Shift in BPAI Fact Finding Necessitates New Rejection

Back in February, In re Stepan (or In re Side-steppin if it helps you remember the case) was argued before the CAFC. In a previous post, I explained how this case demonstrated a problem addressed by the 2010 proposed rule package for practice before the BPAI. Namely, the shifting in rejection grounds during appeal relative to that of the originally applied rejection. The newly proposed Rules attempt to liberalize the manner by which an Applicant/Patent Holder may challenge a “new ground of rejection” as presented in an Examiner Answer. The idea being, it is unfair for the Office to change course once prosecution is closed as no new rebuttal evidence may be entered.

Unchecked, a modification to the Office’s fact finding/legal theory in an Examiner Answer or BPAI decision can be quite prejudicial during patent reexamination. This is because, once on appeal, there is no RCE-like procedural mechanism by which a patent holder can unilaterally restart prosecution for the purpose of submitting new rebuttal evidence (unlike patent application prosecution).

At issue in Stepan was reexamination of U.S.Patent 6,359,022. During the reexamination, the USPTO disputed the priority right to a parent application under 35 USC  § 120. As the parent was a CIP, the examiner did not agree that certain claims were entitled to priority. Thus, under the examiner’s theory the applied art of the reexamination qualified under 102(b).

The Patentee argued that the priority claim was effective and that the art qualified as 102(a). Therefore, the Patentee asserted that declaration evidence (antedating) under 37 CFR § 1.131 was effective to “swear behind” the applied art. As the examiner maintained the 102(b) rejection, the sufficiency of the declaration evidence was not examined.

On appeal, the Board found that the Examiner was incorrect as to 120, and that some of the disputed claims were entitled to the priority date of the parent. However, the Board found that the declaration evidence was insufficient for these claims. In essence, the Board affirmed the examiner by changing the basis of the rejection from 102(b) to 102(a), but did not designate the 102(a) rejection as new. The Board sidestepped the new rejection issue by taking the position that the Patentee had anticipated the 102(a) rejection by submitting the declaration evidence, and that either rejection(102(a) or 102(b)) was still applied under 102.

As noted above, this change in grounds was significant as the Patentee never had an opportunity to address the perceived deficiencies in the declaration evidence, and has no ability to unilaterally reopen prosecution. In their analysis of the issues (here), the CAFC explained:

By making and relying on new fact findings regarding an issue the examiner did not raise, i.e., the sufficiency of Stepan’s Declaration to swear behind the Singh reference as § 102(a) prior art, the Board relied on a new ground of rejection. Kumar, 418 F.3d at 1367–68 (finding that a new ground of rejection exists when the Board relies on new fact findings which had not been previously advanced by the examiner about an existing prior art reference); see also In re Kronig, 539 F.2d 1300, 1302–03 (CCPA 1976) (noting there was no new ground of rejection when the Board used the same basis and the same reasoning advanced by the examiner). It is crucial that the examiner issue a rejection (even if that rejection is subsequently withdrawn) so the applicant is on notice that it is obligated to respond. Mere reliance by the Board on the same type of rejection or the same prior art references relied upon by the examiner, alone, is insufficient to avoid a new ground of rejection where it propounds new facts and rationales to advance a rejection—none of which were previously raised by the examiner.

(emphasis added)

.                .               .              .                .                 .

Notice does not focus on the applicant’s arguments divorced from the examiner’s rejections of record that are actually appealed to the Board. Instead, it focuses on the “adverse decisions of examiners” during prosecution which form the basis of the Board’s scope of review. 35 U.S.C. § 6(b). Because Stepan did not have prior notice of the Board’s intent to craft and rely on new findings of fact to support a §§ 102(a)/103(a) rejection and because it failed to identify this rejection as a new ground, Stepan’s notice rights were violated. 5 U.S.C. § 554(b)(3); 35 U.S.C. § 6(b). Had the Board labeled its rejection as a new ground of rejection, Stepan could have reopened prosecution to address the newly-alleged deficiencies in its Declaration with the examiner. We vacate the Board’s decision and remand with instructions to designate its rejection as a new ground of rejection.

Going forward it is expected that prosecution will be reopened in more appeals, especially appeals in patent reexamination as Patentees/Requesters have available no mechanism to reopen prosecution on their own to rebut new reasoning of the Board.