CAFC Finds SNQ Denial Not Subject to Appeal in Inter Partes Patent Reexamination

Back in March of 2011, an expanded panel of the Board of Patent Appeals & Interferences (BPAI) decided Belkin International et al., v. Optimumpath LLC. Belkin’s appeal stemmed from a denial of a proposed SNQ of an inter partes patent reexamination request of  U.S. Patent 7,035,281 (95/001,089). The initial request for inter partes patent reexamination was granted as to claims 1-3 and 8-10, but denied as to claims 4-7 and 11-31.

The denial of the SNQ targeting claims 4-7 and 11-31 was petitioned to the Director of the Central Reexamination Unit (CRU). Upon reconsideration, the Director refused to reverse the examiner. On the other hand, Belkin did not petition the denial of SNQs pertaining to the claims being actively reexamined (claims 1-3 and 8-10). During prosecution of the reexamination, the rejection of claims 1-3 and 8-10 was withdrawn by the examiner. Thereafter, Belkin appealed the withdrawn rejection of claims 1-3 and 8-10 together with the denial of the SNQs pertaining to those reexamined claims.

The procedural issue before the Board was whether or not denied SNQs, which pertain to claims being actively reexamined (i.e., claims 1-3 and 8-10) must be petitioned rather than appealed to the BPAI. The Board found that:

[I]f the Director makes the non-appealable determination that no substantial new question of patentability has been raised, then reexamination is not performed for those claims in question with respect to the corresponding prior art references. There cannot have been a final decision (either favorable or unfavorable) on the patentability of the claims in question under 35 U.S.C. § 315(b), the claims not having been reexamined in the first place for lack of a substantial new question of patentability. (emphasis added)

Yesterday the CAFC weighed in on the debate.

Belkin argued (here) that the Board has jurisdiction to consider prior art found not to raise a substantial new question of patentability in inter partes reexamination when reexamination is subsequently granted for the same claim on another reference. Belkin presented reexamination as a two-step procedure: (1) determining whether a substantial new question of patentability exists; and (2) if so, determining whether the claims are patentable over all prior art.  Belkin conceded that the first step is not appealable under § 312(c) (as was the case for claims 4-7 and 11-31), but contended that once an SNQ affecting a claim is found, all prior art must be considered on appeal, including prior art found previously not to raise a substantial new question of patentability.

The CAFC sided with the USPTO explaining:

We disagree with Belkin’s position because there was no final decision favorable to patentability regarding the issues based on the [denied SNQs].  First, the Director’s determination that an issue does not raise a substantial new question of patentability is not a decision favorable to patentability.  Lack of a substantial new question of patentability is not a favorable decision on patentability.  Indeed, it cannot be one, as the decision on the substantial new question preceded the actual reexamination, and merely raised a “question” to be answered.  Furthermore, it is explicitly non-appealable under § 312(c).  To allow an otherwise non-appealable decision by the Director to become appealable simply by raising it a second time during the later reexamination would impermissibly circumvent the statutory bar on appeals.

In deciding the issue, however, the CAFC did highlight a potential non-petition route to preserve such issues for appeal, explaining:

In this case, the Director determined, in part, that the issues based on the first three references cited by Belkin did not raise a substantial new question of patentability regarding claims 1–3 and  8–10.  Under § 312(c), that decision is final and non-appealable.  But the Director also determined that one issue based on anticipation by another reference, Peirce, did raise such a question.  At that point, the Director was entitled to, and did, order reexamination for resolution of that single question.  The scope of the resulting reexamination was then limited to answering that question of patentability, anticipation by Peirce.  Belkin, at that point, could only raise the three references if they were necessary to rebut findings of fact by the examiner or as a response to the patent owner relevant to answering that single patentability question.  See 37 C.F.R. § 1.948(a).  Here, Belkin has not argued that the three references were cited for such a purpose, and the limited record before us does not suggest that they were.  Thus, the Board was correct not to consider the previously raised and rejected issues based on the other three references.

(emphasis added)

It is worth noting that the above option was never available to Belkin. This is because the first action was an Action Closing Prosecution (ACP), and the Patentee did not respond. Thus, Belkin had no option to argue the merits before the examiner until appeal briefing. Still, for those legacy inter partes reexamination filings that are still applying the SNQ standard, the above rebuttal option may be the best option for preserving such matters for PTAB review. (note that the SNQ standard changed on September 16, 2011, so the last year of inter partes reexamination filings are free of this confusion).