Legal Conclusions & Fact Finding, Pursuing USPTO Appeals to the CAFC

CAFC Standard of Review Driven by Appeal Posture

The appeal of a rejection from the Board of Patent Appeals & Interferences (BPAI) to the Court of Appeals for the Federal Circuit (CAFC) is a relatively uncommon event in the prosecution of patent applications. This is because the cost of such an appeal is rarely advisable in light of the ability to simply request continued prosecution before the Examiner.

On the other hand, post grant proceeding appeals from the BPAI (and soon to be Patent Trial & Appeal Board (PTAB)) to the CAFC are far more commonplace. Unlike application prosecution, where virtually unlimited prosecution is possible via requests for continued examination (RCEs), neither patent reexamination nor the new post grant proceedings of the America Invents Act (AIA) permit such alternatives to appeal. Moreover, amendment of claims during these proceedings is generally disfavored as creating an intervening rights defense, and patents subject to post grant proceedings are almost always high-value assets. Accordingly, as the popularity of post grant proceedings continues to increase, so too do the number of appeals from the USPTO to the CAFC.

When considering decisions of the USPTO, the CAFC employs either a de novo standard of review or substantial evidence standard of review, as appropriate. Not surprisingly, appeals that employ the de novo standard provide a more significant opportunity for reversal than those that do not. For this reason, it is important to understand the Court’s practice in applying one standard over the other.

For fact finding, the CAFC applies the more liberal substantial evidence standard. That is to say, when considering whether or not the USPTO’s finding meets the substantial evidence standard, the CAFC considers whether a reasonable mind would accept the underlying evidence as supporting the associated finding. Thus, the Court will affirm a USPTO conclusion if the fact finding is deemed sufficient, even if the individual judges of the Court do not necessarily agree with the conclusion of the agency. As many USPTO appellants quickly realize, when appealing an art based rejection to the CAFC, disputing the fact finding of the Office can be quite an uphill battle.

On the other hand, legal conclusions are reviewed de novo. For example, many of the recent reversals of the BPAI in the area of patent reissue were a result of perceived misapplications of the law by the USPTO.

A recent illustration of the interrelationship between the differing standards was explained in Plasmart v. Kappos (here). In Plasmart, the BPAI reversed the obviousness rejections of an examiner in the inter partes patent reexamination of  U.S. Patent 6,722,674 (directed to a scooter safety improvement). On appeal to the CAFC, the third party requester (Plasmart) questioned the Board’s application of the 103 case law to reverse the rejection of the examiner (i.e., KSR), arguing that the Board failed to account for a “common sense view of the references” as mandated by KSR. In reversing the Board, the CAFC agreed with the Examiner and ruled the claims obvious, explaining:

Although the ultimate determination of obviousness under § 103 is a question of law, it is based on several underlying factual findings, including (1) the scope and content of the prior art; (2) the level of ordinary skill in the pertinent art; (3) the differences between the claimed invention and the prior art; and (4) evidence of secondary factors, such as commercial success, long-felt need, and the failure of others. Graham v. John Deere Co., 383 U.S. 1, 17–18 (1966). “The combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results.” KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 416 (2007). In other words, when there exists a finite number of identified, predict-able solutions to a known problem, a combination that results in “anticipated success” is likely the product not of innovation, but of ordinary skill and common sense. Id. at 421. That is the case here.

The Board, in reversing the examiner’s rejections, relied only on minor distinctions between the prior art and the claimed invention. . . . .The Board agreed with the examiner that [the secondary reference] discloses a reason for adding universal wheels (the safety driving equipment in [the secondary reference]) to [the primary reference] scooter, but then held that because [the secondary reference] does not place those universal wheels in the exact location as the ’674 patent, it cannot render claim 1 obvious. . . . .

The decision to attach the [secondary reference] safety wheel directly to the twister member instead of the body would have been a common sense alternative design choice and reasonably obvious to one of ordinary skill in designing a safety feature to prevent tipping of the [primary reference] scooter. Such a modification is nothing more than a predictable use of prior art elements (universal wheels in contact with the ground in front of the twister member) to address a known problem (stability), and would thus have been obvious. See KSR, 550 U.S. at 417. We therefore reverse the Board’s holding that claim 1 would not have been obvious over the prior art.

Plasmart is noteworthy as a rare instance in which the USPTO identification of allowable subject matter was appealed to the CAFC.  With the new 12-18 month timeline of Inter Parties Review and Post Grant Review to an appealable, PTAB decision, such appeals will become more frequent going forward. Future appellants may find it helpful, where possible, to pursue USPTO conclusions of law as opposed to USPTO fact finding.