Federal Circuit Reverses Because PTAB Relied Upon Argument First Raised at Oral Argument

cafc1In a decision today from the Federal Circuit, in Dell Inc. v. Acceleron, LLC, 2015-1513, -1514 (March 15, 2016), involving US Patent No. 6,948,021, the PTAB was reversed because its Final Written Decision relied upon a new argument that was first raised by Petitioner in oral argument.

In the underlying IPR, the PTAB determined that claims 14-17 and 34-36 of the ‘021 patent had not been shown to be unpatentable, but determined that claims 3 and 20 were unpatentable. In today’s Federal Circuit decision, the Court affirmed the Board’s determination that claims 14-17 and 34-36 were not shown to be unpatentable, but reversed and remanded relative to the unpatentability determinations of claims 3 and 20.

With regard to claim 20, the Court took the Board to task for failing to give meaning to all of a claim’s terms. The claim term at issue requires a microcontroller with a connection to remotely poll a CPU module. Decision at 11. The Board’s construction, in effect, ignored the “remotely poll” limitation from the claim, meaning that the Board’s claim construction was unreasonable. Id. at 13.

The more groundbreaking aspect of the Court’s decision, however, relates to the Court’s remand of claim 3. The Court held that, because the argument upon which the Board relied was first identified by Petitioner in the oral argument, Patent Owner was denied a fair opportunity to respond to the basis of cancellation. Id. at 13. As such, the Board’s decision was vacated and remanded. This holding is interesting because previous PTAB Final Written Decisions relied upon new evidence and argument advanced for the first time in reply or on appeal, but the Court did not take issue with those PTAB decisions.

More specifically, Patent Owner argued in its Patent Owner response that the “caddies” required by claim 3 were not shown by the “articulating door” from the prior art, that was identified in the Petition. In its reply brief, Petitioner presented the new argument that the caddies were also shown in the prior art’s power-supply mounting mechanisms. At the oral hearing, Petitioner expanded on this argument, arguing that unlabeled “slides” from the prior art mounting mechanisms constituted the claimed caddies. In the Final Written Decision, the Board relied upon this new argument from the oral argument, determining that claim 3 was unpatentable based on the disclosure from the prior art of the slides.

The Court noted the statutory and regulatory bases for the requirement that the Board put a Patent Owner on notice of the bases upon which it determines a claim to be unpatentable. Id. at 13-14. In view of those requirements, “the Board denied [Patent Owner] its procedural rights by relying in its decision on a factual assertion introduced into the proceeding only at oral argument, after [Patent Owner] could meaningfully respond.” Id. at 14.

Because the oral argument does not provide Patent Owner with any opportunity to supply evidence, Patent Owner had no opportunity to comprehensively address this contention. In its Final Written Decision, the Board had dismissed Patent Owner’s argument that this “slide” argument was new, by concluding that Petitioner pointed to the “slides” in its reply. The Federal Circuit disagreed, finding that the key factual assertion was only specifically made at the oral hearing. Thus, in its holding, the Court pointed to the fact that Petitioner has not shown “that there can be no genuine factual dispute” on the issue of anticipation and, as such, vacated the Board’s cancellation of claim 3 remanded the case for further proceedings. Id. 

The Federal Circuit’s decision is a glimmer of hope for Patent Owners. The relatively unfettered discretion the Court has otherwise been affording the Board has (at least temporarily) been limited.

PTAB Reiterates Prohibition Against New Arguments at IPR Oral Hearing

15503338_sOne of the most litigated aspects of inter partes review proceedings is the issue of whether an argument presented in a petitioner reply or at oral hearing is “new.” This issue arose in Level 3 Communications, LLC v. AIP Acquisition LLC, IPR2013-00296, Paper 42, at 9-10, wherein the Board discussed what will and will not be allowed in terms of new arguments at oral hearing.

Patent Challenger objected to four arguments asserted by Patent Owner during oral hearing:

  • Reliance on a case not yet of record;
  • A previously-unasserted argument of unpredictable results;
  • A new argument regarding a reference of record; and
  • Reference to a specific page of reference of record.

Order at 9.

The Board began by addressing Patent Owner’s reliance on a case at oral hearing that had not been previously discussed in the trial.  Because Patent Challenger had no opportunity to address the new case, the Board sustained an objection to its use in this proceeding. Id. at 9.

Second, Petitioner objected to Patent Owner’s argument that the patent-at-issue disclosed unpredictable results and a characterization of the claimed invention. Patent Owner countered that its arguments were made in response to a new argument in Patent Challenger’s reply brief and should, therefore, be allowed.  The Board sided with Petitioner, finding that there are no exceptions to the rule that new arguments may not be raised during oral hearing, even if in reply to another new argument.  Accordingly, the Board sustained these objections, as well. Id. at 9-10.

Lastly, the Board addressed the fourth objection, listed above, where Patent Owner referenced a specific page of a reference of record during oral hearing. The Board noted that the specific page of the reference was previously admitted as evidence and Petitioner had access to it.  Further, the reference citation was in support of a previously-asserted argument. Accordingly, the Board overruled this last objection.  Id. at 10.

The Board reiterated its rule that no new arguments can be presented during oral hearing, disallowing arguments which depended on new references or which were not previously advanced. However, if argument or evidence relied upon were previously presented, the Board will allow discussion of it during oral hearing.