Federal Circuit Limits BPAI’s Ability To Group Claims for a Common Ground of Rejection

In Hyatt v. Dudas, 551 F3d 1307; 89 USPQ2d 1465 (Fed. Cir. 2008), the Federal Circuit affirms the district court’s vacating of the Board of Patent Appeals and Interferences’ (BPAI) rejection of all claims in twelve of Gilbert P. Hyatt’s patent applications.  In particular, the Federal Circuit held that a “ground of rejection,” as stipulated in 37 C.F.R. §1.192(c)(7), includes both the statutory section under which a claim is rejected, and the reason why the claim does not meet that statutory requirement.

Between April and June of 1995, Hyatt filed the twelve patent applications as part of a series of continuation applications.  By the time of appeal, the twelve applications included approximately 2,400 claims.  The PTO examiner rejected all of the claims on various different grounds, including obviousness and lack of enablement.  However, the most common ground for rejection was that the claims lacked written description support under 35 U.S.C. §112, first paragraph.  Hyatt appealed the examiner’s rejections to the BPAI, discussing only twenty-one of his claims in the “Summary of the Invention” sections of his appeal briefs.  Accordingly, the BPAI selected these twenty-one claims as representative claims, affirmed the examiner’s rejections, and affirmed the rejections of the non-representative claims.

On appeal to the district court, Hyatt argued that the BPAI improperly selected the twenty-one claims as representative of the remaining claims.  The PTO, in turn, argued that the claims were properly grouped because each group was rejected under the same statutory provision (35 U.S.C. §112, first paragraph).  The district court agreed with Hyatt, holding that the BPAI failed to comply with 37 C.F.R. §1.192(c)(7) when selecting the representative claims.  Specifically, the BPAI “should not have grouped claims that have been rejected for lack of a written description unless those claims share a limitation that has been found to have not been disclosed by the specification.”

The PTO raises two issues on appeal to the Federal Circuit.  The first issue relates to the meaning of “ground of rejection” in 37 C.F.R. §1.192(c)(7), and whether the BPAI improperly selected claims to be representative of groups of claims that were rejected on different grounds.  The second issue is whether the district court’s remand requires the BPAI to consider arguments that Hyatt waived by not raising them on appeal before the BPAI.

As to the first issue, 37 C.F.R. §1.192(c)(7) states:

Grouping of claims. For each ground of rejection which appellant contests and which applies to a group of two or more claims, the Board shall select a single claim from the group and shall decide the appeal as to the ground of rejection on the basis of that claim alone unless a statement is included that the claims of the group do not stand or fall together and, in the argument under paragraph (c)(8) of this section, appellant explains why the claims of the group are believed to be separately patentable. Merely pointing out differences in what the claims cover is not an argument as to why the claims are separately patentable.

The PTO argues that a “ground of rejection” is the statutory section under which a claim is rejected.  In the present case, then, the ground of rejection is the claims’ failure to satisfy 35 U.S.C. §112, first paragraph, regardless of whether the limitation in the representative claim that lacks written description support is also present in the other claims of the represented group.  Conversely, Hyatt argues that the “ground of rejection” includes both the statutory section and the reason why the claim failed to meet that statutory requirement.

The Federal Circuit noted that, in 2002, the Federal Circuit held in In re McDaniel, that 37 C.F.R. §1.192(c)(7) “operates to relieve the [BPAI] from having to review… the myriad of distinctions that might exist among claims, where those distinctions are, in and of themselves, of no patentable consequence to a rejected claim.”  293 F.3d 1379, 1383 (Fed. Cir. 2002).  Accordingly, the Federal Circuit cited In re McDaniel in reasoning that a group of claims rejected on the same ground is one in which the differences between the claims is “of no patentable consequence to a contested rejection.”  Thus, the Federal Circuit concluded that the PTO’s interpretation of 37 C.F.R. §1.192(c)(7) is erroneous, and that a group of claims rejected under 35 U.S.C. §112, first paragraph do not share a common ground of rejection unless the claims have a common limitation that lacks written description support.

As to the second issue, the PTO argues that if its interpretation of 37 C.F.R. §1.192(c)(7) is rejected, then it will be required, on remand, to consider grounds of rejection that Hyatt failed to contest in his initial appeals to the BPAI.  The Federal Circuit, again, disagreed with the PTO, and affirmed that the rules of waiver (37 C.F.R. §1.192(a)) exempt the BPAI from considering grounds of rejection that were not contested on initial appeal.  However, while an Applicant can waive appeal of a ground of rejection, the Applicant cannot waive the BPAI’s obligation to select and consider at least one representative claim for each properly defined ground of rejection appealed.

Thus, in the present case, the BPAI must consider all grounds of rejection challenged by Hyatt without selecting a claim to be representative of a group that were rejected on different grounds.  However, the BPAI is not obligated to consider any grounds of rejection not challenged by Hyatt in his initial appeals, unless such grounds become relevant on remand.

Significance for Patent Applicants

While seemingly a narrow holding, the lesson of Hyatt is important to the extent that it demonstrates that the USPTO must reasonably comply with its rules.  Thus, even after the Federal Circuit’s holding in Tafas by which the Federal Circuit held that the USPTO has broad rulemaking authority for such procedural rules, the USPTO’s interpretations must still be within the bounds of reason.

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