Inventor Asks Supreme Court to Review CAFC Decision on MPEP Rule Allowing Reopening of Examination After Appeal

“A decision in Hyatt’s favor could be a signal to other inventors that the current makeup of the Supreme Court might be more sympathetic to inventors in other cases reaching the nation’s highest court.” April 10, inventor Gilbert Hyatt and the American Association for Equitable Treatment (AAET) filed a petition for writ of certiorari with the U.S. Supreme Court asking the Court to review a Federal Circuit case that struck down an Administrative Procedures Act (APA) claim brought by the petitioners. If the Supreme Court grants certiorari, they will determine whether a section of the U.S. Patent and Trademark Office’s (USPTO) Manual of Patent Examining Procedure (MPEP) authorizing examiners to reopen patent prosecution and block a patent applicant’s appeal after a second rejection violates that patent applicant’s statutory right of appeal under the Patent Act.

Hyatt’s Clash with MPEP § 1207.04

The particular section of patent examination procedure at issue in this appeal is MPEP § 1207.04, titled Reopening of Prosecution After Appeal. This section was adopted by the USPTO in August 2005. Prior to this, patent examiners could propose reopening prosecution to patent applicants who had appealed a decision after a second rejection and patent applicants were free to disregard this proposal. In Gil Hyatt’s case, Section 1207.04 was used by patent examiners to force the reopening of prosecution, ending 80 appeals of examiner decisions to the Patent Trial and Appeal Board (PTAB). In response, Hyatt filed an APA rulemaking petition at the USPTO arguing that Section 1207.04 contravenes the requirements of the Patent Act regarding appeals. 35 U.S.C. § 6(b) states that the PTAB shall review adverse decisions in response to a patent applicant’s written appeal, and 35 U.S.C. § 134(a) states that a patent applicant who has had their claims rejected twice may appeal the decision to the PTAB.

After the USPTO denied multiple petitions by Hyatt to repeal or declare MPEP Section 1207.04 invalid, Hyatt and the AAET filed suit in the District of Nevada claiming violations of the APA. The district court claimed that it lacked subject matter jurisdiction over the PTAB. The Federal Circuit then reversed the Nevada district court on its jurisdictional ruling but ruled in favor of the USPTO on the merits, claiming that Section 1207.04 didn’t conflict with the Patent Act. The Federal Circuit found that nothing in the statute prevented the USPTO from imposing conditions on the PTAB’s ability to decide an appeal.


Considering Both Sides

Though MPEP Section 1207.04 isn’t a major rule in and of itself, it’s a rule that obviously has some big implications, according to Patrick Richards, patent attorney and Founder of Richards Patent Law. “I was surprised the first time an examiner reopened prosecution after appeal in one of my cases,” he said, adding that he’s come up against the issue twice in the previous year. “In many cases, the point of appealing is to get away from a particular examiner at a particular point in the examination.” Richards pointed out that this particular rule was just a smaller part of one section of the MPEP, a massive volume of text in and of itself and only one tier of rulemaking in the whole of U.S. patent law.

Having looked at Hyatt’s petition, Richards said that he could see how either side of the case could be successfully argued. “The Patent Office certainly has justification for providing procedures to efficiently administer the resources of the Office to accomplish the goals of the patent statute,” he said. “And reopening prosecution doesn’t prevent an appeal, it just adds another step in the process. Of course, if the effect is that the examination becomes burdensomely long, or an appeal is effectively out of reach for an applicant, the rule doesn’t seem to be following the spirit of the law.” Usually, when a case makes it all the way to the Supreme Court, Richards noted, it’s because that case involves an issue where either side has a supportable argument.

Hyatt’s Arguments

Hyatt’s petition argued that the Supreme Court ought to take up the case on appeal because the Federal Circuit’s decision effectively sanctions the USPTO’s refusal to allow patent applicants the right to appeal adverse decisions, which is guaranteed to them by Congress. The Federal Circuit’s stance on the issue conflicts with more than a century of Supreme Court case law stemming from its 1904 decision in U.S. ex rel. Steinmetz v. Allen, which held that mandamus was the appropriate remedy when the USPTO refused to allow an appeal to proceed to the Board of Examiners-in-Chief, the appeal board within the USPTO at that time, and a predecessor to the PTAB. By blocking Hyatt’s appeal after the APA challenge, the petition argues that the Federal Circuit overturned this Supreme Court precedent.

Petitioners also argue that the Federal Circuit’s decision subverts Sections 6(b) and 134(a), which guarantee a patent applicant’s right to appeal an examiner’s rejection, a conclusion compelled by four features of the statute. First, the right to appeal vests at the specific time that a claim has been “twice rejected,” reflecting a decision to limit the amount of back-and-forth examination before obtaining independent review. Second, the statute uses the word “appeal” which has an established legal meaning “that goes far beyond just filing a piece of paper labeled ‘notice of appeal’ that an agency is free to disregard.” Third, the statute says that the PTAB “shall” review adverse decisions on appeal, the use of the word “shall” making it “difficult to conceive of any way that Congress could more clearly have communicated that applicants have the right to Board review.” Finally, because Board review is the gateway to judicial review of patentability determinations, MPEP Section 1207.04 effectively enables the USPTO to block judicial review by the courts indefinitely. While the Federal Circuit’s decision indicated that a claimant could file an undue delay action under the APA, such a claim wouldn’t provide for any review of a patentability determination.

What a Win for Hyatt Could Mean for Independent Inventors

In arguing that the question presented was exceptional and frequently occurring, petitioners cited statistics showing that, in 2017 alone, the USPTO used MPEP Section 1207.04 to block 2,200 appeals in which the patent applicant had filed an appeal brief out of 15,800 total such appeals, about 14% of the total. Petitioners also cited multiple cases in which the USPTO has used the rule to block multiple appeals of a single patent application. The present case is an ideal vehicle to decide the issue, petitioners argue, in no small part because while the issue is recurring, the process to bring it before the Federal Circuit requires both petitioning the USPTO for rulemaking to repeal the rule and then challenging the petition denial through an APA action—an expensive and lengthy process which another party isn’t likely to repeat any day soon.

Although the rule on reopening examination after appeal has importance, Richards didn’t feel as though a Supreme Court decision either way would much affect his practice or how he advises his clients to proceed during prosecution. “I’ve been doing patent prosecution for almost 20 years and I think that I’ve run into this rule twice,” he said. “It’s one of those things that I wasn’t aware of until recently, and when I first had an application reopened, I thought, ‘That’s not how this is supposed to work,’ but then very quickly realized that it was a non-issue for my client’s application.” In Hyatt’s case, Richards said that the fact pattern was so unique that it became valuable enough to argue the case all the way to the Supreme Court.

Instead, Richards said that the more meaningful takeaway from any decision the Supreme Court might make in this case would be to look at which side of the argument better persuades SCOTUS. In other words, any decision might provide an insight as to whether the Supreme Court thinks that it’s more important to give the USPTO more leeway to set rules for efficient agency operations or if it’s more important to bend over backwards to support the rights of patent applicants and patent owners. A decision in Hyatt’s favor, for example, could be a signal to other inventors that the current makeup of SCOTUS might be more sympathetic to inventors in other cases reaching the nation’s highest court. “I wouldn’t look at [any eventual decision in this case] and say, ‘This changes the way that I advise clients,’ but I would look at it and say, ‘This gives me some perspective of how the current Supreme Court Justices might lean when balancing the rights of the applicant against the responsibilities of the USPTO,” Richards said.

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Join the Discussion

2 comments so far.

  • [Avatar for JR]
    April 23, 2019 07:17 pm

    To “bend over backwards to support the rights of patent applicants”? Where did you get this distorted notion? How about to comply with the statute and not rewrite it “backwards” to support the ultra virus whim of the USPTO?

    First, the statutory right to reach the appeal Board vests for any applicant whose claim has been “twice rejected.” 35 USC 134(a). Upon filing that appeal brief, prosecution is closed. Second, under MPEP 1207.04, the only way the USPTO can reopen prosecution is if the examiner actually rejects the claim under a new ground of rejection and obtains a TC Director approval to do so. MPEP 1207.04 does not permit the examiner to reopen prosecution without actually making that new rejection. Therefore, the imposition of this MPEP authority blocks the appeal from reaching the Board and it necessarily injects another rejection. It follows that any appeal can be attempted again only after prosecution is reopened and after at least three rejections – not two – have been entered. So in MPEP 1207.04 the USPTO has effectively rewritten the statute in 35 USC 134(a): the soonest an applicant can reach the Board is when applicant’s claim has been “thrice rejected.”

    The Petitioner presented examples where the USPTO invoked MPEP 1207.04 three times, necessarily meaning that the applicant could not reach the Board until the application was rejected 5 times. In other examples, applicants simply gave up after several such reopening. This USPTO clear violation of the statute is what the Federal Circuit totally missed.

  • [Avatar for Anon]
    April 21, 2019 02:28 pm

    Interesting take, and only a minor nit that I would take with:

    In other words, any decision might provide an insight as to whether the Supreme Court thinks that it’s more important to give the USPTO more leeway to set rules for efficient agency operations or if it’s more important to bend over backwards to support the rights of patent applicants and patent owners.

    Given just who is the party involved here (and the unexplored — but very real — complication of running term of any patent that successfully makes it out of the Office in this case), I think that the phrase “bending over backwards” is NOT at play here.