Opinion ID: 4458371
Heading Depth: 2
Heading Rank: 1

Heading: Ground One and UMTS

Text: Our review of final written decisions by the Board is rooted in “basic principles of administrative law.” Pers. Web Techs., LLC v. Apple, Inc., 848 F.3d 987, 992 (Fed. Cir. 2017). These principles impose important limits on our review of decisions by the Board. But they also impose important limits on the Board’s authority during inter partes reviews. For example, “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.” In re Magnum Oil Tools Int’l, Ltd., 829 F.3d 1364, 1381 (Fed. Cir. 2016); see also Rovalma, S.A. v. Bohler-Edelstahl GmbH & Co. KG, 856 F.3d 1019 (Fed. Cir. 2017). Whether the Board improperly relied on new arguments is reviewed de novo. In re NuVasive, Inc., 841 F.3d 966, 970 (Fed. Cir. 2016). According to the Board’s regulations, an issue upon which the Board does not institute review is not part of the ensuing inter partes review proceeding. See, e.g., AIA Regulation Comments, 77 Fed. Reg. 48,680 at 48,689 (“Any claim or issue not included in the authorization for review is not part of the review.”). The patent owner therefore has no opportunity to be heard on non-instituted grounds during trial. 37 C.F.R. § 42.120 (“A patent owner may file a response to the petition addressing any ground for unpatentability not already denied.” (emphasis added)); see also Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc., 817 F.3d 1293 (Fed. Cir. 2016) (holding that petitioner could not have reasonably raised a reference during inter partes review where the Board denied institution on related ground). Nor does the patent owner have notice that the Board might rely on a non-instituted ground in its final written decision. The Board therefore cannot rely on evidence relating solely to grounds on which it never instituted. To hold otherwise would allow the Board’s final written decision to rest on arguments that a patent owner has no ability to 10 IN RE: IPR LICENSING, INC. rebut or anticipate. See Magnum Oil, 829 F.3d at 1381 (“[T]he Board must base its decision on arguments . . . to which the opposing party was given a chance to respond.”). But the Board did just that in relying on UMTS in its final written decision here. The fact that UMTS was not part of this inter partes review is evident from the proceeding itself. ZTE’s petition does not mention UMTS in discussing ground one—the only ground on which the Board instituted review. IPRL’s response therefore never referenced it either. Nor did ZTE’s reply. Dr. Bims, ZTE’s expert, also confirmed that the Board’s review was not based on UMTS. J.A. 4778. (“[Q.] And Draft UMTS, the PTAB did not grant review based on that? [A.] That’s my understanding.”). And yet, the Board referenced UMTS several times on remand when analyzing why claim 8 was unpatentable. For example, in addressing why a person of ordinary skill would have included the PDP Context feature in a CDMA system—the key issue on remand—the Board reasoned that “use of that feature in a CDMA-based system was not only known, but recognized as beneficial” based on the fact that “UMTS included a ‘PDP context’ feature.” Remand Decision, 2018 WL 1224736, at . ZTE insists that the Board’s reliance on UMTS was proper because “[t]he Board addressed the Draft UMTS Standards only as evidence of whether one skilled in the art at the time of the invention would have known that the PDP Context of the GPRS Standards could also be used with CDMA.” Appellees’ Br. 34. But whether and when one skilled in the art would have known that, and what the implications of such knowledge might be, were the critical questions on remand. Not only had ZTE not relied on the UMTS standards in its petition, but when the Board specifically asked ZTE to point to any record evidence supporting the conclusion that there was a motivation to combine the prior art references cited in ground one, ZTE never IN RE: IPR LICENSING, INC. 11 pointed to the Draft UMTS Standards; it pointed to nothing. J.A. 9013 (seeking evidence “concerning the motivation to combine the PDP Context feature of the GPRS standard . . . with a CDMA network”). The Board’s decision to rely on the Draft UMTS Standards to fill the gap in its evidentiary finding was, thus, erroneous. 2 ZTE’s attempt to justify the Board’s analysis by claiming that the Board did not rely on matters outside of ground one is wrong. Appellees’ Br. 35 (“[W]ith one harmless exception, all of the Board’s citations to the petition and to Dr. Bims’ testimony were directed to either the overview sections or the specific arguments of Ground 1.”). The Board’s first reference to UMTS expressly cited ZTE’s arguments under ground three. Remand Decision, 2018 WL 1224736, at  (citing J.A. 731–32 (overview sections); J.A. 321 (argument as to ground three)). That is not harmless. And, while the Board’s analysis does, as it did before remand, cite sections of ZTE’s petition addressing ground one, UMTS is not mentioned in those sections. Apart from UMTS, the Board’s decision is supported by the same faulty reasoning we rejected in the previous appeal. Compare, e.g., Remand Decision, 2018 WL 1224736, at  (“Petitioner demonstrates convincingly the inclusion of the PDP context feature in a CDMA-based standard in arguing that the same PDP context feature disclosed in the GPRS Standards is also included in the [WCDMA] 2 IPRL claims that, even if the Draft UMTS Stand- ards had been cited in ground one, the standards do not fill the evidentiary void we found in the Board’s judgment. The fact that our decision is based on an error in the Board’s process should not be read as an endorsement of its conclusions on the merits. We express no opinion on the merits of the Board’s reliance on the Draft Standards or its conclusions about what those standards might have taught one of skill in the art. 12 IN RE: IPR LICENSING, INC. standard.” (internal quotation marks and brackets omitted)), with IPR Licensing, 685 F. App’x at 939–940 (“While [testimony about WCDMA] may establish that, at some point, there was a reason to combine the PDP Context feature with CDMA protocols, it does not provide that reason or show why the references cited or the knowledge of one of skill in the art at the time of the invention would motivate a skilled artisan to alter the standards with a reasonable expectation of success.”). We therefore conclude that reversal as to the portion of the judgment on ground one that addresses claim 8 is appropriate. Cf. In re Power Integrations, Inc., 884 F.3d 1370, 1379 (Fed. Cir. 2018) (reversing because “[t]he board has had two opportunities” to justify its position and “failed”).