Addressing the issue of introducing a new ground of invalidity after institution of an inter partes review (IPR) on which the Patent Trial and Appeal Board (PTAB or Board) relied to render a final written decision, the US Court of Appeals for the Federal Circuit affirmed the PTAB’s invalidity ruling in a first proceeding, but vacated and remanded the PTAB’s invalidity ruling in a second proceeding, concluding that in the second proceeding the patent owner was not given adequate notice and opportunity to address a reading of a reference not originally cited in the petition. In re: NuVasive, Inc., Case Nos. 15-1672; -1673 (Fed. Cir., Nov. 9, 2016) (Taranto, J).

NuVasive sued Medtronic alleging infringement of a patent directed to implants for spinal fusion surgery. In response, Medtronic filed two separate petitions requesting IPR of the patent. The PTAB instituted IPR proceedings on each of the petitions, and NuVasive filed patent owner preliminary responses in each. Medtronic filed a reply to the patent owner responses, citing Figure 18 of one of the cited references (Michelson). In its final written decision, the PTAB found the challenged claim to be unpatentable as obvious. The PTAB referred to the factual assertions by Medtronic in concluding that a limitation on the spinal fusion implant recited in the challenged claims would have been obvious in view of the petitioner’s reading of Figure 18 of the Michelson reference. NuVasive appealed the invalidity rulings, and Medtronic later withdrew as appellee. The US Patent and Trademark Office (PTO) intervened to defend the PTAB’s rulings.

On appeal, NuVasive argued that the PTAB violated the notice requirements of the Administrative Procedure Act (APA), contending that Medtronic’s reply in the second proceeding included a new ground of invalidity. The Federal Circuit agreed, noting that the PTAB’s reliance on the Michelson reference was an essential part of its ruling, and that NuVasive was entitled to an adequate opportunity to respond to it. Although Medtronic introduced the cited passage of the Michelson reference after institution of the proceeding, the Court found no evidence that discussion of Figure 18 of the Michelson reference “merely serve[d] to describe the state of the art [at the time of the invention]” in the manner permitted by the Court’s prior ruling in Genzyme Therapeutic (IP Update, Vol. 19, No. 7).

The Federal Circuit explained that the APA protections apply when a factual assertion constitutes “a ‘new ground’ where ‘the thrust of the rejection’ has changed, even when the new ground involved the same prior art as an earlier asserted grounds of invalidity.” The factual assertion regarding Figure 18 of the Michelson reference in the second proceeding was sufficiently distinct from other assertions about the reference in that proceeding that it triggered an adequate opportunity to respond for NuVasive. Unlike in the first proceeding where Medtronic cited to Figure 18 in its petition, the Court concluded here was no such notice regarding Figure 18 before NuVasive filed its patent owner’s response in the second proceeding. 

The Federal Circuit also noted the PTAB’s refusal to permit NuVasive to file a surreply or address the factual assertion during oral argument. The Court explained that filing observations is not a substitute for the opportunity to present arguments and evidence, dismissing the PTO’s argument that NuVasive had an opportunity to respond on the cross-examination of a witness. The Court therefore vacated and remanded the PTAB’s ruling in the second proceeding in view of the procedural violation.