Ethicon Endo-Surgery, Inc. v. Covidien Lp
812 F.3d 1023
| Fed. Cir. | 2016Background
- Ethicon owns U.S. Patent No. 8,317,070 directed to a surgical stapling device combining staples of differing pre-deformation/formed heights with staples whose legs extend non-parallelly. The specification discloses no special synergy from the combination.
- Covidien petitioned the PTO for inter partes review (IPR) of claims 1–14 as obvious over prior art that separately disclosed varying staple heights and nonparallel staple legs; the PTAB instituted the IPR and the same panel issued the final written decision finding the claims obvious under 35 U.S.C. § 103.
- Ethicon appealed, arguing (1) § 314(d) and due process/statutory limits prohibit the same Board panel from both instituting and deciding the IPR, and (2) the Board erred on obviousness and failed to properly credit secondary considerations (commercial success, long‑felt need).
- The Federal Circuit held it had jurisdiction to hear Ethicon’s challenge to the Board’s authority to issue the final decision, and rejected Ethicon’s constitutional and statutory arguments: the Director may delegate institution to the Board and the same panel may decide institution and the merits absent specific extra‑procedural bias.
- On obviousness, the court affirmed the PTAB’s factual findings (all claim elements in the prior art; motivation to combine; absence of teaching away) and agreed the Board properly discounted secondary considerations because Covidien’s commercial success was attributable to unclaimed features and known prior‑art attributes (e.g., graduated staple heights).
Issues
| Issue | Ethicon's Argument | Covidien/PTO's Argument | Held |
|---|---|---|---|
| Whether § 314(d) or statute/Constitution preclude the same PTAB panel from instituting IPR and issuing the final decision | Same panel creates due process risk of prejudgment; statute assigns institution to the Director and trial to the Board, so functions must be separate | Director may delegate institution to the Board; agency heads have implied authority to subdelegate; combining functions does not violate due process absent extrajudicial bias | The court held § 314(d) does not bar review of final decisions; Director may delegate institution to the Board; same panel may decide institution and merits; no due process violation shown |
| Whether the PTO’s regulation delegating institution to the Board is permissible | Delegation violates the AIA’s text/structure and undermines statutory separation and impartiality | Regulation is a reasonable interpretation under Director’s rulemaking and inherent delegation authority; entitled to Chevron deference | Regulation and delegation upheld; Director has authority to delegate and to promulgate § 42.4(a) |
| Whether the challenged claims are obvious over the prior art | The claimed combination produced unexpected results and secondary considerations (commercial success, long‑felt need) rebut obviousness | Prior art disclosed both features separately; motivation to combine existed; secondary evidence lacked nexus to the claimed combination | The court affirmed obviousness: prior art taught elements and combination was obvious; secondary considerations did not overcome strong prima facie case |
| Whether evidence of Covidien’s commercial success and long‑felt need establishes nonobviousness | Sales of Covidien’s allegedly infringing device show nexus to claimed features; marketing/testimony shows long-felt unmet need | Success attributable to unclaimed features and prior‑art staple height feature; marketing evidence insufficient to show need for the claimed combination | Board’s weighing of secondary considerations affirmed: insufficient nexus and evidence tied success to unclaimed/prior‑art features |
Key Cases Cited
- Withrow v. Larkin, 421 U.S. 35 (1975) (combining investigative and adjudicative functions does not automatically violate due process)
- Liteky v. United States, 510 U.S. 540 (1994) (judicial opinions formed in earlier proceedings are not disqualifying bias absent extrajudicial source)
- KSR Int’l Co. v. Teleflex, Inc., 550 U.S. 398 (2007) (framework for obviousness inquiry)
- Graham v. John Deere Co. of Kan. City, 383 U.S. 1 (1966) (factors governing obviousness analysis)
- Fleming v. Mohawk Wrecking & Lumber Co., 331 U.S. 111 (1947) (agency heads may implicitly delegate duties absent contrary congressional intent)
- Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984) (deference to reasonable agency statutory interpretations)
- In re Cuozzo Speed Techs., LLC, 793 F.3d 1268 (Fed. Cir.) (statutory limitations on review of institution decision and deference to PTO procedures)