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    6367   JP3481800005

DAIKIN INDUSTRIES,LTD.

(6367)
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End-of-day quote. End-of-day quote Japan Exchange - 10/27
25705 JPY   +0.43%
10/17CHEMOURS : Traversing Obviousness Rejections
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10/06DAIKIN INDUSTRIES : Group Releases Its Sustainability Report 2021
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09/29DAIKIN INDUSTRIES,LTD. : Ex-dividend day for interim dividend
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Daikin Industries : Federal Circuit Clarifies The "Teaches Away" Doctrine And The "Substantial Evidence" Requirement When Making An Obviousness Determination

08/24/2021 | 06:10am EDT

On July 22, 2021, in  Chemours Company FC, LLC v. Daikin Industries, Ltd. ("Chemours v. Daikin"), the United States Court of Appeals for the Federal Circuit ("Federal Circuit") reversed a decision made by the Patent Trial and Appeal Board ("PTAB"). In two inter partes reviews ("IPRs") filed by Daikin Industries, Ltd. ("Daikin"), the PTAB held that the relevant claims of two patents owned by Chemours Company FC, LLC ("Chemours"), US Patent No. 7,122,609 ("the '609 patent") and US Patent No. 8,076,431 ("the '431 patent"), were unpatentable as obvious in view of US Patent No. 6,541,588 ("Kaulbach"). Chemours appealed and the two cases were consolidated and reviewed by the Federal Circuit in Chemours v. Daikin. The Federal Circuit ultimately reversed the PTAB's decision. Hopefully, Chemours v. Daikin can help to clarify aspects of the obviousness determination. The Federal Circuit held that the PTAB's obviousness determination was not supported by substantial evidence and that the PTAB erred in its analysis of certain objective indicia of nonobviousness.

The '609 and '431 patents are directed to "a unique polymer for insulating communication cables formed by pulling wires through melted polymer to coat and insulate the wires, a process known as 'extrusion'". Relevant to the obviousness determination, the relevant claims of the '609 and '431 patent recited that the polymer has a high melt flow rate of "about 30±3 g/10 min". The melt flow rate is the "rate at which melted polymer flows under pressure". Essentially, "[t]he higher the melt flow rate, the faster the polymer can be coated onto a wire". Kaulbach's exemplary embodiment taught a melt flow rate of 24 g/10 min, and the PTAB held that the melt flow rate range of Kaulbach "fully encompassed the claimed range, and that a skilled artisan would have been motivated to increase the melt flow rate of Kaulbach's preferred embodiment to within the claimed range in order to coat wires faster." As part of Kaulbach's disclosure, it noted that narrow molecular weight distribution, which "reflects the range of molecular weights (or chain lengths) in a given polymer", is more effective than a broad molecular weight distribution in terms of achieving higher coating speeds. The PTAB concluded that in order to achieve higher coating speeds, a person skilled in the art may have considered increasing Kaulbach's example flow rate of 24 g/10 min to 30±3 g/10 min even if it meant broadening the molecular weight distribution beyond the narrow molecular weight distribution suggested by Kaulbach.

The Federal Circuit held that the PTAB's obviousness findings were not supported by substantial evidence. The Federal Circuit noted that the PTAB did not provide adequate evidence explaining why a person of ordinary skill in the art would have found it obvious to increase the melt flow rate while retaining a narrow molecular weight distribution. The Federal Circuit does not believe that a person having ordinary skill in the art would have been motivated to increase the melt flow rate, "when doing so would necessarily involve altering the inventive concept of a narrow molecular weight distribution polymer." The Federal Circuit noted that Kaulbach teaches away from broadening the molecular weight distribution and other known methods for increasing melt flow rate. The Federal Circuit further notes that Kaulbach references several techniques used to increase melt flow rate and teaches that they should not be used because they may broaden the molecular weight distribution. The court further pointed out that Kaulbach was the only prior art reference cited by the PTAB, and Kaulbach identified a narrow molecular weight distribution as a key feature. Therefore, the Federal Circuit concluded that "modifying Kaulbach as the [PTAB] suggested would not be obvious absent additional evidence supporting that finding." The Federal Circuit agreed with Chemours in that the PTAB needed proof showing that it would have been obvious for a person skilled in the art to increase the melt flow rate of Kaulbach's polymer to the range claimed in the '609 and '431 patents when "all known methods for doing so would go against Kaulbach's invention by broadening molecular weight distribution." Thus, the Federal Circuit held that the PTAB lacked substantial evidence of obviousness.

Judge Dyk of the Federal Circuit concurred in part and dissented in part. Judge Dyk dissented as to the Federal Circuit's decision regarding substantial evidence of obviousness as outlined above. Judge Dyk disagreed with the majority's stance that Kaulbach teaches away from what is claimed in the '609 and '431 patents. Judge Dyk noted that although Kaulbach discovered that a narrow molecular weight distribution performs better than a broad molecular weight distribution, Kaulbach "expressly acknowledged the feasibility of using a broad molecular weight distribution to create polymers for high speed extrusion coating of wires." Judge Dyk cited case law holding "that 'better alternatives exist in the prior art does not mean that an inferior combination is inapt for obviousness purposes.'" Bayer Pharma AG v. Watson Lab'ys, Inc., 874 F.3d 1316, 1327 (Fed. Cir. 2017) (quoting In re Mouttet, 686 F.3d 1322, 1334 (Fed. Cir. 2012)). Thus, Judge Dyk concluded that "[t]he majority's approach impermissibly expands the teaching away doctrine such that it encompasses a reference's mere preference for a particular alternative." Judge Dyk also argued that the majority engaged in appellate fact finding, which has no record support, in holding that modifying the molecular weight distribution of Kaulbach's disclosure would "destroy the basic objective" of Kaulbach.

The Federal Circuit also held that the PTAB erred in its analysis of certain objective indicia of nonobviousness. The PTAB found that there was no nexus between the patents at issue and the alleged commercial success partly because they considered the nexus issue on a feature-by-feature basis rather than considering the patents at issue as a whole. The PTAB noted that Kaulbach disclosed all features of the patents at issue except the claimed melt flow rate and that other prior art disclosed a higher melt flow rate than what was disclosed in the patents at issue. The Federal Circuit held that the PTAB erred because a sufficient nexus can be shown in cases when a unique combination of known elements is combined in a claimed invention. Thus, it is the combination of elements as a whole that is important when considering if a sufficient nexus exists rather than the individual elements of a claimed invention. The Federal Circuit also found that the PTAB erred in its analysis that market share evidence is necessary to show commercial success. Rather, evidence of sales data alone without market share data can be adequate to make a showing of commercial success. The Federal Circuit also found that the PTAB misapplied the "blocking patents" doctrine because the patents at issue cannot act as "blocking patents" to themselves. Judge Dyk agreed with the majority regarding its holdings related to objective indicia of nonobviousness.

Hopefully this decision by the Federal Circuit clarifies the "teaches away" doctrine as well as the requirements for demonstrating "substantial evidence" when making an obviousness determination. Some, such as Judge Dyk, would argue that this decision has expanded the "teaches away" doctrine.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mr Joseph M. Hallman
McKee, Voorhees and Sease
801 Grand Avenue
Suite 3200
Des Moines
IA 50309-2721
UNITED STATES

© Mondaq Ltd, 2021 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com, source Business Briefing

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Sales 2022 2 908 B 25 571 M 25 571 M
Net income 2022 226 B 1 984 M 1 984 M
Net cash 2022 31 116 M 274 M 274 M
P/E ratio 2022 33,3x
Yield 2022 0,75%
Capitalization 7 523 B 66 101 M 66 146 M
EV / Sales 2022 2,58x
EV / Sales 2023 2,36x
Nbr of Employees 84 870
Free-Float 91,6%
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Masanori Togawa President, CEO & Representative Director
Koichi Takahashi GM-Accounting, Finance & Manager-Budget
Noriyuki Inoue Chairman
Takashi Matsuzaki Director, EVP, Head-North America R&D
Jiro Tomita Director, EVP & Head-Production Technology
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