Discussion Board

PTAB Obviousness Decision Must Provide “Reasoned Explanation” For Motivation To Combine References

Team Contact: Sangeeta G. Shah

In a recent pair of decisions, the Federal Circuit has tightened the procedural and substantive requirements for Board decisions on obviousness.  In Nuvasive, the Federal Circuit vacated a PTAB final decision that challenged claims were unpatentable as obvious when the Board failed to articulate a reasoned explanation for combining two prior art references. In re Nuvasive, Inc., No. 2015-1670 (Fed. Cir. Dec. 7, 2016). This decision provides patent owners with relief from tenuous conclusory arguments that claims are obvious based on combinations of prior art references without a specific reasoned motivation for the combination, and should serve as notice to petitioners that conclusory obviousness arguments will not succeed at the PTAB.  In another recent case involving the same patent owner, the Federal Circuit found the Board erred in relying on new obviousness arguments presented on reply when the patent owner lacked an opportunity to respond.  These cases may signal a trend toward increased scrutiny of obviousness rulings. See In re Nuvasive, Inc., No. 2015-1672 (U.S. Nov. 9, 2016).

The more recent decision involved an inter partes review proceeding initiated by Medtronic, Inc. concerning Nuvasive’s U.S. Patent No. 8,361,156, relating to spinal fusion implants. The Board entered a final written decision that several challenged claims were unpatentable as obvious under 35 U.S.C. § 103, ruling that a person skilled in the art would have combined cited references to arrive at the claimed invention. In its final decision, the PTAB acknowledged the arguments advanced by the parties on whether a person skilled in the art would have combined the references and rejected Nuvasive’s arguments. It also noted that the level of skill in the relevant art was very high, and that Nuvasive’s position “vastly underestimate[d] the ordinary skill of surgeons in this field. However, the PTAB never actually made an explanation-supported finding that the evidence affirmatively proved that the PHOSITA would have made the combination.” Slip op. at 12.

On appeal, Nuvasive raised two arguments. First, it argued that the cited references were not prior art printed publications because they were not accessible to the public. On this point, the Federal Circuit ruled that the argument was waived because Nuvasive did not include it in its trial submissions and expressly abandoned the argument at trial.

Nuvasive was successful on its second argument, however. Reviewing the Board’s decision for substantial evidence, the court ruled that the final decision was not supported by an adequate finding of a motivation to combine. The Federal Circuit noted that, in applying KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007), it has consistently looked for a stated motivation to combine when a combination of prior art references is the basis of an obviousness rejection. “[T]he factual inquiry whether to combine references must be thorough and searching and [t]he need for specificity pervades [our] authority on the PTAB’s findings on motivation to combine.” Slip op. at __, quoting In re Lee, 277 F.3d 1338 (Fed. Cir. 2002)(quotation omitted). The court noted that although the stated rational need not be perfect, and is not a “rigid and mandatory formula,” the PTAB “must articulate a reason why a PHOSITA would combine the prior art references.” Id. at 9 (emphasis in original). The appeals court observed that it previously has accepted rationales such as reducing waste in a production process, and allowing a greater degree of movement in a mechanical device. On the other hand, an explanation is not sufficient where it is a conclusory statement without a reasoned explanation, simply a rejection of patent owner arguments disputing a motivation to combine, or invocation of “common sense” alone.

Against this standard, the court ruled that the PTAB had failed to provide a reasoned explanation for its conclusion that a motivation to combine the references existed. Although the USPTO argued that the Board “effectively” adopted Medronic’s arguments advocating obviousness, the court noted that the PTAB did not articulate “why” PHOSITA would have been motivated to combine the references. Id. at 12. Additionally the court noted that the “PTAB failed to articulate a reason why the PHOSITA would have been motivated to modify” the prior art. Ultimately, the court vacated the final decision and remanded for additional findings on the motivation issue. Id. at 13. This result sends a strong message that conclusory statements and superficial analysis of motivations to combine are insufficient to establish a prima facie case under 35 U.S.C. § 103, that the burden of proof to establish motivation in IPR proceedings lies squarely with the petitioner, and the PTAB must make specific findings regarding a motivation to combine in its decisions.

In the earlier Nuvasive decision, involving an IPR proceeding challenging a different patent, the Federal Circuit vacated a final written decision of unpatentability when the Board relied on arguments submitted by the petitioner for the first time at the reply stage in violation of the Administrative Procedure Act.  In Nuvasive I, although the petitioner’s reply relied on new arguments involving a previously undisclosed reference, the Board denied Nuvasive’s request to strike the petitioner’s argument or to file a surreply brief.  On review the Federal Circuit found that under the Administrative Procedure Act, “NuVasive was entitled to an adequate opportunity to respond to” the reference used by the USPTO to base its obviousness decision. Slip op. at 10. This due process right was not satisfied by Nuvasive’s ability to respond to the reference in a parallel IPR proceeding, or by the ability to submit its “observations,” not accompanied by factual submissions.