How to treat "Applicant Admitted Prior Art" in Inter Partes Reviews in the United States

35 U.S.C § 311(b)

§ 311(b) limits the prior art that may be used as "the basis" of an IPR proceeding to "patents or printed publications". Despite this seemingly clear language, there is considerable debate over the scope of permissible grounds under § 311(b). “Applicant-admitted prior art” exemplifies this issue. AAPA, which typically appears in a patent’s background refers to the applicant’s description of prior art and existing technical problems before presenting the invention. The case below focuses on whether AAPA constitutes a permissible ground in an IPR proceeding.

Apple v. Qualcomm (Qualcomm I):

In 2018, Apple filed an IPR petition challenging certain claims of Qualcomm’s ’674 patent. The petition asserted two obviousness grounds under 35 U.S.C. § 103, one of which relied on AAPA in combination with prior art patents (Ground 2 in the table below). As the table illustrates, the petition identified AAPA, in view of the Majcherczak and Matthews patents, as the “basis” for Ground 2.

In January 2020, the Patent Trial and Appeal Board (PTAB) determined that the challenged claims were not unpatentable under Ground 1 but were unpatentable under Ground 2. The PTAB reasoned that because AAPA appeared in the ’674 patent, it qualified as prior art consisting of patents or printed publications and could thus form “the basis” for cancellation under § 311(b). Qualcomm appealed, arguing that Ground 2 should not have served as the basis for the decision.

On appeal, the Federal Circuit concluded that the PTAB had erred in interpreting § 311(b) to include AAPA from the challenged patent as permissible grounds and remanded the case.

Apple v. Qualcomm (Qualcomm II):

On remand, the PTAB again found the challenged claims of the ’674 patent to be unpatentable as obvious under Ground 2, concluding that Apple’s use of AAPA did not violate § 311(b) because AAPA did not form the basis of Ground 2. Qualcomm appealed once more.

Court of Appeals for the Federal Circuit

A few important issues were considered by the Federal Circuit on appeal:

1. Whether the PTAB’s decision to consider Ground 2 in IPR proceedings, based on its interpretation and application of § 311(b), was reviewable by this court

In analyzing the courts’ case law around the reviewability of IPR related appeals, the court noted that there was a distinction between cases involving ordinary challenges to straightforward procedural rules closely tied to IPR institution decisions where judicial review were barred, and cases involving issues that were related, but not closely tied to institution decisions or cases presenting a question about the manner in which the agency’s review proceeds once instituted where judicial review were allowed.

In the present case, the court considered that Qualcomm did not challenge the Board’s threshold decision to institute the IPRs, rather, challenged the Board’s determination of unpatentability on one ground in respect of the use of AAPA in reaching that determination which pertained to the Board’s interpretation and application of section 311(b) on what qualified as a permissible basis for a ground in an IPR petition.

Accordingly, Qualcomm’s challenge was not of procedural nature, but presented a question about the manner in which the agency’s review proceeds once instituted. Thus, the court held Qualcomm’s appeal fell outside the criteria for unreviewability under section 314 (d) and was therefore not barred from judicial review.

2. Whether the PTAB misinterpreted § 311(b)

The appellate court held that the PTAB’s interpretation of § 311(b) contradicted the statute’s plain language.

First, the court reaffirmed its Qualcomm I ruling, holding that § 311(b) limits IPR grounds to prior art patents or printed publications - because AAPA is neither, it cannot form the basis of an IPR ground.

The court also acknowledged that AAPA may be used in an IPR petition to establish a skilled artisan’s general knowledge when assessing obviousness.

The court noted that there is no blanket “in-combination” rule treating any use of AAPA with prior art as non-basis under § 311(b).

Under § 311(b)’s plain meaning, the inquiry is whether a petitioner used AAPA as the basis, or part thereof, for a ground—not simply whether the petition relied on AAPA in combination with prior art.

3. Whether Apple used AAPA as a basis or non-basis

In Qualcomm I, the court determined that an IPR petition may rely on AAPA for certain purposes, provided AAPA is not the basis of a ground in violation of § 311(b).

In this case, the PTAB correctly read Qualcomm I to allow reliance on AAPA; however, the PTAB conflated “reliance” with “basis” under § 311(b).

To decide if AAPA was used in a “reliance” or “basis” manner, the court examined the text of Apple’s petition and found that Apple expressly labeled AAPA as a basis, which constituted a concession that it formed the basis of a ground.

The court agreed with Qualcomm that Apple should be held to its own petition’s wording, as an IPR petitioner is the “master of its own petition.”

Responding to Apple’s “substance over label” argument, the court pointed to § 311(b)’s text, which provides no guidance on whether form or substance controls in determining if AAPA is part of a ground’s basis. Although the court anticipates that future cases may assess petition substance to determine § 311(b) compliance, it deemed Apple’s concession sufficient to resolve the issue here.

Thus, the court concluded that Apple used AAPA as a basis in violation of § 311(b) and reversed the PTAB’s decision that the challenged claims were unpatentable as obvious.

Comments:

How to treat AAPA in an IPR proceeding remains a hotly debated topic. During the case, the USPTO issued two guidance memoranda on AAPA treatment in IPR petitions, each adopting markedly different positions, with the latter superseding the former.

In August 2020, the USPTO issued its first guidance memorandum on § 311(b), stating that although AAPA alone does not qualify as prior art under § 311(b), when used with one or more prior art patents or printed publications, it could form the basis for an IPR proceeding.

Following Qualcomm I, in June 2022, the USPTO issued new guidance - the so-called “in-combination rule”—stating that AAPA used with prior art patents or printed publications does not form part of § 311(b) basis. Instead, an IPR petitioner may rely on AAPA solely as background knowledge, without treating it as the basis in violation of § 311(b).

In Qualcomm II, the PTAB adopted the “in-combination rule,” considering AAPA alongside prior art and finding the challenged claims unpatentable, even though AAPA was expressly labeled as part of a ground’s basis.

The Federal Circuit in Qualcomm II rejected this approach, clarifying that the critical issue is whether AAPA served as a basis or part of a basis for an IPR ground, irrespective of any “in-combination rule.” The court declined to define the distinction further because Apple’s explicit labeling of AAPA as a basis was sufficient to find a § 311(b) violation.

It appears that the court took the petition's wording at face value and held the petitioner accountable for it, without delving into the substantive distinction of the grounds presented. The task of drawing that line is thus left to future cases.

Departing from a blanket rule approach, the Federal Circuit seems to have tread a fine line in its treatment of AAPA within IPR proceedings. From the Federal Circuit's standpoint, there exists a "good" use of AAPA—where it is properly combined with patents or printed publications without violating § 311(b)—and a "bad" use—where such a combination contravenes § 311(b) and thus cannot be relied upon by the PTAB.

However, the decision provides no clear framework for distinguishing the two. Beyond examining the petition's language and labels, the court offers little guidance. It remains to be seen how the USPTO and future courts will interpret and apply this precedent.