Federal Circuit Addresses Reviewability of Petition Scope, Affirms PTAB Treatment of Prior Art

The Federal Circuit’s IBM v. Zillow decision (Appeal No. 24-1170) clarifies the scope of Section 314(d)’s bar to reviewing institution decisions and reaffirms that patent owners may still challenge final written decisions that exceed the petition’s scope, consistent with Koninklijke Philips, notwithstanding Lone Star. The Federal Circuit also reiterated that anticipation analyses may properly rely on a skilled artisan’s background knowledge without converting the analysis into an obviousness argument.

Rakuten Rewards[1] and Zillow, Inc. challenged claims of IBM’s U.S. Patent No. 7,631,346, which concerns single sign-on operations, in two inter partes reviews (IPRs).[2] After the Board issued a split decision finding some claims patentable and others unpatentable, IBM and Zillow cross-appealed to the Federal Circuit.[3]  

IBM argued that the Board exceeded the scope of the petition by relying on theories not raised by petitioners and that the Board’s anticipation analysis improperly invoked obviousness‑style reasoning.[4] Zillow challenged the Board’s inconsistent treatment of two limitations directed to requesting additional data.

REVIEWABILITY OF PETITION SCOPE REMAINS INTACT DESPITE § 314(D) AND LONE STAR

Zillow argued that IBM’s challenge was barred by 35 USC § 314(d) as being closely tied to institution. (IPR institution decisions “shall be final and nonappealable”).[5] The Federal Circuit held otherwise, emphasizing that Section 314(d) only bars review of issues “closely related” to the institution decision, not whether the Board stayed within the petition’s bounds during trial.

The court clarified that Lone Star[6] does not alter the Koninklijke Philips framework,[7] noting Lone Star’s nonprecedential status and its acknowledgement of earlier cases holding that the Board errs when it institutes or decides issues not presented in the petition.

SKILLED ARTISAN KNOWLEDGE MAY INFORM ANTICIPATION WITHOUT CONVERTING TO OBVIOUSNESS

IBM argued that the Board improperly relied on what a prior art reference “suggests” rather than what it “discloses.”[8] The Federal Circuit disagreed, concluding that the Board permissibly interpreted the prior art’s disclosure of a “web application” through the lens of a skilled artisan, who would understand such applications to use conventional URLs or URIs.

Because anticipation requires evaluating a reference through the eyes of a person of ordinary skill in the art, the Board did not improperly shift anticipation to obviousness.

ZILLOW’S CROSS-APPEAL ILLUSTRATES HOW NARROW ISSUES CAN BE DISPOSITIVE

While claims 5 and 14 appear similar, the Federal Circuit agreed that claim 5 requires requesting additional information from a “first system” storing authentication data, whereas claim 14 requires requesting information from a “fourth system”: the user.[9]

Because the prior art reference disclosed requesting information only from the user, substantial evidence supported the Board’s finding that claim 5 was not anticipated but claim 14 was. This distinction underscores how minor claim‑language differences can drive different outcomes in PTAB and appellate review.

KEY TAKEAWAYS

• Section 314(d) does not insulate the PTAB from review when its final written decision exceeds the petition’s scope
• Petitioners may rely on a skilled artisan’s background knowledge to interpret prior art disclosures but may not use that knowledge to supply missing limitations under the guise of anticipation
• Small differences in claim drafting may lead to materially different validity outcomes

STRATEGIC INSIGHT

Patent owners should scrutinize PTAB decisions for instances where the Board departs from the challenged grounds, especially in cases involving mixed questions of anticipation and obviousness.

Petitioners, meanwhile, should take care to expressly articulate how a skilled artisan’s knowledge informs a reference’s disclosures to avoid allegations of improper ground‑shifting.

The decision also offers renewed opportunities for appealing PTAB outcomes based on procedural overreach, an avenue that remains open despite Section 314(d).