The US Court of Appeals for the Federal Circuit vacated and remanded an obviousness determination by the Patent Trial and Appeal Board (PTAB), holding that the PTAB erred in disregarding a factual finding that the petitioner copied the patented method. Liqwd, Inc. v. L’Oreal USA, Inc., Case No. 18-2152 (Fed. Cir. Oct. 30, 2019) (Reyna, J).

Liqwd owns a patent directed to a method for bleaching hair. L’Oreal filed a petition for post-grant review of the patent on several grounds, including obviousness. Before the PTAB, Liqwd presented evidence purported to show that L’Oreal copied Liqwd’s patented method as an objective indicia of non-obviousness. The evidence showed, among other things, that Liqwd had disclosed to L’Oreal (subject to a non-disclosure agreement) the then-confidential application that ultimately issued as Liqwd’s patent.

The PTAB made a factual finding that L’Oreal used the particular claimed method as a result of its access to Liqwd’s confidential information—i.e., that L’Oreal had copied the patented method. However, the PTAB disregarded this finding because Liqwd failed to show that L’Oreal had copied a specific patented product. The PTAB ultimately determined that the patent claims were obvious. Liqwd appealed.

The Federal Circuit held that it was error for the PTAB to disregard its finding that L’Oreal had copied the patented method. The Court distinguished between cases in which a patentee seeks an inference of copying from the mere similarity of the accused product to its own embodiments of the claimed invention and cases in which there is direct evidence of copying. The Court held, subject to the requirement to show a nexus between the claims and the alleged evidence of copying, that “where there is evidence of actual copying efforts, that evidence is always relevant” to the obviousness inquiry. The Court explained that because the evidence in this case was actual copying efforts by L’Oreal, it was relevant to, and should have been considered in, the obviousness analysis. The Court vacated the PTAB’s obviousness determination and remanded for further proceedings to take into account the finding of copying.

Practice Note: The Court reviewed the PTAB’s factual finding regarding copying for substantial evidence and did not hold that similar evidence would establish copying in other cases. The Court held only that copying was relevant and gave no guidance as to its relative weight in this case, which will presumably be one of the issues on remand.

The Court attempted to contextualize its holding within the long line of cases requiring copying of a specific product. It remains unclear how any tension between the instant holding and the prior line of cases would be resolved if it were reviewed en banc or on further appeal.