Innovention Toys v. MGA Entertainment et al (CAFC 2010-1290) precedential

Infringement

A determination of infringement involves two steps: First, the court determines the scope and meaning of the asserted patent claims. The court then compares the properly construed claims to the allegedly infringing device to determine whether all of the claim limitations are present, either literally or by a substantial equivalent. Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1454 (Fed. Cir. 1998) (en banc). The first step, claim construction, is a question of law, reviewed de novo. Id. (citing Markman v. Westview Instruments, Inc., 52 F.3d 967, 979 (Fed. Cir. 1995) (en banc)). In contrast, infringement, whether literal or under the doctrine of equivalents, is a question of fact. Bai v. L & L Wings, Inc., 160 F.3d 1350, 1353 (Fed. Cir. 1998). Accordingly, a court may determine infringement on summary judgment "when no reasonable jury could find that every limitation recited in the properly construed claim either is or is not found in the accused device." Id.

Infringement hinged on whether the accused product game pieces moved. The instructions said they could. Hence, the courts found infringement.

(Non)Obviousness

MGA's failure to define "the level of ordinary skill in the art" lead, rather strangely, to nonobviousness by the district court.

The district court also granted Innovention's motion for summary judgment of nonobviousness. Id. at 655. The court first found that the Laser Chess references were non-analogous art because they described electronic, rather than real-world, laser games. Id. at 653. The district court then held that, because MGA had provided no evidence to support a finding as to the level of ordinary skill in the art, MGA's obviousness argument could be pursued only on the basis of what would have been obvious to a layperson. Id. at 654. The court then decided that because MGA had not provided any evidence that a layperson would have known of the Laser Chess articles or would have had any reason to modify the teachings of the Laser Chess references, MGA had failed to state a prima facie case of obviousness. Id.

Less strange was Innovention aptly lining up good secondary considerations for nonobviousness.

Finally, the court found that Innovention had demonstrated several secondary considerations of nonobviousness. These included (1) commercial success based on the sale of 140,000 games by Innovention, a small company with minimal marketing capabilities, and evidence that fans had started clubs and tournaments around the world; (2) long-felt need based on the game's sudden success and media praise; and (3) industry praise based on, inter alia, the game's nomination for Outstanding Technology of the Year by the International Academy of Science and its being one of five finalists for the Toy Industry Association's 2007 Game of the Year award. Id. at 654-55. In light of its summary judgment rulings, the district court granted Innovention's motion for a permanent injunction on January 13, 2010.

On to appeal, where material facts only matter if they matter by a convincing difference between the parties, at least when it comes to summary judgment. In other words, a fact is a fact unless a lawyer can drag it through the mud and make the mud stick.

This court reviews a district court's decision on summary judgment de novo, reapplying the same standard applied by the district court. Iovate Health Scis., Inc. v. Bio-Engineered Supplements & Nutrition, Inc., 586 F.3d 1376, 1380 (Fed. Cir. 2009). Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a).

Under the Patent Act, "[a] patent may not be obtained . . . if the differences between the subject matter sought to be patented 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." 35 U.S.C. § 103(a). Although the ultimate determination of obviousness under § 103 is a question of law, it is based on several underlying factual findings, including (1) the scope and content of the prior art; (2) the level of ordinary skill in the pertinent art; (3) the differences between the claimed invention and the prior art; and (4) evidence of secondary factors, such as commercial success, long-felt need, and the failure of others. Graham v. John Deere Co., 383 U.S. 1, 17-18 (1966). A patent is presumed valid, 35 U.S.C. § 282, and this presumption can be overcome only by clear and convincing evidence to the contrary. Bristol-Myers Squibb Co. v. Ben Venue Labs., Inc., 246 F.3d 1368, 1374 (Fed. Cir. 2001).

The district court erred in finding that the Laser Chess references fail to qualify as analogous art. The court also erred in concluding that the level of skill in the art is that of a layperson.

Obzilla (KSR) doesn't much care whether prior art is analogous, because "a court can take account of the inferences and creative steps that a person of ordinary skill in the art would employ." Note that the case law quotes below all predate KSR.

A. Analogous Art

A reference qualifies as prior art for a determination under § 103 when it is analogous to the claimed invention. In re Clay, 966 F.2d 656, 658 (Fed. Cir. 1992). "Two separate tests define the scope of analogous art: (1) whether the art is from the same field of endeavor, regardless of the problem addressed, and (2) if the reference is not within the field of the inventor's endeavor, whether the reference still is reasonably pertinent to the particular problem with which the inventor is involved." In re Bigio, 381 F.3d 1320, 1325 (Fed. Cir. 2004). "A reference is reasonably pertinent if . . . it is one which, because of the matter with which it deals, logically would have commended itself to an inventor's attention in considering his problem." Clay, 966 F.2d at 659. "If a reference disclosure has the same purpose as the claimed invention, the reference relates to the same problem, and that fact supports use of that reference in an obviousness rejection." Id. Whether a prior art reference is "analogous" is a question of fact. Id. at 658.

Any art is analogous if it lends insight into a solution for a problem claimed as invention. Under the Obzilla regime, that makes "analogous" more of a handle for a legal doctrine than a circumscribed concept. Reading quotes like the above, the fascinating facet is the clarifying recognition that the CAFC under Judge Michel had dug a deep TSM (teaching-suggestion-motivation) hole for itself that ended up being covered over by the Supreme Court in KSR. A more flexible CAFC would have precluded Obzilla from being spawned by SCOTUS. Chief Judge Radar's record is emerging as quite a contrast.

Innovention argues that the Laser Chess articles are non-analogous art because the '242 patent's inventors were concerned with making a non-virtual, threedimensional, laser-based board game, a project that involves mechanical engineering and optics, not computer programming. The district court appears to have agreed, finding that the Laser Chess references were nonanalogous art since each discloses "an electronic version of the '242 patent." Innovention Toys, 665 F. Supp. 2d at 653. The court, however, failed to consider whether a reference disclosing an electronic, laser-based strategy game, even if not in the same field of endeavor, would nonetheless have been reasonably pertinent to the problem facing an inventor of a new, physical, laser-based strategy game. In this case, the district court clearly erred in not finding the Laser Chess references to be analogous art based on this test as a matter of law. See Wyers v. Master Lock Co., 616 F.3d 1231, 1238 (Fed. Cir. 2010) (holding as a matter of law that prior art padlock seals were analogous since directed to the same problem of preventing the ingress of contaminants into the locking mechanism).

The prior art references were "directed to the same purpose," and "relate to the same goal." Computerization does not confer patentability.

The specific combination of game elements disclosed and claimed in the '242 patent thus deals with the problem of game design, and game elements from any strategy game, regardless how implemented, "logically would have commended itself to an inventor's attention in considering [this] problem." Clay, 966 F.2d at 659. Basic game elements remain the same regardless of the medium in which they are implemented: whether molded in plastic by a mechanical engineer or coded in software by a computer scientist.

And so the corrective to the district court -

Because of its error, the district court failed to properly consider the scope and content of the relevant prior art as well as the differences between that art and the claimed invention, including whether one of ordinary skill in the art would have been motivated to combine the teachings of the Laser Chess references with the Swift patent in light of the standard articulated in KSR International Co. v. Teleflex, Inc., 550 U.S. 398 (2007). We therefore remand these factual determinations to the district court to consider in the first instance. Furthermore, should the district court conclude that MGA has made out a prima facie case of obviousness based on the Laser Chess articles and the Swift patent, the court must then determine whether Innovention's secondary considerations overcome MGA's prima facie case.

B. Level of Skill in the Art

It is a common flaw of district courts, particularly in claim construction and adjudication of summary judgment, to not take the perspective of one of skill in the art. Many district court judges hardly cognize the concept. It is this facet that makes patent cases so daunting for district court judges, where more readily understood facts are the bread-and-butter business.

A determination of obviousness requires a factual finding of the level of ordinary skill in the art. 35 U.S.C. § 103(a); Graham, 383 U.S. at 17. Yet, a district court's failure to make a correct finding on the level of skill constitutes reversible error only where it affects the ultimate conclusion under § 103. Custom Accessories, Inc. v. Jeffrey-Allan Indus., Inc., 807 F.2d 955, 963 (Fed. Cir. 1986). For example, no reversal is necessary where a district court makes a determination that an invention would have been obvious to one having the lowest level of skill, i.e., a layperson, because what is obvious to a layperson is necessarily obvious to one with a higher level of skill in the field of the invention. Kloster Speedsteel AB v. Crucible Inc., 793 F.2d 1565, 1574 (Fed. Cir. 1986), overruled on other grounds by Knorr-Bremse Systeme Fuer Nutzfahrzeuge GMbH v. Dana Corp., 383 F.3d 1337 (Fed. Cir. 2004) (en banc). Conversely, no reversal is necessary where a district court makes a determination of nonobviousness based on a finding of the highest possible level of skill in the relevant art, as fewer inventions are obvious to a person with a lower level of skill than to one with a higher level of skill. Id. A less sophisticated level of skill generally favors a determination of nonobviousness, and thus the patentee, while a higher level of skill favors the reverse. See Union Carbide Corp. v. Am. Can Co., 724 F.2d 1567, 1573 (Fed. Cir. 1984).

In this case, the district court found that MGA had failed to provide any evidence of the level of skill in the art, and thus concluded that MGA's obviousness argument could be pursued only on the basis of what is obvious to a layperson. Innovention Toys, 665 F. Supp. 2d at 654. In so concluding, the district court erred. While MGA is permitted to argue that any level of skill, and thus the skill of a layperson, would suffice to support a holding of obviousness, the factual record in this case does not support such a finding. Here, Innovention conceded to the district court that the level of ordinary skill in the art was greater than that of a layperson. Specifically, Innovention asserted that the development of a threedimensional game would not, in fact, be easy for the average layperson, as it took Innovention's game creators, a Ph.D. in mechanical engineering and two mechanical engineering students, a year and a half to develop and finalize Innovention's game, J.A. 1884 n.10, and that Innovention's patent reveals that the claimed invention requires an understanding of geometrical optics, J.A. 1885. The district court appeared to agree, stating that "it seems some knowledge of mechanical engineering or optics is required." Innovention Toys, 665 F. Supp. 2d at 654. The district court thus clearly erred in basing its obviousness analysis on what would have been obvious to a layperson notwithstanding evidence in the record and its apparent factual finding that one of ordinary skill in the art would possess a higher level of skill in the art.

Because the district court found nonobviousness based on an inappropriately low level of skill in the art, the error was not harmless. Kloster, 793 F.2d at 1574. Accordingly, on remand, the district court must make a finding on the level of skill in the art and base its obviousness analysis on that level of skill.

Infringement affirmed. Injunction vacated. Remanded for an obviousness determination.