Due Process in AIA Trials - Buchanan PTAB Report

In Cuozzo, the Supreme Court emphasized that it "do[es] not categorically preclude review of a final decision where a petition fails to give 'sufficient notice' such that there is a due process problem with the entire proceeding." Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2142 (2016). Several recent decisions from the Federal Circuit and the Patent Trial and Appeal Board (PTAB) have dealt with the issue of whether the patent owner was afforded due process during inter partes review (IPR) proceedings.

For instance, in Dell Inc. v. Acceleron, LLC, the Federal Circuit vacated part of the final written decision by the PTAB finding a challenged claim to be unpatentable, because the PTAB relied on arguments and a "key factual assertion" that were raised for the first time at the oral hearing.  818 F.3d 1293, 1301 (2016).  The Federal Circuit emphasized that the patent owner is entitled to notice of and a fair opportunity to respond to the grounds of challenge asserted by the petitioner.  Id.  The Federal Circuit determined that the PTAB denied the patent owner of due process by relying in its decision on a factual assertion that was first introduced at the oral hearing, when the patent owner could not meaningfully respond.  Id.

In SAS Inst. v. ComplementSoft, LLC, the Federal Circuit vacated part of the PTAB's final written decision because the PTAB adopted a new claim construction in the final written decision that neither party advocated during the trial.  While the Federal Circuit agreed with the PTAB's new claim construction, the court faulted the PTAB for not affording the parties an opportunity to brief the changed claim construction.  825 F.3d 1341, 1351 (2016).  The Federal Circuit held that not providing the parties with notice of the changed claim construction amounted to a violation of § 554(b)(3) of the Administrate Procedures Act (APA).  Id.  In the context of IPR proceedings, the PTAB "'may not change theories in midstream without giving respondents reasonable notice of the change' and 'the opportunity to present argument under the new theory.'" Id. (quoting Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064, 1080 (Fed. Cir. 2015)).

In Genzyme Therapeutic Prods. Ltd. P'ship v. Biomarin Pharmaceutical Inc., the Federal Circuit held that the PTAB did not violate the APA when it relied upon prior art references to establish the state of the art at the time of the claimed invention.  825 F.3d 1360, 1365-66 (2016).  Petitioner first cited the background references in its reply in response to arguments in the patent owner's response.  The Federal Circuit held that the patent owner had notice of those references and therefore had an opportunity to be heard with regard to the references.  Id. at 1366-67.  For instance, the Federal Circuit noted that the patent owner could have requested authorization to file a surreply, or filed a motion to exclude the references.  Id. at 1368.

Perhaps in light of these Federal Circuit decisions, the PTAB recently refused to consider the petitioner's argument that an asserted reference qualified as prior art under 35 U.S.C. § 102(a).  Maxlinear, Inc. v. Cresta Tech. Corp., IPR2015-00594, Paper 90 at 29-30 (PTAB Aug. 15, 2016).  Petitioner presented this argument in its reply in an attempt to avoid disqualification of the reference under 35 U.S.C. § 103(c).  In its petition, the petitioner identified the reference as prior art "at least under 35 U.S.C. § 102(e)" against the challenged patent.  Maxlinear, Paper 2 at 5.  In its patent owner response, the patent owner argued that the reference "is not prior art under § 102(a)," in support of its argument that the reference should be disqualified as prior art under 35 U.S.C. § 103(c).  Maxlinear, Paper 23 at 22-23.  In its reply, the petitioner argued that the reference qualified as prior art under § 102(a) in response to the patent owner's argument.  Maxlinear, Paper 45 at 24-25.

The PTAB authorized the patent owner to file a paper "describing why the arguments at pages 24-25 of Petitioner's Reply is beyond the scope of a permissible reply under 37 C.F.R. § 42.23(b)."  Maxlinear, Paper 48 at 1.   37 C.F.R. § 42.23(b) provides that "[a] reply may only respond to arguments raised in the corresponding opposition, patent owner preliminary response, or patent owner response."

In the final written decision, the PTAB indicated that the petitioner was not prevented under 37 C.F.R. § 42.23(b) from arguing that the reference is prior art under § 102(a), because the petitioner's argument was in response to the patent owner's argument.  Maxlinear, Paper 90 at 28-29.  However, the PTAB refused to consider the petitioner's contention that the reference is prior art under § 102(a) because "adding consideration of § 102(a) at this late date would deprive Patent Owner of due process."  Maxlinear, Paper 90 at 29-30.  The PTAB noted that the petitioner, at the time of filing its petition, knew from the patent owner's contentions in the corresponding ITC proceeding "that the safe haven of § 103(c) was a potential issue….Even armed with this knowledge, Petitioner chose not to assert in the Petition that [the reference] is prior art under § 102(a).  If Petitioner had asserted both § 102(a) and § 102(e), perhaps Patent Owner would have chosen a different response and the evidence in this proceeding would have developed differently."  Id. at 29.

In view of the PTAB's decision in Maxlinear, petitioners and patent owners alike should be mindful of the importance that the initial petition identifies "with particularity…the evidence that supports the ground for challenge to each claim."  35 U.S.C. § 312(a)(3); 37 C.F.R. 42.104(b)(2) (requiring a petition to specify "the specific statutory grounds under 35 U.S.C. 102 or 103 on which the challenge to the claim is based").  Arguments or evidence not presented in the petition may be refused consideration due to the patent owner's due process rights.