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Federal Circuit

Failure to challenge “new” arguments during an IPR proceeding may waive APA procedural objections on appeal

In Securus Techs. v. Global Tel*Link Corp., the Federal Circuit rejected a patent owner’s argument that the PTAB improperly considered new arguments raised in the petitioner’s reply brief, in part because the patent owner did not object during the IPR proceeding.

In Securus, the Federal Circuit reviewed a pair of final written decisions involving U.S. Patent No. 7,860,222. The claims of the ‘222 patent describe investigative tools and communication monitoring that include such features as:

an investigative tools module in communication with said communication service module operable to allow a user to monitor said communications between individuals and to place event identifiers in association with said communications between individuals, said event identifiers comprise a plurality of bookmarks representing different events of interest …

Or, as more succinctly described by the Federal Circuit, “a system and method for reviewing conversation data for certain events and noting when something of interest happens.”

In two IPR decisions, the Board found all claims unpatentable. In affirming the unpatentability of some claims, the Federal Circuit rejected Securus’ argument that the Board erred in considering arguments raised for the first time in Global’s reply. In doing so, the Federal Circuit took Securus to task for not raising this objection during the IPR proceeding.

Moreover, it is incumbent upon the party complaining of some procedural violation—such as the inclusion of improper rebuttal in a reply brief—to first raise the issue below. … Securus presents no evidence that it availed itself of the procedures for filing a sur-reply, a motion to strike, or a conference call to challenge this allegedly improper argument.

This decision emphasizes the importance of promptly challenging the introduction of arguments that stray from the theories set forth in the petition. The failure to act during the proceeding may be held against you on appeal.

The Federal Circuit also reversed and remanded as to some claims because the Board “failed to articulate any reason supporting its decision.” Referring to its past decisions in Nuvasive and Cutsforth, the Federal Circuit again indicated that “it is not adequate [for the Board] to summarize and reject arguments without explaining why the [Board] accepts the prevailing argument.” Whether this will affect the Board’s prior finding of unpatentability of these claims remains to be seen. Although such reversals result in new decisions by the Board, they rarely result in new outcomes.

Posted on 05/09/2017 by Deakin Lauer

To avoid running afoul of the APA, patent owners must be permitted to respond to “new” grounds of unpatentability

In In re: NuVasive, Inc., the Federal Circuit vacated and remanded the Board’s final written decision in IPR2013-0508 for further proceedings. At issue was the Board’s reliance on a prior art figure that was first raised in petitioner’s reply and which the Board did not permit the patent owner to address in the preceding.

In August 2013, Medtronic filed an IPR petition challenging the patentability of twenty-two claims of a patent owned by NuVasive (U.S. Patent No. 8,187,334) and directed to implants for spinal fusion surgery. In its reply brief, Medtronic argued–for the first time–that a particular figure in one of the prior art references of record disclosed two of the claim requirements of the ’334 patent. The Board agreed with Medtronic and canceled all but one of the challenged claims.

On appeal, NuVasive objected to not receiving adequate notice of NuVasive’s assertion that the figure (FIG. 18 of U.S. Patent No. 5,860,973 to Michelson) rendered the challenged claims obvious. In addition, NuVasive requested and was denied the opportunity to submit a surreply to address this new argument by the Board.

Not only did the Board deny NuVasive’s request to file a surreply, it prevented NuVasive from presenting any arguments about FIG. 18 of Michelson during the oral argument.

PATENT OWNER:  And in the reply, they specifically point to the alleged narrower disclosure in Michelson, and then they show it in the vertebral space here. The key of figure 18 and figure 19 is that it is showing a modular implant that is designed to be inserted in modular fashion, again, to create a wide implant.

PETITIONER: Your Honor, I again object, that is raising a new argument that’s not in his response.

PATENT OWNER: And this was an argument that we brought to the Board’s attention, Your Honor, that they raised in reply, and we’re just addressing the argument because I will not have an opportunity to address this argument when Mr. Schwartz stands up in reply and points this Board to figures 18 and 19.

JUDGE: But you asked for a surreply and we denied that.


JUDGE: So I think you just need to stick with — you can point out what they argue, but you should not be responding to it at this hearing.

Because NuVasive was not given the opportunity to present evidence or arguments regarding the applicability of FIG. 18 of Michelson to the obviousness inquiry, the Federal Circuit found a procedural violation of the APA and remanded the case for further proceedings.

For NuVasive, however, the victory may be more procedural than substantive. Only two dependent claims were remanded for further proceedings because most of the challenged claims were also found invalid in view of FIG. 18 of Michelson in another IPR proceeding, which the Federal Circuit affirmed in the same opinion. In the other proceeding, Medtronic raised the FIG. 18 argument in the original petition and thus there was no procedural violation.


Posted on 11/18/2016 by Deakin T. Lauer

Federal Circuit maps out two-step approach, decides not to dance: Split panel refuses to review applicability of assignor estoppel to IPRs

In Husky Injection Molding Sys. v. Athena Automation Ltd., a split panel of the Federal Circuit dismissed a patent owner’s appeal of the PTAB’s final written decision in an IPR where patent owner asserted that institution should have been denied based on assignor estoppel.

The majority’s opinion cites the Supreme Court’s Cuozzo decision as setting up a two-step analysis for determining whether a PTAB IPR institution decision is reviewable:

First, the Federal Circuit must determine whether the challenge is “closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review” – thus foreclosing review – or if it instead “implicate[s] constitutional questions,” “depend[s] on other less closely related statutes,” or “present[s] other questions of interpretation that reach, in terms of scope and impact,” “well beyond ‘this section,’” in which case its “authority to review the decision to institute appears unfettered.”

Second, even in decisions grounded in a closely related statute, the Federal Circuit must determine if the challenge is “directed to the Board’s ultimate invalidation authority with respect to a specific patent,” in which case the decision is also reviewable.

In the underlying IPR proceeding, Husky had argued that the doctrine of assignee estoppel barred institution of an IPR brought by petitioner Athena, a company formed by a co-inventor and assignor of the challenged patent (also a former owner and president of Husky itself). In instituting the IPR, the Board found that in light of the broad language of 35 USC § 311 – providing that “a person who is not the owner of a patent may file with the Office a petition to institute an inter partes review of the patent” – assignors are not estopped from petitioning for IPR review. In its final written decision, the Board went on to reject most, but not all, challenged claims. Husky appealed to the Federal Circuit, and Athena across-appealed.

On appeal, under the first step of its analysis, the panel majority held that the Board’s institution decision rested on its interpretation of 35 USC § 311, and that § 311 is “closely related” to any decision to initiate inter partes review, foreclosing Federal Circuit review. Under the second step of its analysis, the majority held that, as in the previous Achates decision, the question of assignor estoppel is not “directed to the Board’s ultimate invalidation authority.” Rather, it is limited to “who may petition for review,” a question that “falls outside of the narrow exceptions to the otherwise broad ban on our review of the decision whether to institute.” Thus, the panel found that it lacked jurisdiction to review the Board’s institution decision, resulting in dismissal of Husky’s appeal.

Judge Plager dissented from the dismissal, warning against limiting the reviewability of a Board decision “simply because the Board may attribute its decision to an interpretation of a ‘related’ statute.” He questioned the majority’s characterization of the Board’s decision as interpreting a “related statute,” pointing out first that assignor estoppel is a common law doctrine. He further argued that “[t]he decision to institute inter partes review is governed primarily by the specifics of § 314(a)–(c),” so even if the Board’s decision was based on an interpretation of 35 USC § 111, “[i]It would not be beyond reason to consider § 311 … a ‘less closely related statute.’” He further argued that in view of the questions related to assignor estoppel and its interplay with 35 USC § 111, the institution decision “present[ed] other questions of interpretation that reach, in terms of scope and impact, well beyond ‘this section.’” Finally, he cited  Judge Reyna’s concurring opinion in the recent WiFi v Broadcom case, stating that in applying Cuozzo, “there is a range of reviewable issues that this court is obligated to consider. Examples may include, among others, filing deadlines and joinder and estoppel issues.”

Because Athena prevailed in its cross appeal on substantive validity issues, the case was remanded to the Board for further proceeding. So, any challenge to the majority’s decision vis-à-vis assignor estoppel – or to its broader “two-step” approach to determining jurisdiction over challenges to IPR institution decisions –­ will have to wait.


Posted on 09/30/2016 by Derrick W. Toddy

Shenanigans aside, time-bar decisions still not appealable; Judge Reyna invites en banc review

In WiFi v Broadcom, the Federal Circuit confirmed that the Supreme Court decision in Cuozzo did not overrule the prohibition on appellate review of decisions relating to institution of IPR proceedings. Although Cuozzo left open the possibility that certain “shenanigans” (e.g., notice failures that create due process problems) might be reviewable, the Federal Circuit rejected Wi-Fi’s assertion that the denial of requests for discovery on the time-bar issue falls within that narrow exception.

In the IPR proceeding, Patent Owner Wi-Fi argued that petitioner Broadcom was time-barred because of an alleged privy relationship with litigants subject to the Section 315(b) time bar. The Board rejected Wi-Fi’s argument, and rejected its request for discovery on the privity issue.

Last fall, in Achates, the Federal Circuit held that Section 314(d) prohibits review of “the Board’s determination to initiate IPR proceedings based on its assessment of the time-bar of § 315(b)” even if those issues are restated in the final written decision. On appeal, Wi-Fi argued that Achates had been “implicitly overruled” by Cuozzo and that the Board’s denial of discovery on the privity issue was just the type of “shenanigan” contemplated by Cuozzo. In rejecting this argument, the Federal Circuit panel noted that its logical conclusion “would render routine procedural orders reviewable, contrary to the entire thrust of the Cuozzo decision.”

After rejecting Wi-Fi’s time bar argument, the Federal Circuit affirmed the Board’s finding that all challenged claims are unpatentable as anticipated.

Judge Reyna filed a concurring opinion, describing why he believes a final decision concerning the time bar set forth by 35 U.S.C. § 315(b) should be subject to review, and that the contrary rule set forth in Achates should be reconsidered by an en banc Federal Circuit. Judge Reyna reasoned that “[c]ompliance with the time bar is part of the statutory basis on which the final decision rests, despite the fact that the question is first evaluated at the outset of the proceeding,” and that Cuozzo “compels us to review allegations that the Board has ignored, or erred in the application of, the statutory time bar.” Wi-Fi now has 30 days to request an en banc rehearing.


Posted on 09/20/2016 by Andrew M. Mason

PTAB’s denial of motion to amend was arbitrary and capricious

The Federal Circuit continues to show interest in the amendment process for PTAB proceedings. In addition to accepting In re Aqua Products for en banc review of the current standards for amending claims in PTAB proceedings, last week the Federal Circuit issued a decision in Veritas Tech. v. Veeam Software Corp., No. 2015-1894 (Fed. Cir. Aug. 30, 2016), reversing the PTAB’s denial of a motion to amend claims as arbitrary and capricious.

In Veeam Software Corp. v. Symantec Corp. (IPR2014-00090), the Patent Owner (originally Symantec, but Veritas on appeal) moved to substitute two claims, contingent on two other claims being found unpatentable. In the Final Written Decision issued on April 23, 2015, the PTAB found the original claims unpatentable and denied the motion to amend on the basis that Patent Owner failed to address whether the newly-added features themselves (as opposed to the “newly added feature in combination with other known features”) were found in the prior art.

On appeal, the Federal Circuit rejected this reasoning. First, the Federal Circuit found that the Patent Owner had indicated that the newly-added features themselves were not known and specifically discussed their absence from the two key prior-art references. Second, the Federal Circuit noted that it is often the combination of features that is patentable—not the individual elements themselves:

Here, we have been shown no reason to doubt that it is only the combination that was the “new feature,” a scenario recognized in a long line of Supreme Court and Federal Circuit cases noting that novel and nonobvious inventions often are only a combination of known individual features. See KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 418–19 (2007) (“[I]nventions in most, if not all, instances rely upon building blocks long since uncovered, and claimed discoveries almost of necessity will be combinations of what, in some sense, is already known.”); Parks v. Booth, 102 U.S. 96, 102 (1880); Plantronics, Inc. v. Aliph, Inc., 724 F.3d 1343, 1354 (Fed. Cir. 2013); Envtl. Designs, Ltd. v. Union Oil Co. of Cal., 713 F.2d 693, 698 (Fed. Cir. 1983); In re Warner, 379 F.2d 1011, 1016 (CCPA 1967). In this case, we fail to see how describing the combination is meaningfully different from describing what is new about the proposed claims, even in comparison to the unamended claims.

Finding that the denial of the contingent motion to amend was “arbitrary and capricious,” the Federal Circuit remanded the case to allow for a determination of the patentability of the proposed substitute claims. The Federal Circuit also noted that its opinion would not be affected by the pending en banc proceeding in In re Aqua Products. See our discussion of In re Aqua Products here.


Posted on 9/8/2016 by Deakin T. Lauer

On remand, PTAB says it did consider an exhibit submitted to show the “state of the art”

In a decision on remand issued on August 15, 2016, a PTAB panel again found patentable claims 1-30 of Verinata Health’s U.S. Patent No. 8,318,430, directed to methods for determining the presence or absence of fetal aneuploidy in a fetus. This time, the PTAB specifically addressed the applicability of an exhibit to the state of the art, responding to the Federal Circuit’s concerns about whether it was considered for that purpose.

In October 2014, the PTAB issued a pair of final written decisions confirming the patentability of all claims of the ‘430 patent. On appeal, the Federal Circuit remanded, finding that the PTAB may have erred in its treatment of the exhibit (the Illumina Brochure). The Illumina Brochure was not included in the proposed grounds of unpatentability, nor was it specifically discussed as part of the Petition. Instead, it was submitted with Petitioner Ariosa’s expert declarations as evidence of the state of the art at the time of the alleged invention. For example, Ariosa’s expert stated that:

“It is my opinion that one of ordinary skill in January 2010 would not only be aware of the use of next generation, massively parallel sequencing [e.g., Ex. 1033; Ex. 1036; Ex. 1011; Ex. 1045], but would have been aware of the commercially-available indexing kit available through Illumina, Inc. in 2008 [Ex. 1010] that allowed for sequencing of 96 different samples on a single flow cell.” (Emphasis added.)

In its 2014 decisions, the PTAB rejected Ariosa’s obviousness arguments and questioned why the Illumina Brochure “could not have been presented as part of the asserted ground of unpatentability in the first instance with the Petition.” This language caused the Federal Circuit to remand the case to the PTAB to clarify whether the it meant (1) that the “development of the argument invoking [the Illumina Brochure] was not adequate (legally proper) or (2) that the Illumina Brochure could not be considered as “evidence of the background understanding of skilled artisans … because the brochure had not been identified at the petition stage as one of the pieces of prior
art defining a combination for obviousness” (legally improper). See Ariosa Diagnostics v. Verinata Health, Inc., 805 F.3d 1359 (Fed. Cir. 2015).

After permitting supplemental briefing by both parties on the question of “how [the PTAB] may have overlooked how Petitioner relied upon [the Illumina Brochure] in the record that went up to the [Federal Circuit],” the PTAB issued another decision confirming the patentability of all claims and clarified its reasons for not finding the challenged grounds of unpatentability persuasive, even in view of the Illumina Brochure.

The Illumina Brochure is marked “FOR RESEARCH USE ONLY,” which may explain why it was not used in an asserted ground of unpatentability. If it is not a “printed publication,” it cannot form the basis of a ground of unpatentability in an IPR proceeding. However, the Federal Circuit’s Ariosa opinion confirms that such background information can be useful to establish the state of the art or to show the level of skill in the art. See also Randall Mfg. v. Rea, 733 F.3d 1355 (Fed. Cir. 2013) (“Reversing finding of non-obviousness where court “narrowly focus[ed] on the four prior-art references” and ignored record evidence of “the knowledge and perspective of one of ordinary skill in the art” to explain motivation to combine or modify references”). Given the PTAB’s hesitancy to consider references not asserted as a ground of rejection, when relying on references for background purposes (e.g., state of the art, level of ordinary skill) careful explanation is necessary to establish exactly how the prior art fits into the story of unpatentability.


Posted on 9/2/2016 by Deakin T. Lauer

En banc Federal Circuit to review standards for amending claims in PTAB proceedings

On August 12, 2016, the Federal Circuit granted the petition for rehearing filed in In re Aqua Products Inc. and decided that its full panel of judges will consider the PTAB’s current practice for allowing (or, in most cases, not allowing) claim amendments.

Amendments in PTAB proceedings are currently guided by the Informative Opinion issued in Idle Free Systems, Inc. v. Bergstrom, Inc. IPR2012-00027 (PTAB June 11, 2013), which places the burden on patent owners to demonstrate that a proposed claim is patentably distinct over the prior art of record and other prior art known to the patent owner. The Federal Circuit has upheld this practice and the original panel in the now-vacated decision of In re Aqua Products Inc., 823 F.3d 1369 (Fed. Cir. 2016) affirmed the PTAB decision noting that they were bound by this precedent.

In its order granting the petition for rehearing en banc, the Federal Circuit requested supplemental briefing on the following questions:

      (a) When the patent owner moves to amend its claims under 35 U.S.C. § 316(d), may the PTO require the patent owner to bear the burden of persuasion, or a burden of production, regarding patentability of the amended claims as a condition of allowing them? Which burdens are permitted under 35 U.S.C. § 316(e)?

      (b) When the petitioner does not challenge the patentability of a proposed amended claim, or the Board thinks the challenge is inadequate, may the Board sua sponte raise patentability challenges to such a claim? If so, where would the burden of persuasion, or a burden of production, lie?

Oral argument in this case is scheduled for December 9, 2016.


Posted on 8/17/2016 by Deakin T. Lauer and Todd M. Siegel

Obviousness at the PTAB: Use common sense with care.

On August 10, 2016, in Arendi v. Apple et al., the Federal Circuit reversed a final written decision in which the PTAB held that claims were unpatentable as obvious, finding that the PTAB had improperly relied on common sense to fill a gap in the primary prior art reference.

The court acknowledged that, post-KSR, common sense has a role in the obviousness inquiry, but also spelled out “three caveats … in applying ‘common sense’”: (1) common sense typically provides a motivation to combine and does not fill in missing claim limitations; (2) when common sense is used to fill in a missing limitation, it has always involved “unusually simple” limitations in which the technology is “particularly straightforward”; and (3) in any context, common sense “cannot be used as a wholesale substitute for reasoned analysis and evidentiary support.”

In reversing the PTAB’s finding of obviousness, the Federal Circuit emphasized that common sense should not be used as a substitute for missing claim limitations that “play[] a major role in the subject matter claimed.” The court found that substantial evidence did not support the PTAB’s reliance on common sense to fill an “important limitation” in the claims. The court also noted that “[t]he use of common sense does not require a specific hint or suggestion in a particular reference, only a reasoned explanation that avoids conclusory generalizations.”

Notably, the primary prior art reference here did disclose the missing limitation (as discussed at oral argument), but the PTAB refused to consider that part of the reference because it was not cited in the petition. At oral argument, the panel made a clear distinction between evidence relied on by the Board (can be used as a basis to affirm) and evidence merely in the record (not necessarily helpful to an appellee seeking to establish substantial evidence supporting the PTAB’s final written decision).

The takeaway? Whenever possible, petitioners should (1) include prior art that discloses all challenged claim limitations (unless they are “unusually simple”), (2) carefully cite to all relevant portions of the prior art, and (3) only argue common sense when necessary, and usually only as a reason to combine references.


Posted on 08/12/2016 by Andrew M. Mason

Put it all in the Petition, and with particularity. PTAB authority is limited to unpatentability theories spelled out with specificity in the petition.

On July 25, 2016, the Federal Circuit reversed a PTAB finding of unpatentability because the decision was based on unpatentability theories never presented by the petitioner and that were not supported by the record. In re: Magnum Oil Tools Int’l, No. 2015-1300 (Fed. Cir. July 25, 2016).

The proceeding began when McClinton Energy Group filed a petition for inter partes review (“IPR”) of U.S. Patent No. 8,079,413, directed to “fracking” technologies and owned by Magnum Oil Tools Int’l. In its IPR petition, McClinton presented alternative combinations of references or grounds to establish unpatentability.  The first combination was based on a first primary reference combined with secondary references and the second combination was based on the same secondary references with a second primary reference. In the second combination, however, “McClinton merely attempted to incorporate its arguments based on [the first primary reference] to its obviousness analysis based on [the second primary reference]” without providing particularized arguments about the applicability of the second primary reference.  IPR 2013-00231, Petition, p. 18 (“The same analysis applies to combinations using [the second primary reference] as a base reference…”).

The Board instituted on the second combination and, in its final written decision, filled in the gaps in the petition by adopting arguments (e.g., motivation to combine) based on the first combination. In doing so, the PTAB also shifted the burden of persuasion to the patentee, asserting that “Magnum does not explain adequately why the same analysis [provided for the first combination] is not applicable [to the second primary reference].”  IPR 2013-00231, Final Written Decision, p. 23.  The Federal Circuit explicitly rejected this burden-shifting approach, stating that 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.” In re: Magnum, p. 15. The Federal Circuit also noted that the burden of production also does not change in an IPR proceeding, except in the limited circumstances where the patentee is trying to establish conception and reduction to practice to establish a priority date. In re: Magnum, pp. 15-18.

This decision serves as a reminder to petitioners that all proposed grounds of patentability should be supported by specific arguments and evidence.  Shortcuts, such as conclusory statements about alternative references or combinations, can be problematic. This decision also confirms that in IPR proceedings, unlike ex parte appeals, the PTAB has very limited ability to decide issues not presented in the petition.

“Thus, 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 the record evidence.” –  In re: Magnum, p. 26.

 Since an IPR Petition is limited to 14,000 words (formerly 60 pages), a Petitioner may not have sufficient space in its Petition to fully explain the arguments of both the first and second combinations as it would have without such word-limit restriction. To get around this, Petitioners sometimes incorporate arguments from a first combination into a second combination rather than fully argue them separately, especially when a Petitioner recognizes a potential weakness in a reference of the first combination and, as a result, includes another reference in a second combination to shore up such potential weakness. In such situations, and especially in light of In re: Magnum, a Petitioner may be better off filing more than one Petition to ensure that each argument for unpatentability is explained with sufficient particularity.


Posted on 07/27/2016 by Deakin T. Lauer

Motions to Amend – The Federal Circuit discusses the Who (has the Burden), What (Prior Art needs to be distinguished), and How (does the PTAB need to address secondary considerations)

In Nike, Inc. v. Adidas AG, decided February 11, 2016, the Federal Circuit clarified the requirements for proposing substitute claims in IPR proceedings. In the IPR proceeding subject to the appeal, the PTAB granted Nike’s motion to cancel claims 1-46, but denied its motion to substitute claims 47-50 finding that Nike failed to establish patentabilty of those claims.  Nike challenged several aspects of the Board’s finding, including the three questions discussed below.

Who … Has the Burden to Prove Patentability?; Answer:  The Patentee

In IPR proceedings, the petitioner has the burden of proving unpatentability (Section 316(e)); thus, Nike argued that it was improper to require it to prove patentabilty. Although the Federal Circuit acknowledged this argument had “some merit” it held that the Board did not err because (1) the evidentiary standard of Section 316(e) does not apply to “new” claims not present during institution and (2) the promulgated rules provide that a moving party carries the burden of proof (37 CFR 42.20).

What … Prior Art Must be Distinguished?;  Answer:  All of Record and All Known, But Only if Material

The Board also found that Nike failed to show patentable distinction over “prior art not of record but known to the patent owner.” The Federal Circuit disagreed.  Although Nike specifically distinguished only the prior art of record, it stated that its proposed claims were patentable over prior art known but not of record.  Absent an allegation that Nike violated its duty of candor by not identifying other known, material prior art (and there was no such allegation), Nike’s non-specific statement about the other prior art is sufficient.

How … Does the Board Need to Address Secondary Considerations?;  Answer:  Directly, not in passing or implicitly

Nike presented evidence of secondary considerations, including a long-felt need in the shoe industry to reduce waste in the manufacture of knit textile uppers.  The Federal Circuit held that the Board did not properly consider these arguments.  And the Board’s statements describing the prior art do not amount to an implicit rejection of Nike’s argument. On this issue, the Federal Circuit remanded for the Board to consider Nike’s evidence of long-felt need.

Nike v. Adidas – Federal Circuit


Posted on 02/20/2016 by Deakin T. Lauer