United States: Rule Review

New Grounds of Rejection at the USPTO Patent Trial and Appeal Board
Last Updated: February 4 2014
Article by Eric Raciti

Patent applicants are entitled to fair treatment by the U.S. Patent and Trademark Office (USPTO) under the Administrative Procedure Act (APA), a federal law that governs how administrative agencies are permitted to take certain actions.  5 U.S.C. § 500 et seq.  When deciding a contested matter, such as the patentability of an applicant's patent claims, the APA requires that an applicant be provided with an opportunity to respond to a ground of rejection.  In other words, if the Patent Trial and Appeal Board (PTAB or the Board) relies on a new ground of rejection denying patentability of an applicant's claims, that applicant has a right to argue against those new grounds.

Since the Supreme Court's decision in KSR International Co. v. Teleflex Inc., 550 U.S. 398 (2007), patent applicants have been faced with steepening challenges arguing patentability.  The KSR decision permitted the USPTO to rely on "common sense" in formulating obviousness rejections, which can sometimes be vexing and difficult to overcome.  See id.  However, the PTAB may not overstep the requirement to treat applicants fairly by taking procedural shortcuts that deprive an applicant the right to respond fully to a rejection, on the record. 

Two recent decisions of the United States Court of Appeals for the Federal Circuit define when a ground of rejection by the PTAB is new.  It has long been the case that the Board can supplement the findings of a patent examiner.  The central question is whether the Board and the examiner properly relied on the same factual underpinnings and articulated reasoning in rejecting an applicant's claims or whether the Board made new findings and adopted different reasons to create a new ground of rejection under 37 C.F.R. § 41.77, thereby depriving the applicant of an opportunity to respond.

In Rambus v. Rea, 731 F.3d 1248 (Fed. Cir. 2013), the court considered a case where claims filed by Rambus directed to certain dynamic RAM memory operations were determined to be invalid on grounds of obviousness during reexamination.  The technology in question allowed memory write operations to take place during an entire microprocessor clock cycle, whereas in the prior art only half of the cycle was commonly used for writing to memory.  The examiner rejected the claims based on a certain combination of two references.  The examiner's rejection, however, was factually flawed, and all parties to the reexamination and appeal conceded that the rejection was in error.  The Board modified the examiner's reasoning that certain features of the primary reference could be replaced with teachings from a secondary reference by replacing it with a new finding that certain features of the primary reference could simply be dropped.  The Board justified its approach by stating that the rationale was obvious, and that Rambus had never shown that the application's claims were not obvious.  Rambus argued that this was a new ground of rejection and that it was not afforded the opportunity to fully respond.  Rambus also argued that the Board had improperly shifted the burden onto Rambus to prove patentability, rather than keeping the burden on the USPTO to show unpatentability.

The Federal Circuit, citing In re Leithem, 661 F.3d 1316, 1319 (Fed. Cir. 2011), held that the Board may not rely on new facts and post-hoc rationale not previously raised to the applicant.  The court restated the existing law that the Board is not required "to recite and agree with the examiner's rejection in haec verba" and that the Board may elaborate on the examiner's findings, as long as the applicant had an adequate opportunity to respond during the USPTO proceeding.

By changing the specific finding of the examiner—that one skilled in the art would have been motivated to modify the primary reference in a certain way—the Board issued a new ground of rejection.  Because the findings were completely new, the Board was obliged to issue a new ground of rejection under 37 C.F.R. § 41.77(b).

In In re Biedermann, the court considered claims directed to an orthopedic bone screw having a holding portion that connects to other bone screws.  733 F.3d 329 (Fed. Cir. 2013).  The holding portion has an inner thread that cooperates with the outer thread of a locking element to hold screws securely together. The configuration of the screw threads was at issue in this case.  In the prior art, the threads on the holding portion of the primary reference were of a certain "saw-tooth" configuration.  In contrast, the claimed apparatus used square threads.

During examination, the examiner rejected the claims for obviousness.  The examiner reasoned that one of ordinary skill in the art would have substituted square threads, as taught by a secondary reference, for the "saw-tooth" threads in the bone screw of the primary reference in order to provide "for efficient load transfer."  The secondary reference applied by the examiner was based on machine parts used to transfer heavy loads, and taught that square threads were desirable because of their large cross-section.

The Board modified the examiner's rejection to state that the substitution of threadforms could be made based on an additional reference (the Machinery's Handbook), which stated that the "saw-tooth" threadform of the primary reference was a type of "buttress" thread that could be used for load translation.  Because both square threads and buttress threads can be used for load translation, the Board concluded they would have been interchangeable to one of ordinary skill in the art.  Specifically, the Board pointed to the elimination of the radial component of a load when screwing components together.

The Federal Circuit refused the Board's substitution of the rationale for combining the teachings.  The substitution of "interchangeability" for the examiner's "load transfer efficiency" constituted a new ground of rejection because the rationale for combining the prior art references had been modified.  The court also found that the Board had ignored evidence in the primary reference stating that square threads (used in the claimed invention) were in fact difficult to cut, undercutting the Board's argument of interchangeability of the threadforms.

The reminder for patent prosecutors is that the procedural requirements imposed on the USPTO are designed to ensure fair treatment of patent applicants.  If at any time during the prosecution of a patent application, an applicant is confronted with a prematurely final rejection, the applicant should object in a timely manner.  Applicants almost always have an opportunity to call an examiner's attention to their right to respond to any grounds of rejection.  Although the cases discussed here pertain to actions before the PTAB, analogous arguments could be made during prosecution.  See 37 C.F.R. § 1.113; M.P.E.P. § 706.07 et seq.

A new ground of rejection is likely to be accompanied by the citation of a new reference, which should be treated as a yellow flag.  As held by the Federal Circuit's predecessor court, the citation and reliance on a new reference to support a rejection will usually be an indication of a new ground of rejection.  In re Biedermann, 733 F.3d at 338 (quoting In re Boon, 439 F.2d 724, 727-28 (CCPA 1971)).  There are possible exceptions, such as when the reference is a standard work, cited only to support a fact that was previously judicially noticed or plays a minor role, such as filling in any gaps which might exist in the evidentiary showing made by the examiner to support a particular ground for rejection.  But the recent teaching of the Federal Circuit makes it clear that the Board errs when it relies on new grounds of rejection.

This article previously appeared in Full Disclosure Patent Prosecution Update, January 2014.

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