Expert Agency Need Not Accept Expert Testimony

AIA trial practices of the Patent Trial & Appeal Board (PTAB) are often analogized to that of the district courts. Yet, in practice, there are more differences than similarities between the two. The PTAB, unlike the district courts, is an expert agency. For this reason, its decisions are reviewed on the substantial evidence standard of the Administrative Procedure Act (APA). 5 U.S.C. § 706. Further the PTAB applies the preponderance of the evidence evidentiary standard, which stands in stark contrast to the clear and convincing standard of the district court. Taken together, these two foundational differences are worlds apart from district court trial practices, and, serve as the primary drivers behind the appeal of the PTAB to patent challengers.

Counsel more accustomed to the favorable patentee standards of the district courts, often times find themselves struggling with the seemingly bizarro world of PTAB administrative trials— such as the agency's ability to disregard expert testimony that would be given weight in the district courts.

The role of the PTAB in discerning credible from baseless expert testimony, even in the absence of competing testimony, was recently explored by the Federal Circuit. In its non-precedential decision in Virnetx Inc. v. Apple Inc. (CAFC 2016) (here). In Virnetx, Apple sought inter partes review (IPR) of claims 1-11, 14-25, and 28-30 of U.S. Patent No. 8,504,697 (“the ’697 patent”). The Board instituted the review, and later found the claims unpatentable. Virnetx appealed to the Federal Circuit alleging, inter alia, that the Board made unpatentability findings without expert support from the patent challenger, Apple.

In affirming the PTAB decision, the Court explained that the agency, in many circumstances may disregard expert testimony, even in the absence of competing testimony. This is because "[n]o rule requires… an expert [to] guid[e] the [PTAB] as to how it should read prior art." Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064, 1079 (Fed. Cir. 2015). The Court continued:

PTAB ‘members, because of expertise, may more often find it easier to understand and soundly explain the teachings and suggestions of prior art without expert assistance. . . . Nevertheless, “what the [PTAB] can find without an expert depends on the prior art involved in a particular case.” Synopsys, Inc. v. Mentor Graphics Corp., 814 F.3d 1309, 1320 (Fed. Cir. 2016) (internal quotation marks, brackets, and citation omitted). If the PTAB finds “that the technology in a particular case is sufficiently complex that expert testimony is essential,” it may rely upon that evidence. Id. (emphasis added). But even if the record contains such testimony, the PTAB must weigh that testimony against other record evidence in reaching its conclusion, and it may give that testimony less weight, so long as it supports its decision with substantial evidence. . .Thus, even if the record contains expert testimony, the law does not require the PTAB to rely upon it. . . . Although “it is impermissible for the [PTAB] to base its factual findings on its expertise, rather than on evidence in the record,” the PTAB’s “expertise appropriately plays a role in interpreting record evidence.” Brand v. Miller, 487 F.3d 862, 869 (Fed. Cir. 2007). And to fulfill its duties, the PTAB must “make the necessary findings” based on a review of the complete “administrative record,” as well as provide “a full and reasoned explanation” in support of its decision.

(emphasis added)

The dissent, while acknowledging the majority's statements of the law, would have found the case sufficiently complex (telecommunication network technology) to find the PTAB record inadequate for cancelling the claims. As can be appreciated, the question of technological complexity in the predictable arts is fraught with subjectivity.

Most AIA trials will include evidence from both sides as a matter of best practice. Still, the fact that one witness addresses a point unrebutted by the other does not guarantee the same win that might be assured in the distrcit court on the same record.