On September 11, 2023, the Federal Circuit issued a precedential opinion that vacated and remanded two final written decisions of the Patent Trial and Appeal Board (the “Board”) in Apple, Inc. v. Corephotonics, Ltd..1 The Corephotonics patent discloses a thin dual-aperture zoom digital camera that combines wide lens and tele lens images to create a fused image with a blurry background and shallower depth-of-field, commonly known as a “portrait photo.”2 Apple filed two IPRs (including IPR2020-906) challenging Corephotonics’ patent as obvious.3 This article focuses on the Administrative Procedure Act (APA) issue raised in one of those IPRs.
In IPR2020-906, Apple argued that a skilled artisan would combine two prior art references and arrive at the lens parameters disclosed in the challenged claims.4 Apple’s theory relied on Dr. Sasián’s expert declaration, which contained what the Board referred to as a “typographical error.”5 The error affected Dr. Sasián’s calculation of the combined lens parameters, however the error was only mentioned once in Corephotonics’ Patent Owner Response.6 The Board’s final written decision focused almost entirely on the error rather than the parties arguments on the merits, which the Panel found on appeal did not comport with the notice requirements of the APA.7
Before the Board, Apple challenged several claims with limitations relating to camera parameters, arguing that a combination of the Parulski and Ogata references would render the challenged claims obvious.8 Ogata discloses a “wide-angle photographic lens system” including specific data about lens parameters, whereas Parulski discloses a dual aperture lens system without any lens parameter specifics.9 Apple argued that the skilled artisan would have scaled Ogata’s larger lens down to match the size disclosed by Parulski, resulting in a lens with the characteristics required by the challenged claims.10 Apple’s theory relied on the declaration of its expert, Dr. Sasián, who apparently inadvertently typed the wrong Abbe number— a measure of a transparent material’s dispersion11— into the software program he used to calculate the scaled down Ogata lens characteristics.12 Corephotonics only mentioned this error once, noting in the background section of its Patent Owner Response that Dr. Sasián’s calculations do not accurately reflect the performance of a scaled version of Ogata’s lens.13 However, Corephotonics did not mention the error in its obviousness argument, nor did it allege that it affected whether the prior art combination discloses the lens characteristics of challenged claims.14 Instead, Corephotonics argued in its Response that the proposed Ogata scaling would result in a miniature lens that would impact both the practicality of manufacturing the design and the performance characteristics.15 Apple did not respond to the mention of the error in its Reply, and countered that the lens would not be miniature.16
The Board issued a final written decision that did not focus on the arguments raised, but rather identified several other errors in Dr. Sasián’s declaration.17 Noting that there were multiple inconsistencies between Ogata and the data in the declaration, the Board found that Apple had not met its burden to show that the challenged claims were unpatentable by providing a reasonable expectation of success.18
The Federal Circuit’s Analysis:
Apple challenged the Board’s decision, which was based primarily on its determination that the expert declaration was unreliable, arguing that it violated the Administrative Procedure Act (APA).19 The APA, passed in 1946, prescribes procedures for agency rulemaking and adjudication, and sets standards for judicial review of final agency actions.20 Under the APA, persons entitled to notice of an agency hearing must be informed of “the matters of fact and law asserted,” and interested parties must be given an opportunity for submission and consideration of the same.21 The APA limits the Board’s authority during inter partes review, requiring the Board’s decision to be based on arguments raised by the parties, and to which the opposing party was given an opportunity to respond.22
The Federal Circuit noted that the Board in IPR 2020-906 focused almost exclusively on Dr. Sasián’s error, which was only mentioned briefly in the Background section of Corephotonics’ Response.23 Corephotonics did not argue that because of this error Dr. Sasián’s declaration was unreliable or that there would have been no reasonable expectation of success in combining the prior art.24 The Federal Circuit found that the error pertained to data that lacked relevance to the issues argued, and the Board “failed to provide a reasoned explanation” for why the number was meaningful.25 The parties never identified the error as a dispositive issue.26 Moreover, the board based its finding on what it determined were errors, but neither party raised.27 And, both parties agreed that the additional inconsistencies identified by the Board were not errors.28
The Federal Circuit concluded that the Board’s determination does not comport with the APA notice requirements and vacated and remanded the final written decision for further proceedings.29
The Decision’s Impact and Takeaway:
Under the APA, the Board may not make sua sponte findings without giving the parties a reason to anticipate the basis of its decision.30 In its opinion, the Federal Circuit emphasized that although the Board is entitled to set aside testimony it finds scientifically unreliable and make credibility determinations, it must base these decisions on substantial evidence after the parties have been given fair notice and an opportunity to be heard.31 Thus, a takeaway for practitioners is that credibility and reliability arguments should be explicitly raised if either party seeks to have expert testimony set aside.