Reluctant to Reverse, the Federal Circuit Offers the PTAB a Mulligan

The Federal Circuit recently vacated the PTAB’s decisions in three interferences. Board of Trustees of Leland Stanford Jr. Univ. v. Chinese Univ. of Hong Kong, Appeal 2015-2011 (Fed. Cir. June 27, 2017). These interferences concern which parties’ inventors first conceived methods for diagnosing fetal aneuploidies using cell-free fetal DNA from maternal blood samples. The PTAB concluded that two patents it issued to Stanford’s inventors and their pending application lacked an adequate description of the interfering invention and, thus, entered judgment against Stanford. The Federal Circuit determined, however, that the PTAB failed to properly assess the description in Stanford’s patents and application and, thus, vacated the PTAB’s decisions. The court’s disposition is an example of how even a fact-intensive inquiry, reviewed on appeal with substantial deference, can be shown to have been misguided, leading to an appellant’s success.

During the interference, The Chinese University of Hong Kong (CUHK) filed a motion for judgment that Stanford’s specification did not, as of its February 2007 filing date, describe diagnostic methods using “random” massively parallel sequencing (MPS), a step recited in the parties’ interfering claims, but described only “targeted” MPS. In opposition, Stanford, argued that various passages in its specification adequately described random MPS even if it did not explicitly use those words. Among those passages was a reference to a product made by Illumina. In deciding the motion, the PTAB had to determine whether the skilled person as of February 2007 would have understood from Stanford’s specification that Stanford’s inventors possessed a complete method of sequencing random DNA fragments and identifying the sequenced fragments to diagnose aneuploidy.

The PTAB granted CUHK’s motion, concluding the skilled person would not have understood the passages as Stanford argued. In support, the PTAB found that the passages did not preclude targeted MPS, and credited the CUHK’s expert testimony, which was supported by published references, that the skilled person could have considered the reference to the Illumina product indicates targeted sequencing. The PTAB’s decision, if affirmed on appeal, would have effectively canceled Stanford’s interfering patent claims, finally rejected Stanford’s interfering application claims, and returned CUHK’s interfering applications to prosecution and ultimately, perhaps, to issuance.

The Federal Circuit vacated the PTAB’s decision because the PTAB “relied on improper evidence to support its key findings and did not cite to other substantial evidence to support its findings.” Slip op. at 2. First, the PTAB failed, according to the court, to cite any evidence of sequencing—targeted or random—in the Illumina product before Stanford’s February 2007 filing date. The published references to the Illumina product on which the PTAB relied were after that date, and the other published references on which the PTAB relied did not even concern the Illumina product. Next, the court noted that the same passages in Stanford’s specification that the PTAB determined “do not preclude” targeted sequencing, might actually indicate both random and targeted sequencing. Finally, the court criticized the PTAB’s analysis:

The Board’s error on this issue is compounded by its failure to explain the meaning of key sentences and phrases in the specification’s discussion of the sequencing process, and its failure to compare these statements to the claim limitations.

Id. at 18–19. In remanding the case, the court directed the PTAB to address the record evidence as to “pre-filing date art-related facts on [the] Illumina products,” rather than “post-dated references as a source for ‘later knowledge about later art-related facts … which did not exist on the filing date.’” The court also directed the PTAB to examine whether the skilled person would have understood that Stanford’s specification disclosed random MPS, as opposed to whether the specification does not preclude targeted MPS. Id. at 19–20.

Citing SEC v. Chenery, Corp., 332 U.S. 194, 196 (1947), the Federal Circuit acknowledged that it must base its review on the analysis the PTAB presented. Id. at 15. While the court may be reluctant to affirm misguided PTAB decisions based on Chenery, there seems to be no practical reason why the court could not have simply reversed the PTAB’s decision here based on the interference record the court reviewed. It is unclear how the PTAB may proceed on remand. The PTAB’s mulligan could become CUHK’s mulligan if the PTAB re-opens the record to further evidence and argument. Stanford would likely have preferred a reversal, but it may be sufficiently content with the opportunity to continue the interference, perhaps to a priority determination. Whatever transpires, the court should expect to revisit this interference again.