Case: 22-1532 Document: 47 Page: 1 Filed: 08/07/2023
United States Court of Appeals
for the Federal Circuit
______________________
AXONICS, INC.,
Appellant
v.
MEDTRONIC, INC.,
Appellee
______________________
2022-1532, 2022-1533
______________________
Appeals from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in Nos. IPR2020-
00680, IPR2020-00712.
______________________
Decided: August 7, 2023
______________________
AARON MATTHEW NATHAN, Tensegrity Law Group LLP,
McLean, VA, argued for appellant. Also represented by
AZRA HADZIMEHMEDOVIC, SAMANTHA A. JAMESON, STEPHEN
SHAHIDA; WILLIAM P. NELSON, MATTHEW D. POWERS, Red-
wood Shores, CA.
NAVEEN MODI, Paul Hastings LLP, Washington, DC,
argued for appellee. Also represented by QUADEER AHMED,
CHETAN BANSAL, STEPHEN BLAKE KINNAIRD, ALEXA LOW-
MAN.
______________________
Case: 22-1532 Document: 47 Page: 2 Filed: 08/07/2023
2 AXONICS, INC. v. MEDTRONIC, INC.
Before LOURIE, DYK, and TARANTO, Circuit Judges.
DYK, Circuit Judge.
Appellant Axonics, Inc. appeals two inter partes review
(“IPR”) determinations. The Patent Trial and Appeal
Board held, in relevant part, that Axonics had failed to
show that claims 1, 5, and 9 of U.S. Patent No. 8,457,758
(“’758 patent”) and claims 3–6, 9–12, and 15–18 of
U.S. Patent No. 8,738,148 (“’148 patent”), in patents
owned by Medtronic, Inc., were unpatentable as antici-
pated or obvious. In each final written decision, the Board
adopted a claim construction first presented in the patent
owner’s response after the institution decision and declined
to consider Axonics’ reply arguments and evidence under
the new claim construction. We hold that the Board’s re-
fusal to consider the new arguments and evidence was er-
roneous, and we vacate and remand for the Board to
consider the merits of Axonics’ responsive arguments and
evidence under the new claim construction.
BACKGROUND
I
The ’758 and ’148 patents, which share a specification,
relate to the transcutaneous (i.e., through the skin) charg-
ing of implanted medical devices. This charging occurs by
inductive coupling, whereby energy is transferred between
a primary coil in the external charger and a secondary coil
in the implanted device when the two coils are placed in
proximity to each other. The patents seek to improve
charging efficiency by automatically varying the power out-
put of the external charger based on various measured pa-
rameters of the current passing through the implanted
device. For example, in one embodiment, the charger
would decrease its charging power “if the voltage across re-
chargeable power source 24” in the implanted device is over
4.05 volts, J.A. 242 (’758 patent, col. 21, ll. 56–57)
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AXONICS, INC. v. MEDTRONIC, INC. 3
(emphasis omitted); the charger would also decrease its
charging power if the voltage is less than 4.05 volts but “the
charging current through rechargeable power source 24 is
over a current rate” of 50 milliamperes, J.A. 242 (’758 pa-
tent, col. 21, ll. 63–64) (emphasis omitted).
The patent claims at issue here require the power of
the external charger to be automatically varied based on
(in the language of claim 1 of the ’758 patent) a “value as-
sociated with [the] current passing through [the] internal
power source” and a “measured current associated with
[the] current passing through [the] internal power source.”
J.A. 242 (’758 patent, col. 22, ll. 41–46). As discussed later,
the parties have disagreed as to the meaning of these two
clauses and whether a single disclosure, e.g., a measured
charging current over 50 milliamperes, could satisfy both
limitations. The parties agree that claim 1 of the ’758 pa-
tent is representative:
1. A system for transcutaneous energy transfer,
comprising:
an implantable medical device having compo-
nentry for providing a therapeutic output, said
implantable medical device having an internal
power source and a secondary coil operatively
coupled to said internal power source, said im-
plantable medical device adapted to be im-
planted in a patient; and
an external power source having a primary coil,
said external power source providing energy to
said implantable medical device when said pri-
mary coil of said external power source is
placed in proximity of said secondary coil of
said implantable medical device and thereby
generating a current, having a value, passing
through said internal power source:
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4 AXONICS, INC. v. MEDTRONIC, INC.
wherein said external power source automatically
varies its power output based on a value asso-
ciated with said current passing through said
internal power source;
wherein said external power source automatically
varies its power output based on a measured
current associated with said current passing
through said internal power source.
J.A. 242 (’758 patent, col. 22, ll. 25–46) (emphasis added).
We refer to the two “wherein” limitations as the “value”
limitation and the “measured current” limitation. 1
II
Axonics filed two IPR petitions challenging claims of
the ’758 and ’148 patents as anticipated by three prior art
references: Schulman (U.S. Patent No. 3,942,535),
Fischell, 2 and Baumann (U.S. Patent No. 6,227,204).
Given the parties’ agreement that claim 1 of the
1 Each challenged claim in this appeal includes (or
depends from an independent claim that includes) two
“wherein” clauses similar to those present in claim 1 of the
’758 patent, requiring the power of the external power
source to be automatically varied (1) based on a “value” as-
sociated with the current passing through the internal
power source, and (2) based on a specific kind of value, e.g.,
a “measured current,” J.A. 242–44 (’758 patent, claims 1,
5, & 9), a “signal,” J.A. 272–74 (’148 patent, claims 3, 9, &
15), or a “measured voltage,” J.A. 272–74 (’148 patent,
claims 6, 12, & 18), associated with or proportional to the
current.
2 R.E. Fischell et al., A Long-Lived, Reliable,
Rechargeable Cardiac Pacemaker, in Advances in Pace-
maker Technology 357–82 (M. Schaldach et al. eds. 1975).
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AXONICS, INC. v. MEDTRONIC, INC. 5
’758 patent is representative, we focus on the ’758 IPR and
the treatment of claim 1 in that proceeding. 3
In its petition, Axonics did not propose an express con-
struction of any claim term. But in its claim charts, the
petition adopted a construction of the two “wherein”
clauses, stating that “[i]t is . . . clear that the second
wherein clause simply narrows the ‘value’ of the first
3 The ’758 petition challenged claims 1, 5, and 9 (the
only claims of the ’758 patent that Axonics still challenges
on appeal) as independently anticipated by Schulman,
Fischell, and Baumann. The petition had originally chal-
lenged all of the claims of the ’758 patent (claims 1–12), but
following the institution decision, Medtronic disclaimed
claims 3, 7, and 11. The petition had also challenged claims
2, 4, 6, 8, 10, and 12 as anticipated by Baumann or obvious
over a combination of Baumann and either Schulman or
Fischell.
The ’148 petition initially challenged all of the claims
of the ’148 patent (claims 1–18), but, following the institu-
tion decision, Medtronic disclaimed claims 1–2, 7–8, and
13–14. Axonics continues to challenge on appeal all of the
remaining claims on the grounds asserted in the ’148 peti-
tion. The petition, as relevant here, asserted anticipation
grounds based on Schulman (claims 3–6, 9–12, and 15–18)
and Fischell (claims 3–4, 9–10, and 15–16), but not
Baumann, and also challenged certain claims (5–6, 11–12,
and 17–18) as obvious over a combination of Fischell and
another reference, U.S. Patent No. 3,888,260 (“Fischell
’260”). Axonics continues to assert obviousness based on
Fischell and Fischell ’260 for the ’148 patent. As to the ob-
viousness ground, the same question as in the anticipation
grounds is central—whether the prior art reference (here,
Fischell) discloses the two “wherein” limitations.
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6 AXONICS, INC. v. MEDTRONIC, INC.
wherein clause to ‘measured current,’ and does not require
a separate measurement.” J.A. 301 (comparing the claim
with Schulman); J.A. 317–18 (same with respect to
Fischell); see also J.A. 338 (same with respect to
Baumann). Axonics thus adopted a “one-input” claim con-
struction under which both “wherein” limitations could be
satisfied if the external power source automatically varied
its power output using a single input based on the current
in the implanted device. Under the implicit one-input
claim construction, Axonics argued that Schulman,
Fischell, and Baumann disclosed the two “wherein” limita-
tions because each prior art reference disclosed varying the
power output of an external charger based on some param-
eter of the current in the implanted device.
Medtronic filed a preliminary response to the petition
arguing that Axonics had failed to show that Schulman,
Fischell, and Baumann disclosed an input anticipating the
“wherein” limitations under the one-input construction. In
addressing Axonics invalidity arguments, Medtronic
agreed that “the Board need not construe any terms be-
cause . . . construction is unnecessary to resolve any under-
lying controversy.” J.A. 509.
Following the parties’ lead, the Board, in its institution
decision, agreed that “no term requires express construc-
tion.” J.A. 609. Indeed, the Board explicitly noted that
“Patent Owner does not yet dispute Petitioner’s contention
that the measured current limitation only narrows the
[value] limitation.” J.A. 621. On the merits of Axonics’ in-
validity arguments under the one-input construction, the
Board found Axonics had shown a reasonable likelihood of
prevailing and granted institution.
After the Board’s institution decision, Medtronic, in its
patent owner response, for the first time advanced a claim
construction that each of the two “wherein” clauses in the
challenged independent claims required a separate input
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AXONICS, INC. v. MEDTRONIC, INC. 7
(what we will refer to as the “two-input” construction). Un-
der the two-input construction, a “measured current” that
satisfied the second “wherein” clause could not also qualify
as a “value” for purposes of the first “wherein” clause. In
other words, the first “wherein” clause required a second
“value,” other than the value of the “measured current” of
the second “wherein” clause. Arguing almost exclusively
under the two-input construction, Medtronic contended
that the petition had not identified two separate inputs in
any of the prior art references. In some respects, Medtronic
went further and argued that Axonics could not have made
such a showing, because the prior art references in fact did
not teach two separate inputs. 4 Unlike the preliminary re-
sponse, the final response largely abandoned the argument
that the petition had failed to show the prior art references
satisfied the one-input construction.
In Axonics’ reply, it continued to defend the one-input
construction. But Axonics also argued, under Medtronic’s
new two-input construction, that each of Schulman,
Fischell, and Baumann disclosed two separate inputs that
would satisfy the two “wherein” limitations. In support,
Axonics submitted a supplemental expert declaration.
Both the reply and the supplemental expert declaration
cited additional disclosures in the prior art references per-
taining to the same embodiments relied on in the petition.
Medtronic filed a sur-reply continuing to argue the
prior art references did not disclose two separate inputs
and also arguing it would be prejudicial for the Board to
4 For example, Medtronic argued that “Schulman
teaches that the magnetic output signal is used as the sole
input used to regulate the external power source.”
J.A. 713; see also J.A. 715 (“Indeed, Fischell teaches that it
is this frequency modulated signal that is used as the sole
input to regulate the external power source.”).
Case: 22-1532 Document: 47 Page: 8 Filed: 08/07/2023
8 AXONICS, INC. v. MEDTRONIC, INC.
consider Axonics’ new reply arguments without providing
Medtronic an opportunity to submit its own supplemental
expert declaration. Medtronic did not seek leave to submit
a supplemental expert declaration in support of its sur-re-
ply.
III
In the final written decision, the Board adopted the
two-input construction, concluding that the one-input con-
struction would have rendered the first “wherein” limita-
tion superfluous. The Board then refused to consider
Axonics’ anticipation arguments and evidence under the
two-input construction. 5 The Board found that Axonics
had not identified anywhere in the petition that the two-
input anticipation arguments had originally been made
and, for that reason, considered them to be improper reply
arguments. The Board explained that, before filing the pe-
tition, “Petitioner had an adequate opportunity to assess
the ’758 patent and to understand that it disclosed support
for two separate measurements, but failed to do so.”
J.A. 36. Although the Board agreed that “Petitioner may
respond to arguments raised in the Patent Owner Re-
sponse in its Reply,” the Board concluded that a reply “may
not offer an entirely new rationale based on a new combi-
nation of elements in the asserted references to show un-
patentability based on what amounts to a new ground not
set forth in the Petition.” J.A. 36.
Axonics appeals. We have jurisdiction under 35 U.S.C.
§ 141(c) and 28 U.S.C. § 1295(a)(4)(A).
5 In the ’148 IPR, the Board declined to consider
Axonics obviousness arguments on the same grounds.
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AXONICS, INC. v. MEDTRONIC, INC. 9
DISCUSSION
On appeal, Axonics does not argue the Board erred in
adopting the two-input claim construction, only that the
Board erred in refusing to consider Axonics’ reply argu-
ments and evidence under the two-input construction.
We review a determination by the Board that, under
the Board’s own regulations, a party exceeded the scope of
a proper reply for abuse of discretion. Apple Inc. v. Andrea
Electronics Corp., 949 F.3d 697, 705 (Fed. Cir. 2020). “An
abuse of discretion is found if the decision: (1) is clearly un-
reasonable, arbitrary, or fanciful; (2) is based on an errone-
ous conclusion of law; (3) rests on clearly erroneous fact
finding; or (4) involves a record that contains no evidence
on which the Board could rationally base its decision.”
Ericsson Inc. v. Intellectual Ventures I LLC, 901 F.3d 1374,
1379 (Fed. Cir. 2018) (citation omitted). We review the
Board’s compliance with the procedural requirements of
the Administrative Procedure Act (“APA”) de novo. Sirona
Dental Sys. GmbH v. Institut Staumann AG, 892 F.3d
1349, 1352 (Fed. Cir. 2018); 5 U.S.C. § 706(2)(D) (“The re-
viewing court shall . . . hold unlawful and set aside agency
action, findings, and conclusions found to be . . . without
observance of procedure required by law.”).
An IPR is an expedited administrative procedure,
driven by the invalidity theories presented in a petition. As
the Supreme Court has explained, “the petitioner’s petition
. . . is supposed to guide the life of the litigation [in an IPR
proceeding].” SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348, 1356
(2018). By creating the IPR procedure, “Congress chose to
structure a process in which it’s the petitioner . . . who gets
to define the contours of the proceeding.” Id. at 1355. An
IPR proceeds “in accordance with or in conformance to the
petition,” id. at 1356 (internal quotation marks, modifica-
tion, and citation omitted), and “the petitioner’s
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10 AXONICS, INC. v. MEDTRONIC, INC.
contentions . . . define the scope of the litigation all the way
from institution through to conclusion,” id. at 1357.
Under the statute, a petition is required to identify “in
writing and with particularity . . . the grounds on which the
challenge to each claim is based, and the evidence that sup-
ports the grounds for the challenge to each claim.”
35 U.S.C. § 312(a)(3); see also Intelligent Bio-Sys., Inc. v.
Illumina Cambridge Ltd., 821 F.3d 1359, 1369 (Fed. Cir.
2016). According to patent office guidance, a petitioner
“may not submit new evidence or argument in reply that it
could have presented earlier, e.g. to make out a prima facie
case of unpatentability.” U.S. Patent Trial and Appeal
Board, Consolidated Trial Practice Guide 73 (Nov. 2019).
However, under the Board’s rules and consistent with
the Supreme Court’s decision in SAS, a petitioner is enti-
tled to respond to new arguments made in a patent owner
response. The rules provide that the petitioner may “re-
spond to arguments raised in the corresponding opposition,
patent owner preliminary response, or patent owner re-
sponse.” 37 C.F.R. § 42.23(b). “As we have regularly held,
the petitioner in an inter partes review proceeding may in-
troduce new evidence after the petition stage if the evi-
dence is a legitimate reply to evidence introduced by the
patent owner.” Apple, 949 F.3d at 706–07 (internal quota-
tion marks and citation omitted).
The Board’s rules do not address the specific question
presented here: whether, where a patent owner offers a
new claim construction for the first time in its response af-
ter the institution decision, a petitioner may introduce new
arguments and evidence in reply under the newly proposed
claim construction. There is no rule, for example, requiring
a petition to describe all possible or reasonable claim con-
structions and to present invalidity theories under those
constructions.
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AXONICS, INC. v. MEDTRONIC, INC. 11
In a formal adjudication under the APA, such as an IPR
proceeding, the Board must inform the parties of “the mat-
ters of fact and law asserted,” 5 U.S.C. § 554(b)(3), and
“give all interested parties opportunity for . . . the submis-
sion and consideration of facts [and] arguments,” id.
§ 554(c). The Board must also permit parties “to submit
rebuttal evidence, and to conduct such cross-examination
as may be required for a full and true disclosure of the
facts.” Id. § 556(d); see Fanduel, Inc. v. Interactive Games
LLC, 966 F.3d 1334, 1339 (Fed. Cir. 2020). Thus, in an IPR
proceeding, “the Board must base its decision on argu-
ments that were advanced by a party, and to which the op-
posing party was given a chance to respond.” Rovalma,
S.A. v. Bohler-Edelstahl GmbH & Co. KG, 856 F.3d 1019,
1027 (Fed. Cir. 2017) (citation omitted).
Despite the Supreme Court’s admonition in SAS that
the petition “is supposed to guide the life of the litigation,”
138 S. Ct. at 1356, we have specifically held that, under the
APA, it is permissible for the Board to adopt a new con-
struction, proposed either by the patent owner or by the
Board itself, in a final written decision. 6 But before the
6 See WesternGeco LLC v. ION Geophysical Corp.,
889 F.3d 1308, 1328 (Fed. Cir. 2018) (“[T]he Board was per-
mitted to issue a new construction in the final written de-
cision given that claim construction was a disputed issue
during the proceedings . . . [and] is not bound to adopt ei-
ther party’s preferred articulated construction of a dis-
puted claim term.”); Praxair Distribution, Inc. v.
Mallinckrodt Hospital Prods. IP Ltd., 890 F.3d 1024, 1034
(Fed. Cir. 2018) (affirming the Board’s decision to adopt a
claim construction for the first time in the final written de-
cision where “the parties litigated the meaning and rele-
vance of the [disputed] term . . . and the Board resolved the
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12 AXONICS, INC. v. MEDTRONIC, INC.
Board decides a case under a construction adopted after the
institution decision, it must give a petitioner an oppor-
tunity to respond to the new construction, whether that
construction was first proposed by the patent owner or the
Board. 7
In this court’s decision in SAS, both parties had agreed
to the claim construction adopted by the Board in the insti-
tution decision, but the Board, without notice, adopted a
different construction in the final written decision. SAS
Inst., Inc. v. ComplementSoft, LLC, 825 F.3d 1341, 1351
(Fed. Cir. 2016), rev’d on other grounds sub nom. SAS Inst.,
Inc. v. Iancu, 138 S. Ct. 1348. We rejected the Board’s rea-
soning that its approach was permissible “because [the pe-
titioner] could have made construction arguments for the
term in its IPR petition,” id., a justification similar to the
one adopted by the Board in this case. See J.A. 36 (“Peti-
tioner had an adequate opportunity [before filing its peti-
tion] to assess the ’758 patent and to understand that it
disclosed support for two separate measurements, but
failed to do so.”). In SAS, we held that, under the APA, the
Board “may not change theories midstream” by adopting a
different claim construction in the final written decision
than that adopted in the institution decision “without
issue in [the petitioner’s] favor”). In general, “we have en-
couraged the Board to change its view of the merits after
further development of the record [following an institution
decision] if convinced its initial inclinations were wrong.”
Fanduel, 966 F.3d at 1340–41 (Fed. Cir. 2020) (internal
quotation marks, modification, and citation omitted).
7 If the ultimate construction adopted in the final
written decision is sufficiently similar to a construction dis-
puted by the parties, the Board need not give the parties
prior notice of the exact construction the Board adopts. See
WesternGeco, 889 F.3d at 1328.
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AXONICS, INC. v. MEDTRONIC, INC. 13
giving respondents reasonable notice of the change and the
opportunity to present argument under the new theory.”
SAS, 825 F.3d at 1351 (internal quotation marks and cita-
tion omitted).
Following the Supreme Court’s SAS decision—which
reversed our SAS decision solely on the ground that the
Board could not institute on only some of the claims chal-
lenged in the petition—we have continued to recognize that
a petitioner is entitled under the APA to respond to new
claim construction arguments made by a patent owner or
adopted by the Board sua sponte and that both parties are
entitled to respond to a new construction adopted by the
Board sua sponte after an institution decision. In that con-
nection, we have continued to cite as authority our earlier
SAS decision.
In Ericsson, after the Supreme Court’s SAS decision,
we again addressed a new construction proposed for the
first time in a patent owner response. 901 F.3d at 1378. In
its institution decision, following the parties’ lead, the
Board construed the relevant claim terms under the
“broadest reasonable interpretation” standard. Id. at
1378–79. For the first time in the patent owner response,
because the patent had expired, the patent owner proposed
a different construction under the standard set forth in
Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en
banc). 8 In the final written decision, the Board adopted the
8 Ericsson was decided before the U.S. Patent and
Trademark Office adopted the Phillips standard for all IPR
proceedings. See 37 C.F.R. § 42.100(b); Changes to the
Claim Construction Standard for Interpreting Claims in
Trial Proceedings Before the Patent Trial and Appeal
Board, 83 Fed. Reg. 51,340 (Oct. 11, 2018). Even before
that revision, the Phillips standard applied in IPR
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14 AXONICS, INC. v. MEDTRONIC, INC.
new claim construction under the Phillips standard but re-
fused to consider portions of petitioner’s reply containing
arguments and evidence under the newly proposed claim
construction, explaining “that the reply is not an oppor-
tunity for Petitioner to identify, for the first time, new and
different prior art elements that are alleged to satisfy the
claim requirements.” Id. at 1379 (internal quotation marks
and citation omitted).
We vacated, disagreeing that the petitioner’s reply ar-
guments were improper, in part because “the significance
of [the arguments in the Petition] arose after the Petition
was filed, in that the Board adopted a different construc-
tion of the [relevant] terms after the Petition instituting
inter partes review was granted.” Id. at 1380. We held
that, under the APA, the petitioner “should have been
given an opportunity to respond” to the new claim construc-
tion in its reply. Id. We concluded that “[i]n light of [the]
changed circumstances [regarding the correct claim con-
struction], the Board revisited its approach to the claims in
light of this error, and [the petitioner] likewise deserved an
opportunity to do the same.” Id.
Similarly, in Hamilton Beach Brands, Inc. v. f’real
Foods LLC, relying on our earlier decision in SAS, we con-
cluded, again, that a petitioner is entitled to respond to a
new claim construction. 908 F.3d 1328 (Fed. Cir. 2018).
There, as here, prior to institution, neither party had pro-
posed an express construction of the relevant terms, and
the Board instituted under the parties’ implicit under-
standing of the terms. Id. at 1335. After institution the
patent owner response proposed a new construction, which
the Board adopted in its final written decision. Id. Citing
proceedings concerning expired and soon-to-be-expired pa-
tents. See Changes to the Claim Construction Standard, 85
Fed. Reg. at 51,341.
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AXONICS, INC. v. MEDTRONIC, INC. 15
our SAS decision, we reiterated the rule that, under the
APA, the Board cannot adopt a new claim construction
without giving the petitioner an opportunity to respond.
Id. at 1338. But we held that those requirements had been
met because the petitioner was able to respond in its reply
and at oral argument to the construction proposed in the
patent owner response. Id. at 1338–39.
In Qualcomm Inc. v. Intel Corp., we again relied on our
SAS decision and held that, under the APA, parties in an
IPR must be permitted to respond to a new claim construc-
tion adopted by the Board sua sponte after the institution
decision. 6 F.4th 1256, 1263 (Fed. Cir. 2021). There,
through the oral argument before the Board, the parties
had proceeded under a shared understanding of the rele-
vant claim term. Id. at 1261–62. In the final written deci-
sion, without providing any notice or opportunity to
respond, the Board adopted a new claim construction. Id.
at 1262. The patent owner appealed. Relying on our deci-
sion in SAS, we held that, because the Board’s construction
in the final written decision “diverged from the agreed-
upon” construction of the parties, the Board needed to pro-
vide notice and an adequate opportunity to respond. Id. at
1263. 9
We think this case falls squarely within the rule of
SAS, Ericsson, Hamilton Beach, and Qualcomm: that, un-
der the APA, when the Board adopts a new claim construc-
tion following institution, an IPR petitioner must have
9 Compare TQ Delta, LLC v. DISH Network LLC,
929 F.3d 1350, 1356 (Fed. Cir. 2019) (affirming where the
Board adopted a claim construction in the final written de-
cision after having not adopted any construction in the in-
stitution decision, because the complaining party “had
notice of the claim construction issue and the opportunity
to be heard” (citing Hamilton Beach, 908 F.3d at 1339)).
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16 AXONICS, INC. v. MEDTRONIC, INC.
adequate notice and an opportunity to respond under the
new construction. In particular, the petitioner must be af-
forded a reasonable opportunity in reply to present argu-
ment and evidence under that new construction. 10 Here,
Axonics was not afforded that opportunity. Although the
Board considered Axonics’ arguments against the new
claim construction, it refused to consider Axonics’ evidence
and argument under that construction.
That is not to say a petitioner may rely on new prior
art in response to a new claim construction presented in
the patent owner response. We have held that a petitioner
may not in reply rely on new prior art to teach a claim lim-
itation. See Intelligent Bio-Sys., 821 F.3d at 1369 (holding
a reply brief and declaration exceeded the proper scope for
a reply because they cited “a number of non-patent litera-
ture references which were not relied upon to support un-
patentability in the Petition”). But that is not the situation
10 Medtronic argues on appeal that Axonics “clearly
anticipated” the two-input claim construction and should
have presented argument and evidence under the construc-
tion in the petition. Appellee’s Br. 1. The Board made no
finding that Axonics clearly anticipated the two-input con-
struction in the petition. See SEC v. Chenery Corp., 318
U.S. 80, 95 (1943) (“[A]n administrative order cannot be
upheld unless the grounds upon which the agency acted in
exercising its powers were those upon which its action can
be sustained.”). There is, moreover, no support for a rule
that would create challenges including line-drawing and
unworkability problems and consistency with the regula-
tion that governs the content of a petition, which does not
direct a petitioner to raise, address, and apply alternative
possible constructions, but instead requires a petitioner af-
firmatively to state “[h]ow the challenged claim is to be con-
strued.” 37 C.F.R. § 42.104(b)(3).
Case: 22-1532 Document: 47 Page: 17 Filed: 08/07/2023
AXONICS, INC. v. MEDTRONIC, INC. 17
here: Axonics did not rely on new prior art in its reply. We
leave for another day the question of whether, when pre-
sented with a new claim construction, a petitioner can rely
in its reply on new embodiments from the prior art refer-
ences that were relied on in the petition. See Apple, 949
F.3d at 706 (concluding, in a case where there had not been
a changed claim construction, that petitioner’s reply argu-
ments did not exceed the scope of a proper reply because
those arguments did not cite new embodiments or new
prior art). Here, Axonics, in the reply, relied on the same
embodiments as it relied on in the petition.
Barring argument and evidence in a reply directed to a
new claim construction proposed by the patent owner
would create opportunities for sandbagging by the patent
owner in order to create an estoppel. A patent owner has
the opportunity in a preliminary response to oppose insti-
tution on the ground that the claim construction relied on
by the petitioner is incorrect, and the Board may adopt the
patent owner’s proposed claim construction and deny insti-
tution if the petition fails to demonstrate a reasonable like-
lihood that a claim would be unpatentable under the
correct claim construction. See 35 U.S.C. § 314(a). The re-
sult would be that there would be no institution and no es-
toppel pursuant to 35 U.S.C. § 315(e). But if instead of
raising the issue in a preliminary response, a patent owner
sits on its strongest claim construction arguments before
institution and then raises them in response after institu-
tion, a patent owner could obtain a favorable final IPR de-
cision and an estoppel without the Board’s reaching the
merits of any invalidity arguments under the newly
adopted claim construction. Indeed, Medtronic admitted in
this appeal that the Board’s approach below would allow
Case: 22-1532 Document: 47 Page: 18 Filed: 08/07/2023
18 AXONICS, INC. v. MEDTRONIC, INC.
for such sandbagging. 11 We are reluctant to adopt a con-
struction of the APA and the Board’s rules that would per-
mit such gamesmanship.
Medtronic argues that it is unfair to permit a new ex-
pert declaration to be submitted with a reply, because a pa-
tent owner is not permitted to submit a supplemental
declaration in sur-reply. See 37 C.F.R. § 42.23(b) (“A sur-
reply . . . may not be accompanied by new evidence other
than deposition transcripts of the cross-examination of any
reply witnesses.”). But the Board “may waive or suspend”
such requirements in appropriate cases. See id. § 42.5(b).
Indeed, while the Board here recognized that declarations
are not “typically” permitted with sur-replies, it also noted
Medtronic had not asked for leave to submit an additional
expert declaration in this case. J.A. 37 n.7. We are confi-
dent that in circumstances such as these, the Board will
allow an appropriate opportunity for a patent owner to sub-
mit evidence with a sur-reply.
CONCLUSION
We hold that where a patent owner in an IPR first pro-
poses a claim construction in a patent owner response, a
petitioner must be given the opportunity in its reply to ar-
gue and present evidence of anticipation or obviousness
11 The Court: “But isn’t there a risk here of sandbag-
ging, that you realize there’s a good claim construction ar-
gument, [and] you leave it out of your preliminary
response. If you argued it in your preliminary response,
then maybe institution would be denied and there would
be no estoppel. But if you hold back on the argument and
wait to make it until the response, then you get the estop-
pel. Isn’t there a risk of that?” Medtronic’s counsel: “Cer-
tainly, your honor, there is a risk of that . . . .” Oral Arg. at
14:24–51.
Case: 22-1532 Document: 47 Page: 19 Filed: 08/07/2023
AXONICS, INC. v. MEDTRONIC, INC. 19
under the new construction, at least where it relies on the
same embodiments for each invalidity ground as were re-
lied on in the petition. We vacate the Board’s decisions in
these IPRs and remand for the Board to consider Axonics’
arguments and evidence under the two-input claim con-
struction and, correspondingly, to consider any request by
Medtronic to present new evidence in support of its sur-
reply.
VACATED AND REMANDED
COSTS
Costs to Axonics.