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Last week, the U.S. Court of Appeals for the Federal Circuit issued a divided opinion in <a href="http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/19-1393.OPINION.7-29-2020_1627172.pdf" target="_blank" rel="noopener"><em>FanDuel, Inc. v. Interactive Games LLC</em></a>, No. 19-1393 (July 29, 2020), holding the Patent Trial and Appeal Board complied with the Administrative Procedure Act (“APA”) when determining FanDuel failed to prove the obviousness of Claim 6 of U.S. Patent No. 8,771,058.

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FanDuel filed an IPR petition asserting obviousness of several claims of the ’058 Patent, which concerns wireless gambling technology. Interactive Games opposed, but an IPR was instituted. The Board ultimately found Claims 1, 7-9 and 19 unpatentable, but it held FanDuel failed to prove Claim 6 was obvious. The Board determined FanDuel had not shown the art rendered a limitation concerning “look-up tables” obvious.

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FanDuel appealed. It asserted the look-up tables argument was not discussed by Patent Owner or the Board prior to the Board’s final decision, and, thus, the Board violated FanDuel’s procedural rights by not providing notice and a chance to respond to the argument. The Federal Circuit disagreed. Initially, the Court rejected FanDuel’s position that the Board “changed[d] theories” by relying on an argument in the Final Written Decision that was not discussed in the Institution Decision. The Court held the Board did not endorse FanDuel’s argument on look-up tables in the Institution Decision. Rather, the Board did not address that issue.

Further, the Court held that, even if the Board did change theories, it was entitled to do so for two reasons. “First, the different standards of proof required to institute versus to invalidate permit the Board to adopt different views of the sufficiency of a petitioner’s asserted obviousness arguments in its initial versus final decisions without first alerting the parties to that possibility.” Second, “the burden of proving invalidity in an IPR remains on the petitioner throughout the proceeding.” This is true regardless of whether the Patent Owner or the Board raise any particular argument. The Court thus concluded the Board did not violate the APA, and affirmed the obviousness determination on Claim 6.

Judge Dyk concurred that the Board did not violate APA. He dissented, however, on the ultimate conclusion as to the obviousness of Claim 6 and would have reversed the Board’s determination.

CAFC Holds Board Did Not Violate APA in IPR Ruling

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