Federal Circuit Says IPR Petitioners Must be Allowed to Present Invalidity Arguments and Evidence In Response To New Claim Construction

A petition for Inter Partes Review (IPR) kicks off an IPR proceeding, and is required to set forth the grounds of invalidity and how the claim terms should be construed. In the precedential opinion Axonics, Inc. v. Medtronic, Inc., the Federal Circuit held that if the patent owner proposes, or the Patent Trial and Appeal Board (PTAB) adopts, a claim construction that is different from the construction proposed by the petitioner, the petitioner should be given an opportunity to present invalidity arguments and evidence under the new construction. In responding to the new claim construction, however, the petitioner is limited to the prior art of record, and it may not rely upon new prior art references. The Federal Circuit left open whether the petitioner may rely upon different embodiments in a previously cited reference.

In this case, Axonics, the petitioner, did not offer an express claim construction in its petition, and the patent owner, Medtronic, agreed in its preliminary response that no term required construction. However, Medtronic, in its patent owner response after the institution, for the first time advanced a claim construction and argued that the cited references fail to disclose a claim limitation under the proposed claim construction. In response, Axonics defended its original argument that the claims did not require construction, and responded to the patent owner’s new construction with additional evidence and argument that the same embodiments in the same references disclose the disputed limitation even under the patent owner’s construction. Eventually, the PTAB adopted the patent owner’s claim construction and refused to consider the petitioner’s new invalidity argument and evidence. The PTAB held that the petitioner may respond to arguments raised in the patent owner response, but it may not offer an entirely new rationale.

The Federal Circuit reversed, explaining that there is no rule requiring an IPR petition to present all possible claim constructions and to present invalidity theories under those constructions. Citing a series of its own decisions, the Federal Circuit held that after institution, a petitioner is entitled under the Administrative Procedure Act to respond to new claim construction arguments made by a patent owner or adopted by the PTAB sua sponte. If a petitioner were barred from responding to a new post-institution construction, patent owners would be encouraged to sandbag their claim construction arguments until a later stage. The Federal Circuit further confirmed that a petitioner should be given an opportunity to submit supplemental evidence, including a declaration. However, the Federal Circuit reiterated that a petitioner is not allowed to rely upon prior art references that were not in the original petition. The Federal Circuit did not answer whether the petitioner can rely on embodiments in cited prior art references that are different from the embodiments relied upon in the petition.

While the decision offers leeway to supplement arguments and evidence in view of a new claim construction, the scope is not unlimited. A new prior art reference is not allowed, and it is not yet clear if arguments based on uncited portions of an existing reference will be allowed. To avoid this possible pitfall, a petitioner should still comprehensively consider alternative claim constructions and offer sufficient materials and rationales in the petition with an eye toward those alternative constructions.