In Re: Natural Alternatives, LLC ( 2016 )

NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
IN RE: NATURAL ALTERNATIVES, LLC,
Appellant
______________________
2015-1911
______________________
Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in Nos. 90/010,381,
90/011,454, 90/011,713.
______________________
Decided: August 31, 2016
______________________
STEVEN EDWARD TILLER, Whiteford, Taylor & Preston
L.L.P., Baltimore, MD, argued for appellant. Also repre-
sented by GREGORY MILTON STONE.
MARY L. KELLY, Office of the Solicitor, United States
Patent and Trademark Office, Alexandria, VA, argued for
appellee Michelle K. Lee. Also represented by THOMAS W.
KRAUSE, SCOTT WEIDENFELLER, AMY J. NELSON.
______________________
Before NEWMAN, CLEVENGER, and O’MALLEY, Circuit
Judges.
O’MALLEY, Circuit Judge.
2 IN RE: NATURAL ALTERNATIVES, LLC
Natural Alternatives, LLC (“Natural”) appeals the
judgment of the Patent Trial and Appeal Board (“the
Board”) holding all claims of U.S. Patent No. 6,080,330
(“the ’330 patent”) invalid as obvious. For the reasons
below, we reverse.
BACKGROUND
The ’330 patent is directed to the problem of deicing
road surfaces using a natural product, desugared sugar
beet molasses (“DSBM”).
The Patent in Suit
The claims of the ’330 patent recite a composition con-
taining as a primary ingredient DSBM used for deicing
and preventing ice formation on surfaces. As noted in the
’330 patent, “desugared molasses is considered a waste
product,” and “[t]he price of desugared molasses is less
than half of that of regular molasses. ’330 patent, col. 2,
ll. 58-63. The inventors of the ’330 patent sought to
repurpose this waste product as a natural alternative to
the inorganic rock salts commonly used in deicing road
surfaces. Claims 1 and 6 of the ’330 patent are repre-
sentative, and are reproduced in full below:
1. A composition for deicing and inhibiting the
formation of ice and snow on surfaces comprising
from 25-99% by volume of desugared sugar beet
molasses having 60-75% suspended solids and
1-75% by volume of a component selected from the
group consisting of sodium formate, calcium mag-
nesium acetate, potassium acetate, ethylene gly-
col, di- ethylene glycol, magnesium chloride,
calcium chloride, sodium chloride, potassium chlo-
ride and mixtures thereof.
Id. at col. 9, ll. 6-14.
IN RE: NATURAL ALTERNATIVES, LLC 3
6. A composition for deicing or inhibiting the for-
mation of ice and snow on surfaces comprising
a mixture of
desugared sugar beet molasses and
rock salt
including from 8-10 gallons of desugared beet mo-
lasses per ton of rock salt.
Id. at col. 9, ll. 29-33.
The ’330 patent’s written description explains that the
claimed composition has the advantages of being more
environmentally friendly, less expensive, less corrosive,
and more effective (achieving lower freezing tempera-
tures) than prior art products, such as mixtures of inor-
ganic salts. Id. at col. 3 l. 51-col. 4 l. 4. The written
description also notes that the claimed composition does
not have the offensive odor inherent in the organic fer-
mentation products of certain other prior art products.
Id. Natural markets the product claimed in the ’330
patent under the trademark GEOMELT®.
Two key features of the ’330 patent for purposes of the
present appeal are the processes for manufacturing
DSBM, and, relatedly, the low sugar content of DSBM.
The ’330 patent teaches two methods of manufacture,
namely (a) a process known as the “Steffen” process, and
(b) an older, multi-step process similar to a centrifuging
process. This older process involves eight steps:
The older of two most widely used processes of
removing sugar from sugar beets involves clean-
ing the beets and slicing them into thin chips. The
sliced beets are then subject to a sugar extraction
process whereby hot water is passed over the
beets for approximately one (1) hour. This process
removes most, but not all, of the sugar from the
beets in the form of beet “juice.” The beets are
4 IN RE: NATURAL ALTERNATIVES, LLC
then pressed in screw presses to remove the re-
maining sugar containing juice therefrom. The
juice is then subjected to a process called carbona-
tion, where small clumps of chalk are provided in
the juice to filter out any nonsugars. The chalk is
then filtered from the juice, which has evaporated
to form a syrup. The syrup is then boiled until
sugar crystals form therein. Once the crystals
form, the resulting mixture is centrifuged to sepa-
rate the crystals from the remaining liquor. The
crystals become commercial grade sugar; the liq-
uor is the desugared sugar beet molasses that
forms the anti-freezing and deicing composition of
the present invention.
’330 patent, col. 5 ll. 9-27. The ’330 patent discloses that
DSBM made using the Steffen process “exhibits slightly
better anti-freezing and deicing properties” than DSBM
made by the centrifugation process. The ’330 patent
nonetheless teaches that DSBMs made from both process-
es “will generally serve equally well” in the claimed
composition and “the manner of producing the [DSBM] is
not critical to the present invention.” Id. at col. 5, ll. 37-
44.
Procedural Background
Univar, a licensee of the ’330 patent, filed three third
party requests for reexamination of the ’330 patent. The
examiner found a substantial new question of patentabil-
ity and proceeded to merge these three reexamination
proceedings on November 8, 2011. The examiner held the
challenged claims invalid as obvious in view of three
primary prior art references: Polish Patent No. PL 164018
B1 to Zdzislaw, published Nov. 7, 1990 (“Zdzislaw”); U.S.
Patent No. 5,639,319 to Daly (“Daly”); and a journal
article titled “Winter is Hell,” published July 1997 in
Public Works (“Public Works”).
IN RE: NATURAL ALTERNATIVES, LLC 5
On appeal to the Board, Natural argued that Zdzislaw
taught a molasses composition containing “approximately
50% of sugar,” such that Zdzislaw’s beet molasses is not
equivalent to the ’330 patent’s DSBM. The Board rejected
Natural’s argument, finding that Zdzislaw disclosed a
deicing composition having the relative amounts of DSBM
and ethylene glycol recited in representative claim 1. The
Board thus affirmed the examiner’s rejections of claims 1-
23 and 25-55 of the ’330 patent as obvious in view of
Zdzislaw and Daly, or in view of Zdzislaw, Daly, and
Public Works. Joint Appendix (“J.A.”) 24.
The Board also affirmed the examiner’s rejection of
representative claim 6 based on Public Works’ disclosure
of mixing a beet molasses product with a salt-containing
mix. The Board noted that Public Works disclosed deicing
mixtures containing 8 gallons of a fermented beet molas-
ses product per ton of salt containing mix (25% road salt
and 75% crushed cinders). The Board also found that
Public Works discloses a composition comprising “from
13% to 100% by volume DSBM and 0% to 87% by volume
of rock salt, which overlapped the ranges of the DSBM
and the second component as claimed.” J.A. 649.
Finally, the Board rejected Natural’s objective indicia
of nonobviousness, holding that Natural failed to estab-
lish a nexus between the claimed invention and industry
praise for GEOMELT®. The Board found that the prior
art disclosed all the advantages of GEOMELT®’s compo-
sition, and that Natural therefore had failed to establish
that GEOMELT® has an advantage over the prior art.
Natural moved for rehearing of the Board’s decision,
but the Board denied Natural’s request. J.A. 36. Natural
now appeals.
DISCUSSION
Natural argues that the Board impermissibly recon-
structed the claimed invention of the ’330 patent from
6 IN RE: NATURAL ALTERNATIVES, LLC
multiple references, including Zdzislaw, Daly, and Public
Works. Hindsight bias, Natural asserts, is evident in the
Board’s reliance on selective portions of each of these
disparate references to find all of the limitations of the
recited claims. The PTO responds that the Board’s find-
ings of fact are supported by substantial evidence, and the
Board’s conclusion of obviousness was not erroneous.
We discuss representative claims 1 and 6 of the ’330
patent in turn.
Standard of Review
Obviousness is a question of law based on underlying
facts. In re Gartside, 203 F.3d 1305, 1316 (Fed. Cir.
2000). The PTAB’s legal conclusion of obviousness is
reviewed de novo; its factual findings are reviewed for
substantial evidence. In re Cuozzo Speed Techs., LLC,
793 F.3d at 1280.
Substantial evidence “means such relevant evidence
as a reasonable mind might accept as adequate to support
a conclusion.” Consol. Edison Co. v. NLRB, 305 U.S. 197,
229 (1938); accord In re Morsa, 713 F.3d 104, 109 (Fed.
Cir. 2002).
Representative Claim 1
Natural contends that the Board and the examiner
never established a prima facie case of obviousness be-
cause they improperly combined the Zdzislaw, Daly, and
Public Works references without addressing the funda-
mental differences between those references and the
challenged claims of the ’330 patent. Natural further
argues that, even if the examiner had established a prima
facie case of obviousness, the Board’s obviousness conclu-
sion was infected by hindsight bias because the Board
failed to consider the extensive objective indicia of nonob-
viousness in the record.
IN RE: NATURAL ALTERNATIVES, LLC 7
The PTO responds that the Board correctly rejected
Natural’s arguments on appeal and that the Board’s
factual findings regarding motivation to combine are due
substantial deference. For the reasons below, we agree
with Natural that the Board erred in concluding that the
challenged claims of the ’330 patent are invalid as obvi-
ous. Accordingly, we reverse the judgment of the Board.
Natural contends that Zdzislaw, the main reference
relied on by the examiner and the Board, does not teach
DSBM, which is expressly recited in the ’330 claims as the
primary starting ingredient for the claimed deicing com-
position. According to Natural, Zdzislaw instead teaches a
beet molasses product that “contains approximately 50%
of sugar.” J.A. 52. Zdzislaw’s molasses, Natural argues,
is thus a far cry from the desugared beet molasses recited
in the ’330 patent. Natural emphasizes that the ’330
patent teaches a process that “removes most, but not all,
of the sugar from the beets in the form of beet ‘juice.’”
Appellant Reply Br. at 3 (quoting ’330 patent at col. 3, ll.
51-57; col. 5, ll. 7-16).
In patent reexamination, it is the examiner’s burden
to demonstrate a prima facie case of obviousness. Even
before Natural had any obligation to proffer any evidence
supporting the validity of the ’330 patent, the examiner
was required to set forth sufficient facts supporting the
examiner’s position that the prior art disclosed the limita-
tions of the ’330 patent claims in a manner that renders
the claimed invention obvious. Kennametal, Inc. v. Inger-
sol Cutting Tool Co., 780 F.3d 1376, 1384 (Fed. Cir. 2015)
(noting that the Patent Office “bears the initial burden of
showing a prima facie case of obviousness”). Zdzislaw’s
teaching that the “[m]olasses contains approximately 50%
of sugar” directly contradicts the ’330 patent’s teaching of
a process that “removes most, but not all, of the sugar
from the beets in the form of beet ‘juice.’” Compare
J.A. 52 (Zdzislaw) with ’330 patent at col. 3, ll. 51-57; col.
5, ll. 7-16). Since DSBM is the primary ingredient of the
8 IN RE: NATURAL ALTERNATIVES, LLC
claimed invention, the discrepancy between the amount of
sugar content of the beet molasses taught in Zdzislaw and
the ’330 patent warrants explanation.
The Board attempted to bridge the gap by citing the
’330 patent’s teachings that DSBM could be made through
either of the two processes taught in the ’330 patent: the
newer “Steffen” process, or an older multi-step process.
The Board concluded that the centrifuging method taught
in the Zdzislaw reference must have produced DSBM,
because the ’330 patent taught that either of the two
processes “serve equally well” for purposes of manufactur-
ing DSBM. J.A. 13 (citing ’330 patent, at col. 5, ll. 42-44).
The PTO argues that the Board’s finding that Zdzislaw
teaches DSBM is thus supported by substantial evidence.
The Board’s reasoning rests on the premise that
Zdzislaw discloses a process for making DSBM that is
equivalent to a process taught in the ’330 patent. This
reasoning, however, ignores the express teaching in
Zdzislaw that the beet molasses product “contains approx-
imately 50% of sugar.” J.A. 52. Zdzislaw teaches making
molasses in the traditional sugared form. Against this
express teaching of the prior art, it was improper for the
Board to assume, without citing evidence, that there is no
material difference between the beet molasses taught in
Zdzislaw, and the DSBM taught in the ’330 patent or that
the centrifuging process in the former must be the same
as in the latter. See Graham v. John Deere Co., 383 U.S.
1, 17 (1966) (requiring the consideration of “differences
between the prior art and the claims at issue” in an
obviousness analysis). We thus hold that substantial
evidence does not support the Board’s finding that
Zdzislaw discloses DSBM.
Natural next notes that Daly, the second primary ref-
erence relied on by the Board, is in a different technologi-
cal field than the claimed invention of the ’330 patent.
According to Natural, a skilled artisan would not have
IN RE: NATURAL ALTERNATIVES, LLC 9
found Daly to be reasonably pertinent to the problem of
deicing road surfaces because Daly taught the use of
DSBM as tire ballast, which serves the unrelated purpose
of stabilizing and balancing tires.
The PTO responds that Daly is “reasonably pertinent”
prior art because it is directed to the same problem of
preventing freezing in the transportation industry, as
recited in the ’330 patent. Daly provides a motivation to
combine, according to the Board, because it teaches that
DSBM is noncorrosive, environmentally friendly, and has
a very low freezing point.
The “analogous arts test” governs the question of
whether a skilled artisan would have looked to an unre-
lated prior art reference. Under this test, “a reference is
either in the field of the applicant’s endeavor or is reason-
ably pertinent to the problem of which the inventor was
concerned in order to rely on [that] reference as a basis for
rejection.” In re Kahn, 441 F.3d 977, 986-87 (Fed. Cir.
2006) (quoted with approval in KSR Int’l Co. v. Teleflex,
Inc., 550 U.S. 398, 418 (2007)). Daly teaches the use of
DSBM in “a wheel having a pneumatic tire filled with
liquid molasses as ballast.” J.A. 47. While Daly recites
several of the same advantages of DSBM taught in the
’330 patent, the Board ignored the fact that Daly and the
’330 patent are directed to substantially different prob-
lems. Again, it was the burden of the examiner, not
Natural, to set forth a prima facie case explaining why a
person of ordinary skill in the art would have been moti-
vated to combine references in disparate technological
fields. To satisfy this burden, the Board must explain
why a person of ordinary skill in the art would have found
the prior art to be “reasonably pertinent to the problem of
which the inventor was concerned.” Kahn, 441 F.3d at
986-87. Here, the examiner and the Board both sought to
rely on Daly without explaining how the objective of
balancing and stabilizing tires using tire ballast would be
10 IN RE: NATURAL ALTERNATIVES, LLC
reasonably pertinent to the objective of deicing and pre-
venting ice formation on road surfaces.
The PTO, in an attempt to salvage the Board’s deci-
sion, argues that both Daly and the ’330 patent are in the
same general field, namely, the transportation industry.
Our decision in In re Clay, 966 F.2d 656 (Fed. Cir. 1992)
informs our analysis of whether two references in the
same general industry are reasonably pertinent. In Clay,
we held that the prior art reference “cannot be considered
to be within Clay’s field of endeavor merely because both
relate to the petroleum industry.” Id. at 659. Instead, the
prior art was not reasonably pertinent to the claimed
invention because one taught the use of a gel in “uncon-
fined and irregular volumes,” whereas the other taught
the use of the gel in a static, regular container. The
claimed invention in Clay related to storage of oil, where-
as the prior art related to extraction of oil. Under such
disparate conditions, the prior art could not be considered
within the same field of invention. Clay is directly appli-
cable to the present case, where Daly teaches the use of
DSBM as ballast for the purpose of balancing tires. The
’330 patent teaches, in contrast, DSBM as part of a mix-
ture to deice road surfaces. By failing to address this
difference in the objectives of the prior art and the
claimed invention, the examiner failed to set forth a
prima facie case for motivation to combine. The Board
accordingly erred in adopting the examiner’s analysis.
We must therefore reverse the Board’s judgment that the
challenged claims are invalid as obvious.
Upon showing that the Board failed to establish a
prima facie case of obviousness, Natural had no obligation
to present any affirmative arguments or evidence of
nonobviousness. Natural nonetheless argued in the
alternative that even if the Board had established a
prima facie case of obviousness, the Board erred in failing
to consider the extensive objective indicia of nonobvious-
ness regarding the ’330 patent. In response, the PTO
IN RE: NATURAL ALTERNATIVES, LLC 11
argues that the Board properly discounted Natural’s
proffered evidence of objective indicia because Natural
failed to demonstrate a nexus between such objective
indicia and the innovative features of the ’330 patent.
Objective indicia of nonobviousness serve precisely to
“guard against slipping into use of hindsight.” Graham,
383 U.S. at 36. Because such objective indicia help an-
chor abstract analyses of obviousness to actual evidence of
the claimed invention’s benefits over the prior art, this
evidence “must always when present be considered en
route to a determination of obviousness.” Stratoflex, Inc.
v. Aeroquip Corp., 713 F.2d 1530, 1538 (Fed. Cir. 1983).
Objective indicia of nonobviousness is particularly useful
where, as here, the examiner alleges that an ordinarily
skilled artisan would have been motivated to combine
prior art references across disparate fields. In this case,
our observation that the Board failed to establish a prima
facie case of obviousness is further supported by Natural’s
objective evidence of nonobviousness, including industry
praise, commercial success, and licensing. J.A. 946-57,
1115-68. A review of the objective indicia confirms that
the Board’s obviousness conclusion is contradicted by
unrebutted, real world evidence of nonobviousness.
Natural’s evidence included several letters from various
municipalities approving the purchase of GEOMELT®
and extolling the advantages of GEOMELT® over tradi-
tional rock salt. See J.A. 946-57. The evidence further
encompasses no less than fourteen declarations from
customers of GEOMELT®, and the declarations of two
licensees of GEOMELT®. See J.A. 1115-68. These decla-
rations attest to the many benefits of DSBM in lowering
the freezing point of the deicing mixture, reducing corro-
siveness, protecting the environment, and reducing over-
all cost of deicing road surfaces. See id.
The PTO’s singular response to Natural’s evidence of
objective indicia is that Natural failed to demonstrate a
nexus between the asserted objective indicia and the
12 IN RE: NATURAL ALTERNATIVES, LLC
specific advantages of the claimed invention over the prior
art. Appellee Br. at 36-37 (citing In re GPAC Inc., 57 F.3d
1573, 1580 (Fed. Cir. 1995). The PTO correctly notes that
“[i]f commercial success is due to an element in the prior
art, no nexus exists.” Tokai Corp. v. Easton Enterprises,
Inc., 632 F.3d 1358, 1369 (Fed. Cir. 2011). Here, the PTO
does not dispute that GEOMELT® is an embodiment of
the claimed invention. Appellee Br. at 36-37. The PTO’s
arguments on the lack of a nexus thus rise and fall with
its arguments that the claimed invention has no ad-
vantages over the prior art. As discussed above, however,
the prior art merely taught the use of molasses in general,
not DSBM in particular, to deice road surfaces. The PTO
does not address the fact that DSBM was previously
considered a waste product, but can now be used in a
deicing mixture with great efficacy, low environmental
impact, and high cost effectiveness. Thus, we reject the
Board’s conclusions regarding lack of nexus, and we
conclude that the unrebutted objective indicia in the
record confirm that the claimed invention would not have
been obvious.
Representative Claim 6
We next address the Board’s conclusion that repre-
sentative claim 6 of the ’330 patent would have been
obvious to an ordinarily skilled artisan at the time of the
invention. The primary difference between claim 6 and
claim 1 of the ’330 patent is that claim 6 recites a deicing
composition comprising DSBM and rock salt, “including
from 8-10 gallons of [DSBM] per ton of rock salt.” To find
this limitation disclosed, the Board relied on a combina-
tion of Zdzislaw, Daly, and Public Works. As we have
already discussed Zdzislaw and Daly above, we focus here
on the Public Works reference.
Public Works teaches the use of ICE BAN, a “fermen-
tation and distillation” product. J.A. 56. The ’330 patent,
in contrast, expressly teaches the manufacture of DSBM
IN RE: NATURAL ALTERNATIVES, LLC 13
as a byproduct from the production of commercial grade
sugar. J.A. 4. The ’330 patent specifically disparages
Public Works and teaches that Public Works’ disclosed
that fermentation products have various disadvantages
compared to DSBM. Specifically, the ’330 patent notes
that fermentation products “are often biologically reac-
tive,” yielding “strong odors and foam.” J.A. 35. Where
“used on roadways in residential neighborhoods, this
unpleasant and unsightly mess may be tracked into
garages and homes making these compositions totally
unacceptable for use.” Id. The Board failed to address
these differences between the fermentation product of
Public Works and the DSBM taught in the ’330 patent.
The Board also concluded without evidence that a
person of ordinary skill in the art would have “optimized”
the amounts of DSBM and road salt to achieve the
claimed invention. The Board asserted that such optimi-
zation would have been obvious from the teaching in
Zdzislaw that the freezing temperature, viscosity, and
effectiveness of the molasses composition can be modified
by adjusting the relative amounts of the constituent
components in the mixture. The Board, however, never
made any findings regarding the level of skill of an ordi-
narily skilled artisan in the field. And as noted above,
Zdzislaw taught the use of sugared beet molasses, not
DSBM. This difference is critical since DSBM is the
primary ingredient in the claimed invention of the ’330
patent. The Board could not simply assume, without
explanation, that Zdzislaw was directed to the same
composition. Thus, the Board erred in concluding that an
ordinarily skilled artisan would have modified Public
Works in view of Zdzislaw and Daly to achieve the
claimed invention of the ’330 patent. We therefore re-
verse the Board’s judgment of obviousness regarding
representative claim 6.
14 IN RE: NATURAL ALTERNATIVES, LLC
CONCLUSION
As discussed above, the Board erred in finding the
challenged claims of the ’330 patent invalid as obvious.
Accordingly, we reverse the judgment of the Board.
REVERSED
COSTS
No costs.