Infineum USA L.P. v. Chevron Oronite Co., 2020-1333

INFINEUM USA L.P., Appellant v. CHEVRON ORONITE COMPANY LLC, AppelleeDREW HIRSHFELD, PERFORMING THE FUNCTIONSAND DUTIES OF THE UNDER SECRETARYOF COMMERCE FOR INTELLECTUAL PROPERTYAND DIRECTOR OF THE UNITED STATES PATENTAND TRADEMARK OFFICE, Intervenor

2020-1333

United States Court of Appeals for the Federal Circuit

January 21, 2021

NOTE: This disposition is nonprecedential.

Appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in No. IPR2018-00922.

CHRISTOPHER STRATE, Gibbons P.C., Newark, NJ, for appellant. Also represented by DAVID E. DE LORENZI,

SAMUEL H. MEGERDITCHIAN.

NAVEEN MODI, Paul Hastings LLP, Washington, DC, for appellee. Also represented by STEPHEN BLAKE KINNAIRD, IGOR VICTOR TIMOFEYEV, MICHAEL WOLFE, DANIEL ZEILBERGER; SCOTT FREDERICK PEACHMAN, New York, NY.

DANIEL KAZHDAN, Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA, for intervenor. Also represented by MARY L. KELLY, THOMAS W. KRAUSE, FARHEENA YASMEEN RASHEED.

Before O'MALLEY, TARANTO, and STOLL, Circuit Judges.

STOLL, Circuit Judge.

Infineum USA L.P. appeals from the final written decision of the Patent Trial and Appeal Board holding claims 1-20 of U.S. Patent No. 6,723,685 unpatentable under 35 U.S.C. § 103. The '685 patent claims cover lubricating oil compositions and their use in internal combustion engines. Because substantial evidence supports the Board's determination of obviousness, we affirm.

BACKGROUND

Lubricating oil compositions for internal combustion engines comprise a base oil (or mixture of base oils) of lubricating viscosity and additives used to improve the performance characteristics of the base oil. Base oils are comprised of basestocks classified by the American Petroleum Institute (API) in Groups I-V. Additive components are generally known by their structure and properties and may be used to inhibit corrosion and to reduce engine wear, oil consumption, and friction loss.

Industry standards, such as those set by the International Lubricant Standardization and Approval Committee (ILSAC), set requirements for certain properties, ingredients, and performance of base oils. The ILSAC GF-3 standard, in effect as of the filing date of the '685 patent, set a maximum engine oil volatility of 15%.¹ A higher viscosity index (VI)² reduces base oil and finished oil volatility. The base oil is the primary influence on a finished engine oil's volatility. High VI is a feature of premium, high-quality base oils. Though the GF-3 standard does not recite any particular VI threshold, it was understood that commercially available base oils would need to have a VI of at least 95 for the engine oil to comply with the maximum Noack volatility requirement of 15%. See J.A. 1835, 1847 Fig. 1, 2285-86. At the time of the '685 patent's filing, the industry was using base oils in Groups III and IV and certain base oils in Group II in developing engine oils that would meet the GF-3 standard. See J.A. 566.

Traditionally, anti-wear additive components contained phosphorous. The GF-3 standard set a limit on the phosphorous content of engine oils. Seeking to reduce phosphorous content in additive components, formulators turned to solutions such as oil-soluble molybdenum compounds and organic friction modifiers to control wear and reduce friction.

The '685 patent, titled "Lubricating Oil Composition," was filed on April 5, 2002, and sought "to find a lubricating oil composition that provides improved fuel economy benefit[,] demonstrates excellent wear protectioncharacteristics, is relatively low in cost, and is free of nitrogen-containing friction modifiers." '685 patent col. 1 ll. 63-67.

Claim 1 is the sole independent claim of the '685 patent:

1. A lubricating oil composition comprising:

a) an oil of lubricating viscosity having a viscosity index of at least 95;

b) at least one calcium detergent;

c) at least one oil soluble molybdenum compound;

d) at least one organic ashless nitrogen-free friction modifier; and

e) at least one metal dihydrocarbyl dithiophosphate compound, wherein said composition is substantially free of ashless aminic friction modifiers, has a Noack volatility of about 15 wt. % or less, from about 0.05 to 0.6 wt. % calcium from the calcium detergent, molybdenum in an amount of from about 10 ppm to about 350 ppm from the molybdenum compound, and phosphorus from the metal dihydrocarbyl dithiophosphate compound in an amount up to about 0.1 wt. %.

Id. at col. 13 ll. 47-62.

Chevron Oronite Co. filed a petition for inter partes review challenging all claims of the '685 patent as obvious under 35 U.S.C. § 103 over primary reference Toshikazu³ in view of Henderson.⁴

Toshikazu is a published Japanese patent application titled "Lubricating Oil Composition for Internal Combustion Engines" that discloses formulations having "excellent wear resistance and friction characteristics." Toshikazu ¶ 55. Toshikazu's Examples 1-19 are inventive lubricating oil formulations, most of which contain varying amounts of each of the additive components claimed in the '685 patent. Toshikazu Tables 1-2.

Henderson is a technical paper published in 1998 and discusses the changing requirements for engine oils as of that time. Henderson describes an industry shift toward higher-viscosity, lower-volatility base oils and discusses the then-upcoming GF-3 standard, its requirements, and its expected performance improvements to engine oils.

Relevant to this appeal, the petition challenged claims 1-4, 6-11, and 13-20 as obvious over Toshikazu Example 16 in view of Henderson, and challenged claims 1-20 as obvious over Toshikazu Example 2 in view of Henderson.⁵ Oronite supported its petition with a declaration from its expert, Dr. Donald Smolenski, who has significant experience in lubricating engine oil development and testing.

Infineum did not file a preliminary response to Oronite's petition, and the Board instituted review of all challenged claims on all grounds. Infineum then filed a patent owner response supported by the declaration of its expert, Dr. Jai Bansal. In addition to responding to the merits of Oronite's petition, Infineum's patent owner response argued that Dr. Smolenski was not a person of ordinary skill in the art because he had not worked as a formulator, and that the Board should disregard his testimony in its entirety.

In reply, Oronite argued that Dr. Smolenski was a person of ordinary skill, and it further supported its reply with the declaration of a new expert, Dr. Syed Rizvi, who has experience in engine oil formulation. The Board permitted Infineum to file a sur-reply, in which Infineum responded to Oronite's reply arguments on the merits, in addition to arguing that the Board should disregard Oronite's reply and Dr. Rizvi's testimony in their entirety. The Board denied Infineum's request to file a motion to strike the reply and Dr. Rizvi's testimony, but permitted the parties to file a joint chart identifying reply arguments and evidence that Infineum considered improper.

Relevant to this appeal, the Board issued a final written decision holding claims 1-4, 6-11, and 13-20 obvious over Example 16 of Toshikazu in view of Henderson and holding claims 1-20 obvious over Example 2 of Toshikazu in view of Henderson. Chevron Oronite Co. v. Infineum USA L.P., IPR2018-00922, 2019 WL 5806946, at *14-15, *17-19, *21-23 (P.T.A.B. Nov. 6, 2019) (Decision).

Infineum appeals. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(4).

DISCUSSION

On appeal, Infineum argues that the Board improperly relied on new theories and evidence raised for the first time in Oronite's reply, that substantial evidence does not support the Board's decision, and that the decision runs afoul of certain constitutional provisions. We address each set of arguments in turn.

I

Infineum first asserts that the Board improperly relied on certain new theories and evidence that Oronite raised for the first time in its reply. We disagree.

"Whether the Board improperly relied on new arguments is reviewed de novo." Nike, Inc. v. Adidas AG, 955 F.3d 45, 50 (Fed. Cir. 2020) (citing In re IPR Licensing, Inc., 942 F.3d 1363, 1369 (Fed. Cir. 2019)). The IPR provisions of the America Invents Act (AIA) require that a petition identify, "with particularity, each claim challenged, the grounds on which the challenge to each claim is based, and the evidence that supports the grounds for the challenge to each claim." 35 U.S.C. § 312(a)(3). The regulations implementing the AIA further state that "[a] reply may only respond to arguments raised in the corresponding opposition, patent owner preliminary response, or patent owner response." 37 C.F.R. § 42.23(b); see also 35 U.S.C. § 316(a). Because an IPR must proceed "'[i]n accordance with' or 'in conformance to' the petition," SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348, 1356 (2018) (alteration in original) (quoting Oxford English Dictionary (3d ed., Mar. 2016), www.oed.com/view/Entry/155073), it would "not be proper for the Board to deviate from the grounds in the petition and raise its own obviousness theory," Sirona Dental Sys. GmbH v. Institut Straumann AG, 892 F.3d 1349, 1356 (Fed. Cir. 2018).

As inter partes review is a formal adjudication, the Administrative Procedures Act (APA) also "imposes certain procedural requirements on the agency." Genzyme Therapeutic Prods. Ltd. v. Biomarin Pharm. Inc., 825 F.3d 1360, 1365-66 (Fed. Cir. 2016). For example, "[i]n interpreting the APA's notice provisions in the context of IPR proceedings, we have cautioned that 'an agency may not change theories in midstream without giving respondents reasonable notice of the change and the opportunity to present argument under the new theory.'" Nike, 955 F.3d at 52 (first quoting SAS Inst., Inc. v. ComplementSoft, LLC, 825 F.3d 1341, 1351 (Fed. Cir. 2016), rev'd on other grounds, 138 S. Ct. 1348 (2018); and then citing Genzyme, 825 F.3d at 1366).

But the AIA and APA do not uniformly preclude the introduction of new...