Stewart Clarifies Application of Advanced Bionics, Orders New Briefing in Light of Rescinded Fintiv Memo

Acting U.S. Patent and Trademark Office (USPTO) Director Coke Morgan Stewart issued a Director Review decision Monday, May 19, designated precedential by the Patent Trial and Appeal Board and clarifying that a petitioner for inter partes review (IPR) who challenges claims using prior art previously presented to the USPTO on an information disclosure statement (IDS) must provide an analysis of how the Office erred in “a manner material to the patentability of challenged claims”.

The decision also addressed the patent owner’s argument in response that the IPR petition should be discretionarily denied under the Office’s new guidance on Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020) and Sotera Wireless, Inc. v. Masimo Corp., IPR2020-01019, Paper 12 (PTAB Dec. 1, 2020), due to the timing of a parallel proceeding at the International Trade Commission (ITC). At the time the petition for Director Review and patent owner response were filed, former USPTO Director Kathi Vidal’s memo on interim procedures under Fintiv was in place; Stewart rescinded that memo in February.

The IPR petition, filed by Ecto World, LLC and SV3, LLC (Ecto World) against claims of RAI Strategic Holdings’ U.S. Patent 11,925,202, relied entirely on prior art references that were submitted to the Office in an IDS during prosecution of the patent. The examiner noted during prosecution that the IDS contained a large number of references and asked the applicant to identify the important ones, but there was no record of the applicant having responded. However, since the examiner certified that the IDS had been considered, and the petitioner failed to address whether the Office “materially erred” in its decision to allow the application, the PTAB denied institution of the IPR under the two-part framework of Advanced Bionics, LLC v. MED-EL Elektromedizinische Geräte GmbH, IPR2019-01469, Paper 6 (PTAB Feb. 13, 2020).

That framework says that, in evaluating whether to exercise discretion to deny institution under 35 U.S.C. § 325(d), the Board should first consider “(1) whether the same or substantially the same prior art or argument previously was presented to the Office; and (2) if the first part is satisfied, whether the petitioner has demonstrated that the Office erred in a manner material to the patentability of challenged claims.”

Since Ecto World used the same references submitted in the IDS, it met part one of the framework and the PTAB determined the references were previously presented to the Office. As to the second part of the framework, the Board said Ecto World failed to “articulate how the Office erred in a manner material to the patentability of the challenged claims,” and Ecto World argued this was a misapplication of part two of Advanced Bionics. Ecto World claimed that other parts of its petition sufficiently challenged the patentability of the claims and were sufficient to satisfy part two. But Stewart disagreed. She explained:

“Board panels have disagreed as to whether a petitioner must provide an analysis under part two of Advanced Bionics and, if so, whether a petitioner must explain how the Examiner erred or whether a petitioner can simply rely on its unpatentability contentions to imply that an error occurred…. This decision resolves that dispute and clarifies that a petitioner must provide an analysis even when the asserted prior art is on an IDS, but the Examiner did not apply the reference.”

While Stewart went on to provide examples of how a petitioner could have successfully argued it had satisfied part two, she concluded that, “[h]ere, Petitioner’s generalized statements as to the strength of its Petition fail to identify sufficiently a material error.” She further commented in a footnote that “Petitioner’s suggestion that the Board should have scoured the Petition to cobble together an argument under the second part of Advanced Bionics improperly shifts Petitioner’s burden to demonstrate material error onto the Board.”

However, under step (f) of the framework established by Becton, Dickinson & Co. v. B. Braun Melsungen AG, IPR2017-01586, Paper 8 (PTAB Dec. 15, 2017) for determining how to apply Advanced Bionics, a petitioner may still be able to argue that discretionary denial is inappropriate due to “the extent to which additional evidence and facts warrant reconsideration of the prior art or arguments.” In this case, the 1,000 references submitted with the IDS “ is over 40 times the size of a typical IDS,” Stewart wrote, and the applicant failed to respond to the examiner’s request to narrow them down. “These facts may demonstrate that discretionary denial under § 325(d) is not warranted,” the decision said.

Despite her findings, Stewart did not deny institution to Ecto World. She said that “[b]ecause this decision clarifies how to apply Advanced Bionics and Becton Dickinson, the appropriate course of action is to remand the proceeding to the Board.”

Turning to the patent owner’s argument that institution should be denied under the new Fintiv guidance, Stewart agreed that the parties should be allowed additional briefing on remand addressing the Fintiv factors in view of the ITC timeline. But the Board should only address those arguments if it decides not to exercise discretion to deny institution under Section 325(d).

The petition for Director Review was thus granted, the PTAB’s decision denying institution was vacated, and the case was remanded to the Board for further proceedings.

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Author: Devon
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