Summary: The Board must consider arguments in an IPR petitioner’s reply, where the arguments expressly follow from the petition, do not rely on new references or rationales, and are necessary to address an issue that arose after institution.

Ericsson petitioned for IPR of a patent owned by Intellectual Ventures.  The challenged patent was directed to improvements in wireless communications, using a technique known as interleaving.  Ericsson’s petition proposed constructions under the broadest reasonable interpretation standard.  And in deciding to institute, the Board applied the BRI standard.  Following institution, Intellectual Ventures argued and Ericsson did not dispute that claims must be construed under the Phillips standard, because the challenged patent expired prior to Ericsson petitioning for IPR.  Under the Phillips construction, both challenged independent claims required interleaving packets.  Ericsson argued in its reply that although the prior art did not disclose interleaving as claimed, the claims were still obvious because the difference between the type of interleaving that was disclosed and the type of interleaving that was claimed would be insubstantial to a person of ordinary skill in the art.  The Board determined Ericsson’s argument on reply was new and struck the argument.  The Board then determined Ericsson had not shown the challenged claims were unpatentable.

The Federal Circuit vacated and remanded because the Board parsed Ericsson’s reply argument “with too fine a filter.”  The challenged patent disclosure admitted that interleaving was known in the prior art, and Ericsson’s petition described how one of ordinary skill in the art would be familiar with interleaving.  Thus, Ericsson was entitle to argue on reply that the distinction between specific types of interleaving would have been insubstantial to a person of ordinary skill in the art.  The Court further noted that the Board’s error was exacerbated because the significance of interleaving only arose after the petition was filed, due to the changed construction.  Because the missing interleaving limitation was the essential basis of the Board’s decision, Ericsson should have been given an opportunity to respond.