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Federal Circuit Requires Notice and Opportunity to Respond to Asserted Grounds of Invalidity in IPRs But Sets Low Bar for “Minimally Sufficient” Notice

In re Nuvasive, Inc.

In In re Nuvasive, Inc. (Fed. Cir. Nov. 9, 2016) (Judges Moore, Wallach, and Taranto), the Federal Circuit considered two Board decisions with respect to U.S. Patent No. 8,187,334 (“the ’334 patent”).  The Federal Circuit affirmed the Board’s final written decision in IPR2013-507 (“IPR507”), which invalidated all but one challenged claim, and vacated the Board’s decision in IPR2013-508 (“IPR508”) and remanded for further proceedings regarding two claims that were not at issue in IPR507.  The Decision was based on the Administrative Procedure Act (“APA”).  See id. at 7-10.  The Federal Circuit found sufficient notice and opportunity to respond in IPR507 and insufficient notice and insufficient opportunity to respond in IPR508.  See id. at 10-13.

NuVasive, Inc. owns the ’334 patent, which relates to implants for spinal fusion surgery.  Slip op. at 1.  The claims require, inter alia, that (1) “said implant has a longitudinal length greater than 40 mm” and (2) “said longitudinal length is at least two and half times greater than said maximum lateral width.”  Id. at col. 12, lines 44-54.  See also slip op. at 3-4.  The Board relied on the embodiment shown in Fig. 18 of U.S. Patent No. 5,860,973 to Michelson (“Michelson”) as disclosing a spinal fusion implant having the length and width claim elements.  Id. at 2 & 9.  See also Michelson at col. 10, lines 48-55.

Medtronic, Inc. filed the petitions for inter partes review (“IPR”) but withdrew from the appeals after settling with NuVasive.  Slip op. at 2.  In the IPR petitions, Medtronic did not rely on Michelson as disclosing both the length and width claim elements.  Id. at 4-5.  Instead, the petitions only relied on Michelson as a secondary reference to show that it would have been obvious to modify the implant of a primary reference to have a length greater than 40 mm.  Id.  In the IPR508 petition, Medtronic included neither assertions about nor citations to the embodiment of Fig. 18 of Michelson.  Id. at 5.  In contrast, in the IPR507 petition, Medtronic generally cited the embodiments of Figs. 16-20 of Michelson, but Medtronic did not specifically assert that Michelson discloses the claim limitation requiring the length to be at least two and half times greater than the width.  Slip op. at 4 & 11.  See also Michelson at col. 10, line 6-col. 11, line 15.

In its patent owner responses, NuVasive “argued that no single reference taught an implant that was both longer than 40 mm and had a length at least 2.5 times its width” and addressed some embodiments of Michelson.  Slip op. at 5-6.  However, NuVasive did not specifically address the Fig. 18 embodiment of Michelson on which the Board later relied.  See id.

In its reply, Medtronic specifically relied on the Fig. 18 embodiment of Michelson and “argued that it disclosed an implant whose length was greater than 40 mm and at least 2.5 times its width.”  Slip op. at 6.  NuVasive objected to Medtronic’s Fig. 18 argument as “a new ground of invalidity asserted for the first time on reply.”  Id.  The Board denied NuVasive’s requests for leave to file motions to strike or to file surreplies.  Id.  Further, at oral argument, the Board refused to allow NuVasive to respond substantively to Medtronic’s assertions about Fig. 18.  Id.  When NuVasive objected to Medtronic’s arguments about Fig. 18 of Michelson during Medtronic’s rebuttal, “the Board assured NuVasive that it understood NuVasive’s position and would consider the propriety of Medtronic’s arguments when making a final decision.”  Id.

In its final written decisions, the Board held that all of the challenged claims except claim 18 would have been obvious and, to do so, “relied heavily on its findings that Michelson, by itself, discloses both disputed dimensional limitations in a single implant—one whose length is both greater than 40 mm and at least 2.5 times its width.”  Slip op. at 6-7.  “On appeal, NuVasive contends that it did not receive adequate notice of or opportunity to address that reading of Michelson and its consequences for the overall obviousness analysis.”  Id. at 2.

According to the court, “’[a] patent owner in [NuVasive’s] position is undoubtedly entitled to notice of and a fair opportunity to meet the grounds of rejection,’ based on due-process and APA guarantees.”  Slip op. at 8 (quoting Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064, 1080 (Fed. Cir. 2015)).  The court noted that the Board “relied on Michelson’s Figure 18 and nothing else for a prior-art disclosure of an implant having a length that is greater than 40 mm and at least 2.5 times its width.”  Slip op. at 9.  The court found that, “[u]nder the APA’s standards, NuVasive was entitled to an adequate opportunity to respond to this asserted fact about Michelson” and that this “entitlement was not lessened in this case by virtue of the opportunity NuVasive had to respond to other factual assertions about Michelson.”  Id. at 10 (citing Dell Inc. v. Acceleron, LLC, 818 F.3d 1293, 1301 (Fed. Cir. 2016) & In re Leithem, 661 F.3d 1316, 1319 (Fed. Cir. 2011)).

On appeal, on one hand, the court found that, in the IPR508 proceeding, the opportunity to file the patent owner response “did not provide the required opportunity to address the factual assertion about Figure 18 on which the Board ultimately relied” because the IPR508 petition did not include citations or assertions about the Fig. 18 alternative embodiment of Michelson, and “there was no notice of the Figure 18 point before NuVasive filed its Patent Owner Response.”  Slip op. at 11.  According to the court:

Not until Medtronic’s Reply, after NuVasive’s Patent Owner Response, was NuVasive given fair notice in IPR508 of the Figure 18 factual assertion on which the Board eventually relied.  But at no point after the Reply did the Board give NuVasive the required opportunity to respond to that point.  Despite requests from NuVasive, the Board refused to permit NuVasive to file a surreply or even to address the matter during oral argument.

Slip op. at 12.  The court also found that the opportunity to file observations did not provide the required opportunity to respond because the court does not view observations “as a substitute for the opportunity to present arguments and evidence,” and “the permitted content and format of observations are tightly circumscribed.”  Id. at 12-13.

On the other hand, the court found that, in the IPR507 proceeding, NuVasive did have the opportunity to respond because the notice provided by the IPR507 petition “was at least minimally sufficient.”  Id. at 10.  According to the court:

In IPR507, Medtronic’s petition cited the Michelson text that specifically discusses Figure 18 in addition to nearby figures in Michelson.  The petition did so in asserting that the text shows “longer than wide” implants. J.A. 172. The only limitation in the ’334 patent addressing a comparison of length to width is the one requiring length at least 2.5 times width.  It is true that Medtronic did not make a clear or direct reference to that limitation or a clear or direct assertion that the 2.5 ratio is shown in Michelson, in Figure 18 or elsewhere.  But we think that the citation of the text discussing Figure 18, plus the reference to “longer than wide” implants, should have put NuVasive on notice that it was obliged to use its Patent Owner Response to address Figure 18 and its relationship to the length/width ratio claim limitation.

Slip op. at 10-11.  Finding no procedural violation in IPR507, the court then considered NuVasive’s arguments against the Board’s obviousness ruling and rejected them.  Id. at 13-15.  Accordingly, the court “affirm[ed] the Board’s final written decision in IPR2013-507, invalidating claims 1–5, 10, 11, 14, 15, and 19–28 and upholding claim 18.”

With respect to IPR508, the court found that the procedural violation did not support reversal but instead warranted a remand for further proceedings regarding claims 16 and 17, which were only at issue in IPR508.  Slip op. at 2 & 15-16.

Based on these cases, a patent owner would be wise to carefully consider all citations to the prior art in the petitioner’s petition and respond to any citation that is relevant to any claim limitation.  Likewise, a petitioner should make sure all citations relevant to the claims are included in its petition.  The Board expects all arguments and responses to be brought out early in a post-grant proceeding.  Given the speed with which these proceedings are conducted, the Board has little tolerance for late-developed arguments or responses.