Due Process Trumps Validity Concerns in AIA Trials

In Dell Inc. v. Acceleron, LLC, the Federal Circuit held that a panel of the Patent Trial and Appeal Board (PTAB) correctly declined to consider the petitioner’s new argument on remand, even though the panel previously found a challenged claim unpatentable on the basis of that argument.[1] In doing so, the Federal Circuit emphasized that concerns over due process in inter partes review (IPR) trials outweigh public policy concerns over the validity of an issued patent claim.[2]

Background

As discussed in my previous article, in an earlier appeal of the same IPR proceeding, the Federal Circuit vacated part of the PTAB’s final written decision because the PTAB relied on a new argument and evidence that the petitioner (Dell) presented for the first time at the oral hearing.[3] The Federal Circuit held that the patent owner (Acceleron) was denied its procedural rights under the Administrative Procedure Act (APA) because it did not have notice of the new argument and could not meaningfully respond to the new argument at the oral hearing.[4]

On remand, the PTAB panel declined to consider the new argument presented at the oral hearing because it was not presented in the IPR petition, and it was not responsive to an argument made by the patent owner.[5] In its decision on remand, the PTAB panel held that the petitioner did not establish that the challenged claim was unpatentable based on the arguments presented in the petition.[6] The petitioner appealed the PTAB’s decision not to consider its new argument and evidence on remand.

Second Appeal

In the second appeal following the PTAB’s decision on remand, Dell argued that the PTAB should have (i) considered its new argument presented at the oral hearing, and (ii) provided Acceleron an opportunity to address the argument on remand.[7] The Federal Circuit disagreed, holding that its remand order in the initial appeal did not require the PTAB to consider the new argument.[8] Rather, the Federal Circuit’s remand order in the initial appeal “set out the requisite procedures that would apply had the Board actually considered Dell’s new evidence.”[9]

Dell argued that the Federal Circuit’s prior decisions in NuVasive and SAS compelled the PTAB to consider its new argument on remand, because in those cases the Federal Circuit required the PTAB to consider new evidence on remand.[10] The Federal Circuit disagreed, explaining that “Dell draws too broad a lesson from those decisions.”[11] In NuVasive, the Federal Circuit explained that the PTAB would need to provide the patent owner an adequate opportunity to respond if the PTAB relied on portions of a prior art reference that were not used to challenge the claims before the patent owner’s response was filed.[12] In SAS, the Federal Circuit required the PTAB on remand to give the parties an opportunity to address a new claim construction that the PTAB adopted in the final written decision with no prior notice to the parties.[13] The Federal Circuit explained that NuVasive and SAS did not compel the PTAB to consider Dell’s new argument or evidence on remand, because the issues considered in the NuVasive and SAS decisions were not involved in the PTAB’s decision to not consider Dell’s new argument on remand.[14]

The Federal Circuit noted that the Office Patent Trial Practice Guide provides that “[n]o new evidence or arguments may be presented at the oral argument.”[15] The court explained that in the absence of the PTAB exercising its authority to waive trial regulations,[16] the PTAB was “obligated to dismiss Dell’s untimely argument given that the untimely argument in this case was raised for the first time during oral argument.”[17]

Due Process is Paramount to Validity Concerns

Dell also argued that “ignoring evidence of unpatentability is against public policy because it will not improve patent quality.”[18] The Federal Circuit was not persuaded by this argument. The court explained that “under these circumstances, due process and preserving the Board’s discretion outweigh any negative effects of not invalidating a patent claim, especially since our decision does not preclude another party from challenging the validity of [the challenged claim] on the same basis.”[19] Thus, even though the PTAB panel previously held that the challenged claim was unpatentable on the basis of the new argument and evidence raised at the oral hearing, the notice and opportunity to respond requirements of the APA were paramount to concerns over the validity of the challenged claim.

Conclusion    

The Federal Circuit’s decision in Dell serves as an important reminder that a patent challenger’s arguments and evidence in support of invalidity positions should be particularly set forth in the initial petition for review. Petitioners may be able to present new arguments after the petition is filed, but only if the new arguments are responsive to arguments raised in the patent owner’s response.[20] Arguments or evidence that are not presented in the petition or are not responsive to the patent owner’s arguments may be refused consideration due to the patent owner’s procedural rights under the APA.


[1] 884 F.3d 1364 (Fed. Cir. 2018).

[2] Id. at 1370.

[3] 818 F.3d 1293, 1301 (Fed. Cir. 2016).

[4] Id. (citing 5 U.S.C. §§ 554 and 556).

[5] Dell Inc. v. Acceleron, LLC, IPR2013-00440, Paper 49 at 6, 8-9 (PTAB Aug. 22, 2016).

[6] Id. at 11.

[7] Dell, 884 F.3d at 1368.

[8] Id. at 1369.

[9] Id.

[10] Id. (citing In re NuVasive, Inc., 841 F.3d 966, 970, 972 (Fed. Cir. 2016), and SAS Institute, Inc. v. ComplementSoft, LLC, 825 F.3d 1341 (Fed. Cir. 2016)).

[11] Id.

[12] NuVasive, 841 F.3d at 972.

[13] SAS, 825 F.3d at 1351-52.

[14] Dell, 884 F.3d at 1369.

[15] Id. (citing 77 Fed. Reg. 48,756, 48,768 (Aug. 14, 2012).

[16] 37 C.F.R. § 42.5(b).

[17] Dell, 884 F.3d at 1369.

[18] Id. at 1370.

[19] Id.

[20] 37 C.F.R. 42.23(b).

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