Federal Circuit Affirms Patent Trial And Appeal Board Reconsideration Ruling That Claims Are Unpatentable On Non-Instituted Ground Not Addressed In Final Written Decision
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  • Federal Circuit Affirms Patent Trial And Appeal Board Reconsideration Ruling That Claims Are Unpatentable On Non-Instituted Ground Not Addressed In Final Written Decision

    On January 9, 2019, the Court of Appeals for the Federal Circuit (CAFC) issued an opinion affirming a decision on reconsideration by the Patent Trial and Appeal Board (PTAB) that held challenged claims to be unpatentable on a non-instituted ground that was not addressed by the PTAB in its final written decision.  AG Technologies S.A. v. Amazon.com Inc., —F.3d—, (Fed. Cir. Jan. 9, 2019).  The CAFC ruled that the PTAB had not exceeded its statutory authority or deprived the patent owner of fair process by belatedly considering the additional ground.

    35 U.S.C. § 311 provides that “[a] petitioner in inter partes review [IPR] may request to cancel as unpatentable 1 or more claims of a patent only on a ground that could be raised under section 102 or 103 and only on the basis of prior art consisting of patents or printed publications.”  The PTAB may then, pursuant to 35 U.S.C. § 314, institute an IPR proceeding if the petition “shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition,” and, within one year of institution, render its “final determination” as to the patentability of the challenged claims, per 35 U.S.C. § 316. 

    This statutory framework, according to the Supreme Court in its SAS decision and the CAFC’s interpretation thereof — as we discussed in our prior posts, see Shearman & Sterling LLP, US Supreme Court Approves IPRs, But Requires Decision On All Challenged Claims, Need-to-Know Litigation Weekly, May 1, 2018, https://www.lit-ip.shearman.com/us-supreme-court-approves-iprs-but-requires-decision, and Shearman & Sterling LLP, Federal Circuit Expands The Supreme Court’s SAS Holding To Require Institution On All Grounds Argued In An IPR Petition, July 10, 2018, https://www.lit-ip.shearman.com/federal-circuit-expands-the-supreme-courts — requires that the PTAB institute IPR, if at all, on all challenged claims and all grounds included in the petition.  Prior to SAS, the PTAB would pick and choose the grounds and claims upon which to institute — instituting on some claims and grounds and denying on others.  

    Petitioner Amazon filed a petition for IPR, challenging the patent claims on three prior-art patentability grounds:  (1) a single-reference obviousness ground challenging all claims under a narrow claim construction; (2) an anticipatory ground based on the same reference challenging some of the claims under a broad claim construction; and (3) a single-reference obviousness ground based on the same reference challenging other claims under the broad claim construction.

    In its institution decision — which issued prior to the Supreme Court’s SAS decision — the PTAB adopted the broad claim construction and instituted Amazon’s IPR on the first and second grounds.  As to the third ground, the PTAB found it moot.  According to the PTAB, it had already “addressed Petitioner’s contentions [with respect to Ground 3] in [the PTAB’s] analysis of Ground 1 and determined that Petitioner has established a reasonable likelihood of showing that [claims challenged in Ground 3] are unpatentable as obvious” under the broad construction.

    After the parties’ briefing and the hearing, the PTAB issued a final written decision (again prior to the SAS decision), finding unpatentable the claims challenged in Ground 2 (which challenged a subset of claims), but not Ground 1 (which challenged all claims).  The PTAB’s decision did not address Ground 3.

    Amazon moved for reconsideration that the PTAB had overlooked Ground 3.  The PTAB agreed, and allowed the parties to submit additional arguments, expert declarations and exhibits.  Upon reconsideration, the PTAB found unpatentable the claims challenged in Ground 3.  AG Technologies appealed, arguing that the PTAB committed a procedural error when it found unpatentable claims based on a ground that was not included in the institution decision.

    The CAFC disagreed for two reasons.  First, it found that the Supreme Court’s SAS decision foreclosed any argument that the PTAB exceeded its statutory authority when it reconsidered its final written decision and addressed the non-instituted Ground 3.  In fact, according to the CAFC, the PTAB would have violated the statutory scheme had it refused to so reconsider.  Second, the CAFC found that the PTAB did not commit a due process violation, as the PTAB allowed the parties to submit additional briefing, evidence and argument, and the patent owner had not requested a hearing to address the third ground.

    This decision illustrates the continuing trend — in the wake of SAS — of requiring a final written decision on all challenged claims based on all grounds in the petition, and that a due process violation will not be found, so long as the opposing party is provided with notice and an opportunity to respond.