CAFC vacates PTAB obviousness decision in Nuvasive [IPR2013- 00506. ]. A lack of articulation.

The conclusion of Nuvasive reads:


We have considered the parties’ remaining arguments
and find them unpersuasive. For these reasons, the Final
Written Decision of the U.S. Patent and Trademark
Office’s Patent and Trial Appeal Board is
VACATED AND REMANDED



As to standards:


We review the PTAB’s factual determinations for substantial
evidence and its legal determinations de novo.
See In re Gartside, 203 F.3d 1305, 1316 (Fed. Cir. 2000).
“Substantial evidence is something less than the weight of
the evidence but more than a mere scintilla of evidence.”
In re Kotzab, 217 F.3d 1365, 1369 (Fed. Cir. 2000) (citation
omitted). It is “such relevant evidence as a reasonable
mind might accept as adequate to support a concluconclusion.”
In re Applied Materials, Inc., 692 F.3d 1289,
1294 (Fed. Cir. 2012) (



Of background law on obviousness, the CAFC observed:


A patent claim is invalid as obvious “if the differences
between the subject matter sought to be patented and the
prior art are such that the subject matter as a whole
would have been obvious at the time the invention was
made to a person having ordinary skill in the [relevant]
art [(‘PHOSITA’)] . . . .” 35 U.S.C. § 103(a) (2006).4 The
ultimate determination of obviousness is a question of
law, but that determination is based on underlying factual
findings. See Gartside, 203 F.3d at 1316. The underlying
factual findings include (1) “the scope and content of
the prior art,” (2) “differences between the prior art and
the claims at issue,” (3) “the level of ordinary skill in the
pertinent art,” and (4) the presence of secondary considerations
of nonobviousness such “as commercial success,
long felt but unsolved needs, failure of others,” and unexpected
results. Graham v. John Deere Co., 383 U.S. 1,
17–18 (1966); United States v. Adams, 383 U.S. 39, 50–52
(1966).

In assessing the prior art, the PTAB “consider[s]
whether a PHOSITA would have been motivated to
combine the prior art to achieve the claimed invention.”
In re Warsaw Orthopedic, Inc., 832 F.3d 1327, 1333 (Fed.
Cir. 2016) (internal quotation marks, brackets, and citation
omitted); see KSR Int’l Co. v. Teleflex Inc., 550 U.S.
398, 418 (2007) (“[I]t can be important to identify a reason
that would have prompted a [PHOSITA] to combine the
elements in the way the claimed new invention does.”).
Although we review this factual finding for substantial
evidence, “[t]he factual inquiry whether to combine references
must be thorough and searching,” and “[t]he need
for specificity pervades [our] authority” on the PTAB’s
findings on motivation to combine. In re Lee, 277 F.3d
1338, 1343 (Fed. Cir. 2002) (internal quotation marks and
citations omitted); see id. (stating that “[t]his precedent
has been reinforced in myriad decisions[] and cannot be
dispensed with” and listing supporting precedent).




NuVasive won because PTAB did not well articulate a motivation to combine:


NuVasive argues that, inter alia, the PTAB’s Final
Written Decision did not make adequately explained
findings as to why a PHOSITA would have been motivated
to combine the prior art references and place the
radiopaque markers on the medial plane. Appellant’s
Br. 27–28. According to NuVasive, the PTAB relied on
only one conclusory statement by Medtronic’s expert that
the modification would provide “additional information.”
Id. (emphasis omitted). We agree with NuVasive.



And, a Supreme Court case is invoked:


Two distinct yet related principles are relevant to our
review. First, the PTAB must make the necessary findings
and have an adequate “evidentiary basis for its
findings.” Lee, 277 F.3d at 1344. Second, the PTAB
“must examine the relevant data and articulate a satisfactory
explanation for its action including a rational
connection between the facts found and the choice made.”
Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins.
Co., 463 U.S. 29, 43 (1983) (internal quotation marks and
citation omitted); see Synopsys, Inc. v. Mentor Graphics
Corp., 814 F.3d 1309, 1322 (Fed. Cir. 2016) (stating that,
as an administrative agency, the PTAB “must articulate
logical and rational reasons for [its] decisions” (internal
quotation marks and citation omitted)

This explanation enables the court to exercise its duty
to review the PTAB’s decisions to assess whether those
decisions are “arbitrary, capricious, an abuse of discretion,
or . . . unsupported by substantial evidence . . . .” 5 U.S.C.
§ 706(2)(A)–(E) (2012); see Dickinson v. Zurko, 527 U.S.
150, 152 (1999) (holding that § 706 governs our reviews of
the USPTO’s findings of fact and providing the framework
for this review). We “cannot exercise [our] duty of review
unless [we] are advised of the considerations underlying
the action under review.” SEC v. Chenery Corp., 318 U.S.
80, 94 (1943). Indeed, “the orderly functioning of the
process of review requires that the grounds upon which
the [PTAB] acted be clearly disclosed and adequately
sustained.” Id. Although we do not require perfect explanations,
we may affirm the PTAB’s findings “if we may
reasonably discern that it followed a proper path, even if
that path is less than perfectly clear.” Ariosa Diagnostics
v. Verinata Health, Inc., 805 F.3d 1359, 1365 (Fed. Cir.
2015) (citation omitted).

(...)
The PTAB must provide “a reasoned basis for the
agency’s action,” and “we will uphold a decision of less
than ideal clarity if the agency’s path may reasonably be
discerned.” Bowman Transp., Inc. v. Ark.-Best Freight
Sys., Inc., 419 U.S. 281, 285, 286 (1974). The PTAB’s own
explanation must suffice for us to see that the agency has
done its job and must be capable of being “reasonably
. . . discerned” from a relatively concise PTAB discussion.
In re Huston, 308 F.3d 1267, 1281 (Fed. Cir. 2002).
We have, however, identified some insufficient articulations
of motivation to combine. First, “conclusory
statements” alone are insufficient and, instead, the finding
must be supported by a “reasoned explanation.” Lee,
277 F.3d at 1342, 1345. Second, it is not adequate to
summarize and reject arguments without explaining why
the PTAB accepts the prevailing argument. See
Cutsforth, Inc. v. MotivePower, Inc., 636 F. App’x 575, 578
(Fed. Cir. 2016)




The CAFC addresses "common sense":


Third, although reliance
on common sense may be appropriate in some circumstances,
see KSR, 550 U.S. at 421 (“Rigid preventative
rules that deny factfinders recourse to common
sense . . . are neither necessary under our case law nor
consistent with it.”), the PTAB cannot rely solely on
common knowledge or common sense to support its findings,
see Arendi S.A.R.L. v. Apple Inc., 832 F.3d 1355,
1362 (Fed. Cir. 2016) (“[R]eferences to ‘common
sense’ . . . cannot be used as a wholesale substitute for
reasoned analysis and evidentiary support . . . .”); see also
In re Rouffet, 149 F.3d 1350, 1357 (Fed. Cir. 1998) (explaining
that the Board of Patent Appeals and Interferences
cannot simply invoke “the high level of skill in the
art” as proof positive of its findings).



Of adopting the arguments of a party:


The PTAB avers that it “effectively” adopted Medtronic’s
arguments, Oral Argument at 14:52–15:11,
http://oralarguments.cafc.uscourts.gov/default.aspx?fl=20
15-1670.mp3, but the PTAB neither expressly did so nor
provided reasoned explanations for crediting the arguments.
Medtronic’s arguments amount to nothing more
than conclusory statements that a PHOSITA would have
been motivated to combine the prior art references to
obtain additional information. In its summary of Medtronic’s
arguments, the PTAB never articulated why the
additional information would benefit a PHOSITA when
implanting a posterior lumbar interbody fusion implant,
such as the implants disclosed by the SVS-PR brochure
and the Telamon references. It also failed to explain the
type of additional information a PHOSITA would obtain
or how the PHOSITA would use that informatio


Of a waiver issue:


NuVasive abandoned its
challenge to the public accessibility determination even
though the PTAB had warned NuVasive that this would
result in waiver. J.A. 201–02 (where the PTAB indicated
in a scheduling order that “[t]he patent owner is cautioned
that any arguments for patentability not raised
and fully briefed in the response will be deemed waived”).




**Separately, of the US Supreme Court on "abuse of discretion"


the Supreme Court has noted that the discretion is not unbridled;
a cogent explanation for the use of discretion is required and
there must be a rational connection between the facts found and the choice made.

"There are no findings and no analysis here to justify the choice made,
no indication of the basis on which the [agency] exercised its expert discretion.
(…) Expert discretion is the lifeblood of the administrative process, but
'unless we make the requirements for administrative action strict and demanding,
expertise, the strength of modern government, can become a monster which
rules with no practical limits on its discretion.' New York v. United States,
342 U.S. 882, 884 (dissenting opinion)" (footnote omitted). (…)
We have frequently reiterated that an agency must cogently explain why
it has exercised its discretion in a given manner, [p. 49]
Atchison, T. & S. F. R. Co. v. Wichita Bd. of Trade, 412 U.S., at 806;
FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 249 (1972);
NLRB v. Metropolitan Life Ins. Co., 380 U.S. 438, 443 (1965);
and we reaffirm this principle again today.
from MOTOR VEHICLE MANUFACTURERS v. STATE FARM MUTUAL AUTOMOBILE INSURANCE, 463 U.S. 29, 48-49 (1983).