United States: Federal Circuit Reverses PTAB Decision For Failing To Adequately Explain Its Obviousness Findings

The Federal Circuit In In re: NuVasive, Inc. vacated and remanded the Patent Trial and Appeal Board's finding that NuVasive's claims are unpatentable in IPR2013-00506. The court held that it was unable to review the PTAB's obviousness findings because the Board failed to adequately explain its finding of motivation to combine the prior art references.

NuVasive Waived Its Arguments Regarding Whether The Cited References Were Printed Publications

The court first addressed whether NuVasive preserved for appeal its arguments that the cited prior art references were not actually prior art because they were not publicly accessible. During the pre-institution phase of the IPR, NuVasive asserted in its Patent Owner's Preliminary Response that the SVS-PR brochure and the Telamon references were not prior art. The court found that NuVasive waived these arguments, however, by not raising them again during the trial phase, i.e., post-institution.

In fact, during oral argument, NuVasive expressly declined to raise further arguments regarding public accessibility. In response to a question from one of the judges, NuVasive's attorney stated that they were "leaving that issue aside," focusing on obviousness, and "assuming" that the references were prior art. The Federal Circuit held that this constituted abandonment of the public accessibility issue. In view of counsel's statements, the Board did not address this issue in the Final Written Decision, the court was unable to review the Board's judgment on appeal.

The PTAB Must Adequately Explain Its Obviousness Findings

In the second part of the opinion, the Federal Circuit considered NuVasive's arguments regarding the Board's finding of unpatentability of claims 1-14, 19-20, and 23-27. After setting forth the relevant legal principles and noting that it reviews the Board's factual findings for substantial evidence, the court focused on the Board's ruling on motivation to combine the references.

The Federal Circuit agreed with NuVasive that the Board did not adequately explain its finding that a person of ordinary skill in the art would have been motivated to combine the prior art references. According to NuVasive, the Board erred by relying solely on a single conclusory statement by Medtronic's expert. When motivation to combine is disputed, the court held, the Board must make a finding of motivation to combine. The Board must articulate "a reason why" a skilled artisan would combine the prior art references.

The Court quoted the Board's reasoning in other opinions to show examples of sufficient explanations on motivation to combine. In contrast, the court found lacking the Board's reasoning in this case. The court invoked administrative law principles when it held that the PTAB must provide "a reasoned basis" for its action. Here, the Board merely summarized both parties' arguments and indicated that it agreed with NuVasive's. This is not enough, according to the court, because it left little explanation for the court to review on appeal.

All was not lost for NuVasive because the court remanded to the PTAB for additional findings regarding motivation to combine the references.

Lessons To Be Learned

This first portion of the decision should serve as a warning to PTAB practitioners. Merely raising an argument during the pre-institution phase is not enough to preserve it for appeal if the Board does not accept the argument. Of course, counsel for NuVasive expressly told the Board that they were "putting that issue aside," but careful practitioners will be sure to re-assert any arguments post-institution that they want to preserve for appeal to avoid a finding of waiver.

Although the Federal Circuit focused on the adequacy of the Board's written decision, the opinion still contains a take-away for practitioners. By only providing a single conclusory statement from its expert, NuVasive did not give the Board much to work with regarding motivation to combine. Practitioners asserting unpatentability based on obviousness should provide in the petition ample reasons why a skilled artisan would have been motivated to combine the prior art references. Doing so should avoid the situation here where the parties have to return to the PTAB for further proceedings regarding motivation to combine.

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