Court Opinion

ID: 9539237
Source: CourtListenerOpinion
Date Created: 2023-08-07 15:01:11.50189+00
Date Added: 2024-06-11T14:58:38.466535
License: Public Domain

Case: 22-1532   Document: 47    Page: 1   Filed: 08/07/2023

   United States Court of Appeals
       for the Federal Circuit
                 ______________________

                    AXONICS, INC.,
                      Appellant

                           v.

                  MEDTRONIC, INC.,
                        Appellee
                 ______________________

                  2022-1532, 2022-1533
                 ______________________

     Appeals from the United States Patent and Trademark
 Office, Patent Trial and Appeal Board in Nos. IPR2020-
 00680, IPR2020-00712.
                  ______________________

                Decided: August 7, 2023
                ______________________

    AARON MATTHEW NATHAN, Tensegrity Law Group LLP,
 McLean, VA, argued for appellant. Also represented by
 AZRA HADZIMEHMEDOVIC, SAMANTHA A. JAMESON, STEPHEN
 SHAHIDA; WILLIAM P. NELSON, MATTHEW D. POWERS, Red-
 wood Shores, CA.

    NAVEEN MODI, Paul Hastings LLP, Washington, DC,
 argued for appellee. Also represented by QUADEER AHMED,
 CHETAN BANSAL, STEPHEN BLAKE KINNAIRD, ALEXA LOW-
 MAN.
                  ______________________
Case: 22-1532    Document: 47     Page: 2    Filed: 08/07/2023

 2                           AXONICS, INC. v. MEDTRONIC, INC.

     Before LOURIE, DYK, and TARANTO, Circuit Judges.
 DYK, Circuit Judge.
      Appellant Axonics, Inc. appeals two inter partes review
 (“IPR”) determinations. The Patent Trial and Appeal
 Board held, in relevant part, that Axonics had failed to
 show that claims 1, 5, and 9 of U.S. Patent No. 8,457,758
 (“’758 patent”) and claims 3–6, 9–12, and 15–18 of
 U.S. Patent No. 8,738,148 (“’148 patent”), in patents
 owned by Medtronic, Inc., were unpatentable as antici-
 pated or obvious. In each final written decision, the Board
 adopted a claim construction first presented in the patent
 owner’s response after the institution decision and declined
 to consider Axonics’ reply arguments and evidence under
 the new claim construction. We hold that the Board’s re-
 fusal to consider the new arguments and evidence was er-
 roneous, and we vacate and remand for the Board to
 consider the merits of Axonics’ responsive arguments and
 evidence under the new claim construction.
                        BACKGROUND
                              I
     The ’758 and ’148 patents, which share a specification,
 relate to the transcutaneous (i.e., through the skin) charg-
 ing of implanted medical devices. This charging occurs by
 inductive coupling, whereby energy is transferred between
 a primary coil in the external charger and a secondary coil
 in the implanted device when the two coils are placed in
 proximity to each other. The patents seek to improve
 charging efficiency by automatically varying the power out-
 put of the external charger based on various measured pa-
 rameters of the current passing through the implanted
 device. For example, in one embodiment, the charger
 would decrease its charging power “if the voltage across re-
 chargeable power source 24” in the implanted device is over
 4.05 volts, J.A. 242 (’758 patent, col. 21, ll. 56–57)
Case: 22-1532     Document: 47      Page: 3    Filed: 08/07/2023

 AXONICS, INC. v. MEDTRONIC, INC.                             3

 (emphasis omitted); the charger would also decrease its
 charging power if the voltage is less than 4.05 volts but “the
 charging current through rechargeable power source 24 is
 over a current rate” of 50 milliamperes, J.A. 242 (’758 pa-
 tent, col. 21, ll. 63–64) (emphasis omitted).
      The patent claims at issue here require the power of
 the external charger to be automatically varied based on
 (in the language of claim 1 of the ’758 patent) a “value as-
 sociated with [the] current passing through [the] internal
 power source” and a “measured current associated with
 [the] current passing through [the] internal power source.”
 J.A. 242 (’758 patent, col. 22, ll. 41–46). As discussed later,
 the parties have disagreed as to the meaning of these two
 clauses and whether a single disclosure, e.g., a measured
 charging current over 50 milliamperes, could satisfy both
 limitations. The parties agree that claim 1 of the ’758 pa-
 tent is representative:
     1. A system for transcutaneous energy transfer,
        comprising:
     an implantable medical device having compo-
        nentry for providing a therapeutic output, said
        implantable medical device having an internal
        power source and a secondary coil operatively
        coupled to said internal power source, said im-
        plantable medical device adapted to be im-
        planted in a patient; and
     an external power source having a primary coil,
         said external power source providing energy to
         said implantable medical device when said pri-
         mary coil of said external power source is
         placed in proximity of said secondary coil of
         said implantable medical device and thereby
         generating a current, having a value, passing
         through said internal power source:
Case: 22-1532     Document: 47      Page: 4   Filed: 08/07/2023

 4                            AXONICS, INC. v. MEDTRONIC, INC.

     wherein said external power source automatically
        varies its power output based on a value asso-
        ciated with said current passing through said
        internal power source;
     wherein said external power source automatically
        varies its power output based on a measured
        current associated with said current passing
        through said internal power source.
 J.A. 242 (’758 patent, col. 22, ll. 25–46) (emphasis added).
 We refer to the two “wherein” limitations as the “value”
 limitation and the “measured current” limitation. 1
                               II
     Axonics filed two IPR petitions challenging claims of
 the ’758 and ’148 patents as anticipated by three prior art
 references: Schulman (U.S. Patent No. 3,942,535),
 Fischell, 2 and Baumann (U.S. Patent No. 6,227,204).
 Given the parties’ agreement that claim 1 of the

     1    Each challenged claim in this appeal includes (or
 depends from an independent claim that includes) two
 “wherein” clauses similar to those present in claim 1 of the
 ’758 patent, requiring the power of the external power
 source to be automatically varied (1) based on a “value” as-
 sociated with the current passing through the internal
 power source, and (2) based on a specific kind of value, e.g.,
 a “measured current,” J.A. 242–44 (’758 patent, claims 1,
 5, & 9), a “signal,” J.A. 272–74 (’148 patent, claims 3, 9, &
 15), or a “measured voltage,” J.A. 272–74 (’148 patent,
 claims 6, 12, & 18), associated with or proportional to the
 current.
     2    R.E. Fischell et al., A Long-Lived, Reliable,
 Rechargeable Cardiac Pacemaker, in Advances in Pace-
 maker Technology 357–82 (M. Schaldach et al. eds. 1975).
Case: 22-1532     Document: 47      Page: 5   Filed: 08/07/2023

 AXONICS, INC. v. MEDTRONIC, INC.                            5

 ’758 patent is representative, we focus on the ’758 IPR and
 the treatment of claim 1 in that proceeding. 3
     In its petition, Axonics did not propose an express con-
 struction of any claim term. But in its claim charts, the
 petition adopted a construction of the two “wherein”
 clauses, stating that “[i]t is . . . clear that the second
 wherein clause simply narrows the ‘value’ of the first

     3     The ’758 petition challenged claims 1, 5, and 9 (the
 only claims of the ’758 patent that Axonics still challenges
 on appeal) as independently anticipated by Schulman,
 Fischell, and Baumann. The petition had originally chal-
 lenged all of the claims of the ’758 patent (claims 1–12), but
 following the institution decision, Medtronic disclaimed
 claims 3, 7, and 11. The petition had also challenged claims
 2, 4, 6, 8, 10, and 12 as anticipated by Baumann or obvious
 over a combination of Baumann and either Schulman or
 Fischell.
     The ’148 petition initially challenged all of the claims
 of the ’148 patent (claims 1–18), but, following the institu-
 tion decision, Medtronic disclaimed claims 1–2, 7–8, and
 13–14. Axonics continues to challenge on appeal all of the
 remaining claims on the grounds asserted in the ’148 peti-
 tion. The petition, as relevant here, asserted anticipation
 grounds based on Schulman (claims 3–6, 9–12, and 15–18)
 and Fischell (claims 3–4, 9–10, and 15–16), but not
 Baumann, and also challenged certain claims (5–6, 11–12,
 and 17–18) as obvious over a combination of Fischell and
 another reference, U.S. Patent No. 3,888,260 (“Fischell
 ’260”). Axonics continues to assert obviousness based on
 Fischell and Fischell ’260 for the ’148 patent. As to the ob-
 viousness ground, the same question as in the anticipation
 grounds is central—whether the prior art reference (here,
 Fischell) discloses the two “wherein” limitations.
Case: 22-1532     Document: 47     Page: 6    Filed: 08/07/2023

 6                            AXONICS, INC. v. MEDTRONIC, INC.

 wherein clause to ‘measured current,’ and does not require
 a separate measurement.” J.A. 301 (comparing the claim
 with Schulman); J.A. 317–18 (same with respect to
 Fischell); see also J.A. 338 (same with respect to
 Baumann). Axonics thus adopted a “one-input” claim con-
 struction under which both “wherein” limitations could be
 satisfied if the external power source automatically varied
 its power output using a single input based on the current
 in the implanted device. Under the implicit one-input
 claim construction, Axonics argued that Schulman,
 Fischell, and Baumann disclosed the two “wherein” limita-
 tions because each prior art reference disclosed varying the
 power output of an external charger based on some param-
 eter of the current in the implanted device.
     Medtronic filed a preliminary response to the petition
 arguing that Axonics had failed to show that Schulman,
 Fischell, and Baumann disclosed an input anticipating the
 “wherein” limitations under the one-input construction. In
 addressing Axonics invalidity arguments, Medtronic
 agreed that “the Board need not construe any terms be-
 cause . . . construction is unnecessary to resolve any under-
 lying controversy.” J.A. 509.
     Following the parties’ lead, the Board, in its institution
 decision, agreed that “no term requires express construc-
 tion.” J.A. 609. Indeed, the Board explicitly noted that
 “Patent Owner does not yet dispute Petitioner’s contention
 that the measured current limitation only narrows the
 [value] limitation.” J.A. 621. On the merits of Axonics’ in-
 validity arguments under the one-input construction, the
 Board found Axonics had shown a reasonable likelihood of
 prevailing and granted institution.
     After the Board’s institution decision, Medtronic, in its
 patent owner response, for the first time advanced a claim
 construction that each of the two “wherein” clauses in the
 challenged independent claims required a separate input
Case: 22-1532     Document: 47      Page: 7   Filed: 08/07/2023

 AXONICS, INC. v. MEDTRONIC, INC.                            7

 (what we will refer to as the “two-input” construction). Un-
 der the two-input construction, a “measured current” that
 satisfied the second “wherein” clause could not also qualify
 as a “value” for purposes of the first “wherein” clause. In
 other words, the first “wherein” clause required a second
 “value,” other than the value of the “measured current” of
 the second “wherein” clause. Arguing almost exclusively
 under the two-input construction, Medtronic contended
 that the petition had not identified two separate inputs in
 any of the prior art references. In some respects, Medtronic
 went further and argued that Axonics could not have made
 such a showing, because the prior art references in fact did
 not teach two separate inputs. 4 Unlike the preliminary re-
 sponse, the final response largely abandoned the argument
 that the petition had failed to show the prior art references
 satisfied the one-input construction.
     In Axonics’ reply, it continued to defend the one-input
 construction. But Axonics also argued, under Medtronic’s
 new two-input construction, that each of Schulman,
 Fischell, and Baumann disclosed two separate inputs that
 would satisfy the two “wherein” limitations. In support,
 Axonics submitted a supplemental expert declaration.
 Both the reply and the supplemental expert declaration
 cited additional disclosures in the prior art references per-
 taining to the same embodiments relied on in the petition.
     Medtronic filed a sur-reply continuing to argue the
 prior art references did not disclose two separate inputs
 and also arguing it would be prejudicial for the Board to

     4    For example, Medtronic argued that “Schulman
 teaches that the magnetic output signal is used as the sole
 input used to regulate the external power source.”
 J.A. 713; see also J.A. 715 (“Indeed, Fischell teaches that it
 is this frequency modulated signal that is used as the sole
 input to regulate the external power source.”).
Case: 22-1532    Document: 47      Page: 8   Filed: 08/07/2023

 8                           AXONICS, INC. v. MEDTRONIC, INC.

 consider Axonics’ new reply arguments without providing
 Medtronic an opportunity to submit its own supplemental
 expert declaration. Medtronic did not seek leave to submit
 a supplemental expert declaration in support of its sur-re-
 ply.
                             III
      In the final written decision, the Board adopted the
 two-input construction, concluding that the one-input con-
 struction would have rendered the first “wherein” limita-
 tion superfluous. The Board then refused to consider
 Axonics’ anticipation arguments and evidence under the
 two-input construction. 5 The Board found that Axonics
 had not identified anywhere in the petition that the two-
 input anticipation arguments had originally been made
 and, for that reason, considered them to be improper reply
 arguments. The Board explained that, before filing the pe-
 tition, “Petitioner had an adequate opportunity to assess
 the ’758 patent and to understand that it disclosed support
 for two separate measurements, but failed to do so.”
 J.A. 36. Although the Board agreed that “Petitioner may
 respond to arguments raised in the Patent Owner Re-
 sponse in its Reply,” the Board concluded that a reply “may
 not offer an entirely new rationale based on a new combi-
 nation of elements in the asserted references to show un-
 patentability based on what amounts to a new ground not
 set forth in the Petition.” J.A. 36.
     Axonics appeals. We have jurisdiction under 35 U.S.C.
 § 141(c) and 28 U.S.C. § 1295(a)(4)(A).

     5  In the ’148 IPR, the Board declined to consider
 Axonics obviousness arguments on the same grounds.
Case: 22-1532     Document: 47      Page: 9     Filed: 08/07/2023

 AXONICS, INC. v. MEDTRONIC, INC.                              9

                          DISCUSSION
    On appeal, Axonics does not argue the Board erred in
 adopting the two-input claim construction, only that the
 Board erred in refusing to consider Axonics’ reply argu-
 ments and evidence under the two-input construction.
     We review a determination by the Board that, under
 the Board’s own regulations, a party exceeded the scope of
 a proper reply for abuse of discretion. Apple Inc. v. Andrea
 Electronics Corp., 949 F.3d 697, 705 (Fed. Cir. 2020). “An
 abuse of discretion is found if the decision: (1) is clearly un-
 reasonable, arbitrary, or fanciful; (2) is based on an errone-
 ous conclusion of law; (3) rests on clearly erroneous fact
 finding; or (4) involves a record that contains no evidence
 on which the Board could rationally base its decision.”
 Ericsson Inc. v. Intellectual Ventures I LLC, 901 F.3d 1374,
 1379 (Fed. Cir. 2018) (citation omitted). We review the
 Board’s compliance with the procedural requirements of
 the Administrative Procedure Act (“APA”) de novo. Sirona
 Dental Sys. GmbH v. Institut Staumann AG, 892 F.3d
 1349, 1352 (Fed. Cir. 2018); 5 U.S.C. § 706(2)(D) (“The re-
 viewing court shall . . . hold unlawful and set aside agency
 action, findings, and conclusions found to be . . . without
 observance of procedure required by law.”).
       An IPR is an expedited administrative procedure,
 driven by the invalidity theories presented in a petition. As
 the Supreme Court has explained, “the petitioner’s petition
 . . . is supposed to guide the life of the litigation [in an IPR
 proceeding].” SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348, 1356
 (2018). By creating the IPR procedure, “Congress chose to
 structure a process in which it’s the petitioner . . . who gets
 to define the contours of the proceeding.” Id. at 1355. An
 IPR proceeds “in accordance with or in conformance to the
 petition,” id. at 1356 (internal quotation marks, modifica-
 tion, and citation omitted), and “the petitioner’s
Case: 22-1532     Document: 47      Page: 10    Filed: 08/07/2023

 10                            AXONICS, INC. v. MEDTRONIC, INC.

 contentions . . . define the scope of the litigation all the way
 from institution through to conclusion,” id. at 1357.
     Under the statute, a petition is required to identify “in
 writing and with particularity . . . the grounds on which the
 challenge to each claim is based, and the evidence that sup-
 ports the grounds for the challenge to each claim.”
 35 U.S.C. § 312(a)(3); see also Intelligent Bio-Sys., Inc. v.
 Illumina Cambridge Ltd., 821 F.3d 1359, 1369 (Fed. Cir.
 2016). According to patent office guidance, a petitioner
 “may not submit new evidence or argument in reply that it
 could have presented earlier, e.g. to make out a prima facie
 case of unpatentability.” U.S. Patent Trial and Appeal
 Board, Consolidated Trial Practice Guide 73 (Nov. 2019).
     However, under the Board’s rules and consistent with
 the Supreme Court’s decision in SAS, a petitioner is enti-
 tled to respond to new arguments made in a patent owner
 response. The rules provide that the petitioner may “re-
 spond to arguments raised in the corresponding opposition,
 patent owner preliminary response, or patent owner re-
 sponse.” 37 C.F.R. § 42.23(b). “As we have regularly held,
 the petitioner in an inter partes review proceeding may in-
 troduce new evidence after the petition stage if the evi-
 dence is a legitimate reply to evidence introduced by the
 patent owner.” Apple, 949 F.3d at 706–07 (internal quota-
 tion marks and citation omitted).
      The Board’s rules do not address the specific question
 presented here: whether, where a patent owner offers a
 new claim construction for the first time in its response af-
 ter the institution decision, a petitioner may introduce new
 arguments and evidence in reply under the newly proposed
 claim construction. There is no rule, for example, requiring
 a petition to describe all possible or reasonable claim con-
 structions and to present invalidity theories under those
 constructions.
Case: 22-1532    Document: 47       Page: 11    Filed: 08/07/2023

 AXONICS, INC. v. MEDTRONIC, INC.                            11

     In a formal adjudication under the APA, such as an IPR
 proceeding, the Board must inform the parties of “the mat-
 ters of fact and law asserted,” 5 U.S.C. § 554(b)(3), and
 “give all interested parties opportunity for . . . the submis-
 sion and consideration of facts [and] arguments,” id.
 § 554(c). The Board must also permit parties “to submit
 rebuttal evidence, and to conduct such cross-examination
 as may be required for a full and true disclosure of the
 facts.” Id. § 556(d); see Fanduel, Inc. v. Interactive Games
 LLC, 966 F.3d 1334, 1339 (Fed. Cir. 2020). Thus, in an IPR
 proceeding, “the Board must base its decision on argu-
 ments that were advanced by a party, and to which the op-
 posing party was given a chance to respond.” Rovalma,
 S.A. v. Bohler-Edelstahl GmbH & Co. KG, 856 F.3d 1019,
 1027 (Fed. Cir. 2017) (citation omitted).
     Despite the Supreme Court’s admonition in SAS that
 the petition “is supposed to guide the life of the litigation,”
 138 S. Ct. at 1356, we have specifically held that, under the
 APA, it is permissible for the Board to adopt a new con-
 struction, proposed either by the patent owner or by the
 Board itself, in a final written decision. 6 But before the

     6   See WesternGeco LLC v. ION Geophysical Corp.,
 889 F.3d 1308, 1328 (Fed. Cir. 2018) (“[T]he Board was per-
 mitted to issue a new construction in the final written de-
 cision given that claim construction was a disputed issue
 during the proceedings . . . [and] is not bound to adopt ei-
 ther party’s preferred articulated construction of a dis-
 puted claim term.”); Praxair Distribution, Inc. v.
 Mallinckrodt Hospital Prods. IP Ltd., 890 F.3d 1024, 1034
 (Fed. Cir. 2018) (affirming the Board’s decision to adopt a
 claim construction for the first time in the final written de-
 cision where “the parties litigated the meaning and rele-
 vance of the [disputed] term . . . and the Board resolved the
Case: 22-1532    Document: 47      Page: 12     Filed: 08/07/2023

 12                            AXONICS, INC. v. MEDTRONIC, INC.

 Board decides a case under a construction adopted after the
 institution decision, it must give a petitioner an oppor-
 tunity to respond to the new construction, whether that
 construction was first proposed by the patent owner or the
 Board. 7
      In this court’s decision in SAS, both parties had agreed
 to the claim construction adopted by the Board in the insti-
 tution decision, but the Board, without notice, adopted a
 different construction in the final written decision. SAS
 Inst., Inc. v. ComplementSoft, LLC, 825 F.3d 1341, 1351
 (Fed. Cir. 2016), rev’d on other grounds sub nom. SAS Inst.,
 Inc. v. Iancu, 138 S. Ct. 1348. We rejected the Board’s rea-
 soning that its approach was permissible “because [the pe-
 titioner] could have made construction arguments for the
 term in its IPR petition,” id., a justification similar to the
 one adopted by the Board in this case. See J.A. 36 (“Peti-
 tioner had an adequate opportunity [before filing its peti-
 tion] to assess the ’758 patent and to understand that it
 disclosed support for two separate measurements, but
 failed to do so.”). In SAS, we held that, under the APA, the
 Board “may not change theories midstream” by adopting a
 different claim construction in the final written decision
 than that adopted in the institution decision “without

 issue in [the petitioner’s] favor”). In general, “we have en-
 couraged the Board to change its view of the merits after
 further development of the record [following an institution
 decision] if convinced its initial inclinations were wrong.”
 Fanduel, 966 F.3d at 1340–41 (Fed. Cir. 2020) (internal
 quotation marks, modification, and citation omitted).
     7   If the ultimate construction adopted in the final
 written decision is sufficiently similar to a construction dis-
 puted by the parties, the Board need not give the parties
 prior notice of the exact construction the Board adopts. See
 WesternGeco, 889 F.3d at 1328.
Case: 22-1532    Document: 47       Page: 13   Filed: 08/07/2023

 AXONICS, INC. v. MEDTRONIC, INC.                          13

 giving respondents reasonable notice of the change and the
 opportunity to present argument under the new theory.”
 SAS, 825 F.3d at 1351 (internal quotation marks and cita-
 tion omitted).
     Following the Supreme Court’s SAS decision—which
 reversed our SAS decision solely on the ground that the
 Board could not institute on only some of the claims chal-
 lenged in the petition—we have continued to recognize that
 a petitioner is entitled under the APA to respond to new
 claim construction arguments made by a patent owner or
 adopted by the Board sua sponte and that both parties are
 entitled to respond to a new construction adopted by the
 Board sua sponte after an institution decision. In that con-
 nection, we have continued to cite as authority our earlier
 SAS decision.
      In Ericsson, after the Supreme Court’s SAS decision,
 we again addressed a new construction proposed for the
 first time in a patent owner response. 901 F.3d at 1378. In
 its institution decision, following the parties’ lead, the
 Board construed the relevant claim terms under the
 “broadest reasonable interpretation” standard. Id. at
 1378–79. For the first time in the patent owner response,
 because the patent had expired, the patent owner proposed
 a different construction under the standard set forth in
 Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en
 banc). 8 In the final written decision, the Board adopted the

     8  Ericsson was decided before the U.S. Patent and
 Trademark Office adopted the Phillips standard for all IPR
 proceedings. See 37 C.F.R. § 42.100(b); Changes to the
 Claim Construction Standard for Interpreting Claims in
 Trial Proceedings Before the Patent Trial and Appeal
 Board, 83 Fed. Reg. 51,340 (Oct. 11, 2018). Even before
 that revision, the Phillips standard applied in IPR
Case: 22-1532    Document: 47      Page: 14    Filed: 08/07/2023

 14                           AXONICS, INC. v. MEDTRONIC, INC.

 new claim construction under the Phillips standard but re-
 fused to consider portions of petitioner’s reply containing
 arguments and evidence under the newly proposed claim
 construction, explaining “that the reply is not an oppor-
 tunity for Petitioner to identify, for the first time, new and
 different prior art elements that are alleged to satisfy the
 claim requirements.” Id. at 1379 (internal quotation marks
 and citation omitted).
      We vacated, disagreeing that the petitioner’s reply ar-
 guments were improper, in part because “the significance
 of [the arguments in the Petition] arose after the Petition
 was filed, in that the Board adopted a different construc-
 tion of the [relevant] terms after the Petition instituting
 inter partes review was granted.” Id. at 1380. We held
 that, under the APA, the petitioner “should have been
 given an opportunity to respond” to the new claim construc-
 tion in its reply. Id. We concluded that “[i]n light of [the]
 changed circumstances [regarding the correct claim con-
 struction], the Board revisited its approach to the claims in
 light of this error, and [the petitioner] likewise deserved an
 opportunity to do the same.” Id.
     Similarly, in Hamilton Beach Brands, Inc. v. f’real
 Foods LLC, relying on our earlier decision in SAS, we con-
 cluded, again, that a petitioner is entitled to respond to a
 new claim construction. 908 F.3d 1328 (Fed. Cir. 2018).
 There, as here, prior to institution, neither party had pro-
 posed an express construction of the relevant terms, and
 the Board instituted under the parties’ implicit under-
 standing of the terms. Id. at 1335. After institution the
 patent owner response proposed a new construction, which
 the Board adopted in its final written decision. Id. Citing

 proceedings concerning expired and soon-to-be-expired pa-
 tents. See Changes to the Claim Construction Standard, 85
 Fed. Reg. at 51,341.
Case: 22-1532    Document: 47       Page: 15   Filed: 08/07/2023

 AXONICS, INC. v. MEDTRONIC, INC.                          15

 our SAS decision, we reiterated the rule that, under the
 APA, the Board cannot adopt a new claim construction
 without giving the petitioner an opportunity to respond.
 Id. at 1338. But we held that those requirements had been
 met because the petitioner was able to respond in its reply
 and at oral argument to the construction proposed in the
 patent owner response. Id. at 1338–39.
     In Qualcomm Inc. v. Intel Corp., we again relied on our
 SAS decision and held that, under the APA, parties in an
 IPR must be permitted to respond to a new claim construc-
 tion adopted by the Board sua sponte after the institution
 decision. 6 F.4th 1256, 1263 (Fed. Cir. 2021). There,
 through the oral argument before the Board, the parties
 had proceeded under a shared understanding of the rele-
 vant claim term. Id. at 1261–62. In the final written deci-
 sion, without providing any notice or opportunity to
 respond, the Board adopted a new claim construction. Id.
 at 1262. The patent owner appealed. Relying on our deci-
 sion in SAS, we held that, because the Board’s construction
 in the final written decision “diverged from the agreed-
 upon” construction of the parties, the Board needed to pro-
 vide notice and an adequate opportunity to respond. Id. at
 1263. 9
     We think this case falls squarely within the rule of
 SAS, Ericsson, Hamilton Beach, and Qualcomm: that, un-
 der the APA, when the Board adopts a new claim construc-
 tion following institution, an IPR petitioner must have

     9   Compare TQ Delta, LLC v. DISH Network LLC,
 929 F.3d 1350, 1356 (Fed. Cir. 2019) (affirming where the
 Board adopted a claim construction in the final written de-
 cision after having not adopted any construction in the in-
 stitution decision, because the complaining party “had
 notice of the claim construction issue and the opportunity
 to be heard” (citing Hamilton Beach, 908 F.3d at 1339)).
Case: 22-1532    Document: 47      Page: 16    Filed: 08/07/2023

 16                           AXONICS, INC. v. MEDTRONIC, INC.

 adequate notice and an opportunity to respond under the
 new construction. In particular, the petitioner must be af-
 forded a reasonable opportunity in reply to present argu-
 ment and evidence under that new construction. 10 Here,
 Axonics was not afforded that opportunity. Although the
 Board considered Axonics’ arguments against the new
 claim construction, it refused to consider Axonics’ evidence
 and argument under that construction.
     That is not to say a petitioner may rely on new prior
 art in response to a new claim construction presented in
 the patent owner response. We have held that a petitioner
 may not in reply rely on new prior art to teach a claim lim-
 itation. See Intelligent Bio-Sys., 821 F.3d at 1369 (holding
 a reply brief and declaration exceeded the proper scope for
 a reply because they cited “a number of non-patent litera-
 ture references which were not relied upon to support un-
 patentability in the Petition”). But that is not the situation

      10  Medtronic argues on appeal that Axonics “clearly
 anticipated” the two-input claim construction and should
 have presented argument and evidence under the construc-
 tion in the petition. Appellee’s Br. 1. The Board made no
 finding that Axonics clearly anticipated the two-input con-
 struction in the petition. See SEC v. Chenery Corp., 318
 U.S. 80, 95 (1943) (“[A]n administrative order cannot be
 upheld unless the grounds upon which the agency acted in
 exercising its powers were those upon which its action can
 be sustained.”). There is, moreover, no support for a rule
 that would create challenges including line-drawing and
 unworkability problems and consistency with the regula-
 tion that governs the content of a petition, which does not
 direct a petitioner to raise, address, and apply alternative
 possible constructions, but instead requires a petitioner af-
 firmatively to state “[h]ow the challenged claim is to be con-
 strued.” 37 C.F.R. § 42.104(b)(3).
Case: 22-1532    Document: 47       Page: 17   Filed: 08/07/2023

 AXONICS, INC. v. MEDTRONIC, INC.                           17

 here: Axonics did not rely on new prior art in its reply. We
 leave for another day the question of whether, when pre-
 sented with a new claim construction, a petitioner can rely
 in its reply on new embodiments from the prior art refer-
 ences that were relied on in the petition. See Apple, 949
 F.3d at 706 (concluding, in a case where there had not been
 a changed claim construction, that petitioner’s reply argu-
 ments did not exceed the scope of a proper reply because
 those arguments did not cite new embodiments or new
 prior art). Here, Axonics, in the reply, relied on the same
 embodiments as it relied on in the petition.
      Barring argument and evidence in a reply directed to a
 new claim construction proposed by the patent owner
 would create opportunities for sandbagging by the patent
 owner in order to create an estoppel. A patent owner has
 the opportunity in a preliminary response to oppose insti-
 tution on the ground that the claim construction relied on
 by the petitioner is incorrect, and the Board may adopt the
 patent owner’s proposed claim construction and deny insti-
 tution if the petition fails to demonstrate a reasonable like-
 lihood that a claim would be unpatentable under the
 correct claim construction. See 35 U.S.C. § 314(a). The re-
 sult would be that there would be no institution and no es-
 toppel pursuant to 35 U.S.C. § 315(e). But if instead of
 raising the issue in a preliminary response, a patent owner
 sits on its strongest claim construction arguments before
 institution and then raises them in response after institu-
 tion, a patent owner could obtain a favorable final IPR de-
 cision and an estoppel without the Board’s reaching the
 merits of any invalidity arguments under the newly
 adopted claim construction. Indeed, Medtronic admitted in
 this appeal that the Board’s approach below would allow
Case: 22-1532     Document: 47      Page: 18     Filed: 08/07/2023

 18                             AXONICS, INC. v. MEDTRONIC, INC.

 for such sandbagging. 11 We are reluctant to adopt a con-
 struction of the APA and the Board’s rules that would per-
 mit such gamesmanship.
     Medtronic argues that it is unfair to permit a new ex-
 pert declaration to be submitted with a reply, because a pa-
 tent owner is not permitted to submit a supplemental
 declaration in sur-reply. See 37 C.F.R. § 42.23(b) (“A sur-
 reply . . . may not be accompanied by new evidence other
 than deposition transcripts of the cross-examination of any
 reply witnesses.”). But the Board “may waive or suspend”
 such requirements in appropriate cases. See id. § 42.5(b).
 Indeed, while the Board here recognized that declarations
 are not “typically” permitted with sur-replies, it also noted
 Medtronic had not asked for leave to submit an additional
 expert declaration in this case. J.A. 37 n.7. We are confi-
 dent that in circumstances such as these, the Board will
 allow an appropriate opportunity for a patent owner to sub-
 mit evidence with a sur-reply.
                          CONCLUSION
     We hold that where a patent owner in an IPR first pro-
 poses a claim construction in a patent owner response, a
 petitioner must be given the opportunity in its reply to ar-
 gue and present evidence of anticipation or obviousness

      11  The Court: “But isn’t there a risk here of sandbag-
 ging, that you realize there’s a good claim construction ar-
 gument, [and] you leave it out of your preliminary
 response. If you argued it in your preliminary response,
 then maybe institution would be denied and there would
 be no estoppel. But if you hold back on the argument and
 wait to make it until the response, then you get the estop-
 pel. Isn’t there a risk of that?” Medtronic’s counsel: “Cer-
 tainly, your honor, there is a risk of that . . . .” Oral Arg. at
 14:24–51.
Case: 22-1532    Document: 47       Page: 19   Filed: 08/07/2023

 AXONICS, INC. v. MEDTRONIC, INC.                          19

 under the new construction, at least where it relies on the
 same embodiments for each invalidity ground as were re-
 lied on in the petition. We vacate the Board’s decisions in
 these IPRs and remand for the Board to consider Axonics’
 arguments and evidence under the two-input claim con-
 struction and, correspondingly, to consider any request by
 Medtronic to present new evidence in support of its sur-
 reply.
                VACATED AND REMANDED
                            COSTS
 Costs to Axonics.