In Hunting Titan Inc. v. DynaEnergetics GmbH & Co. KG, Case IPR 2018-00600 (PTAB Jul. 6, 2020), the Patent Trial and Appeal Board’s Precedential Opinion Panel (POP) vacated the decision of another Board panel to deny patent owner’s (DynaEnergetics) motion to amend. In that vacated decision, the Board had sua sponte determined the proposed substitute claims were anticipated, despite the petitioner’s (Hunting Titan) failure to advance such a position. After vacating the decision of the panel, the POP granted DynaEnergetics’ motion to amend and its request for rehearing of that panel’s final written decision finding DynaEnergetics’ claims unpatentable. The POP’s decision focuses on the question of when the Board may sua sponte raise a ground of unpatentability that a petitioner did not advance. Of particular note, the POP directly and repeatedly criticizes Hunting Titan’s strategy to intentionally exclude anticipation arguments against DynaEnergetics’ proposed substitute claims.
Hunting Titan successfully petitioned for an IPR of all claims of DynaEnergetics’ U.S. Patent No. 9,581,422 (“the ’422 patent”). Hunting Titan presented multiple grounds of unpatentability based on obviousness and anticipation. Among those grounds, one alleged that all claims were anticipated by U.S. Patent No. 9,689,223 (“the ’223 patent”). During trial, DynaEnergetics moved to amend. Hunting Titan opposed arguing the ’223 patent rendered obvious the substitute claims. Hunting Titan did not argue the substitute claims were anticipated. Nevertheless, the Board issued a final written decision finding that the ’223 patent anticipated both the issued and proposed substitute claims, stating that “Hunting Titan has carried its burden in demonstrating that th[e] proposed amendment does not overcome the anticipatory nature of” the ’223 patent. Slip Op. at 3 (citing Paper 42 (“Decision”)).
After vacating this decision and ordering rehearing, the POP resolved (i) whether the Board may raise a ground of unpatentability that a petitioner did not advance or insufficiently developed in an IPR against proposed substitute claims, and if so, (ii) whether the Board must provide the patent owner with notice and an opportunity to respond before making a final determination. In view of the Federal Circuit’s recent decision in Nike, Inc. v. Adidas AG, 955 F.3d 45 (Fed. Cir. 2020) (discussed here), the POP observed that the Board may raise such a ground against proposed substitute claims “in certain rare circumstances,” but warned that broad use of this authority “would not provide the parties with the appropriate incentives to participate in the adversarial process” and would “greatly undermine the efficiency of AIA proceedings” by placing the “onus on the [B]oard to develop arguments for the petitioner.” Id. at 12. In the present case, the POP determined that such “rare circumstances” were not present. Slip Op. at 4.
The POP delineated the “rare circumstances” in which the Board may sua sponte raise a ground of unpatentability. According to the POP, if a petitioner ceases to participate in the proceedings, chooses not to oppose a motion to amend, or if “certain evidence of unpatentability” is “readily identifiable and persuasive,” the Board may advance a position of unpatentability “in the interest of supporting the integrity of the patent system.” Slip Op. at 12-13. In such circumstances, the Board must provide the patent owner “notice of how the prior art allegedly discloses the newly-added limitations of each proposed substitute claim, as well as a theory of unpatentability asserted against those claims.” Id. at 15.
In concluding that the circumstances of the present case failed to qualify, the POP stated that the anticipation grounds raised in the Board’s decision constituted an “entirely new theory of unpatentability” because DynaEnergetics had no notice that “new arguments would be asserted using that same reference.” Id. at 18. The POP therefore concluded that the Board’s decision to sua sponte raise a ground of unpatentability was improper. See id. at 19.
The POP then criticized Hunting Titan’s apparent strategy to not argue anticipation of the substitute claims. See e.g., Slip Op. at 19 (stating that the “[p]etitioner’s failure to raise the anticipation ground is particularly meaningful because Petitioner affirmatively chose not to raise this particular anticipation ground”). While Hunting Titan argued that overturning the Board’s decision would harm the public interest by issuing “substitute claims that the USPTO knows to be unpatentable,” the POP dismissed this argument, stating that the “adversarial system has not failed” because the “[p]etitioner vigorously prosecuted its case but made a tactical decision not to raise anticipation arguments.” See id. at 20. “The public interest,” said the POP, “is best served by the Office acting with humility and restraint, and deferring to those who come before the Board in these adversarial proceedings, who have the most at stake, and who surely know the record best.” Id.
In any event, the POP noted that other parties were free to “bring a subsequent challenge against the amended claims” and “arguments regarding broad harm to the public … are not convincing.” Id. at 21; see also, id. at 20 (stating that the “[p]etitioner is the primary party affected by the decisions it makes in this adversarial proceeding”). While undoubtedly correct that others might later successfully challenge the issued claims, the POP’s rationale fails adequately to address the fact that a petitioner’s poor “tactical decision” has led to the issuance of amended claims that the Board has acknowledged should be unpatentable.
In the end, the POP concluded that the evidence of record was “not the sort of readily identifiable and persuasive evidence of anticipation in the record that would justify the Board raising its own grounds of unpatentability.” Slip Op. at 21. As a result, this case counsels practitioners to raise all potential grounds of unpatentability that can be asserted in an IPR. The PTAB has the authority to raise grounds of unpatentability that are not asserted by the petitioner in “rare” circumstances. But relying on that potential rarity may be a poor tactical decision.