Federal Circuit Weighs in on Evidentiary Challenge in IPR, Reversing PTAB

34447773_sMore often than not, evidentiary issues in IPR proceedings fail to make headlines because the Board will structure its Final Written Decision to avoid evidentiary challenges. Findings that a party’s motion to exclude is denied as moot are common. That makes the Federal Circuit’s decision in REG Synthetic Fuels, LLC v. Neste Oil Oyj (November 8, 2016) all the more interesting. In that decision, the Court reversed the Board’s decision to exclude certain evidence submitted by Patent Owner during the trial.

More specifically, Patent Owner sought to swear behind one of the prior art references presented in the Petition. Among the evidence provided for this purpose was test data from third parties, communications between the inventor and third parties, and minutes from a meeting that the inventor had attended. Id. at 5. Petitioner moved to exclude this evidence on the basis of lack of authentication, hearsay, or as improper reply evidence. The Board granted the motion to exclude.

On appeal, the Court first clarified that priority issues, including conception and reduction to practice, are questions of law predicated on subsidiary factual findings. Id. at 6. The Court addressed the Board’s finding that two emails between the inventor and a third party (Exhibit 2061 in the case) provided necessary corroboration of the patented invention. Id. at 16. Petitioner argued that the emails were hearsay because they contain out of court statements by a third party. Patent Owner responded by arguing that it did not offer the emails to prove the truth of the matter asserted. The Court agreed with Patent Owner, finding that the emails were offered for the non-hearsay purpose to show that the inventor thought he had achieved a quality claimed in the patent-at-issue. “The act of writing and sending the email is, by itself, probative evidence on whether [the inventor] recognized–at the time that he had written the email–” the claimed property. Id. at 17. In short, the exhibit was legally significant because it showed that the inventor communicated the conception of the invention to the third party.

Because the Board excluded relevant evidence in the trial, the case was remanded for further consideration.

Federal Circuit Issues Ironic Decision Reversing PTAB For Not Providing Enough Analysis

cafc1The PTAB was rebuked by the Federal Circuit on January 22nd for failing to provide an adequate description of its reasoning for finding the claims of the challenged patent obvious in an inter partes review proceeding. In Cutsforth, Inc. v. MotivePower, Inc., Judge Clevenger, in a non-precedential opinion, analyzed the obviousness finding from the Board, as set forth in the Final Written Decision. Among the aspects of the Board’s decision analyzed by the Court were:

  1. In its analysis of claim 1, the Board referenced Petitioner’s arguments, but did not state an independent reason for why the claim was obvious and did not formally adopt those arguments.
  2. In its analysis of claim 5, the Board only conclusorily stated that the limitation at issue was a “matter of design choice.”
  3. In its analysis of claim 8, the Board again repeated Petitioner’s argument but gave no other reason why the modification at issue was obvious.

The Court criticized the Board for failing to adequately articulate its reasoning for making its decision so that the Court could conduct a meaningful review. “Broad, conclusory statements are not enough to satisfy the Board’s obligation to provide reasoned explanation for its decision.” Id. at 6.

This non-precedential opinion has the aura of a building frustration at the Federal Circuit regarding an ongoing problem with the quality of the Final Written Decisions. Many of those decisions are thorough and complete, but others can be said to lack the necessary detail of a formal opinion, even if the conclusions of the decision are clearly correct. The Federal Circuit took this opportunity to let the Board know that shortcut analyses will not past muster.

It is good feedback from the Court, but an ironic decision. The decision is ironic because the Federal Circuit has, to date, made liberal use of Rule 36 Judgments – a one word decision (“AFFIRMED”) that provides no information about the Court’s analysis. Just as the Court required adequate description of the Board’s rationale for its decision, many would prefer more feedback from the Court regarding its rationale to better educate parties regarding the nuances of IPR.