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Ex Parte Yudoovsky: Petitions Are (Sometimes?) Unnecessary to Traverse Unauthorized New Grounds of Rejection on Appeal


Written by: Kip Werking
Advantedge Law Group LLC
Posted: January 8, 2013 @ 9:15 am

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The Board of Patent Appeals and Interferences did something fascinating in Ex Parte Yudoovsky. [1] The Board sua sponte declined to consider an unauthorized new ground of rejection—even though the appellant never filed a petition.  In footnote 3 (slip. op. 5), the Board held:

In the “Response to Arguments” section of the Answer, the Examiner, for the first time, expresses an alternative rationale for unpatentability, which is that it would have been obvious to one of ordinary skill in the art to transform the RT2 and RT3 devices of Ohshimo into a single device, citing In re Larson, 340 F.3d 965, 968 (CCPA 1965) (Ans. 10). This abstract rationale is completely unrelated to the claim interpretation rationale of the Examiner’s stated rejections. We decline to consider this new rationale because it implicitly constitutes an unauthorized new ground of rejection. The “Response to Arguments” section of the Answer is not an appropriate place to raise a new rationale for unpatentability.

In other words, the Board refused to consider a new ground of rejection, because the Examiner failed to designate the ground as “new.”

To a client advocate like me, the Board’s holding seems like good policy.  The Board should require the Examiner to designate new rejections as “new,” because that designation gives procedural protections to the appellant.  One protection is that the appellant can freely reopen prosecution under 37 C.F.R. 41.39(b)(1).  The appellant can do that without filing a request for continued examination (“RCE”).  The appellant thus avoids the $930 RCE fee.  The appellant also avoids the potential cutoff of type B patent term adjustment (“PTA”) that the RCE would cause. [2]  (But, as I understand, the appellant does not receive type C PTA even if the examiner withdraws all of the appealed rejections.)  Failing to give these protections to the appellant is simply unfair.

Designating rejections as “new” has another huge benefit: it clarifies the record.  Examiners can make new rejections in two different ways: as supplements to old rejections, or as substitutes for old rejections.  Without the “new” designation, the record becomes vague and convoluted about which of these the Examiner is doing.  If the old rejection is withdrawn, the appellant need not address it.  Yet the appellant cannot avoid doing that unless the Examiner makes clear that the old rejection is withdrawn.

The Patent Office (“PTO”) currently states that requesting a “new” designation is not “necessary” unless the appellant intends to reopen prosecution. [3]  That policy overlooks the fact that the “new” designation provides needed clarity to the record, even if the appellant desires to maintain the appeal.

Designating rejections as “new” on appeal has one last benefit, too: if the applicant reopens prosecution, the Examiner must make the new rejection non-final.  The Examiner must do that even if the applicant previously amended the claims in response to a non-final rejection.  In contrast, some art units in the PTO have a policy of making rejections final after an examiner (as opposed to the appellant) withdraws an application from appeal, thereby conceding.  These art units cite MPEP 706.07(a) as permitting this “reopen to make a final rejection” policy when the appellant previously amended the claims.  Ombudsmen in the PTO have told me that the Office of Patent Legal Administration has an internal memo defending this policy.  (I want to read that memo.)  In contrast, when the Examiner places the new rejection in the Examiner’s Answer, and designates it “new,” then the Applicant can force the Examiner to make the new rejection non-final under 37 C.F.R. 41.39(b)(1).  That rule, unlike MPEP 706.07(a), does not distinguish between amended and non-amended claims.  The rule requires the Examiner to always make the new rejection non-final.  (I believe that the apparent inconsistency between 41.39(b)(1) and this interpretation of MPEP 706.07(a) counsels against that interpretation.)

For all of these reasons, I welcome the Board’s refusal to consider the undesignated ground of rejection in Yudoovsky.  Yet the Board’s holding seems to conflict with the waiver rule of MPEP 1207.03 IV.  That provision requires the appellant to request the “new” designation in a petition, or else the request is “waived”:

If appellant believes that an examiner’s answer contains a new ground of rejection not identified as such, appellant may file a petition under 37 CFR 1.181(a) within two months from the mailing of the examiner’s answer[.] […] Any allegation that an examiner’s answer contains a new ground of rejection not identified as such is waived if not timely raised (i.e., by filing the petition within two months of the answer) by way of a petition under 37 CFR 1.181(a).

As shown, the appellant must petition the Director within two months or else “waive[]” the allegation of a new rejection.  This “waiv[er]” rule implies that the petition is the exclusive mechanism for obtaining the “new” designation.  New Board rule 41.40 is even more explicit: “Any request to seek review of the primary examiner’s failure to designate a rejection as a new ground of rejection in an examiner’s answer must be by way of a petition to the Director.”  The PTO adopted that rule too late for Yudoovsky to benefit from it.  But it appears to codify in the C.F.R. essentially the same “waiv[er]” rule as MPEP 1207.03 IV (while adding a “tolling” provision).

This waiver rule does not seem to contemplate the Board sua sponte identifying “new” rejections and refusing to consider them.  Yet that is precisely what the Board did in Yudoovsky.  Yudoovsky never filed a petition.  He merely included a short discussion of the new rejection in the reply brief.  Yet the Board still refused to consider the new rejection.  If the Board can and does do that, why force the appellant to file a petition?  Why threaten to ignore the issue as “waived” if the Board can sua sponte resurrect it from the dead?

In answering those questions, we can reject one possible reason for the Board limiting its sua sponte behavior to cases like Yudoovsky.  Namely, the Board affirmed the Examiner in Yudoovsky despite refusing to consider the new ground of rejection.  In other words, the new rejection in Yudoovsky supplemented, rather than substituted for, old rejections.  Likely, the Board felt more comfortable ignoring the new rejection because it seemed moot in view of the affirmed rejection.  Yet the question of whether the new rejection was actually “new” has no logical relevance to the question of whether the old rejection is incorrect.  If it was procedurally fair to refuse to consider the new rejection upon affirming the old rejection, it should also be fair upon reversing.  In other words, the Board should not selectively apply the waiver rule so that it is either (A) applying the rule, which hurts appellants, or (B) affirming the examiner, which hurts appellants.  The Board shouldn’t selectively apply the waiver rule so that the appellant always loses.

The holding in Yudoovsky becomes more important when one considers new rejections that substitute for old rejections, instead of merely supplementing them (as in Yudoovsky).  For substitution cases, the new rejection may be the only rejection remaining in the appeal.  If the Board refuses to consider the new rejection on procedural grounds, then you can win your appeal without the Board even considering the merits!

Of course, the potential exists for the Examiner to reopen prosecution and reinstate the new rejection.  That raises the concern of wasting time and resources trying to avoid a rejection that is inevitable.  But we should not overstate that concern.  There is no guarantee that the Examiner will reinstate the new ground of rejection.  Upon reopening prosecution, the Examiner may find even better prior art and make stronger rejections (as often happens after reversal on appeal).  Alternatively, the Examiner’s supervisors may decide, upon further review, that the new rejection is not supportable.  For example, if the Board decision constitutes a reversal, because there is no rejection to affirm, then the Examiner can only reopen prosecution with the approval of a Technology Center (“TC”) director. [4]  The TC director might review the appeal for the first time and refuse to provide a signature (perhaps not desiring to risk losing at the Board twice in a row).  Moreover, over the many years of the appeal process, the original Examiner may leave the PTO, or transfer to another art unit.  The next Examiner may not agree with the original Examiner’s rejection (especially if the new Examiner is a more senior Examiner with a higher allowance rate).  Moreover, the appellant will receive type C PTA for the time consumed by the successful appeal.

The Yudoovsky policy also creates an inventive for examiners to designate new rejections as “new” in other cases.  That practice provides the benefits outlined above (i.e. option to reopen prosecution and clarity added to the record).  In short, there is little cost associated with pursuing a small chance of permanently defeating a rejection on procedural grounds.  Nevertheless, contra Yudoovsky, clients that are especially time or cost sensitive may desire for the Board to review even undesignated new grounds of rejection.  (One wonders whether Yudoovsky would have preferred for the Board to review the unauthorized new ground of rejection in order to reverse it.)

Let’s return to the potential conflict between Yudoovsky and the waiver rule.  Of course, we can attempt to resolve that conflict by saying that Yudoovsky waived his right to the remedy, but remained eligible to receive it as a gift from the Board, in its discretion.  By analogy, assertions of new grounds of rejection under Board rule 41.50 are discretionary.  But this attempt at reconciliation, like rule 41.50, strikes me as bad policy.  The policy is misguided for the simple reason that these discretionary decisions of the Board have profound, prejudicial effects against appellants.  Those decisions should not be subject to happenstance.  Whether an applicant receives a patent should not be a matter of luck.

The Board’s sua sponte behavior raises the intriguing question of subject matter jurisdiction.  Of course, the Board does not have infinite subject matter jurisdiction.  The Board has no jurisdiction, for example, to decide the next winner of American Idol.  Likewise, the Board, unlike the federal district courts, has no jurisdiction over suits for patent infringement.  This raises the question of the precise boundaries of the Board’s subject matter jurisdiction.

Congress generally limits by statute the subject matter jurisdiction of article I tribunals like the Board.  Yet not every statutory limitation is “jurisdictional.” [5]  These other limitations may be merely procedural or “claim processing” rules.  Moreover, “[b]ecause the consequences that attach to the jurisdictional label may be so drastic,” the Supreme Court has been increasingly cautious in applying that label. [6]

Nevertheless, the Board’s behavior in Yudoovsky has the hallmarks of true questions over subject matter jurisdiction.  Tellingly, the Board ignored the waiver rule, while subject matter jurisdiction is one rare objection that can never be waived.  Moreover, the Board apparently based its sua sponte behavior on the recognition that an undesignated new ground of rejection simply does not belong within the Board’s review (“the Answer is not an appropriate place to raise a new rationale for unpatentability.”)

The Federal Circuit’s recent decision in In re Stepan reinforces the suspicion that undesignated new grounds of rejection are outside of the Board’s subject matter jurisdiction. [7]  There the Federal Circuit held that the Board’s decision contained an undesignated new ground of rejection.  In remanding the case to the PTO, the Federal Circuit emphasized the statutory limits on the Board’s review by not just quoting 35 U.S.C. § 6(b), but italicizing the key phrase: “The Board of Patent Appeals and Interferences shall, on written appeal of an applicant, review adverse decisions of examiners upon applications for patents. . . .” (emphasis by Federal Circuit). [8]

The Supreme Court’s recent decision in Henderson v. Shinseki also reinforces the suspicion that undesignated new grounds of rejection are outside of the Board’s subject matter jurisdiction.  Henderson is likely the most relevant case here because, unlike a long line of earlier precedent that “involved review by Article III courts,” Henderson “involves review by an Article I tribunal as part of a unique administrative scheme.” [9]

The Court in Henderson decided the “jurisdictional” question by considering several factors.  First, the Court considered whether the terms of the statute suggest that “the provision was meant to carry jurisdictional consequences.” [10]  As quoted by the Federal Circuit in Stepan, the relevant statute here, 35 U.S.C. 6, does suggest that the statute was meant to carry jurisdictional consequences.  The statute establishes the Board and sets forth the Board’s duties.  One of those duties is to “review adverse decisions of examiners.”  Arguably, the Board’s subject matter jurisdiction is limited to the “decision” of the Examiner made in an office action pursuant to 35 U.S.C. 132 and 134—not unauthorized new grounds of rejection untimely made in the Answer. [11]  Of course, the Board may review new grounds of rejection made during appeal, but only when those grounds of rejection are designated new and appellant receives the protection of Board rule 41.39(b) or 41.50(b) (or perhaps if the appellant has waived that objection, as discussed below).

The other Henderson factors reinforce the suspicion that undesignated new grounds of rejection are outside of the Board’s subject matter jurisdiction.  Most importantly, the Court observed that “what is most telling here are the singular characteristics of the review scheme that Congress created for the adjudication of veterans’ benefits claims.” [12]  Although the respective statutory schemes are friendlier to veterans than patent applicants, most of the statutory advantages cited in Henderson exist in both systems.  Like Department of Veterans Affairs (“VA”) proceedings, PTO proceedings are “nonadversarial,” or at least ex parte. [13]  Similar to VA proceedings, PTO proceedings must give the applicant the “benefit” of the doubt, at least to the extent that the PTO must prove unpatentability by a preponderance of evidence. [14]  As for VA proceedings, disappointed applicants may obtain “de novo review” at the Board, and “further review” in court.  As for VA proceedings, an unfavorable Board decision is appealable but a favorable Board decision is “final” [15] (with the caveat that the Examiner can request reconsideration [16]).  And, like veterans, patent applicants may “reopen a claim simply by presenting ‘new and material evidence.’” [17]

For all of these reasons, I wonder whether unauthorized new grounds of rejections are outside of the Board’s subject matter jurisdiction.  Nevertheless, I am not convinced that they are.  One argument is that the Board’s subject matter jurisdiction encompasses the “decision” of the Examiner, regardless of the Examiner’s reasoning.  And an Examiner who rejects an application for new reasons on appeal is still rejecting it.  In my view, that interpretation likely violates the spirit, if not the literal text, of 35 U.S.C. 6.  In that case, an amendment to section 6 may be necessary to clarify the narrower scope of the Board’s jurisdiction.

Second, there is a potentially relevant difference between Henderson and patent appeals at the Board: the Court in Henderson ruled in favor of the applicant by holding that a rule is not jurisdictional.  In contrast, to rule in favor of patent applicants, the courts would need to hold that the “new ground of rejection” rule is jurisdictional.  But, as we have seen, the Supreme Court is increasingly reluctant to do that.  Most importantly, experts smarter than me tell me that, in their view, the rule is merely procedural, not jurisdictional.  On balance, I would be reluctant to advance the argument that unauthorized grounds of rejections are outside the Board’s jurisdiction.

Because the Board in Yudoovsky decided an issue that the Director traditionally decides by petition, Yudoovsky also raises fascinating questions about the Board’s independence.  Arguably, it is the duty of Board, and not the Director, to decide the Board’s own jurisdiction.  The Board is not “the alter ego or agent of the Commissioner,” and “the fact remains that the Commissioner may not […] instruct other Board members how to vote.” [18]  The Director’s inability to instruct the Board how to vote arguably includes voting on whether a ground of rejection is new.

Indeed, regardless of jurisdictional questions, one wonders whether the Board should do nothing whenever it perceives that the Director has decided a petition incorrectly.  Suppose the Director refuses to enter an amendment, or evidence, or designate a ground of rejection as new, in plain violation of law, is the Board powerless to intervene?

The Board’s sua sponte action in Yudoovsky is also consistent with precedent on petitionable matters.  Although the Director traditionally answers some questions by petition, the Board may nevertheless answer questions that are “determinative of the rejection” and “require[] the exercise of technical skill and legal judgment.” [19]  The question of whether a rejection is new satisfies that test.  The question is determinative of the rejection (i.e. determinative of which rejection to review).  The question also requires the exercise of technical skill in reviewing the record, and legal judgment in reviewing precedent on new grounds of rejection.

In view of the above, to the extent that Yudoovsky conflicts with the waiver rule of MPEP 1207.03 IV, Yudoovsky presents the better policy.  That policy is fairer to appellants, arguably required by the Board’s limited subject matter jurisdiction, and consistent with precedent on petitionable matters.

Nevertheless, I believe that the Director and Board are unlikely to adopt the policy of Yudoovsky more broadly.  Curiously, Deputy Director Rea joined the panel in Yudoovsky.  But we cannot know whether the Director or Chief Judge intended her seat on the panel to signal the importance of Yudoovsky’s footnote 3 (which is the only remarkable feature of the opinion).  Sadly, Yudoovsky is non-precedential, like virtually all Board decisions.  (And even if it was precedential, the footnote is arguably dicta.)  So perhaps the decision will remain a curious outlier collecting dust in the Board’s reading room.  In that case, it remains a good policy, when faced with undesignated new grounds of rejection, to file a 41.40 petition within two months of the Examiner’s Answer.

If you choose not file a petition, for whatever reason, you may still want to invite the Board to follow Yudoovsky in the reply brief.  The key word is “invite,” because if the right can be waived, and if you’ve waived that right, then all that you can do is beg for mercy.  Yudoovsky shows that sometimes the Board is merciful.


[1] Appeal 2011-006238; Application 12/246,086.  After the February 16, 2012 decision in Yudoovsky, patent reform later changed the name of the Board to the Patent Trial and Appeal Board.

[3] “Rules of Practice Before the Board of Patent Appeals and Interferences in Ex Parte Appeals,” 76 Fed. Reg. 72270, 72278 (Nov. 22, 2011).

[4] MPEP 1214.04.

[5] Henderson v. Shinseki, 131 S.Ct. 1197 (2011).

[6] Id. at 1202.

[7] In re Stepan Co., 660 F.3d 1341, 1344 (Fed. Cir. 2011)

[8] Stepan, 660 F.3d at 1344.

[9] Henderson., 131 S.Ct. at 1204.

[10] Id.

[11] In re Webb, 916 F.2d 1553 (Fed. Cir. 1990) (“It follows, then, that an examiner’s final rejection, which precipitates the statutory right to appeal to the Board, 35 U.S.C. § 134 (1988), constitutes the ‘decision’ of an examiner for purposes of § 1.196(a) [now § 41.50(a)].”) (citing In re Bush, 296 F.2d 491, 492, 49 CCPA 752, 131 USPQ 263, 264 (1961)).

[12] Henderson., 131 S.Ct. at 1205.

[13] Id. at 1206.

[14] In re Oetiker, 977 F.2d 1443, 1449 (Fed. Cir. 1992) (Plager, J., concurring) (“If, as a matter of law, the issue is in equipoise, the applicant is entitled to the patent.”).

[15] Henderson., 131 S.Ct. at 1206.

[16] MPEP 1214.04.

[17] Id. (see In re Craig, 411 F.2d 1333, 1335-36 (1969)).

[18] In re Alappat, 33 F. 3d 1526, 1535 (Fed. Cir. 1994) (en banc) (citing Animal Legal Defense Fund v. Quigg, 932 F.2d 920, 928-29, 18 USPQ2d 1677, 1684 (Fed.Cir.1991)); accord. In re Alappat, 33 F.3d at 1575 (Mayer, J., dissenting) (“[T]he board is a quasi-judicial body, and its proceedings must conform to judicial standards and be free from undue influence by the Commissioner.”); but cf. In re Alappat, 33 F.3d at 1578 (Plager, J., concurring) (“I suggest, however, that [Judge Mayer] is not correct because [he] does not take into account the fundamental differences between administrative and judicial decision-making.”).

[19] Application of Searles, 422 F.2d 431, 435 (CCPA 1970).

About the Author

Kip Werking is a registered patent attorney with a wealth of patent-prosecution experience in the electrical and computer-engineering arts. Throughout his career, Mr. Werking has participated in all aspects of U.S. patent prosecution, including hundreds of in-person examiner interviews at the U.S. Patent & Trademark Office, appeals, and personal appearances before the Board of Patent Appeals and Interferences. Mr. Werking specializes in ex parte patent appeals. Prior to joining ALG, Mr. Werking practiced as a patent attorney with a nationally recognized law firm in Alexandria, Virginia. Mr. Werking also clerked for the International Trade Commission in Washington, D.C.

2 comments
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  1. Kip,

    Great catch. Thanks.

    As a matter of good practice, I always file a Reply Brief. And I always quote the examiner’s answer before providing my arguments so that the APJ’s can’t use the old dodge of refusing to consider arguments raised for the first time in the reply brief. Of course, if the examiner argues something for the first time in the examiner’s answer, it’s helpful to point that out.

  2. John,

    Thanks!

    I agree: I *always* file a reply brief. I’ve heard criminal defense attorneys say that they would trade the “beyond a reasonable doubt” standard for the right to give the last closing remarks to the jury. Think about that.