Holding
Petitioner, Parse Biosciences, Inc. ("Petitioner"), filed petitions for inter partes reviews ("IPR") of all claims in U.S. Patent No. 10,697,013 ("the '013 Patent") (IPR2023-00958) and U.S. Patent No. 10,240,197 ("the '197 Patent") (IPR2023-00955_owned by 10X Genomics, Inc. ("Patent Owner"). Following Patent Owner's Preliminary Response, the Patent Trial and Appeal Board ("PTAB") initially issued decisions denying both of the petitions. However, upon rehearing, the PTAB decided not to exercise its discretionary denial under 35 U.S.C. § 325(d), thus granting Petitioner's request and instituting IPR. See Paper 9 in both proceedings.
Background
For the PTAB to grant a request for rehearing, a party "must specifically identify all matters the party believes the Board misapprehended or overlooked, and the place where each matter was previously addressed in a motion, an opposition, or a reply." 37 C.F.R. § 42.71(d). Here, Petitioner argued that the PTAB misconstrued a claim limitation, leading to a finding that the asserted reference did not disclose the limitation. The PTAB agreed that its initial claim construction was erroneous, and granted the request for rehearing.
Adv. Bionics Framework
In determining whether to exercise discretionary denial under § 325(d), the PTAB applied the two-part framework under Advanced Bionics: (1) "whether 'the same or substantially the same' art or arguments were previously presented to the Office"; and if so, then (2) "whether the petition demonstrates that the Office 'erred in a manner material to the patentability of the challenged claims.'" Here, despite agreeing with Patent Owner on the first part of the framework, that "the same or substantially the same" prior art was previously presented to the Office, the PTAB found that there was a material error affecting the patentability of the challenged claims in both patents. The PTAB agreed with Petitioner that the Examiner erroneously concluded that the prior art failed to teach the dual sequence tagging approach claimed in the '197 and '013 Patents. While no one single piece of prior art alone disclosed this method, Petitioner argued that it would have been obvious to a person of ordinary skill in the art given the combined teachings of the prior art references. The PTAB agreed that there was a reasonable likelihood that Petitioner would succeed in proving that Patent Owner's claims in both patents are unpatentable on this basis. Therefore, not only did the Examiner erroneously conclude that the prior art failed to teach what was claimed in the '197 and '013 Patents, but this error was also material to patentability. For that reason, the PTAB decided not to exercise discretionary denial under § 325(d), and granted institution of IPR.
Takeaways
When the PTAB uses the two-part framework in Advanced Bionics to determine whether it should exercise discretionary denial under § 325(d), each step is considered separately. Finding that the same or substantially the same prior art was previously presented during prosecution does not preclude a party seeking IPR from arguing that the prior art should be revisited from the lens of its potential material effects on patentability. While the prior art or previous arguments presented in prosecution cannot be revisited and rehashed in an IPR, patentees should be aware that this does not stop challengers from raising arguments that material error occurred in the way that these prior art references or arguments were applied by a patent examiner during prosecution. Thus, overcoming prior art rejections during prosecution does not necessarily mean that the same prior art cannot be used as a basis for granting institution of an IPR, or eventually to even render claims unpatentable after trial.
This case also serves as a reminder that although requests for rehearing are not commonly granted, perseverance may be rewarded, and a decision changed when a party is able to meet the burden of showing that the PTAB misapprehended or overlooked a matter that is outcome determinative.
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