The Federal Circuit today in In re NuVasive, Appeal Nos. 2015-1672 and 2015-1673, found that the Patent Trial and Appeal Board in an inter partes review (IPR) proceeding violated a patentee’s rights under the Administrative Procedure Act by canceling patent claims based on a portion of a prior art reference that was not specifically identified in the IPR petition, and by denying the patentee the opportunity to address that portion of the reference substantively. The Federal Circuit thus vacated the cancellation of the claims and remanded the matter to the Board.

In two separate IPR proceedings, 2013-507 (“507”) and 2013-508 (“508”), petitioner Medtronic challenged several claims in patentee NuVasive’s U.S. Patent No. 8,187,334. Those claims are directed to a spinal fusion implant having a length both greater than 40 mm and at least 2.5 times its width. The Board canceled all but one of the claims, finding them obvious based on combinations of prior art references including “Figure 18” from a prior art Michaelson patent. In both its 507 and 508 IPR petitions, Medtronic had set forth combinations of prior art references including Michaelson. And, in its 507 petition, Medtronic also had cited text from Michaelson discussing Figure 18. However, Medtronic did not specifically mention Figure 18 in its 508 petition. Instead, Medtronic first mentioned Figure 18 in its 508 Reply—after NuVasive had filed its Patent Owner Response—to argue that Figure 18 disclosed an implant whose length was both greater than 40 mm and at least 2.5 times its width.

NuVasive tried, unsuccessfully, to move the Board either to strike Medtronic’s new Figure 18 argument or to allow NuVasive to respond to that new argument in a surreply. NuVasive further tried to address Figure 18 substantively at oral argument, but the Board refused to allow NuVasive to do so. The Board in the 508 IPR went on to find all but one of the challenged claims obvious, crediting Medtronic’s argument that Figure 18 disclosed an implant with a length both greater than 40 mm and at least 2.5 times its width.

On appeal, the Federal Circuit noted that the Board in IPR proceedings is “not limited to citing only portions of the prior art specifically drawn to its attention” and can make fact findings based on other art that “merely reinforce the meaning of another prior-art disclosure.” The Federal Circuit also noted that NuVasive had adequate notice of Figure 18 in the 507 IPR, based upon the citation in Medtronic’s 507 petition of text from Michaelson discussing Figure 18.

Nevertheless, the Federal Circuit held that the Board did not provide NuVasive with adequate notice or opportunity to respond to Figure 18 in the 508 IPR, and that notice from the 507 IPR did not cure that inadequacy, given the Board’s treatment of the 507 and 508 IPRs as “separate, distinct proceeding[s]” based on “different mixes of prior art.” The Federal Circuit also held that the Board’s findings based on Figure 18 were not merely reinforcing of other prior art disclosures; instead, the Federal Circuit observed that Figure 18 was “essential” to the Board’s obviousness decision, because it was the only prior art disclosure relied upon by the Board for the “greater than 40 mm” and “at least 2.5 times its width” claim elements. The Federal Circuit further held that the opportunity for NuVasive—after having received Medtronic’s Reply—to cross-examine Medtronic’s expert on Figure 18 and to file “observations” on that cross-examination were not “a substitute for the opportunity to present arguments and evidence” affirmatively in response to Figure 18.

The Federal Circuit concluded that the Board had committed a procedural violation by denying NuVasive a full opportunity to respond to Figure 18 in the 508 IPR using additional evidence and arguments. The Federal Circuit thus vacated the Board’s decision in the 508 IPR and remanded the matter to the Board.