CAFC Cites Inconsistencies in Reexamination Appeal Ruling

Back in June, the Court of Appeals for the Federal Circuit (CAFC) decided Q. I. Press Controls, B.V.,v. Quad/Tech, Inc. (here) The appeal stemmed from an inter partes reexamination of U.S. patent 6,867,423 (95/000,526). Of particular interest in the appeal from the Patent Trial & Appeal Board (PTAB) was the allowance of claims 1-60 in view of the rejection of claims 61-72. That is the Board rejected claims 61-72 on a combination of references never applied to claims 1-60, but, the allowed claims (1-60) and rejected claims (61-72) only differed in minor respects.

On appeal, the requester raised this inconsistency with the CAFC and cried foul (despite never having raised the potential rejection formally for claims 1-60). In reversing the Board, the CAFC stated that the combination must be applied to claims 1-60 as a new rejection under 37 C.F.R. § 41.77(b). In doing so, the CAFC opinion could be interpreted to suggest that a new rejection under 41.77 was no longer discretionary, but mandatory.  

The PTO took issue with this aspect of the opinion. Earlier this month, the CAFC declined the PTO’s rehearing request directed to this concern.

The key language of the June decision is as follows:

[T]he Board has the discretion to issue a new ground of rejection if it has knowledge of one. 37 C.F.R. § 41.77(b) (“[S]hould the Board have knowledge of any grounds not raised in the appeal for rejecting any pending claim, it may include in its opinion a statement to that effect with its reasons for so holding, which statement shall constitute a new ground of rejection of the claim.”). In those instances, the “Board must designate its decision a new ground of rejection and provide the appellant with
an opportunity to respond.”
. . . .
Here, when all these references were before the Board, and this court, an obligation is owed to the public not to permit inconsistent results when a proper challenge to that inconsistency is made on appeal. The Board should have observed the similarities between the claims, noted those similarities between the claims and the references before the Board on appeal, analyzed whether the [combination] would have rendered claims 1–60 obvious, and if so, issued a new ground of rejection. The [combination] was before the Board on appeal because those references were cited by the examiner to invalidate claims 61–72. And, given the minor differences between the claims, the Board “[had] knowledge of . . . grounds not raised in the appeal for rejecting [claims 1–60].”

(emphasis added)
In their rehearing request (here), the PTO expressed concern that the discretion of 41.77 was being ignored, explaining:

Although 37 CF.R. § 41.77(b) expressly states that the Board “may” issue a new ground of rejection if it knows of a ground of rejection not raised in the appeal, the panel determined that the Board “must” designate a new ground of rejection in those circumstances, and ordered the Board to consider a new ground of rejection based on the combination . . .The panel appears to have relied on Rambus v. Rea, 731 F.3d 1248 (Fed. Cir. 2013) as support for its decision. Op. at 18. However, Rambus did not hold that if the Board has knowledge of a new ground of rejection, it must enter a new ground of rejection.  . . Rather, Rambus stands for the unremarkable principle that if a Board’s decision relies on a ground for rejecting a claim that was not raised in the appeal, then it must designate that ground as a new ground of rejection to ensure that the appellant is afforded a fair opportunity to respond.  . . . Nowhere did this Court state in Rambus, or in any other decision identified by the Panel, that the Board is required to issue a new ground of rejection if it has knowledge of a rejection not discussed in the appeal.

The PTO rehearing was denied without explanation. But, presumably the panel was satisfied with the below aspect of the opinion, which explained:

We do not hold that the Board should always apply references that are before it affecting some claims to every other claim on appeal, but we do find that in this instance, in which nearly identical claims were found both valid and invalid due to similar combinations of prior art resulting in a Board opinion that was seemingly inconsistent, the Board erred by not considering the [combination] as a new ground for rejection of claims 1–60.

While the case may seem like an outlier in terms of facts, in the predictable arts it is not uncommon to have substantially overlapping claim sets (apparatus, method, system, etc). This case gives requester’s in inter partes reexamination yet another oportunity to defeat challenged claims. While inter partes reexaminations can no longer be requested, there is still a significant number of such proceedings heading to the Board in the months ahead.