Category Archives: Inter Partes Review

Federal Circuit Vacates and Remands PTAB Obviousness Determination Not Supported by Adequate Reasoned Explanation

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In In re Warsaw Orthopedic, Inc., 2015-1050, 2015-1058 (August 9, 2016), the Federal Circuit affirmed in part, vacated in part, and remaned, the PTAB’s decision in IPR2013-00206 and IPR2013-00208 that claims 1–8 and 17–23 of U.S. Patent No. 8,251,997, were obvious and therefore invalid.

The Federal Circuit largely affirmed the PTAB obviosuness determination.   However, the Federal Circuit noted the PTAB has an obligation to make the necessary findings and to provide an administrative record showing the evidence on which the findings are based, accompanied by the agency’s reasoning in reaching its conclusions.  As for its reasoning, the PTAB must articulate ‘logical and rational’ reasons for its decisions.

The Federal Circuit said it could affirm the PTAB’s findings if it can reasonably discern that that the PTAB followed a proper path, even if that path is less than
perfectly clear.  However with respect to the obviousness determination of claim 17, the Federal Circuit could not reasonably discern that the PTAB’s decision.  The Federal Circuit complainted that the PTAB’s narrative
in support of its finding with respect to claim 17 consists of a single sentence, which “does not equate to the reasoned explanation needed to support its conclusion.”  Thus the Federal Circuit vacated and remanded for additional explanation.

 

PTO Cannot Raise and Decide Unpatentability Theories Never Presented by the Petitioner

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In In re Magnum Tools International, Ltd., [2015-1300] (July 25, 2016) the Federal Circuit reverse the PTAB’s determination that the challenged claims U.S. Patent No. 8,079,413 were invalid for obviousness.

The Federal Circuit examined burden of proof, which encompasses both a burden of persuasion and a burden of production.  The Federal Circuit said that In an inter partes review, the burden of persuasion is on the petitioner to prove ‘unpatentability by a preponderance of the evidence,’ 35 U.S.C. § 316(e), and that burden never shifts to the patentee.”  Where, as here, the only question presented is whether due consideration of the four Graham factors renders a claim or claims obvious, no burden shifts from the patent challenger to the patentee.  This is especially true where the only issues to be considered are what the prior art discloses, whether there would have been a motivation to combine the prior art, and whether that combination would render the patented claims obvious.  The Federal Circuit said that the PTO’s burden shifting framework is directly at odds with its precedent holding that the decision to institute and the final written decision are “two very different analyses,” and each applies a “qualitatively different standard.”  Furthermore, because of the significant
difference between the standards of proof at institution and trial during an IPR, it is inappropriate to shift the burden to the patentee after institution to prove that the patent is patentable.

The Federal Circuit said the petitioner continues to bear the burden of
proving unpatentability after institution, and must do so by a preponderance of the evidence at trial. See 35 U.S.C. § 316(e). The Board has an obligation to assess the question anew after trial based on the totality of the record.

The patent owner argued that petitioner failed to establish a motivation to combine, pointing out that the Petition was based on a different reference than relied upon in the institution decision.  The Federal Circuit rejected the PTO’s position that this should have been challenged with a request for rehearing of the institution decision, holding that the patent owner can challenge a final Board opinion relying on the same rationale given in the institution decision.

The Federal Circuit agreed with the patent owner that the Board improperly shifted the burden to the patent owner to prove nonobviousness.  To satisfy its burden of proving obviousness, a petitioner cannot employ mere conclusory statements. The petitioner must instead articulate specific reasoning, based on evidence of record, to support the legal conclusion of obviousness.

Finding that the petitioner failed to separately meet its burden of establishing obviousness, the Federal Circuit reversed.

The Federal Circuit went on to reject the USPTO’s position that the Board is free to adopt arguments on behalf of petitioners that could have been, but were not, raised by the petitioner during an IPR. Instead, the Board must base its decision on arguments that were advanced by a party, and to which the opposing party was given a chance to respond.  The Federal Circuit said that while the PTO has broad authority to establish procedures for revisiting earlier-granted patents in IPRs, that authority is not so broad that it allows the PTO to raise, address, and decide unpatentability theories never presented by the petitioner and not supported by record evidence.

 

 

 

 
 
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Board Not Limited to Prior Art in the Grounds, as Long as Patent Owner Had Notice

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In Genzyme Therapeutic Products Limited v. Biomarin Pharmaceutical, Inc., [2015-1720, 2015-1721](June 14, 2016), the Federal Circuit affirmed the PTAB’s decisions in IPR2013-00534 and IPR2013-00537 that certain claims of  U.S. Patent No. 7,351,410 and U.S. Patent No. 7,655,226 were invalid for obviousness.

Genzyme’s APA challenged the result under the Administrative Procedures Act because the Board cited references in its final written decisions that were not specifically included in the combinations of prior art on which the Board instituted review.  The Federal Circuit was unmoved, explaining that the introduction of new evidence in the course of the trial is to be expected in inter partes review trial proceedings and, as long as the opposing party is given notice of the evidence and an opportunity to respond to it, the introduction of such evidence is perfectly permissible under the APA.

The Federal Circuit said that Genzyme’s argument reflected a misunderstanding
of the role of the institution decision in inter partes review proceedings before the Board. There is no requirement, either in the Board’s regulations, in the APA, or as a matter of due process, for the institution decision to anticipate and set forth every legal or factual
issue that might arise in the course of the trial.  The critical question for compliance with the APA and due process is whether Genzyme received “adequate notice of the issues that would be considered, and ultimately resolved, at that hearing.” Ultimately the Federal Circuit blamed Genzyme for not either moving to exclude the added references or seeking leave to file a surreply.

The Federal Circuit held in Ariosa that the Board may consider a prior art reference to show the state of the art at the time of the invention, regardless of whether that reference was cited in the Board’s institution decision, and that is how the Board used the contested references.

 

The Board Cannot Adopt a Surprise Claim Construction

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In SAS Institute, Inc. v. Complementsoft,LLC, [2015-1346, 2015-1347] (June 10, 2016), the Federal Circuit agree with the Board in an IPR involving U.S. Patent No. 7,110,936 on all of the challenged constructions resulting in finding of invalidity of all but one of the challenged claims.  The Federal Circuit also confirmed that the Board did not need to address in its final written decision claims for which IPR was not instituted.  Finally, the Federal Circuit vacated the Board’s determination that claim 4 is patentable and remanded so that the parties may address a new construction that the Board adopted in its final written decision after interpreting the claim differently before.

With respect to claim 4, which was sustained based upon a different construction of the phrase “graphical representations of data flows, the Federal Circuit remanded so that the parties could address the construction in the final written decision.  The Federal Circuit agreed with the construction of graphical representations of data flows” as “a graphical representation comprised of icons depicting data processing steps and arrows to depict the movement of data through source code.”  The Federal Circuit noted that the term was not used in the specification, and agreed with the Board’s use of the definition of the term “data flow diagrams,” which did appear in the specification.

The Federal Circuit rejected petitioner’s argument that because the construction was narrow, it could not be the broadest reasonable interpretation, saying:

While we have endorsed the Board’s use of the broadest reasonable interpretation standard in IPR proceedings, we also take care to not read “reasonable” out of the standard. This is to say that “[e]ven under the broadest reasonable interpretation, the Board’s construction cannot be divorced from the specification and the record evidence, and must be consistent with the one that those skilled in the art would reach.”

The Federal Circuit also relied upon the structure of the claims, noting that some of the claims speak broadly of flows, while others speak of data flows and program flows, was instructive as to the meaning of the claims (although this is not claim differentiation).

The Federal Circuit affirmed the Board’s invalidation of claims in the face of patent owner’s arguments that the claim constructions were incorrect.  The Federal Circuit specifically noting that because the specification and prosecution history did not conclusively resolve construction, it was appropriate for the Board to rely on dictionaries and expert testimony to aid its construction.

The most interesting aspect of the case may be the Federal Circuit’s treatment of the Board’s change in claim construction between the Institution Decision and the Final Written Decision, which gave the Federal Circuit “pause.”  The Federal Circuit noted that the Board’s new construction of “graphical representations of data flows” as “a graphical representation comprised of icons depicting data processing steps and arrows to depict the movement of data through source code,” varied varied significantly from its initial interpretation of the term as “a map of the path of data through the executing
source code.”  The Federal Circuit was not concered that the Board changed its construction, which the Federal Circuit said it was free to do, but that it Petitioner was not given an opportunity to address the new construction since the Patent Owner agreed with the original construction, and never suggested that the Board adopt the
construction that eventually materialized in the final written decision. Under these circumstances, the Federal Circuit said that it was difficult to imagine either party anticipating that already-interpreted terms were actually moving targets, and it is thus unreasonable to expect that they would have briefed or argued hypothetical constructions not asserted by their opponent.  The Federal Circuit vacated the decision, and remanded for further proceedings.

Patent Owner Must Show Patentability Over Art of Record to Amend Claims in IPR

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In In re Aqua Products, Inc., [2015-1177] (May 25, 2016), the Federal Circuit affirmed the PTAB’s denial of the patent owner’s motion to amend in IPR2013-00159.

The Federal Circuit made quick work of the PTAB’s placing the burden on the patent owner to show patentability over all of the prior art of record, holding it was bound by precedent.

The Federal Circuit also found no abuse of discretion in the Board’s failure to to evaluate objective indicia of non-obviousness and various new limitations in the proposed claims, because Aqua did not argue that those indicia and limitations distinguish the proposed claims over the prior art.  The PTAB’s obligation with respect to motions to amend is limited to considering
only those arguments that the patent owner actually raises,   The Federal Circuit said that to hold otherwise would require the Board to fully reexamine the proposed claims in the first instance, effectively shifting
the burden from the patentee to the Board.  The Federal Circuuit said that consideration of a motion to amend in compliance with the APA only requires
that the Board show that it fully considered the particular arguments raised by the patentee and that it provided a reasoned explanation for why those arguments were unpersuasive.