dissenting Opinion: Judge Wallach concurred with the majority’s decision to vacate and remand the decision, but disagreed with the majority’s conclusion that the PTAB relied on a new ground of rejection when it used Omure as a basis of rejecting Honeywell’s evidence of unexpected results. Judge Wallach reasoned that the Omure discussion alone does not necessitate a different result because it was not the “principal evidence upon which the [PTAB]’s rejection was based.” Id. at 1359 (quoting In re Leitham, 661 F.3d 1316, 1320 (Fed. Cir. 2011) (citation omitted)). Instead, this discussion was merely an explanation of why Honeywell’s evidence did not overcome the Examiner’s obviousness determination. Therefore, because it was an explanation of an existing rejection, rather than a new rejection itself, it was not a new ground for rejection to which Honeywell was entitled notice and opportunity to respond.