In Intellectual Ventures II LLC v. Ericsson Inc.,[1] the Federal Circuit considered whether the PTAB’s adoption of a new claim construction in its Final Written Decision constitutes a violation of the parties’ due process. Intellectual Ventures argued that it was denied due process because the construction set forth in the Board’s Final Written Decision was not one that any of the parties offered and was never “previewed” to the parties until oral argument. IV contended that the Board’s decision runs afoul of two recent Federal Circuit decisions—In re Magnum Oil International, Ltd. and SAS Institute, Inc. v. ComplementSoft, LLC. The Federal Circuit rejected these arguments.

The Court explained that, under the Administrative Procedures Act, the Board must inform the parties of “the matters of fact and law asserted,” and give each party an opportunity to submit evidence and argument in support of its case (including rebuttal). “Pursuant to these provisions, the Board may not change theories midstream without giving the parties reasonable notice of its change.”

The Court concluded that the Board had met these obligations because IV had both notice and an opportunity to be heard. The proper construction of the term in dispute was vigorously disputed by the parties throughout the proceeding before the Board; thus, “Intellectual Ventures was on notice that construction of this term was central to the case.” At oral argument, the Board previewed its construction and gave the parties a chance to respond.

The Court noted that IV had an additional chance to respond by seeking rehearing after the Board issued its Final Written Decision, but IV did not do so. Additionally, the Court noted that, unlike in SAS, the Board did not change theories midstream by construing the disputed term one way in its Institution Decision and another in the Final Written Decision—the Board did not offer a construction of the disputed term in its Institution Decision. “Given the continuous focus on [the disputed term] before and during oral arguments and Intellectual Ventures’ opportunity to [respond],” the Court found that there had been no due process violation.

The Court also distinguished Magnum Oil. There, “the Board supplied completely new arguments that the petitioner never raised.” Here, that was not the case—the Board considered arguments presented by the parties that contested both whether and how the Board needed to construe the term and questioned counsel extensively over the construction of the term. The Board did not err when, after considering all the arguments and evidence, it adopted a construction different from the constructions proposed by the parties. “The Board is not constrained by the parties’ proposed constructions and is free to adopt its own construction, as it did here.”

[1] This opinion was designated by the Federal Circuit as nonprecedential.