United States: The Federal Circuit Considers A New Issue On Appeal, Lectures The PTO On Its Burden To Establish Obviousness, And Reveals An Internal Split On What To Do When The PTO Fails To Carry That Burden

The Federal Circuit in Icon Health & Fitness, Inc. v. Strava, Inc., Appeal No. 2016-1475 (Feb. 27, 2017), made several interesting points and revealed a disagreement among four of its judges about the proper disposition when the PTO fails to carry its burden in "examination appeals." More specifically, the court explained when an appellant might successfully raise an issue it did not raise in the lower tribunal. It also addressed the burden on the PTO to defend its rejections at the Federal Circuit. Finally, the opinion reflects a disagreement about whether the court should give the PTO a second bite at the apple when it fails to carry that burden.

Regarding a party's raising new issues on appeal, usually a fruitless exercise, the court observed that it has discretion to forgive any implicit waiver. It described "[s]ome of the relevant considerations" as follows:

whether (1) "the issue involves a pure question of law and refusal to consider it would result in a miscarriage of justice"; (2) "the proper resolution is beyond any doubt"; (3) "the appellant had no opportunity to raise the objection" below; (4) "the issue presents significant questions of general impact or of great public concern"; or (5) "the interest of substantial justice is at stake."

Slip op. at 5 (quoting Automated Merch. Sys., Inc. v. Lee, 782 F.3d 1376, 1379 (Fed. Cir. 2015)). The court added as considerations "whether the issue has been fully briefed, a party will be prejudiced by consideration of the issue, or no purpose will be served by remand." Id. (citing Automated Merch. at 1380).

In the case before it—an appeal by the patent owner in an inter partes reexamination—the appellant had failed to argue before the PTAB that the examiner had improperly relied on the legal conclusions in its expert's declarations. Although the court acknowledged that several considerations weighed in favor of a waiver, it nevertheless considered the appellant's new arguments because "the issue potentially could affect the weight afforded to a large number of expert declarations," and further "[b]ecause the issue has been fully briefed, the record is complete, there will be no prejudice to any party, and no purpose is served by remand." Id. at 5-6 (citing Automated Merch., 782 F.3d at 1379-80).

Thus, when appealing to the Federal Circuit, one can attempt to raise new issues by asserting the existence of some of the circumstances described above. But the existence of those circumstances will not guarantee success. By far the better practice is to raise and preserve all issues in the lower tribunal that one might want to argue on appeal. On the other hand, the party opposing new issues on appeal should argue waiver, to avoid waiving the waiver, and should nevertheless also address the new issues on the merits rather than risk that the court will hold that the appellant waived the new issues because of the lack of full briefing.

Regarding the PTO's burden to defend a rejection at the Federal Circuit, although affirming the rejection of some of the patent claims on appeal, the court sharply criticized the PTAB's affirmance of the examiner's rejection of other claims. The court approved reliance on an expert's declarations containing legal conclusions of obviousness "so long as other aspects of the declarations contain statements related to factual findings." Slip op. at 7. But the court disapproved the PTAB's failure to address some of the appellant's arguments except by Rincorporating the examiner's comments that incorporated the appellees' arguments. The court commented that "[a]rgument is not evidence" and "[t]his multi-layered incorporation by reference does not satisfy the substantial evidence standard of review." Id. at 10-11. The court stressed that the PTAB must make findings that have a sufficient evidentiary basis and must adequately explain how those findings support its legal conclusion. Id. at 11-12 (citing In re NuVasive, 842 F.3d 1376, 1382 (Fed. Cir. 2016)).

Thus, with respect to a number of claims, the court declined to affirm "[b]ecause the PTAB failed to make the requisite factual findings or provide the attendant explanation." Id. at 15. As long as the PTAB or the examiner made findings based on evidence and provided a reasonable explanation for the rejection based on those findings, the court deferred to the PTAB in accordance with Dickinson v. Zurko, 527 U.S. 150, 152 (1999). The court appears to be carefully scrutinizing the PTAB's procedure and otherwise according it great deference.

Finally, the panel majority vacated and remanded, rather than reversed, the PTAB's rulings that were not supported by evidence-based findings and adequate explanations. Slip op. at 12 (citing In re Van Os, 842 F.3d 1359, 1362 (Fed. Cir. 2017)). In that case, the panel majority, consisting of Circuit Judges Moore and Wallach, vacated and remanded a PTAB affirmance of an examiner's rejection in ex parte examination of an application filed by inventors at Apple Inc. As in Icon Health, the court declined to affirm because "neither the Board nor the examiner provided any reasoning or analysis to support finding a motivation" to combine the teachings of the references. 844 F.3d at 1361-62. The third panel member, Circuit Judge Newman, however, would not have given the PTO a second bite at Apple "because remand is not the appropriate remedy in examination appeals in which the PTO has not carried its burden of establishing unpatentability." Judge Newman reasoned that under 35 U.S.C. § 102(a), when the PTO has not carried its burden, Apple is "entitled to a patent." Id. at 1362. Judge Newman distinguished "examination appeals" from post-grant procedures under the AIA because "[i]n examination appeals, the PTO and the PTAB are not neutral arbiters; they bear the burden of establishing unpatentability. . . . If the PTO fails to carry that burden, by statute the applicant is 'entitled to a patent.'" Id.[1]

In Icon Health, the panel majority consisted of Circuit Judges Reyna and Wallach, and this time Circuit Judge O'Malley dissented in part, adopting Judge Newman's opinion in In re Van Os and applying Judge Newman's reasoning regarding "examination appeals" to inter partes reexamination. Consequently, two judges—Newman and O'Malley—would simply reverse erroneous PTO rejections in "examination appeals" with instructions to allow the appealed claims, while two other judges—Moore and Wallach—would at least in some cases remand to the PTAB for further proceedings, such as "when the Board's action is 'potentially lawful but insufficiently or inappropriately explained.'" In re Van Os, 844 F.3d at 1362 (quoting In re Lee, 277 F.3d 1338, 1346 (Fed. Cir. 2015)). It remains to be seen which view will ultimately prevail.

[1] Presumably, if the petitioner in an IPR settles with the patent owner and drops out of the proceeding and the PTO nevertheless continues with the proceeding, in that case the PTO would no longer be a neutral arbiter; if it failed to then carry the burden of establishing unpatentability, the patent owner would be "entitled to a patent." See Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131, 2144 (2016):

As explained above, challengers need not remain in the proceeding; rather, the Patent Office may continue to conduct an inter partes review even after the adverse party has settled. § 317(a). Moreover, as is the case here, the Patent Office may intervene in a later judicial proceeding to defend its decision—even if the private challengers drop out. And the burden of proof in inter partes review is different than in the district courts: In inter partes review, the challenger (or the Patent Office) must establish unpatentability "by a preponderance of the evidence" . . . .

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions