Background
Medtronic, Inc. holds U.S. Patents Nos. 8,457,758 and 8,738,148 directed to systems for transcutaneous (through-the-skin) charging of implanted medical devices. Axonics, Inc. — a competing medical device company that makes sacral nerve stimulation systems — petitioned for inter partes review (IPR) of both patents. In its petition and accompanying claim charts, Axonics proceeded under a particular interpretation of how certain claim terms should be read: specifically, that certain value and current measurement limitations required a single input (the “one-input” construction).
After PTAB instituted the IPR proceedings, Medtronic filed its Patent Owner Response and — for the first time in the proceedings — advanced a different claim construction. Medtronic argued that the disputed limitations required two separate inputs (the “two-input” construction). Faced with this new construction, Axonics attempted to respond in its reply brief with new arguments and evidence showing that the prior art anticipated or rendered obvious the claims even under Medtronic’s newly proposed two-input construction. PTAB refused to consider Axonics’ reply arguments and evidence under the two-input construction, viewing them as impermissibly new arguments that a petitioner cannot raise for the first time in a reply. PTAB then upheld the patents based on the two-input construction. Axonics appealed.
The Court’s Holding
The Federal Circuit vacated both PTAB decisions and remanded. The court held that PTAB erred in refusing to consider Axonics’ reply arguments and evidence under the two-input construction that Medtronic had introduced post-institution. The court’s reasoning was grounded in basic fairness and the structure of IPR proceedings: if a patent owner is permitted to advance a new claim construction in its response — after the petitioner has already filed its petition and after institution has been granted — then the petitioner must be given a meaningful opportunity to respond to that new construction with its own arguments and evidence.
The court distinguished between a petitioner impermissibly raising a brand new invalidity theory for the first time in a reply (which remains prohibited) and a petitioner responding to a new claim construction introduced by the patent owner after institution (which is appropriate and must be permitted). The former is an unfair attempt to expand the case beyond what was properly before the Board; the latter is a legitimate response to a new issue the patent owner introduced into the proceeding. PTAB’s failure to draw this distinction resulted in a procedurally unfair outcome that denied Axonics its right to be heard on Medtronic’s own proposed construction. On remand, the court directed PTAB to consider both Axonics’ reply arguments under the two-input construction and any responsive evidence Medtronic might seek to introduce in a sur-reply.
Key Takeaways
- When a patent owner introduces a new claim construction for the first time in its post-institution Patent Owner Response, the petitioner may present new arguments and evidence in its reply brief directed to that newly proposed construction — PTAB cannot categorically exclude such reply evidence as impermissibly new.
- There is a key distinction between a petitioner raising a new invalidity theory in its reply (not allowed) and a petitioner responding to a new claim construction the patent owner introduced (allowed and required).
- Patent owners who adopt new claim constructions post-institution as a strategic move must accept that the petitioner will have a meaningful opportunity to counter-argue under those constructions with evidence.
- PTAB must afford petitioners adequate notice and opportunity to be heard whenever new constructions or theories are introduced into an IPR proceeding after institution.
Why It Matters
This decision addresses a recurring strategic tension in IPR proceedings: patent owners sometimes wait until their post-institution response to advance claim constructions that were not clearly signaled in the proceeding’s earlier stages. Doing so can put petitioners in a bind — the petitioner’s petition was directed at a different construction, and the rules generally limit what can be introduced for the first time in a reply. PTAB had sometimes used those reply-limitation rules to exclude petitioner evidence responsive to the new construction, effectively allowing the patent owner to benefit from sandbagging.
The Federal Circuit’s ruling corrects this imbalance. By holding that petitioners have a right to respond with new evidence to new constructions introduced post-institution, the court ensures that PTAB proceedings remain fair and that patent owners cannot strategically deploy new constructions as a shield against petitioner counter-evidence. For IPR practitioners, the decision means that petitioners facing a new claim construction in the Patent Owner Response should aggressively present responsive arguments and evidence in their reply — and can expect PTAB to consider that evidence on remand if the Board initially refuses. Medical device companies, pharmaceutical firms, and technology businesses that regularly use IPR to challenge competitor patents will benefit from clearer rules ensuring they can fully contest whatever constructions the patent owner advances.