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Failure to Let Patent Owner Address Unpatentability Arguments Relied on by the Board Violates Administrative Procedures

The Federal Circuit has ruled that the Patent Trial and Appeal Board cannot deny Patent Owner an opportunity to address portions of a prior art reference first discussed in Petitioner’s Reply, and then rely on those same portions to hold the claims unpatentable.

In re NuVasive (Appeal Nos. 2015-1672, -1673) involved the appeal of two separate inter partes review (“IPR”) proceedings initiated by Medtronic against U.S. Patent No. 8,187,334 directed to spinal implants.  Both petitions relied on the Michelson reference for teaching a single implant whose length is both greater than 40 mm and at least 2.5 times its width as recited in the ‘334 patent claims.  The petitions differed however in that one specifically discussed Michelson Figure 18 and the other did not.  Not until its reply in the latter IPR did Medtronic point to Figure 18 and argue that it disclosed the dimensional limitations.  Over NuVasive’s objection at the oral hearing and request to move to strike or file a sur-reply, the Board found that all challenged claims but one were obvious based, in large part, on Figure 18 of Michelson disclosing an implant with a length greater than 40 mm and at least 2.5 times its width.  Slip. Op at 6-7.

The primary issue on appeal was whether NuVasive received adequate notice of or opportunity to adequately address arguments concerning Figure 18.  The Federal Circuit ruled that NuVasive had not.  According to the Court, the Figure 18 teachings relied on by the Board were an essential part of its obviousness finding and sufficiently distinct from other Michelson assertions in the second petition, such that NuVasive was entitled to an opportunity to address the Figure 18 teachings.  Slip Op. at 10.  Judge Taranto explained that this entitlement was not lessened by the fact that NuVasive had opportunities to respond to other factual assertions about Michelson.  Slip Op. at 10.  The panel also noted that the ability to file observations on cross-examination of Medtronic’s expert did not provide NuVasive with sufficient opportunity to address Michelson’s Figure 18 because such “observations” are not a substitute for presenting arguments and evidence.  Slip Op. at 12.  The Federal Circuit thus found that the Board’s “ultimate reliance on [Figure 18], together with its refusal to allow NuVasive to respond fully once that material was called out, violated NuVasive’s rights under the [APA].”  Slip Op. at 2, 9-13 and 16.

Notably the Federal Circuit found that NuVasive was not provided with an adequate opportunity to respond to the assertions regarding Figure 18 in the second IPR even though it found that NuVasive did have that opportunity in the first IPR because the first IPR petition specifically cited text concerning Figure 18.  Slip Op. at 10-11.  The Court held that “the Director has furnished no persuasive basis on which we are prepared to hold that a (barely sufficient) notice in one proceeding constituted an obligation-triggering notice in the other proceeding in which a comparable notice was missing.”  Slip Op. at 11.  The panel also noted that “[w]hat NuVasive said in its Response was enough to allow the Board to conclude that Medtronic’s Reply assertions about Figure 18 came within the rule that ‘[a] reply may only respond to arguments raised in the corresponding opposition, patent owner preliminary response, or patent owner response.’  But satisfying that rule does not mean that the pre-Response notice was sufficient.”  Slip Op. at 12, fn. 2 (emphasis added).  Therefore, even if a reply properly responds only to arguments made by the Patent Owner, the Board arguably must let Patent Owner address those arguments before relying on any them as a basis for unpatentability if such arguments did not first appear in the petition.

In short, petitioners should be sure to submit their best evidence and arguments in the petition, as any evidence or arguments not included and found only in the reply may not be considered or could open the door for the patent owner to submit a sur-reply.  Likewise, patent owners should carefully review petitioner replies for arguments or evidence that patent owner did not previously have the opportunity to address and let the Board know, citing to this Federal Circuit decision.

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Brad M. Scheller is an experienced patent litigator and strategic counselor to start-up ventures and established businesses in the mechanical and electrical arts, with a focus in EV and battery technologies and advising clients on patent portfolio growth, management and enforcement. He represents clients before the United States Patent and Trademark Office and as lead counsel in federal district court and appellate litigation across the country.