“Substantial Evidence” Hurdle is Substantially Difficult to Overcome

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One of the less appreciated hurdles to a successful appeal of a Final Written Decision in an IPR proceeding is the “substantial evidence” standard of review the Federal Circuit applies to the Graham factors that underlie a determination of obviousness.  Although the ultimate determination of obviousness is a legal issue subject to de novo review, the underlying Graham factors are questions of fact, which receive the more deferential, substantial evidence standard of review.  In practice, the ultimate legal conclusion rises and falls with the Graham factors—particularly, whether the prior art teaches the claimed limitations (i.e., “the differences between the prior art and the claim at issue”).

The Federal Circuit’s August 9, 2016 opinion in In re: Warsaw Orthopedics illustrates the deferential nature of the substantial evidence standard.  According to the Federal Circuit, “substantial evidence” is “something less than the weight of the evidence more than a mere scintilla.”  In Warsaw, the claim limitation of interest was: “[i]nserting…a non-bone interbody intraspinal implant…, the length of said implant being sized to occupy substantially the full transverse width of the vertebral bodies of the two adjacent vertebrae, the length of said implant being greater than the depth of the disc space,…[and] the length of said implant being greater than the maximum height of said implant.”

The factual question was whether the prior art disclosed these limitations.  The prior art disclosed implants that were recessed within the vertebrae and which were substantially shorter than the full width of the vertebrae.  The PTAB nevertheless found it would have been obvious to one of ordinary skill that the prior art implant would be sized to conform to the disk space.  The Federal Circuit determined this was supported by substantial evidence, despite the fact that no expert testimony was referenced in the Federal Circuit opinion.  In doing so, the Federal Circuit indicates that an obviousness determination does not actually require each claimed limitation be met by the prior art, stating “To the extent that Warsaw argues the PTAB erred because it did not decide whether [the prior art] discloses dimensions that exactly meet the limitation ‘substantially the full transverse width’ in claims 1 and 17 of the ‘’97 patent, Warsaw misunderstands the governing law, see, e.g., Beckson Marine, Inc. v. NFM, Inc., 292 F.3d 718, 727 (Fed. Cir. 2002) (“[O]bviousness does not require the prior art to reach expressly each limitation exactly.”).

The Federal Circuit did, however, throw a bone to the patentee with respect to the PTAB’s cancellation of claim 17.  There, the Court agreed that the PTAB’s following explanation on one limitation did not sufficiently show its reasoning in reaching its decision:  “Jacobsen appears to disclose anchor wires (i.e., ‘elongated portions’) that are positions over adjacent vertebrae.’) (citing Figure 5).”  The reversal as to claim 17 may be a fleeting victory for the patentee, though, because the Federal Circuit remanded for further findings on the issue.

Federal Circuit Maintains “Substantial Evidence” Standard of Review in AIA Post Grant Proceedings

cafc1The Federal Circuit, today, denied a petition seeking rehearing en banc of its application of the “substantial evidence” standard of review in post grant administrative proceedings, in the case of Merck & Cie v. Gnosis S.P.A., Appeal No. 2014-1779 (from IPR2013-00117). Writing a concurring opinion (in which Judges Wallach and Stoll joined), Judge O’Malley recognized the appeal of a change in the standard, such that the Federal Circuit would apply a less deferential “clear error” standard of review in AIA proceedings. But, Judge O’Malley felt compelled by Supreme Court precedent to maintain the “substantial evidence” standard. In short, Judge O’Malley signaled that the issue should be left to Congress to change, finding that, because Congress failed to expressly change the standard when it created IPR proceedings, the Court is not free to make that change now.

In dissent, Judge Newman wrote that it was inappropriate for the Federal Circuit to continue to apply the highly deferential standard of review and, instead, a full and fair review is more appropriate to the America Invents Act. More specifically, because PTAB proceedings are intended to be an alternative to district court proceedings on the issue of validity/patentability, the “substantial evidence” standard “does not assure the intended identity of result for these PTAB and district court determinations.”

Consider the baton officially passed to Congress to decide whether PTAB proceedings should be reviewed using a less deferential standard. For the foreseeable future, the Board will continue to receive high deference in its factual determinations.

Federal Circuit Weighs in on IPR Again, and Judge Newman Regains Her Footing as Pro-Patent Crusader

cafc1The Federal Circuit issued another substantive, IPR-related opinion today in Prolitec, Inc. v. ScentAir Techs., Inc., 2015-1020 (Fed. Cir. Dec. 4, 2015) (appealing from IPR2013-00179). The Board had determined that each of the two claims at issue was unpatentable and the Federal Circuit affirmed. On appeal, Patent Owner made five challenges to the PTAB’s decision in the underlying IPR – three claim construction arguments, a related argument against anticipation, and an argument directed to its Motion to Amend in the IPR. It is worth discussing here one of the claim construction arguments, the Federal Circuit’s treatment of the Motion to Amend, and a broad-based and strong dissenting opinion filed by Judge Newman.

Regarding claim construction, Patent Owner argued that the term “mounted” was not properly construed to require a permanent joining of two parts. In support, Patent Owner pointed out that the purpose of the invention was to provide a disposable cartridge for one-time use and that each embodiment in the patent required a permanent means of bonding. The Federal Circuit disagreed. As to the purpose of the invention argument, the Court cited to broad language from the specification, that taught that “it may be desirable that the cartridge is configured to be used only one time prior to being discarded.” Op. at 5. The Court specifically noted that “[t]he problem for [Patent Owner] is that the use of ‘may’ signifies that the inventors did not intend to limit the patent as [Patent Owner’s] expert opined.” Id. at 5-6. As to the fact that each embodiment required permanent bonding, the Court pointed to more permissive language which taught that the two parts “may be jointed to each other by heat or ultrasonic welding spin welding, or by use of an adhesive.” Id. at 6 (emphasis in original).

In short, this is another example of a situation where the blind pursuit of breadth in the drafting of the patent specification hurt a Patent Owner by requiring that its patent claim(s) be construed broader than what was likely necessary to cover the commercial embodiment of the invention. The prior art seemed to show non-permanent joining of the key parts and, as such, if Patent Owner intended the patent-at-issue to cover permanent joining, it should have made that point of novelty clear in the specification and/or the patent claims.

Regarding the Motion to Amend, Patent Owner had attempted to substitute “permanently joined” into the subject claims, substituting its above-referenced claim construction for the claim element. Petitioner opposed, pointing to a reference in the prior art (cited in the original examination of the patent) that taught permanent joining. Patent Owner did not dispute that the subject prior art reference disclosed that limitation, but argued that other claim limitations were not found in the reference. The Board denied the Motion to Amend, finding that Patent Owner failed to demonstrate that the proposed claim was patentable. On appeal, Patent Owner made two arguments that came up short. The first argument was that it was not required to prove patentability over prior art references cited in the original file history because they were not of record in the IPR. This was an issue that was left open by the Federal Circuit in Microsoft v. Proxyconn789 F.3d 1292 (Fed. Cir. 2015). In that case, the Court had indicated that it was not deciding on the reasonableness of the Board’s jurisprudence regarding the scope of the requirement that Patent Owner show patentability over all “prior art of record” (which, at the time, arguably required a showing of patentability over the entire universe of uncited prior art). Op. at 14. Subsequent to the Federal Circuit’s decision in Proxyconn, the PTAB narrowed its guidance on what constituted “prior art of record” to include material contained in the prosecution history of the patent-at-issue. The Federal Circuit agreed with the Board’s approach in this regard, finding that the Patent Owner’s burden to show patentability over the art from the original prosecution history “is not in conflict with any statute or regulation. Moreover, it is not unreasonable to require patentee to meet this burden.” Id. As such, the Board’s denial of the Motion to Amend was affirmed.

Lastly, Judge Newman seemed to return to her pro-Patent Owner role, after signing onto the decidedly pro-Petitioner decision in Belden v. Berk-Tek, by filing a broad and strong dissentSpecifically, Judge Newman disagreed with the majority’s decision in five ways. First, she argued that the PTAB improperly refused entry of the amendment-at-issue, given that Patent Owner had complied with all the statutory and regulatory requirements. Judge Newman’s view is that the proposed amendment resolved the key dispute in the proceeding about claim breadth and, as such, “refusal to enter the amendment is contrary to both the purpose and the text of the America Invents Act.” Dissenting Op. at 3. Second, Judge Newman disagreed with the majority regarding the burden of proof for amended claims. It was not proper, per the dissenting opinion, for the Board and majority to shift the burden for amended claims to Patent Owner. Instead, the AIA places the burden of proof, throughout the proceeding – for amended and unamended claims – on Petitioner. Third, Judge Newman argued that it is the Federal Circuit’s duty to assure that the preponderance of the evidence standard is met in PTAB proceedings. As such, it is erroneous to apply the highly-deferential substantial evidence standard to AIA post-grant appeals. Fourth, Judge Newman criticized the majority opinion for not remanding the case to the Board given that the PTAB changed its view of the scope of “prior art of record” during the pendency of the case.

Lastly, Judge Newman took issue with the majority’s affirmance of the anticipation finding in view of the fact that the anticipatory reference was Patent Owner’s prior incarnation of the subject device. Per Judge Newman: “A finding of anticipation requires that the same invention was previously known and described, not that a claim can be construed so broadly and incorrectly as to embrace a prior art device.” Id. at 11.

Judge Newman is back to her old self, but another Patent Owner has found its patent rights in rubble.