In re NuVasive Brings the Administrative Procedure Act to IPRs

45686244_sNuVasive owns US 8,187,334, which claims certain spinal implants. Medtronic filed a petition challenging various claims of the ‘334 patent as obviousness over US 2002/0165550 (Frey) in view of US 5,860,973 (Michelson). Medtronic also filed a second petition challenging other claims over a promotional brochure for the Synthes Vertebral Spacer-PR (SVS-PR) in view of Michelson. Medtronic specifically mentioned Michelson figure 18 in its argument for obviousness over Frey, but not in its argument about obviousness over SVS-PR. The PTAB instituted two separate IPR proceedings on these two petitions. The proceedings were not consolidated, but there was a single oral hearing held for both proceedings.

In its patent owner response, NuVasive argued that its claimed implant was long and narrow, but that the cited art taught long and wide implants, for larger surface area to stabilize. Medtronic responded by noting that Michelson’s figure 18 shows a long and narrow implant. NuVasive attempted to have Medtronic’s response stricken as a new ground of rejection not present in the petition, or alternatively to be allowed to file a surreply. The PTAB denied both requests, and cut NuVasive off when it tried to make arguments on this point during the oral hearing.

Both IPRs ended with a determination that all challenged claims but one were unpatentable. Both final decisions relied on Michelson figure 18 to establish prima facie obviousness.

On appeal, the Federal Circuit (CAFC) affirmed the first IPR (in which figure 18 was cited in the petition). However, the CAFC vacated the second IPR, and remanded for the PTAB to give NuVasive a chance to respond to Medtronic’s argument about figure 18. The CAFC concluded that this result was compelled by the Administrative Procedures Act (APA), which requires (5 U.S.C. § 706) that a reviewing court “set aside agency action… not in accordance with law [or]… without observance of procedure required by law.” This case constitutes only the second time (after Dell Inc. v. Acceleron LLC, 818 F.3d 1293 (Fed. Cir. 2016)) that an IPR appellant has successfully challenged a PTAB defeat on APA grounds.

There are a few points to pause and notice about this outcome. First, the argument here is not about introducing a new reference into the mix, but rather about whether NuVasive was sufficiently on notice about one figure in Michelson. Second, there is no question that NuVasive actually knew about Michelson figure 18 at the time that it was writing its response to the argument about SVS-PR, because figure 18 was cited in the Frey petition. In other words, the APA failure here lay in not calling out figure 18 in the other of the pair of IPR petitions. It requires a very rigorous application of the APA to find reversible error in this argument about figure 18.

Other appellants have made APA arguments after a PTAB loss, and the NuVasive court was careful to distinguish from the cases in which APA arguments failed. In particular, the NuVasive court distinguished Genzyme Therapeutic Prods. v. Biomarin Pharm., 825 F.3d 1360 (Fed. Cir. 2016) and Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064 (Fed. Cir. 2015). While the PTAB decisions in those cases had cited references or portions of references not specifically mentioned in the petition, the “new” material was merely cited as background, but not relied upon for part of the prima facie rejection.

There are a few take-home lessons to learn from this. First, if you are challenging a patent, be careful about citing to any portion of a reference in the challenger’s reply that was not cited in the petition. Similarly, if you are defending a patent, pay careful attention to what is cited in the challenger’s reply, compared to the original petition, and do not be shy about insisting on a right to make additional replies to anything that is cited for the first time in the reply. Finally—and more broadly—this case shows that the APA can provide a successful basis for an appeal from the PTAB.

PTAB’s Ambiguous Language Is Basis For Federal Circuit Vacating PTAB’s Opinion

cafc1Yesterday, the Federal Circuit remanded a PTAB decision for just the second time.  In Ariosa Diagnostics v. Verinata Health, Inc., the Federal Circuit vacated and remanded the Board’s decision upholding the validity of Verinata’s patent because the Board’s opinion was ambiguous as to whether or not it had appropriately considered a prior art brochure (identified as Exhibit 1010).

Ariosa submitted Exhibit 1010 with its Petition, and Exhibit 1010 was referenced in the declarations filed by Ariosa’s expert witnesses.  However, Exhibit 1010 was not relied upon as invalidating art under §103.  Rather, Ariosa and its experts referenced Exhibit 1010 in a general manner to illustrate the background knowledge that a person of ordinary skill in the art would have possessed at the time of the invention.  Ariosa relied upon three other references to establish a prima facie case of obviousness.

In its reply brief, Ariosa submitted a second declaration of one of its experts that again referenced Exhibit 1010, but did so in a way that provided little, if any, additional explanation as to the role of Exhibit 1010 in Ariosa’s argument.  The Board declined to consider Exhibit 1010 at all because “neither Petitioner nor Dr. Morton explains why Exhibit 1010 could not have been presented as part of the asserted ground of unpatentability in the first instance with the Petition.”

The Federal Circuit found the language of the Board’s opinion to be ambiguous as to whether the Board declined to consider Exhibit 1010 because (i) it had not been identified at the petition stage as one of the pieces of prior art defining a combination for obviousness as part of the asserted ground of unpatentability, or (ii) Ariosa had failed to adequately explain the relevance of Exhibit 1010.  If the former, then the Board erred, because prior art submitted as part of the original petition can be used to demonstrate the knowledge of skilled artisans without being asserted as part of the §103 combination of art.  If the latter, however, the Board would be justified in giving no weight to Exhibit 1010.  Because the Federal Circuit was unable to determine the underlying reason for the Board giving no weight to Exhibit 1010, the Federal Circuit vacated and remanded the case.

Secondarily, Ariosa challenged the Board’s refusal to consider an embodiment that was disclosed in one of the prior art references that formed Ariosa’s ground for unpatentability, but was not relied upon until Ariosa filed its reply brief.  The Board declined to consider the alternative embodiments because they had not been identified or discussed in the petition or supporting declarations.  The Federal Circuit upheld the Board’s decision in this regard, citing the Board’s discretion to “exclude or give no weight to the evidence where a party has failed to state its relevance or to identify specific portions of the evidence that support the challenge.”  37 C.F.R. §42.104(b)(5).