Notice of grounds for unpatentability in one proceeding does not provide notice in a second, related proceeding, even where the proceedings relate to the same patent, are between the same two parties, and include the same prior art reference. The Federal Circuit, in In re: NuVasive, Inc., Case Nos. 2015-1672 and 2015-1673 (Fed. Cir. Nov. 9, 2016), relied on the Administrative Procedure Act (“APA”) and determined that the PTAB had violated the patent owner’s right to an opportunity to respond to grounds for rejection in one proceeding, while simultaneously determining that the patent owner had an opportunity to respond to the same grounds for rejection in a companion case. In reaching its decision, the Court stated that “[t]he 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.” (p. 11).
Background
Originally, Petitioner Medtronic, Inc.[1] filed two petitions for inter partes review, IPR2013-00507 and IPR2013-00508, seeking to cancel various claims of U.S. Patent No. 8,187,334 (the ’334 patent), owned by NuVasive, Inc., as obvious. The NuVasive patent relates to spinal fusion implants, in particular the size dimensions of such implants. The focus of the obviousness issue specifically relates to a long-and-thin design of an implant where the length of the implant is greater than 40 mm and the length is at least 2.5 times the maximum width of the implant (also referred to as the “dimensional limitations”). (p. 3).
In IPR507, Petitioner sought to cancel claims based on a patent application publication (Frey), which teaches an implant whose length is 2.5 times the width, in combination with U.S. Patent No. 5,860,973 (Michelson) that teaches a length greater than 40 mm. In the petition, Petitioner argued that “Michelson teaches implants ‘having an elongated shape,’ and ‘dimensions that are longer than wide.’” (p. 4). In support, Petitioner cited several paragraphs of Michelson that include a discussion of Figure 18 showing an alternative embodiment of an implant that “has a narrower width.” (p. 4).
In IPR508, the Petitioner relied on two brochures (Telamon) that teach implants whose lengths are at least 2.5 times their widths. The Petitioner then argued that it would have been obvious to have lengths greater than 40 mm as taught by Michelson. Significantly, Petitioner did not include any assertion about or citation to the paragraphs encompassing Michelson’s Figure 18. (p. 5).
The Board instituted IPR507 based on evidence the claims would have been obvious over Frey in view of Michelson. The Board instituted IPR508 based on evidence the claims would have been obvious over either of the brochures in view of Michelson and in view of another patent application publication (Baccelli). IPR507 and IPR508 involve all of the same claims, except for claims 16 and 17, which are only contested in IPR508.
PTAB’s Final Written Decisions
In IPR507, the Board held that all but one of the challenged claims would have been obvious over Frey and Michelson. The Board specifically pointed to Michelson alone as teaching an implant whose length is 2.5 times its width and whose length is greater than 40 mm.
In IPR508, the Board also held that all but one of the challenged claims would have been obvious over either of the brochures in view of Baccelli and Michelson. The Board again specifically pointed to Michelson alone as teaching the dimensional limitation.
Appeals
On appeal, Patent Owner NuVasive contends, among other things, that it did not have adequate notice of or opportunity to address Michelson Figure 18 with respect to the implant dimensional limitation claim element and its impact on the overall obviousness analysis. (p. 2).
As a matter of first impression for IPR appeals, the Federal Circuit determined that whether a ground that the Board relied upon was ‘new,’ such that the APA requires a new opportunity to respond, is a question of law subject to de novo review. (p. 8). Although this appears to be the first time the Federal Circuit has addressed the standard of review for this issue in an IPR proceeding, the Court noted that it has previously adopted such standard in the closely related context of an appeal from a reexamination proceeding. (p. 8).
In its appeals, the Patent Owner alleged that the Board violated its procedural rights under the APA, because it did not have proper notice of and opportunity to respond to Michelson’s Figure 18 as teaching the dimensional limitation. The Patent Owner asserted both (1) that the APA entitles a patent owner to notice of and a fair opportunity to meet the grounds on rejection, based on due-process and APA guarantees; and (2) that the Patent Owner did not have such opportunity in either of the proceedings.
Under the APA, for a formal adjudication like an inter partes review, the PTO must timely inform the patent owner of the matters of fact and law asserted. (p. 8). The PTO also must provide the patent owner an opportunity for the submission and consideration of facts and arguments, and a hearing and decision on notice. (p. 8).
The Federal Circuit focused on the significance of the prior art to the Board’s ultimate decision before assessing whether the Patent Owner had an adequate opportunity to respond. The court noted, “although the Board is not limited to citing only portions of prior art specifically drawn to its attention, in this case it is clear that the Board treated Michelson’s Figure 18 as an essential part of its obviousness findings.” (p. 9). After reasoning that Michelson’s Figure 18 was not immaterial, the court held, “[u]nder the APA’s fact-specific standard, common sense, and this court’s precedent” the patent owner is entitled to an adequate opportunity to respond to the specific asserted fact. (p. 10).
Under the APA’s fact-specific standard, common sense, and this court’s precedent the patent owner is entitled to an adequate opportunity to respond to the specific asserted fact.
Having the opportunity to respond to other facts about the prior art reference is not sufficient. (p. 10). The Federal Circuit assessed each of the proceedings to determine if the Patent Owner had its APA-required opportunity to respond to Michelson’s Figure 18. The Court reached different decisions in the two IPRs.
In IPR507, the court noted that the petition itself referenced Michelson, and specifically cited text that discusses Figure 18 (which shows an embodiment with a narrower width). The court reasoned that even though the petition did not specifically reference the 2.5 ratio, the petition’s reference to the text showing “longer than wide” implants and Figure 18 specifically was sufficient to put the Patent Owner on notice that Michelson may be used for the dimension limitation. Accordingly, because the petition should have put the Patent Owner on notice, the Patent Owner was obligated to use its Response to address Figure 18 and its relationship to the dimension limitation. After finding no procedural defect with respect to IPR507, the Federal Circuit affirmed the Board’s substantive finding that Michelson’s Figure 18 taught the dimensional limitation of the ’334 patent and the Board’s conclusion that the claims on appeal were invalid as obvious over the prior art.
In IPR508, the court focused on Petitioner’s failure to include references to Michelson’s Figure 18 and the relevant text in the Michelson patent. Because of this omission, the court held that the Patent Owner was not on notice as to the grounds in this proceeding at the time of the Patent Owner’s Response. The Court noted that Patent Owner was not on notice until the Petitioner’s Reply, after which the Board refused to permit the Patent Owner to file a surreply or to address the matter during oral argument, thus preventing the Patent Owner from having an opportunity to respond. In addition, the court held that the mere opportunity to file “observations” on cross-examination is not a substitute for the opportunity to present arguments and evidence. The court also noted that the Board treated each of the IPRs as separate, distinct proceedings, and the Board issued separate final written decisions. Moreover, the court noted, the Director provided no persuasive basis for treating notice in one proceeding as the basis for notice in the other. Accordingly, the Federal Circuit vacated the Board’s decision and remanded for future proceedings. In its opinion, however, the Court specifically noted that the Board’s procedural error does not preclude the Board from considering the disclosure of Michelson Figure 18 after giving the Patent Owner a full opportunity to submit additional evidence and arguments on that point. Thus court thus suggests that even after remand, the Board may still conclude that that the claims are invalid based on the same grounds.
[1] While the appeals were pending, Medtronic settled with NuVasive and withdrew from the appeals. However, the Director of the PTO intervened to defend the Board’s rulings against NuVasive’s inadequate-process challenges.