PTAB Explains When Sua Sponte Arguments Will Be Allowed

July 16, 2020
Firm Publication

On July 6, the USPTO’s Precedential Opinion Panel (POP) issued a precedential decision in Hunting Titan, Inc. v. DynaEnergetics Europe GmbH, Case IPR2018-00600, Paper 67 (P.T.A.B. July 6, 2020) (precedential), explaining the circumstances under which it is appropriate for the Board to sua sponte raise a ground of unpatentability in response to a motion to amend in an inter partes review (IPR).  The POP concluded that “the Board may, in certain rare circumstances, raise a ground of unpatentability that a petitioner did not advance, or insufficiently developed, against substitute claims proposed in a motion to amend.”  However, the POP held that the instant case was not one of those rare circumstances.

Background

The Patent Owner filed a motion to amend.  The Petitioner opposed that motion, but only argued obviousness grounds for rejection without any anticipation grounds.  The Petitioner’s sur-reply also argued that “the Board is tasked with determining whether the substitute claims are unpatentable by a preponderance of the evidence based on the entirety of the record” (emphasis in original).

In its final written decision, the Board found the original claims anticipated by the prior art.  That decision explained that “[Petitioner] has carried its burden in demonstrating that th[e] proposed amendment does not overcome the anticipatory nature of Schacherer,” and stated that it “addresses only [Petitioner’s] anticipation challenge based on Schacherer, while rendering no findings or conclusions as to [Petitioner’s] numerous obviousness challenges.”

Afterward, the Patent Owner requested rehearing and POP review, which was granted to review the following issues:

  1. Under what circumstances and at what time during an inter partes review may the Board raise a ground of unpatentability that a petitioner did not advance or insufficiently developed against substitute claims proposed in a motion to amend?
  2. If the Board raises such a ground of unpatentability, whether the Board must provide the parties notice and an opportunity to respond to the ground of unpatentability before the Board makes a final determination.

Briefing was submitted and oral arguments were conducted before the POP.  After the oral arguments, but before the POP rendered a decision, the Federal Circuit issued its decision in Nike, Inc. v. Adidas AG, 955 F.3d 45 (Fed. Cir. 2020), where the Court held that “it is appropriate for the Board to sua sponte raise unpatentability grounds based on the IPR record and not be limited to the unpatentability grounds asserted by the petitioner in its petition or opposition to the motion to amend, provided that the Board gives the parties notice and an opportunity to respond.”  The POP authorized supplemental briefing to address Nike.

May the Board Raise a New Ground?

To answer this question, the Board turned to the Nike decision, noting that limiting the Board to only considering the Petitioner’s arguments to a Patent Owner’s motion to amend, would leave the Board “with no ability to examine the new claims.”  To refute Nike, the Patent Owner pointed to SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348 (2018), where the Supreme Court explained that “the petitioner’s contentions, not the Director’s discretion, define the scope of the litigation all the way from institution through to conclusion.”  The Patent Owner contended that SAS controlled the outcome, regardless of Nike’s holding.

The POP determined that SAS was distinguishable from Nike because it involved original claims from an issued patent whereas Nike addressed new amended claims that are not present in an issued patent.  Specifically, the POP stated that “‘the Board’s authority with respect to new and amended claims’ is different than with respect to originally issued claims, and ‘necessarily extends to other possible grounds of unpatentability’” (quoting Samsung Elecs. Am., Inc. v. Prisua Eng’g Corp., 948 F.3d 1342, 1352 (Fed. Cir. 2020)).  The POP concluded that “the Board has the ability to raise a ground of unpatentability a petitioner has not advanced or has insufficiently developed, but should do so only under rare circumstances” (emphasis in original).

When Should the Board Raise a New Ground?

Following its answer to the first question, the POP noted that Nike “does not address the circumstances in which the Board should advance such a ground of unpatentability to address proposed substitute claims that the petitioner did not advance, or insufficiently developed, in its opposition to the motion” (emphasis in original).  It explained that, although the Board may raise a ground of unpatentability, it is not “obligated to undertake an independent examination of every proposed substitute claim.”

The POP further explained that an independent examination would “require the Board to raise,  develop, and resolve every possible argument supported by the evidence of record that an amended claim is unpatentable, even if the petitioner has never raised or sufficiently developed that argument in the record” and “a rule mandating the Board to evaluate all possible arguments that may be supported by the evidence of record would not provide the parties with the appropriate incentives to participate in the adversarial process.”  As such, “the opposition to a motion to amend typically should guide the contours of the motion to amend patentability analysis” and the Board typically need not raise its own unpatentability arguments.

The POP referenced the Supreme Court’s Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016) decision as providing one example where sua sponte grounds would be appropriate because the Petitioner ceased participation in the proceeding.  The POP also mentioned other suitable situations:

    1. “where a petitioner chooses not to oppose the motion to amend;” or
    2. “where both a petitioner and patent owner participate in the motion to amend process, there may be situations where certain evidence of unpatentability has not been raised by the petitioner, but is readily identifiable and persuasive such that the Board should take it up in the interest of supporting the integrity of the patent system, notwithstanding the adversarial nature of the proceedings” such as “where the record readily and persuasively establishes that substitute claims are unpatentable for the same reasons that corresponding original claims are unpatentable.”

The POP acknowledged that additional situations may exist, but each determination would be heavily fact dependent.  It concluded “that only under rare circumstances should the need arise for the Board to advance grounds of unpatentability to address proposed substitute claims that the petitioner did not advance, or insufficiently developed, in its opposition to the motion.”

Notice and the Opportunity for the Parties to Respond

The Hunting Titan decision also held that the Board must provide the parties with notice of the grounds raised sua sponte and an opportunity to response to those grounds.

The POP did not agree with the Petitioner’s argument that a ground of unpatentability raised in the petition against original claims provides sufficient notice to a Patent Owner that the Board may apply that ground to newly-proposed substitute claims.  This is because the newly proposed claims would include new limitations not present in the initial claims. That approach would also fail to balance the parties’ burdens because this could cause the Patent Owner to guess at which grounds from the petition the Board may apply against the substitute claims, while “absolving the petitioner from addressing which grounds it believes are meritorious in view of the proposed amendment.”  Therefore, the Board must provide notice of “how the prior art allegedly discloses the newly-added limitations of each proposed substitute claim, as well as a theory of unpatentability asserted against those claims.”  After that, the Patent Owner must have an opportunity to respond.  This could occur via supplemental briefing or arguments at oral hearing.

The Merits of the Hunting Titan Case

The POP disagreed with the Petitioner’s argument that it raised the anticipation ground in its opposition to the motion to amend and that it supplied the anticipation ground in its petition.  Indeed, the anticipation theory was never mentioned as a ground in the opposition.  The anticipation theory raised in the Petition was also inadequate because it was based only on the original claims, and not the proposed substitute claims.

Additionally, the POP found that, “as a policy matter,” the Board should not have raised the anticipation ground.  The POP did “not find the circumstances of this case to qualify as one of the rare circumstances necessitating the Board to advance a ground of unpatentability that Petitioner did not advance or sufficiently develop.”  The Petitioner’s failure to raise the anticipation ground was “particularly meaningful because Petitioner chose not to raise [that] particular anticipation ground.”

The POP also considered whether the public interest was harmed by the failure of the Board to consider the anticipation ground, resulting in the issuance of unpatentable claims.  It concluded that its holding preserved a “well-functioning adversarial system” and allowing the Board to fill in the gaps “intentionally left void by IPR petitioners…would reduce incentives for petitioners to bring out the best arguments and would reduce the integrity of the patent system.”  The POP did not believe its holding would result in the issuance of a patent known to be unpatentable because the record before the Board may have been insufficient to fully reach that conclusion.

As to notice, the POP determined that the parties lacked adequate notice because “raising a ground of unpatentability for the first time in a final written decision, after the parties have exhausted their ability to submit briefing and argument to the Board, does not provide sufficient notice of, and opportunity to respond to, such a ground.”  Finally, the POP determined that Petitioner’s opposition to the motion to amend did not provide persuasive grounds for an obviousness finding.

Conclusion

Hunting Titan authorizes the Board to raise sua sponte grounds, but in only rare circumstances.  Therefore, Petitioners need to be diligent and raise the best possible grounds when opposing a motion to amend.

If you have questions about what recent patent-related decisions mean for your business, please contact the authors.