Basf Corporation v. Ingevity South Carolina, LLC

• Court: Court of Appeals for the Federal Circuit
• Decided: June 22, 2023
• Docket: 22-1129
• Status: Unpublished

Opinion

Case: 22-1129 Document: 58 Page: 1 Filed: 06/22/2023

NOTE: This disposition is nonprecedential.

United States Court of Appeals for the Federal Circuit ______________________

BASF CORPORATION, Appellant

v.

INGEVITY SOUTH CAROLINA, LLC, Appellee ______________________

2022-1129 ______________________

Appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in No. PGR2020- 00037. ______________________

Decided: June 22, 2023 ______________________

PAUL ALESSIO MEZZINA, King & Spalding LLP, Wash- ington, DC, argued for appellant. Also represented by JOSHUA NATHANIEL MITCHELL; BRIAN EUTERMOSER, MIKAELA STONE, Denver, CO.

BRIAN BUROKER, Gibson, Dunn & Crutcher LLP, Wash- ington, DC, argued for appellee. Also represented by VLADIMIR J. SEMENDYAI; KATHERINE QUINN DOMINGUEZ, New York, NY; NATHANIEL RYAN SCHARN, BRIAN YANG, Ir- vine, CA. Case: 22-1129 Document: 58 Page: 2 Filed: 06/22/2023

______________________

Before LOURIE, DYK, and STOLL, Circuit Judges. STOLL, Circuit Judge. BASF Corporation appeals the Patent Trial and Appeal Board’s final written decision determining that BASF failed to show that certain claims of U.S. Patent No. 10,323,553 were unpatentable as indefinite or obvious. We affirm in part, vacate in part, and remand. In particu- lar, we hold that, based on its statement that it need not consider BASF’s evidence, the Board failed to properly con- sider the record evidence and adequately explain its ra- tionale for indefiniteness. We therefore vacate the Board’s indefiniteness determination and remand for further pro- ceedings. We otherwise find no reversible error in the Board’s obviousness determination and affirm the Board’s decision in that regard. BACKGROUND Ingevity South Carolina, LLC owns the ’553 patent, which relates to systems for reducing fuel vapor emissions in low purge conditions, e.g., in hybrid vehicles. ’553 pa- tent col. 1 ll. 22–25, col. 2 ll. 55–65. Gasoline-powered motor vehicles are equipped with a vented fuel tank to allow for fuel vapors to expand and con- tract. As a result, fuel vapors escape to the atmosphere through the fuel tank’s vent and pollute the air. These fuel vapor emissions are known as diurnal breathing losses (DBLs). To reduce fuel vapor emissions, engineers devel- oped adsorption canister systems. First, honeycomb- shaped volumes made of adsorbent material, such as acti- vated carbon, collect fuel vapors while allowing other com- ponents to pass through. But adsorbent volumes can only adsorb so much vapor; so, once the adsorbent volumes reach their limit, non-adsorbed fuel vapors escape into the atmosphere. To address this issue, the vehicle’s engine— Case: 22-1129 Document: 58 Page: 3 Filed: 06/22/2023

BASF CORPORATION v. INGEVITY SOUTH CAROLINA, LLC 3

while on—draws air back through the canister, and the ad- sorbed fuel vapors are drawn back into the engine (desorp- tion) and burned (purge). This canister system, however, was not as effective for hybrid vehicles because the engines in hybrid vehicles do not run as frequently as traditional gasoline-powered vehicles and thus spend less time in this second, desorption phase. Hence, hybrid vehicles operate in “low purge” conditions. The ’553 patent purports to reduce fuel vapor emis- sions in hybrid vehicles using a canister system with an initial adsorbent volume and at least one subsequent ad- sorbent volume with lower adsorptive properties (i.e., lesser adsorptive capacity) than the initial adsorption vol- ume. ’553 patent Abstract. For example, as depicted below in Figure 4 of the patent, fuel-side adsorbent volume 201 would have a higher adsorption capacity than at least one of the subsequent adsorbent volumes 202, 203, 204, or 301:

Id. at Fig. 4, col. 4 l. 61–col. 5 l. 3. Claim 1 is illustrative and describes the characteristics of the adsorbent volumes: Case: 22-1129 Document: 58 Page: 4 Filed: 06/22/2023

1. An evaporative emission control canister system, including one or more canisters and comprising: a fuel-side adsorbent volume having an ef- fective incremental adsorption capacity at 25° C. of greater than 35 grams n-butane/L between vapor concentration of 5 vol % and 50 vol % n-butane; and at least one subsequent adsorbent volume having an effective incremental adsorption capacity at 25° C. of less than 35 grams n- butane/L between vapor concentration of 5 vol % and 50 vol % n-butane, an effective butane working capacity (BWC) of less than 3 g/dL, and a g-total BWC of ≤6 grams, wherein the fuel-side adsorbent volume having an effective incremental adsorption capacity at 25° C. of greater than 35 grams n-butane/L between vapor concentration of 5 vol % and 50 vol % n-butane, and the at least one subsequent adsorbent volume are located within a single canister, or in sepa- rate canisters that are connected to permit sequential contact by fuel vapor, and wherein the canister system has a two-day diurnal breathing loss (DBL) of no more than 20 mg at no more than 100 BV of purge applied after a 40 g/hr butane load- ing step. Id. at col. 23 ll. 18–40. BASF, a competitor in the design and manufacture of carbon honeycombs, petitioned for post-grant review of claims 1–10, 14–28, 32–38, 51, 52, 55–57, 59, 64–72, and 76–82 of the ’553 patent. BASF asserted that the chal- lenged claims are indefinite and would have been obvious Case: 22-1129 Document: 58 Page: 5 Filed: 06/22/2023

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over Hiltzik1 in view of Clontz WIPO 2 and Clontz SAE. 3 Hiltzik is Ingevity’s own patent, shares two common inven- tors with the ’553 patent, and discloses similar subject matter as the limitations of claim 1, but not the low-purge performance limitation: “wherein the canister system has a two-day diurnal breathing loss (DBL) of no more than 20 mg at no more than 100 BV of purge applied after a 40 g/hr butane loading step.” The Board held that BASF had not shown the challenged claims were unpatentable under either ground. BASF Corp. v. Ingevity S.C., LLC, 2021 Pat. App. LEXIS 5450, at *47–48 (P.T.A.B. Sept. 9, 2021) (Decision). BASF appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(4)(A). DISCUSSION BASF challenges the Board’s indefiniteness and obvi- ousness determinations. Ingevity challenges BASF’s standing for this appeal. We address the threshold issue 4

of standing before addressing the Board’s indefiniteness and obviousness determinations. I We begin with standing. Ingevity argues that BASF lacks standing because BASF failed to provide evidence of

1 U.S. Patent No. RE38,844. 2 WO 2009/061533 A1. 3 Clontz, R., et al., Effects of Low-Purge Vehicle Ap- plications and Ethanol-Containing Fuels on Evaporative Emissions Canister Performance, SOC’Y AUTO. ENG’RS JAPAN (2007). 4 Ingevity filed a motion to terminate BASF’s appeal, alleging that BASF lacked Article III standing. ECF No. 9. We denied the motion and directed the parties to address standing in their merits briefing. ECF No. 20. Case: 22-1129 Document: 58 Page: 6 Filed: 06/22/2023

a likely infringing act in the United States or concrete busi- ness plans for a BASF product that could lead to such an act. Appellee’s Br. 58. Specifically, Ingevity contends that BASF does not explain what testing, manufacturing, or selling of its products has occurred in the United States; BASF has not explicitly named interested customers; and BASF’s business plans are speculative in light of the lengthy validation process required for products on vehicle platforms in the United States. Id. at 58–62. BASF contends that it has standing because Ingevity previously sued it for infringement of Hiltzik—directed to an invention similar to the ’553 patent—based on BASF’s use and testing of EvapTrap XC, its previously produced activated carbon product. Appellant’s Br 62–65; see Com- plaint, Ingevity Corp. v. BASF Corp., No. 1:18CV01391, 2018 WL 11360396 (D. Del. Sept. 6, 2018). Mr. Joseph Moonjely, BASF’s in-house counsel, explained that BASF’s product was developed to be used in U.S. vehicles and to meet U.S. emissions standards, and BASF can currently manufacture and provide its product to customers. Appel- lant’s Br. 62–65 (citing Moonjely Decl. ¶¶ 9, 29–30); Reply Br. 34–35. Mr. Moonjely also stated that interested cus- tomers have inquired about the product’s pricing and in- ventory for use on vehicle platforms in the United States. Moonjely Decl. ¶ 29. BASF, as the party invoking federal jurisdiction, bears the burden of establishing standing. Spokeo, Inc. v. Rob- ins, 578 U.S. 330, 338 (2016), as revised (May 24, 2016). To establish Article III standing, BASF must show: (1) it “suf- fered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Id. To demonstrate the requisite injury in an appeal from a final written decision in a post grant review, “we have concluded that it is generally sufficient for the appellant to show that it has engaged in, is engaging in, or will likely engage in ‘activity that would give rise to a possible infringement Case: 22-1129 Document: 58 Page: 7 Filed: 06/22/2023

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suit.’” Grit Energy Sols., LLC v. Oren Techs., LLC, 957 F.3d 1309, 1319 (Fed. Cir. 2020) (quoting Consumer Watchdog v. Wis. Alumni Rsch. Found., 753 F.3d 1258, 1262 (Fed. Cir. 2014)). BASF “need not face ‘a specific threat of infringement litigation by the patentee’ to estab- lish jurisdiction,” but rather need only “generally show a controversy ‘of sufficient immediacy and reality’ to warrant the requested judicial relief.” E.I. DuPont de Nemours & Co. v. Synvina C.V., 904 F.3d 996, 1004 (Fed. Cir. 2018) (quoting ABB Inc. v. Cooper Indus., LLC, 635 F.3d 1345, 1348 (Fed. Cir. 2011)). We are satisfied that BASF has met its burden of es- tablishing standing. “[F]or purposes of assessing stand- ing,” we accept Mr. Moonjely’s declaration “as true . . . material representations of fact.” Amerigen Pharms. Ltd. v. UCB Pharma GmBH, 913 F.3d 1076, 1083 (Fed. Cir. 2019). We have previously found a substantial risk of fu- ture infringement where the appellant “operates a plant [that is] capable of infringing the . . . patent” at issue. DuPont, 904 F.3d at 1004–05. We have also held that prior litigation involving, for example, the patent-in-suit or re- lated patents “presents an even stronger basis for stand- ing.” Google LLC v. Conversant Wireless Licensing S.A.R.L., 753 F. App’x 890, 894 (Fed. Cir. 2018) (non-prec- edential) (finding appellants’ risk of infringement concrete and substantial where appellant was previously accused of patent infringement by the appellee); see also Adidas AG v. Nike, Inc., 963 F.3d 1355, 1357 (Fed. Cir. 2020) (finding the appellant had standing where the appellee asserted the patent-at-issue against a third-party product similar to that of the appellant’s). Here, BASF has demonstrated that it plans to sell its product in the United States and was previously sued by Ingevity. Because BASF “has con- crete plans for future activity that create[] a substantial risk of future infringement or likely cause the patentee to assert a claim of infringement,” JTEKT Corp. v. GKN Auto. Ltd., 898 F.3d 1217, 1221 (Fed. Cir. 2018), we conclude that Case: 22-1129 Document: 58 Page: 8 Filed: 06/22/2023

BASF has satisfied the requirements for Article III stand- ing. II We thus proceed to the merits of BASF’s appeal. We review the Board’s ultimate conclusions of indefiniteness and obviousness de novo and its underlying fact determi- nations for substantial evidence. Guangdong Alison Hi- Tech Co. v. Int’l Trade Comm’n, 936 F.3d 1353, 1359 (Fed. Cir. 2019); TQ Delta, LLC v. CISCO Sys., Inc., 942 F.3d 1352, 1357 (Fed. Cir. 2019). The substantial evidence standard asks whether, after examining the record evi- dence, “a reasonable fact finder could arrive at the agency’s decision.” TQ Delta, 942 F.3d at 1358. BASF challenges the Board’s findings that (1) two methods of measuring adsorption capacity—the gravimet- ric and volumetric measurement methods—are compara- ble; and (2) a skilled artisan would not have been motivated to dilute Hiltzik’s honeycomb to achieve lower emissions in view of Clontz SAE. We address each issue in turn. A BASF challenges the Board’s rejection of its indefinite- ness ground as being arbitrary and capricious and not sup- ported by substantial evidence. Appellant’s Br. 30–43. The challenged claims recite “an effective incremental ad- sorption capacity.” For example, Claim 1 requires “a fuel- side adsorbent volume having an effective incremental ad- sorption capacity [(IAC)] . . . of greater than 35 grams n- butane/L” and “at least one subsequent adsorbent volume having an effective incremental adsorption capacity . . . of less than 35 grams n-butane/L.” ’553 patent col. 9 ll. 6–25, col. 23 ll. 20–26 (emphases added). The ’553 patent dis- closes two different methods of measuring effective IAC: a gravimetric method and a volumetric method. Id. at col. 13 l. 60–col. 14 l. 54. Case: 22-1129 Document: 58 Page: 9 Filed: 06/22/2023

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BASF argued before the Board that the challenged claims are indefinite because the patent specification fails to teach with reasonable certainty how the effective IAC should be measured, and the specification articulates two measurement methods that give varying results. Appel- lant’s Br. 30–31 (“[W]hen ‘different approaches to measure- ment are involved,’ the patent ‘must disclose a single known approach or establish that, where multiple known approaches exist, a [skilled artisan] would know which ap- proach to select.’” (quoting Dow Chem. Co. v. Nova Chems. Corp. (Can.), 803 F.3d 620, 630 (Fed. Cir. 2015)). In sup- port, BASF offered a memorandum from its expert Dr. Guo, as well as third-party testing, to show alleged sig- nificant differences between results determined using the gravimetric and volumetric methods. See Decision, 2021 Pat. App. LEXIS 5450, at *17; J.A. 2055; J.A. 3092. In response, Ingevity offered contrary evidence, such as peer-reviewed articles and expert testimony, to show that the two measurement methods “were known to measure equivalent adsorption capacities and were viewed as com- patible with each other.” Decision, 2021 Pat. App. LEXIS 5450, at *17. This evidence showed, Ingevity argued, that the large differences found in BASF’s testing resulted from “instrument inaccuracies and experimental error.” Id. The Board ultimately found that BASF had not estab- lished indefiniteness of the claims by a preponderance of the evidence. Id. at *18. On appeal, BASF argues that the Board credited Ingevity’s evidence and failed to consider its contrary evidence of indefiniteness, including its third- party testing evidence. Appellant’s Br. 37–40. The Board’s opinion states in relevant part: We find that the evidence submitted by Patent Owner as to the gravimetric and volumetric meas- urement techniques demonstrates that they were well established in the art as comparable methods for measuring adsorption capacity, and Case: 22-1129 Document: 58 Page: 10 Filed: 06/22/2023

accordingly, not a basis for determining claim in- definiteness. Because this determination is dispositive as to Pe- titioner’s indefiniteness challenge, we need not ad- dress Petitioner’s allegations as to the measurement differences . . . . Decision, 2021 Pat. App. LEXIS 5450, at *19 (emphasis added; citations omitted). The Board’s statement suggests that, because it found Ingevity’s evidence on indefiniteness convincing, the Board did not consider BASF’s evidence on the issue. Substantial evidence review “asks whether a reasona- ble fact finder could have arrived at the agency’s decision, and involves examination of the record as a whole, taking into account evidence that both justifies and detracts from an agency’s decision.” TQ Delta, 942 F.3d at 1358 (quota- tions omitted). Although our review under the Administra- tive Procedure Act (APA) is deferential, id., the Board must “explain[] its decisions with sufficient precision, including the underlying factfindings and [its] rationale,” Packard Press, Inc. v. Hewlett-Packard Co., 227 F.3d 1352, 1357 (Fed. Cir. 2000). Indeed, “the Board may not short-cut its consideration of the factual record before it.” Princeton Vanguard, LLC v. Frito-Lay N. Am., Inc., 786 F.3d 960, 970 (Fed. Cir. 2015); see id. (“Though the Board is not required to discuss every piece of evidence, it cannot . . . disregard [the appellant’s] evidence without explanation.”). At oral argument, Ingevity asserted that the Board did weigh BASF’s evidence against Ingevity’s. For example, Ingevity suggested the Board noted that Dr. Zielinski, who oversaw BASF’s third-party testing, also wrote one of the peer-reviewed publications submitted by Ingevity. See Oral Arg. at 16:12–17:13, https://oralargu- ments.cafc.uscourts.gov/default.aspx?fl=22-1129_0503202 3.mp3. In Ingevity’s view, the Board made a credibility Case: 22-1129 Document: 58 Page: 11 Filed: 06/22/2023

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finding and determined that Dr. Zielinski’s peer-reviewed article was more reliable than the third-party testing, in light of the other evidence in the record. Id. In other words, Ingevity argued that the Board considered the evi- dence submitted by BASF and Ingevity, and ultimately de- termined that Ingevity’s evidence established that the volumetric and gravimetric techniques are comparable methods in the art. Id. at 16:12–17:43; see id. at 18:12– 18:26 (“All you have to do is find a path to their outcome, which is clear—[the Board] found the peer-reviewed arti- cles . . . and unbiased materials to be more compelling.”). But the Board did not explain whether it found Ingevity’s evidence more credible; nor did it explain whether it found BASF’s testing unreliable and therefore did not give that evidence any weight. See id. at 17:43–18:16. While we may well have affirmed the Board had it articulated any of these purported reasons for its conclusion, we cannot meaning- fully review the Board’s opinion to determine whether its underlying factual finding is supported by substantial evi- dence because we cannot discern the basis for the Board’s finding—other than its very clear statement that it need not consider BASF’s evidence. Such a statement, without further elaboration, runs afoul of the APA’s requirement to consider all the evidence and thus the Board’s analysis is improper. We therefore vacate the Board’s decision regarding BASF’s indefiniteness challenge and remand for the Board to consider all the proffered evidence of record and make the relevant factual findings and legal conclusion regard- ing indefiniteness. B We now turn to BASF’s challenge to the Board’s finding on motivation to combine the asserted prior art. Appel- lant’s Br. 43–61. Claim 1 is illustrative and requires “at least one subsequent adsorbent volume having . . . an ef- fective butane working capacity (BWC) of less than 3 g/dL, Case: 22-1129 Document: 58 Page: 12 Filed: 06/22/2023

and a g-total BWC of ≤6 grams” and “the canister system ha[ving] a two-day diurnal breathing loss (DBL) of no more than 20 mg at no more than 100 BV of purge applied after a 40 g/hr butane loading step.” See ’553 patent col. 23 ll. 24–40. In its petition, BASF asserted that Hiltzik, Clontz WIPO, and Clontz SAE taught this limitation—spe- cifically, that a skilled artisan would have been motivated to dilute the honeycomb in Hiltzik’s Example 2 in view of the teachings of the two Clontz references that such a dilu- tion would be preferable in a low purge environment. J.A. 214–16; see also Decision, 2021 Pat. App. LEXIS 5450, at *28–29. The Board found that BASF had not established by a preponderance of the evidence that a skilled artisan would have been motivated to dilute Hiltzik’s honeycomb adsor- bent “to meet emissions standards at low-purge conditions in view of Clontz SAE and Clontz WIPO.” 5 Id. at *32–36. The Board was persuaded by Ingevity’s argument that Clontz SAE expressly teaches that “higher working capac- ity honeycombs ‘facilitate achievement of target emissions

5 Although both parties assert that the Board found that Clontz SAE teaches away from the claimed invention, we understand the Board’s opinion as holding that a person of ordinary skill in the art would not have been motivated to modify Hiltzik in view of the Clontz references because Clontz SAE teaches an alternative solution to the same low-purge problem present in the ’553 patent. See, e.g., Ap- pellant’s Br. 27–28; Appellee’s Br. 2. Indeed, the Board’s decision does not use the legal term “teaching away,” nor does it analyze the stringent criteria required for establish- ing teaching away. See Rembrandt Wireless Techs., LP v. Samsung Elecs. Co., 853 F.3d 1370, 1379 (Fed. Cir. 2017) (“Whether a reference teaches away is doctrinally distinct from whether there is no motivation to combine prior art references.”). Case: 22-1129 Document: 58 Page: 13 Filed: 06/22/2023

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levels under the reduced purge conditions.’” Id. at *32–33 (quoting J.A. 2272). On appeal, BASF challenges the Board’s finding that a skilled artisan would not have been motivated to combine Hiltzik with the Clontz references. Specifically, BASF ar- gues that contrary to the Board’s finding, Clontz WIPO suggests diluting Hiltzik’s honeycomb with its teaching us- ing adsorbents with flatter isotherms, including voids in the adsorbents, and reducing the honeycomb’s resistance. Appellant’s Br. 43–60; see also id. at 44–51. We hold that the Board’s finding—that a skilled arti- san would not have been motivated to make the proposed combination of Hiltzik and the Clontz references—is sup- ported by substantial evidence. Clontz SAE discloses using “higher capacity honeycombs” than the honeycombs in Hiltzik to achieve “target emissions levels under the re- duced purge conditions.” J.A. 2272. Clontz SAE teaches that canister emissions were generally better in large vol- umes, as shown by a larger honeycomb exhibiting lower emissions levels than the smaller honeycomb at purge vol- umes less than 200 bed volumes. J.A. 2268–69. A reason- able factfinder could therefore find that Clontz SAE would have motivated a skilled artisan to use a higher BWC in subsequent adsorbent volumes. While BASF introduced evidence arguably demon- strating a motivation to combine—e.g., BASF’s expert opin- ing that the skilled artisan would have been motivated because both Hiltzik and Clontz WIPO teach diluting the honeycomb (either by flattening its isotherm or reducing its resistance) to achieve better emissions and reduce its IAC and BWC—the Board considered this evidence. In- stead, the Board found that Clontz SAE never mentions di- lution as a means to address the problem with low-purge conditions. See Decision, 2021 Pat. App. LEXIS 5450, at *33–34. Given the varied record evidence—with some supporting BASF’s view and some supporting Ingevity’s Case: 22-1129 Document: 58 Page: 14 Filed: 06/22/2023

view—the Board was entitled to reasonably reach its fac- tual finding. “This court does not reweigh evidence on ap- peal, but rather determines whether substantial evidence supports the Board’s fact findings.” In re NTP, Inc., 654 F.3d 1279, 1292 (Fed. Cir. 2011). Therefore, we conclude that substantial evidence supports a finding of no motiva- tion to combine. CONCLUSION We have considered BASF’s remaining arguments and find them unpersuasive. For the foregoing reasons, BASF has standing to appeal the Board’s final written decision. Because the Board did not explain why it disregarded BASF’s proffered evidence regarding the measurement techniques, we vacate the Board’s indefiniteness determi- nation and remand for further proceedings consistent with this opinion. Because substantial evidence supports the Board’s finding no motivation to combine, we affirm the Board’s obviousness determination. AFFIRMED-IN-PART, VACATED-IN-PART, AND REMANDED COSTS No costs.