Patent Prosecution and Appeal – a Review –

As our regular readers may recall, several of our past columns have covered patent prosecution(1) and appeal(2) in the United States Patent and Trademark Office. To summarize the former, prosecution of a patent application begins when a Patent Examiner studies the application, searches for prior art, and makes a determination on whether or not to grant a patent on the invention as defined by the claims.  In most instances, the Examiner finds at least some basis to reject one or more claims in the application, and issues an Office Action that sets forth the rejections and their statutory basis.

At that point, the Applicant has the option of filing a response to the Office Action that may include an amendment of the claims, supporting arguments to challenge the rejections, or other evidence in support of patentability.  In the best case scenario, the Examiner will then find that the claims are allowable, and issue a Notice of Allowance.  With payment of an issue fee to the USPTO, the Applicant will be issued a patent.  At times, however, the Examiner will find further grounds for rejecting the claims (often by doing further prior art searching), or the Examiner may issue the same rejections if the arguments are found “not persuasive.”  In either case, the Examiner will issue a second Office Action, which is usually a Final Rejection.

As we have noted in a previous column³, “Final” rejection is not the end of the road, and is not really final at all.  The Applicant has a first option of filing a Request for Continued Examination (with payment of a fee), and continuing on with further amendments of the claims, arguments, or other evidence. In response, the Examiner may then issue a Notice of Allowance, or yet another Office Action with the same or further rejections of the claims.  In a worst case scenario, the Applicant and the Examiner engage in multiple cycles of Office Actions and Responses without arriving at an agreement that the application contains patentable subject matter.

At some point in the prosecution process, the Applicant (often through the advice of his patent practitioner) reaches the conclusion that the application is not advancing toward an allowance with the particular Examiner assigned to the case.  This conclusion can often be reached through an interview⁴ with the Examiner to discuss the rejections made in an Office Action.  The Applicant may strongly believe that the Examiner is in error in making or maintaining the rejections of the claims.  It is quite possible for an Examiner to make a number of errors in rejecting claims, including not applying the statutes correctly, not interpreting the prior art correctly, and/or not understanding the Applicant’s invention as defined by the claims.

When an Examiner “digs in,” and refuses to concede to an Applicant’s arguments, rather than continuing on with the Office Action-Response churn, it may be better for the Applicant to pursue a second option, which is to file an Appeal.  Under current appeal practice, once the claims of an application have been twice rejected, the Applicant may pursue an Appeal before the Patent Trial and Appeal Board⁵ (PTAB) by filing a Notice of Appeal and an Appeal Brief, which contains arguments by the Appellant (formerly the “Applicant”) as to why the Examiner has erred in rejecting the claims.  The Examiner then files an Answer to the Appeal Brief.

The Appeal is heard within the PTAB by a Board of three administrative law judges.  The judges may rule in favor of the Appellant, they may affirm the findings of the Examiner, or they may remand the application back to the Examiner for further action.  They may also split a decision, ruling in favor of the Appellant on some of the claims, and affirming the Examiner’s findings on others.

“The process of Appeal, both within the Patent Office and in federal courts, has a major effect on how our patent laws are interpreted and applied.”

In the worst case scenario, the Board affirms the Examiner in full, and the claims in the application remain rejected.  For most Appellants, this is the end of the line in prosecution of the application.  From this point, continuing on with prosecution becomes that much more expensive (having not been cheap to have come this far), with the odds of obtaining a patent becoming much lower as well.

See You in Court

However, the Appellant still has two remaining options for further appeal.  Both are litigated outside of the USPTO.   A first option⁶ is to appeal to the Court of Appeals for the Federal Circuit (CAFC).  The CAFC, which was created by statute in 1982, hears a variety of appeals from certain administrative agencies of the federal government (as well as appeals by parties opposing rulings by those agencies).  Appeals of decisions within the USPTO by the PTAB are among those heard by the CAFC.

When an appeal is filed in the CAFC, the Appellant is represented by an attorney (or often a team of attorneys), while the USPTO is represented by attorneys from the Office of the Solicitor.  The opposing attorneys argue the case, and a panel of three judges from the Court issues a ruling.  (We note that litigation before the CAFC is highly complex, and that a detailed discussion of the possible proceedings is beyond the scope of this column.)  The Court may issue its mandate and opinion in favor of the Appellant, it may affirm the findings of the PTAB, or it may remand the application back to the PTAB for further action.

As a second option, the Appellant may file a civil action⁷ against the Director of the USPTO in the United States District Court for the Eastern District of Virginia.  This option may only be pursued if the Appellant has not first appealed his case before the CAFC; doing so precludes the option of filing the civil action in the District Court.  When such a civil action is filed, the Appellant is suing the USPTO to withdraw its ruling by the PTAB, and issue a patent.  As done in practice before the CAFC, opposing counsel for the two parties argue their case before the Court, and a ruling is issued.  The Court may rule in favor of the Appellant, or in favor of the USPTO, in which case a patent is again denied.

SCOTUS – the Final Destination

When a ruling against the Appellant has been issued, whether by the CAFC or by the District Court, the Appellant has one final option: appeal to the Supreme Court of the United States.  Of course, this is a very rare occurrence.  There must be the confluence of several key circumstances:

• The patent being pursued must have a very high economic value in order to justify the extreme expense of further litigation at this level, and the Appellant must have deep pockets to have come this far, and to be willing to continue onward.
• The Appellant must believe that there is a strong case to be made before the Court, and there is a reasonable chance of success in overcoming all of the previous adverse rulings.
• There must be a truly unique issue to be argued before the Court – an issue that has not been settled by prior precedents and case law from previous court decisions.
• The Court must agree to hear the case. The Court denies hearings of many cases, and filing an appeal to the Supreme Court certainly does not mean that the case will be heard as a matter of right.

With regard to the third criterion above, the “unique issue” to be argued often is a case where a groundbreaking invention has been made, and the technology involved “outruns” the applicable laws.  In other words, the invention is such an advance that there is uncertainty as to how the existing patent statutes apply, and there is no case law upon which to rely.  In particular, 35 U.S.C. 101, which is directed to defining what subject matter is patentable, has been a key statute argued previously before the Supreme Court.

A relatively recent example of this is the case of Diamond v. Chakrabarty.  Anand Chakrabarty, a biochemist at General Electric, developed a genetically modified bacterium in the early 1970s that could break crude oil down into harmless byproducts.  In June of 1972, Chakrabarty applied for a patent on his invention.  The USPTO rejected his application on the grounds that the subject matter was non-statutory.  Chakrabarty appealed repeatedly, ultimately taking his case to the Supreme Court, which ruled in his favor.  Chakrabarty’s patent issued in March of 1981.  The Court found that “His claim is not to a hitherto unknown natural phenomenon, but to a non-naturally occurring manufacture or composition of matter – a product of human ingenuity…”  In hindsight, it is easy to see that the Court was dealing with complex issues involving a breakthrough technology: the USPTO had never examined a patent application for such a life form before.  A difference of opinion arose as to whether it was patentable, and there were no prior court decisions to provide guidance.

In another case from 1972, Gottschalk v. Benson, the Court found in favor of the USPTO, ruling that a process claim directed to a numerical algorithm was not patentable because “the patent would wholly pre-empt the mathematical formula and in practical effect would be a patent on the algorithm itself.” The Court found that if such a patent were issued, it would be directed only to an abstract idea.  (More recently, the court has issued another landmark ruling in Alice Corp. v. CLS Bank International.  In Alice, the Court ruled that patents held by CLS Bank International were invalid because their claims were drawn to an abstract idea, and implementation of the idea on a computer was not enough to transform that idea into a patentable invention.  This ruling is already having an effect on the prosecution of software patent applications in the USPTO, and will likely also result in many issued patents being found invalid.)

An Ever Changing Landscape

Patent prosecution before the USPTO, and the process of Appeal, both within the Office and in the courts, continues to have a major effect on how our patent laws are interpreted and applied. Additionally, patent litigation between opposing parties, and not involving the USPTO, also plays a major role.  We’ll discuss aspects of case law resulting from patent litigation in a future column.

1. The Limited Monopoly®, March 2009.
2. The Limited Monopoly®, February 2011.
3. The Limited Monopoly®, September 2010.
4. The Limited Monopoly®, September 2008.
5. Prior to the America Invents Act, the Board of Patent Appeals and Interferences.
6. As set forth in 35 U.S.C. §§ 143-144.
7. 35 U.S.C. §§ 143-144.
8. The Limited Monopoly®, September 2008.

PHOTO  CREDIT: United States Supreme Court building under construction in 1933.  Courtesy of U.S. National Archives.

Authors John M. Hammond P.E. (Patent Innovations, LLC www.patent-innovations.com) and Robert D. Gunderman P.E. (Patent Technologies, LLC www.patentechnologies.com) are both registered patent agents and licensed professional engineers.  They offer several courses that qualify for PDH credits.  More information can be found at www.patenteducation.com. Copyright 2014 John Hammond and Robert Gunderman, Jr.

Note:  This short article is intended only to provide cursory background information, and is not intended to be legal advice.  No client relationship with the authors is in any way established by this article.

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