U.S. Patent Office Director Kicks Back IPR Decision to PTAB Panel in Light of Federal Circuit Decision in Related IPR

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In a rare move, the interim Director of the U.S. Patent Office granted review of a final written decision in an inter partes review proceeding. In its request for Director review, the patent owner argued that the Patent Trial and Appeal Board’s failure to give weight to objective evidence of nonobviousness in one IPR was legal error for the same reasons cited by the Federal Circuit on appeal of the PTAB’s decision in a related IPR.

U.S. Patent No. 9,403,626 (the ’626 Patent) claims a container intended for use in fracking, and U.S. Patent No. 9,440,785 (the ’785 Patent) claims methods of delivering, storing, unloading, and using the container. In two separate IPRs, the PTAB concluded that all challenged claims of both patents were unpatentable as obvious. In particular, the PTAB found that the patent owner had presented evidence of nexus between its commercialized container product and the claims of the ’626 Patent and ’785 Patent. However, the PTAB ultimately credited the patent challenger’s evidence purportedly showing that the patent owner’s commercial success and industry praise were the result of additional, unclaimed features, thereby rebutting the patent owner’s presumption of nexus.

The patent owner appealed the final decisions in both IPRs. On appeal of the IPR of the ’626 Patent, the Federal Circuit reversed and remanded the PTAB’s obviousness finding as to a subset of challenged claims. The appellate court faulted the PTAB for failing to weigh the patent owner’s evidence showing that the container had generated significant revenue and was specifically praised by customers and a market analyst as an effective and industry-disrupting technology. Because a patented invention need not be solely responsible for commercial success in order for such indicia of nonobviousness to be given weight, the Federal Circuit concluded that the PTAB had legally erred by ignoring the patent owner’s evidence.

After this Federal Circuit decision issued but while the appeal of the second IPR was pending, the patent owner requested Director review of the final written decision in the second IPR. The patent owner used the Director review process implemented by the PTAB in view of United States v. Arthrex, 141 S. Ct. 1970 (2021). The patent owner argued that the PTAB’s treatment of evidence of nonobviousness in the IPR of the ’785 Patent was nearly identical to its approach in the IPR of the ’626 Patent, which the Federal Circuit had found legally erroneous. The patent owner therefore requested that the Director either review the evidence of nonobviousness de novo or remand the proceeding for reconsideration in light of the Federal Circuit decision as to the ’626 Patent. The Director agreed that the PTAB’s analysis of the patent owner’s evidence was “substantially similar” in the two cases, and thus vacated the final written decision in the IPR of the ’785 Patent and remanded for the PTAB to address the patent owner’s objective evidence of nonobviousness.

Practice Tip: Although the impact of Arthrex has been modest thus far, Director review appears to be a viable option in some unique circumstances. The grant of review in this case—where the Federal Circuit had already decided the same legal question on appeal of an IPR involving the same parties, the same technology, similar evidence, and similar approach to that evidence by the PTAB—makes clear that Director review is not a dead end. Parties should thus consider carefully, and set forth explicitly in their requests, any unique circumstances that may support Director review.

Proppant Express Invs., LLC v. Oren Techs., LLC, IPR2018-00733, Paper 95 (PTAB Nov. 18, 2021).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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