Federal Circuit reverses PTAB under the APA, remands so the agency can “do its job”

Alacritech v Intel

Background

Alacritech is the applicant of US patent number 8,131,880 (the ‘880 patent”) directed to apparatus for transferring packets to a host computer system.  In particular, the claims of the ‘880 patent recite an apparatus that offloads certain network related processing tasks from a host computer’s CPU to an “intelligent network interface card” (INIC).

Appellees Intel Corp at al petitioned for inter partes review of certain claims of the ‘880 patent, asserting that the challenged claims would have been obvious.  The parties agreed that the two references cited by Intel disclosed the reassembly of data portions, but disagreed over where this reassembly took place.  The Board agreed with Intel, and held all claims of the ‘880 patent invalid as obvious.

Appeal

On appeal, Alacritech argued that the board’s analysis was inadequate to support its findings in violation of the Administrative Procedures Act (“APA”).

The Federal Circuit first set the bar low, stating “we do not require perfect explanations and we will uphold a decision of less than ideal clarity if the agency’s path may be reasonably discerned.”  The Court stated, all that is required to meet the requirements of the APA is that the Board’s explanation allow the conclusion that they have “done their job.”  The Federal Circuit then held that the Board had not cleared the bar.

In their decision the court pointed out that the board had failed to acknowledge the parties dispute regarding the location of reassembly.  The Board had thus also necessarily failed to explain how the prior art taught or suggested reassembly in the network interface.  The court then stated:

As such we cannot reasonably discern whether the Board followed a proper path in determining that the asserted prior art teaches or suggests the reassembly limitations, and by extension, that the subject matter of claims 41 through 43 would have been obvious.

Citation of Appellee’s arguments is not sufficient

Appellees Intel et al. argued that the Board had adopted Intel’s interpretation of the reassembly teachings by citing Appellee’s petition in their final written decision.  The Court was not persuaded:

Although the board cited to the relevant portions of Intel’s petition as it recounted certain arguments made by Intel, the Board did not endorse, adopt or otherwise suggest that it was persuaded by those arguments, much less explain why it found those arguments persuasive.

Citing Pers. Web Techs., LLC v. Apple, Inc., 848 F.3d 987, 993 (Fed. Cir. 2017) (rejecting the Board’s analysis as inadequate where it did not “cite, let alone explain or analyze or adopt” the relevant portion of the petition).

Neither is rejection of Appellant’s arguments

The Federal Circuit also found Intel’s arguments that the Board had rejected Alacritechs unpersuasive:

But the Board’s rejection of certain arguments made by Alacritech does not necessarily support the Board’s finding that the asserted prior art teaches or suggests reassembly in the network interface.

Citing In re Nuvasive, Inc., 842 F.3d 1376 at 1383 (Fed. Cir. 2016) (“[I]t is not adequate to summarize and reject arguments without explaining why the [Board] accepts the prevailing argument.”)

The Federal Circuit concluded:

And although our review under the APA is deferential, that “does not relieve the agency of its obligation to develop an evidentiary basis for its findings.” … Indeed, the more recent precedents of NuVasive and its progeny … plainly establish that the Board is obligated to “articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made.”