In Re: Stepan Company , 868 F.3d 1342 ( 2017 )

United States Court of Appeals
for the Federal Circuit
______________________
IN RE: STEPAN COMPANY,
Appellant
______________________
2016-1811
______________________
Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. 12/456,567.
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Decided: August 25, 2017
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THOMAS J. WIMBISCUS, McAndrews, Held & Malloy,
Ltd., Chicago, IL, argued for appellant. Also represented
by GEORGE WHEELER.
JEREMIAH HELM, Office of the Solicitor, United States
Patent and Trademark Office, Alexandria, VA, argued for
appellee Joseph Matal. Also represented by NATHAN K.
KELLEY, THOMAS W. KRAUSE, FRANCES LYNCH.
______________________
Before LOURIE, MOORE, and O’MALLEY, Circuit Judges.
Opinion for the court filed by Circuit Judge MOORE.
Dissenting opinion filed by Circuit Judge LOURIE.
MOORE, Circuit Judge.
Stepan Company (“Stepan”) appeals from a decision of
the Patent Trial and Appeal Board (“Board”) affirming the
2 IN RE: STEPAN COMPANY
examiner’s rejection of claims 1–31 of U.S. Patent Appli-
cation No. 12/456,567 (“the ’567 application”). For the
reasons discussed below, we vacate and remand.
BACKGROUND
The ’567 application is directed to herbicidal formula-
tions containing glyphosate salt with a surfactant system.
Surfactants can enhance glyphosate’s effectiveness as an
herbicide by providing better adherence to leaves, thereby
enhancing penetration. According to the specification,
“[t]he present invention is based on the unexpected dis-
covery that surfactant systems comprising dialkoxylated
alkylamine, water miscible solubilizer and amine oxide
allow for formulation of ultra-high loaded (‘high-strength’)
glyphosate salt concentrates possessing high or no cloud
points.” J.A. 29 ¶ 13. A cloud point is the temperature at
which a solution becomes cloudy due to the surfactants
becoming insoluble and separating into layers. Cloudi-
ness can be avoided if the cloud point is higher than the
solution’s temperature or if the solution is cooled before
adding the surfactant. The specification explains that
because glyphosate salt is created at about 75ºC, it is
advantageous to formulate glyphosate with a surfactant
system exhibiting a high cloud point to “obviate the
necessity of waiting for the temperature of the glyphosate
salt reaction product to cool down.” J.A. 27–28 ¶ 7.
Surfactant systems with high cloud points or no cloud
point, in which the solution never becomes cloudy, allow
for quicker formulation of glyphosate concentrates and
thus quicker delivery to the market. Id.
Claim 1 is the sole independent claim:
1. An ultra-high load, aqueous glyphosate salt-
containing concentrate comprising:
a. water;
b. glyphosate salt in solution in the water
in an amount greater than about 39
IN RE: STEPAN COMPANY 3
weight percent of acid equivalent, based
on the weight of the concentrate, said
glyphosate salt being selected from the
group consisting of the isopropylamine
salt of glyphosate, the potassium salt of
glyphosate, mixtures of the isopropyla-
mine salt and the potassium salt of
glyphosate and mixtures of the potassium
salt and the ammonium salt of glyphosate;
c. a surfactant system in an amount rang-
ing from about 1 to about 20 weight per-
cent, based on the weight of the
concentrate, comprising:
i. from about 10 to about 60 weight
percent, based on the weight of the
surfactant system, of one or more
dialkoxylated alkylamines;
ii. from about 5 to about 30 weight
percent, based on the weight of the
surfactant system, of one or more
water miscible solubilizers; and
iii. from about 30 to about 75
weight percent, based on the
weight of the surfactant system, of
one or more amine oxides;
said concentrate having a cloud point above at
least 70ºC. or no cloud point when the concentrate
is heated to its boiling point.
Several dependent claims further limit the surfactant
system of claim 1. For example, claims 20–24 specify that
the dialkoxylated alkylamine is diethoxylated tallow
amine. Claim 26 specifies that the water miscible solubil-
izer is a polyalkylene glycol with a molecular weight from
about 200 to about 1000, and claim 27 further limits the
water miscible solubilizer to polyethylene glycol.
4 IN RE: STEPAN COMPANY
Claim 29 states the amine oxide is selected from a group
of six amine oxides, among which includes lauryl dime-
thylamine oxide.
The examiner rejected claims 1–25 and 28–31 for ob-
viousness over U.S. Pub. No. 2003/0087764, titled “Stable
Liquid Pesticide Compositions” (“Pallas”). Pallas disclos-
es highly-loaded glyphosate compositions containing
surfactants having a cloud point of at least 50ºC and
ideally 60ºC. Relevant to Stepan’s appeal, the examiner
found Pallas teaches preferred surfactants “includ[ing]
the amine oxide lauryl dimethylamine oxide (Chemoxide
[L70]) and the dialkoxylated amine diethoxylated tallow
amine (Ethomeen T).” J.A. 653 (citing J.A. 750–52
¶¶ 115–16, 119–20). She found that Pallas teaches a
surfactant component “may optionally contain glycols
such as polypropylene glycol.” J.A. 653 (citing J.A. 757–
58 ¶¶ 152–55). For the claimed ranges of the surfactants,
she found “it is routine optimization to select and adjust
the surfactants to this range since Pallas teaches the
surfactant component comprises any combination of
surfactants.” J.A. 653. The examiner found Pallas does
not teach a cloud point above 70ºC but that achieving this
cloud point would be a matter of “optimizing the formula-
tion” because Pallas teaches the ideal cloud point should
be above 60ºC. J.A. 653 (citing J.A. 735 ¶ 29).
The examiner rejected claims 26 and 27 over Pallas in
view of U.S. Patent No. 5,843,866, titled “Pesticidal
Compositions Comprising Solutions of Polyurea and/or
Polyurethane” (“Parker”). The examiner found Pallas
does not teach the specific water miscible solubilizer
polyethylene glycol with a molecular weight from about
200 to about 1000, but Parker discloses polyethylene
glycol 600 in a surfactant system mixed with tallow amine
and used with glyphosate. She found a skilled artisan
“would have been motivated to make the formulation
because Parker et al. teach that surfactant systems for
glyphosate were known to have polyethylene glycol 600
IN RE: STEPAN COMPANY 5
with tallow amine surfactants.” J.A. 656–57.
The Board adopted the examiner’s findings in support
of rejection and agreed with her conclusion that claims 1–
31 would have been obvious. It determined Stepan failed
to rebut the examiner’s prima facie case of obviousness
and affirmed the examiner’s rejections. Stepan appeals.
We have jurisdiction pursuant to 28 U.S.C.
§ 1295(a)(4)(A).
DISCUSSION
We review the Board’s factual findings for substantial
evidence and its legal determinations de novo. In re Van
Os, 844 F.3d 1359, 1360 (Fed. Cir. 2017). Obviousness is
a question of law based on subsidiary findings of fact. Id.
An obviousness determination requires finding both “that
a skilled artisan would have been motivated to combine
the teachings of the prior art . . . and that the skilled
artisan would have had a reasonable expectation of suc-
cess in doing so.” 1 Intelligent Bio-Sys., Inc. v. Illumina
Cambridge Ltd., 821 F.3d 1359, 1367–68 (Fed. Cir. 2016).
Whether a person of ordinary skill in the art would have
been motivated to modify or combine teachings in the
prior art, and whether he would have had a reasonable
expectation of success, are questions of fact. Id. at 1366.
1 The dissent suggests the PTO need not establish a
reasonable expectation of success where there is a single
prior art reference. See Dissent at 3. We do not agree.
Whether a rejection is based on combining disclosures
from multiple references, combining multiple embodi-
ments from a single reference, or selecting from large lists
of elements in a single reference, there must be a motiva-
tion to make the combination and a reasonable expecta-
tion that such a combination would be successful,
otherwise a skilled artisan would not arrive at the
claimed combination.
6 IN RE: STEPAN COMPANY
The Board found Stepan failed to provide evidence
that it would not have been routine optimization for a
skilled artisan to select and adjust the claimed surfac-
tants to achieve a cloud point above at least 70ºC “since
Pallas teaches the surfactant component comprises any
combination of surfactants” and “teaches the ideal cloud
point should be above 60[ºC].” J.A. 8–9. It rejected evi-
dence in Pallas that certain surfactant combinations
failed the cloud point test at 60ºC because it concluded
that these failures did not involve the claimed surfac-
tants. J.A. 9. It found Stepan failed to establish the
criticality of its claimed range of surfactants, showing
neither that a 70ºC cloud point was unexpectedly good nor
that the prior art was silent on the connection between
optimizing surfactants and cloud point. J.A. 10. Because
the Board failed to adequately articulate its reasoning,
erroneously rejected relevant evidence of nonobviousness,
and improperly shifted to Stepan the burden of proving
patentability, we vacate the Board’s decision that
claims 1–31 of the ’567 application would have been
obvious.
The Board failed to explain why it would have been
“routine optimization” to select and adjust the claimed
surfactants and achieve a cloud point above at least 70ºC.
See J.A. 8–9. “The agency tribunal must make findings of
relevant facts, and present its reasoning in sufficient
detail that the court may conduct meaningful review of
the agency action.” In re Lee, 277 F.3d 1338, 1346 (Fed.
Cir. 2002). Stating that a person of ordinary skill in the
art would have arrived at the claimed invention through
routine optimization falls short of this standard. Missing
from the Board’s analysis is an explanation as to why it
would have been routine optimization to arrive at the
claimed invention. Similar to cases in which the Board
found claimed inventions would have been “intuitive” or
“common sense,” the Board must provide some rational
underpinning explaining why a person of ordinary skill in
IN RE: STEPAN COMPANY 7
the art would have arrived at the claimed invention
through routine optimization. See, e.g., Van Os, 844 F.3d
at 1361 (“Absent some articulated rationale, a finding
that a combination of prior art would have been ‘common
sense’ or ‘intuitive’ is no different than merely stating the
combination ‘would have been obvious.’”); Arendi S.A.R.L.
v. Apple Inc., 832 F.3d 1355, 1362 (Fed. Cir. 2016)
(“[R]eferences to ‘common sense’ . . . cannot be used as a
wholesale substitute for reasoned analysis and eviden-
tiary support . . . .”). Absent some additional reasoning,
the Board’s finding that a skilled artisan would have
arrived at the claimed invention through routine optimi-
zation is insufficient to support a conclusion of obvious-
ness.
The PTO argues substantial evidence supports the
Board’s finding that formulating the claimed surfactant
system with a cloud point above at least 70ºC would have
been a matter of routine experimentation. It argues the
thousands of formulations screened by Pallas indicate the
routine nature of combining the surfactants and testing
their cloud point. PTO Br. 24 (citing generally J.A. 761–
99 ¶¶ 194–386). It argues these tests can be easily con-
ducted in a short period of time and would have been
tested by a skilled artisan as a matter of course. Oral Arg.
at 28:03–42. And it argues a skilled artisan would have
selected the claimed surfactant system among those
disclosed because Pallas teaches, inter alia, that amine
oxides and dialkoxylated alkylamines are two of only four
preferred surfactants. PTO Br. 21–22, 29 (citing J.A. 754
¶ 130). This evidence could be relevant to whether there
would have been a motivation to combine the claimed
surfactants with a reasonable expectation of achieving a
cloud point above at least 70ºC. The Board, however, did
not make any of these findings. We “may not accept
appellate counsel’s post hoc rationalization for agency
action.” Lee, 277 F.3d at 1345 (quoting Burlington Truck
Lines, Inc. v. United States, 371 U.S. 156, 168 (1962)). We
8 IN RE: STEPAN COMPANY
leave it to the Board to assess these arguments on re-
mand.
Nor did the Board articulate why a person of ordinary
skill in the art would have had a reasonable expectation
of success to formulate the claimed surfactant system
with a cloud point above at least 70ºC. The Board’s
purported explanation that “Pallas teaches the surfactant
component comprises any combination of surfactants” and
“teaches the ideal cloud point should be above 60[ºC]” does
not indicate whether a skilled artisan would have had a
reasonable expectation of success. J.A. 8–9. “[T]o have a
reasonable expectation of success, one must be motivated
to do more than merely to vary all parameters or try each
of numerous possible choices until one possibly arrived at
a successful result.” Pfizer, Inc. v. Apotex, Inc., 480 F.3d
1348, 1365 (Fed. Cir. 2007) (quoting Medichem, S.A. v.
Rolabo, S.L., 437 F.3d 1157, 1165 (Fed. Cir. 2006)).
Reciting Pallas’ teachings that “any combination” of
surfactants may be used and that a cloud point above
60ºC is desired fails to illuminate why a skilled artisan
would have selected the claimed combination of surfac-
tants and reasonably expected a cloud point above at least
70ºC.
Moreover, the Board undisputedly erred to the extent
that it concluded the failures in Pallas did not involve the
claimed surfactants. Stepan presented evidence demon-
strating that none of the examples in Pallas include all
three of the claimed surfactants and that the closest
examples failed to achieve a cloud point above at least
70ºC. It argued Pallas’ Example 76 includes a dialkox-
ylated alkylamine and water miscible solubilizer, but not
an amine oxide, and failed the cloud point test at 60ºC. It
argued Pallas’ Example 127 includes a dialkoxylated
alkylamine and amine oxide, but not a water miscible
solubilizer, and failed the cloud point test at 60ºC. The
Board conflated Stepan’s arguments regarding Exam-
ples 76 and 127 and held that neither example was rele-
IN RE: STEPAN COMPANY 9
vant because they “are not comparative with Pallas[’]
disclosed preferred amine oxide surfactants.” J.A. 9. The
PTO does not dispute that Example 127 in fact contains
an amine oxide, thus the Board’s basis for disregarding
this evidence lacks support. In any event, because both
examples contain two of the three claimed surfactants
and were tested for cloud point, both examples are rele-
vant to whether a skilled artisan would have had a rea-
sonable expectation of success to achieve a cloud point
above at least 70ºC with the claimed surfactant systems. 2
We do not reach in the first instance what weight these
examples ought to be afforded in the Board’s obviousness
analysis, but instruct the Board to consider this evidence
on remand.
Lastly, the Board erred when it shifted the burden of
proving patentability to Stepan. The PTO bears the
burden of establishing a prima facie case of obviousness.
In re Deuel, 51 F.3d 1552, 1557 (Fed. Cir. 1995). “Only if
this burden is met does the burden of coming forward
with rebuttal argument or evidence shift to the appli-
cant.” Id. In holding that Stepan had not met its burden,
the Board cited case law in which the patentee claimed a
range within the prior art and had to rebut a prima facie
case of obviousness by showing criticality of its claimed
range. See J.A. 10. This line of case law does not apply
here for two reasons. First, for the reasons discussed
above, the Board did not establish a prima facie case of
2 We note that while claim 1 recites a surfactant
system comprising a dialkoxylated alkylamine, water
miscible solubilizer, and amine oxide, several of the
’567 application’s dependent claims recite specific com-
pounds within those categories of surfactants. To the
extent these dependent claims are separately argued, the
Board’s reasonable expectation of success analysis must
extend to these specific surfactant systems.
10 IN RE: STEPAN COMPANY
obviousness because it failed to adequately articulate its
reasoning. See In re Kahn, 441 F.3d 977, 986 (Fed. Cir.
2006) (“[T]o establish a prima facie case of obviousness
based on a combination of elements disclosed in the prior
art, the Board must articulate the basis on which it
concludes that it would have been obvious to make the
claimed invention.”). Second, Stepan’s ’567 application
does not merely claim a range of surfactants that is
within or overlaps with the range of surfactant systems
taught by Pallas. The claimed surfactant system contains
four elements. The first three elements describe the
surfactants, and their respective ranges, that comprise
the surfactant system. The fourth element limits the
combination of those surfactants to only those combina-
tions that produce a cloud point above at least 70ºC or no
cloud point at all. The cloud point thus limits and defines
the scope of what surfactant combinations satisfy the
claimed composition. It therefore may be that not all
compositions that contain the claimed combination and
range of surfactants fall within the claims. As an element
of the composition claims, it was the PTO’s—not Ste-
pan’s—burden to show that achieving a cloud point above
70ºC would have been obvious to a person of ordinary skill
in the art. To the extent the Board shifted the burden to
Stepan to show the criticality of the cloud point element,
the Board erred.
CONCLUSION
We have considered Stepan’s remaining arguments
for vacatur and do not disturb the Board’s decision on
those bases. For the reasons discussed above, we vacate
the Board’s decision holding claims 1–31 of the
’567 application would have been obvious and remand for
further proceedings consistent with this opinion.
VACATED AND REMANDED
IN RE: STEPAN COMPANY 11
COSTS
Costs to Stepan.
United States Court of Appeals
for the Federal Circuit
______________________
IN RE: STEPAN COMPANY,
Appellant
______________________
2016-1811
______________________
Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. 12/456,567.
______________________
LOURIE, Circuit Judge, dissenting.
I respectfully dissent. While the opinion of the Patent
Trial and Appeal Board (“the Board”) was not without
flaw, its conclusion that the claims of U.S. Patent Appli-
cation 12/456,567 (“the ’567 application”), particularly
claim 1, were obvious, was not erroneous.
Claim 1 is directed to a composition comprising water
and four other components described in broad terms. A
particular cloud point is not one of those components. The
primary reference relied on by the Board, U.S. Pub.
2003/0087764, entitled “Stable Liquid Pesticide Composi-
tions” (“Pallas”), disclosed compositions composed of the
same components as claim 1, described in similarly broad
terms.
The majority focuses its decision on the 70ºC cloud
point and points to the failure of examples in Pallas to
recite a cloud point above at least 70ºC. But a 70ºC cloud
point is not a component of this composition claim; it is a
result, or a property. While no composition in Pallas is
2 IN RE: STEPAN COMPANY
described as possessing a 70ºC cloud point, there is noth-
ing in the record indicating that all compositions satisfy-
ing the component limitations of claim 1 of the ’567
application achieve that result either. Indeed, the report-
ed examples in the application include compositions that
contained the components of claim 1, but had cloud points
below 70ºC, J.A. 42 (Example 20), or for which the cloud
point was not determined, id. (Examples 5–9, 21–25); J.A.
43 (Examples 26–37, 50). Thus, I believe the Board was
correct in holding that the broad claims of the application
claim an invention that was obvious over the similarly
broad disclosure of Pallas.
In fact, Pallas almost anticipates claim 1. Each broad
component limitation of claim 1 is met by a similar disclo-
sure in Pallas. Compare J.A. 695 (claim 1), with J.A. 733
(“glyphosate potassium salt”), J.A. 754 (“Some preferred
cationic surfactants include alkylamine ethoxylates
(including etheramines and diamines) such as tallowa-
mine ethoxylate . . . ; and amine oxides . . . .”), and J.A.
758 (“Nonlimiting examples of water soluble solvents
include acetates, c1-6 alkanols, c1-6 dials, c1-6 alkyl ethers of
alkylene glycols and polyalkylene glycols, and mixtures
thereof.”). Pallas also teaches that “[i]deally the cloud
point should be 60°C. or more . . . .” J.A. 735 (emphasis
added).
The situation would be different if the claim at issue
narrowly defined each of the components of the composi-
tion. In that case it could be argued that the achievement
of a 70ºC cloud point was a special goal of the invention,
which made its achievement nonobvious and important,
where the claim recited a specific composition having a
unique or surprising result. No such situation appears
before us.
Claiming the 70ºC or more cloud point result seems to
be just a means of distinguishing this composition claim
from the prior art. But discovery of a new property or
IN RE: STEPAN COMPANY 3
result does not make a claim to what is essentially dis-
closed by the prior art nonobvious. These are not narrow-
ly drawn claims to, for example, a method of achieving a
70ºC or more cloud point by means of specifically defined
materials. These are shotgun claims argued to be patent-
able by a property or result that only some of the broadly
disclosed compositions have been shown to possess. See
J.A. 42–43 (reporting cloud points above 70ºC for only half
of the tested examples).
Moreover, the majority focuses on the lack of a rea-
sonable expectation of success in making any modification
to Pallas to achieve the invention of claim 1, including the
70ºC or more cloud point result. Even if reasonable
expectation of success is a proper test in such a situation,
what is the success for which there must be a reasonable
expectation? Where, as here, there is a single prior art
reference, there does not need to be a finding of reasona-
ble expectation of success for those skilled in a particular
art to make conventional modifications to the prior art
and look for improvements in some parameter. See In re
Ethicon, Inc., 844 F.3d 1344, 1351 (Fed. Cir. 2017) (“The
normal desire of artisans to improve upon what is already
generally known can provide the motivation to optimize
variables such as the percentage of a known polymer for
use in a known device.”). Such improvements may be
nonobvious and patentable, but they must be claimed as
such, constrained by what it takes to achieve that unex-
pected and desirable result. But that is not the situation
here.
While the majority faults the Board for not explaining
itself adequately, based on reasoning with which I do not
disagree, the rejection of the claims based on a reference
we can plainly see, and which nearly anticipates the
claims, does not in my view justify overturning the Board.
I therefore would affirm the Board’s determination
that claims 1–31 would have been obvious over Pallas.
4 IN RE: STEPAN COMPANY
Stepan did not argue the dependent claims, except for
claims 26 and 27, separately. Claims 26 and 27 have a
separate ground of rejection, which I would also have
affirmed.