The recent Federal Circuit decision in In re Leithem highlights what some practitioners believe is a growing problem with decisions from the USPTO Board of Patent Appeals and Interferences: the Board's practice of "affirming" a rejection based on a new ground of rejection. The court soundly criticized this practice when it vacated and remanded the Board decision "to allow appellants a full opportunity to respond to the new rejection."

The Claims At Issue

The claims at issue were directed to a diaper product made with a specific absorbent core material. The court cited claim 104 as representative:

104. An absorbent personal hygiene device comprising: a layer that allows liquid to pass, a water barrier sheet, an absorbent core interposed between said layer and said sheet, the absorbent core containing at least about 25% of fluffed wood fiber pulp, wherein said fluffed wood fiber pulp comprises wood fiber pulp that has been cold caustic extracted and fluffed by mechanical action and is without chemical cross-linking.

As noted by the court, prior art diaper products use fluffed wood fiber pulp that has been chemically cross-linked. The invention was alleged to provide a comparable product without requiring chemical cross-linking.

The Examiner's Rejection

The Examiner rejected the claims over the combination of U.S. Patent 3,658,064 ("Pociluyko") and U.S. Patent 2,083,575 (“Novak”). In particular, the Examiner asserted that Pociluyko discloses a diaper satisfying every element of claim 104 except that it did not disclose using a fluff pulp that satisfied the cold caustic extraction limitation. The examiner cited Novak for disclosing cold caustic extraction of wood pulp and "a method of making fluff pulp." The Examiner asserted that it would have been obvious "to modify the invention of Pociluyko with a fluff pulp made by the method taught in Novak."

The Argument On Appeal

On appeal, the Applicant argued that "Novak does not teach that his pulp is fluffed." Instead, according to the Applicant, the pulp product of Novak is a wet-laid paper, not a fluff material. Accordingly, the wet-laid paper product of Novak could not be substituted for the dried fluff pulp of Pociluyko to arrive at the claimed invention.

The Board's First Decision

Although the Board agreed with the Applicant that Novak only discloses the cold caustic treatment of pulp to produce a wet-laid paper, it found that Novak's pulp "may be fluffed for use in an absorbent core." As summarized by the court, the Board reasoned that because "Novak’s goal was to create a more absorptive paper" one of skill in the art "would have had reason to use this pulp as a fluffed pulp in an absorbent product such as Pociluyko."

The Request For Rehearing

The Applicant filed a petition for rehearing, arguing that the Board decision was based on a new ground of rejection. That is, while the Examiner found that Novak’s wet-laid pulp was a fluff pulp, the Board had affirmed the rejection on the basis that Novak's pulp could be mechanically fluffed and used in the product of Pociluyko.

The Board Denial Of Rehearing

The Board denied the petition for rehearing, disagreeing that its affirmance was based on a new ground of rejection. The Board noted that "both the Examiner and the Board had rejected the claim under 35 USC § 103 over Novak and Pociluyko," and glossed over other differences in the stated rationales.

The Federal Circuit Decision

The Federal Circuit reviewed the Board decison under the Administrative Procedure Act (APA), and particularly considered whether the decision should be "set aside" as being "not in accordance with law."

The court cited 35 USC § 6(b) as requiring the Board "to review, on appeal, adverse decisions of the examiner." Reading this in conjunction with the APA, the court noted that an applicant "is entitled to notice of the factual and legal bases upon which the rejection was based." Thus, the Board's own rules provide that "when the Board relies upon a new ground of rejection . . . the applicant is entitled to reopen prosecution or to request a rehearing."

The Federal Circuit explained that merely citing the same references does not necessarily avoid a new ground of rejection.  Rather, whether a new rejection has been made depends on "whether [applicants] have had fair opportunity to react to the thrust of the rejection." That might not be the case "if the Board relies on new facts and rationales not previously raised . . . by the examiner." The court drew a line between the Board's ability to "fill in the gaps" that might exist in the examiner’s evidentiary showing and a Board decision that "changes the thrust of the rejection."

Turning to the case before it, the court agreed that the Board decision altered the thrust of the rejection made by the Examiner. Indeed, the Federal Circuit took the USPTO to task for continuing to develop, modify and augment the rejection during the Federal Circuit appeal. Not only did the USPTO cite a new reference during oral argument (!), it criticized the Applicant for shifting arguments from its original position. The Federal Circuit had little patience for this conduct:

This begs the question and highlights the problem when the Board relies on a new ground of rejection. Leithem’s argument to the Board was in response to the grounds relied upon by the examiner, namely, that Novak disclosed a fluff pulp. When the Board affirmed the rejection on the basis that Novak taught a pulp that was not fluffed, but that could be fluffed, of course Leithem’s argument had to shift—the thrust of the Board’s rejection had shifted. The Board cannot play it so fast and loose in affirming an examiner’s rejection that it disregards procedural safeguards afforded to the applicant.

The court therefore found that the Board decision was "not in accordance with law," and vacated and remanded to allow the Applicant "a full opportunity to respond to the new rejection in the first instance."

A Pervasive Problem

Practitioners with a significant practice before the Board know how frustrating it can be for the Board to "affirm" a rejection based on a new rationale. Often an Applicant has a good argument against the Board's position—if only there was an opportunity to respond without the significant delays associated with reopening prosecution.

Those delays highlight another unfair consequence of this problem. When the Board "affirms" the appealed rejection, the application does not earn patent term adjustment for the time spent on appeal. Thus, even if the Board finds that the examiner's basis for rejection was wrong (as it appears to have done here), by styling its new rationale as an "affirmance" the Board effectively deprives the patent of several years of patent term.