United States: PTAB, Explain Yourself! Federal Circuit Scrutinizes Articulated Rationales At The Patent Office

Despite the high bar for appellants to contest the adequacy of articulated reasoning for agency action by the Patent Trial and Appeal Board, the last few months brought several Federal Circuit decisions enforcing these procedural decision-making requirements on the PTAB and reinforcing the need for the PTAB to adequately explain its evidentiary findings and legal conclusions.

As an administrative agency, the United States Patent and Trademark Office enjoys broad discretion in its decision-making. Its evidentiary findings need only be supported by substantial evidence, and it must articulate its rationale in reaching its conclusions from the evidence.

These standards are not high. In In re Kotzab, the court held that "Substantial evidence is something less than the weight of the evidence but more than a mere scintilla of evidence." This standard requires only "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion," according to the court in In re Applied Materials. "Less than the weight of the evidence" that "a reasonable mind 'might' accept" do not inspire confidence in an appellant.

Typically, final and reviewable decisions by the USPTO are appealed to the PTAB, in either contested proceedings or in ex parte patent examination appeals. Even when the PTAB does not clearly explain itself, such decisions may still be upheld by the Federal Circuit when "we may reasonably discern that it followed a proper path, even if that path is less than perfectly clear," according to the court's decision in Ariosa Diagnostics v. Verinata Health.

The sufficiency of the PTAB's explanation is perhaps most keenly felt when patent claims are rejected as obvious. When rejecting claims as obvious, the PTAB must identify a reason that a person of ordinary skill in the art would have modified the references to yield the claimed invention. Under KSR International v. Teleflex, this inquiry is a flexible one that may rely on "common sense." To patent applicants and patentees, this "common sense" can appear to be license for the PTAB to apply loose hindsight and conjecture.

In In re Nuvasive, the Federal Circuit remanded the PTAB's decision in an inter partes review for failing to adequately articulate a motivation to combine two references. The court emphasized the need for adequate articulation of agency action and that adequate review by the court requires articulation of a motivation to combine when contested. The court identified three common situations in which the motivation to combine is insufficiently articulated: (1) a conclusory statement of a motivation unsupported by articulated reasoning; (2) a summary of competing arguments and rejection or acceptance thereof without explaining why the prevailing argument is accepted; and (3) a sole reliance on "common sense" as a reason to combine, without an analysis of how common sense applies. In Nuvasive, the Federal Circuit reversed because the PTAB had summarized arguments of the parties, but "the PTAB never actually made an explanation-supported finding that the evidence affirmatively proved that the PHOSITA [i.e., person having ordinary skill in the art] would have sought [information that would lead a skilled artisan to make the combination]."

Additional recent cases follow suit. In In re Van Os, the Federal Circuit remanded in an ex parte patent application appeal. The PTAB had found that the combination of two user-interface techniques would have been "intuitive." Citing Nuvasive, the Federal Circuit reversed because "intuitive," without more, effectively becomes a replacement for "common sense" and does not meaningfully differ from a conclusory statement that the combination would have been obvious.

In Personal Web Technologies v. Apple, the court remanded in an inter partes review. Emphasizing reviewability and principles of agency law, the Federal Circuit initially emphasized the need for a clear record. It clarified that the PTAB's reasoning that a skilled artisan "would have understood that the combination... would have allowed for [a combination of features]" was insufficient (emphasis in original). Rather, the court emphasized that the requirement is not whether one "could have" combined references, but instead requires a reasoning of why those two references would be selected and combined to reach the claimed invention.

The Federal Circuit has also remanded when the PTAB articulated none of its own reasoning. In Icon Health and Fitness v. Strava, on appeal from an inter partes re-examination, the court remanded to the PTAB some patent claims and affirmed others based solely on the adequacy of the PTAB's articulated evidence and reasoning. With respect to some claims, the PTAB stated it had addressed certain arguments "as discussed above." It had not. Nonetheless, the Federal Circuit still evaluated support in the record based on the PTAB's general statement that for any unaddressed issues, it agreed with the appellee and the underlying examiner. For certain of these claims, however, the examiner made no findings and instead incorporated by reference the arguments of the appellee Strava. The Federal Circuit dismissed these as providing no support because "[a]ttorney argument is not evidence," and the incorporation by reference did not transform the argument into factual findings or required explanation. Accordingly, for some claims, neither the PTAB nor the examiner had made particular findings, and those claims were remanded. For other claims, in which the examiner did provide an explanation separate from attorney argument, the Federal Circuit affirmed.

Unfortunately for the owners in these various cases, the remedies in these actions were to remand to the PTAB to provide an adequate rationale for its decision, rather than a reversal. In both Van Os and Icon Health, however, Judges Newman and O'Malley, respectively, wrote separately to support reversal rather than remand because in examination proceedings, the USPTO has the obligation to establish unpatentability. Thus, when unpatentability has been insufficiently established, they argue, the remedy should be a granted patent. This issue may continue to simmer and invite en banc consideration.

Typically, contesting "motivation to combine" is a challenging proposition for patent owners and patent applicants. The flexible inquiry lends itself to hindsight reasoning that can be difficult to clearly challenge. Together, these cases revitalize the requirement that these considerations be clearly articulated and flow from support in the record in both contested proceeding and ex parte appeals. To many applicants, contesting "motivation to combine" is a difficult burden that often appears challenging to appeal at the examiner level because of its nuanced flexibility.

These cases suggest that applicants should do so more often. Because examiners are expected to perform "compact prosecution," examiners must examine an application for all conditions of patentability (and make corresponding rejections) at each office action and are expected to bring forward the best available references in a rejection. See 37 C.F.R. 1.104(a)(1). As a result, when an examiner is reversed, an examiner "should never regard such a reversal as a challenge to make a new search to uncover other and better references" and, when the examiner has specific knowledge of such references, may reopen prosecution only with technology center director approval. See Manual of Patent Examining Procedure (M.P.E.P.) § 1214.04. Thus, should the PTAB follow these cases and reverse an examiner's improperly articulated motivation to combine, the applicant typically can expect a patent rather than a further search and articulation by the examiner.

As discussed in the Quick Update below, while the Federal Circuit has recently enforced the need for the USPTO to articulate its rationales as an administrative agency, the Federal Circuit itself has increasingly declined to articulate its own rationales by issuing summary affirmances without opinion.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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