February 9, 2017

USPTO Standards of Review for Inter Partes Review Proceedings

By Gregory S. DeLassus, Associate

The Administrative Procedures Act (APA) applies to Patent Trial & Appeal Board (PTAB) proceedings, and the Court of Appeals for the Federal Circuit (CAFC) is using the APA to check the PTAB’s tendency to invalidate claims.

PTAB proceedings — unlike district court litigation — take place in front of an administrative agency tribunal, where they are governed by the APA.  In In re NuVasive, 841 F.3d 966 (Fed. Cir. 2016) (NuVasive I) an inter Partes Review (IPR) challenger argued obviousness of NuVasive’s claims covering certain spinal implants over US 2002/0165550 in view of US 5,860,973. The petition did not specifically mention Figure 18 in ‘973. NuVasive responded by arguing that its claimed implant was long and narrow, while the cited art taught long and wide implants.  The challenger countered this argument by noting that Figure 18 in ‘973 shows a long and narrow implant.  The CAFC vacated the PTAB’s conclusion of obviousness.  The APA (5 U.S.C. § 706) requires that a reviewing court “set aside agency action… not in accordance with law [or]… without observance of procedure required by law.”  The CAFC concluded that NuVasive was deprived of due process of law because the challenger had waited until after NuVasive’s last opportunity to speak before the challenger raised the issue of ‘973 Figure 18.  NuVasive I shows that if an essential (even if only small) part of the challenger’s argument is presented for the first time after the patentee’s response, then a PTAB decision relying upon the late-submitted material can be reversed on APA grounds.

When the same challenger attacked a different NuVasive patent in In re NuVasive, No. 15-1670 (Fed. Cir. Dec. 7, 2016) (NuVasive II), the challenger argued that the person of ordinary skill would obtain “additional information” by combining two references to arrive at the claimed invention.  The challenger did not, however, explain what that “additional information” was.  The PTAB did not offer its own explanation for why a person of ordinary skill would combine the cited references, but merely relied on the conclusory explanation from the challenger’s expert.  The CAFC concluded that this PTAB decision was “unsupported by substantial evidence” and must be set aside under the APA.  The CAFC remanded the case for additional PTAB findings and explanations regarding whether a person of ordinary skill would be motivated to combine the two references.

Takeaway: NuVasive I & II demonstrate that the CAFC is applying the APA strictly to IPR proceedings. If you are defending a patent, make sure to insist that the APA is rigorously applied to all steps of the proceeding.

Citation: In re NuVasive, 841 F.3d 966 (Fed. Cir. 2016) (NuVasive I) and In re NuVasive, No. 15-1670 (Fed. Cir. Dec. 7, 2016) (NuVasive II)