IP Law Daily, PATENT—Fed. Cir.: Non-unpatentability ruling on most claims of Merck’s α-alumina patent vacated and remanded, (Mar 10, 2025)

By Saurabh Kashyap, B.A., LL.B., LL.M.

PTAB improperly disregarded key evidence regarding whether Merck’s own Xirallic® Sample C qualified as prior art.

The U.S. Court of Appeals for the Federal Circuit vacated and remanded the Patent Trial and Appeal Board’s (PTAB) decision that upheld the validity of Merck Patent GmbH’s U.S. Patent No. 10,647,861 (the ’861 patent) in a post-grant review (PGR) initiated by CQV Co., Ltd. The Federal Circuit found that PTAB failed to properly consider CQV’s evidence that Xirallic® Sample C—a pearlescent pigment product developed by Merck—qualified as prior art (CQV Co., Ltd. v. Merck Patent GmbH , No. 23-1027 (Fed. Cir. March 10, 2025)).

Background. The appellant, CQV Co., Ltd., is a South Korean company specializing in pearlescent pigments used in automotive coatings, printing inks, industrial coatings, and cosmetics. CQV challenged Merck’s patent on α-alumina flakes, arguing that Merck’s own Xirallic® product line contained similar pigments that were publicly available before the ’861 patent’s critical date, making the patent claims obvious.

The appellee, Merck Patent GmbH, is a German subsidiary of Merck KGaA, which develops specialty chemicals and pigments, including pearlescent coatings. Merck’s ’861 patent covers α-alumina flakes with specific particle thickness and size distribution, which Merck claims offer improved optical properties, including increased chroma, higher luster, and lower haze. These flakes are used in paints, coatings, printing inks, and cosmetic formulations.

CQV petitioned for post-grant review (PGR) of claims 1–22 of the ’861 patent, alleging that the patent was obvious in view of prior art, particularly Xirallic® pigments that were available before the critical date. CQV contended that the prior art status of Xirallic® was dispositive in showing unpatentability, but PTAB ultimately ruled against CQV, concluding that the company failed to establish that Xirallic® Sample C was publicly available before the critical date. CQV appealed to the Federal Circuit, arguing that PTAB improperly dismissed its prior art evidence and applied an overly strict evidentiary standard.

Standing. The appellate court addressed the threshold issue of standing before considering the Board’s determination. CQV argued that it had standing because its Adamas® pearlescent pigment directly competed with Merck’s Xirallic®. CQV submitted evidence that Merck contacted its U.S. customers, alleging potential infringement of the ’861 patent. As a result, one customer ceased purchasing Adamas®, while another required CQV to enter into an indemnity agreement. The Federal Circuit found that this indemnification obligation constituted sufficient injury-in-fact under Arris Grp., Inc. v. British Telecommunications PLC, 639 F.3d 1368 (Fed. Cir. 2011). The court concluded that CQV’s potential liability and lost business due to Merck’s actions established standing to challenge the patent.

Prior art. The Federal Circuit ruled that PTAB failed to adequately assess CQV’s evidence regarding the public availability of Xirallic® Sample C. CQV had presented unrebutted testimony and documentation suggesting that the sample had been released for commercial sale before April 30, 2012, the critical date. However, PTAB found this evidence insufficient, stating that CQV had not conclusively shown the exact date on which the sample became available to the public.

The appellate court disagreed, emphasizing that PTAB must evaluate the entire evidentiary record and cannot dismiss critical testimony without proper analysis. The court referenced Applications in Internet Time, LLC v. RPX Corp., 897 F.3d 1336 (Fed. Cir. 2018), reiterating that PTAB must consider all relevant evidence in making factual determinations. The Federal Circuit determined that PTAB’s failure to sufficiently address key testimony and supporting documents constituted a lack of substantial evidence, rendering its decision unsupported by substantial evidence.

Standard of proof. CQV also argued that PTAB applied an incorrect evidentiary burden by requiring it to prove Xirallic® Sample C’s availability with near-certainty rather than a preponderance of the evidence. The Federal Circuit agreed, citing Dynamic Drinkware, LLC v. National Graphics, Inc., 800 F.3d 1375 (Fed. Cir. 2015), which established that the burden of proving prior art only requires showing that it is more likely than not that the reference was publicly available before the critical date.

The court noted that CQV presented substantial evidence, including (1) Testimony from its Chief of Lab, Byung-Ki Choi, confirming that CQV purchased Xirallic® Sample C in October 2011; (2) Quality control documentation indicating that Xirallic® products typically became available to the public within two to three weeks after manufacturing; and (3) Testimony from Merck’s witness, Mr. Fritsch, who stated that Xirallic® products were immediately available for customer orders after passing quality control.

Despite this evidence, PTAB discounted CQV’s submissions without providing a sufficient rationale. Thus, the Federal Circuit concluded that the Board’s decision lacked the necessary substantial evidence to support its rejection of Sample C as prior art.

Vacatur and remand. Due to these errors, the Federal Circuit vacated PTAB’s ruling and remanded the case for reconsideration. The appellate court instructed PTAB to reevaluate whether Xirallic® Sample C qualifies as prior art by: (1) Considering all evidence in the record, including CQV’s quality control timeline and product availability testimony; (2) Applying the correct evidentiary standard, ensuring that the preponderance of the evidence standard is used rather than an excessively high burden; and (3) Providing a reasoned explanation if it decides to exclude certain evidence from its analysis.

The Case is No. 23-1027.

Judge: Cunningham, T.

Attorneys: Nicholas Geiger (Cantor Colburn LLP) for CQV Co., Ltd. John A. Dragseth (Fish & Richardson P.C.) for Merck Patent GmbH.

Companies: CQV Co., Ltd.; Merck Patent GmbH

MainStory: TopStory Patent FedCirNews USPTO