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An Applicant Is Entitled to Reopen Prosecution or Request Rehearing When the Board Relies on New Facts Changing the Thrust of an Examiner’s Rejection

11-1030
September 19, 2011

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Last Month at the Federal Circuit - October 2011

Judges: Newman, Bryson, Linn (author

[Appealed from: Board]

In In re Leithem, No. 11-1030 (Fed. Cir. Sept. 19, 2011), the Federal Circuit vacated and remanded the Board’s decision to sustain the unpatentability of the sole pending claim of U.S. patent application No. 09/863,585 (“the ’585 application”) for obviousness because the Board, in affirming the examiner’s rejection, relied on a new ground of rejection.

The ’585 application discloses an improved personal hygiene device (“diaper”). Traditional diapers are constructed using an absorbent core of dry shredded wood fiber pulp, known as fluff pulp, that is often pretreated with a chemical cross-linking agent to enhance absorbency. The fluff pulp for the improved device is manufactured by extracting wood pulp with a caustic substance at low temperature followed by drying and fluffing, thus maintaining the superior absorbency properties of traditional diapers without requiring chemical cross-linking.

The examiner rejected the pending claim as obvious over U.S. Patent No. 3,658,064 (“Pociluyko”) in view of U.S. Patent No. 2,083,575 (“Novak”), finding that Pociluyko disclosed a diaper satisfying every claim element except manufacturing the fluff pulp by cold caustic extraction, and that Novak disclosed cold caustic extraction of wood pulp and a method of making fluff pulp. The examiner concluded that it would have been obvious to modify Pociluyko with a fluff pulp made by Novak’s method.

On appeal to the Board, Leithem argued that Novak teaches a pulp that is wet-laid paper, not a fluffed pulp material, and, thus, Novak’s wet-laid paper could not be simply substituted for the dried fluff pulp of Pociluyko to produce the claimed invention. In its initial decision, the Board agreed with Leithem regarding Novak’s disclosure, but sustained the rejection because the Board also found that “the Novak pulp is a pulp which may be fluffed for use in an absorbent core.” Slip op. at 4 (citation omitted).

Leithem petitioned the Board for rehearing, contending that the Board relied on a new ground of rejection in finding that Novak’s pulp was not fluffed, but could be dried, fluffed, and then used as disclosed in Pociluyko because the examiner found that Novak’s wet-laid pulp was itself already a fluff pulp. The Board disagreed, finding that the thrust of the rejection had not changed because the examiner referred to “pulp,” Leithem referred to “pulp,” and the Board’s initial decision referred to “pulp.” Thus, the Board denied Leithem’s request for rehearing.

On appeal to the Federal Circuit, Leithem argued that the Board relied on a new ground of rejection in affirming the examiner’s rejection. While Leithem agreed that the wet-laid paper of Novak could be dried and then shredded in a hammermill to make fluff pulp, but that was not the basis for the examiner’s rejection. The PTO responded by asserting that Novak discloses “fluffed cold caustic-extracted wood pulp” because Novak teaches (1) that cold caustic-extracted wood pulp may be used as a fluff; and (2) fluffing because it discloses the use of a Holland beater. Further, the PTO contended that the process of beating in a Holland mill equates to the process of fluffing in a hammermill. Thus, the PTO asserted that the Board and examiner based their rejections on these shared findings and the Board did not impose a new ground of rejection.

The Federal Circuit first noted that it is important for the Board to treat an applicant’s petition fully and fairly at the administrative level. Thus, an applicant is entitled to notice of the factual and legal bases upon which an examiner’s rejection is based. When the Board relies upon a new ground of rejection, the applicant is entitled to reopen prosecution or to request a rehearing. While “[t]he Board need not recite and agree with the examiner’s rejection in haec verba to avoid issuing a new ground of rejection,” the ultimate criterion is whether an applicant “had fair opportunity to react to the thrust of the rejection.” Id. at 7 (citation omitted).

The Court explained that mere reliance on the same statutory basis and the same prior art references, alone, is insufficient to avoid a new ground of rejection when the Board relies on new facts and rationales not previously raised by the examiner. While the Board can make additional factual findings based upon the Board’s own knowledge and experience to “fill in the gaps” that might exist in the examiner’s evidentiary showing, “when reliance upon such facts changes the thrust of the rejection, the Board’s action ‘does everything but cry out for an opportunity to respond.’” Id. (citation omitted). The Court noted that this constraint also serves the interests of judicial efficiency because the Federal Circuit will review only “arguments concerning those rejections properly made by the examiner and, in due time, reviewed by the Board.” Id. at 8.

In the instant case, the examiner cited Novak as teaching a fluff pulp and Leithem argued on appeal that Novak did not teach a fluff pulp. The Board agreed with Leithem but affirmed the examiner’s rejection by finding that Novak teaches a pulp “which may be fluffed.” Id. (citation omitted). “The Board thus found new facts concerning the scope and content of the prior art” that “were the principal evidence upon which the Board’s rejection was based.” Id. The Court concluded that Leithem would have responded differently if the examiner’s original rejection was premised upon Novak teaching pulp that may be fluffed rather than fluff pulp that could be directly substituted into the diaper of Pociluyko. Because the examiner never articulated, nor relied upon, the Board’s rationale for combining Novak with Pociluyko, Leithem was never given an opportunity to respond to this rejection. Thus, the Court found that “fairness dictates that [Leithem] . . . should be afforded an opportunity to respond to the Board’s new rejection.” Id. at 9.

Finally, the Federal Circuit noted that the proceedings before the Board on rehearing and in the briefs and oral argument during the appeal to the Court further solidify conclusion that the thrust of the Board’s rejection differed from that of the examiner. First, the Board’s rationale in denying rehearing was “hardly persuasive” because nothing in the Board’s initial decision described the wet-laid paper of Novak as “fluffed,” the precise issue appealed by Leithem. Second, on appeal to the Federal Circuit, the PTO relied upon additional facts not articulated by the examiner, e.g., that beating Novak’s pulp with a Holland beater was equivalent to the shredding of dry paper in a hammermill, as required by the claim. Third, at oral argument, the PTO relied on the teachings of a third reference that was not relied upon in the instant rejection. And the PTO argued that Leithem was shifting his argument and not presenting the argument he presented to the Board. The Court noted that the PTO’s position begs the question and highlights the problem when the Board relies on a new ground of rejection. Specifically, Leithem’s argument to the Board was in response to the grounds relied on by the examiner, but when the Board relied upon a new ground, Leithem’s argument had to shift because the thrust of the Board’s rejection shifted. “The Board cannot play it so fast and loose in affirming an examiner’s rejection that it disregards procedural safeguards afforded to the applicant.” Id. at 11.

Accordingly, while the Federal Circuit did not express an opinion on the propriety of the Board’s new rejection, the Court vacated the Board’s decision and remanded to provide Leithem a full opportunity to respond to the new rejection.


Summary authored by Hala S. Mourad, Esq.