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Federal Circuit Reminds PTAB That Short Cuts Are Not Allowed

Last month, in a precedential decision, the Federal Circuit vacated-in-part and remanded the Patent Trial and Appeal Board’s (“Board”) obviousness determination regarding Alacritech’s computer networking patent because the Board failed to adequately explain its findings for three of the challenged claims.

Alacritech, Inc. v. Intel Corp., et al. (Appeal Nos. 2019-1467 and 2019-1468) involved the appeal of inter partes review (“IPR”) proceedings initiated by Intel Corporation, Cavium, LLC and Dell Inc. (collectively, “Intel”) against certain claims of Alacritech U.S. Patent No. 8,131,880 (the “’880 Patent”).  The ’880 Patent concerns offloading certain network-related processing tasks from a host computer’s central processing unit (“CPU”) to an intelligent network interface card (“INIC”).  Relevant here, the Board issued a Final Written Decision determining that claims 41-43 of the ’880 Patent, all of which require offloading the task of reassembling data received by the host computer from the host computer’s CPU to the INIC (the “reassembly limitations”), were unpatentable as obvious over the cited prior art references.  To support its ruling, the Board merely “recit[ed] some of the parties’ arguments in two terse paragraphs” and concluded, without explanation, that the asserted prior art teaches the reassembly limitations.

On appeal, Alacritech argued that the Board’s analysis did not adequately support its obviousness finding as to the reassembly limitations.  The Federal Circuit panel of Judges Moore, Chen and Stoll agreed.  The Court explained that under the Administrative Procedure Act “the Board is obligated to provide an administrative record showing the evidence on which the findings are based, accompanied by the agency’s reasoning in reaching its conclusions.”  While “perfect explanations” are not required, the panel clarified that the Board’s “explanation [must] be sufficient for us to see that the agency has done its job.”  The Court reasoned that the Board failed to meet this obligation by stating that the prior art generally teaches data reassembly without addressing or even acknowledging the crux of the parties’ dispute—i.e., where data reassembly takes place in the prior art.  The Board’s failure to explain how the prior art teaches reassembly in the network interface, as required by the claims, left the panel unable to “reasonably discern whether the Board followed a proper path in determining that the asserted prior art teaches or suggests the reassembly limitations, and by extension, that the subject of claims 41-43 would have been obvious.”  The Court therefore vacated that portion of the Board’s decision and ordered the Board to reconsider whether the asserted prior art teaches the entirety of the reassembly limitations, including the requirement that reassembly takes place in the network interface.

This case underscores the importance of the Board adequately explaining its findings.  Parties to post grant reviews that have received an adverse decision from the Board should pay careful attention to whether the Board sufficiently supported its findings.

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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.