Ethicon Endo-Surgery, Inc. v. Covidien LP

Addressing for the first time the issue of whether the same panel of Patent Trial and Appeal Board (PTAB or Board) may both institute aninter partes review (IPR) and finally decide its merits, the U.S. Court of Appeals for the Federal Circuit affirmed the single panel authority of the Board as well as the PTAB panel’s finding that the challenged claims were obvious. Ethicon Endo-Surgery, Inc. v. Covidien LP, Case No. 14-1771 (Fed. Cir., Jan. 13, 2016) (Dyk, J.) (Newman, J., dissenting as to single panel’s authority to both institute and decide).

Ethicon Endo-Surgery (the patent owner) owns a patent for a surgical stapler. Covidien (the petitioner) challenged claims of the patent in an IPR as being obvious over certain prior art. A three-member panel of the Board decided to institute the IPR, and that same panel later issued a final written decision finding the challenged claims invalid for obviousness. The patent owner appealed, challenging the authority of the same panel to both institute and then try the case to a final written decision.

With respect to the panel constituency, the Federal Circuit affirmed that the America Invents Act (AIA) permits the same panel of the Board to render both the institution and final decisions. The Court found that combining functions in one panel was not contrary to constitutional principles and that deciding whether to institute IPR would not unfairly bias the panel in rendering its final decision. Then, the Court interpreted the statutory text of the AIA and determined that the Director can delegate her authority to institute an IPR to the Board.

As to the merits, the Federal Circuit affirmed that the challenged claims were obvious over the prior art, where patent owner only challenged the Board’s treatment of secondary considerations of non-obviousness, specifically commercial success and long-felt but unresolved need. The Court affirmed that the alleged commercial success of (and alleged long-felt but unresolved need for) the claimed device was not sufficient evidence of non-obviousness because here the patent owner had not demonstrated a sufficient nexus between the inventive aspect of the claims and its commercial success.

Judge Newman, in dissent, argued that use of a single panel to decide on both institution and ultimate disposition was contrary to the AIA. She argued that “[t]he majority’s endorsement of the PTO’s statutory violation departs not only from the statute, but also from the due process guarantee of a ‘fair and impartial decision-maker.’”

Practice Note: The Board and the Court both emphasized the need for a nexus between secondary considerations and the inventive aspect of the claims. Presenting evidence that such a nexus exists is a wise use of the patent owner’s page count.