Judges: Newman, Gajarsa (author), Ward (District Judge sitting by designation) [Appealed from D.D.C., Judge Kennedy]

In Hyatt v. Dudas, Nos. 07-1050, -1051, -1052, -1053 (Fed. Cir. Dec. 23, 2008), the Federal Circuit affirmed the district court’s interpretation of “ground of rejection” in 37 C.F.R. § 1.192(c)(7) (2000) and its remand of Gilbert P. Hyatt’s appeals. In so doing, the Court also held that the district court’s remand order did not require the Board to consider arguments waived by Hyatt.

Hyatt filed twelve patent applications between April and June 1995 relating to microcomputers, computer memories, computer displays, and global positioning systems. The twelve applications encompassed over 2,400 claims and each claim was rejected by the examiner. The most common basis for rejection was that the claims lacked written description support as required by 35 U.S.C. § 112, ¶ 1. Hyatt appealed to the Board. Hyatt argued that each of his claims should be reviewed independently, noting that the claims were separately patentable and that the claims had been separately argued. The Board concluded, however, that Hyatt had separately argued only twenty-one of his claims. On this basis, the Board selected those twenty-one claims as representative, and upon consideration of those claims, the Board affirmed the examiner’s rejections of all the claims.

Hyatt challenged the Board’s decision in district court pursuant to 35 U.S.C. § 145. The district court found that Hyatt had failed to separately argue all of his claims. It also concluded, however, that the Board had failed to comply with section 1.192(c)(7) when selecting the representative claims upon which it based its review of the examiner’s rejection of groups of claims in Hyatt’s applications. The district court held that the Board should not have grouped claims that had been rejected for lack of a written description unless those claims shared a limitation that had been found to have not been disclosed by the specification. Accordingly, the district court remanded to the Board. The PTO appealed to the Federal Circuit.

On appeal, the Federal Circuit first addressed the issue of whether it had jurisdiction over the appeal. The Court noted that it has exclusive jurisdiction over appeals of final decisions in § 145 actions, but that the case before it was an appeal of a remand order. The Court explained that appellate courts generally do not have jurisdiction over a case when no final judgment has been rendered, and that a remand for further agency proceedings is generally not a final judgment. It observed, however, that there is an exception to the final judgment rule in the rare situation when denying appellate review would likely result in the permanent loss of the agency’s ability to appeal the lower court’s determination of a legal issue. Applying these principles, the Court reasoned that should it deny appellate review, there would be a substantial risk that the PTO would permanently lose its ability to challenge the district court’s interpretation of section 1.192(c)(7). Accordingly, the Court concluded that it had jurisdiction.

The Federal Circuit next turned to the merits. It noted that section 1.192(c)(7) provides that “[f]or each ground of rejection which appellant contests and which applies to a group of two or more claims, the Board shall select a single claim from the group and shall decide the appeal as to the ground of rejection on the basis of that claim alone.” Slip op. at 6. The PTO asserted that a “ground of rejection,” as used in section 1.192(c)(7), was simply the statutory section under which a claim was rejected. Thus, it contended that it could select a claim rejected for failure to satisfy the written description requirement as representative of all claims rejected for failure to satisfy the written description requirement—regardless of whether the limitation in the representative claim that lacks written description support is present in the nonrepresentative claims. Conversely, Hyatt argued that a “ground of rejection” included both (1) the statutory section under which a claim was rejected and (2) the reason why the claim failed to meet that statutory requirement. Thus, Hyatt contended that the PTO could only select a claim as representative of a group of claims rejected for failure to satisfy the written description requirement if the representative claim and all claims in the group shared a common limitation that lacked written description support.

The Federal Circuit agreed with Hyatt. It found that under section 1.192(c)(7), “a group of claims rejected on the same ground . . . is one in which the differences between the claims is ‘of no patentable consequence to a contested rejection.’” Id. at 7 (citing In re McDaniel, 293 F.3d 1379, 1383 (Fed. Cir. 2002)). It noted that under McDaniel, a “ground of rejection” for purposes of section 1.192(c)(7) is not merely the statutory requirement for patentability that a claim fails to meet but also the precise reason why the claim fails that requirement. The Court observed that its interpretation of section 1.192(c)(7) was also consistent with the fact that the PTO bears the initial burden of presenting a prima facie case of unpatentability. It held that “a group of claims rejected for lack of written description do not share a common ‘ground of rejection’ under section 1.192(c)(7)—thus, allowing the Board to consider the group on the basis of a single representative claim—unless the claims share a common limitation that lacks written description support.” Id. at 10. Accordingly, the Court concluded that because the PTO plainly erred in its interpretation of section 1.192(c)(7), the district court was correct in remanding Hyatt’s appeals to the Board.

The Federal Circuit then turned to the PTO’s argument that if the Court rejects its interpretation of “ground of rejection” in section 1.192(c)(7), then the Board will be required on remand to consider grounds of rejection that Hyatt failed to contest in his initial appeals to the Board. The Federal Circuit disagreed. It explained that under the well-established rules of waiver, the Board is not required on remand to consider grounds of rejection that were not contested by Hyatt in his initial appeals to the Board. The Court noted, however, that arguments that become relevant on remand, whether due to implementation of the district court’s decision or other actions by the Board or the examiner, cannot be deemed waived if they were not previously required to have been made.