In Everstar Merch. Co. v. Willis Elec. Co., No. 2021-1882, 2022 WL 1089909 (Fed. Cir. Apr. 12, 2022), the Federal Circuit provided guidance to distinguish between raising a new argument and elaborating on previously raised arguments in proceedings before the Patent Trial and Appeal Board (“Board”). Here it was decided that a minor point in a petition, fleshed out much more during the remaining of the proceeding, was sufficiently raised such that it must be considered by the Board in its final decision.
Everstar Merchandise Co. (“Everstar”) sought Post Grant Review of U.S. Patent No. 10,222,037, owned by Willis Electric Company, Ltd. (“Willis”). Among its arguments, Everstar asserted that two prior art references, Kumada and Debladis ’120, rendered the patent obvious. The parties agreed that the prior art references disclosed all elements of the claims, but disagreed about the motivation to combine the references and whether the prior art references were analogous art. The Board was unwilling to consider Everstar’s arguments that the desire to reduce costs would motivate one to combine the prior art references because the Board found that those arguments were not part of Everstar’s petition, but only raised in its later briefings.
On appeal, the Federal Circuit noted that a petitioner may not assert an entirely new rationale in a post-institution reply, but may elaborate on their arguments on issues previously raised. The court found the Board abused its discretion by declining to consider Everstar’s argument that cost, in addition to increased strength and durability, provided sufficient motivation to combine. Several reasons supported the court’s holding. The patent stated among its benefits were increased wire strength and reduced material costs. Related to this, Everstar noted in its petition that Kumada teaches the inverse relationship between cost and the amount of material used. Willis addressed this relationship in its preliminary response and associated expert testimony. Furthermore, the Board discussed that the prior art references showed a desire to reduce manufacturing costs.
The Federal Circuit further noted that 37 C.F.R. § 42.23(b) allows a petitioner to “respond to arguments raised in the corresponding opposition, patent owner preliminary response, patent owner response, or decision on institution.” A legitimate reply to arguments in these situations is not a new argument. Willis raised cost reduction in its preliminary response and post-institution response. Even if there were ambiguity about whether Everstar’s arguments were present in the petition, Everstar was permitted to respond the arguments presented by Willis and in the Board’s institution decision. Therefore, the Board erred by not fully considering the arguments raised.