Federal Circuit No. 2015-1047

PTAB has Significant Leeway in Interpreting its Own Regulations

In Redline Detection LLC v. Star Envirotech, Inc., the Federal Circuit held that the Patent Trial and Appeal Board must be granted deference in interpreting the PTO's own regulations. More specifically, a motion to submit supplemental information under 37 CFR 42.123(a) can still be denied by the PTAB, even if it meets the minimum requirements set forth in that Rule, as that Rule is permissive and not mandatory.

At trial, Redline, the petitioner, filed a motion to submit four exhibits, one of which was a sixty page declaration from its expert, just under 30 days after institution of trial. Normally, the petitioner must present its substantive case in the petition, which is filed well before institution of trial. Redline argued that this was a valid submission under 37 CFR 42.123(a), which only requires that the supplemental information be relevant and submitted less than one month after institution of trial. The Board denied Redline's motion to submit this supplemental information, and Redline appealed.

The Federal Circuit affirmed the Board's decision for several reasons. Firstly, the PTAB is accorded deference when interpreting its own regulations unless its interpretation is plainly erroneous or inconsistent with the regulation. Here, the PTAB's interpretation was neither erroneous nor inconsistent because the plain meaning of the Rule does not preclude consideration of additional criteria beyond relevance and timing. The Rule specifically states: "a party may file a motion to submit supplemental information in accordance with the following requirements…" In other words, the requirements in the Rule are a floor, not a ceiling, and the PTAB can impose additional requirements.

Lastly, the Federal Circuit also held that the PTAB did not act arbitrarily or capriciously, and that the PTAB's findings that the that claims in question were not obvious was supported by substantial evidence.

The Redline decision shows that the PTAB has significant leeway in interpreting its own regulation, as long as the interpretation is not plainly erroneous or inconsistent with the Rule at issue. Additionally, the Federal Circuit gave significant weight to the PTO's mandate to secure the just, speedy, and inexpensive resolution of trials. In this case, Redline erred because it could have submitted the exhibits in question much earlier, but failed to do so and even admitted as much. Late submissions make it more difficult for the Board to reach a decision on the merits in a timely manner, and the Board is required by statute to reach a final written decision within one year of institution of trial. Thus if the PTAB denies a motion under its Rules in accordance with the just and speedy mandate, parties may find it difficult to overturn on appeal.