PTAB Precedent (Not Surprisingly) Embraces CAFC Precedent

As I pointed out last week, it is a heavy lift for the Patent Trial & Appeal Board (PTAB) to designate a precedential decision.  For this reason, nothing but the most straightforward of issues can be decided and designated “precedential.”

The PTAB issued a prime example of a seemingly straightforward precedential decision a few days ago in Ex parte McAward, Appeal 2015-006416 (PTAB Aug. 25, 2017), Section I.B. (here). This PTAB precedent makes clear that the USPTO assesses indefiniteness pursuant to the Federal Circuit’s guidance in In re Packard, 751 F.3d 1307, 1310 (Fed. Cir. 2014).

While some have expressed shock at the PTAB pronouncing a different standard than that expressed in Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120 (2014), this is just a restatement of the Board’s status quo since the Packard decision. (It is not exactly shocking that the Board is following the guidance of its reviewing court).

The more interesting issue is whether the Court’s reasoning in Packard is equally applicable to AIA trial proceedings? Continue Reading New PTAB Precedent Endorses In re Packard….But For How Long?

Preserving The PTAB Trial Record

An objection operates to preserve errors in admitting evidence. At the PTAB, the manner and timing of making evidentiary objections is governed by agency rule rather than the Federal Rules of Evidence (FRE). 37 C.F.R. § 42.64.  An Offer of Proof, on the other hand, preserves errors in excluding evidence. But, to date, Offers of Proof have not been a recognized mechanism of PTAB trials — not formally anyway.  This is despite the fact that there is no agency rule on point to displace FRE 103, and the FRE apply to PTAB trials. 37 C.F.R.§ 42.64.

That is not to say that PTAB litigants are unable to otherwise preserve the record when evidence is denied entry, or that the need to preserve such is anywhere near as pronounced as compared to the district court. Only that PTAB litigants may have to work a little harder to preserve such issues for appeal. Continue Reading PTAB Offers of Proof?

Functional Aspect of Structural Term Overlooked

Yesterday, in Power Integrations, Inc., v. Lee (CAFC 2015) the Court considered the rejection of claims 1, and 17-19 of  U.S Patent 6,249,876. Reexamination of the ‘876 patent was initiated by the USPTO in 2006 at the request of Fairchild Semiconductor. At issue in the reexamination (and in a parallel infringement action) was the meaning of the claim terminology  “coupled to.” The Patentee insisted that this terminology had both a functional and structural meaning. On appeal to the Board of Patent Appeals and Interferences (BPAI — Now the PTAB), affirmed the examiner’s rejection of the claims. In doing so, the Board appeared to focus only on the structural aspect of the disputed claim terminology.

The CAFC reversed and remanded finding that the Board’s focus on the structural aspects of the disputed claim terminology to be “red herring.”  
The Board stated that Patentee “appear[ed] to argue that one of ordinary skill in the art would understand the term ‘coupled to’ to restrict device connections to exclude intervening components.”  The Board concluded, however, that the term meant simply to “join[] devices into a single circuit,” and did not preclude the presence of intervening components.  In addition, the Board rejected Patente’s argument “that the respective counters in [the cited art] are not coupled to the respective digital to analog converters because all [have intervening components]  Patentee requested the Board’s reconsideration prior to appeal to the CAFC. Patentee asserted the Board misapprehended their argument regarding their construction of “coupled to” explaining that it had never contended that the term precluded the presence of intermediate circuit elements between the counter and the digital to analog converter.  The Board denied rehearing and dismissed Patentee’s argument

The CAFC noted that Patentee had consistently argued before every tribunal that claim 1, when read in light of the specification and surrounding claim language, requires that the counter itself – not an intervening element – control the digital to analog converter’s output to vary the switching frequency. The Court described the Board’s structural focus to be a red herring, and opined that it failed to adequately evaluate Patentee’s  primary argument (i.e., the aforementioned control aspect).

The Court reminded the Board that while the district court claim construction was not binding on it, full consideration of the earlier construction may have proved enlightening. That is, the Court felt “the board had an obligation, in these circumstances, to evaluate that [district court] construction and determine whether it was consistent with the broadest reasonable construction of the term.” However, the court expressly noted they were not creating a new requirement that the Board must in all cases assess a previous judicial interpretation of a disputed claim term. Rather, the court remanded the case so that the Board may fully assess the functional aspect of the claim and set forth its “reasoning in sufficient detail to permit meaningful appellate review.”

How Patentee will fare on remand remains to be seen. The Court mentions that the Solicitor briefing provided an alternative explanation to affirm that the Board may simply adopt on remand. 

While it is one thing to say that the Board did not fully address the functional issue, “coupled to” would not seem to denote exclusive control on its own. Also, had the litigation construction not been before the Court in 2013, it is not clear that the Court would have faulted the Board’s analysis. The takeaway here is to clearly present all arguments to the Board.

Upcoming PTAB Programs

The USPTO’s Patent Trial & Appeal Board (PTAB) will host a “Boardside Chat” lunch webinar tomorrow, April 7th. This month’s chat will focus on “Do’s and Dont’s of Ex Parte Appeals.”  The bi-monthly chat program updates the public on current Board activities and initiatives. Tomorrow’s dial-in is as follows:

Webinar Access Information:
Event address: uspto-events.webex.com/uspto-events/onstage/g.php?MTID=ee4b8faff5a188332aaa6a752f4b6c292
Event number: 994 593 512
Event password: 123456
Audio conference: Call-in toll number is 1-650-479-3208, access code is 994 593 512

The schedule of topics through October is listed below.

Date

Time

Topic

Speakers

Tuesday, April 7

Noon to 1PM (EST)

Do’s and Don’ts for Ex Parte Appeals

Panel of Administrative Patent Judges

Tuesday, June 2

Discovery in AIA Trials

Panel of Practitioners and Administrative Patent Judges

Tuesday, August 4

AIA Rulemaking and Guidance Changes

Lead Judge Susan Mitchell

Tuesday, October 6

Best Practices before the PTAB

Panel of Administrative Patent Judges

For those seeking CLE in the months ahead, the Practicing Law Institute’s USPTO Post-Grant Patent Trials 2015. returns to San Francisco in two weeks.
Apr. 17, 2015 San Francisco, CA (webcast available) (Register here)

Also returning this month is the Patents Post-Grant.com free monthly webinar series. This month’s topic is “PTAB Changes & The Road Ahead.”  A registration link will be posted later this week.

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  Continue Reading CAFC Finds PTAB More Than Mere Umpire

CAFC Finds SNQ Denial Not Subject to Appeal in Inter Partes Patent Reexamination

Back in March of 2011, an expanded panel of the Board of Patent Appeals & Interferences (BPAI) decided Belkin International et al., v. Optimumpath LLC. Belkin’s appeal stemmed from a denial of a proposed SNQ of an inter partes patent reexamination request of  U.S. Patent 7,035,281 (95/001,089). The initial request for inter partes patent reexamination was granted as to claims 1-3 and 8-10, but denied as to claims 4-7 and 11-31.

The denial of the SNQ targeting claims 4-7 and 11-31 was petitioned to the Director of the Central Reexamination Unit (CRU). Upon reconsideration, the Director refused to reverse the examiner. On the other hand, Belkin did not petition the denial of SNQs pertaining to the claims being actively reexamined (claims 1-3 and 8-10). During prosecution of the reexamination, the rejection of claims 1-3 and 8-10 was withdrawn by the examiner. Thereafter, Belkin appealed the withdrawn rejection of claims 1-3 and 8-10 together with the denial of the SNQs pertaining to those reexamined claims.

The procedural issue before the Board was whether or not denied SNQs, which pertain to claims being actively reexamined (i.e., claims 1-3 and 8-10) must be petitioned rather than appealed to the BPAI. The Board found that:

[I]f the Director makes the non-appealable determination that no substantial new question of patentability has been raised, then reexamination is not performed for those claims in question with respect to the corresponding prior art references. There cannot have been a final decision (either favorable or unfavorable) on the patentability of the claims in question under 35 U.S.C. § 315(b), the claims not having been reexamined in the first place for lack of a substantial new question of patentability. (emphasis added)

Yesterday the CAFC weighed in on the debate.

Belkin argued (here) that the Board has jurisdiction to consider prior art found not to raise a substantial new question of patentability in inter partes reexamination when reexamination is subsequently granted for the same claim on another reference. Belkin presented reexamination as a two-step procedure: (1) determining whether a substantial new question of patentability exists; and (2) if so, determining whether the claims are patentable over all prior art.  Belkin conceded that the first step is not appealable under § 312(c) (as was the case for claims 4-7 and 11-31), but contended that once an SNQ affecting a claim is found, all prior art must be considered on appeal, including prior art found previously not to raise a substantial new question of patentability.

The CAFC sided with the USPTO explaining:

We disagree with Belkin’s position because there was no final decision favorable to patentability regarding the issues based on the [denied SNQs].  First, the Director’s determination that an issue does not raise a substantial new question of patentability is not a decision favorable to patentability.  Lack of a substantial new question of patentability is not a favorable decision on patentability.  Indeed, it cannot be one, as the decision on the substantial new question preceded the actual reexamination, and merely raised a “question” to be answered.  Furthermore, it is explicitly non-appealable under § 312(c).  To allow an otherwise non-appealable decision by the Director to become appealable simply by raising it a second time during the later reexamination would impermissibly circumvent the statutory bar on appeals.

In deciding the issue, however, the CAFC did highlight a potential non-petition route to preserve such issues for appeal, explaining:

In this case, the Director determined, in part, that the issues based on the first three references cited by Belkin did not raise a substantial new question of patentability regarding claims 1–3 and  8–10.  Under § 312(c), that decision is final and non-appealable.  But the Director also determined that one issue based on anticipation by another reference, Peirce, did raise such a question.  At that point, the Director was entitled to, and did, order reexamination for resolution of that single question. The scope of the resulting reexamination was then limited to answering that question of patentability, anticipation by Peirce. Belkin, at that point, could only raise the three references if they were necessary to rebut findings of fact by the examiner or as a response to the patent owner relevant to answering that single patentability question.  See 37 C.F.R. § 1.948(a).  Here, Belkin has not argued that the three references were cited for such a purpose, and the limited record before us does not suggest that they were.  Thus, the Board was correct not to consider the previously raised and rejected issues based on the other three references.

(emphasis added)

It is worth noting that the above option was never available to Belkin. This is because the first action was an Action Closing Prosecution (ACP), and the Patentee did not respond. Thus, Belkin had no option to argue the merits before the examiner until appeal briefing. Still, for those legacy inter partes reexamination filings that fall under the old SNQ standard, the above rebuttal option may be the best option for preserving such matters for PTAB review. (note that the SNQ standard changed on September 16, 2011, so the last year of inter partes reexamination filings are free of this confusion).

How Often Are Examiner Claim Confirmations Upheld in Inter Partes Patent Reexamination

For challengers in an inter partes patent reexamination (IPX), confirmation of patent claims by the examiner can pose a significant set back. That is to say, the challenger would be estopped (35 U.S.C. § 317(b)) from raising invalidity defenses that “could have been raised” relative to the confirmed claims during the IPX proceeding, in a later court proceeding.

Although IPX is no longer available as an option to patent challengers, the rate of affirmance by the PTAB in such situations will still be of significant interest in the years to come thanks to the avalanche of IPX filings submitted to the USPTO earlier this month.

Based upon the outcomes of the IPX decisions issued so far in 2012, challengers have about a 50/50 chance of reversing at least one claim of the examiner confirmation.

The chart below illustrates the outcomes of  the 46 IPX decisions in which a claim was confirmed.

So far in 2012 there have been 46 IPX Board decisions where an appeal/cross-appeal concerned either the Examiner’s confirmation of claims 40 or the Examiner’s decision not to adopt additional rejections 6.

Of those cases, confirmed claims were:

-Affirmed in 16 – Affirmed in part in 10 – Reversed in 14

Additional rejections not adopted:

-Affirmed in all 6

Thus, of those 46 decisions, 24 resulted in the reversal of at least one confirmed claim (52%). (Click to Enlarge)

confirmed

Working Patent Reexamination Developments Into the Appeal Record

Previously, I discussed how an appellant sought relief at the CAFC from an earlier Markman Order under Fed. R. Civ. P. 60(b). The Appellant argued on appeal that a recently concluded ex parte patent reexamination of the patent at issue constituted new evidence requiring relief from the earlier decision. The appellant theorized that the USPTO’s analysis as to claim scope should carry significant weight, and were contrary to the court’s earlier Markman and SJ findings. While the CAFC accepted the argument under Rule 60, they ultimately found for the Appellee.

Recently, yet another appeal rule was leveraged to inform the CAFC of USPTO findings in patent reexamination.

In General Electric Co. v. ITC, one issue reviewed by the court was the Commission’s determination of no domestic industry in regard to a particular patent based on its claim constructions. The Federal Circuit reversed the Commission’s construction and ruled in favor of General Electric’s claim construction. The Court noted in a footnote that the other party “submitted a letter in accordance with Fed. R. App. P. 28(j), arguing that General Electric stated a position before the PTO during the ongoing reexamination of the ‘985 patent that contradicts its arguments here. General Electric responds that its argument distinguishing a certain reference does not conflict with its position here. On the information before us, the reexamination arguments do not affect our conclusion.”

Here too, the court was unmoved by the inconsistent reexamination evidence. Yet, the footnote suggests yet another avenue that parties may explore at the appeal stage, namely, filing a letter or submission under Fed. R. App. P. 28(j) as a “citation of supplemental authorities.”

USPTO Explains Appeal Fee Setting

The America Invents Act (AIA), Section 10 provides fee setting authority to the USPTO. As a result, the Office has been busy preparing new fee proposals that will take effect in early 2013. For example, the new USPTO fee setting authority permits the USPTO to revise the fees set by Congress under 35 U.S.C. §§ 41 (a) and (b) based on the aggregate costs of funding the USPTO, which in some cases has led to proposals to dramatically raise certain filing fees.

The USPTO has also proposed a recalibration of appeal fees and payment timing. In a post on the USPTO web site yesterday (here) the Director explained that upon further investigation, some of the initial appeal fee proposals are unfeasible.

In constructing our preliminary fee proposal, our initial thought was to refund most appeal fees if the application did not proceed to the BPAI. However, this proved to be a non-viable option as the law does not permit us to provide refunds of appeal fees.

As an alternative, the Office presented an option during the preliminary proposal at the PPAC hearings that included two components: (1) Shifting the payment timing for some of the appeal-related fees, and (2) Offering a combined $0 PGPub and Issue fee if the examiner withdraws a Final Rejection prior to an appeal being forwarded to the BPAI.

The second aspect of the initial proposal ($0 PGPub and Issue fee) raised implementation issues. As originally envisioned, a $0 PGPub and Issue fee would have been considered if the examiner withdrew a Final Rejection prior to an appeal being forwarded to the BPAI. However, withdrawing the Final Rejection can happen under many circumstances, including times when there is no error in prosecution by the examiner. For example, examiners often properly consider After Final amendments filed after notice of appeal, resulting in an allowance. Assessing when a $0 PGPub and Issue fee would be proper would require the USPTO to review the circumstances of each withdrawal of Final Rejection on a case-by-case basis, increasing the cost of patent operations.

Another consideration is that a $0 PGPub and Issue fee would eliminate the need for the notice of issue fee payment. Applicants often use this notification to decide if there is a need to file a continuing application. So after reviewing the resources that would be required to consider these situations on a case-by-case basis, and the possible negative impact applicants would experience, this particular piece of the initial proposal will not be pursued.

However, the Office does plan to maintain the first component in our rulemaking proposal as a means to provide savings to applicants—shifting the timing of when some of the appeal-related fees are paid. This approach provides the benefits related to the staging and timing of fee payments, without creating potential harm to applicants or additional implementation issues.

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.