Patent Law Blog (Patently-O)

BPAI Appeals Cyclic Decision Making

By Dennis Crouch

The USPTO's Board of Patent Appeals (BPAI) has an incredibly large backlog of ex parte appeals pending – more than 25,000. In 2006, that figure was less than 1,000 pending appeals. Since then, the backlog has grown month-after-month-after-month. Cases being decided by the BPAI now were fully briefed more than two years ago, and began the appeal briefing process more than three years ago. Most of those are on applications filed at least five years ago with priority claims reaching back even further. The current USPTO solution is to hire more Administrative Patent Judges – 100 new judges this fiscal year with at least that many arriving next year. I agree that this is an important part of the solution. However, in my view simply hiring more judges is insufficient.

The following chart looks at the number of BPAI decisions each month. The pattern reveals the results of a performance rating system (i.e., quota system) used to judge the Judges. Ordinarily, BPAI judicial performance is reviewed two times per year, and that process is reflected in a systematic incentive for the judges to do more work at the end of the fiscal year (September) and at the midpoint (March). The chart shows those months as the high-points for BPAI output and the subsequent months as low-points.

It seems to me that the current cadre of Administrative Patent Judges have proven that they have the capability of increasing their throughput by 60% or more in any given month. But, the Judges only act on that capability when properly motivated. I hate to play the "if I were manager" game, but once these phenomena are recognized, a likely general solution is fairly obvious – provide motivation for the Judges to more often work to their potential. Economists have shown that people almost always act in their own self-interest – that's why personal incentives work. However, in a team environment, personal incentives are rarely sufficient. Most highly successful teams also rely on team and other goal oriented incentives that suggest a culture of success. In my mind, the chart showing high-effort-as-deadline-approaches suggests a commitment to personal achievement but also a lack of commitment to the broader timeliness goal of ex parte patent appeal administration. Of course, timeliness is only one variable in the time-quality-cost equation, and the other important elements cannot be ignored.

As the PTO moves to more than double the size of the Board, now is the time to make structural changes to ensure a better future for this important segment of the Office.

Note - A key feature of the chart above is that the figures for FY2012 are significantly higher than for prior years. Unfortunately, the increase in productivity is still only slowing the growth of the backlog. With the increase in judges, I expect for the backlog to begin declining by the end of this fiscal year. Further, once implemented, the proposed increased appeal fees will also tend to reduce appeals filed.

BPAI's ex parte Decision Based Upon New Factual Findings Constitutes a New Ground of Rejection

In re Stepan Co. (Fed. Cir. 2011)

by Dennis Crouch

This is an important administrative patent law case holding that when the Board of Patent Appeals (BPAI) affirms a rejection based upon a new factual finding, it must identify the holding as a new ground for rejection.  This holding benefits patent applicants because it creates a right to either reopen prosecution or request a rehearing based upon the new ground.

Here, the examiner rejected Stepan's claims as anticipated and obvious.  Stepan had submitted a Rule 1.131 affidavit claiming a prior invention date in order to antedate one of the references. However, the examiner gave the affidavit no legal effect based upon the judgment that a prior public use of a portion of the invention qualified as 102(b) prior art because it occurred more than one year before the application filing date.

In the administrative appeal, the Board ruled that the applicant could claim priority to an earlier application and that, therefore the the prior art was no longer 102(b) prior art. However, the Board affirmed the rejection after holding that the prior use was still 102(a) prior art because the content of the Rule 1.131 affidavit was insufficient to prove Stepan's prior invention rights.

Writing for the Court of Appeals for the Federal Circuit, Judge Prost vacated the Board's decision — holding that the Board's factual finding on the sufficiency of the content of the affidavit was a new factual finding that was not a basis of the examiner's rejection being reviewed and, therefore, that the Board must identify the affirmed rejection as a new ground of rejection.

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. 

Note: Although this case involves an ex parte reexamination, the principles here apply equally with ordinary ex parte examination.  However, the decision will not apply to the new post grant review proceedings under the Leahy-Smith AIA because the review goes directly to the Board (the newly named Patent Trial and Appeal Board or PTAB) rather than an examiner.

No Litigation Estoppel until All Appeals Exhausted in Inter Partes Reexamination

Bettcher Industries v. Bunzl USA (Fed. Cir. 2011)

by Dennis Crouch

For one summer during college, I worked in a meat packing plant. In one hand, I wielded a power-operated knife while the other, gloved in chain-mail, held thawing pork-bellies. This case involves litigation over a hand-held rotary blade used in the commercial food processing industries. As is now common, after Bettcher filed its infringement lawsuit, Bunzl, the defendant, requested the patent undergo inter partes reexamination at the USPTO. Bunzl asserted the same prior art in both its reexamination request and in its invalidity defense before the district court.

The issue on appeal is the timing of the estoppel provision associated with inter partes reexamination under 35 U.S.C. § 315(c). Under the statute,

"[a] third-party requester whose request for an inter partes reexamination results in a[ reexamination] order … is estopped from asserting at a later time, in any civil action [related to patent law] … the invalidity of any claim finally determined to be valid and patentable on any ground which the third-party requester raised or could have raised during the inter partes reexamination proceedings.

As I read the statute, a reexamination requester is blocked from making particular invalidity arguments in court if certain conditions are met. These conditions include: (1) a final determination that the reexamined claim is valid; and (2) a finding that the invalidity argument is based on grounds that were or could-have-been raised by the requester during the inter partes reexamination.

In the case at hand, the USPTO had granted Bunzl's reexamination request, but the reexamination examiner had rejected Bunzl's position and issued a right-to-appeal-notice to Bunzl. Bunzl appealed to the BPAI, and recently lost the appeal, but had now requested rehearing by the Board. If Bunzl loses at the BPAI, it has a right to further appeal the reexamination to the Court of Appeals for the Federal Circuit.

In summary, at this point, the USPTO Examiner has made a "final" decisions that the claim is valid, and the BPAI has made a "final" decision that the claim is valid. However, Bunzl still has a right to appeal. The question from those facts is whether the claim is "finally determined to be valid" under the statute.

Deciding the issue, the Federal Circuit held that a claim is not "finally determined to be valid" under Section 315 until all appeals are exhausted.

[T]his court agrees with Bunzl that the estoppel provision of § 315 is triggered not when examination is completed but only after all appeal rights have been exhausted.

On remand, the district court will need to determine whether a new trial is necessitated by the additional prior art made available by the lack of estoppel.

Judge Reyna dissented – arguing that the estoppel issue is moot because the claim is anticipated as a matter of law.

The plain meaning of the claim language of the '325 patent reads on Bettcher's own prior art products, which include all of the structural features required by the claims, and which possess the capability of satisfying the functional or intended use limitations.

. . . .

No reasonable jury could conclude that the claims of the '325 patent were novel over the pre-1998 blades because none of the dispositive facts were disputed and the law is clear. I would reverse the district court and enter judgment as a matter of law of anticipation.

In reaching his outcome, Judge Reyna is finding that, as a matter of law, the wrong conclusion was reached by the trial jury, the district court judge, the original patent examiner, the reexamination examiner, the BPAI, and the other two judges on the court.

Comments by Crouch: This case is in tension with the recent Federal Circuit decision of Marine Polymer Tech. v. Hemcon, Inc. In that case, the court held that non-final arguments made during reexamination created intervening rights that relieved an accused infringer from liability, and that the intervening rights were created at the point of the arguments even though the reexamination was ongoing.

The Federal Circuit’s Rare Opportunity to Protect the Public from Agency Misconduct

Guest Post by Richard B. Belzer, Ph.D.

The Federal Circuit has before it an unusual petition for rehearing en banc. It involves an issue that, to my knowledge, has never before been heard by this court, and it's one that hardly anyone who practices patent law even knows about. Indeed, the reason that this issue is arising now is the U.S. Patent and Trademark Office has made an extraordinary (and heretofore successful) effort to prevent inventors and the patent bar from understanding it.

For this reason, my nonprofit organization has filed an amicus brief asking the Court to uphold statutory rights that, until recently, possibly no patent lawyer knew how to defend. If the Court acts favorably, it can undo decades of rogue agency practice at the PTO.

In In re Lovin, the key issue is whether an examiner's failure to state a prima facie case of obviousness, as required by MPEP Chapter 2100, is sufficient ground for the Board of Patent Appeals and Interferences to vacate or reverse a rejection. Lovin's brief alleges that the Board abandoned its longstanding practice of vacating rejections when the examiner had not made this case, and instead required the appellant to make a substantive showing of patentability in their appeal brief—that is, to prove a negative. The amicus brief of CFPH, LLC, a business unit of Cantor Fitzgerald, offered a complementary explanation of why the Board's interpretation of PTO Rule 41.37 was incorrect.

Regulatory Checkbook, the nonprofit I manage, seeks leave to intervene because the PTO lacked any legal authority to compel Lovin to provide this information. In fact, until December 22, 2009, the PTO had no legal authority to require any appellant to comply with any of the material information collections contained in 37 C.F.R. Part 41.

How could that be? To understand why, let's take a short trip to the Office of Management and Budget, which occupies the tall red brick building across Lafayette Park from the tall red brick building housing the Court of Appeals for the Federal Circuit.

BPAI Backlog: Only Growth

As Congress considers adding additional burden to the Board of Patent Appeals, the Board’s backlog of pending cases continues its dramatic rise. The process-flow of the Board appears to be fairly steady-state.  Each month, the Board receives about 1,150 cases and disposes of (decides or remands) about half (575) of those cases. The other half goes to the backlog.

Operating at this rate, it will take 3 1/2 years for the BPAI to dispose of the cases already in its docket. Thus, assuming that the BPAI takes appeals in-turn, an appeal docketed today will not be decided until the year 2015.

A note on the data: The chart is compiled from the BPAI’s own reports that are available online. [Link]  A case is only considered part of the BPAI backlog once it receives an “appeal number.” Appeal numbers are assigned only after briefing is complete.  The large “jump” in the reported backlog in early 2009 is due largely to a clerical change that identified a large number of briefed appeals that had not been given appeal numbers.

Inquiry: Does anyone have a nice memo or chart that they use to help in choosing the best after-final practice? (dcrouch@gmail.com)

Hyatt v. Kappos: Federal Circuit Opens Door to Post-BPAI Civil Actions

By Dennis Crouch

Hyatt v. Kappos (Fed. Cir. 2010) (en banc)

Summary: In a 6-2-1 en banc decision, the Federal Circuit has reversed its prior precedent and held that a patent applicant must be allowed to introduce new evidence in a Section 145 civil action filed to challenge a USPTO refusal to grant patent rights and that the issues implicated by the new facts must be considered de novo.

[W]e hold that the only limitations on the admissibility of evidence applicable to a § 145 proceeding are the limitations imposed by the Federal Rules of Evidence and Federal Rules of Civil Procedure. Therefore, we hold that the district court applied the wrong legal standard for the admissibility of evidence in a § 145 proceeding and abused its discretion when it excluded Mr. Hyatt's declaration. . . .

The particular significance of a § 145 civil action is that it affords an applicant the opportunity to introduce new evidence after the close of the administra-tive proceedings—and once an applicant introduces new evidence on an issue, the district court reviews that issue de novo.

However, the Court also wrote that an applicant may still be barred from presenting new "issues" in the civil action and that, when no new evidence is presented, that BPAI findings and rulings should be given deference under the Administrative Procedures Act.

Impact: This decision could be seen as relieving some pressure on applicants to ensure that their cases for patentability are exhaustively presented to the USPTO's internal Board of Patent Appeals and Interferences (BPAI). The decision is especially important in light of the growing role of BPAI appeals in the ordinary course of patent prosecution. In its argument, the USPTO suggests that a strategic applicant may now choose hold-back some evidence from the BPAI appeal in order to overcome the APA deference if the case goes to the District Court.

Statute in Question: 35 U.S.C. § 145 creates a right to a "civil action" in Federal District Court against the USPTO Director whenever an applicant is "dissatisfied with the decision of the Board of Patent Appeals and Interferences in an appeal under section 134(a)." In the alternative, an applicant may appeal directly to the Court of Appeals for the Federal Circuit.

Background: Gil Hyatt is a well-known inventor and successful patentee. Hyatt filed a civil action in 2003 after the BPAI sustained written description and enablement rejections for seventy-nine of Hyatt's claims. The examiner had issued "2546 separate rejections of Mr. Hyatt's 117 claims" based on the doctrines of inadequate "written description, lack of enablement, double patenting, anticipation, and obviousness." The Board reversed all of the examiner rejections except for the § 112 p1 arguments. Complicating this case is the fact that the application's claimed priority date is 1975. Hyatt has aggressively pushed the bounds of USPTO practice. This decision is one of more than a dozen Federal Circuit decisions focusing on Hyatt's patent rights. When California pursued Hyatt for tax revenue for his patent licenses, Hyatt took the case to the Supreme Court and eventually won a $388 million judgment against the state of California for invasion of privacy.

After the Board affirmed a set of written description and enablement rejections, Hyatt filed a Section 145 civil action and included a declaration offering new evidence of enablement and written description. The district court excluded that inventor-declaration from evidence based on Hyatt's "negligence" in failing to previously submit the information to the PTO. In a 2009 panel decision, the Federal Circuit held that the district court had properly excluded the new evidence – holding that the district court may properly exclude evidence that Hyatt should have produced to the PTO. That opinion was penned by former Chief Judge Michel and Joined by Judge Dyk. Judge Moore wrote a vigorous dissent that supported a patent applicant's right to a full civil action including the right to submit additional evidence when challenging a PTO decision.

Judge Moore wrote the en banc decision that was joined by Chief Judge Rader and Judges Lourie, Bryson, Linn, and Prost. Judge Dyk dissented and was joined by Judge Gajarsa. Judge Newman Concurred-in-Part – arguing that the civil action should not give deference to PTO factual determinations.

A key to the majority decision is the notion that a Section 145 civil action is not an appeal, but rather a new, separate lawsuit filed to force the PTO to act. In its analysis, the court began with a focus on the 150-year history of the civil action right (and its predecessor Bill in Equity) and the reality that new evidence has always a part of those remedies. See, e.g., Gandy v. Marble, 122 U.S. 432 (1887) (explaining that the [predecessor] § 4915 suit in equity was "not a technical appeal from the Patent Office, nor confined to the case as made in the record on that office"). The court then reviewed the current text of the statute, implications of the APA, and various policy arguments before reaching its conclusions.

In a 37-page dissent, Judge Dyk argued that the majority made an improper leap from (1) the correct premise that new evidence should be admissible in the civil action to (2) the incorrect conclusion that the law provides no meaningful limits on the introduction of new evidence regardless of what was presented at the BPAI.

Notes:

• Michael Barclay's Discussion of the case
• Oral Arguments
• Appellate specialist Aaron Panner argued the case on behalf of Hyatt. The USPTO's case was argued by Beth Brinkman of the DOJ. In the original panel, the late Ken Bass has argued for Hyatt and Bill Jenks for the Government. Michael L. Martinez represented Hyatt in the civil action.

Patentable Subject Matter at the Board of Patent Appeals

The work of the Board must go on . . . . In several recent decisions, the Board of Patent Appeals (BPAI or Board) has continued to affirm rejections of claims on patentable subject matter eligibility grounds under 35 U.S.C. § 101.

In Ex parte Kelkar, App. No. 2009–004635 (BPAI, September 24 ,2010), the applicant had claimed a method of determining the similarity between two genetic profiles and a computer program stored on a recordable medium for accomplishing the method. The method involves the broad steps of iteratively matching gene expression profile pairs in clusters until a best match is found. Because the method neither recites any particular machinery nor transforms an article into a different state or thing, the Board held that it failed the machine-or-transformation test. Citing Flook (1978), the Board then held that the claim was improperly directed to an abstract algorithm because the underlying innovation was the unpatentable mathematical algorithm. Some of the method claims included a preamble statement that the method occurred “in a computer.” The Board found that limitation at most a “a field-of-use limitation that is insufficient to render the otherwise ineligible process . . . patent eligible.”

The Board went on to affirm the rejection of the computer program claims that were “stored on a recordable medium.”  The Board agreed with the examiner that those the storage medium limitation was broad enough to encompass unpatentable “carrier wave storage.” (See Nuijten (Fed. Cir. 2007)). The Board wrote:

When the broadest reasonable interpretation of a claim covers a signal per se, the claim must be rejected under 35 U.S.C. § 101 as covering nonstatutory subject matter. See In re Nuijten, 500 F.3d 1346, 1356-57 (Fed. Cir. 2007) (transitory embodiments are not directed to statutory subject matter). See also, Subject Matter Eligibility of Computer Readable Media, 1351 Off. Gaz. Pat. Office 212 (Feb. 23, 2010).

In Ex parte MacKenzie, App. No. 2009–-7332 (BPAI, October 4, 2010), the Board issued a new grounds of rejection under Section 101 because the claimed method was directed to an abstract process under Bilski. MacKenzie's rejected claim 1 reads as follows:

1. A method for use in a device associated with a first party for performing a signature operation on a message substantially based on the digital signature algorithm (DSA), the method comprising the steps of:

generating in the first party device a first component associated with the signature operation based on assistance from a device associated with a second party, wherein the assistance from the second party device is received as a first message from the second party device;

transmitting the first component to the second party device;

generating in the first party device a second component associated with the signature operation based on further assistance from the second party device, wherein the further assistance from the second party device is received as a second message from the second party device, wherein the second message comprises results generated using the transmitted first component; and

outputting a form of the first component and the second component as a result of the DSA signature operation.

Although MacKenzie's claim does recite various devices, the Board saw these as “nominal” limitations to “generic devices.” The Board wrote:

As the unpatentability of abstract ideas was reaffirmed by the U.S. Supreme Court in Bilski (2010), clever claim drafting involving the nominal addition of generic structures cannot circumvent the principles articulated by the Court. That is, even when a claim appears to apply an idea or concept in combination with a nominal claim to generic structure(s), one must ensure that it does not in reality seek patent protection for that idea in the abstract.

In Ex parte Venkata, App. No. 2009–007302 (BPAI, October 5, 2010), the Board held that “the claim’s body recites nothing more than software [and therefore] lacks statutory subject matter.” Venkata's claim was directed to a “system” that included two “discovery agents” that operate either via a local network or via an Internet host.

Kelkar's patent application is owned by IBM and prosecuted by its in-house patent department. MacKenzie's patent application is owned by Lucent and prosecuted by the small firm of Ryan, Mason & Lewis. Venkata's patent application is owned by Nokia and prosecuted by the small firm of Hollingsworth & Funk.

Notes:

The USPTO's January 2010 guidance on the Subject Matter Eligibility of Computer Readable Media is repeated as follows. I would argue that the Nuijten decision – if read to categorically exclude transitory embodiments, is no longer good law post-Bilski.

The United States Patent and Trademark Office (USPTO) is obliged to give claims their broadest reasonable interpretation consistent with the specification during proceedings before the USPTO. See In re Zletz, 893 F.2d 319 (Fed. Cir. 1989) (during patent examination the pending claims must be interpreted as broadly as their terms reasonably allow). The broadest reasonable interpretation of a claim drawn to a computer readable medium (also called machine readable medium and other such variations) typically covers forms of non-transitory tangible media and transitory propagating signals per se in view of the ordinary and customary meaning of computer readable media, particularly when the specification is silent. See MPEP 2111.01. When the broadest reasonable interpretation of a claim covers a signal per se, the claim must be rejected under 35 U.S.C. § 101 as covering non-statutory subject matter. See In re Nuijten, 500 F.3d 1346, 1356-57 (Fed. Cir. 2007) (transitory embodiments are not directed to
statutory subject matter) and Interim Examination Instructions for Evaluating Subject Matter Eligibility Under 35 U.S.C. § 101, Aug. 24, 2009; p. 2.

The USPTO recognizes that applicants may have claims directed to computer readable media that cover signals per se, which the USPTO must reject under 35 U.S.C. § 101 as covering both non-statutory subject matter and statutory subject matter. In an effort to assist the patent community in overcoming a rejection or potential rejection under 35 U.S.C. § 101 in this situation, the USPTO suggests the following approach. A claim drawn to such a computer readable medium that covers both transitory and non-transitory embodiments may be amended to narrow the claim to cover only statutory embodiments to avoid a rejection under 35 U.S.C. § 101 by adding the limitation "non-transitory" to the claim. Cf. Animals - Patentability, 1077 Off. Gaz. Pat. Office 24 (April 21, 1987) (suggesting that applicants add the limitation "non-human" to a claim covering a multi-cellular organism to avoid a rejection under 35 U.S.C. § 101). Such an amendment would typically not raise the issue of new matter, even when the specification is silent because the broadest reasonable interpretation relies on the ordinary and customary meaning that includes signals per se. The limited situations in which such an amendment could raise issues of new matter occur, for example, when the specification does not support a non-transitory embodiment because a signal per se is the only viable embodiment such that the amended claim is impermissibly broadened beyond the supporting disclosure. See, e.g., Gentry Gallery, Inc. v. Berkline Corp., 134 F.3d 1473 (Fed. Cir. 1998).

DAVID J. KAPPOS
Under Secretary of Commerce for Intellectual Property and
Director of the United States Patent and Trademark Office

Patent Term Adjustments – Accounting for Rejections Withdrawn after Appeal-Brief Filings

The next Patent-Term-Adjustment (PTA) challenge appears to be simmering.

The ordinary term of a patent is twenty-years from the original patent application filing date. The first several years of that term are generally worthless because they are spent prosecuting the application. The Patent Act provides for a patent term adjustment in cases where the patent prosecution process is unduly slow. With the current USPTO backlog, about 80% of issued patent receive some term adjustment. The average PTA for recently issued patents is just shy of two years. Thus, any discussion of the US twenty-year patent term must consider the real impact of PTA. In Wyeth v. Kappos, 591 F.3d 1364 (Fed. Cir. 2010), the Federal Circuit held that the USPTO had been substantially under-calculating the PTO due to patentees. That change boosted the average calculated PTA by about six-months.

Now, a new PTA challenge appears to be brewing in relation the dramatic increase in the number of appeals to the Board of Patent Appeals & Interferences (BPAI). There is typically a fairly long delay between (1) the point that a patent applicant files a notice of appeal and (2) the point that the appeal is docketed at the BPAI. That delay is due to a lengthy briefing and review period. The patent examiner maintains control over the case during that entire briefing period. It turns out that the majority of appeals never actually reach the BPAI. Rather, the most common occurrence is that at some point during the briefing-period the patent examiner withdraws the appealed rejection and subsequently either issues (1) a notice of allowance or else (2) a new rejection.

The brewing patent term adjustment issue involves how to account for the prosecution delay when a patent applicant appeals a rejection that is later withdrawn prior to a BPAI decision . The delay from notice-to-appeal to withdrawal-of-rejection is often around eight months.

PTA calculations are somewhat complex. 35 U.S.C. 154(b)(1) divides the "patent term guarantee" into three parts: (A) adjustments for delayed USPTO office responses; (B) adjustments for application pendency of more than three years; and (C) adjustments for delays due to appeals, interferences, and secrecy orders. Each Part considers aspects of appeals to the BPAI: Part (A) accounts for any USPTO delay that is more than four-months in responding to "an appeal taken under section 134" or to a decision by the BPAI where allowable claims remain; Part (B) states that the three-year pendency guarantee does not include "any time consumed by appellate review by the Board of Patent Appeals and Interferences or by a Federal court;" while Part (C) accounts for time in appellate review, but only if "the patent was issued under a decision in the review reversing an adverse determination of patentability."

In recent papers, the USPTO petitions office has rejected any PTA for the situation discussed above – where the applicant files a notice of appeal and appeal brief but then the examiner withdraws the rejection, so long as the withdrawal occurs within four-months of the appeal brief filing date. Running through the three-parts, the PTO argues that: Part (A) does not apply because the response to the appeal occurred within four months of the appeal brief. (37 U.S.C. §1.703 specifically interprets "appeal taken" to mean filing of the appeal brief rather than notice of appeal.) Part (B) does not apply because the USPTO interprets every day subsequent to the notice of appeal as being "consumed by appellate review." Finally, Part (C) does not apply because the board did not reach a decision.

Wrong Interpretation: The PTO's interpretation of the statute is not clearly right and is probably wrong because of the inconsistency in how the Office interprets the timing of BPAI review and because the current interpretation frustrates the "guarantees" provided in the statute. In particular, for Part (A) the USPTO states that an appeal is "taken" (and PTA counting-started) only after the applicant files the appeal brief while for Part (B) the USPTO states that time is being consumed by appellate review (and PTA counting-delayed) as soon as a notice of appeal is filed. The better interpretation is that "appellate review by the Board" for Part (B) does not begin until after the examiner answer. Certainly, until that point, the case-file remains under the examiner's control and not under review by the Board.

Board of Patent Appeals

Although the Board of Patent Appeals (BPAI) is working harder than ever, its backlog continues to rise. The first chart below shows the BPAI’s inventory of undecided appeals in ex parte cases. This only includes fully-briefed appeals whose dockets have been transferred to the BPAI and does not include the thousands of other applications where awaiting briefing. The average timing from notice-of-appeal to appellate decision is 29 months.

I spoke with BPAI officials who identified the jump in early 2009 as a one-time issue involving the bulk transfer of cases that had been previously delayed.

The next chart shows the number of Ex Parte cases decided each month. The average number of cases being decided each month continues to rise. However, the chart also reveals a high month-to-month variability. That variability is explained by the BPAI judge quota system. BPAI judge performance is primarily judged two times per year, and that process is reflected in a systematic incentive for the judges to do more work in Feburary and August and then less work in March and September.

Although the BPAI is deciding more cases than ever, inventory continues to rise because more appeals are being filed than ever.

BPAI Review of Obviousness Rejections

Ex parte Quist (BPAI 2010) (precedential opinion)

In only its second precedential opinion of 2010, the Board of Patent Appeals and Interferences (BPAI) has further developed its procedures for its review of obviousness rejections and consideration of evidence of nonobviousness.

On Board review, if the appellant raises the issue as to whether the examiner’s conclusion of obviousness was in error, based in part on the proffered evidence of secondary considerations, the panel must consider if the examiner erred in determining patentability, based upon the totality of the record. In such instances, the Board panel must consider anew all the relevant evidence of obviousness, both for and against, in view of the argument on the issue. One such instance requiring a reweighing is seen in the present appeal – if the Appellants argue that the Examiner erred in determining that the weight of the evidence supports a conclusion of obviousness, the Board must review that conclusion of obviousness anew to see if the preponderance of relevant evidence properly before the Office supports that conclusion.

This decision should be seen as a continuation of the Ex parte Frye (BPAI 2010) holding that the Board must review "the particular finding(s) contested by an appellant anew in light of all the evidence and argument on that issue.”

Despite taking a fresh look at the evidence and conclusions, the BPAI held that the examiner had been correct in determining that the claimed "process for the manufacturing of decorative boards with an abrasion resistant surface and edges" was indeed obvious.

Over 85% of BPAI appeals focus on obviousness. The BPAI has a current backlog of over 16,000 cases. At its current rate of disposal, this figure represents a 29-month backlog.

 

Evidence Based Prosecution: The Status of Applications Filed 4 ½ Years Ago

This morning I created a dataset of prosecution information for 462 randomly selected utility patent applications filed in December 2004 and January 2005 to get a sense of where those applications stand after 4 ½ years of prosecution. Overall, 48% of the applications have issued as patents; 26% have been abandoned; and 26% are still pending. (Note – I excluded the 12% of cases from my sample that were never published as applications because data is not available for most of them).

Table 1 below shows the detailed status for each case as provided by the USPTO's PAIR system. All but two of the pending cases have received at least an initial examination. The two still-unexamined cases are both software-related applications.

High-Level Status	Status	Percent of Cases
Patented	Patented Case	47.8%
Abandoned	Abandoned -- Failure to Respond to an Office Action	25.2%
Abandoned	Abandoned -- Failure to Pay Issue Fee	0.7%
Abandoned	Expressly Abandoned -- During Examination	0.2%
Pending	Non Final Action Mailed	8.9%
Pending	Final Rejection Mailed	6.4%
Pending	Response to Non-Final Office Action Entered and Forwarded to Examiner	5.0%
Pending	On Appeal -- Awaiting Decision by the Board of Appeals	1.0%
Pending	Notice of Allowance Mailed -- Application Received in Office of Publications	1.0%
Pending	Notice of Appeal Filed	0.7%
Pending	Publications -- Issue Fee Payment Verified	0.5%
Pending	Examiner's Answer to Appeal Brief Mailed	0.5%
Pending	Docketed New Case - Ready for Examination	0.5%
Pending	Appeal Awaiting BPAI Docketing	0.5%
Pending	Withdrawn Abandonment awaiting examiner action	0.2%
Pending	Response after Final Action Forwarded to Examiner	0.2%
Pending	Appeal Brief (or Supplemental Brief) Entered and Forwarded to Examiner	0.2%
Pending	Advisory Action Mailed	0.2%
Table 1

An often frustrating aspect of application pendency is that abandoned cases can be kept alive by filing a continuation application. Of those cases that have been either patented or abandoned, 25% have one or more descendents in the form continuation or CIP applications. (I have not determined whether those continuations are themselves still pending.)

Of the cases already completed (no longer pending), the median patent took 2.6 years to issue while the median abandonment did not occur until 3.1 years into prosecution. Along this line, the longer a case was pending, the greater the likelihood that the case was abandoned. Thus, 71% of cases that were pending for fewer than three years were allowed while only 29% of cases that were pending for three to four and a half years were allowed.

The chart below shows the percentage of applications pending as a function of the number of years in prosecution. Although the average time in prosecution for this cohort cannot be calculated yet (because so many cases are still pending), the median time in prosecution – as seen in the chart – is 3.3 years.

The patent office examination corps is divided into various technology centers. In my sample, TC 2800 (Semiconductors, Electrical and Optical Systems and Components) had allowed the highest percentage of cases (70%) and had the lowest rate of applications still-pending after 4 ½ years (3%). TC 1600 (Biotechnology and Organic Chemistry) has the highest abandonment rate (36%) while TC 2600 has the highest percentage of cases still pending (48%).

Timeline of the BPAI Backlog

I used data reported by the Board of Patent Appeals and Interferences (BPAI) to compile the chart above. The chart reports the number of pending appeals each month from October 1997 – May 2009.

Understanding the Role of the Board of Patent Appeals: Ex Parte Rejection Rates on Appeal

By Dennis Crouch     PDF Version of the Article

Abstract:

This study provides an issue-by-issue analysis of decisions on ex parte appeals by the Board of Patent Appeals and Interferences (BPAI) of the United States Patent and Trademark Office (USPTO). All the cases in this study were appealed to the BPAI after one or more of the pending claims were rejected by a patent examiner. 

In the study, I report that most BPAI appeals focus on two or more issues. Of those, the majority of issues (61%) are affirmed and the remainder reversed. When more issues are presented, the case as a whole becomes more likely to be affirmed-in-part. In addition, I find that the likelihood that a case is affirmed has increased over time (Jan 2008 - May 2009).

By far, the most common issue on appeal is obviousness. I find that 87% - 90% of ex parte BPAI decisions decide an issue of obviousness. Only 4% of appeals consider neither obviousness nor novelty. The major aberration of this trend is for cases involving biotechnology and organic chemistry (TC 1600). 18% of BPAI decisions arising from TC 1600 focus on issues other than obviousness and novelty.

In comparing results by issue, I find that obviousness rejections are more likely to be affirmed than are other types of rejections. Most cases (74%) that discuss neither obviousness nor novelty are reversed.

The BPAI is becoming increasingly important. Over the past several years, the BPAI has seen a dramatic rise in the number of appeals being filed. In addition every recent patent reform legislative proposal has included an increased role for the Board.

Understanding the Role of the Board of Patent Appeals: Ex Parte Rejection Rates on Appeal

Every proposed patent reform measure includes an expanded role for the US Patent & Trademark Office's administrative patent court - known today as the Board of Patent Appeals and Interferences, the BPAI, or simply the Board. Even without legislation, the role of the BPAI has expanded greatly in the past few years. The number of ex parte appeals in FY2009 is expected to at least double the record-filing of 6,400 appeals in FY2008. I suggest that two factors have led to this short term dramatic rise in appeals: (1) an increase in rejection-rate by patent examiners; and (2) attempts by the PTO to limit non-appeal avenues for achieving full claim scope. These limits include the PTO's proposed rules that would curtail the applicant's ability to file multiple requests for continued examination (RCEs), continuation applications, and a multitude of claims. Although these rules have only been threatened, they impact appeal practice because they may apply to already-pending applications. Although more gradual, two additional influences on the rise in appeals include: (1) the continued perceived value of patent rights and (2) the continued rise in the number of patent application filed each year.

During patent prosecution, an applicant has a right to appeal to the Board after its application is twice rejected. 35 U.S.C. 134. In this short article, I look at how the Board responds to those rejections on appeal. Many appeals involve multiple rejections each of which may be affirmed or reversed. In addition, the Board occasionally introduces a new ground for rejection even after reversing an examiner decision. This analysis opens-up these decisions and provides data issue-by-issue.

My data comes from two primary sources. First, using Westlaw, I downloaded copies of the approximately 6,000 ex parte BPAI decisions issued between January 2008 and May 2009. Using an automated script, I extracted data from each of those appeals, including the holding and the extent of discussion of various issues. (i.e., how often "obviousness" or "enablement" is discussed in the opinion.) In addition, just under 200 ex parte decisions from 2009 were randomly selected and scored by hand to determine how the BPAI decided individual issues within the appeals. Board decisions typically identify a series of issues and then decide each issue. In Ex Parte Cypher, 2009 WL 1162435, 2008-4722, (Bd. Pat. App. Inter. 2009), for instance, the Board identified two issues: "(1) Claims 1-4 … are rejected under 35 U.S.C. § 103(a) as being unpatentable over Loh in view of McFarling. (2) Claims 9-11 … are rejected under 35 U.S.C. § 103(a) as being unpatentable over Loh and McFarling in view of Yeh." In Cypher, both issues were affirmed. As a consequence, the data for this case reflects that two obviousness issues were raised, both of which were affirmed.

Results:

In the hand-scored sample, the average Board decision considered 2.1 issues (median of two issues). Approximately 61% of decided issues are affirmed on appeal and 39% are reversed. (In this study, fewer than 1% of issues were expressly not decided.) The issue-by-issue analysis fits with the overall holdings for cases on appeal. In the hand-scored sample, 59% of the cases were affirmed as a whole, 12% were affirmed-in-part, and 29% were reversed. (This sample parallels the Board's own statistics for FY2009 which indicate that 60% of its decisions on the merits are affirmances, 15% affirmance in part, and 25% reversals). Table 1 shows the issue-by-issue results alongside the overall case-holding for the hand-scored sample.

	Issue-by-Issue Results	Case-by-Case results
Affirmed	61% of issues affirmed	59% of cases affirmed
Affirmed-in-Part	N/A	12% of cases affirmed-in-part
Reversed	39% of issues reversed	29% of cases reversed
Table 1

As you might expect, when there is a strong correlation between the overall case holding of an appeal and the holdings on individual issues at issue in the appeal. When the overall case-holding is affirmed, the vast majority of issues are also affirmed. However, in the hand-scored sample, about 10% of cases that were affirmed included some individual issues that were reversed. Often, the reversed issues were rejections argued by the examiner in the alternative. In Ex Parte Mcquiston, 2009 WL 598537, 2008-3224 (Bd. Pat. App. Inter. 2009), for instance, applicant's claim 1 had been rejected as (1) anticipated by Golds; (2) obvious over Golds; (3) anticipated by Simso; and (4) obvious over Simso. The Board rejected the first three of these rejections, but the claim remained unpatentable as obvious over Simso and the examiner's decision affirmed as a whole.

Table 2 compares the case-holding with the issue-by-issue analysis based on our hand-scored sample of 200 BPAI decisions. As seen in Table 2, when a case is affirmed-in-part, roughly half (on average) of the issues are affirmed and half are reversed. In cases that were reversed, every issue was also reversed. (?² P<.01).

Case Holding	Percent of Issued Affirmed	Percent of Issues Reversed
Affirmed	92%	8%
Affirmed-in-Part	51%	49%
Reversed	0%	100%
Table 2

Number of Issues on Appeal: In Mcquiston, the applicant needed to address each alternate reason for rejection in order to win on appeal. In most cases, however, each claim is rejected for only a single reason - usually obviousness. See infra. The applicant can then choose how to group issues on appeal. If, for instance, claims 1-10 are each rejected as obvious, the applicant could choose to argue each claim separately or cluster the claims into one or more groups that are then argued as a unit. Chart 1 uses the hand-scored data to presents the likelihood of a particular case-holding as a function of the number of issues on appeal.

When only one issue is presented, the result in the case tracks the result of that issue. As more issues are presented, the likelihood of a split affirmed-in-part decision rises dramatically while the likelihood of either complete affirmance or complete reversal drops. Chart 2 is a cumulative frequency for the number of issues presented on appeal. In our sample, the number of claims ranged from 1 to 8. The median was 2 claims and the mode 1 claim. About 94% of decisions discussed four or fewer issues.

The Board is authorized to offer new grounds for rejection, and did-so in about 4% of the cases in the hand-scored study. The most common new ground was for obviousness.

Obviousness: Obviousness is the bread and butter of patent examinations. In this study, I also show that it is the mainstay of BPAI ex parte appeals. 90% of appeals in my hand-scored study included at least one obviousness issue that was decided on appeal. More than half of the appeals (54%) focused only on obviousness. The closest runner-up issue – anticipation – was an issue in 37% of the appeals. Other issues on appeal (each with a frequency of < 5%) included in descending frequency: written description requirement; indefiniteness, patentable subject matter, obviousness-type double patenting, and enablement.

For applicants, the fact that the majority of issues involve obviousness spells trouble for applicants. In the hand-scored data, the Board affirmed obviousness findings much more often it did for other grounds of rejection. Specifically, the Board affirmed 65% of the appealed obviousness issues, but affirmed only 52% of the appeal issues made on grounds other than obviousness. Table 3 compares these results for the hand-scored sample of 200 cases. (?² P<.05).

Issue Holding	Obviousness Rejection	Other Grounds of Rejection
Affirmed	65%	52%
Reversed	35%	48%
Table 3

The pervasiveness of obviousness issues is further confirmed by the larger sample of 6,000 ex parte decisions issued between January 2008 and May 2009. Using a parsing script, I looked for discussions of obviousness issues by counting the number of times that the terms such as "obvious" and "35 U.S.C. § 103(a)" appeared in each opinion. In that sample, 87% of the decisions discussion obviousness while only 13% do not discuss obviousness. Table 4 shows the roughly parallel results.

	Hand-Scored Sample	Automatically Parsed Sample
	(n ˜ 200)	(n ˜ 6,000)
Obviousness at Issue	90% of cases decide an obviousness issue	87% of cases discuss either obviousness or Section 103(a)
No Obviousness Issue	10% of cases do not decide any obviousness issue	13% of cases do not discuss obviousness or Section 103(a)
Table 4

In order to ensure that I was picking up an actual obviousness issue, I created a script that looked for cases where obviousness was more intensely discussed, i.e., where obviousness terms were mentioned at least three times. In those cases where obviousness was intensely discussed, the Board affirmed the examiner's rejections decisions 59% of the time. In cases where obviousness was not discussed at all, the examiner was affirmed in only 37% of cases. Table 5 compares these results for the automatically-parsed sample of 6000 cases. (?² P<.01).

Case Holding	Obviousness Intensely Discussed	No Discussion of Obviousness	No Discussion of Obviousness or Novelty
Affirmed	59%	37%	22%
Affirmed-in-Part	15%	10%	4%
Reversed	26%	47%	74%
Table 5

The far right column of Table 5 provides a compelling statistic. 358 cases in the sample had no discussion of either obviousness or novelty. Of those cases, 74% were reversed on appeal.

Technology Center Specific Results: Patent examination is divided amongst various technology centers. Although the substantive patent laws do not vary across technology lines, patent practice can vary greatly. The BPAI regularly updates a statistical breakdown of its opinions by tech center. [Link]. Table 6 is derived directly from the BPAI statistics for FY2009 through May 2009 and shows the percentage of decisions on the merits from each tech center that arrive affirm, affirm-in-part, or reverse, respectively.

Technology Center	Affirmed	Affirmed-In-Part	Reversed
1600 Biotechnology and Organic Chemistry	59%	15%	27%
1700 Chemical and Materials Engineering	69%	11%	20%
2100 Computer Architecture, Software, and Information Security	63%	13%	24%
2600 Communications	64%	14%	21%
2800 Semiconductors, Electrical and Optical Systems and Components	65%	11%	24%
3600 Transportation, Construction, Electronic Commerce, Agriculture,	47%	22%	31%
3700 Mechanical Engineering, Manufacturing, Products	53%	17%	30%
Table 6

Focusing in on obviousness again, it is interesting to see that appeals from Tech Center 1600 (Biotechnology and Organic Chemistry) are the least likely to discuss obviousness. The most appeal decisions emerge from Tech Center 1700 (Chemical and Materials Engineering), and those appeals are the most likely to include a discussion of obviousness. In particular, a discussion of obviousness is found in 92% of TC 1700 appeals but only 76% of TC 1600 appeals. (?² P<.01). The difference is partially explained by TC 1600's more rigorous application of the Section 112 issues of written description, enablement and indefiniteness. Table 6 is again derived from the automatically-parsed sample of 6,000 Board decisions. For each tech center, Table 7 indicates the percent of cases that discuss obviousness; both obviousness and novelty; novelty; and neither obviousness nor novelty. This table again highlights (1) the focus of the PTO on obviousness issues (and to a lesser extent novelty issues) and (2) the differences of TC 1600 from the rest of patent practice.

	Percent of Cases Issue on Appeal
Technology Center	Obviousness+	Obviousness and Novelty	Novelty+	Neither Obviousness Nor Novelty
All	87%	31%	40%	4%
1600 Biotechnology and Organic Chemistry	76%	20%	26%	18%
1700 Chemical and Materials Engineering	92%	29%	34%	3%
2100 Computer Architecture, Software, and Information Security	82%	29%	43%	3%
2600 Communications	89%	31%	39%	3%
2800 Semiconductors, Electrical and Optical Systems and Components	88%	35%	45%	3%
3600 Transportation, Construction, Electronic Commerce, Agriculture,	87%	30%	40%	2%
3700 Mechanical Engineering, Manufacturing, Products	87%	37%	47%	2%
Table 7

 

Notes:

• Thanks to two of my research assistants – Patrick Barnacle and Jaron Brunner – for helping me to score the individual decisions by hand.

• The BPAI only publishes opinions once the underlying application is either published or issued as a patent. Consequently, this article misses those

Appealing BPAI Rejections to the Federal Circuit

In re Baggett (Fed. Cir. 2009) (nonprecedential)

The Board rejected Bagget's patent claims as obvious. On appeal, the Federal Circuit largely affirmed - holding that the the administrative body's factual findings were supported by the requisite "substantial evidence" and that the Board had properly “articulated [its] reasoning with some rational underpinning to support the legal conclusion of obviousness" as required by KSR. (Quoting KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 418 (2007)).

The only portion vacated involves an error interpreting the term "memoization." The Board had initially misinterpreted the term as memorization. After a petition for rehearing, the Board corrected its mistake - but only as to one of the four claims containing the term. On appeal, PTO Solicitor Chen explained that Baggett had only addressed the one claim in the petition for rehearing, but offered that a remand would still be appropriate.

Notes:

• This case may serve to emphasize the difficulty in appealing an obviousness decision from the Board of Patent Appeals & Interferences. The "substantial evidence" standard is low, i.e., "more than a mere scintilla of evidence." Likewise, the legal conclusion of obviousness now looks merely for "some rational underpinning."
• In a note, Hal Wegner identifies four Federal Circuit appeals up for review that may focus on obviousness: In re Applied Materials Israel Ltd., Fed. Cir. No. 2009-1083 (argument July 7, 2009); In re Mettke, Fed. Cir. No. 2009-1125; In re Roth, Fed. Cir. No. 2009-1223; and In re Rivera, Fed. Cir. No. 2009-1123.
• Although it may have been amended during prosecution, the original claim 1 reads as follows: 1. A method of producing constructed fares that includes an arbitrary added to a published fare, said method executed in a computer system, the method comprising: determining interior cities that appear with gateway cities in arbitraries for the airline; searching for gateway cities corresponding to the determined interior cities appearing in the arbitraries; and applying an arbitrary corresponding to one of the interior cities to a published fare involving one of the gateway cities to produce the constructed fare.
• Read the decision: 09-1029.pdf

BPAI Backlog

In January 2009, I reported on a dramatic rise of BPAI Appeals and the associated backlog. Since then, the backlog has almost doubled to over 10,000 pending appeals. This is the largest backlog on record and tends to explain why the Board is attempting to implement procedures to streamline the process.

At the Board's average rate of 500 disposals per month, the backlog would take over 20 months to eliminate. However, that result requires the counterfactual assumption that no additional appeals will be filed during that period. Rather, though four months remain in FY2009, the number of ex parte appeals filed this year will likely more than double the record-filing of 6400 ex parte appeals in FY2008. Thus, appeals are being filed at a rate about 2 1/2 times faster than the Board's usual work flow rate. In May 2009, for instance, the Board disposed of 523 appeals, but received 1641 new appeals to decide.

See, BPAI WEBSITE; PATENTLY-O POST.

Appealing BPAI Rejections: Part I

My keen research assistant Patrick Barnacle pulled up records on 56 ex parte patent appeals that have been decided by the Court of Appeals for the Federal Circuit since March 2005. All of these cases arise from rejections sustained by the USPTO's internal Board of Patent Appeals and Interferences (BPAI). We are working to create a more complete database. In the meantime, I wanted to report some preliminary results on timing.

The median ex parte appeal took just over fifteen months to complete as measured from the date of the BPAI decision until the date of the Federal Circuit decision. As measured from the filing of the CAFC Notice of Appeal, the median appeal took exactly one year (365 days). Some appeals took longer: Comiskey, Ferguson, and Bilski each took more than two years from the NOA, but they were all tied to en banc decisions. About 25% of the appeals took less than ten months from the NOA.

Once oral arguments (if any) are complete, the Federal Circuit is rather quick at issuing an opinion. The median decision was issued 47 days after the oral arguments. (Again, a skewed average of 86 days is driven by the handful of en banc decisions) 30% of the decisions came within one week of oral arguments - most of those took one to two days.

We have not yet analyzed the correlation between delay and results, but it appears that especially quick decisions tend to favor the PTO over the applicant. As you might expect, delays in judgment correlate with longer opinions; opinions marked precedential; dissenting opinions; and opinions with Judge Newman on the panel.

BPAI Statistics: How Many Opinions do BPAI Judges Write?

As a follow-up to an earlier post on BPAI decisions; appeal efficiency and potentially over-worked Administrative Patent Judges, I took a look at BPAI decisions from January and February 2009. According to BPAI's statistics, the BPAI disposed of 993 ex parte appeals during that two month period. Based on the PTO's FY2009 numbers, about 9% of those disposals were either remands or dismissals without a decision on the merits. The examiner's rejection was affirmed in 55% of the cases; Affirmed-in-part in 14% of the cases; and reversed in 23% of the cases.

776 of the Jan-Feb 2009 ex parte decisions show-up in the Westlaw database. Those 776 decisions were authored by 78 different Administrative Patent Judges. During the two month period, four judges penned more than 25 opinions, although the average is closer to 10 opinions. (If we assume that Westlaw includes 80% of the opinions, then the average jumps to 12 opinions in the two months – or six opinions per month). On an annualized basis this extrapolates to authoring an average of 72 opinions per year. Of course, this average includes opinions by BPAI administration who regularly write only a small handful of decisions. Excluding those individuals pushes the extrapolated average to about 75 opinions per year for each BPAI Judge handling ex parte cases.

These numbers are comparable to the Court of Appeals for the Federal Circuit. Each of the twelve Federal Circuit judges (not counting Senior Judges) wrote about 28 majority opinions in 2008. In addition, each Federal Circuit judge participated in over 400 cases (most of which were decided without opinion). Thus, while the BPAI judges write more opinions, the Federal CIrcuit judges actually decide more cases.

Notes:

• The lower number of cases found in Westlaw is due – in part – to the fact that many of the cases being appealed are unpublished. In those cases, the BPAI decisions are kept secret. In addition, for some reason, Westlaw is not picking up all of the released BPAI decisions. Still, the Westlaw format is easier to use than the BPAI PDF.

BPAI Shuts Down Dissent in Favor of Efficiency

The Board of Patent Appeals (BPAI or Board) is very much a quasi-judicial body. The emphasis for today is on quasi. 35 USC §6 calls for each appeal to be heard by at least a three judge panel. Yet, the Board appears to be taking steps to limit the effectiveness of those panels. These changes are apparently motivated by a need for efficiency in the face of budget shortfalls and increased appeals.

Like examiners, BPAI judges have a count system. BPAI Judges are expected to sit on about 300 panels per year and draft about 100 opinions. In the past, judges would receive credit for drafting full dissents and concurring opinions. That has changed. In an internal email, BPAI Vice-Chief Jay Moore has indicated that these extraneous opinions will no longer ordinarily garner any credit. According to Vice-Chief Judge Moore, "[c]oncurrences, dissents, and remands are not normally efficient mechanisms for securing the 'just, speedy, and inexpensive' resolution of an appeal before the Board." The e-mail is reproduced below:

====

From: Moore, James T
Sent: Thursday, May 07, 2009 9:57 AM

To: All BPAI Judges
Cc: MacDonald, Allen; Fleming, Michael R.; Santiago, Amalia

Subject: Policy Clarification on Dissents, Concurrences and Remands

Importance: High

Colleagues:

Please note that, effective immediately, if you would like a dissent, concurrence, or remand to be considered towards your productivity totals, you must submit a request. The form is attached, and may be used retroactively for cases prior to this date. For cases after this date, it must be submitted to your Vice Chief Judge within one week of mailing of the dissent, concurrence, or remand in order to be considered.

Concurrences, dissents, and remands are not normally efficient mechanisms for securing the “just, speedy, and inexpensive” resolution of an appeal before the Board. (Bd. R. 1). As indicated in the PAPs, a productivity credit is not automatically earned for a concurring opinion, dissenting opinion, or remand. Accordingly, justification is required to explain the need to undertake the extra work and occasion the extra delay in order to ensure efficient and proper utilization of our resources. Further, any credit given for a concurring opinion, dissenting opinion, or remand will be commensurate in scope with the justification provided and the scope of the extra work.

Please see Al or Jay if you have any questions.

Thanks,

Jay Moore
Allen MacDonald

====

The push for efficiency at the BPAI is also seen in the non-judge "patent attorney" program. Many of the BPAI opinions are now ghost written by newly minted patent attorneys and then signed by the BPAI judges. The real problem with this program is that when the patent attorneys are used, the BPAI judge is given a much higher throughput quota.

According to an anonymous observer - "the time constraints [under the Patent Attorney program] are so serious that for many cases, not a single one of the judges signing off on a decision will have read the underlying papers detailing the facts of the case." This observer asked to remain anonymous based on "the intolerance of dissent at the Board."

This need for efficiency is also the driver behind the still-pending BPAI appeal rule changes.

BPAI Precedential Opinion on Rejecting Software Means Claims

Ex parte Catlin (BPAI 2009)(precedential) fd073072.pdf.

The first-time around, the BPAI found some of Catlin's claims patentable. On rehearing (requested by the SPE), the BPAI reversed course - finding the means-plus-function claims indefinite under 35 USC § 112.

Catlin's claim one reads as follows:

1. A method for implementing an on-line incentive system, said method comprising the steps of:
providing, at a merchant's web site, means for a consumer to participate in an earning activity to earn value from a merchant; and
transferring value from said merchant to said consumer for participation in said earning activity, if said consumer qualifies, without re-directing said consumer away from said merchant's web site, whereby said consumer's focus of activity remains at said merchant's web site.

The Patent Act allows a patentee to claim inventive elements using "means plus function" language. A means plus function term is construed to cover the corresponding structures as described in the specification as well as any equivalents. This rule of construction means that seemingly broadly written means limitations are often quite limited in practice -- especially when the specification is not thoroughly drafted.

If no corresponding structure can be identified in the disclosure, then the claim will be found "invalid as indefinite."

Here, the claim recites a "means for a consumer to participate in an earning activity to earn value from a merchant." On rehearing, the BPAI could not find any corresponding structure in the specification. In particular, the Board was looking for an algorithm for performing the claimed function.

[W]e have thoroughly reviewed the Appellants' Specification and have not been able to locate an adequate disclosure of structure, material, or acts corresponding to the functions of allowing a consumer to participate in an earning activity and earn value from an earning activity. In particular, the Specification does not disclose any specific algorithm that could be implemented on a general purpose computer to allow a consumer to participate in an earning activity and earn value from an earning activity.

Holding: Claims indefinite.

BPAI Precedential Opinion: The Nexus for Obviousness and Nonobviousness

Ex parte Jellá (BPAI Precedential Opinion) fd081619-1.pdf

Most modern metal garage doors have four or five panel sections. The older wooden doors often had only one panel. Jella's invention is simple -- have three panels each "substantially twenty-eight inches" in hight. The prior art taught "any number" of panels including one, four, five, or six. Following the examiner's lead, the Board of Patent Appeals and Interferences (BPAI) found the invention obvious.

The BPAI issued a precedential opinion focusing on obviousness. The prima facie case of obviousness is easy under KSR even without any evidence that anyone had previously considered a twenty-eight inch door.

The Court in KSR noted that "[wlhen a work is available in one field of endeavor, design incentives and other market forces can prompt variations of it, either in the same field or a different one. If a person of ordinary skill can implement a predictable variation, Section 103 likely bars its patentability." Changing a conventional seven foot high overhead garage door from a four panel section door to a three panel section door is nothing more than a predictable variation sparked by design incentives in the hope that a new look to the door would result in increased sales.

What it looks like here is that the driver for the innovation really was a need for a new ornamental design - motivating PHOSITA to create the obvious variation.

In our minds, this is an example of market demand driving a design trend, and the Supreme Court in KSR warned against granting patent protection to advances such as this that would occur in the ordinary course without real innovation . . . .

We further find that market pressure existed in the garage door industry to create a new design trend by updating the look of garage doors to spur additional sales in the industry.

In addition to allowing ornamental design needs to serve as the motivator to try a new design, the Board did not require any tight nexus between the design motivation and the new design (other than the need for a new design).

I highlight the lax approach on obviousness to contrast the Board's strict approach when considering objective or secondary factors of nonobviousness.

Nexus: The bulk of the Jellá opinion is spent repeatedly shooting down the applicant's arguments on secondary considerations of non-obviousness and the accompanying declarations. The most often repeated point was that any objective evidence must have a clear nexus with the invention as claimed.

"To be given substantial weight in the determination of obviousness or non-obviousness, evidence of secondary considerations must be relevant to the subject matter as claimed, and therefore the examiner must determine whether there is a nexus between the merits of the claimed invention and the evidence of secondary considerations."

The nexus requirement include being "commensurate in scope with the claims."

Ornamental Features in Utility Patents: Additionally, the ornamentality or striking good looks of a design cannot be used as evidence of nonobviousness. Here, the BPAI rejected a declaration discussing the "unique" look of the garage door based on a desire to avoid overlap with design patent law: "Were we to allow secondary considerations of non-obviousness to be based on the industry's reaction to the ornamental appearance of the claimed invention, we would be blurring the distinction between design and utility patent protection. Objective evidence of secondary considerations of non-obviousness should be tied to the functional aspects of the claimed invention for a utility patent application." Oddly enough, the BPAI did allow the PTO to use the ornamental features to prove a "market pressure" -- finding that "market pressure existed in the garage door industry to create a new design trend by updating the look [and appearance] of garage doors to spur additional sales in the industry. ...  In our minds, this is an example of market demand driving a design trend, and the Supreme Court in KSR warned against granting patent protection to advances such as this that would occur in the ordinary course without real innovation."

Rejection Affirmed.

In re Ferguson: Patentable Subject Matter

In re Ferguson (Fed. Cir. 2009)

Scott Harris has been discussed several times on Patently-O. Harris is a former Fish & Richardson partner. Fish handles the most patent litigation of any firm in the country. In addition to being a patent attorney, Harris is an inventor. He has contracted with the plaintiffs firm Niro Scavone in several actions to enforce patents against Google and other companies. Harris is one of the named inventors of the Ferguson application and he handled the [futile] appeal.

The claimed invention focuses on a "method of marketing a product" and a "paradigm for marketing software." These claims focus on methods and structures for operating a business.

Methods Under Bilski: Claim 1 reads as follows:

A method of marketing a product, comprising:

developing a shared marketing force, said shared marketing force including at least marketing channels, which enable marketing a number of related products;

using said shared marketing force to market a plurality of different products that are made by a plurality of different autonomous producing company, so that different autonomous companies, having different ownerships, respectively produce said related products;

obtaining a share of total profits from each of said plurality of different autonomous producing companies in return for said using; and

obtaining an exclusive right to market each of said plurality of products in return for said using.

Under Bilski, this case is open and shut. The claim is not even arguably tied to a machine -- especially under the Nuijten construction of machine to be a "concrete thing, consisting of parts, or of certain devices and combination of devices [including] every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result." (Quoting Burr v. Duryee, 68 U.S. (1 Wall.) 531, 570 (1863)). Thus, the 1863 touchability definition of machine appears to hold weight. On the second Bilski prong, the claim does not require transformation of any article into a different state or thing. The only transformation is that of legal rights and organizational relationships that were explicitly excluded in the Bilski decision: "transformations or manipulations simply of public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances.”

Harris asked the court to consider a different test of patentable subject matter: “Does the claimed subject matter require that the product or process has more than a scintilla of interaction with the real world in a specific way?” The CAFC panel rejected that proposal primarily based on the precedential value of Bilski: "In light of this court’s clear statements that the “sole,” “definitive,” “applicable,” “governing,” and “proper” test for a process claim under § 101 is the Supreme Court’s machine-or-transformation test, see Bilski, passim, we are reluctant to consider Applicants’ proposed test." The court went on to determine that the "scintilla" test would create too much ambiguity as well.

Non Method Claims: The application also included claims directed to a "paradigm for marketing software" made up of a marketing company that markets software in return for a contingent share of income. Although "instructive," the Federal Circuit did not directly follow Bilski. Rather, the court looked to determine whether the claimed paradigm fit within one of the four statutory classes listed in Section 101:

Inventions Patentable: "... any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof..."

In a gentle Koan, the Court stated that it "need not resolve the particular class of statutory subject matter into which Applicants' paradigm claims fall, [however], the claims must satisfy at least one category." In fact, the court did attempt to resolve the particular class, but was unable to fit the paradigm claim into any of the four.

Applicants’ paradigm claims are not directed to processes, as “no act or series of acts” is required. Nuijten, 500 F.3d at 1355. Applicants do not argue otherwise. Applicants’ marketing company paradigm is also not a manufacture, because although a marketing company may own or produce tangible articles or commodities, it clearly cannot itself be an “‘article[]’ resulting from the process of manufacture.” Nuijten, 500 F.3d at 1356. Again, Applicants do not argue otherwise. And Applicants’ marketing company paradigm is certainly not a composition of matter. Applicants do not argue otherwise.  

Again applying the touchability notion of machine, the Court also rejected the notion that the company paradigm could be a machine:

Applicants do assert, however, that “[a] company is a physical thing, and as such analogous to a machine.” But the paradigm claims do not recite “a concrete thing, consisting of parts, or of certain devices and combination of devices,” Nuijtent, and as Applicants conceded during oral argument, “you cannot touch the company.”

Ending in a flourish, the court found that in fact, the Ferguson paradigm claims are "drawn quite literally to the paradigmatic abstract idea." (quoting Warmerdam).

Judge Newman offers a poignant concurring opinion.  

Waiving Arguments at the Board of Patent Appeals

Pivonka v. Axelrod (Fed. Cir. 2009)(non-precedential)

In 2003, Axelrod asked the PTO to declare an interference against Pivonka’s patent which had issued the year prior. (Pat. No. 6,408,797). During the interference, the BPAI found Pivonka’s collapsible pet carrier claims to be unpatentable as obvious. [Link] On appeal, the Federal Circuit affirmed.

In reviewing a BPAI obviousness rejection, the Federal Circuit looks for “substantial evidence” to support any factual determinations, but reviews the ultimate question of obviousness de novo.

Here Pivonka pointed to three potential errors: (1) improperly saying that the invention has a “barn-like structure;” (2) failing to consider the patented claims individually; and (3) failing to appreciate the structural differences and functional benefits provided by the claimed invention as compared to the prior art.

The Federal Circuit dismissed these concerns in turn: (1) the reference to the barn was merely shorthand and not reversible error; (2) the applicant waived any right to have claims 2–9 considered separately by failing to make arguments on those claims earlier; and (3) the Board’s conclusion of obviousness was correct.

“Under KSR International Co. v. Teleflex, Inc. “[t]he combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results.” 550 U.S. 398, 1739 (2007). According to Dr. Shina’s unrebutted affidavit [Axelrod’s Expert], both the structural benefits and the way in which to build the container claimed by Pivonka were readily apparent to a person of ordinary skill in the art. Accordingly, we find no error in the Board’s conclusion that claims 1-9 are obvious.”

The Court also rejected an argument of improper procedure based on Pivonka’s waiver of the issue before the BPAI. One important take-away from this case is that the Federal Circuit generally treats the BPAI as it would a lower court in the sense that an issue must first be raised with the BPAI in order to be ripe for appeal to the Federal Circuit. If the issue is not raised at the lower level, then any appeal will be deemed waived.

Although not directly related, I enjoyed the following recent anonymous comment to another post:

Whoever said "necessity is the mother of invention" was wrong. According to KSR, "necessity is the mother of obviousness."

Underlying the interference is a patent infringement case between Pivonka and TFH Publications (Axelrod’s assignee). That case is also on appeal but will be heard by a different panel. Interestingly, after this favorable decision, TFH requested that the case be reassigned to the Axelrod panel. The Federal Circuit denied that motion. [Link]

Law Firms That Appeal

A patent applicant has several options after receiving a final rejection from a patent examiner. "After final" practice is a matter of strategy, tactics, and art. The primary approaches are (1) abandon the application; (2) appeal to the Board of Patent Appeals and Interferences (BPAI); (3) file a request for continued examination (RCE) arguing against the rejection; or (4) concede scope and narrow the application (probably through an RCE). Each of these approaches differs in cost, timing, and likelihood of success. Of course, success may depend upon whether broad claims are important. And, in the background, applicants know that alternate claims can later be pursued in continuation applications (for a fee).

BPAI Appeals are generally thought to have a higher up-front cost – both in terms of PTO fees and attorney costs. However, if you win, appeals have the benefit of dramatically changing the course of the examination. Often, an applicant's successful appeal results in an issued patent soon thereafter.

In this study, I looked at law firms involved in ex parte appeals to the BPAI that were decided in the calendar year 2008. Of the 4000+ decisions, only about 75% of the decisions mentioned the law firm name in the case caption. Using those names, I constructed the following table of the firms associated with the most decisions during 2008. It is interesting to compare Oblon Spivak and Sughrue Mion – both firms handle over 3000 patents each year - many of them involving electronics owned by non-US entities. Oblon, however, appears to have taken the strategy of appealing while Sughrue may be using alternate strategies. Foley & Lardner is regularly listed in the top-ten firms in terms of the number of patent grants – however, that firm does not make the list of having the most appeal decisions.

Some words of caution on the numbers game: (1) These are ordinarily dominated by lower cost electronics and software patents. (2) Some clients request that docketing go through their office – in those cases, the firm name would not show up here. (3) Focusing on appeals, it may be that some firms not on the list actually filed more appeal briefs. It turns out that in most cases, examiners withdraw their final rejections in the face of a high quality appeal brief.

2008 Rank	Law Firm	Number of BPAI Decisions	Primary Location
1	OBLON SPIVAK	62	VA
2	FISH & RICHARDSON	46	MA
3	NIXON & VANDERHYE	42	VA
4	KENYON & KENYON	38	NY
5	TROP PRUNER	38	TX
6	GREENBLUM & BERNSTEIN	36	VA
7	CARLSON GASKEY	35	MI
8	FINNEGAN HENDERSON	34	DC
9	GIFFORD KRASS	33	MI
10	SUGHRUE MION	32	DC
11	BROOKS KUSHMAN	29	MI
12	TOWNSEND	29	CA
13	SCHWEGMAN	28	MN
14	HARNESS DICKEY	27	MI
15	PATTERSON & SHERIDAN	27	NJ
16	ARMSTRONG TEASDALE	23	MO
17	BAYER MATERIAL SCIENCE	22	PA
18	RYAN MASON	22	CT
19	FULBRIGHT JAWORSKI	21	TX
20	ALSTON & BIRD	19	NC
21	BARNES & THORNBURG	19	IN
22	WILLIAMS MORGAN	19	TX
23	BIRCH STEWART	18	VA
24	BLAKELY SOKOLOFF	18	CA
25	CAREY RODRIGUEZ	18	FL

BPAI Again Rejects System Claims under Bilski

Ex parte Atkins (BPAI 2009)

The BPAI has again raised the issue of Post-Bilski patentable subject matter sua sponte. Like most claims challenged under Section101, Atkins claims also have serious nonobvousness and indefiniteness problems.

Atkins claims a method of "converting a unidirectional domain name to a bidirectional domain name." In reviewing the claim under Bilski, the BPAI noted that the claims do not "recite any machine or apparatus or call for transforming an article into a different state or thing. A domain name is simply a series of characters representing the address of a resource, such as a server, on the World Wide Web. All of the steps are data manipulation steps."

Atkins also claims a parallel "system" for converting the domain name. The BPAI rejected the system claims under Bilski since "those claims encompass any and all structures for performing the recited functions. As a result, [the system claims] are at least as broad as method claims ... which we have determined recite patent ineligible subject matter under Bilski."

• Ex parte Atkin.pdf

The BPAI and the Machine or Transformation test of Bilski

In three recent cases, the BPAI has continued its trend of applying the Federal Circuit's en banc Bilski decision to reject software-style method claims as lacking patentable subject matter. The BPAI is not asserting that software is unpatentable -- the Board is simply failing to find ties to a particular machine; transformation of a physical object; or transformation of articles "representative of physical objects." In two of the cases, the BPAI applied its power to issue new grounds of rejection -- raising the Section 101 issue sua sponte.

In ex parte Gutta (BPAI 2009), Gutta (Philips) claimed a "computerized method performed by a data processor." The claims include elements such as "a history;" "a plurality of clusters;" a "target user;" and "preferences of a third party." The final step in the method involved "displaying" a score. In Bilski, the Federal Circuit found that the transformation of data into a visual depiction could render a claimed method patentable. Here, however, the generically worded step was merely "post-solution activity [insufficient] to impart patentability to a claim involving the solving of a mathematical algorithm."

In ex parte Barnes (BPAI 2009), Barnes (Landmark Graphics) claimed a "fault identification method" that obtains seismic data and determines "a planarity value for discontinuities" in each "analysis window" in the seismic data. In this case, the BPAI entered a new ground of rejection under Section 101. The BPAI recognized that the claim called for both gathering and analyzing data, but those steps - without explicit limitations of how they are done - are insufficient to render the claim patentable.

In ex parte Becker (BPAI 2009), Becker and his fourteen co-inventors (Siemens) claimed a "method for maintaining a user profile." As in Barnes, the BPAI entered a new ground of rejection under Section 101 -- finding again that the method claims failed to satisfy the machine or transformation test.

Read the Opinions

• Ex parte Gutta (BPAI 2009)
• Ex parte Barnes (BPAI 2009)
• Ex parte Becker (BPAI 2009)
• Ex parte Cornea-Hasegan (BPAI 2009)
  
• Ex parte Bo Li (BPAI 2008)

Note: This was originally posted on Jan 26, but was inadvertently un-published. I this version is slightly modified to take-into account an insightful comment regarding the transformation of data into a visual depiction.

The Soaring Rate of BPAI Appeals

In two earlier posts, I discussed the BPAI reversal rate (link) and the reopening of prosecution after a reversal (link). In the reversal rate, I also looked at the historic jump in the absolute number of BPAI appeals filed. In FY2008 (ending Sept 30, 2008), the BPAI received over 6,000 ex parte appeals– concluding two consecutive years of over 35% annual growth rate in appeal filings.

Although dramatic, the reported filing increases pale in comparison to those seen in the past four months. The BPAI reports that in the period of Sept-Dec 2008, it received an average of 954 ex parte appeal cases per month. That value is well more than double the monthly average for the same span in 2007.

At this rate, the number of BPAI appeals would easily reach 10,000 in FY2009.

The planned BPAI rule changes may explain at least part of the sudden jump. In a recent presentation, William Smith of Woodcock Washburn stated that the new rules are "onerous and will significantly increase the cost of preparing an Appeal Brief." [Link]. I have spoken with several patent attorneys who intentionally filed appeal briefs early in order to beat the December 10 deadline. That deadline has now been postponed. If the rules truly are onerous, then we may see a drop in appeals once they become effective.

BPAI Appeal Statistics: The Plummeting Reversal Rate

In an earlier post, I examined what happens to patent applications after the BPAI reverses an examiner rejection. [LINK] This next post looks at the BPAI reversal rate itself. Here, I define the reversal rate as the percentage of cases where the Examiner rejections are completely reversed (as opposed to partial reversals).

Over the past several years, the BPAI reversal rate has dropped dramatically. From FY1999-FY2005, the reversal rate remained relatively steady between 35% and 40%. Then, in FY2006 we began to see a smaller proportion of reversals. By the first two months of FY2009, the reversal rate had dropped to 20%. Part of the drop is likely attributable to new filtering mechanisms that keep low-quality rejections from reaching the Board. The pre-appeal brief conference program started in 2005 and allows a patent applicant to request an internal review of the examiner's final rejection at the Tech Center (TC) level before an appeal brief is filed. Even if no pre-appeal brief conference request is made, the examiner's case for a rejection is usually reviewed at the TC level before the examiner is allowed to file a responsive brief.

In recent years, these filters have operated to weed-out 80% of the cases where an appeal brief or pre-appeal brief conference request had been filed. Prior to implementation of these filters, the majority of appeal briefs led to BPAI decisions. [See Katznelson, Slide 15]

When the low quality rejections are eliminated from consideration, we should expect that the BPAI reversal rate would drop – as it has. The BPAI is no longer seeing many of the easy reversal cases where the examiner made a clear legal error. Rather, today's cases before the board tend to be more focused on arguable issues involving obviousness, enablement, and patentable subject matter.

The filters only tell part of the story, and the reversal rate masks the fact that - in absolute numbers - the Board is reversing more cases than ever. Over this same period, the number of appeals filed has increased dramatically. And, although the BPAI has increased its throughput, the backlog has grown five-fold since 2005. These pendency pressures give the Board an incentive to make appeals less hospitable – as we saw with the new (not-yet-final) BPAI appeal rules.

Notes:

• Prior Patently-O Posts: How long does a BPAI Appeal take; BPAI Appeal Statistics; BPAI Patent Judges

What Happens After the BPAI Reverses an Examiner Rejection

Even after the Board of Patent Appeals and Interferences (BPAI) reverses an examiner's rejection, the case is returned to the same examiner to ensure that the application is in condition for allowance. 37 CFR 41.54. At that point, the examiner is not allowed to make another search for prior art. However, the examiner may reopen prosecution and enter a new grounds for rejection "[i]f the examiner has specific knowledge of the existence of a particular reference or references which indicate nonpatentability of any of the appealed claims." MPEP §1214.04. According to the MPEP, reopening prosecution requires written approval of the Technology Center Director.

To get a sense of how this post-reversal process operates in practice, I looked at a set of 149 decisions from 2006 where the BPAI had reversed examiner rejections. In 80% of cases, the examiner accepted the BPAI decision and did not re-open prosecution. In these cases, a patent generally issued within nine-months of the BPAI decision (median of six months) unless the applicant caused some delay. A typical delay is seen in IBM's Application No. 10/047,116. After winning an appeal on nonobviousness grounds and receiving a notice of allowance, IBM failed to pay the issue fee in a timely fashion. The patent finally issued after the PTO granted a petition to revive.

In the remaining 20% of the reversals, the PTO re-opened prosecution by offering new grounds for rejection. Occasionally the new grounds are suggested by the BPAI but more often they come from the examiner and fall under §101, §103, or §112. The current status of those re-opened cases from my 2006 sample can roughly be broken into thirds: a third of the cases were eventually patented despite the new rejection; a third of the cases are still pending; and a third of the cases were abandoned after the PTO continued to press its case. A handful of the pending cases are on their way to the BPAI for a second go-round.

Notes:

• One PTO insider takes issue with my statement that after being reversed "the examiner is not allowed to make another search for prior art." The MPEP §1214.04 states that "[t]he examiner should never regard such a reversal as a challenge to make a new search to uncover other and better references." According to the insider, that statement is not a prohibition on making a new search, but only a "discouragement." In practice, new searches are conducted and, if new art is found the PTO will reopen prosecution.

BPAI: Under §102(e), Provisional Application Considered Prior Art as of its Filing Date.

Ex parte Yamaguchi (BPAI 2008)(Precedential Opinion)

In prosecution, the Examiner cited the Narayanan reference against a Texas Instruments patent application filed by Yamaguchi. The rejection identified Narayanan as prior art under 35 U.S.C. § 102(e). The issue on appeal to the BPAI was whether the Narayanan reference can be considered 102(e) prior art as of the filing date of its provisional application.

Section 102(e) allows for submarine prior art – these are typically pending US patent applications that, when published or patented, suddenly become prior art as of their filing date. The statute allows that "[a] person shall be entitled to a patent unless . . .the invention was described in . . .a patent granted on an application for patent by another filed in the United States before the invention by the applicant for patent.. . ." 35 U.S.C. § 102(e).

102(e) Provisional: The issue here is whether Narayanan's provisional application can be used in 102(e) analysis. The expanded BPAI panel agreed with the examiner that the 102(e) prior art date does reach-back to the date of provisional filing. This result is based on their analysis of 35 U.S.C. § 111(b). Section 111(b) requires that "provisions of this title relating to applications for patent shall apply to provisional applications for patent."

"Based on this express intent to apply the provisions of Title 35 relating to "applications for patent" to provisional applications (except for four enumerated sections noted in §111(b)(8)), a provisional application can therefore be reasonably considered an "application for patent" within the meaning of §102(e). The plain meaning of these provisions of Title 35 as noted above is outlined in MPEP 2136.03(111) for establishing the critical reference date under §102(e) of a U.S. patent or U.S. application publication that is entitled to the benefit of the filing date of a provisional application under §119(e). Based on the statutory scheme of Title 35, we hold that Appellants have not shown harmful error in the rejections on appeal."

This holding is in tension with the controlling precedent of In re Wertheim, 646 F.2d 527 (CCPA 1981). In Wertheim, the CCPA held that for a continuation-in-part application, the parent's filing date may serve as a §102(e) date, but only if the parent contains full §§120 and 112 support for the disclosure.

In this case the Examiner found that the Narayanan provisional application fully supported the eventual publication – and thus that the 102(e) date for narayanan was the filing date of the provisional. The applicant was unable to disprove these findings and the BPAI affirmed the rejection.

Patently-O Bits and Bytes No. 57

• New PTO Fees: Up 5% to account for inflation. [LINK]
• Patently-O Job site has a new media partner: the Inhouse Blog. The Inhouse blog has its own job board with inhouse jobs.
• Duffy Provision: Duffy expressed his "skeptic[ism] about the constitutionality of the retroactivity provision." [LINK]
• Speedo's torso-swimsuit patent is still pending. See http://www.pat2pdf.org/patents/pat20080141431.pdf.

Recent BPAI Decisions

• Precedential:
• Ex parte Ghuman, Appeal No. 2008-1175 (BPAI May 1, 2008)(rejected claims that are not appealed are considered withdrawn and subject to cancellation by examiner).
• Ex parte Fu, Appeal No. 2008-0601, 2008 WL 867826 (BPAI March 31, 2008) (applying KSR to find it obvious to substitute one species for its genus where the genus contains a limited number of species).
• Ex Parte Nehls, Appeal No. 2007-1823, 2008 WL 258370 (BPAI January 28, 2008) (“substantial” and “specific” utility).
• Ex parte Letts, Appeal No. 2007-1392, 2008 WL 275515 (BPAI January 31, 2008) (applicant may not conditionally withdraw a claim on appeal).
• Informative:
• Ex parte Wasynczuk (BPAI June 2, 2008) (Computer method claims were patentable subject matter because they “recite a process that employs one of the other statutory categories.” On the other hand, the “computer implemented system” claims were not patentable subject matter because they did not recite a “particular machine implementation”.)
• Ex parte Langemyr (BPAI May 28. 2008) (mathematical manipulations of data do not become eligible subject matter even when performed on a computer and outputted to a display).
• Ex parte Kim (BPAI May 29, 2008) (indefiniteness rejection affirmed; PTO will not assume a particular meaning of claim terms without some factual or rational basis).

Obvious to Try? BIO Challenges Ex Parte Kubin

In re Kubin (Fed. Cir. 2008)

Immunex (a subsidiary of Amgen) is hoping to patent its a DNA sequence coding for a NK (Natural Killer) cell regulator protein. The BPAI rejected the “nucleic acid molecule” claim — finding it obvious over the prior art. [BPAI Decision]. This decision is one of only three precedential BPAI decisions in 2007.

Just looking at the claimed sequence, it would not seem obvious — its structure is not overly similar to other regulator proteins, and the unpredictable nature of protein folding makes it virtually impossible to predict whether a particular sequence would code for an appropriate protein.

Despite the structural uniqueness, the BPAI found the claim obvious because it could have been isolated and verified simply by following conventional laboratory techniques — thus, making it obvious to try.

Although the CAFC has previously warned the BPAI away from using “obvious to try” analysis in its 1995 In re Deuel case. There, the appellate court held that obviousness analysis of a structure should focus on the structure itself as compared to prior art structures.

In Kubin, the BPAI rejected Deuel as limited by the Supreme Court’s KSR decision. That case focused on combination claims, but included the stray quote that “the fact that a combination was obvious to try might show that it was obvious under Section 103.”

Here, the BPAI argued, the inventor wanted to isolate the NK Regulator and simply used known methods to do so. “Thus, isolating NAIL cDNA was ‘the product not of innovation but of ordinary skill and common sense.’” (again quoting KSR).

The case is now on appeal at the the CAFC. On June 10, the Biotechnology Industry Organization filed an amicus brief asking the court to cabin in the scope of KSR and hold that its obvious to try dicta does not abrogate the Deuel standard. Briefing is ongoing and a decision is not expected until the end of the year.

• Download kubin.amicus.pdf
• The PTO's Obviousness Guidelines have the following rules for making an obviousness rejection based on the obvious to try reasoning:
  • (1) a finding that at the time of the invention, there had been a recognized problem or need in the art, which may include a design need or market pressure to solve a problem;
  • (2) a finding that there had been a finite number of identified, predictable potential solutions to the recognized need or problem;
  • (3) a finding that one of ordinary skill in the art could have pursued the known potential solutions with a reasonable expectation of success; and
  • (4) whatever additional findings based on the Graham factual inquiries may be necessary, in view of the facts of the case under consideration, to explain a conclusion of obviousness.The BPAI decision is notable for a few reasons, including the following two: (1) It was written by Nancy Linck, former PTO Solicitor, Newman law clerk, & PhD Chemist. Soon after authoring the decision, Linck left the firm to join the Rothwell Figg firm. (2) It is a unanimous opinion.
• Thanks to Hal Wegner for providing a copy of the brief which his firm filed on behalf of BIO.

PTO Implements Final BPAI Appeal Rules

The PTO has announced implementation of “final rules” that govern the procedure of ex parte appeals before the PTO’s Board of Patent Appeals and Interferences (BPAI).  A year ago, I commented on the rise of of “technical rejections” of appeal filings. Most of these involved issues such as failing to list non-appealed claims; failing to include an appendix page (even if you have no appendix); and the use of a section headings that varied (in form but not substance) from the required heading. In my 2007 sample of 720 appeals, I found that a full 25% had been rejected as ‘defective’ based on these formalities. [Link]

With this large number of defective briefs in mind, the BPAI developed the new rules:

A major objective of the amended rules is to avoid unnecessary returns to examiners by the Appeals Center and the Board, along with the resulting delays in application and appeal pendency. The requirements of the amended rules are believed to be more objective and, therefore, both appellants and examiners will have a better understanding of what is required, thereby minimizing, if not eliminating, a need to hold appeal briefs defective.

In reality, the new rules appear to significantly increase the number of formalities.  This increase in formalities will likely increase the time required to prepare an appeal. The new rules apply to all appeals in which an appeal brief is filed on or after December 10, 2008.

Some changes:

1. The most substantive change may be the requirement that non-appealable errors must be resolved by petition prior to filing an appeal to the BPAI. “Failure to timely file a petition seeking review of a decision of the examiner related to a non-appealable issue would generally constitute a waiver to have those issues considered.”
2. Instead of filing a summary of the invention, the applicant must file “a claims analysis.” This analysis is essentially a claim chart indicating “the page and line or paragraph after each limitation where the limitation is described in the specification as filed.”
3. 30 page limit for the Grounds of Rejection, Statement of Facts, and Arguments. (14 point font).
4. A complete appeal brief will include each of the following (in the correct order):
• Statement of the real party in interest,
• statement of related cases,
• jurisdictional statement,
• table of contents,
• table of authorities,
• [reserved],
• status of amendments,
• grounds of rejection to be reviewed,
• statement of facts,
• argument, and
• an appendix containing (a) claims section, (b) claim support and drawing analysis section, (c) means or step plus function analysis section, (d) evidence section, and (e) related cases section.
5. new grounds of rejection are no longer permitted in an examiner’s answer,
   the examiner’s response to a reply brief is eliminated,
6. petitions to exceed the page limit for an appeal brief, reply brief or request for rehearing are made under Rule 41.3 which requires a $400 fee,
7. petitions for an extension of time to file a reply brief, request for oral hearing, or request for rehearing are made under Rule 41.3 which requires a $400 fee, and
8. a list of technical terms or unusual words to be provided to the transcriber at the oral hearing.

Appeal Rules PDF

BPAI Administrative Patent Judges

There continues to be interest in the BPAI appointments problem identified by Professor John Duffy. The solution going forward is quite simple — change the law so that BPAI administrative patent judges will be appointed by the Secretary of Commerce then re-appoint the current judges.  No one is arguing that the BPAI judges are incompetent or lack qualifications for their position — only that they have been appointed in a way that runs contrary to the Constitution.  This issue may not come to a head until demanded by a court of law. The Translogic petition for certiorari is one avenue, although many more will follow until a clear resolution is reached. 

In 2000, the BPAI judge appointment law changed to require the PTO director to appoint the administrative patent judges rather than the Secretary of Commerce. Through a FOIA request, Wendy Gombert and Joel Ard from the Black Lowe firm recently obtained a listing of the 47 BPAI judges who have been appointed since the law was amended. [THE LIST].

To get some sense of the impact of these judges, I looked at the 2500+ BPAI decisions between March 2007 and March 2008 and found most of those decisions (83%) included at least one panel member that had been illegally appointed under the Duffy construction. A significant number of panels (44%) included a majority of illegally appointed judges, and about half of the opinions were authored by illegally appointed judges. By technology center, applications classified in TC1700 (Chemical and Material Engineering) had the fewest opinions drafted by the illegal appointees while TC1600 (Biochemistry and Organic Chemistry) had the most. This difference is likely primarily due to the core group of veteran TC1700 judges.

Notes:

• 35 USC 6
• Translogic Tech. v. Dudas (on petition for certiorari 2008)
• Patently-O Patent Law Journal article
• Duffy on NPR: http://www.npr.org/templates/story/story.php?storyId=90245762.

Interview Before The Examination ("First Action Interview Pilot Program")

By my count, well over eighty percent of patent applications are initially rejected by the PTO. Yet, most applications eventually result in an issued patent.  Many of the rejected patents are amended slightly. It is unclear, however, if those amendments are really made to overcome prior art or rather offered as negotiation chips to the examiner in order to obtain the patent as quickly and cheaply as possible.  The truth is that a non-trivial number of initial rejections might be termed “off course” because they miss the true nature of the invention. These off course rejections end up extending prosecution, increasing the PTO backlog, and causing endless patent attorney frustration.

In the hope of avoiding the problem of potentially off-course rejections, the PTO has created a new pilot program to allow an applicant to discuss the claims with the examiner before an initial rejection is issued (but after the examiner’s prior art search). Of course, under the current rules, pre-examination interviews are already allowed under MPEP 713.02 at the discretion of the Examiner.  This pilot program adds to the rules by forcing the Examiner to prepare a pre-examination search (upon request) and also meet for an interview.  The idea here is to ensure that everyone is on the same page regarding the invention and hopefully quickly issue patents for state of the art inventions.

The pilot program is limited to data processing inventions (Class 707 & 709) that have been pending for a couple of years. Likewise, a qualified application may only have three independent and twenty dependent claims. If successful, it may spread to art units with high-pendency.

Thoughts on Interviews: Over the last few years, in-person interviews at the PTO have lost much of their charm. In the past, a savvy attorney coupled with a tech-whiz inventor could convincingly elaborate the invention — without having the actual interview on record. After a tidy noncommittal “interview summary,” the case would issue.  As the record has become more important, Patent Office practice has also shifted toward examiners taking a harder post-interview look and often “renegotiating” the result. Still, interviews are useful for a patent applicant – just not as useful as they used to be.

My hope for this pre-examination interview is that it can create a communication link to help the PTO better understand the invention before crystallizing a particular position.  The PTO’s approach with the pilot is quite thoughtful because it requires the Examiner to prepare (by conducting a prior art search). This helps ensure that both sides will be ready to go when the interview begins.

Notes:

• PTO Press Release
• First Action Interview Pilot Program Website (with forms, explanations, and requirements).

Patentee has no "Presumption of Priority" Unless Specifically Adjudged by the PTO During Prosecution

PowerOasis v. T-Mobile (Fed. Cir. 2008)

The district court granted summary judgment to T-Mobile — finding the PowerOasis cell-phone vending machine patents invalid.

The patent family history includes a continuation-in-part (CIP) preceded by a continuation and an original utility patent application. Based on the prior art date, the issue boiled down to whether the asserted patents could claim priority through the CIP to the original application.

Patentee Bears Burden of Proving Priority. Despite the statutory presumption of validity, the CAFC first held that the patentee normally has the burden of proving priority. The exception is when the PTO considers the issue of priority during prosecution.  In drafting the opinion, Judge Moore shifted the decision from a question of validity (where a presumption lies) to a question of effective filing date (where there is no statutory presumption). “When neither the PTO nor the Board has previously considered priority, there is simply no reason to presume that claims in a CIP application are entitled to the effective filing date of an earlier filed application.”

Interestingly, this decision falls runs parallel to Microsoft’s recent petition for certiorari in the z4 case.

Written Description: To claim priority to the original application date, that original application must “convey with reasonable clarity to those skilled in the art, as of the filing date sought, [that the inventor] was in possession of the [claimed] invention.” (Quoting Vas-Cath). Here, the original application disclosed a “display” and “user interface” while the asserted patent claimed a “customer interface.” Although these terms appear quite close, the CIP had added specific examples of a laptop customer interface while the original application only included interface embodiments attached to the vending machine.  This makes a difference because the accused device uses a laptop and the patentee asked for a construction of the term that would include the laptop interface.

Holding: “Because none of this support was present in the Original Application and because the Original Application did not disclose a customer interface apart from the vending machine, the asserted claims are only entitled to the 2000 CIP Application.” 

 

Board of Patent Appeals and Interferences (BPAI)

Eight Reasons: I am undergoing a project to better understand the role of the Board of Patent Appeals and Interferences (BPAI).  There are several reasons why BPAI is now receiving more limelight than ever. Here are eight such reasons: (1) every proposed patent reform bill includes an expanded role for a patent administrative court, such as the BPAI; (2) as various technology centers make patents more difficult to obtain, more cases are appealed to the administrative court; (3) under the proposed rule changes to limit continuation applications, more cases will likely be appealed; (4) as the value of patent rights continue to grow, important cases will continue to be challenged; (5) the publication of patent applications means that BPAI decisions can now also be immediately published; (6) the current large batch of examiners without much experience requires a serious check on potential abuses of naiveté; (7) under Judge Fleming, the BPAI has begun to open up to more public input and scrutiny; and (8) BPAI decisions are now available via Google search and Westlaw search.

BPAI is a Busy Court: It is important to recognize that the BPAI is deciding 3,500 cases every year. Thousands more are ‘settled’ prior to a BPAI decision either because the patent examiner withdrew a rejection (and likely re-opened prosecution) or the patent applicant filed a continuing application or abandoned the case. The BPAI usually sits in three-member panels, although there are occasionally ‘stacked’ panels for important cases such as Lundgren or Bilski.  In my one-year sample, over seventy different Administrative Patent Judges (APJs) authored opinions. 

As part of my initial study, this week, I created a database of information on recent BPAI decisions and coded them by issues discussed.  My database is derived from decisions available on Westlaw. Consequently, it is missing some decisions. In particular, Westlaw decisions do not include appeals associated with unpublished patent applications.

The table below looks at board decisions for each technology center. The relative numbers are interesting — showing a low affirmance rate for rejection of business method cases (TC 3600) and a high affirmance rate for chemistry cases (TC 1700). The BPAI offers its own calculation of these numbers based on all of its decisions that are roughly parallel. [LINK]
(Note, the table does not add-up to 100% because I excluded decisions to remand and deny rehearing).

Independence of the BPAI: One serious question about the competence of an internal patent appeal board is whether that body can act independently from the examining corps. Most of the BPAI judges are former examiners and they all work for the PTO Director. Although not conclusive, the above numbers give me some cause for hope that the BPAI does act independently. Over the past several years, many of the art units of TC 3600 has been notoriously difficult on applicants (especially e-commerce and business method groups). The BPAI’s low affirmance of rejections from that technology center may indicate that the Board has taken an independent stand against overzealous rejection practice.  There are many other explanations, including some selection bias or difference in quality of attorneys. In addition, there is a skew of judges — i.e., Judges with a technical background related to a particular technology center are more likely to judge cases from that technology center. The BPAI rightfully does this to ensure that every case has at least one administrative patent judge (APJ) who is prepared to understand the technology at issue.

Issues on Appeal: Far and away the most decided issue is that of nonobviousness. Almost 80% of decisions involved a discussion of nonobviousness and 30 U.S.C. 103(a).  Unfortunately for patent applicants, nonobviousness decisions were also the most difficult for applicants to win. In my study, decisions involving Section 103(a) were affirmed 63% of the time; decisions involving anticipation under Section 102 were affirmed 55% of the time; and decisions involving Section 112 were affirmed 52% of the time. As more issues are added to an appeal, the chance of affirmance goes down, and the chance of a split (reverse-in-part) decision goes up.

As might be expected, split decisions tend to be longer than others: 4500 words for split decision vs. 3500 words other decisions.  If a short decision arrives at your desk, you may assume it is a remand.

Notes:

• BPAI Website
• Patently-O: BPAI Informative Opinions
• Patently-O: How long does a BPAI appeal take?
• Patently-O: BPAI Appeal Statistics
• Patently-O: Pre-Appeal-Brief Conference 

Paper Posted to Non-Indexed FTP Site Not 102(b) Prior Art

SRI Int’l v. Internet Security Systems (Fed. Cir. 2008).

In Delaware federal court, SRI accused ISS of infringing four  patents relating live traffic analysis of computer network gateways.  On summary judgment, Judge Sue Robinson held the patents invalid — anticipated by SRI’s own prior work.

In a split panel, the Federal Circuit vacated — finding a lack of evidence that SRI’s prior publication was sufficiently publicly available more than one year before the patent applications were filed.

Event History:

• Aug 1, 1997 — “Live Traffic” paper e-mailed to a conference chair and posted the paper on an accessible SRI FTP site as a “backup” for the conference chair. Paper remained on the FTP site for seven days.
• Nov 10, 1997 — SRI displays the paper on its website.
• Nov 9, 1998 — SRI files its patent application.

Although 35 USC 102(b) contains no explicitly requirement of ‘public accessiblity’ of a prior printed publication, such accessibility has long been required and fills-out the definition of the term ‘publication.’

In the 2006 Bruckelmyer case, the CAFC noted that public accessibility could be satisfied if a person who is “interested and ordinarily skilled in the subject matter” could locate the publication using “reasonable diligence.”  Otherwise hidden publications can often be considered accessible if they are somehow indexed or cataloged by subject.

In Bruckelmyer, the court found that an unpublished Canadian patent document was sufficiently accessible because it was related to an on-point issued patent and could be retrieved at the Canadian patent office.

In this case, the court found insufficient evidence to rule on summary judgment. The FTP server was publicly accessible. However, it was uncataloged and would have been difficult to search. Additionally, only one non-SRI person (the conference chair) was shown to have knowledge of the paper on the FTP site.

Thus, the court vacated summary judgment for further development of the facts.

Judge Moore dissented — arguing forcefully that the facts showed public accessibility of the FTP site. (For instance, the FTP site had been used previously and was linked-to from over 70 Google Group posts). Procedurally, Judge Moore also faulted SRI for failing to present any facts on its side (as opposed to attorney argument). Under Rule 56, an opposing party “must set forth specific facts showing that there is a genuine issue for trial.”

Continued Vitiation of The Doctrine of Equivalents

Wleklinski (dba Comfort Strapp) v. Targus (Fed. Cir. 2007) (Non-Precedential).

In March, 2007, the Central District of California dismissed Comfort Strapp’s complaint on summary judgment — finding no proof of infringement.  Comfort Strapp’s patent relates to a comfortable shoulder strap for luggage.

The fight was over the construction of an “auxiliary strap means” limitation that requires the strap’s end sections be “made of a relatively non-stretchable material” and the strap’s center section be “made of [stretchable] material.”  Because the Targus auxiliary strap was made of a single material, the CAFC agreed that it could not literally infringe.

Doctrine of Equivalents: Accused products that exhibit only ‘insubstantial differences’ from the claimed patent may also be considered infringing under the doctrine of equivalents. (DOE). However, the DOE cannot apply where it would vitiate a claim limitation.

Here, the Federal Circuit panel agreed that as a matter of law, the doctrine of equivalents does not allow a claimed two-material strap to encompass a strap made of only one material. According to the appellate panel, such a reading would be “the fundamental opposite of the claimed invention.” Citing Freedman Seating.

Notes: Although the court’s trend to limit the doctrine of equivalents began well before the Supreme Court’s KSR ruling. The bulked-up nonobviousness test naturally reduces the scope of the doctrine of equivalents as the DOE cannot extend to cover variations that would have been obvious at the time of patenting.

How long does a BPAI appeal take?

In the first two weeks of September 2007, the Board of Patent Appeals and Interferences released over one hundred opinions. I looked at the file wrapper histories of thirty of these recent BPAI decisions to get some picture of the timing of BPAI appeals.

On average it took just under 18 months (542 days) from the filing of the appeal brief until a decision was reached by the BPAI.  The mean hides a wide range of delay: From a minimum of 9 1/2 months to a maximum of 44 months. (Standard Deviation 255). 

Most of the time delay is not attributable directly to the BPAI. Rather, most of the delay occurs between the date that the appeal is filed and the date that the case is submitted to the BPAI.  On average, it took about 11 months (328 days) to ‘complete briefing.’ Typically, that time period involves the applicant’s brief; followed by an examiner’s answer; and finally a reply brief. Once the case is submitted to the BPAI, the average decision time was seven months (214 days).

If you win an appeal, the Examiner may reopen prosecution with an additional rejection, although the more common approach is to issue a notice of allowance.

Based on this information, you can advise clients that an appeal – pushed through to the end – takes an average of 18 months, but that there is a wide variance.  As I noted earlier in 2007, only fewer than of appeals are pushed-through to the end. [Link].  In many cases, Examiners withdraw rejections or applicants file RCE’s with new claims. These calculations also do not include time delays associated with BPAI rejections for improper appeal brief form. Instead, I only began counting once a ‘proper’ brief was filed. In an earlier study, I showed that approximately 25% of appeal briefs are rejected on procedural grounds as either defective or incomplete. [Link].

The prosecution history of a patent application typically includes at least two substantive rejections prior to the appeal brief. In this sample, the average application had been in process for over three years (39 months) before the appeal brief was filed. 

As with essentially every other area of patent law, we can expect that BPAI timing and results will vary by technology area.

Notes:

• Law Students: Work at the BPAI

Judge Moore Opinions: Short, Focused, and To-The-Point

In re Hays (Fed. Cir. 2006) (Nonprecedential)

New Circuit Court Judge Kimberly Moore’s first opinion is likely to be predictive of her future work — short, focused, and to-the-point. 

This case involves a pretty neat invention of a tissue holder for an automobile visor. The BPAI had rejected the claims as anticipated, but the PTO later conceded that the cited reference (relating to a golf-tee holder that clips to a lapel) was not anticipatory.

The PTO is fully expected to present a new grounds of rejection.  In all likelihood, the patent will never issue because another round of appeal would be prohibitively expensive for this type of invention.

Vacated and Remanded.

• This does not really count as Judge Moore’s first opinion because it is a non-precedential opinion. In a few weeks, we’ll get the real one.