Federal Circuit Review | August 2023

| Irfan LateefDaniel Kiang

August 2023 Federal Circuit Newsletter (Japanese)

August 2023 Federal Circuit Newsletter (Chinese)

IPR Petitioners Must Be Permitted to Respond to Claim Constructions First Proposed in Patent Owner Response

In Axonics, Inc. v. Medtronic, Inc., Appeal No. 22-1532, the Federal Circuit held that where a patent owner in an IPR proposes a claim construction for the first time in a patent owner response, a petitioner must be given the opportunity in its reply to argue and present evidence of anticipation or obviousness under the new construction.

Axonics requested Inter Partes Review of two patents owned by Medtronic. Axonics’ petition adopted a “one-input” claim construction of two clauses at issue. Medtronic filed a preliminary response that addressed patentability under that one-input construction. The Board granted institution. Medtronic then filed a patent owner response that advanced, for the first time, a “two-input” claim construction of the clauses at issue. Axonics filed a reply addressing both the initial one-input claim construction and the new two-input claim construction. The Board issued a final written decision that adopted the two-input claim construction. The Board disregarded the arguments and evidence in Axonics’ reply brief regarding the two-input claim construction because they were not presented in the petition. The Board upheld the relevant patent claims. Axonics appealed.

The Federal Circuit vacated the Board’s decision. The court found that, under the Administrative Procedures Act, when the Board adopts a new claim construction following institution, an IPR petitioner must have adequate notice and an opportunity to respond under the new construction. It noted that barring argument and evidence in a reply directed to a new claim construction proposed by the patent owner after institution could lead to “sandbagging” by the patent owner to create an estoppel. The Federal Circuit remanded for the Board to consider Axonics’ arguments and evidence under the two-input claim construction.


Free Samples and Fillers: No Teaching Away or Commercial Success

In Incept LLC v. Palette Life Sciences, Inc., Appeal No. 21-2063, the Federal Circuit held that a patent did not teach away because it did not disparage the prior art, and that free samples are not evidence of commercial success.

Palette requested inter partes review of patents owned by Incept.  The patents at issue claimed introducing a biodegradable filler between a radiation target tissue and other tissue to decrease the amount of radiation received by the non-targeted tissue. Palette argued that some claims at issue were anticipated by the prior art reference Wallace and other claims were obvious in light of Wallace.  Incept argued that Wallace taught away from the claimed inventions because Wallace taught that its fillers were “essentially nondegradable” over at least several months.  Incept also argued that its commercial success in selling a covered product showed the claims were not obvious.  The PTAB found that Wallace anticipated the claimed invention and did not teach away because a teaching that a filler was nondegradable over several months implied that the filler was degradable after several months.  The PTAB also rejected Incept’s commercial success arguments because the sales data that Incept relied on included free samples. 

The Federal Circuit affirmed the Board’s decision. The Federal Circuit agreed that Wallace did not teach away because it did not disparage or discredit using biodegradable filters and instead implied that the fillers were biodegradable.  The Federal Circuit also affirmed the Board’s decision that Incept did not provide sufficient evidence of commercial success.

Judge Newman dissented in part, arguing that Wallace did not describe all limitations of the claims.  Newman further argued that the Board erred by disregarding Incept’s evidence of commercial success.


Weighty Considerations: Objective Indicia of Non-Obviousness

In Volvo Penta of the Americas, LLC, v. Brunswick Corp., Appeal No. 22-1765, the Federal Circuit held that the Board must consider the combined weight of multiple objective indicia of non-obviousness and must provide an explanation for the weight attributed to each objective indicium proven by the patent owner.

Brunswick petitioned for inter partes review of a patent owned by Volvo Penta, asserting that the patent was obvious. Volvo Penta relied on objective indicia of non-obviousness to overcome any prima facie case of obviousness.  It was undisputed that Volvo Penta’s and Brunswick’s products embodied the claimed invention. Volvo Penta’s patent owner response contained one sentence with a cite to a single paragraph of an expert report addressing a presumption of nexus based on alleged co-extensiveness of those products with the claimed invention. The Board found this argument was too conclusory to meet Volvo Penta’s burden. The Board further rejected Volvo Penta’s argument that a nexus exists independent of the presumption, finding that Volvo Penta failed to identify the characteristics of the invention that were tied to the objective evidence. Despite finding a lack of nexus, the Board alternatively considered certain objective indicia. In its final written decision, the Board assigned certain objective indicia “some  weight” and others “very little weight,” but found, overall, that the factors weighed only “somewhat” in favor of non-obviousness. Accordingly, the Board concluded the claims would have been obvious. Volvo Penta appealed.

The Federal Circuit vacated and remanded the Board’s decision. The court affirmed that Volvo Penta was not entitled to a presumption of nexus because its argument to the Board was too conclusory. However, the court found that Volvo Penta proved a nexus independent of the presumption through unrebutted argument and evidence that features of the challenged claims drove commercial success of the product. The Federal Circuit also determined that the Board erred in its alternative analysis of the objective indicia because its assignment of various weights to the objective indica “was overly vague and ambiguous” and not supported by substantial evidence.  The court found that the Board further erred by failing to address the combined weight of the objective indicia.  Because of the Board’s errors regarding objective indicia of non-obviousness, the court vacated and remanded for findings and consideration of the totality of the evidence regarding secondary considerations. 


A Terminal Disclaimer Is Not an Escape Hatch

In Re Cellect, LLC, Appeal No. 22-1293, the Federal Circuit held that obviousness-type double patenting analyses for patents with Patent Term Adjustments are based on the adjusted expiration date of the patent.

Cellect sued Samsung for infringement of four patents (the “challenged patents”) that claimed priority to the same parent application. Each of the challenged patents was granted Patent Term Adjustment (“PTA”) for USPTO delays during their prosecutions. Cellect did not file terminal disclaimers for any of the challenged patents. Samsung requested ex parte reexaminations, asserting that the challenged patents were unpatentable based on obviousness-type double patenting. The examiner agreed and invalidated the challenged claims because they were obvious variants of earlier-expiring claims in the same patent family.

Cellect appealed the rejection of the challenged claims to the Board. Cellect noted that obviousness-type double patenting does not invalidate a validly obtained Patent Term Extension (“PTE”) under 35 U.S.C. § 156 and argued that unpatentability of the challenged patents under a double-patenting analysis should be based on the expiration dates of the challenged patents before any PTA is added, similar to how PTE is handled. However, the Board held that the text of pre-AIA 35 U.S.C. § 154 makes clear that unlike PTE, PTA cannot adjust a term beyond the disclaimed date in any terminal disclaimer, and that double-patenting analyses should be based on the adjusted expiration date of the patent.

The Federal Circuit affirmed the Board’s decision. The Federal Circuit held that PTA and PTE should be treated differently when determining whether claims are unpatentable under obviousness-type double patenting, relying on differences between the two statutes.  In particular, the Federal Circuit held that a double-patenting analysis is performed based on the expiration date of the patent after adding any PTA. The court further explained that, because the patents had expired, the opportunity for Cellect to file a terminal disclaimer had passed and that terminal disclaimers are not an escape hatch to be deployed after a patent expires.