But this case isn’t so much about about the law of obviousness but the adequacy of the appellate record under the Administrative Procedure Act (APA).

The dispute in this IPR related to certain spinal fusion technology in which radiopaque markers were located along a specified area of fusion. Specifically, the patent challenger stated that a person of skill in the art “would have considered it to be common sense” to place radiopaque markers along the medial plane “to provide additional information regarding the orientation or location of an implant.”  This reasoning was affirmed by the Board. Patent Owner NuVasive appealed the PTAB’s obviousness determinations, arguing, inter alia: “whether the PTAB adequately set forth findings and explanations to support the conclusions that a combination of these prior art references would have rendered [the challenged claim] obvious.”

In its decision (here), the Court found that the PTAB failed to articulate a motivation to combine the prior art references.  In particular, in reaching the conclusion that it would have been obvious to combine, “the PTAB failed to explain the reason why a PHOSITA would have been motivated to modify [the prior art references]” to achieve that which the challenged patent teaches.  The PTAB relied on only one conclusory statement by the petitioner’s expert that the modification would provide “additional information.”  The Court explained “the PTAB never articulated why the additional information would benefit a PHOSITA” when implementing the methods taught by the prior art reference.  Furthermore, the Court pointed out that the PTAB “also failed to explain the type of additional information a PHOSITA would obtain or how the PHOSITA would use that information.”

Yet, the Court was not advocating a rigid and mandatory obviousness formula, but rather that the Board explain its rationale as opposed to conclusory statements; summaries of arguments simply followed by their rejection “without an explanation for why the PTAB accepts the prevailing argument[;]” and reliance “solely on common knowledge or common sense to support its findings.”

Citing the APA statutes and the complimentary Chenery Doctrine, the Court stressed that, in its Final Written Decisions, “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 [obviousness determination] made.’” Specifically, “[t]he 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.” (emphasis added)  To emphasize this point, the CAFC went through its APA-based rationale as follows:

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).