Patent for better mousetrap obvious, secondary indicia could not rebut “strong prima facie case”March 31, 2008

In a decision Friday, the Federal Circuit addressed the issue of post-KSR obviousness and fraudulent misrepresentation. Regarding obviousness, the court held that the secondary indicia of nonobviousness simply could not overcome a "textbook case" of claims involving "a combination of familiar elements according to known methods that does no more than yield predictable results."

Interpreting Pennsylvania law, the Federal Circuit found that the defendant had committed fraudulent misrepresentation when the defendant, despite intending to manufacture a competing device throughout negotiations, entered into confidentiality and distribution agreements with the patentee with the understanding that a long-term cooperative distribution relationship would result. There was also sufficient evidence of the amount of damages that the jury's award was not speculative.

Agrizap holds two patents relating to a method and apparatus for electrocuting pests such as gophers and rats. The patent at issue, U.S. Patent No. 5,949,636, delivers a lethal electric charge to a pest that makes contacts with the device's two electrodes. The charge is activated by a resistive switch triggered by a "leakage current" that is formed by contact between the electrodes and the pest.

Agrizap was approached by Woodstream, a nationwide distributor of pest control devices, about marketing and distribution of the Rat Zapper, the commercial embodiment of the '636 patent. The parties entered into a confidentiality agreement where information would be exchanged "for the purposes of assessing Woodstream's interest in purchasing Agrizap's products and forming a business relationship with Agrizap."

While under the confidentiality agreement, Woodstream sent samples of the Rat Zapper to a Chinese supplier. When questioned about its reason for this action, Woodstream assured Agrizap that the shipment was only for obtaining pricing information, however Woodstream actually made the shipment with the intent to make the product themselves. This was significant, as Woodstream and Agrizap entered into an agreement where Woodstream would have exclusive rights to sell the Rat Zapper in large retail stores, such as Lowe's, Home Depot, and Menards.

In 2003, Woodstream released its own electronic mousetrap. Upon learning of this, Agrizap terminated its relationship with Woodstream. Agrizap claimed that had it known of Woodstream's intent to do so, it would not have ceded exclusive rights to large retail distribution, and Woodstream's fraudulent misrepresentation caused it damages insofar as Woodstream was able to establish itself in that market without competition from Agrizap for four years. The jury agreed, and awarded Agrizap $1.275 million in damages.

The jury also found the '636 patent valid and infringed, however the district court granted Woodstream's motion for judgment as a matter of law that the patent was not infringed. Both parties appealed.

The Federal Circuit held sufficient evidence existed to support the jury's verdict in favor of Agrizap on its fraudulent misrepresentation claim, and that while Agrizap did not present a requested damage figure, there was sufficient evidence for the jury to determine an appropriate amount of damages suffered as a result.

The court's reasoning regarding the obviousness issue was significantly more involved. During the prosecution of the '636 patent, the examiner made an obviousness rejection in light of Agrizap's U.S. Patent No. 5,269,091 and two other patents. The '091 patent was similar in operation to the '636 patent, however, a mechanical switch was used instead of a resistive switch. To overcome the rejection, Agrizap corrected the inventors listed in the '636 patent to match the '091 patent and filed a terminal disclaimer to eliminate the '091 patent as prior art. With this alteration, the '636 patent was allowed.

The court noted that, while the addition of the inventor to the '636 patent did eliminate the '091 patent as prior art, it did not eliminate the commercial embodiments of the '091 patent (the Gopher Zapper) from being prior art. Based on the Gopher Zapper and the two patents previously cited by the examiner, the court found that "[t]his is a textbook case of when the asserted claims involve a combination of familiar elements according to known methods that does no more than yield predictable results." Citing to the Leapfrog case, the court determined that the secondary indicia provided were simply not sufficient to overcome this "strong prima facie case of obviousness."

This opinion shows a potential side effect of KSR's lower threshold for establishing obviousness. Under KSR it is easier to establish a "strong prima facie case of obviousness" in so-called combination patents. This case and Leapfrog seem to indicate that even strong secondary indicia of nonobviousness may be insufficient to overcome these "strong" cases of obviousness.

To read the full opinion in Agrizap, Inc. v. Woodstream Corp., click here.

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