Federal Circuit Reverses PTAB Patent Invalidation Based on Lack of APA Due Process

December 12, 2016

Inter partes review (IPR) petitioners must ensure adequate notice of arguments against validity; patent owners must preserve rights to defend against all arguments raised by petitioners—even when they arise late in the process.

The US Court of Appeals for the Federal Circuit recently decided a case (In re: NuVasive, Inc.)[1] in which the patent owner had claims invalidated during IPR but did not have an opportunity to respond to an argument first raised in the petitioner’s reply brief. The Federal Circuit held that this violated the Administrative Procedure Act (APA)—even though the argument had arisen in a related but separate proceeding—and reversed the Patent Trial and Appeal Board (PTAB or the Board).

PTAB and Federal Circuit Decisions

NuVasive involved two IPR proceedings brought by Medtronic to challenge patents directed towards implants for spinal fusion surgery.[2] The Board issued separate decisions invalidating the patents as obvious in view of the prior art in the field. In the Federal Circuit’s words, the Board “relied heavily” on an earlier patent (Michelson) that it found to meet the requirement of NuVasive’s patent that the spinal implant be both long and narrow. In one IPR, Medtronic successfully advanced the Michelson argument. In the other IPR, however, Medtronic did not make a similar Michelson argument until the reply brief (even though it had made other arguments involving that particular patent). Despite requests from NuVasive, the Board did not allow a sur-reply to address the newly raised Michelson argument or let NuVasive rebut the point during oral argument.

The Federal Circuit upheld the Board’s invalidity decision in the first IPR since NuVasive had “at least minimally sufficient” opportunity to respond to the Michelson argument. The court reversed the second IPR ruling, though, holding that the agency “violated NuVasive’s rights under the Administrative Procedure Act” by not allowing NuVasive to respond to material called out in the reply that was relied upon by the Board in making its determination. The Federal Circuit rejected the PTO’s arguments that

  • NuVasive had notice because of the parallel review; and
  • NuVasive’s submission of “observations”—based on the cross-examination of Medtronic’s expert made after the denial of both a sur-reply and a motion to strike—sufficed for opportunity to respond to the Michelson argument.

The court held that, because the Board conducted two separate proceedings, notice of the argument in one of them does not provide notice in the other. Additionally, the filing of “observations” is “tightly circumscribed” and does not “substitute for the opportunity to present arguments and evidence.” 

Considerations for Future PTAB Litigation

This case is instructive for petitioners and patent owners alike. First, petitioners should ensure that the patent owner has adequate notice of all arguments that will be raised in a proceeding, i.e., they need to present their entire case in the petition. At the same time, petitioners should not be afraid to raise arguments late in a proceeding but should allow the patent owner an opportunity to respond to late-raised arguments (e.g., via a sur-reply).

As this case shows, neither the PTAB nor the Federal Circuit struck the argument that was not made until the reply brief, and the Federal Circuit specifically said that the Board was not precluded “from considering the import of Michelson’s Figure 18 after giving NuVasive a full opportunity to submit additional evidence and arguments on that point.”

In addition, patent owners should be vigilant of their due process rights and take all steps to preserve their rights on appeal, e.g., by requesting authorization to file a sur-reply or a motion to exclude or strike, as well as raising any new issues at the hearing. Had NuVasive not taken those steps in this case, it seems likely that the Federal Circuit would have held the challenge waived.


If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Silicon Valley
Dion M. Bregman

C. Erik Hawes
Nicholaus E. Floyd

[1] In re: NuVasive, Inc., 841 F.3d 966 (2016).

[2] Medtronic later settled with NuVasive and did not participate in the appeal, leaving the US Patent and Trademark Office (PTO) to intervene in order to defend the PTAB’s rulings.