PTAB may not replace initially determined claim construction with new claim construction in final decision without permitting parties to address patentability under the new claim construction

SAS Institute, Inc. v. ComplementSoft, LLC, Nos. 2015-1346 and 2015-1347 (Fed. Cir. June 10, 2016)

On SAS’s petition for inter partes review (IPR), the Patent Trial and Appeal Board (PTAB) instituted a review on some but not all of the challenged claims. After the PTAB found all but one of the instituted claims unpatentable in view of the prior art, both the petitioner and the patentee appealed the PTAB’s claim constructions. The Federal Circuit affirmed the claim construction determination, but vacated the PTAB’s determination that one of the instituted claims was patentable, holding that because the PTAB’s final written decision adopted a new claim construction that the parties did not have a chance to address.

Although the court agreed with the substance of the PTAB’s construction, it disapproved of the determination of how that construction applied to the patentability of the claim. In particular, the court found the petitioner was not “timely informed . . . of the matters of fact and law asserted” as the Administrative Procedure Act (APA) requires. Because the parties focused on the claim constructions used in the institution decision and neither party contested this particular claim construction, the petitioner had no reason to expect “that already-interpreted terms were actually moving targets, and it is thus unreasonable to expect that the [parties] would have briefed or argued hypothetical constructions not asserted by their opponent.” The PTAB did not give the parties notice of the change and “the opportunity to present argument under the new theory” when it relied upon a new claim construction for the first time in its final decision.  In order to accord sufficient process to the parties under the APA, the Federal Circuit remanded for further proceedings so that the PTAB could hear from the parties on the new construction before deciding the validity of the claim.

A copy of the opinion can be found here ►