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New Standard, Same Result in Zurko Case

August 02, 2001

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Last Month at the Federal Circuit - September 2001

Judges: Archer (author), Newman, and Michel

In In re Zurko, No. 96-1258 (Fed. Cir. Aug. 2, 2001) (“Zurko IV”), on remand from the Supreme Court, the Federal Circuit applied the substantial evidence standard instead of the clearly erroneous standard it had previously applied in In re Zurko, 111 F.3d 887 (Fed. Cir. 1997) (“Zurko I”), and found that the outcome of the case did not change with the application of the new standard of review. Thus, the Federal Circuit reversed the Board’s conclusion of obviousness under 35 U.S.C. § 103.

In 1995 the Board had sustained the Examiner’s rejection of claims in U.S. Patent Application 07/479,666 (“the ‘666 application”) under 35 U.S.C. § 103 for obviousness over two prior art references. The ‘666 application concerned a method for more efficiently creating a secure computer environment.
The claims were directed to a method for processing and verifying a trusted command using both trusted and untrusted software. The two references disclosed the UNIX operating system that employs both trusted and untrusted code and the FILER2 program that repeats back potentially dangerous commands requesting confirmation from the user before execution.

The applicants had argued that neither reference disclosed a trusted path communication to the user or provided the motivation to combine the references. However, the Board had found that communication along a trusted path was, if not explicit, either inherent or implicit in the prior art and that it was basic knowledge that communication in trusted environments was performed over trusted paths. The Board had found that combining the references was no more than good common sense.

In Zurko I, the Federal Circuit had reversed the Board’s decision, concluding that the Board’s finding that the prior art, either explicitly or implicitly, teaches the step of obtaining confirmation over a trusted pathway was clearly erroneous. The Court had also held that the Board had clearly erred in finding that the prior art taught communicating with the user over both a trusted and untrusted path.

Sitting en banc, the Federal Circuit had affirmed the Zurko I decision, finding that clear error was the correct standard. In re Zurko, 142 F.3d (Fed. Cir. 1998) (“Zurko II”). However, in Dickinson v. Zurko, 527 U.S. 150 (1999) (“Zurko III”), the Supreme Court reversed, holding that the Board’s findings of fact must be reviewed under the Administrative Procedures Act’s (“APA”) standards of review, not under the clearly erroneous standard.

On remand, the Federal Circuit applied the substantial evidence standard of the APA to the Board’s findings. In considering whether the prior art relied upon by the Board disclosed communication between a trusted environment and the user along a trusted path, the Federal Circuit found that the Commissioner had conceded that neither reference disclosed communication between a trusted environment and the user along a trusted path. The Court concluded that the deficiencies in the references could not be remedied by the Board’s general conclusions about basic knowledge and common sense as they were not based on any evidence in the record. Thus, the Court reversed the Board’s conclusion of obviousness.