AXONICS, INC. v. MEDTRONIC, INC.

Before Dyk, Lourie, and Taranto. Appeal from the Patent Trial and Appeal Board.

Summary: Where a patent owner in an IPR proposes a claim construction for the first time in a patent owner response, a petitioner must be given the opportunity in its reply to argue and present evidence of anticipation or obviousness under the new construction.

Axonics requested Inter Partes Review of two patents owned by Medtronic. Axonics’ petition adopted a “one-input” claim construction of two clauses at issue. Medtronic filed a preliminary response that addressed patentability under that one-input construction. The Board granted institution. Medtronic then filed a patent owner response that advanced, for the first time, a “two-input” claim construction of the clauses at issue. Axonics filed a reply addressing both the initial one-input claim construction and the new two-input claim construction. The Board issued a final written decision that adopted the two-input claim construction. The Board disregarded the arguments and evidence in Axonics’ reply brief regarding the two-input claim construction because they were not presented in the petition. The Board upheld the relevant patent claims. Axonics appealed.

The Federal Circuit vacated the Board’s decision. The Court found that, under the Administrative Procedures Act, when the Board adopts a new claim construction following institution, an IPR petitioner must have adequate notice and an opportunity to respond under the new construction. It noted that barring argument and evidence in a reply directed to a new claim construction proposed by the patent owner after institution could lead to “sandbagging” by the patent owner to create an estoppel. The Federal Circuit remanded for the Board to consider Axonics’ arguments and evidence under the two-input claim construction.