On February 14, 2017, the Federal Circuit vacated an obviousness determination by a panel of the Patent Trial and Appeal Board (PTAB) due to an inadequate explanation of why the challenged claims were determined to be obvious in IPR2013-00596. Personal Web Techs., LLC v. Apple, Inc., No. 2016-1174.
The “Clear-Explanation” Requirement
The Federal Circuit emphasized that the PTAB “is obligated to ‘provide an administrative record showing the evidence on which [its] findings are based, accompanied by the agency’s reasoning in reaching its conclusions.’” Id., slip op. at 8-9 (quoting Synopsys, Inc. v. Mentor Graphics Corp., 814, F.3d 1309, 1322 (Fed. Cir. 2016) (citations omitted)). The Federal Circuit also emphasized that the PTAB, “as an administrative agency, ‘must articulate logical and rational reasons for [its] decision.’” Id., slip op. at 9 (quoting Synopsys at 1322). The court explained that “[i]n addition to enabling needed judicial review of agency action…the clear-explanation requirement prevents judicial intrusion on agency authority to make factual, policy, and discretionary determinations committed to the agency.” Id. (quoting SEC v. Chenery Corp., 318 U.S. 80, 88 (1943)).
In the IPR, the PTAB panel determined that several claims of U.S. Patent No. 7,802,310 are unpatentable as being obvious over the Woodhill and Stefik references. IPR2013-00596, Paper 33 (PTAB March, 25, 2015). On appeal, the Federal Circuit held that the PTAB panel’s explanations were insufficient in several respects. In particular, the Federal Circuit held that the panel “did not sufficiently explain and support the conclusions that (1) Woodhill and Stefik disclose all of the elements recited in the challenged claims of the ‘310 patent and (2) a relevant skilled artisan would have been motivated to combine Woodhill and Stefik in the way the ‘310 patent claims and reasonably expected success.” Personal Web Techs., slip op. at 10.
With respect to the PTAB panel’s explanation that all the elements of the challenged claims are disclosed, the Federal Circuit noted that the panel relied on a disclosure of the Stefik reference, whereas the IPR petitioner “had made it clear that it relies solely on Woodhill as disclosing this claim element.” Id. In addition, the court indicated that the panel did not address specific claim limitations nor explain sufficiently how cited portions of the Woodhill reference correspond to certain limitations of the claims. Id. at 10-11.
Insufficient Rationale for Motivation to Combine
The Federal Circuit was also critical of the PTAB panel’s insufficient explanation of whether one skilled in the art “would have had a motivation to combine Woodhill and Stefik in the way claimed in the ‘310 patent and would have had a reasonable expectation of success in doing so.” Id. at 11. With respect to the panel’s discussion of a motivation to combine the asserted references, the Federal Circuit noted that the panel merely agreed with the petitioner’s “contention that ‘a person of ordinary skill in the art reading Woodhill and Stefik would have understood that the combination of Woodhill and Stefik would have allowed for the selective access features’” of the challenged claims. Id. at 11 (quoting PTAB’s Final Written Decision at 15) (emphasis original). The Federal Circuit held that this reasoning was insufficient because it “seems to say no more than a skilled artisan, once presented with the two references, would have understood that they could be combined.” Id. (emphasis original). The Federal Circuit emphasized that such a rationale is “not enough” because it “does not imply a motivation to pick out those two references and combine them to arrive at the claimed invention.” Id. (citing Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064, 1073 (Fed. Cir. 2015) (“[O]bviousness concerns whether a skilled artisan not only could have made but would have been motivated to make the combinations or modifications of prior art to arrive at the claimed invention.”) (emphasis original).
The Federal Circuit further criticized the PTAB panel for not explaining the obvious combination in more detail, noting that the panel “nowhere clearly explained, or cited evidence showing, how the combination of the references was supposed to work.” Id. at 12 (emphasis original). The Federal Circuit held that “[a]t least in this case, such a clear, evidence-supported account of the contemplated workings of the combination is a prerequisite to adequately explaining and supporting a conclusion that a relevant skilled artisan would have been motivated to make the combination and reasonably expect success in doing so.” Id. Although the Federal Circuit does not require an explicit description of how a proposed combination of references would work in every case, it did so in this case. It is possible that the “prerequisite” to provide such an explanation in this case relates to the relative complexity of the technology at issue. Interestingly, the Federal Circuit did not further elaborate on this issue.
The Amount of Explanation Required Depends on the Technology at Issue
The Federal Circuit indicated that the amount of explanation required to support the PTAB’s obviousness determinations “to enable judicial review and to avoid judicial displacement of agency authority” depends on the complexity of the technology at issue. For simpler technologies where “the prior art is clear in its language and easily understood,” a “brief explanation” may be all that is required. Id. Conversely, “complexity or obscurity of the technology or prior-art descriptions may well make more detailed explanations necessary.” Id.
The Federal Circuit’s vacatur of the PTAB’s obviousness determination in Personal Web Technologies follows other remanded PTAB decisions in which the Federal Circuit faulted the PTAB for not adequately explaining its obviousness rationales. See, e.g., Cutsforth, Inc. v. MotivePower, Inc., 636 Fed. Appx. 575, 578 (Fed. Cir. 2016); Black & Decker, Inc. v. Positec USA, Inc., 646 Fed. Appx. 1019, 1027 (Fed. Cir. 2016); In re Nuvasive, Inc., 842 F.3d 1376, 1382-84 (Fed. Cir. 2016); In re Van Os, 844 F.3d 1359 (Fed. Cir. 2017).
In view of this line of cases, litigants should expect the PTAB to follow the Federal Circuit’s guidance and make its obvious determinations more clear and explicit. Nevertheless, patent owners whose claims are determined to be obvious should review the sufficiency of the PTAB’s rationales for any appealable issues. Patent owners may be successful on remand if the PTAB’s obviousness rationale in the final written decision was not clearly explained and the PTAB does not permit additional arguments on remand. Petitioners should ensure that all patentability challenges are adequately supported to enable the PTAB to render final written decisions with clear explanations that survive appellate review.