Facts? We’re The PTAB! We Don’t Need No Stinkin’ Facts

The PTAB is allowing Examiners to use §101 as some kind of magic “super Official Notice” wand


Nick Gross IPWire Profile Picture by: J. Nicholas Gross, guest contributor | January 18, 2018

As a 30 year PTO practitioner I follow the daily jurisprudence coming forth from the PTAB, and it pains me to read some of their recent decisions that seem to be going out of their way to destroy inventor rights in the name of administrative expediency. Everyone knows there is a serious backlog, but it does no one any good to encourage poor and random prosecution examination as a means of killing cases.

Case in point are the ever-growing numbers of § 101 rejections, where the Board is now routinely affirming Examiners whose entire analysis consists of:

  1. boiling down the claim to find an “abstract idea”;
  2. proclaiming the claim does not cover “significantly more”; and
  3. declaring victory! Examiners of course find this “1 paragraph rejection” approach infinitely preferable than the substantive review necessitated by §102 (novelty) and §103 (obviousness). The latter require research, reading references, and applying them to each limitation of the claim.

In their zeal to find an easy §101 rejection in every case however, the Examiners have started cutting corners. Some of them now routinely declare that a claim is directed to a “fundamental economic practice,” without any substantive explanation or facts to back up their contention. More commonly, they wave their hands and baldly assert that all the steps in the claim are “conventional and routine.” This indiscriminate labeling allows them to pigeonhole the claim immediately into the forbidden “abstract idea” territory alluded to but never defined in the Alice decision.

For example, in a recent case involving an invention to IBM, the Board affirmed the Examiner’s contention that the claim was really just about the “abstract idea” of “… managing customer discounts following the receiving of a cancellation request by a customer.” It then proceeded to declare that the Examiner was not required to provide ANY factual evidence that such abstract idea is an impermissible “fundamental economic practice.” As the PTAB declared:

“We are aware of no controlling authority that requires the Office to provide factual evidence to support a finding that a claim is directed to an abstract idea. Nor, contrary to Appellants’ suggestion (id.), did this Board hold, in Ex parte Renald Poisson, Appeal 2012-011084 (PTAB February 27, 2015), that there is any such requirement.”

In Re Johnson et al. (Appeal 2016-004623 January 18 2018).

It is hard to decide which statement is more inaccurate or deceptive in the passage above. The PTAB’s incredibly slippery prefatory comment effectively declares that since someone above them has not explicitly told them yet that this “fact-free” approach is wrong, they are technically free to keep doing it. As vapid and cynical as this pronouncement may be, amazingly it is actually a step down from the PTAB’s statement in earlier §101 cases, where they more boldly proclaimed that they indeed had express authority not to bother with messy things like facts. Compare for example, their language in In Ex Parte Shea (Appeal No. 2015-000280 May 2017) where they instead said (emphasis added):

There is no requirement that Examiners must provide evidentiary’ support in every case before a conclusion can be made that a claim is directed to an abstract idea. See, e.g., para. IV “July 2015 Update: Subject Matter Eligibility” to 2014 Interim Guidance on Subject Matter Eligibility (2014 IEG), 79 Fed. Reg. 74618 (Dec. 16, 2014) (“The courts consider the determination of whether a claim is eligible (which involves identifying whether an exception such as an abstract idea is being claimed) to be a question of law. Accordingly, courts do not rely on evidence that a claimed concept is a judicial exception, and in most cases resolve the ultimate legal conclusion on eligibility without making any factual findings.” (emphasis added)). Evidence may be helpful in certain situations where, for instance, facts are in dispute. But it is not always necessary. It is not necessary in this case.

The discrepancy in PTAB reasoning jumps out right away to experienced practitioners. In the earlier cases the PTAB effectively declared itself as imbued with the same privileges as an Article III “court”; since these courts were not always making factual determinations, the PTAB didn’t have to either. One might cynically wonder why such analogies and aggrandizements of Article III power seem to have disappeared recently in the wake of the Oil States case now pending at the SCOTUS? The PTAB has clearly shifted their defense from “we have just as much power as an Article III court” to “no one has told us we can’t do this”

Furthermore, as seen in these earlier decisions, the PTAB was quick to cite the PTO’s self-serving § 101 Guidelines as giving it authority to bless this kind of “non-factual” Examiner analysis. Yet now these PTAB citations to the PTO Guidelines have mysteriously disappeared over time, most likely because Appellants kept pointing out how the § 101 rejections in their particular case did not actually meet the requirements of such Guidelines. In response, and to avoid the growing multitude of “the rejection is in error because it is internally inconsistent with PTO practice” arguments the PTAB has turned 180 degrees and now tries to disconnect an Applicant’s compliance with the Guidelines as somehow indicative of eligibility. For instance, in Ex Parte Yadav (Appeal 2015-007596, October 26 2017) they now say:

“… reliance on examples in USPTO guidance is problematic at best. The Board decides cases in accordance with the law, not in accordance with hypothetical “examples [ ] intended to be illustrative only” (page 1 of July 2015 Update).

In Re Clement (Appeal No. 2016-008227 May 3 2017) uses the same dishonest sleight of hand to neuter inventor reliance on compliance with the PTO Guidelines to satisfy § 101:

“… Appellant mischaracterizes the purpose of the Memorandum as “current policy.” Rather, the Memorandum at page 1 is explicit in stating “[t]he purpose of this memorandum is to provide examination instructions to the Patent Examining Corps relating to subject matter eligibility of claims under 35 U.S.C. § 101.”

In other words, when it serves its purpose, the PTAB is quick to cite to the PTO Guidelines, but when the shoe is on the other foot, the PTAB hypocritically asserts the Guidelines have no authority; they are simply “examination instructions.” This type of disingenuous analysis is unfortunately extremely commonplace in recent PTAB decisions involving § 101.

But returning to the substance of the main point, is the PTAB really allowed to not provide any “factual evidence to support a finding that a claim is directed to an abstract idea”? This contention seems to fly directly in the face of the Administrative Procedures Act, and decisions such as Dickinson v, Zurko, which add further restrictions to how the PTAB operates. As Zurko confirms:

…Moreover, if the Circuit means to suggest that a change of standard could somehow immunize the PTO’s fact-related “reasoning” from review, 142 F. 3d, at 1449-1450, we disagree. A reviewing court reviews an agency’s reasoning to determine whether it is “arbitrary” or “capricious,” or, if bound up with a record-based factual conclusion, to determine whether it is supported by “substantial evidence.”

Thus, the SCOTUS has declared that the PTAB’s decisions must be reviewed by the CAFC to see if the “fact-related reasonings” are supported by “substantial evidence.” The question that leaps immediately to mind, of course, is how is that possible in instances where the PTAB declares that is not required to provide ANY evidence, let alone “substantial evidence”? In short, the PTAB appears to be unabashedly thumbing its nose to the CAFC, and making clear that it has no intention of complying with its obligations as concerns §101 rejections.

Probably anticipating this line of attack, the PTO has tried to give itself cover by relying heavily on In Re Jung, conveniently cropping out the context of that decision and failing to cite to the full language of the holding. In fact, like its §101 analyses, the PTAB boils down the In Re Jung opinion to an almost meaningless broad abstraction:

“…Appellants also charge that the Examiner’s assertion that the claims are “generic computer functions that are well-understood, routine, and conventional activities previously known in the industry’ is completely unsubstantiated, unsupported by any evidence or argument, and wholly incorrect” (Reply Br. 3). But Appellants present no evidence to establish otherwise. And to the extent Appellants contend that the Examiner is required to provide such evidence, the law is clear that there is no such requirement. See, e.g., In re Jung, 637 F.3d 1356, 1362 (Fed. Cir. 2011)
(holding that the PTO carries its procedural burden of establishing a prima facie case when its rejection satisfies the notice requirement of 35 U.S.C. § 132).”

See In Re Raley (Appeal No. 2015-000259). In practice, therefore, the PTAB is allowing Examiners to use §101 as some kind of magic “super Official Notice” wand, which allows them to make any assertion they want without any substantive evidence whatsoever. What the PTAB conveniently fails to mention is the rest of the Jung opinion, in which the Court elaborates (in the context of §103, not §101) why the PTO satisfied its burden, in that case:

“… Here, the examiner’s discussion of the theory of invalidity (anticipation), the prior art basis for the rejection (Kalnitsky), and the identification of where each limitation of the rejected claims is shown in the prior art reference by specific column and line number was more than sufficient to meet this burden.”

In other words, despite what the PTAB baldly asserts, In Re Jung didn’t give a broad license that allowed the Examiner to simply “give notice” to the Applicant that his claim was “rejected under §103” and oh, “here are the references.” Rather, the Examiner was required to produce a detailed examination of each limitation, and each reference, including specific column and line number. The recent blizzard of adverse §101 opinions from the PTAB readily reveals that Applicants rarely receive anything resembling this appropriate level of “notice” as required under § 132. The PTAB continues to cite the In Re Jung decision without ever once justifying the disparate treatment they imply applies to §101 analyses as compared to §103. Again, a cynic would suggest that the PTAB has to take this non-evidence approach, because even they know they cannot both make a finding that a claim is novel and non-obvious (i.e., because certain steps were not known and thus not routine or conventional) under §102/§103, while at the same time saying these facts show the exact opposite to sustain a §101 finding.

The increasing use of §101 as a convenient PTO application backlog reduction tool is precisely why the PTAB is now so eager to disavow any earlier contrary holdings such as found in Ex parte Renald Poisson. As alluded to above, unlike Ex Parte Johnson, the panel in Poisson acknowledged the obligation of the Examiner to provide facts in support of any contentions involving §101:

…Thus, in the first step of the Alice analysis, the question is whether claim 1, i.e., as a simulation of a football game using a table and cards, is directed to an abstract idea. That determination has not been made in this case based on evidence. Instead, the Examiner merely expresses an opinion that “a set of rules qualifies as an abstract idea.” Yet, absent supporting evidence in the record — of which there is none, the Examiner’s opinion is an inadequate finding of fact on which to base the Alice analysis.” (emphasis added)

As the earlier Poisson panel acknowledges, the PTO is not free to simply wave its hands or rely on a fact-free record for its decisions. Now, almost a year later, the PTAB naturally regrets this opinion, as it would cause no small amount of embarrassment to acknowledge how inadequate and unlawful the current examination protocol is for §101. It is clear the PTAB wants Poisson buried, which is why new panels continue to disavow it whenever possible.

Until the CAFC steps in and sets them straight the PTAB will continue to misapply Jung to arbitrarily destroy inventor rights by asserting that there is no “controlling authority that requires the Office to provide factual evidence” in its §101 determinations.

Someone with both skin in the game and financial muscle needs to take this fight to the next round.

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