Honeywell International Inc. v. Mexichem Amanco Holding S.A. De C.V. ( 2017 )

United States Court of Appeals
for the Federal Circuit
______________________
HONEYWELL INTERNATIONAL INC.,
Appellant
v.
MEXICHEM AMANCO HOLDING S.A. DE C.V.,
DAIKIN INDUSTRIES, LTD.,
Appellees
______________________
2016-1996
______________________
Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in Nos. 95/002,189,
95/002,204.
______________________
Decided: August 1, 2017
______________________
GREGG F. LOCASCIO, Kirkland & Ellis LLP, Washing-
ton, DC, argued for appellant. Also represented by
WILLIAM H. BURGESS, NOAH SAMUEL FRANK; JOSEPH
MICHAEL SKERPON, Banner & Witcoff, Ltd., Washington,
DC.
JOSEPH A. KROMHOLZ, Ryan, Kromholz & Manion,
S.C., Milwaukee, WI, argued for appellee Mexichem
Amanco Holding S.A. de C.V. Also represented by
PATRICK J. FLEIS.
2 HONEYWELL INT’L INC. v. MEXICHEM AMANCO HOLDING S.A.
ANTHONY F. LO CICERO, Amster, Rothstein &
Ebenstein LLP, New York, NY, argued for appellee Dai-
kin Industries, Ltd. Also represented by MARION P.
METELSKI.
______________________
Before LOURIE, REYNA, and WALLACH, Circuit Judges.
Opinion for the court filed by Circuit Judge LOURIE.
Opinion dissenting-in-part filed by Circuit Judge
WALLACH.
LOURIE, Circuit Judge.
Honeywell International, Inc. (“Honeywell”) appeals
from a decision of the U.S. Patent and Trademark Office
(“the PTO”) Patent Trial and Appeal Board (“the Board”)
affirming the Examiner’s rejection, in two merged inter
partes reexaminations, of claims 1–26, 31–37, 46–49, 58,
59, 61–68, 70–75, 80, and 81 of U.S. Patent 7,534,366
(“the ’366 patent”) under 35 U.S.C. § 103. See Mexichem
Amanco Holding S.A. De C.V. v. Honeywell Int’l Inc., No.
2015-006430, 2016 WL 1254603 (P.T.A.B. Mar. 29, 2016)
(“Decision”). Because the Board erred in its analysis, and
hence its decision, we vacate and remand.
BACKGROUND
Honeywell owns the ’366 patent, which is directed to
the use of 1,1,1,2-tetrafluoropropene (“HFO-1234yf”)—an
unsaturated hydrofluorocarbon (“HFC”) compound—and a
polyalkylene glycol (“PAG”) lubricant in heat transfer
systems, such as air conditioning equipment. See, e.g.,
’366 patent col. 13 ll. 37–45. Claim 1 is illustrative and
reads as follows:
A heat transfer composition for use in an air con-
ditioning system comprising:
HONEYWELL INT’L INC. v. MEXICHEM AMANCO HOLDING S.A. 3
(a) at least about 50% by weight of 1,1,1,2-
tetrafluoropropene (HFO-1234yf) having no sub-
stantial acute toxicity; and
(b) at least one poly alkylene glycol lubricant in
the form of a homopolymer or co-polymer consist-
ing of 2 or more oxypropylene groups and having a
viscosity of from about 10 to about 200 centistokes
at about 37 °C.
Id. (emphases added).
Mexichem Amanco Holding S.A. DE C.V. (“Mexichem
Amanco”) and Daikin Industries, Ltd. (“Daikin”) (togeth-
er, “Mexichem”) filed requests for inter partes reexamina-
tion of the ’366 patent, which the PTO granted and
merged into a consolidated proceeding. During the reex-
amination, the Examiner rejected claims 1–26, 31–37, 46–
49, 58, 59, 61–68, 70–75, 80, and 81 of the ’366 patent as
obvious over Japanese Patent H04-110388 (“Inagaki”) in
view of either: (1) U.S. Patent 4,755,316 (“Magid”);
(2) Acura Service Bulletin No. 92-027 (“Acura”) and
“Patentee’s Admissions” 1; or (3) U.S. Patent 6,783,691
(“Bivens”). The Examiner found that Inagaki expressly
discloses HFO-1234yf and that each of the secondary
references—Magid, Acura/Patentee’s Admissions, and
Bivens—teaches the use of PAG lubricants with HFC
refrigerants. Thus, the Examiner concluded that the
1 During original prosecution of the ’366 patent, in
the Supplemental Response, filed November 10, 2008, at
page 20, Honeywell made a statement that a well-known
lubricant, ND-8, meets the structural requirements of the
claimed lubricant. See Decision, 2016 WL 1254603, at *5.
The Examiner relied on this statement by Honeywell in
combination with Acura, which teaches the use of ND-8
with saturated HFC refrigerants. See id.
4 HONEYWELL INT’L INC. v. MEXICHEM AMANCO HOLDING S.A.
claims would have been obvious over the cited prior art at
the time of invention.
Honeywell appealed to the Board, arguing that
Inagaki does not teach the use of HFO-1234yf with any
particular lubricant, much less a PAG lubricant, and that
such a combination would not have been obvious to one of
ordinary skill in the art. See Decision, 2016 WL 1254603,
at *5. Honeywell argued that Inagaki does not teach or
suggest the use of a PAG lubricant with HFO-1234yf
because it teaches that the HFO refrigerants can be
combined with other, less environmentally-friendly refrig-
erants, in order to “improve solubility,” thereby indicating
that it teaches the combination of HFO refrigerants with
immiscible lubricants, such as those commonly employed
in the prior art. See id. Further, Honeywell argued that
Magid, Acura, and Bivens use “HFC” to refer only to
saturated HFC refrigerants, not unsaturated (i.e., HFO)
refrigerants. See id. at *6.
Honeywell submitted evidence that HFO refrigerants
were disfavored at the time of the invention by those of
skill in the art in that they were known to be reactive and
unstable, and that PAG lubricants were also understood
to be hygroscopic and thus unstable. See id. Therefore,
Honeywell argued, one of ordinary skill would not have
been led by Inagaki to combine HFO-1234yf, one of a
disfavored class of refrigerants, with a PAG lubricant,
known to be unstable. It argued that one of ordinary skill
would have expected the combination to result in peroxide
formation that leads to degradation reactions of HFO
compounds that are not possible with the prior art satu-
rated HFC compounds. See id. Honeywell also submitted
evidence of secondary considerations—namely, the unex-
pected stability of HFO-1234yf in combination with PAG
lubricants over other similar refrigerants combined with
PAGs; long-felt but unmet need for compositions having
certain environmentally-favorable characteristics; and
skepticism that such an environmentally-friendly compo-
HONEYWELL INT’L INC. v. MEXICHEM AMANCO HOLDING S.A. 5
sition existed, particularly one that also exhibits other
desirable properties, such as low toxicity, stability, reac-
tivity, and effectiveness. See id.
The Board affirmed the Examiner’s rejection of claims
1–26, 31–37, 46–49, 58, 59, 61–68, 70–75, 80, and 81 of
the ’366 patent as obvious. First, the Board found that
PAGs were known lubricants for “HFC-based refrigera-
tion systems,” as evidenced by Magid, Acura/Patentee’s
Admissions, and Bivens. Id. at *9. Thus, the Board
concluded, because Inagaki teaches that the disclosed
refrigerants, including HFO-1234yf, “do not have any
problem with respect to their general characteristics (e.g.,
compatibility with lubricants . . .),” it would have been
obvious to combine HFO-1234yf with “known lubricants”
such as PAGs. Id. at *10 (emphasis added) (internal
quotation marks omitted). The Board explained that the
known drawbacks of using HFO-1234yf, such as toxicity,
flammability, reactivity, and so forth, would not have
deterred one of ordinary skill from choosing HFO-1234yf,
as taught by Inagaki, because such disadvantages would
have been viewed as merely a “tradeoff” for the benefits
touted by Inagaki—namely, “good cooling with little effect
on the ozone.” Id. at *8. Further, the Board found that,
because PAGs were known lubricants, one of ordinary
skill motivated to use HFO-1234yf based on the teachings
of Inagaki would have arrived at its combination with a
PAG lubricant by mere routine testing. Id. at *10.
Second, the Board rejected Honeywell’s argument that
the claimed combination would not have been obvious
because of the unpredictability of finding suitable lubri-
cants for unsaturated HFO refrigerants based on infor-
mation pertaining to saturated HFC refrigerants, or in
light of the unexpected stability and miscibility of HFO-
1234yf with PAG lubricants. Id. The Board found that
Inagaki expressly discloses HFO-1234yf as possessing
ozone-friendliness and other favorable characteristics for
use in heat transfer compositions, and that its stability
6 HONEYWELL INT’L INC. v. MEXICHEM AMANCO HOLDING S.A.
and miscibility with a PAG lubricant are properties that
are “inherent to the refrigerant.” Id. at *7–8 (emphasis in
original). Thus, the Board concluded, the stability and
miscibility of HFO-1234yf with a PAG lubricant are
“inherent properties of an otherwise known refrigerant”
that could not confer patentable weight to the claimed
mixture. Id. (emphasis added).
Finally, the Board found Honeywell’s evidence of sec-
ondary considerations to be unpersuasive because of a
perceived lack of nexus between the evidence and the
claimed composition. Id. at *11. The Board explained
that most of Honeywell’s evidence shows that a “particu-
lar refrigerant” possessed desirable properties long sought
after in the art, but that the refrigerant—HFO-1234yf—
was known in the art. Id. at *12 (emphasis in original).
Because the claims are directed to the combination of
HFO-1234yf with a PAG lubricant, the Board concluded
that Honeywell’s evidence lacked a nexus to the claimed
composition. See id.
The Board also rejected Honeywell’s evidence of un-
expected stability/miscibility of the claimed combination
in light of JP H5-85970A (“Omure”). The Board disagreed
with the Examiner, who reasoned that Honeywell’s evi-
dence of unexpected stability “do[es] not contradict the
fact that stability is an inherent property of the refriger-
ant/lubricant pair.” Id. at *13 (emphasis added) (internal
quotation marks omitted). The Board acknowledged that
“[e]ven inherent properties, to the extent that they
demonstrate results beyond what would have been ex-
pected to one of ordinary skill in the art, particularly
superior results that demonstrate more than a mere
improvement in a property, are evidence that the inven-
tion is non-obvious and must be considered accordingly.”
Id. (citing In re Geisler, 116 F.3d 1465, 1470 (Fed. Cir.
1997)).
HONEYWELL INT’L INC. v. MEXICHEM AMANCO HOLDING S.A. 7
Yet the Board found Honeywell’s evidence to be un-
persuasive because Omure states that a different unsatu-
rated propene HFO compound has “relatively superior
thermal stability” in PAG. Id. (internal quotation marks
omitted). Thus, the Board concluded that, although
Honeywell’s evidence persuasively shows the unpredicta-
bility of “how various refrigerants would have reacted
with various lubricants,” Omure provides evidence that
one of skill in the art “would no more have expected failure
with respect to the stability of combining [HFOs] with
PAG than would have expected success.” Id. at *14 (em-
phases added). Thus, the Board found that, due to the
“overall unpredictability as to stability in the art,” one of
ordinary skill would have arrived at the claimed combina-
tion by mere routine testing. Id. at *15.
Honeywell timely appealed to this court. We have ju-
risdiction pursuant to 28 U.S.C. § 1295(a)(4)(A).
DISCUSSION
We review the Board’s legal determinations de novo,
In re Elsner, 381 F.3d 1125, 1127 (Fed. Cir. 2004), and the
Board’s factual findings underlying those determinations
for substantial evidence, In re Gartside, 203 F.3d 1305,
1316 (Fed. Cir. 2000). A finding is supported by substan-
tial evidence if a reasonable mind might accept the evi-
dence to support the finding. Consol. Edison Co. v.
NLRB, 305 U.S. 197, 229 (1938). Obviousness is a ques-
tion of law, based on underlying factual findings, includ-
ing what a reference teaches, whether a person of
ordinary skill in the art would have been motivated to
combine references, and any relevant objective indicia of
nonobviousness. Apple Inc. v. Samsung Elecs. Co., 839
F.3d 1034, 1047–48, 1051 (Fed. Cir. 2016) (en banc).
On appeal, Honeywell argues that the Board erred in
(1) finding a motivation to combine the references with a
reasonable expectation of success, (2) rejecting Honey-
well’s objective evidence, and (3) relying on a new ground
8 HONEYWELL INT’L INC. v. MEXICHEM AMANCO HOLDING S.A.
of rejection when it relied on Omure, without giving
Honeywell notice and opportunity to respond. We discuss
each issue in turn.
I
We first consider whether the Board erred in finding
that one of ordinary skill in the art would have been
motivated to combine the references with a reasonable
expectation of success and in considering Honeywell’s
evidence of unexpected results.
Honeywell argues that the Board improperly relied on
hindsight to find that one of ordinary skill would have
had a reasonable expectation of success in combining
HFO-1234yf with PAG lubricants. Honeywell provided
evidence that at the time of the invention, HFO refriger-
ants were known to be highly reactive and unstable and
yet HFO-1234yf was unexpectedly stable in combination
with PAGs, which were also previously understood to be
unstable. Honeywell also points to evidence of the unex-
pected miscibility of the claimed combination, and argues
that the Board improperly disregarded it as an “inherent
property” of the refrigerant, when in fact miscibility is a
property of the combination. Thus, Honeywell argues
that both the ex ante unpredictability of the stabil-
ity/miscibility of HFO-1234yf with PAGs, as well as the ex
post unexpected results weigh against the Board’s obvi-
ousness determination. Honeywell also challenges the
Board’s reasoning concerning inherency in making the
obviousness determination.
Mexichem responds that the Board’s findings were
supported by substantial evidence. Mexichem contends
that the Board properly found a reasonable expectation of
success, emphasizing that “absolute predictability of
success in combining references is not required” for an
obviousness determination. Appellee’s Br. 36 (emphasis
added) (citing Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348,
1364 (Fed. Cir. 2007)). Mexichem argues that Inagaki
HONEYWELL INT’L INC. v. MEXICHEM AMANCO HOLDING S.A. 9
discloses HFO-1234yf as one of five preferred embodi-
ments and generally teaches its use with lubricants. It
asserts that one of ordinary skill would have been moti-
vated to combine HFO-1234yf with PAG lubricants, which
were known to be used with HFC-based refrigerants.
Thus, Mexichem urges, there would have been a reasona-
ble expectation of success in combining the references,
and the Board’s findings were supported by substantial
evidence.
We agree with Honeywell that the Board’s analysis
was flawed. The Board committed legal error by improp-
erly relying on inherency to find obviousness and in its
analysis of motivation to combine the references.
As an initial matter, we find the Board’s analysis to
be internally inconsistent. Early in its analysis, the
Board rejected Honeywell’s argument concerning unex-
pected results and its argument that the unpredictability
of the art weighs against finding a motivation to combine
the references with a reasonable expectation of success.
The Board found that the claimed combination’s stabil-
ity/miscibility is an inherent property of HFO-1234yf and
thus cannot confer patentable weight to the composition.
See Decision, 2016 WL 1254603, at *8. Yet, when the
Examiner used similar reasoning in responding to Hon-
eywell’s evidence of secondary considerations, the Board
rejected that reasoning, acknowledging that inherent
properties must be considered if they demonstrate unex-
pected and nonobvious results. See id. at *13.
Thus, on the one hand, the Board dismissed Honey-
well’s evidence regarding the unpredictability and unex-
pected properties of the claimed combination by
characterizing them as “inherent” and of non-patentable
weight. See id. at *8. On the other hand, the Board later
credited that very same evidence, conceding that it per-
suasively established the “overall unpredictability” in the
art, but then dismissed it for other reasons—namely, that
10 HONEYWELL INT’L INC. v. MEXICHEM AMANCO HOLDING S.A.
because of the unpredictability as to stability of the
claimed combination, “routine testing” would have led to
its discovery. Id. at *14–15.
Each part of that internally inconsistent analysis was
individually flawed. First, the Board erred in relying on
inherency to dismiss evidence showing unpredictability in
the art—evidence which it later acknowledged did per-
suasively demonstrate unpredictability—in order to reject
Honeywell’s argument that one of ordinary skill would not
have been motivated to combine the references with a
reasonable expectation of success. See Decision, 2016 WL
1254603, at *8 (“[I]nherent properties of refrigerants
include their specific toxicity [and] miscibility, . . . whether
or not these properties are predictable.” (emphasis added)),
*15 (“[T]he evidence presented by Patent Owner as a
whole shows the unpredictability of how various refriger-
ants would have reacted with various lubricants.” (em-
phasis added)).
We have previously stated that the use of inherency
in the context of obviousness must be carefully circum-
scribed because “[t]hat which may be inherent is not
necessarily known” and that which is unknown cannot be
obvious. In re Rijckaert, 9 F.3d 1531, 1534 (Fed. Cir.
1993) (internal quotation marks omitted) (quoting In re
Spormann, 363 F.2d 444, 448 (1966)); see also PAR
Pharm., Inc. v. TWI Pharm., Inc., 773 F.3d 1186, 1195
(Fed. Cir. 2014) (distinguishing a prior case finding obvi-
ousness based on inherency because, in that case, “neither
party disputed that the [claimed features] were expected
in light of the dosages disclosed in the prior art” (empha-
sis added)).
What is important regarding properties that may be
inherent, but unknown, is whether they are unexpected.
All properties of a composition are inherent in that com-
position, but unexpected properties may cause what may
appear to be an obvious composition to be nonobvious.
HONEYWELL INT’L INC. v. MEXICHEM AMANCO HOLDING S.A. 11
See, e.g., In re Papesch, 315 F.2d 381, 391 (C.C.P.A. 1963)
(emphasizing that “[f]rom the standpoint of patent law, a
compound and all of its properties are inseparable; they
are one and the same thing,” and yet in comparing the
similarity of the one compound to another, “[t]here is no
basis in law for ignoring any property in making such a
comparison”). Thus, the Board here, in dismissing prop-
erties of the claimed invention as merely inherent, with-
out further consideration as to unpredictability and
unexpectedness, erred as a matter of law.
Second, the Board erred in dismissing Honeywell’s ev-
idence of unpredictability in the art when it stated that
one of ordinary skill would no more have expected failure
than success in combining the references. The Board
made what amounts to a finding that one of ordinary skill
would not have had a reasonable expectation of success in
combining HFO-1234yf with PAG lubricants, but then
seemed to make a burden-shifting argument that Honey-
well did not persuasively establish that one of ordinary
skill would have expected failure. Id. at *14–15 (“[T]he
evidence presented by Patent Owner as a whole shows the
unpredictability of how various refrigerants would have
reacted with various lubricants. Thus, . . . the skilled
artisan would no more have expected failure . . . than
would have expected success.” (emphases added)). The
Board rejected Honeywell’s evidence, concluding that,
because there would have been no reasonable expectation
of success, one of ordinary skill would have arrived at the
claimed combination by mere “routine testing.” Id. (find-
ing Honeywell’s stability data to be unpersuasive “in light
of the evidence of routine testing and overall unpredicta-
bility as to stability in the art” (emphases added)).
Thus, the Board seems to have determined that, be-
cause stability in the art was entirely unpredictable, one
of ordinary skill would have made no predictions at all,
but rather would have expected to undertake efforts to
find an optimal combination and thus that “routine test-
12 HONEYWELL INT’L INC. v. MEXICHEM AMANCO HOLDING S.A.
ing” would have led the skilled artisan to the claimed
combination. Id.
In an inter partes reexamination involving obvious-
ness, the standard is not whether the patent owner can
persuasively show that one of ordinary skill would have
expected failure. Rather, the burden is on the Examiner
to show that one of ordinary skill would have had a moti-
vation to combine the references with a reasonable expec-
tation of success. See, e.g., Redline Detection, LLC v. Star
Envirotech, Inc., 811 F.3d 435, 449 (Fed. Cir. 2015)
(“When asserting that a claimed invention would have
been obvious, that party must demonstrate . . . that a
skilled artisan would have had reason to combine the
teaching of the prior art references to achieve the claimed
invention, and that the skilled artisan would have had a
reasonable expectation of success from doing so.” (empha-
sis added) (internal quotation marks omitted)); Rambus
Inc. v. Rea, 731 F.3d 1248, 1255 (Fed. Cir. 2013) (revers-
ing the Board’s obviousness determination where “[t]he
Board erroneously placed the burden on [the Patent
Owner] to prove that its claims were not obvious” and
emphasizing that “[i]n reexamination proceedings, ‘a
preponderance of the evidence must show nonpatentabil-
ity before the PTO may reject the claims of a patent
application’” (citing Ethicon, Inc. v. Quigg, 849 F.2d 1422,
1427 (Fed. Cir. 1988)); In re Jung, 637 F.3d 1356, 1365–66
(Fed. Cir. 2011) (explaining that while “the applicant
must identify to the Board what the examiner did
wrong, . . . the examiner retains the burden to show
invalidity”)).
The Board made what amounts to a finding that one
of ordinary skill would not have expected success, because
Honeywell’s evidence persuasively established the “over-
all unpredictability” in the art, but then glossed over that
finding with a “routine testing” rationale because Honey-
well did not persuasively prove an expectation of failure.
See Decision, 2016 WL 1254603, at *15.
HONEYWELL INT’L INC. v. MEXICHEM AMANCO HOLDING S.A. 13
That is reverse reasoning. Unpredictability of results
equates more with nonobviousness rather than obvious-
ness, whereas that which is predictable is more likely to
be obvious. Thus, reasoning that one would no more have
expected failure than success is not a valid ground for
holding an invention to have been obvious. The Board
erred in so holding.
Even when presenting evidence of unexpected results
to “rebut” an Examiner’s prima facie case for obviousness,
a patent owner need not demonstrate that one of ordinary
skill would have expected failure—rather, the patent
owner need only establish that the results would have
been unexpected to one of ordinary skill at the time of
invention, or “much greater than would have been pre-
dicted.” Leo Pharm. Prod., Ltd. v. Rea, 726 F.3d 1346,
1358 (Fed. Cir. 2013) (“Unexpected results are useful to
show the improved properties provided by the claimed
compositions are much greater than would have been
predicted.” (internal quotation marks omitted)); In re
Baxter Travenol Labs., 952 F.2d 388, 392 (Fed. Cir. 1991)
(“[W]hen unexpected results are used as evidence of
nonobviousness, the results must be shown to be unex-
pected compared with the closest prior art.”); In re De
Blauwe, 736 F.2d 699, 706 n.8 (Fed. Cir. 1984) (“A proper
showing of unexpected results will rebut a prima facie
case of obviousness.”).
A further point regarding so-called “routine testing” is
that § 103 provides that “[p]atentability shall not be
negated by the manner in which the invention was made.”
35 U.S.C. § 103 (2012). That provision was enacted to
ensure that routine experimentation does not necessarily
preclude patentability. See, e.g., In re Saether, 492 F.2d
849, 854 (C.C.P.A. 1974) (“In his argument that ‘mere
routine experimentation’ was involved in determining the
optimized set of characteristics, the solicitor overlooks the
last sentence of 35 U.S.C. § 103. . . Here we are concerned
with the question of whether the claimed invention would
14 HONEYWELL INT’L INC. v. MEXICHEM AMANCO HOLDING S.A.
have been obvious at the time it was made to a person
having ordinary skill in the art—not how it was
achieved.” (internal citation omitted)); In re Fay, 347 F.2d
597, 602 (C.C.P.A. 1965) (“[W]e do not agree that ‘routine
experimentation’ negatives patentability. The last sen-
tence of section 103 states that ‘patentability shall not be
negatived by the manner in which the invention was
made.’”).
We thus conclude that the Board’s analysis was legal-
ly erroneous in its consideration of inherency, in conclud-
ing that unpredictability indicates obviousness, and in
rejecting Honeywell’s objective evidence. Because finding
a motivation to combine the references and consideration
of objective evidence are fact questions, we vacate and
remand for the Board to make determinations consistent
with this opinion.
II
We next consider whether the Board relied on a new
ground of rejection, when it raised Omure as a basis for
dismissing Honeywell’s evidence of unexpected results.
During reexamination, both Mexichem Amanco and
Daikin mentioned Omure in their “Third Party Requester
Comments” after the Non-final Action and the Action
Closing Prosecution, and Mexichem Amanco proposed a
rejection based on Omure. Joint Appendix 1365, 1567,
8588. However, the Examiner never addressed those
comments or entered the proposed rejection. Yet in its
review of Honeywell’s evidence of unexpected results, the
Board relied on Omure as evidence that, although one of
ordinary skill would not have expected success in combin-
ing HFO-1234yf with a PAG lubricant, one would also not
have expected failure. See Decision, 2016 WL 1254603, at
*14 (“[A]s evidenced by Omure, the skilled artisan would
no more have expected failure with respect to the stability
of combining hydrofluoroolefins with PAG than would
have expected success.” (emphases added)). The Board
HONEYWELL INT’L INC. v. MEXICHEM AMANCO HOLDING S.A. 15
found Honeywell’s evidence to be unpersuasive of nonob-
viousness, based on Omure’s teachings. The question
before us is whether that reliance on Omure constituted a
new ground of rejection.
Under the Administrative Procedure Act (“APA”), the
PTO must ensure that the parties before it are “fully and
fairly treated at the administrative level.” Rambus Inc. v.
Rea, 731 F.3d 1248, 1255 (Fed. Cir. 2013) (internal quota-
tion marks omitted). The APA requires the PTO “to
provide prior notice . . . of all matters of fact and law
asserted prior to an appeal hearing before the Board.” Id.
(internal quotation marks omitted). Such a framework
“limits the Board’s ability to rely on different grounds
than the examiner.” Id.
When considering whether the Board issued a new
ground of rejection, the “ultimate criterion” is “whether
applicants have had fair opportunity to react to the thrust
of the rejection.” Id. (internal quotation marks omitted).
While the Board need not “recite and agree with the
examiner’s rejection in haec verba” to avoid issuing a new
ground of rejection, mere reliance on the same statutory
basis and the same prior art references, alone, is insuffi-
cient to avoid making a new ground of rejection when the
Board “relies on new facts and rationales not previously
raised to the applicant by the examiner.” Id. (emphasis
added) (internal quotation marks omitted). A new ground
of rejection, however, generally will not be found based on
the Board “further explain[ing] the examiner’s rejection”
or the Board’s thoroughness in responding to an appli-
cant’s argument. See In re Jung, 637 F.3d 1356, 1364–65
(Fed. Cir. 2011). Whether the Board relied on a new
ground of rejection is a legal issue that we review de novo.
Rambus, 731 F.3d at 1343.
Honeywell argues that the Board relied on a new
ground of rejection in its reliance on Omure, which was
never mentioned or relied upon by the Examiner. Hon-
16 HONEYWELL INT’L INC. v. MEXICHEM AMANCO HOLDING S.A.
eywell asserts that, during reexamination, the patent
owner responds only to the Examiner’s rejections, not to
the “unacknowledged arguments” of the Requesters.
Appellant’s Br. 41. Therefore, Honeywell contends, even
though Mexichem raised Omure with the Examiner, “the
Examiner did not have a position on Omure, so Honeywell
could not address that position.” Id. at 43. Thus, Honey-
well continues, it did not have notice of or an opportunity
to respond to Omure, and the Board’s reliance on it con-
stituted a new ground of rejection.
Mexichem responds that the Board relied on Omure
only to explain why Honeywell’s evidence of secondary
considerations did not support a determination of nonob-
viousness. Ultimately, Mexichem argues, “the thrust of
the Board’s analysis of secondary considerations was the
same as that of the Examiner.” Appellee’s Br. 25–26.
We disagree. The Board’s analysis was different from
that of the Examiner. During its analysis of Honeywell’s
evidence of secondary considerations, the Board expressly
stated that it “disagree[d]” with the Examiner’s treatment
of that evidence. See Decision, 2016 WL 1254603, at *13
(“The Examiner determined that the stability data ‘do not
contradict the fact that the stability is an inherent prop-
erty of the refrigerant/lubricant pair.’ We disagree. Even
inherent properties, to the extent that they demonstrate
results beyond what would have been expected to one of
ordinary skill in the art . . . must be considered according-
ly.” (emphasis added)).
The Board instead concluded that Honeywell’s evi-
dence persuasively shows the “overall unpredictability” of
the art, but that Omure is evidence that one of ordinary
skill would not have expected failure in combining HFO-
1234yf with PAG lubricants. Id. at *14–15. Accordingly,
the Board rejected the Examiner’s conclusions regarding
the evidence of unexpected results and instead relied on
Omure to find the evidence unpersuasive.
HONEYWELL INT’L INC. v. MEXICHEM AMANCO HOLDING S.A. 17
Thus, it is not correct that “the thrust of the Board’s
analysis of secondary considerations was the same as that
of the Examiner,” Appellee’s Br. 25–26, when the Board
expressly disagreed with the Examiner’s reasons and
instead stated reasons of its own, based on Omure. As in
prior cases where we have found a new ground of rejec-
tion, the Board’s findings regarding Omure here were
“completely new” and the Board did more than merely
“elaborate on the examiner’s findings with more detail.”
Rambus, 731 F.3d at 1256 (internal quotation marks
omitted). It expressly rejected the Examiner’s findings
and then articulated findings of its own.
Furthermore, it cannot be said that Honeywell had a
“fair opportunity to react to the thrust of the rejection,” as
premised on Omure. Id. at 1255. Mexichem raised
Omure with the Examiner, who did not adopt or respond
to that argument. As Honeywell notes, during reexami-
nation, the patent owner responds to the Examiner’s
reasoning, not to the Requesters’ unadopted arguments.
Thus, because the Examiner did not credit Omure’s
teachings in issuing the rejections, Honeywell had no
reason to respond to Mexichem’s arguments regarding
Omure. We have held in an original application setting
that “[i]t is crucial that the examiner issue a rejec-
tion . . . so the applicant is on notice that it is obligated to
respond.” In re Stepan Co., 660 F.3d 1341, 1344–45 (Fed.
Cir. 2011) (emphasis added). Moreover, “[a] new ground
of rejection is not negated by the fact that the Board is
responding to [a party’s] argument.” In re Biedermann,
733 F.3d 329, 338 (Fed. Cir. 2013). “Notice does not focus
on the applicant’s arguments divorced from the examin-
er’s rejections of record that are actually appealed to the
Board. Instead, it focuses on the ‘adverse decisions of
examiners’ during prosecution which form the basis of the
Board’s scope of review.” Stepan, 660 F.3d at 1346 (em-
phasis added) (citing 35 U.S.C. § 6(b)). Thus, even though
Mexichem raised Omure with the Examiner, the Examin-
18 HONEYWELL INT’L INC. v. MEXICHEM AMANCO HOLDING S.A.
er never relied upon, or even mentioned, Omure, so Hon-
eywell was not on notice that it needed to respond to that
argument.
In sum, we conclude that the Board’s reliance on
Omure constituted a new ground of rejection. We there-
fore vacate the Board’s decision and remand with instruc-
tions to designate its rejection as a new ground of
rejection, if it intends to continue relying on Omure in
evaluating Honeywell’s appeal.
Honeywell separately argues that the Examiner erred
in rejecting dependent claims 36, 37, 46–49, 70, and 75.
However, because we find the Board’s analysis of the
representative independent claim legally flawed, we need
not address those separate arguments.
CONCLUSION
We have considered the parties’ remaining arguments
but find them to be unpersuasive. For the foregoing
reasons, we vacate and remand the decision of the Board.
VACATED AND REMANDED
COSTS
Costs to Honeywell.
United States Court of Appeals
for the Federal Circuit
______________________
HONEYWELL INTERNATIONAL INC.,
Appellant
v.
MEXICHEM AMANCO HOLDING S.A. DE C.V.,
DAIKIN INDUSTRIES, LTD.,
Appellees
______________________
2016-1996
______________________
Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in Nos. 95/002,189,
95/002,204.
______________________
WALLACH, Circuit Judge, dissenting-in-part.
The instant appeal concerns whether certain claims of
U.S. Patent No. 7,534,366 (“the ’366 patent”) would have
been obvious over various prior art references. In consoli-
dated inter partes reexaminations, an examiner with the
U.S. Patent and Trademark Office (“PTO”) concluded that
the claims are invalid as obvious, basing its decision on
twenty-eight different grounds of rejection. See J.A.
2548–78. The PTO’s Patent Trial and Appeal Board
(“PTAB”) affirmed the Examiner’s conclusions in full. See
generally Mexichem Amanco Holding S.A. De C.V. v.
Honeywell Int’l Inc., No. 2015-006430, 2016 WL 1254603
(P.T.A.B. Mar. 29, 2016).
2 HONEYWELL INT’L INC. v. MEXICHEM AMANCO HOLDING S.A.
I agree with the majority’s decision to vacate and re-
mand the consolidated reexaminations to the PTAB,
except for the discussion pertaining to a purported new
ground of rejection issued by the PTAB. I respectfully
disagree with the majority’s conclusion that the PTAB
“relied on a new ground of rejection[] when it raised
[Japanese Patent Application No. H05-85970 (‘Omure’)
(J.A. 7956–60)] as a basis for dismissing Honeywell’s
evidence of unexpected results” in its analysis of second-
ary considerations. Maj. Op. 14. Rather, under the facts
of this case, I conclude that the PTAB did not issue a new
ground of rejection. The analysis below focuses solely on
that point of disagreement with the majority.
A. Standard of Review and Legal Standard for New
Ground of Rejection
“Whether the [PTAB] relied on a new ground of rejec-
tion is a legal question that we review de novo.” In re
Stepan Co., 660 F.3d 1341, 1343 (Fed. Cir. 2011). “When
considering whether the [PTAB] issued a new ground of
rejection, the ultimate criterion of whether a rejection is
considered new in a decision by the [PTAB] is whether
applicants have had fair opportunity to react to the thrust
of the rejection.” In re Biedermann, 733 F.3d 329, 337
(Fed. Cir. 2013) (internal quotation marks and citation
omitted). The PTAB is not limited to “recit[ing] and
agree[ing] with the examiner’s rejection in haec verba”;
indeed, it may “further explain[] the examiner’s rejection”
and thoroughly “respond[] to an applicant’s argument.”
Id. (internal quotation marks and citations omitted).
However, if the PTAB “finds facts not found by the exam-
iner regarding the differences between the prior art and
the claimed invention, and these facts are the principal
evidence upon which the [PTAB]’s rejection was based,”
then the PTAB improperly enters a new ground of rejec-
tion. In re Leithem, 661 F.3d 1316, 1320 (Fed. Cir. 2011)
(citation omitted).
HONEYWELL INT’L INC. v. MEXICHEM AMANCO HOLDING S.A. 3
B. The PTAB Did Not Issue a New Ground of Rejection
The majority holds that the PTAB’s analysis of claims
1, 3, 5–6, 8, 11–16, 18–20, 23–25, and 31–33 of the ’366
patent (“subject claims”) “was different from that of the
Examiner” because “[d]uring its analysis of Honeywell’s
evidence of secondary considerations, the [PTAB] express-
ly stated that it disagreed with the Examiner’s treatment
of that evidence.” Maj. Op. 16 (internal quotation marks,
brackets, and citation omitted). 1 Specifically, the majority
believes that the PTAB “rejected the Examiner’s conclu-
sions regarding the evidence of unexpected results and
instead relied on Omure to find the evidence unpersua-
sive.” Id. I do not agree with this assessment of the
record.
Having concluded that the record supported the Ex-
aminer’s determination that a prima facie case of obvi-
ousness exists as to the subject claims, Mexichem, 2016
WL 1254603, at *5–11, the PTAB next considered Honey-
well’s evidence relating to secondary considerations of
non-obviousness, including whether a nexus exists be-
tween what was claimed in the ’366 patent and the evi-
dence of secondary considerations submitted, see id. at
*11–15; see also Apple Inc. v. Samsung Elecs. Co., 839
F.3d 1034, 1052–53 (Fed. Cir. 2016) (en banc) (“[E]vidence
of secondary considerations . . . is to be considered as part
of all the evidence, not just when the decisionmaker
remains in doubt after reviewing the art.” (citation omit-
ted)). The PTAB’s affirmative analysis of whether the
requisite nexus exists here does not mention Omure. See
Mexichem, 2016 WL 1254603, at *5–13, an approach that
1 While the majority opinion does not mention the
specific subset of claims, the enumerated “subject claims”
are those claims the PTAB analyzed specifically with
respect to Omure. See Mexichem, 2016 WL 1254603, at
*5–15.
4 HONEYWELL INT’L INC. v. MEXICHEM AMANCO HOLDING S.A.
tracks the Examiner’s, see J.A. 2548–605. Therefore, the
PTAB’s analysis of secondary considerations does not
include an improper new ground of rejection.
Although the PTAB discussed Omure in other por-
tions of its secondary considerations analysis in rejecting
Honeywell’s arguments, that discussion does not alone
necessitate a different conclusion because the PTAB’s
analysis of Omure was not “the principal evidence upon
which the [PTAB]’s rejection was based.” Leithem, 661
F.3d at 1320 (citation omitted). The PTAB’s discussion of
Omure was limited to consideration of Honeywell’s argu-
ment that the claimed combination of a known refriger-
ant, 2,3,3,3-tetrafluoropropene (also known as “1,1,1,2-
tetrafluoropropene” or “HFO-1234yf”), with a known poly
alkylene glycol (“PAG”) lubricant exhibited an unexpected
superior stability. See Mexichem, 2016 WL 1254603, at
*13–15. The PTAB disagreed with Honeywell, basing its
conclusion in part on statements in Omure. See id. The
PTAB’s discussion of Omure reflects the reality that the
PTAB addresses arguments presented by adverse parties,
and we have permitted the PTAB to thoroughly respond
to such arguments in its decisions without the fear of
entering an improper new ground of rejection. See
Biedermann, 733 F.3d at 337. Here, the PTAB discussed
Omure merely to explain why Honeywell’s evidence of
secondary considerations did not overcome the Examiner’s
determination of a prima facie case of obviousness. See
Mexichem, 2016 WL 1254603, at *13–15. That discussion
provided a more thorough explanation of the Examiner’s
conclusion regarding the stability data. See id at *11–15;
see also J.A. 2580–85 (Examiner’s Right of Appeal Notice).
Under such circumstances, the PTAB does not enter an
improper new ground of rejection. See In re Noznick, 391
F.2d 946, 947–48 (CCPA 1968) (“It does not constitute a
new ground of rejection to point out to an appellant why
his arguments are not persuasive of error in the
[e]xaminer’s rejection, nor does it constitute an implied
HONEYWELL INT’L INC. v. MEXICHEM AMANCO HOLDING S.A. 5
invitation to present belated showings to supply the
deficiencies.”); see also In re Jung, 637 F.3d 1356, 1365
(Fed. Cir. 2011) (“To assert that the [PTAB’s] thorough-
ness in responding to [the examiner’s] explanation put it
in the position of a ‘super-examiner’ would limit the
[PTAB] to verbatim repetition of the examiner’s office
actions, which would ill-serve the [PTAB]’s purpose as a
reviewing body.”). For these reasons, I respectfully dis-
sent-in-part.