The US Court of Appeals for the Federal Circuit affirmed that the Patent Trial and Appeal Board (PTAB) may arrive at its own claim broadest reasonable interpretation (BRI) independent of those proffered by the parties and agreed that under the PTAB’s adopted BRI, the challenged claims would have been obvious. Intellectual Ventures II LLC v. Ericsson Inc., Case Nos. 16-1739; -1740; -1741 (Fed. Cir., May 8, 2017) (Reyna, J).

Ericsson and Google petitioned for inter partes review (IPR) of two Intellectual Ventures (IV) patents as obvious over certain prior art references. In briefing before the PTAB, the parties disputed the construction of the claim term “an indication of an operating bandwidth.” IV contended that the term meant “identification of a particular operating bandwidth,” while the petitioners argued that the term required no construction. After oral arguments, the PTAB issued its final written decision, containing the PTAB’s own construction for the term, which differed from the proposed constructions. After applying its construction, the PTAB found all challenged claims obvious over the cited references. IV appealed.

At the Federal Circuit, IV argued that the PTAB denied it due process by supplying its own construction. IV argued that the PTAB cannot adopt arguments that could have been, but were not, raised by the petitioner, citing In re: Magnum Oil Tools International, Ltd. (IP Update, Vol. 19, No. 8), and that by adopting its own construction, the PTAB changed theories midstream (citing SAS Institute, Inc. v. ComplementSoft, LLC (IP Update, Vol. 19, No. 7)).

The Federal Circuit disagreed. Due process requires notice and an opportunity to be heard. Under the Administrative Procedures Act, the PTAB must give the parties an opportunity to submit facts and arguments for consideration, and each party is entitled to present oral and documentary evidence in support of its case, as well as rebuttal evidence. In this case, IV was given ample notice of the PTAB’s construction of the claim term, and both sides extensively litigated the issue. The Federal Circuit also noted IV’s failure to file a sur-reply or to seek rehearing after the PTAB’s final written decision, which weakened its argument that a due process violation had occurred.

The Federal Circuit also noted that the PTAB extensively questioned both parties’ counsel regarding the proper construction for the claim term, and explained that the PTAB is free to adopt its own construction. After the PTAB adopts a construction, it may not change theories without giving the parties an opportunity to respond, but that was not the case here. The Federal Circuit found the PTAB’s constructions reasonable in light of the specification and affirmed the PTAB’s decision on obviousness using that construction.

Practice Note: Exhaust all administrative procedures available in a proceeding before an administrative agency before arguing a due process violation on appeal.