Federal Circuit Allows Patent Trial and Appeal Board to Rely on Prior Art of Non-Instituted Grounds in Final Written Decision

In a precedential decision issued Wednesday, April 12, 2017, the Federal Circuit addressed whether, at least in certain circumstances, the Patent Trial and Appeal Board may rely on prior art of non-instituted grounds in final written decisions of inter partes review proceedings.

Affirming the Board’s determination of unpatentability in two consolidated inter partes review proceedings, the Federal Circuit in Novartis AG v. Torrent Pharms. Ltd., No. 2016-1352, slip op. (Fed. Cir. Apr. 12, 2017) rejected a patentee’s arguments that the Board violated the “notice and opportunity to be heard” requirements of the Administrative Procedure Act (APA) when the Board relied on a reference that it had refused to institute proceedings on.  Id. at 12-13.  The patentee argued that the Board’s institution decision had ruled the reference “out of the case entirely,” that the patentee had “relied on that ruling” to its detriment, and that the reference provided the “missing link” for the Board’s obviousness conclusions.  Id. at 12-17.  The Federal Circuit disagreed.  See id.

Addressing the patentee’s argument that the reference had been ruled “out of the case entirely,” the Federal Circuit found that the Board’s discussion of the reference in the Final Written Decision merely “reinforced” its motivation-to-combine findings and “was not inconsistent with its review” of the reference in the institution decision.  Id. at 13.  The Federal Circuit then dismissed the patentee’s claims of “surprise,” reasoning that “[t]he parties debated [the reference] at length throughout the proceeding and in the same context that it was discussed by the Board in the Final Written Decision” and noting the petitioner had argued in its petition that the reference further supported a motivation to combine the prior art of the instituted grounds.  Id. at 14.  Under these circumstances, the Federal Circuit found “no APA violation.”  Id. at 16.

The Federal Circuit then went on to reject the patentee’s “missing link” argument as well, finding “substantial evidence supporting the Board’s motivation to combine conclusion, independent of” the reference at issue.  Id. 16-17.  “This is not a case,” it emphasized, “where [the reference] provided the linchpin of the Board’s analysis.”  Id. at 17.  The Federal Circuit also found no error in the Board’s assessment of the patentee’s proffered objective evidence of non-obviousness, dismissing the patentee’s arguments of unexpected results as waived and its arguments of commercial success, praise, and long-felt need as lacking sufficient nexus to the merits of the invention.  See id. at 21-26.

Novartis thus demonstrates that a Board decision denying institution on proposed grounds involving a given prior art reference may not necessarily preclude the petitioner from relying on that reference during proceedings instituted on other grounds (e.g., to bolster factual contentions regarding motivation to combine).

Other Notable Decisions — Week of April 14, 2017

Core Wireless Licensing S.A.R.L. v. Apple Inc., No. 2015-2037 (Fed. Cir. Apr. 14, 2017) (precedential): In Core Wireless, the Federal Circuit affirmed a district court decision upholding a jury verdict of non-infringement.  On appeal, the patentee argued that the district court had erroneously construed a means-plus-function clause, requiring that the corresponding structure disclosed in the specification be capable of performing a function in addition to the function claimed.  The Federal Circuit disagreed, reasoning that the recited purpose of the claimed function was to perform the additional function required by the district court and finding support for the district court’s construction in the patent, the patent’s prosecution history, and extrinsic evidence.

In re: Apple Inc., No. 2016-1402 (Fed. Cir. Apr. 14, 2017) (non-precedential): In Apple, the Federal Circuit reversed and remanded a Patent Trial and Appeal Board reexamination decision.  The Federal Circuit concluded that the inventors had acted “as lexicographers” and “expressly defined” a claim term in the specification, and that the Board erred in its adoption of a broader construction under the broadest reasonable interpretation standard.

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