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A Single PTAB Panel May Institute IPR and Make Final Decision

In Ethicon Endo-Surgery, Inc. v. Covidien LP, 2014-1771 (Fed. Cir. 2016)(Available Here), the Federal Circuit held that neither the statute nor the Constitution precludes the same Patent Trial and Appeal Board (“PTAB” or “Board panel”) that makes a decision to institute an inter parties review (“IPR”) from also making the final determination.  

    Covidien petitioned the Patent and Trademark Office (“PTO”) for inter parties review of Ethicon’s Patent No. 8,317,070, claims 1-14.  A Board panel granted the petition.  The same Board panel also found all challenged claims invalid as obvious over the prior art.  Ethicon appealed asserting that the Board’s final decision is invalid because the same Board panel made both the decision to institute and the final decision and that the Board erred in finding the claims invalid.  

    The Ethicon patent is directed to a surgical device used to staple, secure and seal tissue that has been incised.  The Board concluded that one of skill in the art would have been motivated to combine the prior art staplers disclosing staples of varying heights with staples of non-parallel legs to securely hold the staples in the cartridge because the benefits of both were well known at the time of the invention.  

    The Federal Circuit held that 35 U.S.C. § 314(d) does not preclude the Federal Circuit from hearing Ethicon’s challenge to the authority of the Board to render a final decision.  35 U.S.C. § 314(d) provides that the determination by the Director whether to institute an inter parties review shall be final and nonappealable.  It does not preclude review of the final decision, which is appealable under 35 U.S.C. §319.  

    The Federal Circuit found that the PTO’s assignment of the institution and the final decisions to one panel of the Board does not violate due process under governing Supreme Court precedent.  See Withrow v. Larkin, 421 U.S. 35 (1975) (there was no due process violation when the investigative and adjudicatory functions are combined in a single body).  Additionally, there is a longstanding rule that agency heads have implied authority to delegate to officials within the agency, even without explicit statutory authority and even when agency officials have other statutory duties.  Congress obviously assumed that the Director would delegate, as the Director, as head of the PTO, regularly assigned tasks to subordinate officers.  Moreover, Congress’s vesting of broad rule making powers in the head of the agency is an alternative source of authority to delegate.

    As for the final decision, Ethicon argued that the Board did not properly take into account the secondary considerations of non-obviousness.  However, the Federal Circuit agreed with the Board’s conclusion that Covidien products contained numerous unclaimed features and Ethicon had not shown sufficient credible evidence that the sales of the Covidien device were the result of the claimed invention.  In addition, the Board had substantial evidence before it that the commercial success of the Covidien products was primarily attributable to a single feature present in the prior art, namely the varying staple heights.

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