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CAFC Finds PTAB More Than Mere Umpire

ptabOver the years, the PTAB has shed it’s “super-examiner” role to more of that of an umpire— calling balls and strikes. That is to say, the PTAB has drifted toward a relatively narrower view of the scope of issues it will substantively review on appeal, perhaps as a matter of necessity in dealing with the crushing weight of the growing appeal backlog.

Yesterday, in Rexnord Industries v. Kappos (2011-1434), the Federal Circuit shifted the focus of the PTAB away from their recent umpire-like practices toward a more traditional judicial review model.

The Federal Circuit reversed the PTAB for failing to consider all theories raised by an appellee in support of an examiner’s decision in an inter partes patent reexamination irrespective of whether the theory or ground was adopted by the examiner. Rexnord, the third party requester, had proposed rejections based on a combination of references with the added rationale that a certain claimed feature – a gap of less than 10 mm – was merely an obvious design choice. The examiner rejected the claims on the proposed combination of references but did not adopt the design choice theory, instead, opting to substitute his own reasoning. Namely, the examiner’s rejection was premised on an interpretation of the claims which permitted the gap to be 0 mm, or nonexistent.

The PTAB reversed the examiner but refused to consider Rexnord’s “obvious design choice” argument as an alternative basis for affirming the examiner. The PTAB reasoned that its role on appeal was merely to consider the grounds relied upon by the examiner – the PTAB declined to reach any additional bases on which the examiner’s rejection might also have been affirmed. This decision left Rexnord in the unenviable position of having the rejection of the claims reversed, and perhaps of more significance, potential estoppel relative to the prior art at issue in the inter partes patent reexamination proceeding.

The Federal Circuit held that the PTAB erred in refusing to consider alternative basis or grounds for affirming the rejection which were “fully raised before the examiner.” The opinion notes that “[o]n judicial review, the correctness of the decision appealed from can be defended by the appellee on any ground that is supported by the record, whether or not the appellant raised the argument.” The Federal Circuit held that the Board erred in declining to consider Rexnord’s “obvious design choice” argument as a basis for affirming the examiner because that argument was in fact raised by Rexnord in its request for reexamination.

In this connection the PTAB is presented with a fundamental and philosophical choice between, on the one hand, serving merely as an umpire of balls and strikes (i.e., specific arguments framed by the parties) and, on the other, serving the broader objective of reaching the substantive result dictated by the weight of the evidence. The latter is the approach taken by many district courts and it is not uncommon for an Article III judge to decide a case on a theory advocated by neither party. Of course, the latter is also the more labor intensive task, which is far less attractive for an agency faced with a crushing backlog.

It remains to be seen whether the Rexnord decision will push the PTAB towards assuming a role more akin to an Article III court, raising issues and theories sua sponte where justice so requires. In the meantime, the Rexnord decision is at a minimum ammunition for appellees in inter partes reexaminations to argue for a broader base of arguments on appeal.

One Response to “CAFC Finds PTAB More Than Mere Umpire”

  1. The PTAB has made remarkable moves towards fairness very recently, and we can hope that this reminder from the Federal Circuit will reinforce that trend.