Federal Circuit Holds that the PTAB Violated the Administrative Procedures Act by Failing to Provide Notice Before Finding an Allegedly Obvious Claim to be Anticipated in an IPR Final Written Decision

In M&K Holdings, Inc. v. Samsung Electronics Co., LTD. (Fed. Cir. 2021), the Federal Circuit vacated the Patent Trial and Appeal Board’s finding of anticipation in an IPR Final Written Decision regarding one of the claims at issue, reasoning that it was a “marked deviation” from the obviousness theory presented by the petitioner and mentioned in the IPR’s decision on institution.  This decision by the Federal Circuit was despite the fact that the Board’s finding of anticipation was based on the primary prior art reference for the obviousness theory.

In earlier decisions, the Federal Circuit held that a patent owner is denied the opportunity for “the submission and consideration of facts [and] arguments” as required by the Administrative Procedures Act at 5 U.S.C. § 554(c)(1) when, in a Final Decision, “the Board depart[s] markedly from the evidence and theories presented by the petition or institution decision, creating unfair surprise.”  Here, the Board’s finding of anticipation where only obviousness was alleged, without advance notice, was found to similarly deprive the patent owner of the opportunity to challenge the Board’s interpretation of the claim and the prior art.