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[MLF]

The Supreme Court's decision in Zurko purports to reduce somewhat the level of scrutiny that the CAFC is permitted to give the administrative decsions of the PTO on patent questions. Therefore, does this standard create a situation where an applicant for a patent may be subject to a different appellate standard of review, depending upon which procedural track the applicant chooses to take? For instance, can you go to the Federal District courts and get a de novo review of the application then appeal up to the CAFC that uses a the Zurko standard?

Also, what standard does the BPAI use?

Just how far does Zurko go?

Any good references to websites on this are welcome!

[M. Arthur Auslander]

Dear MLF,
Facts, law, the prior art and the invention, dictate the tactic when there is a problem. Each invention from its inception and use can present a different situation. For a forum the answer would probably be too abstract to speculate as to all the variables.

My instinct would move me to the CAFC if it were possible but who knows and I would not do the research even if I had the facts, without a retainer.

[eric stasik]

Dear MLF,

Mr. Auslander's comments are probably correct. Like most things, it would seem to depend on the facts of any particular case. This appears to be less of a patent issue, than one of American legal procedure. Actually, which path to take seems to me a question more properly addressed to attorneys with expertise other than than patent law...

The SCOTUS majority opinion seems to be a bit optimistic that the presence of two paths of appeal will not create an anomaly. Hogwash I say. The simple fact that the district court does not consider new facts and the CAFC does opens the door for a wide divergence of result depending on the particular circumstances. Frankly it seems silly to imagine there would not be a difference in outcome.

As an aside, I think the Federal Circuit got it right in upholding the PTO's rejection of the claims... the examiner has to have some lattitude over what is obvious.... demanding that the PTO issue a patent unless the invention is clearly spelled out in the prior art turns examiner's role into that of a non-thinking administrator.... with the result that the standard for patentability is unreasonably lowered (my personal opinion.) What is the point of hiring technically skilled examiners and then not letting them use their technical skill?

The CAFC seems have a little too much oh-what-the-heck-patent-it-and-let-the-market-worry-about-it attitude. To have this laisse faire attitude about the granting of patents while demanding a prima facie assumption of validity (and the threat of treble damages) is to adopt positions dangerously at odds with each another.

Interesting topic to bring up. What is your opinion about it MLF?

Regards,

Eric Stasik

[JimIvey]

I'll go ahead and weigh in here -- perhaps I interpret the questions a little differently than do my colleagues.

1.  reduced scrutiny under Zurko.  Under either stanard, a great deal of deference is given to the BPAI/PTO.  The abuse of discetion standard is just a little more deferential than the clearly erroneous standard.  This stuff is always difficult to explain because any paraphrasing isn't exactly right -- the words that define the standards are what they are.  However, it's helpful for comparison's sake to look at the standards as upholding the PTO's decision if there's any reasonable justification for it (old standard) vs. if there's any justification for it (no matter how unreasonable -- new standard).  As you can see, there's not much difference there.

2.  Differect tacts.  From what I understand, there is no appeal from a rejection to the district courts, so that route is unavailable.  When the Federal Circuit is reviewing the PTO (BPAI), the court is reviewing a rejection of one or more claims from within the PTO.  When the Federal Circuit is reviewing a district court, the Fed. Circuit is reviewing a decision of invalidity of a claim issued by the PTO.  The applicant doesn't really choose either of these paths.  If the PTO rejects the claim through appeal, BPAI to FedCir is the only path available.  District Court to FedCir is only available if the PTO allows and issues the claim first.  And once the claim is issued, BPAI is unavailable and the only choice is district court.  So the applicant has no choice in this matter.  ... or have I misunderstood the question?

3.  standard of review of the BPAI.  They review the decision of the original examiner and they are pretty much free to do whatever they want.  I think it's pretty clearly a de novo review.  The BPAI can even raise entirely new grounds for rejection and can find new prior art if they're so inclined.

4.  just how far does the SCt go in Zurko?  See my answer to 1. above.  There was already a great deal of deference given to the BPAI.  Now, there's a little more.  Not much difference in my practice.  With the costs and risks as high as they already were in appealing to the FedCir a rejection of the BPAI, none of my clients have ever gone that route.  Now, it's even less likely that I'll see an appeal to the FedCir for my clients.

5.  Web site.  A google.com search for "in re zurko" found lots.

I hope that helps.

Regards.

[MLF]

My take on it is that once the BPAI makes a decision then the applicant has the choice of either appealing to the Federal district courts where they will perform a de novo review or to the CAFC. If they decide to appeal to the Fed District Courts then this decision can then be appealed to the CAFC where, using the Zurko standard, they will give deference to the examiner's fact finding.

It seems that appealing to the Fed District courts is a waste of time and money because you will only end up at the CAFC where they will follow the Zurko standard of review anyway.

It is likely that the BPAI performs a de novo review. As a matter of fact, I wonder if the CAFC has put pressure on the BPAI to perform a strict de novo review since Zurko was handed down because they (the CAFC) cannot. The reason I say this is because since Zurko the BPAI has been overturning more examiner rejections than ever before. This is evident because more than 2/3 of all the rejections in the biotech/chem/pharma arts get overturned in favor of the applicant. Has anyone heard anything about this or is it all speculation?

I really did not want to do the Zurko google search because I would end up with a googol hits. I was hoping for a good website on patent appeals

[eric stasik]

Mr. Ivey, MLF,

I’m not sure we’re all seeing this the same way, so let’s review the basics of the appeal process:

35 USC § 134

An applicant for a patent, any of whose claims has been twice rejected, may appeal from the decision of the administrative patent judge to the Board of Patent Appeals and Interferences (BPAI), having once paid the fee for such appeal.

http://www4.law.cornell.edu/uscode/35/134.html

If the applicant is rejected by the BPAI, the applicant has two options:

35 USC § 141

An applicant dissatisfied with the decision in an appeal to the Board of Patent Appeals and Interferences under section 134 of this title may appeal the decision to the United States Court of Appeals for the Federal Circuit. By filing such an appeal the applicant waives his or her right to proceed under section 145 of this title.

http://www4.law.cornell.edu/uscode/35/141.html

35 USC § 145

An applicant dissatisfied with the decision of the Board of Patent Appeals and Interferences in an appeal under section 134(a) of this title may, unless appeal has been taken to the United States Court of Appeals for the Federal Circuit, have remedy by civil action against the Director in the United States District Court for the District of Columbia…

http://www4.law.cornell.edu/uscode/35/145.html

Essentially, an applicant has two paths to the CAFC – one direct and one indirect. The issue in Zurko is that depending on how one gets to the CAFC, the CAFC will apply different standards of review. Clearly this is the case. In the direct path (§ 141) the CAFC applies the court/agency standard, in the indirect path (§ 145) the CAFC applies the less stringent “clearly erroneous” court/court standard. This encourages applicants to take the (more expensive and time consuming) indirect path to the CAFC because the difference in review standard is likely to result in a different outcome.

In the SCOTUS majority opinion, Breyer dismisses this arguing that by taking the direct route to the CAFC, the applicant may present facts not considered by the PTO (or by the District court) which depending on the circumstances would balance any potential differences in the stanard of review which is applied. Hence they are equal.

Again, hogwash, I say. Breyer and the majority got it wrong. Applying different standards of review for the same pattern of facts is not balanced by changing the facts.

Any other opinions about this?

Thanks for an interesting discussion.

Kind Regards,

Eric

[JimIvey]

Dear Messr's Stasik, MLF,

Mr. Stasik is correct about Section 145 appeals.  I stand corrected.

What standard of review does the Discrict Court, DC apply to the PTO's (BPAI's) decision?

If no new evidence is presented, the District Court applies the same administrative standard: Mazzari v. Rogan.
http://www.ll.georgetown.edu/federal/judicial/fed/opinions/02opinions/02-1269.html

The review of the CAFC (Court of Appeals, Fed. Circuit) of the DCourt's review is the standard review of any appeals court reviewing any district court.  And, in reviewing the DCourt under whatever standard, the CAFC will apply the administrative standard to the BPAI's decision.

So, the standards of review are essentially the same whatever appeal route the applicant takes.

However, appeal under Section 145 allows the applicant to present new evidence or re-present the same evidence.  This new evidence is reviewed de novo.  

I guess I don't share the same concern regarding dual paths of appelate review.  And, if there is such a concern, it ought to look at Congress and not the Court.  Sections 141 and 145 provide dual, redundant, alternative paths of appelate review.  The Court can only undo that if it's unconstitutional, which I don't believe it is.

Is it wise?  Is it advisable?  I don't know.  Keep in mind that new evidence of invalidity can be introduced to courts during enforcement.  Why not allow courts to look at new evidence on appeals of rejections?  There may be a very good reason for that, but I can't think of any off the top of my head.

Will Zurko send more applicants through Section 145 and the District Court?  Maybe.  Many applicants already think the patent system is about as expensive as they're willing to accept.  The added expense of introducing new evidence at the District Court would discourage the vast majority of applicants, in my opinion.  Given the standard of review (new or old), I think the incentive is to put forth one's best effort in the BPAI and hope to prevail there.  I would surprised to learn that applicants would hold back evidence in the BPAI, hoping to get to the District Court.

The question then becomes whether the District Court is any kinder to applicants than is the BPAI.  Answering that would take a somewhat comprehensive review of Section 145 cases or someone who handles Section 145 appeals fairly regularly.  I don't have time for the former, and I'm not described by the latter.

I suppose any changes in the law (at least here in the US) are like earthquakes.  They move things just inches and shake up a lot.  But, when the dust settles, things aren't really all that different -- unless you happened to be very close to the fault or in an unfortunate position or you relied too heavily on the status quo.

Regards.

[eric stasik]

Mr. Ivey,

You wrote: ...if there is such a concern, it ought to look at Congress and not the Court.  Sections 141 and 145 provide dual, redundant, alternative paths of appelate review.  The Court can only undo that if it's unconstitutional, which I don't believe it is.

You are exactly right about this. On second thought, I guess I have to change my position about the majority opinion. It seems the SCOTUS could not have ruled any other way other. It's the Congress which has created the dual path, and the Congress which established different standards of review. I do not know enough about Constitutional law to say if this is kosher or not, but you're right - it's probably up to the Congress to fix this if it's a problem.

From the applicant's point of view, I guess what one does depends on the circumstances of the particular case.

Thanks for the opportunity to review this. I learn something every day here.

Regards,

Eric Stasik

[JimIvey]

Dear Mr. Stasik,

Not to beat this topic to death, but I have just a couple brief points.

The US Constitution provides explicit power to Congress to protect "discoveries" and "writings".  So Congress is pretty much free to do what it wants (within reason) vis-a-vis patents.

As for the SCt having little choice in its decision, it did change things from the way they were.  But, it's important to remember that there was already a dual standard of review.  Now, it's a slightly different dual standard of review.

For decisions based on evidence already considered by the PTO (specifically, the BPAI) under either Section 141 or 145, the standard of review changed from very high deference to nearly complete deference.

For decisions based on new or re-argued evidence (only permissible under Section 141 as I understand it), the standard of review is de novo (anew).  This is most likely appropriate since the BPAI/PTO has no prior decision to which to defer.

One final thought:  district courts are generally triers of fact -- meaning they evaluate facts in every case they hear.  Appelate courts don't decide issues of fact, only issues of law.  If an appelate court decides that an issue of fact remains undecided (or clearly wrongly decided), they don't "fix" it -- they send the case back to the district court to reconsider its fact findings.

Given this understanding, the dual paths of appelate review sort of make sense.  If you think the BPAI clearly applied the law incorrectly, go straight to the Federal Circuit.  If a rejection by the BPAI motivated you to go out and find new evidence that your invention is non-obvious, go to the district court in DC.

I agree, this topic has kept me on my toes as well.

Regards.