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PTAB Cannot Rely on Key Factual Assertions First Made at Oral Argument—Patent Owners are Entitled to Notice of and a Fair Opportunity to Meet All Grounds

This week the Federal Circuit handed a positive development to Patent Owners working to keep their patent rights before the Patent Trial and Appeal Board.  In an opinion issued on Tuesday in Dell Inc. v. Acceleron, LLC, Case No. 2015-1514, the Court rejected the Board’s reliance on “key factual assertions” in its Final Written Decision that were raised for the first time by Petitioner at oral argument and, in doing so, made clear that Patent Owners are entitled to notice of and a fair opportunity to meet any and all grounds of rejection with evidence under the Administrative Procedures Act (APA).  The three-judge panel comprising Justices Moore, Taranto, and Hughes affirmed-in-part and vacated-in-part (with remand) the Board’s Final Written Decision in IPR2013-00440.

The patent-at-issue, U.S. Patent No. 6,948,021 (“the ’021 Patent”), owned by Acceleron, LLC, covers a computer-network appliance with several hardware modules that can be removed and replaced while the appliance remains “on.”  Id. at 2.  Petitioner Dell, Inc. appealed the Board’s decision of validity of certain claims, and Patent Owner Acceleron appealed the Board’s decision that certain claims were anticipated, including claim 3 for a “procedurally improper” reliance on a “basis first raised during oral argument before the Board.”  Id.

’021 Patent claim 3 recited a “chassis compris[ing] caddies providing air flow from the front to the rear of the chassis.  Id. at 4 (emphasis added).  The Board found claim 3 anticipated by the Hipp reference covering a network interface card coordinating traffic between multiple web server processing cards over one or more networks.  Id. at 5.  Prior to oral argument, Dell argued that the “articulating door” in Fig. 12 of Hipp performed the same function as the recited “caddies.”  Id. at 14.  In its reply, Dell added that the “mounting mechanisms” in Fig. 12 also constituted “caddies.”  At oral argument, Dell for the first time further contended that Fig. 12 showed “slides” that also constituted “caddies.”  Id. at 7.  Acceleron objected to this factual assertion on the ground that Dell had never before identified the slides as “caddies.”  Nevertheless the Board accepted and in fact exclusively relied upon the “slides” in finding claim 3 anticipated in its Final Written Decision.  Id. at 7-8.

The Federal Circuit held that “Acceleron was given no prior notice of that contention” and that the oral argument “presented no opportunity for Acceleron to supply evidence, whether expert or lay or documentary evidence, about what the Hipp Figure 12 ‘slides’ are (even if there is more than one) and whether they meet all the claim requirements[.]”  Id. at 13-14 (citing requirements of APA, 5 U.S.C. §§ 554(b)(3), (c), 556(d); Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,768 (Aug. 14, 2012)).

While the Board concluded that Dell had “pointed to ‘slides’ in its reply,” the Federal Circuit held that such a mention did not amount to the “key factual assertion” that was made for the first time at oral argument.  Id. at 14.  The Federal Circuit added that “[w]e need not address under what circumstances a cancellation may rely on a key factual assertion made for the first time in a petitioner’s reply.”  Id.

This decision serves as a reminder to IPR petitioners to disclose in the petition or at least the reply all factual assertions that one intends to rely upon to invalidate the challenged patent.

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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.