On March 15, 2016, the U.S. Court of Appeals for the Federal Circuit held that the Administrative Procedures Act (APA) places constraints on when petitioners may present evidence and arguments against the patentability of claims during inter partes review (IPR). In particular, the Federal Circuit found that the APA requires that patent owners be given notice and a fair opportunity to respond to evidence or arguments put forward by petitioners in an IPR.
Background
The APA governs administrative agencies of the federal government, including the Patent Office. Among other provisions, the APA places procedural constraints on the conduct of agency adjudications. In particular, the Patent Office must give patent applicants notice and a fair opportunity to respond to evidence and arguments against the patentability of claims.
Prior to the America Invents Act (AIA), the Board of Patent Appeals and Interferences at the Patent Office primarily heard appeals based on rejections of claims during the examination or reexamination of patents. In this context, if the Board found the rejection of claims proper, but based their decision on a ground different from the examiner, the ground would be designated a "new ground of rejection." Such designation entitled the applicant to request either a rehearing in front of the Board or to reopen prosecution of the claims with the examiner. These procedures fulfilled the notice and fair opportunity to respond requirements imposed on the Patent Office through the APA. Prior to Dell v. Acceleron, the extent to which the APA precluded new challenge grounds from being raised during the late stages of the new AIA trials—IPR, Post-Grant Review (PGR), and Covered Business Method Review (CBM)—had not been definitively established.
Dell v. Acceleron
The case resulted from an IPR petition filed by Dell alleging unpatentability of numerous claims of a patent owned by Acceleron. One of the issues on appeal was whether claim 3 was anticipated by art identified in the petition on grounds argued later in the trial.
During the IPR, Dell presented three arguments for anticipation of claim 3—one in the petition, one in the petitioner's reply, and one at oral argument. Each argument relied on a different portion of the prior art reference as disclosing a key limitation. In particular, as noted by the Federal Circuit: "In its petition, Dell argued that the articulating door 262 in Hipp's Figure 12 performs the same function as claim 3's caddies. In its post-institution reply, Dell added that the mounting mechanisms 278 in Hipp's Figure 12 constitute a caddy. It was only at oral argument before the Board that Dell pointed to the structure on which power supplies 280 rest in Hipp's Figure 12 as meeting the 'caddies' requirement of claim 3."
Acceleron objected to Dell's argument presented in its petitioner's reply and requested permission to file a motion to strike the argument or, alternatively, to file a sur-reply. Acceleron's request was denied by the Board. At oral argument, when Dell presented the anticipation arguments originally found in its petition and its reply brief and also presented its third anticipation argument, Acceleron objected on grounds that it had no notice and could not meaningfully respond.
The final written decision by the Board found that claim 3 anticipated and relied exclusively on the argument presented by Dell for the first time at oral argument. Acceleron appealed, arguing that the decision with respect to claim 3 was procedurally improper.
The Federal Circuit agreed, stating that the "APA imposes particular requirements on the PTO," referring to the entitlement of Acceleron to notice and a fair opportunity to respond to the arguments presented by Dell. The Federal Circuit found that "the Board denied Acceleron its procedural rights by relying in its decision on a factual assertion introduced into the proceeding only at oral argument, after Acceleron could meaningfully respond." Because there was no opportunity for Acceleron to present contrary evidence "whether expert or lay or documentary evidence," Acceleron did not receive the "notice of and a fair opportunity to meet the grounds of rejection" to which it was entitled.
Dell v. Acceleron stands for the proposition that the Board may not base a final written decision on factual arguments presented for the first time at oral argument. The issue of whether the Board may rely on arguments presented in a petitioner's reply was not decided; however, the logic of the decision may bar such reliance unless the patent owner is given leave to file a sur-reply in response.
Conclusion
This decision highlights the necessity of developing evidence and arguments in support of unpatentability at the petition stage for IPR, PGR, or CBM. Petitioners should expect limited opportunity to supplement the case following institution. On the other side, patent owners should be mindful of any untimely introduction of new evidence or argument by the petitioner following institution.
