Should the PTAB consider disclosures in an allegedly anticipatory reference that were identified for the first time during an oral hearing? No, according to the Federal Circuit, which ruled recently in a PTAB appeal that a patent owner was denied “notice and a fair opportunity to respond” in such a situation.

Dell Inc. v. Acceleron, LLC is an appeal from the PTAB’s final written decision in IPR2013-00440. The IPR proceeding involved Acceleron’s U.S. Patent No. 6,948,021, which discloses a computer network appliance containing several hardware modules that can be removed and replaced while the appliance remains on. Dell filed a petition challenging certain claims in the ’021 patent. In the final written decision, the PTAB confirmed the patentability of most claims, but found two claims—3 and 20—anticipated.

With respect to claim 3, a key issue in the proceeding was whether the allegedly anticipatory reference, known as Hipp, disclosed “caddies,” as recited in the claim. The caddies hold various hardware modules while providing air flow to the rear of the network appliance. In its petition, Dell pointed to a specific feature in Hipp—an articulating door—that it alleged disclosed caddies. Yet, in its petitioner’s reply, Dell broadened its theory and argued that the caddies were disclosed not only in the articulating door of Hipp but also in a second feature—a power-supply mounting mechanism—that it had not previously identified. Acceleron sought a conference call with the Board to discuss striking Dell’s new invalidity theory, but the Board refused to hold a conference call and denied Acceleron authorization to move to strike.

At the oral hearing, Dell identified yet another feature of Hipp—slides located below a power supply—that allegedly disclosed caddies. Acceleron disagreed with Dell’s contention on its merits and also objected on the procedural ground that Dell had never before pointed to Hipp’s slides as disclosing caddies. In its final written decision, the PTAB found that Hipp anticipated claim 3, relying exclusively on the slides in Hipp as disclosing caddies. In response to Acceleron’s procedural objection, the PTAB asserted that Dell had pointed to Hipp’s slides in its reply.

Acceleron appealed to the Federal Circuit, arguing that the PTAB should not have considered a disclosure in Hipp that was raised for the first time at the oral hearing. The Federal Circuit agreed. According to the court, “the Board denied Acceleron its procedural rights by relying in its decision on a factual assertion introduced into the proceeding only at oral argument, after Acceleron could meaningfully respond.” The court rejected the PTAB’s contention that Dell identified the slides in its reply brief and noted that because the new factual assertion was not raised until the oral hearing, Acceleron was unfairly prevented from supplying evidence to rebut the theory. The Federal Circuit then remanded the case to the PTAB.

Takeaways

The clear takeaway is that the PTAB should not cancel a claim based on a factual assertion that was raised for the first time at the oral hearing, absent some procedure whereby the patent owner is afforded the opportunity to supply evidence to rebut the assertion. Moreover, although the Federal Circuit made clear that it was not addressing “under what circumstances a cancellation may rely on a key factual assertion made for the first time in a petitioner’s reply,” the opinion’s focus on Acceleron’s inability to “meaningfully respond” to the new theory provides guidance for both petitioners and patent owners. Petitioners are at risk if they don’t articulate a winning position early in the case. Patent owners may need to be more aggressive in responding to arguments that were not fairly raised in the petition, either seeking a sur-reply or protesting the unfairness if they cannot meaningfully respond.