On November 16, 2015, the Federal Circuit vacated and remanded a Patent Trial and Appeal Board (PTAB, also the “Board”) inter partesreview (“IPR”) decision holding that a prior art reference, though not identified as an invalidating piece of prior art, may nonetheless be used as evidence of the state of the art in determining how the person of ordinary skill in the art would understand the asserted prior art references. See Ariosa Diagnostics v. Verinata Health Inc., Nos. 2015-1215, 2015-1226, slip op. (Fed. Cir. Nov. 16, 2015). The court explained that the Board failed to sufficiently articulate the grounds for denying consideration of the background prior art reference.

In Ariosa, the principal challenge was to the Board’s refusal to consider a background reference (referred to as “Exhibit 1010”) as supplying a motivation to combine because it was not identified at the petition stage as one of the pieces of prior art defining a combination for obviousness. See id. at 10-11. Ariosa argued that Board was required to consider Exhibit 1010 because Ariosa included Exhibit 1010 in its Petitions as an exhibit to Dr. Nussbaum’s expert declaration. See id. at 12. In rejecting Ariosa’s argument, the Board reasoned that the Petition and accompany Declarations lacked a synthesis of how to combine the prior art references together to support the legal conclusion of obviousness, and the Board declined to search through the record and piece together those teachings that might support Petitioner’s position. See id. at 9.

In considering Ariosa’s argument, the Federal Circuit explained that if Ariosa’s position “is what the Board meant, the Board erred. Art can legitimately serve to document the knowledge that skilled artisans would bring to bear in reading the prior art identified as producing obviousness. Ariosa’s Petitions and opening declarations invoked Exhibit 1010 in that way.” Id. at 11-12. Because the Petitions and opening declarations also relied on Exhibit 1010 as background art, the Federal Circuit held that Exhibit 1010 “had to be considered by the Board even though it was not one of the three pieces of prior art presented as the basis for obviousness.” Id.   

The Federal Circuit further explained that the Board’s decision on not reviewing Exhibit 1010 was not clear: “we cannot confidently discern whether the Board, in its consideration of Exhibit 1010, was actually relying on a legally proper ground rather than the erroneous ground just noted.” Id. at 13; see also 14. The court, however, was critical of Ariosa’s lack of explanation as to relevance of Exhibit 1010 in its reply petition and supporting declarations. Id. Nevertheless, the Board’s inadequate explanation for not considering Exhibit 1010 resulted in the Federal Circuit vacating and remanding the PTAB decision because the court was “not prepared to find that the error that we cannot rule out was non-prejudicial.” Id. at 14. Thus, on remand, the Federal Circuit “leave[s] to the Board the determination of what remand proceedings are appropriate given the governing policies.” Id. at 15.

The Ariosa decision is one of few successful (although how successful remains to be seen on remand) appeals of PTAB decisions to Federal Circuit. Ariosa reinforces the importance of providing: (1) adequate explanation to the PTAB as to the relevance of all prior art references (invalidating or not) as well as the reasoning for combining prior art references; and (2) complete citations to all evidence that support the invalidity of the patent. Although the IPR decision was vacated and remanded due to the Board’s lack of clarity in declining to consider a background reference, the inadequacy of Ariosa’s explanations for obviousness may still result in a win for Verinata.