Does the PTAB have authority to institute a CBM proceeding on grounds that a petitioner did not raise? In the recent case of SightSound Technologies, LLC v. Apple Inc., the Federal Circuit said yes.

Apple petitioned for CBM review of two patents owned by SightSound. In its petitions, Apple identified two grounds for finding the claims unpatentable: (1) anticipation over a prior art computer system and (2) obviousness over a prior art article alone or in combination with certain other references.

The Board granted Apple’s petition and instituted CBM review. In its institution order, the Board agreed with Apple that there was a reasonable likelihood that the challenged claims were anticipated by the prior art computer system. The Board also found, however, that the documents describing the prior art computer system were prior art publications and that there was a reasonable likelihood that the challenged claims would have been obvious in light of those publications. Apple did not raise this second basis for institution in its petition, but the Board nevertheless found that it had the discretionary authority to institute on this previously-unidentified ground.

During the CBM proceeding, SightSound argued that it had been deprived of a fair opportunity to respond to the obviousness ground. The Board granted SightSound additional time for argument and authorized it to file sur-replies and declaration testimony on the obviousness issue. In its final written decision, the Board found that Apple had failed to demonstrate by a preponderance of the evidence that the challenged claims were anticipated by the prior art computer system, but held the challenged claims unpatentable as obvious in light of the publications describing the system. In other words, the Board ultimately found the claims unpatentable on a basis that was never alleged in the initial petition.

On appeal, SightSound challenged the PTAB’s decision in part by arguing that the PTAB had no authority to institute on grounds not alleged in the petition. The Federal Circuit, relying on its prior decision in In re Cuozzo Speed Technologies, held that it lacked any authority to review the Board’s initial institution decision. According to the Federal Circuit, just as 35 U.S.C. § 314(d) barred review of the Board’s institution decisions in the context of inter partes review, the mirroring statute for CBM review, 35 U.S.C. § 324(e), also bars any appellate review.

Takeaway: The Board has broad discretion to institute a CBM proceeding on grounds that have not been explicitly identified in a petition. When rebutting an anticipation argument raised in a petition, a patent owner may consider arguing that any limitation not disclosed in an allegedly anticipatory reference would not have been obvious, in order to prevent the Board from finding the missing limitation obvious on its own.