Friday, April 1, 2016

Busy Board bounces appeal of statutory rejections when provisional rejection matures during appeal

[Today's guest post is from Robert K S, who is a patent attorney from Cleveland, Ohio.]

Takeaway: At the time applicants filed their notice of appeal, fewer than all the pending claims had nonprovisional obviousness rejections associated with them, but all the pending claims were provisionally rejected under non-statutory obviousness-type double patenting over applications that had not yet matured into patents.  Applicants appealed only the nonprovisional § 103 rejections  A provisional rejection was made nonprovisional in the Examiner's Answer, an application underlying the rejection having matured into a patent after the filing of the notice of appeal.  Citing the need to timely consider other appeals on it's docket, the Board disposed of the appeal by affirming the non-appealed, nonstatutory rejections, without considering the § 103 rejections that had been appealed.  (Ex parte Palmer, No. 2014-002277 (P.T.A.B. Mar. 10, 2016).)


Ex parte Palmer
Appeal 2014-002277; Appl. No. 11/429,850; Tech. Center 1700
Decided: March 10, 2016

In a final Office action issued December 18, 2012, the application was provisionally rejected on grounds of nonstatutory obviousness-type double patenting, based on then-unissued co-pending applications. Some of the pending claims were also rejected on statutory obviousness grounds under § 103. In an after-final response filed February 18, 2013, the applicants averred that they would "address the need to file one or more terminal disclaimers to overcome the aforementioned obviousness-type double patenting rejections" "[u]pon indication of allowable subject matter". The applicants appealed on March 12, 2013, and their appeal brief, filed May 8, 2013, addressed only the § 103 rejections.

Unfortunately for the applicants, one of the co-pending applications that was basis for a provisional nonstatutory obviousness-type double-patenting rejection matured to patent on April 13, 2013, while the applicants were busy writing their appeal brief.  The applicants failed or declined to address the provisional rejection-made nonprovisional in the October 11, 2013 Examiner's Answer-in either the appeal brief or a reply brief. Deeming the applicants' February 2013 vow to "address" the then-provisional rejections upon maturation insufficient as a promise to file a terminal disclaimer, the Board opined that "the time to present arguments on the merits-and therefore resolve the question of whether a terminal disclaimer is needed-was in the Appeal Brief in this appeal". The Board therefore affirmed the application's rejection without reaching the § 103 rejections that had been the only basis of the appeal.

The Board made its decision with the understanding that, post-appeal, it will not suffice for the applicants to file a terminal disclaimer to be granted allowance.  Prosecution closed with the appealed § 103 rejections left unreviewed, and these standing rejections will impede the application's advance toward issuance. The decision also cost the applicants their appeals fees, which they will have to pay a second time if they want to have the § 103 rejections reviewed. The Board noted that the applicants could still keep their patent rights alive with an RCE or continuation, but that may be cold comfort. The applicants will suffer years of delay on their path to issuance, and the decision potentially robs the applicants of valuable PTA days (depending on whether a terminal disclaimer is ultimately filed).

The panel in this case was not shy about disclosing the reason for its declining to consider the appealed issues: the Board is too busy to be bothered.[1] "In managing the ex parte appeal docket, we are not only concerned with this appeal, but other appeals on the Board's ex parte appeal docket.  Affirmance of the double patenting rejection disposes of the appeal.  Under the circumstances, and in deference to a need to timely consider other appeals, we exercise discretion to not reach the remaining rejections." Apparently acknowledging that the decision could be perceived as mean-spirited, the opinion deflects blame by stating that any hardship suffered as a result was "self- imposed" by the applicants.

My take:

This decision might serve as a lesson to applicants and their counsel not to ignore provisional rejections, and to read carefully the Examiner's Answer on appeal to check for changed conditions affecting rejections. It also raises questions as to what obligations applicants have to address rejections that are, at least at first, only provisional in nature, and at what points in the proceedings such obligations arise.

The reasons to side against the applicants are many. First, they attempted to "hold in abeyance" the provisional rejections, rather than addressing them immediately. See 37 C.F.R. § 1.111(b). Then, the applicants missed or ignored the issuance of the double-patenting reference application in the month leading up to the filing of their appeal brief, and missed or ignored the examiner's notification of the rejection having become nonprovisional in the answer brief. Finally, the applicants failed to file a reply brief addressing the nonprovisional rejections and showing good cause for doing so (per 37 C.F.R. § 41.41).

On the other hand, applicants generally have neither the obligation nor the incentive to file a terminal disclaimer-and pay the accompanying fee-to overcome rejections that are only provisional in nature. If a co-pending reference application ultimately fails to issue, or issues only with claims upon which an obviousness-type double patenting rejection would not be well founded, any terminal disclaimer fee paid will have been wasted, and the value of the patent portfolio may be needlessly diminished by the term-limiting and enforcement-coupling effects of the disclaimer. How could it be just for the USPTO to require applicants to submit traversal arguments or a signed terminal disclaimer, each expensive in its own way, before the ripening of the issue? [2]
From this perspective, Applicants' counsel can scarcely be faulted for (in effect) asking the PTO to hold the provisional rejections in abeyance, especially when, at the time it was made in February 2013, the request was in accordance with PTO policy, policy that did not change until October 2015, when MPEP § 804(I)(B)(1) was amended to instruct that a filing of either a terminal disclaimer or a showing of patentable distinction over the reference application's claims "should not be held in abeyance" once a provisional double patenting rejection has been issued (for the dubious reason that one or the other filing "is necessary for further consideration of the rejection of the claims").[3]

If an applicant has no obligation to counter a provisional rejection until the applicant receives notice that it has been made nonprovisional, then the applicants in this case were not obligated to traverse or otherwise overcome the nonstatutory rejections here until the Examiner's Answer-by which point it was likely too late to do anything about it.[4] From this perspective, it is not clear that the applicants in this case did anything blameworthy. The decision twice intimates that merely committing to filing a terminal disclaimer would have been as good as actually filing a terminal disclaimer to obviate the double patenting rejection and have the § 103 rejections reviewed. But, despite this decision, is not clear why mere committal would have been effective to obviate the rejections, or how it could have prevented the Board from taking the same action it did in this case.

The decision raises the issue of whether the Board has the prerogative to affirm on uncontested grounds, or even if it does not, whether it ever should, even in the interest of expedient disposal. The decision cites to 37 C.F.R. § 41.37(c)(l)(iv), but the rule does not require an appellant to show examiner error in uncontested grounds of rejection. As a matter both of equity and properly incentivized appellate administration, an appellant who pays to appeal certain grounds should generally have the benefit of review of those grounds unless the review would be unusually burdensome. Otherwise, the Board could become incentivized to dispose of appeals cheaply as a means of generating appeals fees revenue.[5]

Finally, the decision raises the issue as to whether, as a practical matter, the strategy taken by the Board is more likely to reduce the examination and appeal backlogs or increase them. Having gotten no answer on the issues they brought to the Board, the dissatisfied applicants are likely only to get right back in line for another appeal decision. What was a three-year appeal pendency in the Board's statistics effectively became a six-year pendency.

Was the Board's punt in this case efficient docket management, or obnoxious parsimony? Pipe up in the comments.

[1]. The Board is presently dealing with an appeal backlog of about 20,000 cases.
[2]. For some creative, but losing, arguments against obviousness-type double patenting tried by applicants who couldn't or wouldn't file a terminal disclaimer, see Karen's earlier blog post on the subject.
[3]. The policy might be challenged as arbitrary or capricious, since overcoming provisional rejections can hardly be said to be "necessary" for consideration of any outstanding nonprovisional rejections, since Rule 111(b)'s reference to "rejections" is probably best interpreted to mean nonprovisional rejections, and since the courts have held that provisional rejections exist to benefit, rather than harm, the applicant with early notice, In re Wetterau, 356 F.2d 556, 558 n.2 (C.C.P.A. 1966), and, at least in some circumstances, cannot be made final, In re Mott, 539 F.2d 1291, 1295-96 (C.C.P.A. 1976) ("Once the provisional rejection has been made, there is nothing the examiner and the applicant must do until the other application issues. We see no undue burden here.").
[4]. Would notice of a nonprovisional rejection in an Examiner's Answer be a "new ground of rejection" under 37 C.F.R. § 41.39(a)(2) that would entitle an applicant to reopen prosecution under 37 C.F.R. 41.39(b) (see MPEP § 1207.03)? The case law teaches that the ultimate criterion of whether a rejection is considered "new" is whether the applicant has had a fair opportunity to react to the thrust of the rejection. In re Kronig, 539 F.2d 1300, 1302 (C.C.P.A. 1976). The particular situation where, by dint of a patent grant, a provisional rejection matures into a nonprovisional rejection is not listed among the "factual situations that do not constitute a new ground of rejection" in MPEP § 1207.03(a), but this likely means only that the courts have not considered the question.  This issue may have been waived in the present case because of the applicants' failure to petition the examiner's decision not to designate the nonprovisionality of the rejection as a "new ground" in the Examiner's Answer (see 37 C.F.R. § 41.40(a)).
[5]. Although appeals fees collected in 2015 were almost $77 million, they were still 16% below what was anticipated in the budget.See page 159 of the USPTO Fiscal Year 2017 Congressional Justification.)


  1. Fred McKelvey - the PTAB's laziest lifer APJ. Heckuva job, Fred!!!! Keep up the outstanding record breaking quality work!!!!

    1. Services will be this Sunday at 3 PM, Calvary Chapel, Manassas, Virginia.

    2. Judge McKelvey died on Sunday April 3. For much of his career, he really was one of the good guys -- look at his opinions in Ex parte Braeken, 54 USPQ2d 1110 (BPAI Dec. 21, 1999) and several related cases were very insightful.

    3. Ding dong!!!!!!!

    4. Here's the obit.

  2. Would love to hear David Boundy's thoughts on this.

  3. I've seen this BS before. There was an APJ who used to affirm rejections under 35 USC 101 (sometimes enter new 35 USC 101 rejections) and refuse to address the art rejections. After dealing with this BS a couple of times, we filed a Petition to the Director. Coincidentally or not, this APJ retired and this particular practice was abandoned altogether (some other APJs also practiced this but not to the extent of this one APJ but they stopped as well).

    they attempted to "hold in abeyance" the provisional rejections, rather than addressing them immediately. See 37 C.F.R. § 1.111(b).
    You cannot hold a non-rejection in abeyance. A provisional rejection is not a rejection. It is something that COULD be a rejection that is not a rejection.

    The applicants failed or declined to address the provisional rejection-made nonprovisional in the October 11, 2013 Examiner's Answer-in either the appeal brief or a reply brief.
    You don't have to appeal every rejection. However, you need to note that in the Appeal Brief.

    In managing the ex parte appeal docket, we are not only concerned with this appeal, but other appeals on the Board's ex parte appeal docket. Affirmance of the double patenting rejection disposes of the appeal
    David Boundy would have a field day with this. The Board's job is not to minimize its work -- the Board's job is to render decisions on the issues presented to it.

    Although not on point, but the precedential opinion of Ex parte Moncla (Appeal No. 2009-006448) involves a provisional obviousness-type double patenting rejection. After an appeal to the Federal Circuit, a new decision was issued in which the Board stated "The only remaining rejection is a provisional non-statutory double patenting rejection. We conclude that in this circumstance it was premature for the original Board panel to address the Examiner's provisional rejection of the claims."

    If the rejection is not ripe for review by the PTAB, then Appellants should not have to address it in their appeal. If it becomes ripe after the appeal was filed, then the Board should have designated it a new grounds of rejection or requested that the Applicants address the issue under 41.50(d).

    This action, by the Board, was just them being lazy -- plain and simple. The concept of "compact prosecution" should also apply to the Board -- not just Examiners. Perhaps the Board (or this particular APJ) should read MPEP 2103 and rethink the whole purpose of the Board and the USPTO as a whole. They are not an Article III court, to which the concept of judicial efficiency applies. Actions like this is why so many people dislike the Federal Government -- it epitomizes a useless bureaucracy that cares more about itself than doing the job it was tasked to do.

    1. With respect to the point in your penultimate paragraph, I agree wholeheartedly, but as noted in the blog post, the PTO may have a procedural "out" in 37 C.F.R. § 41.40(a), since the examiner raised this "new ground" without so designating, and appellants' counsel failed to petition as required by the rule.

    2. "There was an APJ who used to affirm rejections under 35 USC 101 (sometimes enter new 35 USC 101 rejections) and refuse to address the art rejections."

      Not to worry. That retired APJ passed away earlier this year.

  4. A couple of basic principles, and how they apply

    1. No agency may create “law” against the public except through rulemaking, 5 U.S.C. § 553, which almost always means a “regulation” (in the formal sense of the word) in the Code of Federal Regulations. Appalachian Power Co. v. Environmental Protection Agency, 208 F.3d 1015, 1027, 1020 (D.C. Cir. 2000) (any rule that “impose[s] duties and obligations on those who are regulated” must be promulgated through legislative rulemaking procedure; “Only ‘legislative rules’ have the force and effect of law. A ‘legislative rule’ is one the agency has duly promulgated in compliance with the procedures laid down in the statute or in the Administrative Procedure Act.”) The Board simply, does not have “discretion” to make up a rule like this. If the Board wants to use this kind of technique to reduce its workload, it must promulgate it as a regulation, not as an off-the-cuff rule.

    2. The MPEP does not have force of law against applicants, because it’s not a “regulation.” Thus the PTO’s attempt to change the rules for terminal disclaimers on the fly (MPEP § 804(I)(B)(1)) is simply an illegal act on the part of the PTO, not a reason for the Board to act. Likewise, the “reopening” provision of MPEP § 1207.04 is simply illegal, and unenforceable by the PTO.

    3. The Executive Office of the President reminded all agencies of principle 1 (and thus principle 2) a decade ago in the Bulletin on Agency Good Guidance Practices, If you Google the site for “Bulletin Good Guidance” the only hits you’ll get are the PTO telling me that they don’t have to implement it, and if I don’t like it I should go complain somewhere else. Scofflaws.

    4. Under 5 U.S.C. § 555(b), “… within a reasonable time, each agency shall proceed to conclude a matter presented to it.” The Board does not have the “discretion” to duck issues presented to it. Especially where the cure for double patenting is a simple terminal disclaimer that doesn’t touch on the other issues. “Compact prosecution” is not just a good idea, the PTO’s half of the deal is the law.

    5. Under the Paperwork Reduction Act, an agency must demonstrate that “it has taken every reasonable step to ensure that [all papers to be submitted to the agency] is the least burdensome necessary.” 44 U.S.C. § 3506(c)(2)(A)(iv) and 5 C.F.R. § 1320.5(d)(1)(i). Requiring the applicant to start over with essentially identically the same appeal is not just a nonsensical waste, it’s illegal. Agencies are allowed to save themselves a dollar of cost, but only if the agency does not "[shfit] disproportionate costs or burdens onto the public.” The one-sided cost analysis in this opinion is not just foolish, it's illegal.

    6. The PTO has no authority to promulgate retroactive rules. As Karen points out, at the time of the appeal brief, what the applicant did was entirely within the rules. Not very smart, but within the rules.

    This applicant is entitled to invoke several provisions of law, to send the appeal back to the Board, and demand that they do their jobs. And if they don’t, you probably have an inexpensive way to get this in front of the Federal Circuit under the All Writs Act. If you will contact me, I’ll help you with it. The PTO in general, including the Board, needs a 2x4 upside the head for this kind of nonsense.

    On the other hand, I agree with Karen, this was not handled well by the attorney. In fact, it was pretty dumb. If the patent issued when it did, then surely the applicant had a Notice of Allowance at the time of writing the Appeal Brief?

    1. David, good to see you again. Not my post, credit goes to my guest poster, Robert K S.

      From Robert's post,
      >co-pending applications that was basis for a provisional
      >103 double-patenting rejection matured into a patent
      >while the applicants were busy writing their appeal brief.

      So Applicant could have known -- by monitoring the co-pending application -- that the DP provisional rejection had matured into an actual DP rejection. And probably "should have" known, in the sense that monitoring co-pending applications is a good idea and is common practice some places.

    2. This comment has been removed by the author.

    3. Thanks for the pointer to Robert KS (you may correct the text of my comment!) And on second read, I see that indeed the other patent issued before the appeal brief was filed.

      The regs permit an applicant to appeal fewer than all rejections -- if the brief here was clear that fewer than all rejections were appealed, the Board had no authority whatsoever to second guess that.

      Here, I am rethinking my earlier statment that the choice was dumb -- now the choice to go forward with the appeal was dumb only in hindsight. Prosecution was closed -- had the applicant filed the terminal disclaimer around the time of filing the appeal brief, the PTO could well have aborted the appeal. We all have grown extremely cynical of the PTO's commitment to "efficiency" in situations like this, and their totally one-sided definition of "efficiency" -- the likelihood is very high that the PTO would in fact have aborted the appeal had the TD been filed.

      The PTO isn't permitted to put an applicant to this kind of Hobson's choice, when there's no support in the regs for it. Had the PTO attempted to promulgate this by regulation, the comment letters would have pointed out this kind of situation, why the proposed reg would be unworkable. That's why the PTO's rulemaking statute displaces the normal default rule, and requires the PTO to use notice and comment for its procedural regs.

      The appellant met their legal obligations to get this appeal decided. The Board didn't. The Board's obligation to decide is not contingent on perfect presentation of an appeal.

    4. "The appellant met their legal obligations to get this appeal decided. The Board didn't."

      I disagree that the Board failed to decide the appeal.

      Of the claims on appeal, the examiner's decision is "AFFIRMED." 37 cfr 41.50(a) provides that the "affirmance of the rejection of a claim on any of the grounds specified constitutes a general affirmance of the decision of the examiner on that claim, except as to any ground specifically reversed."

  5. Of the claims on appeal, the examiner's decision is "AFFIRMED."
    That only goes to how the disposition was labeled -- not to whether the Board addressed all the issues being presented in the appeal.

    1. "That only goes to how the disposition was labeled"

      No. "AFFIRMED" is not a label. It is the disposition. -- 37 cfr 41.50(a) - "The Board, in its decision, may affirm or reverse the decision of the examiner in whole or in part on the grounds and on the claims specified by the examiner... . . The Board may also remand an application to the examiner." -- "AFFIRMED" is the final agency decision, ripe for appeal to the Federal Circuit.

      " . . . not to whether the Board addressed all the issues being presented in the appeal."

      That's a separate issue. I've seen arguments, but I haven't seen any authority cited that requires the Board to consider every ground of rejection when one (or more) other ground(s) decides the outcome of the appeal.

  6. I haven't seen any authority cited that requires the Board to consider every ground of rejection when one (or more) other ground(s) decides the outcome of the appeal.
    Read Ex parte Frye and the cases they cite. E.g., Oetiker ("[i]n reviewing the examiner's decision on appeal, the Board must necessarily weigh all of the evidence and argument"). Also refer to David Boundy's discussion. The Board not cannot duck issues presented to it. Doing so makes a mockery of the whole concept of compact prosecution at the USPTO.

    1. "Read Ex parte Frye and the cases they cite."

      I have. You'll need to be more specific (as a page cite) where they say the Board must rule on every ground of rejection on appeal.

      But you may be right. When all else fails, read the statute. 35 usc 6 says "The Patent Trial and Appeal Board shall -- (1) on written appeal of an applicant, review each and every ground of rejection entered by the examiner upon applications for patents pursuant to section 134(a)."

      Oops, sorry, I misread. It says "(1) on written appeal of an applicant, review adverse decisions of examiners upon applications for patents pursuant to section 134(a)."

      As made clear in the Palmer case, the examiner's adverse decision as to the patentability of the claims is "AFFIRMED."

    2. Anonymous April 7, 2016 3:51 PM
      >Oetiker ("[i]n reviewing the examiner's decision on appeal,
      >the Board must necessarily weigh all
      >evidence and argument").

      Anon, I haven't read Oetiker in a while, but I don't think it supports your position. I think the Fed Cir said the Board must consider all evidence/argument for a *particular rejection*. Too much of a stretch to say this means the Board must decide all appealed rejections on the merits.

    3. As made clear in the Palmer case, the examiner's adverse decision as to the patentability of the claims is "AFFIRMED."
      Compact prosecution?
      Compact prosecution?
      Compact prosecution?

      Is there unanswered echo here? BTW -- the job of the PTAB is to review the Examiner's rejections -- not just issue dispositions. "Oh wait, I found a minor error in your independent claim ... this first instance of this claim limitation wasn't preceded with 'a' ... I'll just institute a new grounds of rejection and cite the Federal Circuit case that says it cannot review prior art rejection because claim is indefinite."


  7. Thank you, Robert,

    Good contents!