Federal Circuit Holds That the PTAB May Consider Legal Conclusions of Obviousness by Expert Witnesses That Are Supported by Underlying Factual Findings

The Federal Circuit held that the PTAB may consider legal conclusions of obviousness by experts, but the expert papers must make adequate factual findings and provide a satisfactory explanation as to determinations of obviousness in Icon Health and Fitness, Inc. v. Strava, Inc., No. 16-1475 (Fed. Cir. Feb. 27, 2017).

In an inter partes reexamination, an examiner found several claims of ICON’s patent obvious. The PTAB affirmed, issuing a general catchall statement that incorporated by reference the examiner’s findings, which in turn incorporated by reference statements by Strava’s witness and Strava’s attorney argument. ICON appealed to the Federal Circuit.

ICON argued that the PTAB’s principal error was its reliance on Strava’s expert testimony, which included opinions on the ultimate legal conclusion of obviousness. The Federal Circuit disagreed and held that the PTAB could consider such opinions, so long as other aspects of the expert’s declaration relate to underlying factual findings. The Federal Circuit also confirmed the PTAB’s incorporation-by-reference of examiner findings could sufficiently support an obviousness finding in some circumstances. But for some of the claims, the obviousness finding lacked factual support because it was ultimately based on an incorporation by reference of Strava’s attorney argument. The PTAB’s adoption of Strava’s argument did not “transform Strava’s attorney argument into factual findings or supply the requisite explanation that must accompany such findings.”

A two-judge majority agreed the case should be remanded to give the PTAB an opportunity to explain the factual findings to support its obviousness conclusion.