Federal Circuit issues ruling on "new" rejections resulting from Appeals before the BPAI

“The Board's rules are in accord and provide that when the Board relies upon a new ground of rejection not relied upon by the examiner, the applicant is entitled to reopen prosecution or to request a rehearing…The Board need not recite and agree with the examiner's rejection in haec verba to avoid issuing a new ground of rejection. “[T]he ultimate criterion of whether a rejection is considered ‘new’ in a decision by the [B]oard is whether [applicants] have had fair opportunity to react to the thrust of the rejection… In Re: Phyllis Leithem

In Leithem, the CAFC found that the Board improperly ruled that no new ground of rejection was relied upon in the Board’s affirmance of the Examiner’s rejection.

Leithem’s invention was directed to an improved personal hygiene device (diaper) constructed using an absorbent core of dry shredded wood fiber pulp, known as fluff pulp, interposed between a water barrier sheet and a permeable layer, where the wood fiber pulp was cold caustic extracted and fluffed by mechanical action and was without chemical crosslinking.

In the appealed rejection the Examiner cited two references. The first, Pociluyko, was asserted as disclosing each feature of the claim except for the use of a fluff pulp that satisfied the cold caustic extraction limitation. The second reference Novak was cited as disclosing cold caustic extraction of wood pulp and “a method of making fluff pulp.” The Action asserted that “it would have been obvious to one having ordinary skill in the art to modify the invention of Pociluyko with a fluff pulp made by the method taught in Novak.”

In the Appeal, Leithem argued that “Novak does not teach that his pulp is fluffed.” Further, Leithem argued that because Novak describes the manufacture of wet-laid paper, not dry shredded fluff, those skilled in the art would not simply substitute the wet-laid paper product of Novak for the dried fluff pulp of Pociluyko. The Board agreed with Leithem that Novak only disclosed the cold caustic treatment of pulp to produce a wet-laid paper. Nevertheless, the Board asserted that becauseNovak's goal was to create a more absorptive paper, one of skill in the art “would have had reason to use this pulp as a fluffed pulp in an absorbent product such asPociluyko.”

Leithem then petitioned the Board for rehearing contending that the Board, in affirming the examiner, relied on a new ground of rejection. This petition was denied and the case was appealed to the Federal Circuit.

The court held that the ultimate criterion of whether a rejection is considered ‘new’ in a decision by the Board is whether Applicants have had fair opportunity to react to the thrust of the rejection. Even if the Board relies on the same statutory basis and the same prior art references, this alone is insufficient to avoid making a new ground of rejection, especially when the Board relies on new facts and rationales not previously raised to the applicant by the examiner. The court further stated that the Board can include additional findings of fact based upon the Board's own knowledge and experience to “fill in the gaps” that might exist in the examiner's evidentiary showing, but this use is narrowly construed and cannot change the thrust of the argument. The court then held that the Board changed the thrust of the rejection when the rejection was upheld and thus the Board’s decision relied on a new ground of rejection.

This case provides Applicants with a guide for recognizing when the Board has issued a new ground of rejection. It is important to note that when the Board issues a new ground of rejection, this provides the Applicant with the ability to respond and amend the claims without the need for an RCE (see MPEP §1214.01). Moreover, the fact that the Board has issued a new ground of rejection may also have beneficial patent term adjustment (PTA) consequences as compared with a simple affirmance by the Board.

Therefore, in light of this decision, the Board will now likely acknowledge in its rulings that a new ground of rejection has been relied upon when the board affirms the Examiner but the rationale for doing so deviates from the “thrust” or main basis of the Examiner’s rejection. However, if a new ground of rejection is not acknowledged by the Board, Applicants should consider petitioning for a rehearing when it appears that the Board’s decision changes the thrust of the rejection such that Applicant has not been given a fair opportunity to reply to the new rationale.