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The Bounds of Procedural Due Process – Intellectual Ventures II LLC v. Ericsson, Inc.

The Federal Circuit’s May 8, 2017 opinion in Intellectual Ventures II LLC v. Ericsson, Inc., while non-precedential, provides useful insight into bounds of procedural due process requirements in an IPR proceeding.  Due process necessitates “notice and an opportunity to be heard.”  Further, because IPRs are a formal administrative adjudication under the Administrative Procedure Act (“APA”), each party is entitled to present oral and documentary evidence.  Therefore, the Board may not change theories “midstream without giving the parties reasonable notice of its change.”  The question for the Court here was how far these protections extend.

Intellectual Ventures argued that the Board deprived it of due process by adopting a construction that was not advanced by the parties.  The Court disagreed.  Specifically, the Court explained that “the Board is not constrained by the parties’ proposed constructions and is free to adopt its own construction, as it did here.”  The Court contrasted two recent opinions, In re Magnum Oil International, Ltd., 829 F.3d 1364, 1381 (Fed. Cir. 2016) and SAS Institute, Inc. v. ComplementSoft, LLC, 825 F.3d 1341, 1351 (Fed. Cir. 2016), where the Federal Circuit faulted the Board for reaching conclusions without giving the aggrieved party a sufficient opportunity to respond.  In the present case, the Court noted that the claim term was “central to the case” and “extensively litigated,” including at oral argument.  The Court also noted that Intellectual Ventures did not seek to file a sur-reply at the briefing stage or request rehearing. Under these circumstances, the Court determined that Intellectual Ventures was not deprived of due process.

The takeaway from this opinion is that the Board is constrained by due process requirements, and cannot advance a theory “midstream” and then deny a party an opportunity to respond.  But as a practical matter, a party that feels it has been deprived of its ability to respond to the Board should seek any and all means of redress before the Board, and not rely on the Federal Circuit alone for relief.