For Obviousness, Some Things Change but the Board Statistics Remain the Same

The Anticipat research database continues to comprehensively cover all legal grounds of rejection considered by the Patent Trial and Appeal Board (PTAB) for its ex parte appeals decision. This includes the more exotic like statutory subject matter Section 101 cases to the much more common issues like obviousness (Section 103).

Since July 25, 2016 to February 28, 2019, there have been around 24,448 obviousness decisions from the 29,102 total decisions meaning that nearly 84% of all appeals involve obviousness. Our observation is that obviousness is the most common ground of rejection to be decided at the Board. In this post, the data considered excludes decisions where the outcome involved a new ground of rejection based on obviousness as these typically only form a small fraction of the cases.

Of the 24,448 total decisions, 12,369 were affirmed, 8,386 were reversed, and 2354 were affirmed in part. Thus, the wholly reversed rate (for all claims in a case based on obviousness) was about 34%. The at least partially reversed rate (at least one claim in the case was found patentable) is about 44% (43.9%).

What is interesting to note is the breakdown by technology center in the USPTO. The technology centers contain the various art units to which patent cases are assigned based on how the claimed technology in each patent application is classified by the USPTO. Here is the summary of obviousness cases broken down by technology center based on cases decided between July 25, 2016 to February 28, 2019.

TC 1600 (biotech/pharma): Total decisions: 2333; 1907 total obviousness decisions. 1151 affirmed, 132 affirmed in part, 492 reversed. Wholly reversed rate is 25.8% and at least partially reversed rate is 32.7%.

1700 (chemical): Total decisions: 3950; 3633 total obviousness decisions. 2103 affirmed, 280 affirmed in part, 1041 reversed. Wholly reversed rate is 28.7% and at least partially reversed rate is 36%.

2100 (computer/electrical): Total decisions: 2976; 2575 total obviousness decisions. 1467 affirmed, 228 affirmed in part, and 739 reversed. Wholly reversed rate is 28.7% and at least partially reversed rate is 37.6%.

2400(computer/electrical): Total decisions: 3164; 2791 total obviousness decisions. 1531 affirmed, 276 affirmed in part, and 852 reversed. Wholly reversed rate is 30.5% and at least partially reversed rate is 40.4%.

2600(computer/electrical): Total decisions: 2760; 2458 total obviousness decisions. 1420 affirmed, 241 affirmed in part, and 677 reversed. Wholly reversed 27.5% and at least partially reversed rate is 37.3%.

2800(computer/electrical): Total appealed decisions: 1979; 1648 total obviousness decisions. 813 affirmed, 128 affirmed in part, 583 reversed. Wholly reversed 35.4% and at least partially reversed rate is 43%.

3600 (business methods/software): Total appealed decisions: 5941; 4212 total obviousness decisions. 1842 affirmed, 418 affirmed-in-part, 1755 reversed. Wholly reversed rate is 41.7% and at least partially reversed rate is 51.6%.

3700 (medical device/mechanical): Total decisions: 5734. 5022 total obviousness decisions. 1929 affirmed, 625 affirmed-in-part, 2195 reversed. Wholly reversed rate is 43.7%. At least partial reversal rate is 56.1%.

We note that the data has not shifted more than a couple of percentage points from our review of the data as reported in the past despite the increase in number of decisions. This indicates that, with respect to obviousness, by and large the Examiners (and the two supervisory Examiners involved in the Appeal Conferences) are very consistent in 1) picking the same kinds of bad decisions to take on appeal and the Board is 2) agreeing with applicants that this is the case at the same consistent rate. While some things like the particular cases being taken on appeal today have changed, the behavior by the USPTO has stayed markedly the same.

As a general observation, in the private sector a process producing 34% outright defective parts and 44% partially defective parts as determined by its own internal quality control process (the Board) would likely immediately regarded as being a low quality, unpredictable process (and would probably put a company out of business). At Anticipat, we believe that the ex parte appeals statistics are the closest and best end of line quality control indicator of the quality of the USPTO’s patent examination process. However, since these statistics are just an end of line quality control indicator, trying to change Examiner behavior solely using the ex parte appeals statistics will not solve the quality problem—reducing examiner variability will require the USPTO identifying meaningful inline statistical data monitors (pre-appeal) that could be used to reduce the variability in the examination process. The inline data monitors are what the USPTO could use to reduce the current levels of examination variability–and the end of line data (the ex parte appeals statistics) will show the effect too.

Could such a statistics-based process be implemented at the USPTO? Certainly–but it can only begin when the agency acknowledges that statistics like these reflect unmistakably on the quality and predictability of the patents currently granted. Tightening the USPTO’s distribution to result in lower ex parte appeals reversals will inevitably (through the operation of statistics itself) result in more predictable and better quality issued patents.  Until then, the only predictable thing is that USPTO Examiners will continue to be reversed by the PTAB at these double digit rates for obviousness.

Non-statutory Obviousness-Type Double Patenting Decisions by the PTAB

Non-statutory obviousness-type double patenting.  It is quite a mouthful, and as just as difficult to say quickly three times fast as it is to try to understand when slogging through the relevant sections of the Manual of Patent Examining Procedure (MPEP).  While the name and analysis are complicated, the principle is not–the courts have stated that a patent applicant should not be allowed to patent the same invention merely by filing a second patent application on it later in time.

Reviewing approximately the last six months of ex parte appeals decisions by the Patent Trial and Appeal Board (PTAB), the Board considered this issue in 197 decisions.  In 37 cases, the Board reversed the Examiner’s determination for at least one claim; in 29 of the decisions, the Board’s reversal was for all claims.

The total reversal rate (14.7%) for this issue is lower than that observed over the same period in even non-statutory subject matter cases (see our most recent posts).  We suspect there are likely many reasons for this result.  Here are some possibilities:

  1. Appellants may not be contesting this issue on appeal as it can be relatively easily handled later through filing a terminal disclaimer. This is supported by the large number of summarily affirmed dispositions, meaning the Board affirmed the rejection because the applicant failed to raise any arguments on the issue.
  2. The issue is a narrow, technical one that Examiners and the Board find more black and white.
  3. For many industries (other than biotech or pharmaceuticals), extra patent term is not as commercially important, so many applicants are choosing not to incur additional cost seriously contesting this issue on appeal. Instead, they are fine with filing a Terminal Disclaimer to render the rejection moot.

Current PTAB Decisions of §101 – Nonstatutory Subject Matter

Over the past 6 months, 144 ex parte appeals decisions involving 35 U.S.C. 101 have been handed down that specifically deal with the issue of whether the claims at issue are drawn to statutory subject matter. This subject is the most rapidly evolving area of IP law today, and from our experience one of the most ambiguous in view of what seems to be an “I’ll know it when I see it” approach of the Supreme Court’s two part test set forth in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. __, 134 S.Ct. 2347 (2014).

In the 144 decisions, the Board reversed the Examiner’s finding that the claims were directed to non-statutory subject matter in 37 cases–25.7% of the time.  Of these 37 cases, 36 involved a reversal as to all claims on appeal.

Compared to the reversal rates for obviousness and novelty (see our other posts), the Board is upholding non-statutory subject matter decisions by Examiners much more often.  However, the 25% total reversal rate indicates that even in the unsettled world of section 101, the Board does not agree with the Examiners in 1 out of 4 cases.

The data indicate that the patent-eligibility provision is not being treated by the PTAB as the exception that swallows the rule, which has been the fear of many practitioners observing the steady stream of invalidations on section 101 grounds flowing out of the courts.  Instead, the data indicates that a substantial number of cases are, in its judgment, passing the two part test.

 

Obviousness Appeals before the PTAB

Experience has shown that one of the most difficult issues for patent applicants to overcome during prosecution is a finding the invention is obvious. In 2007, the US Supreme Court freed USPTO Examiners to use many different reasons that one of ordinary skill would combine the teachings of prior art references. Since then, anecdotal evidence from practice suggests that applicants are less successful in overcoming obviousness rejections.

Examiners apply obviousness rejections all the time. How does one make sense of whether an obviousness rejection is reasonable? In the overwhelming majority of cases, one of two scenarios plays out. In the first scenario, the applicant wins after it presents the Examiner with compelling arguments showing that the claims would not have been obvious in light of the applied references. In the second scenario, the Examiner wins by not withdrawing the rejection until amendments are made or forcing the applicant to abandon the application. In a small minority of the time, the case is appealed, which turns out to be one of the most significant measures of the Examiner’s prima facie case for obviousness.

The appeal is a significant measure because both sides are willing to commit significant time and resources into a position. How are patent applicants doing when it comes to reversing obvious rejections on appeal?

The past six months of ex parte appeal decisions from the Patent Trial and Appeal Board (PTAB) show relatively high reversal rates:

In 41.8% of the decisions, the Board reversed the Examiner for at least one appealed claim.

In 32.6% of the decisions, the Board reversed the Examiner for all appealed claims.

The data set included the 3998 total decisions in which 35 USC 103(a) was an issue in an ex parte appeal.  Of the total number of decisions, 1302 were reversed in whole and 369 were partially reversed.  The exact timeframe measured was from 7/25/16 – 1/7/2017. Appeals from reexamination proceedings were not included in the data.

This data indicates that where the issue is obviousness, the practitioner has better than a 1 out of 3 chance that the Board will reverse the Examiner.

35 USC 102 Reversal Rates for PTAB

The doctrine of anticipation under Section 102 is one of the most settled areas of patent law. A reference either discloses the features of a claim or it does not. True, there are nuances to the doctrine, such as inherent disclosure of the applied reference and the broadest reasonable interpretation of claim terms. But for the most part, to support an anticipation rejection, an Examiner must point to where in an applied reference the features of a claim is disclosed and the anticipation rejection should be on solid ground.

Because the doctrine of anticipation is pretty straightforward, one would expect that the frequency that an Examiner is overturned would be relatively low. But the appeals decisions of such rejections tell a surprisingly different story. Looking back at the past six months of ex parte appeal decisions from the Patent Trial and Appeal Board (PTAB) for those decisions involving at least one section of 35 USC 102 reveals that anticipation rejections are among the highest reversed rejections:

In 58% of the decisions, the Board reversed the Examiner for at least one appealed claim.

In 49% of the decisions, the Board reversed the Examiner for all appealed claims.

The data set included the 976 total decisions in which 35 USC 102 (all sections) was an issue in an ex parte appeal. A total of 481 decisions wholly reversed the Examiner on anticipation grounds, and a total of 85 decisions partially reversed the Examiner on anticipation grounds. Appeals from reexamination proceedings were not included in the data.

These data indicate that where the issue is anticipation of the claims, the practitioner has better than 50% odds of having the Board reverse the Examiner.