The Federal Circuit affirmed the Patent Trial and Appeal Board's inter partes review decision declaring various claims of patent owner Thales' U.S. Patent No. 6,474,159 ("the '159 patent") nonobvious. In doing so, the Federal Circuit clarified what constitutes the substantial evidence required to sustain the Board's factual findings on appeal.
As evidence of obviousness, petitioner Elbit proffered expert testimony asserting that the two-step method for calculating a "relative angular rate signal" claimed in the '159 patent is "mathematically equivalent to" and bears "no practical difference" from the three-step method for calculating an object's relative orientation disclosed in the prior art. But the Board dismissed Elbit's expert testimony as being "unsupported" and thus failing to meet "the burden of proving [the claims of the '159 patent are] unpatentable by a preponderance of evidence."
On appeal, the Federal Circuit determined that the Board's conclusion of non-obviousness is supported by substantial evidence, which is described as "relevant evidence as a reasonable mind might accept as adequate to support a conclusion." According to the Federal Circuit's decision, this substantial evidence includes Thales' expert testimony, which differentiated the claimed two-step calculation method from the three-step calculation method disclosed in the prior art by addressing both the mechanics and the advantages of the claimed two-step calculation method. By contrast, Elbit merely argued that a person having ordinary skill in the art would find the claimed two-step calculation method to be an obvious variation of the prior art. But as the Federal Circuit explains, "attorney argument is not evidence." This lack of evidence proved to be a fatal defect in Elbit's argument for obviousness both before the Board and the Federal Circuit.
The Federal Circuit's Elbit decision should serve as a reminder that the substantial evidence standard of review is highly deferential to the Board's factual findings. In fact, the Federal Circuit will sustain the Board's decision to favor any one of two disparate conclusions as long as both conclusions are reasonable in light of the evidence. Arguments that falter before the Board for want of sufficient evidence are therefore unlikely to receive a warmer reception at the Federal Circuit. This uphill evidentiary battle for eventual appellants should urge petitioners and respondents alike to scrutinize, at the outset of inter partes review, the viability of their arguments based on the supporting evidence.
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