PTAB reversals at Federal Circuit: how counsel snag rare wins

Disgruntled company counsel reeling from recent losses at the Patent Trial and Appeal Board face rough odds when they try to convince the US Court of Appeals for the Federal Circuit to change the outcomes of their cases.

Just under three quarters (74%) of PTAB appeals have been affirmed by the Federal Circuit since the board’s inception up until April 30 2021, according to data compiled by Finnegan. Out of 870 appeals, just 112 (13%) were reversed or vacated on every issue.

Reversals that don’t include vacated decisions are even rarer, it turns out. Data compiled by Sterne Kessler shows that just 3% of PTAB decisions were reversed at the appellate court in 2020.

Practitioners will obviously want their clients to stand with the successful 3% when they appeal PTAB decisions – and according to five private practice lawyers who have convinced the appellate court to reverse PTAB rulings, there are ways they can increase the odds of that happening.

Thomas Saunders, partner at WilmerHale in Washington DC, says practitioners should avoid approaching appeals as if they are just re-arguing the same case from the PTAB.

"Getting board decisions changes the landscape, so you need to think very carefully and creatively about what your legal angle is. If you just re-argue the same case, you're not going to be doing what your client wants you to do."

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For one thing, attorneys should carefully consider what kinds of arguments to focus on and try to find matters of law to appeal when they can, rather than matters of fact.

The Federal Circuit applies a deferential “substantial evidence standard” to matters of fact at the PTAB, meaning that the court will defer to the board as long as the PTAB’s findings are supported by substantial evidence.

But the court does not defer to the board on matters of law.

Sources add that whether lawyers appeal on legal issues or try to meet the substantial evidence standard, they should make sure they present arguments with good narratives at the appellate court.

Practitioners may want to raise claim construction arguments (focusing on the meaning of words in patent claims) at the Federal Circuit because claim construction is a matter of law, although there are several factors they should consider when raising these issues.

Michael Flibbert, partner at Finnegan in Washington DC, says practitioners should look at all of the intrinsic evidence, noting that the court typically examines claim language and the specification because these factors can be more directly applicable to disputes over claim construction.

Flibbert won a reversal in the 2018 Federal Circuit case E I Dupont de Nemours & Co v Synvina.

He adds that file histories can be important because claim terms can come up during prosecution, and the court may give weight to an applicant’s history of arguing that certain terms have certain meanings.

If attorneys do make claim construction arguments, they should ensure they’re relevant to their cases.

Flibbert says that even if the court agreed there was a claim construction error, it could still affirm the PTAB’s decision if it decided the mistake wouldn’t affect the outcome for the appellant.

Lawyers should also consider raising administrative procedural issues, say sources, because the court does not defer to the PTAB on those matters.

Saunders at WilmerHale, who recently won a reversal for Becton, Dickinson and Company in the May 2021 case Becton Dickinson v Baxter, says examples of these issues include failure to provide adequate notice and failure of the board to consider key arguments.

He says these types of errors may be more likely to lead to remands than reversals, but notes that such outcomes would depend on the cases. The appellate court will sometimes decide that an administrative error was so central to the dispute that it doesn’t leave the PTAB room to do anything on remand.

Although lawyers may find it challenging to prove that the PTAB’s findings are not supported by substantial evidence, several attorneys have successfully raised these arguments in the right circumstances.

Aaron Fahrenkrog, partner at Robins Kaplan in Minnesota, has won an appeal – the 2019 case ATI Technologies v Iancu – while using this standard. He says that to win these types of challenges, it’s important to establish detailed factual records while cases are still going on at the PTAB.

During his case, he had very detailed discussions with the Federal Circuit about the facts of the matter, supported by thorough records.

Attorneys should also consider what kinds of issues they think the PTAB got wrong. Sources say counsel may want to appeal the board’s findings of anticipation, in which inventions are not considered novel because of the prior art.

Scott Brown, partner at Hovey Williams in Kansas, says he has had some success appealing anticipation findings, such as in the 2017 case Nidec Motor v Zhongshan Broad Ocean Motor.

He notes that the PTAB’s requirements for a finding of anticipation are quite stringent compared to those for obviousness, adding: “The rigorous nature of proving anticipation leads it to being a more appealable subject matter in front of the Federal Circuit.”

He adds that although anticipation is a question of fact, it can be intertwined with claim construction analysis.

Counsel should also ensure that their briefs have a theme, rather than simply throw together every argument they can think of and hope that the Federal Circuit accepts one of them.

Nitika Gupta Fiorella, principal at Fish & Richardson in Delaware, says she made sure to develop a narrative for her successful appeal in Chemours v Daikin Industries, which was decided by the Federal Circuit in July.

She says her theme was that the PTAB didn’t fully engage with the case. She argued that the other side didn’t provide the necessary evidence to satisfy its burden and that the board came up with its own arguments and didn’t give her client’s points enough credit.

Fiorella adds that her experience clerking for former chief judge Sharon Prost at the court helped her understand that the circuit judges are under a lot of time pressure and that it’s important to develop focused arguments.

Attorneys should also make sure they explain what they want from the court.

Fiorella says that when she worked at the Federal Circuit, she sometimes read briefs that weren’t completely clear on whether the appellants were requesting reversals or simply asking the court to remand the decision.

She says it’s important for attorneys to ask for reversals if they want them.

Attorneys can broadly use the same strategies on appeals whether they’re representing patent owners or challengers. But there are a few differences counsel should consider.

Patent challengers, for example, can take advantage of the Federal Circuit’s views of the PTAB’s interpretation of prior art.

Saunders at WilmerHale says the Federal Circuit can occasionally come to the conclusion that the PTAB has interpreted the prior art too narrowly. In those cases, the appellate court would be willing to consider substantial evidence challenges.

Patent owners may want to evaluate how the PTAB handles objective indications of non-obviousness. These are secondary considerations (such as commercial success, failure by others to create the invention and a long-felt need for the invention) that suggest an invention is non-obvious.

Fiorella at Fish says one of the first errors she noticed when she looked through the board’s decision in the Chemours case was its improper rejection of the showing of commercial success.

She adds that these secondary considerations can be good fodder for strong appellant arguments because the board doesn’t always evaluate these issues perfectly

No matter the kinds of litigants practitioners represent, it’s crucial for them to hone their arguments to the needs of the Federal Circuit, as counsel have done.

Doing so could mean the difference between sitting among the 3% of successful appellants at the court or being cast out with the vast majority.