PTAB rules prohibit raising new arguments in a reply brief, but it can be difficult to distinguish between an improper reply argument and a proper rebuttal. In Idemitsu Kosan Co. v. SFC Co., No. 2016-2721 (Fed. Cir. Sept. 15, 2017), the Federal Circuit determined that the IPR petitioner properly made a rebuttal argument—not a belated, new argument—in its reply brief, and the court affirmed the PTAB’s decision canceling the challenged claims for obviousness.

Petitioner SFC Co. filed an IPR petition challenging claims of Patent Owner Idemitsu Kosan Co.’s patent, entitled “Organic Electroluminescence Device and Organic Light Emitting Medium.” The challenged claims recite an electroluminescence device including a pair of electrodes, with an organic light emitting layer between the electrodes. The organic light emitting layer includes: (A) an arylamine compound of a particular formula; and (B) at least one compound selected from particular anthracene derivatives and spirofluorene derivatives.

The PTAB instituted review on one ground, obviousness over a single reference, “Arakane,” which discloses an organic electroluminescence device including an organic layer containing: (1) at least one hole transporting (“HT”) compound; and (2) at least one electron transporting (“ET”) compound. Arakane further discloses that the “energy gap” of the HT compound is less than the energy gap of the ET compound. On appeal, the parties did not dispute that Arakane disclosed preferred formulas for its HT and ET compounds that include the recited formulas for compounds (A) and (B). But the Patent Owner argued that Arakane did not teach combining those particular compounds for use in the light emitting layer, because Arakane did not disclose that those compounds would have satisfied Arkane’s energy gap relationship.

The court determined that the PTAB correctly found that Arakane teaches that any of its disclosed HT compounds may be combined with any if its ET compounds to produce a light emitting layer, regardless of their energy gap relationship, and that if the energy gap relationship were satisfied then the combination would also have improved durability and efficiency. The Patent Owner argued that the Board’s finding on this issue was based on an argument that the Petitioner raised “too late”—in its reply brief instead of in the petition.

The court determined that the Petitioner’s reply argument was a proper rebuttal argument, made in response to the Patent Owner’s argument that Arakane teaches away from the combinations, stating that “what Idemitsu characterizes as an argument raised ‘too late’ is simply the by-product of one party necessarily getting the last word.” The Patent Owner also argued that the PTAB’s finding was not supported by testimony, but neither party provided testimony to support its position. The PTAB thus “weighed the parties’ competing arguments,” and determined that the Petitioner’s argument was more plausible. Approvingly, the court stated: “That is precisely what the Board is supposed to do.”

This decision illustrates that although the Federal Circuit has upheld PTAB decisions strictly applying its rules prohibiting new evidence or arguments in reply, see, e.g., Intelligent Bio-Systems, Inc. v. Illumina Cambridge Ltd., 821 F.3d 1359 (Fed. Cir. 2016) (discussed here), it may sometimes be difficult to distinguish proper rebuttal argument from an improper new reply argument. Patent Owners who believe that improper reply arguments have been raised should request permission from the PTAB to respond by surreply, as the court suggested in Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064 (Fed. Cir. 2015) (discussed here).