Axonics, Inc. v. Medtronic, Inc.
Docket No. 2022-1532, -1533 (IPR2020-00680, -00712) (https://cafc.uscourts.gov/opinions-orders/22-1532.OPINION.8-7-2023_2169283.pdf)
LOURIE, DYK, TARANTO
August 7, 2023
Brief Summary: Board IPR decisions vacated as Axionics was not allowed to respond to new claim construction adopted after Patent Owner reply.
Summary: Axonics appealed two USPTO IPR determinations that it failed to show Medtronics’ claims of two patents “which share a specification, relate to the transcutaneous (i.e., through the skin) charging of implanted medical devices” unpatentable as anticipated or obvious. The representative disputed claims include two “wherein” limitations, “the ‘value’ limitation and the ‘measured current’ limitation” which Axionics did not argue in its petitions require construction but applied its own “one-input” construction in its claim chart. And Axionics argued the that under its construction, the prior art disclosed Medtronic’s claimed system. In its decisions, “the Board adopted [the “two-input”] claim construction first presented in the patent owner’s response after the institution decision and declined to consider Axonics’ reply arguments and evidence under the new claim construction” (i.e., “no term requires express construction”, “a reply ‘may not offer an entirely new rationale based on a new combination of elements in the asserted references to show unpatentability based on what amounts to a new ground not set forth in the Petition’”). In this appeal, Axionics did argue the Board erred in its two-input construction, but that it “erred in refusing to consider Axonics’ reply arguments and evidence” under that construction. The FC panel explained that it reviews a Board decision that “a party exceeded the scope of a proper reply for abuse of discretion” (Apple, FC 2020), and that “[a]n IPR is an expedited administrative procedure, driven by the invalidity theories presented in a petition” (SAS, US 2018; 35 USC section 312 (a)(3); Intelligent Bio-Sys., FC 2016). It also explained, however, that “the Board must base its decision on arguments that were advanced by a party, and to which the opposing party was given a chance to respond” (Rovalma, FC 2017). And here, it found, “the Board, without notice, adopted a different construction in the final written decision” (“the Board ‘may not change theories midstream’” (SAS); Ericsson, FC 2018; Hamilton Beach, FC 2018 (“a petitioner is entitled to respond to a new claim construction”); Qualcomm, FC 2021), “squarely within the rule of SAS, Ericsson, Hamilton Beach, and Qualcomm”. It also explained that in this case “Axonics did not rely on new prior art in its reply” and “relied on the same embodiments as it relied on in the petition” (“leav[ing] for another day the question of whether, when presented with a new claim construction, a petitioner can rely in its reply on new embodiments from the prior art references that were relied on in the petition”). Thus, the Board’s decisions were vacated as Axionics was not “given the opportunity in its reply to argue and present evidence of anticipation or obviousness under the new construction” based on “the same embodiments for each invalidity ground as were relied on in the petition.”