Dickinson v. Zurko, 527 U.S. 150 (1999) requires the Federal Circuit to review the USPTO’s fact-findings under an Administrative Procedures Act (“APA”) standard rather than for clear error, the standard it previously applied to such fact-findings. Id. at 154-65. The Federal Circuit later determined that the correct APA standard was the “substantial evidence” standard. In re Gartside, 203 F.3d 1305, 1316 (Fed. Cir. 2000). Application of the APA standard of review gave the USPTO more deference for its fact-findings but also placed certain requirements on the agency to “provide an administrative record showing the evidence on which the findings are based, accompanied by the agency’s reasoning in reaching its conclusion.” In re Lee, 227 F.3d 1338, 1342 (Fed. Cir. 2002). Recently, the Federal Circuit reminded the PTAB of that obligation in In re Warsaw Orthopedic, Inc., Nos. 2015-1050, -1058 (Fed. Cir. Aug. 9, 2016) (appeal in IPR2013-00206 and IPR2013-00208). See also Arendi S.A.R.L., v. Apple Inc., No. 2015-2073 (Fed. Cir. Aug. 10, 2016) (discussed in D. McCallum, “Limits on Use of Common Sense,” (published Aug. 15, 2016 at www.ptablaw.com)).
In Warsaw Orthopedic, Warsaw appealed the PTAB’s unpatentability determinations of claims 1-8 and 17-23 under 35 U.S.C. § 103. The claims on appeal were directed to spinal surgery that inserts an artificial implant between two adjacent vertebrae from a patient’s side. Slip op. at 4. While the PTAB’s analysis of the unpatentability of independent claim 1 withstood review, slip op. at 5-12, the PTAB failed to provide an adequate analysis of its unpatentability determination of independent claim 17. Slip op. at 12-14. Claim 17 contained an additional limitation not found in claim 1: “In relevant part, claim 17 requires the positioning of a surgical instrument with ‘elongated portions’ so that at least part of one elongated portion ‘is over one of the two adjacent vertebrae and at least part of another … elongated portion is over the other of the two adjacent vertebrae.’” Slip op. at 12. Warsaw made several arguments why the PTAB erred in finding this limitation in the prior art. Id. The PTAB responded that “Warsaw did ‘not provide sufficient evidence of specific differences’” between the claimed invention and the prior art reference, Jacobson. Slip op. at 12-13.
Based on the record before it, the Federal Circuit was unable to determine whether the PTAB properly rejected Warsaw’s argument, given the PTAB’s failure to provide a “reasoned explanation needed to support its conclusion.” Slip op. at 13. The court noted that the “PTAB’s affirmative narration in support of its finding that Jacobson discloses the subject limitation in claim 17 consists of a single sentence: ‘Jacobson appears to disclose anchor wires (i.e., “elongated portions”) that are positioned over adjacent vertebrae’ Nu Vasive II, 2014 WL 3422008, at *13 (citing Jacobson fig. 5).” Id. That single sentence was not sufficient to support the PTAB’s holding that clam 17 was unpatentable. The Federal Circuit explained: “The PTAB’s conclusory assertion that Figure 5 of Jacobson ‘appears to’ support its finding does not equate to the reasoned explanation needed to support its conclusion. See Synopsis, 814 F.3d at 1322; see also Lee, 277 F.3d at 1345 (‘The [PTAB] cannot rely on conclusory statements when dealing with … prior art and specific claims, but must set forth the rationale on which it relies.’).”
The Federal Circuit, however, did not take a position as to whether Jacobson discloses the additional limitation in claim 17 but instead remanded the case for the PTAB to make that determination in the first instance. Of course, the PTAB had already made the determination. Thus, on remand, it seems likely the PTAB will continue to hold claim 17 unpatentable, but will provide a more thorough analysis.