CAFC Holds PTAB Ruling of Unpatentability Comports with APA

Last week, the U.S. Court of Appeals for the Federal Circuit issued an opinion in Arthrex, Inc. v. Smith & Nephew, Inc., No. 2018-1584 (Aug. 21, 2019). The ruling affirmed a finding by the  Patent Trial and Appeal Board (“PTAB” or “Board) in an Inter Partes Review (“IPR”) proceeding that claims 10 and 11 of U.S. Patent No. 8,821,541 (“the ’541 Patent”) were unpatentable.   

The ’541 patent “describes a surgical suture anchor used to reattach soft tissue to bone.” Smith & Nephew filed an IPR petition seeking to have claim 10 declared unpatentable as either anticipated or obvious and claim 11 declared unpatentable as obvious. The PTAB ultimately held both claims unpatentable, and the Federal Circuit affirmed.

The notable issue addressed by the Federal Circuit was whether the PTAB’s analysis of claim 11 violated Arthrex’s procedural rights under the Administrative Procedure Act (“APA”) by applying a motivation to combine the prior art that differed from the motivation asserted in Smith & Nephew’s IPR petition. Smith & Nephew argued a motivation to combine based on a casting process disclosed in one of the references that Smith & Nephew called a “well-known technique [the use of which] would have been a simple design choice.” By contrast, the PTAB relied on the same disclosure to conclude this casting process was the “primary” and “preferred” option taught by the art.

Arthrex argued on appeal that the change in analysis violated its procedural rights under the APA because an agency cannot alter the theories in an administrative proceeding without giving notice of the change. The Federal Circuit disagreed. It concluded that the PTAB did not change theories because the PTAB relied “on the same few lines” of the prior art reference as Petitioner to find the motivation to combine, and the PTAB maintained the “same theory of obviousness printed in the petition.” The Court concluded, “[i]n these circumstances, the mere fact that the Board did not use the exact language of the Petition in the final written decision does not mean that it changed theories in a manner inconsistent with the APA or our case law.” The Court distinguished this case from situations where the PTAB “departed markedly from the evidence and theories presented by the petition or institution decision, creating unfair surprise.”

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