Arthrex, Inc. V. Smith & Nephew, Inc., No. 18-1584
In Arthrex, the Federal Circuit upheld a USPTO inter partes review decision that claims of Arthrex’s patent were obvious, finding that the Patent Trial and Appeal Board’s use of terms that did not appear in the IPR petition did not constitute reliance on a new theory in a manner inconsistent with the Administrative Procedure Act.
Arthrex was the owner of a patent directed to a surgical suture anchor used to reattach soft tissue to bone. Smith & Nephew challenged Arthrex’s patent in an IPR, and the Board issued a final written decision finding that the challenged claims were obvious. Arthrex appealed, arguing that the Board erred in using different language in its final written decision than Smith & Nephew’s IPR petition regarding the motivation to combine certain prior art references, and that this deviation violated Arthrex’s right to be heard under the APA. Specifically, Arthrex argued that by describing methods of a prior art reference as “preferred,” a characterization which was not present in Smith & Nephew’s IPR petition, the Board introduced a new motivation for combining the cited references and violated Arthrex’s procedural rights under the APA.
In an agency adjudication, such as an IPR, the APA imposes certain procedural requirements on the agency. For example, the Board must provide the patent owner with notice of the facts and laws asserted as well as an opportunity to have their own arguments heard. These provisions have been understood to mean that an agency cannot change theories in the middle of a proceeding without giving respondents reasonable notice of the change and an opportunity to present argument under the new theory.
On appeal to the Federal Circuit, the court held that the Board did not rely on a new theory in violation of the APA. The Board properly relied on the same references, the same disclosures, and the same obviousness theories advanced by the IPR petition and debated by the parties. As a result, the court found that the petition provided the patent owner with notice and an opportunity to address the portions of the reference relied on by the Board, and thus found no APA violation.
Key takeaway: The Patent Trial and Appeal Board cannot issue a decision relying on a new theory without giving the participants in inter partes review an opportunity to be heard on that theory. However, where the Board relies on the same references, disclosures and theories advanced in a petition, minor differences in terminology will not constitute reliance on a new theory.
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