Who's in Charge Here? Or Is the PTAB Bound by USPTO Guidances?

By Kevin E. Noonan --

In a decision from an appeal before the Patent Trial and Appeal Board following rejection of claims to an isolated nucleic acid apparently (to applicants) falling within the scope of U.S. Patent and Trademark Office Guidance setting forth Office policy for implementing the Supreme Court's decision in AMP v. Myriad Genetics is this assertion by the Board:

Appellants cite as support the USPTO's 2014 . . . ("Interim Guidance").  In particular, Appellants points to Claim 2 of Example 7 in the Interim Guidance . . . —"Isolated nucleic acid comprising a sequence that has at least 90% identity to SEQ ID No. 1 and contains at least one substitution modification relative to SEQ ID No. 1"—which was found in the Interim Guidance to be patent eligible.  We are not persuaded.  As an initial matter, we are not bound by the Interim Guidance.  Furthermore, we find the instant claims distinguishable from the example in the Interim Guidance, which requires a specific type of mutation (substitution) and specifies that "[n]o substitution modifications of [the gene at issue] are known to occur in nature."

Ex parte Lukyanov, U.S. Appl. Ser. No. 11/607,828 (appeal decided 05/25/2017) (emphasis added).

In contrast, another panel of the Board found the following claim patent-eligible based on another Guidance:

1.  A method for detecting and quantitating in a biological fluid sample from a human [a biomarker having a specific SEQ ID NO], comprising
    (a) contacting the sample with a labeled monoclonal or polyclonal antibody which specifically binds to said [biomarker] and
    (b) detecting and quantitating the resulting [biomarker]: antibody complex using an immunoassay, wherein said immunoassay
        (i) is not a radioimmunoassay, and
        (ii) has a limit of detection of about 50 pmol/L.

Ex parte Bergmann, U.S. Appl. Ser. No. 10/551,298 (appeal decided 07/10/2017):

It seems curious, and the source of inconsistent policy, for the PTAB to take the position that the Board can choose to ignore USPTO Guidances at its leisure (if not its whim) in view of the stance the Office has taken with regard to the importance of maintaining consistency in its policies in other situations.  For example, in convening an expanded panel for deciding whether filing a lawsuit asserting a patent waives sovereign immunity as a grounds to dismiss an inter partes review before the Board (it does; see "PTAB Decides Patent Infringement Lawsuit Waives Eleventh Amendment Sovereign Immunity to Inter Partes Review"), the expanded panel, which comprised Deputy Chief Administrative Patent Judge Scott R. Boalick, Vice Chief Patent Judges Jacqueline Wright Bonilla and Scott C. Weidenfeller, and Administrative Patent Judges Jennifer S. Bisk, Robert J. Weinschenk, and Charles J. Boudreau, in addition to the Chief Administrative Patent Judge, expressly set forth its reliance on the Chief Judge's authority under 35 U.S.C. § 6 to expand panels when issues before the Board are of exceptional importance or are "necessary to secure and maintain uniformity of the Board's decisions."  And a different Board panel excoriated counsel for the St. Regis Mohawk Tribe for filing a motion for discovery regarding whether there would be any attempt to "stack" the Board against it (see "The PTAB Strikes Back -- Issues Order Prohibiting St. Regis Mohawk Tribe from Filing Any Additional Papers in IPR"), despite there being concern before the Federal Circuit (see "Yissum Research Development Co. v. Sony Corp.") and, less directly, the Supreme Court regarding this policy.  In the Tribe's motion that provoked the panel's vociferous response, the request cited portions of the Administrative Procedures Act (specifically, 5 U.S.C. § 554(d)) that others have alleged, and it seems reasonable to suspect, might be bruised if not violated by the enlarged panel practices employed by the PTAB, i.e., a prohibition on members of a PTAB panel from being "subject to the supervision or direction of an employee or agent engaged in the performance of investigative or prosecuting functions for an agency."  In addition, the request cited the prohibition on ex parte communications under 5 U.S.C. § 557 or, if such communications have occurred, that they be included in the public record.

Article I courts, and the PTAB in particular, have a legitimate goal of providing consistent application of the law to applicants and, in the case of implementing the adversarial avenues the AIA created, developing a consistent body of procedural and substantive law.  To this end, for example, the PTAB has designated some (albeit few) cases precedential, thus providing notice to the public regarding how the Office can be expected to conduct the "trials" mandated by the statute.

But the Board's efforts are a larger part of, and expressly dependent on, the authority of the Office through the Director (as Under Secretary of Commerce) "for providing policy direction and management supervision for the Office and for the issuance of patents and the registration of trademarks [] in a fair, impartial, and equitable manner."  35 U.S.C. § 3(2)(A).  Those duties include the powers to "establish regulations, not inconsistent with law" for "govern[ing] the conduct of proceedings in the Office."  35 U.S.C. § 2(2)(A).  However, those activities "shall be made in accordance with section 553 of title 5," 35 U.S.C. § 2(2)(A), which govern administrative rulemaking.  More fundamentally, the Office is established under statute so that while being "subject to the policy direction of the Secretary of Commerce" it "otherwise shall retain responsibility for decisions regarding the management and administration of its operations and shall exercise independent control of its budget allocations and expenditures, personnel decisions and processes, procurements, and other administrative and management functions in accordance with this title and applicable provisions of law."  35 U.S.C. § 1.  Finally, nothing in the enabling statute for establishing the PTAB arrogates to that body any powers or authority independent of or superior to the powers vested in the Director over operation of the Office.  35 U.S.C. § 6.

Which brings us to the source of the Interim Guidance ignored by the PTAB in the Lukyanov case, the Office of Legal Administration, which operates within the Office of Patent Examination Policy.  According to the USPTO website, the OPLA has the following functions:

The Office of Patent Legal Administration (OPLA) drafts regulations and develops practices for the examination of patent applications, as well as assists in the implementation of these new regulations and practices.  In addition, OPLA staff author rule packages published in the Federal Register, create Official Gazette notices, monitor public comments, and formulate Frequently Asked Questions (FAQs).  To reflect changes in law, rules, procedures, and policies, OPLA recommends updates to the Manual of Patent Examining Procedure (MPEP) as well as the forms used by the Patent Examining Corps (Corps) and external customers.  Lastly, OPLA prepares and delivers training to the Corps.

Other OPLA staff duties include supporting post grant instruments such as reexamination proceedings and reissue applications, and treating applications for patent term extension and patent term adjustment.  OPLA has the authority to decide various petitions which have been delegated for consideration.  Legal advisors also deliver training on specialized subjects and patent law and procedure for the Office of Patent Training.

Additionally, in its representative capacity of the USPTO, OPLA responds to inquiries about patent law and Office policies and procedures via letters, phone calls, lectures, presentations, and other contacts with members of the public and the patent bar.  OPLA also assists in the efforts to negotiate the harmonization of patent laws and other international matters.

What is unclear is the statutory basis for the PTAB's evident conviction that it has the authority to ignore USPTO policies, as evinced by Guidances from the OPLA.  As an adjudicatory body it is reasonable for the Board to take the position that is needs the authority to decide how to apply such Guidances from the OPLA a particular case.  But in the language of the Lukyanov decision lingers a flavor of an assertion of a higher authority, along the lines of the Board having the responsibility to decide what the law is independent from and superior to the Office's administration.  This is consistent with the impression created by the chimerical nature of IPR and other adversarial review procedures established by the AIA, which are sometimes characterized as being in the nature of a trial and other times (when the characterization suits) are analogized to any other administrative procedure.  These various roles may have had the effect of engendering a belief that the Board has an obligation greater than its statutory brief, and this reasonably calls into question the legitimacy of its decisions.  Many have opined in the wake of new Director Iancu's confirmation on the matters requiring his attention.  The proper role of the PTAB in the policy-making hierarchy of the USPTO appears to be one of them.

Comments

[Atari Man]

Well, if anyone still needed convincing, after last month's temper tantrum from the PTAB in response to St. Regis Mohawk's motion, that the PTAB is a rogue body, this is it. Sorry Charlie, but two parts of the same administrative body can't play by different rules. But if the PTAB wants to set itself up for a smackdown under admin law by a *real* court, it should keep doing what it's doing.

[skeptical]

The PTAB is out of control (ignoring even the APA), and evidences one of James Madison's greatest fears vis a vis the judiciary (here, in the form of the judicial functions within the executive branch).

We have this concept of separation of powers for a reason.

It is apparent that this notion is NOT understood by a growing body of indolent and careless people.

Some had postulated that a few signs of restraint seen in the days of the Oil States briefings were due mainly to attempts to convince the Supreme Court that the executive branch was "reeling in" their (arbitrary) tactics and that IPRs were "ok" in the hands of the executive body.

Others (including this commentator) pointed out that any such reprieve would be short lived and that the self-aggrandizing power would in short order show itself again.

As much as I like (like anyone else) to be correct so often, this is one time that "I told you so" brings with it a sour taste.

But will the Supreme Court take note? Will they remember the Oil States intimated warnings? And will Congress take note, and write a better law respecting the separation of powers?

Alas, I remain:

[JNG]

Kevin
I've commented as well on this before, the PTAB has a hypocritical attitude towards the Guidelines. When you fail, they say its binding on you, and when you pass, they say its not binding on them. They want to keep using it both ways.

[Skeptical]

JNG,

If anything, the reverse would be true.

As guidelines go, they ONLY bind the administrative body and cannot bind the individual.

To bind the individual, you would need substantive law writing authority.

[JCD]

Such an inquiry and analysis could involve and raise a somewhat unsettled question in administrative law regarding the extent to which an agency's informal guidance is binding on the agency.

The Accardi doctrine (after United States ex rel. Accardi v. Shaughnessy, 347 U.S. 260 (1954)) holds that in general an agency must follow its own rules, but while the issue is pretty straightforward with respect to promulgated regulations, it is not always clear whether an agency is bound by more informal guidance.

In Morton v. Ruiz, 415 U.S. 199 (1974), the Supreme Court offered an expansive application of the Accardi doctrine applying it to a requirement in an agency's unpublished internal manual, but then in Schweiker v. Hansen, 450 U.S. 785 (1981) the Court held that a claims manual had no legal force and did not bind the Social Security Administration. Schweiker at 789.

My understanding is that the law could probably use further development, which may eventually come, but that at the moment it is something of a case by case issue. I could very well be wrong on that, however, as I certainly am not an expert on administrative law, and have not spent sufficient time looking into it to say anything definitive.

[skeptical]

Schweiker is easily distinguishable, JCD (the facts in that case presented a mootness to the decision wanting to be overturned).

Why do you ignore this point already provided to you?

[David Boundy]

I think the distinction between the Accardi line (at least ten cases at the Supreme Court, all uniform in outcome and reasoning) vs. Schweiker v Hanson is this --

In all the Accardi cases, the party asked for relief provided under the APA -- either a "setting aside" of agency action, or a prospective injunction to perform under the agency's guidance.

In Schweiker, the party sought retrospective money, on an estoppel theory. The APA just doesn't provide for that kind of relief.

skeptical, I'd be interested in other observations.

David

[David Boundy]

Kevin, if you have an easy way to combine the next one into the previous comment...

[David Boundy]

I don't know of anything "unsettled" about Accardi, except the PTO's adamant refusal to follow it.

[David Boundy]

An introduction to the Accardi principle is in my paper in ABA Landslide from Nov/Dec 2017. This article starts to explain how agency guidance (the MPEP, examination guidelines, the PTAB Trial Practice Guide, etc.) are binding against agency personnel, but not against the public. I will develop this explanation in future installments. (Parts II and III are in press.)

David Boundy, The PTAB is Not an Article III Court: A Primer on Federal Agency Rule Making, ABA Landslide vol. 10 no 2 (Nov Dec 2017)

https://www.americanbar.org/groups/intellectual_property_law/publications/landslide/2017-18/november-december/ptab-not-article-iii-court.html

[Skeptical]

From another blog:

"Schweiker v. Hansen is easily distinguishable based on its facts (the Court was faced with TWO requirements, and would not reverse in the face of a second requirement which basically mooted the first: “A court is no more authorized to overlook the valid regulation requiring that applications be in writing than it is to overlook any other valid requirement for the receipt of benefits“)."

[David Boundy]

Ah, now I see your point. There's not a hint of "mootness" in the case, and that threw me off.

Your analysis is close -- here's a slight refinement.

First, it's commonplace that where guidance provides procedures more favorable to the public than a regulation, or the guidance is written in terms that facially bind agency employees rather than the public, the guidance prevails. That's in all the Accardi cases. Many mention the principle that in cases of *difference* between regualtion and guidance, with guidance more favorable to the public, then guidance prevails.

But what we have in Schwiker is a *conflict*. In case of *conflict* between regulation and guidance, the regulation has to prevail. And with that adjustment, I think your approach is better than the relief approach I wrote.

Had Hansen pursued the guidance issue timely, and requested appropriate relief, I think it's highly likely that a court *would* have been willing to read the guidance concurrently with the regulation, and give weight to both, to give up to a year of retroactive benefit (as provided by regulation). But she didn't. Hansen's problem was one of sleeping on rights, until the only available relief was outside the scope available from a court. If you think this paragraph is word salad, it is, because on the procedural facts we see in Schweiker v Hansen, I can't see how my fact pattern could have occurred. But for didactic purposes, I've written a paragraph of pure dicta.

[Skeptical]

Mr. Boundy,

Is there a non-paywall version/summary? The article sounds interesting (and sounds like it reflects my post above).

[JCD]

My apologies for any confusion my comment engendered. I tried to caveat it with the fact that I haven't spent sufficient time looking into the issue, and was just trying to be helpful in pointing out a potential line of cases to look into for anyone interested.

I was mainly looking at the language from Schweiker that "the Claims Manual is not a regulation" and "has no legal force, and it does not bind the SSA". Schweiker v. Hansen, 450 U.S. 785, 789 (1981). I saw this language being quoted by some circuits (see e.g. Moore v. Apfel, 216 F.3d 864, 868 9th Cir. 2000) ("The Commissioner, relying on Schweiker v. Hansen, 450 U.S. 785, 789 (1981), argues that HALLEX is a purely internal manual and as such has no legal force and is not binding. We agree.") and Fano v. O'Neill, 806 F.2d 1262, 1264 (5th Cir. 1987) ("We have held OI's to be nonbinding not because they do not affect the individuals dealing with the INS but because they are not an exercise of delegated legislative power and do not purport to be anything other than internal housekeeping measures.")) and did not do much further digging.

Much thanks to David and skeptical for correcting any misinformation or confusion. Great article, as always, David.

[David Boundy]

Send me an email and I'll send you a copy.

[Skeptical]

The response at 11:58 made me chuckle.

[Easwaran]

It seems that something missing from this discussion is a consideration of the interplay between Examiner guidance documents regarding 101 rejections and the actual law as explained by the courts. I interpret Board statements such as "we are not bound by the Interim Guidance" not as a throwing-down of pesky shackles, but instead as ham-handed (but ostensibly uncontroversial) statements that the Board is ultimately bound to follow the law as explained by the courts.

So assuming that that the Examiner guidance is binding against the Board under the Accardi line of cases, what happens in the face of competing case law? My assumption is that the Office guidance must give way.

Given all of the above, I'd be curious for any thoughts on the following two practical questions.

1) What is an appropriate basis for Board determination about a disputed issue regarding which there is (a) a stance set forth in USPTO guidance, and (b) an internally inconsistent set of court precedent?

2) Can anyone think of an issue within a 101 rejection that may be disputed before the Board, that is addressed by an Office guidance document, and that has NOT be addressed by any of the 101 court cases? (brainstorming out loud, perhaps there is something around the burden of setting forth a prima facie rejection or the requirement to analogize to a court case?)

[Skeptical]

Easwaran - to your comment and explicitly in regards to 101 rejections - in the examination phase (before the Board phase) the guidance** cannot be said to conflict with ANY "actual law as explained by the courts" - especially as pertains to the factual predicate portion of the 101 legal determination.

As we have seen lately, the "actual law as explained by the courts" is STARTING TO hold BOTH the PTAB and the examiners to the PROPER factual element requirements.

***Within the term of "guidance," I include both the "guidance" of the Administrative Procedures Act as well as the USPTO requirements as to taking Official Notice.

I recognize that THAT is not the question - directly - that you are asking (but is a far more interesting fact pattern, and may be tied to your question "2)").

For example, Office guidance prevents ANY taking of Official Notice (even of things for which otherwise Official Notice may be appropriate) in order to establish "the state of the art."

An examiner "taking official notice to establish the state of the art in so far as attempting to merely draw the conclusion of something being "generic" or "conventional***" violates the guidance of the Office (at a minimum).

One quick side note: There is an interesting problem that the Office has in attempting to "use" ANY of the 101 court cases in that any such use in an Article III forum which may be winked and nodded at as being the development of law through the mechanism of common law development is OUTSIDE of the authority of the USPTO, which does not have the authority to engage in common law law writing.

As to being "outside of" any of the (Supreme Court or other Article III) 101 court cases, this aspect of the limitation of the patent office as an administrative agency under the executive branch and changing law through common law evolution has NOT been adjudicated DIRECTLY. Tafas comes to mind as most on point regarding what powers the administrative agency has in regards to substantive law making.

Now back to the factual predicate example and the examiner attempting to use Official Notice improperly... No court (or the Court) has had before it the issue of whether or not an examiner taking official notice to establish a state of the art in that examiner's factual predicate portion of determining the legal status under 101.

***I will also note that establishing the state of the art FOR 102 or 103 is a "lighter" task than establishing the state of the art FOR 101. That is because mere presence (plus fine details not important here) suffices for 102, and accumulated presence with at least motivation to combine (there are other factors) suffice foe 103. But for 101, the standard is "conventional," and "conventional" means: what is generally done, or established by general consent or accepted usage" which carries with it the notion of widespread use. Merely appearing in a patent, or even appearing in several related patents and patent applications does not rise to that notion of widespread use or what is generally done.

As to your question "1)", the case provided by JCD (Schweiker) already provides an answer.

[Easwaran]

"As to your question "1)", the case provided by JCD (Schweiker) already provides an answer."

I don't see it. Schweiker has one regulation at issue and a separate guidance document, and the point I think you're making is that the regulation trumps the guidance and that this somehow addresses my question.

But the question I'm ACTUALLY asking is about the situation where there is an agency guidance document and then multiple - but inconsistent - cases (consider preemption in the 101 context, with a discussion in the MPEP, and separately with Sequenom and its progeny on one side, and then McRO, Rapid Litigation, BASCOM Global, DDR Holdings, etc. on the other). Given the gray area set up by the courts on when non-preemption matters, it likely would not be "wrong" to go either way on the issue in a given case.

Given the above, must the Board follow the guidance document and essentially disregard preemption (quoting the line that "questions of preemption are inherent in and resolved by the two-part framework from Alice Corp. and Mayo"), or is the guidance document essentially a dead letter on the issue because its substantive pronouncements address a point discussed many times by the Federal Circuit? If the latter, isn't it appropriate for the Board to toss out the substantive components of the guidance document and just use typical legal analysis to determine which court cases sets forth the most relevant precedent? That's where I'm coming out on this issue, and it is the reason I asked the second question.

Is there an example of any practical significance that comes from making clear that the examiner guidance is binding on the Board?

[skeptical]

Easwaran,

The Court would never admit that its own legacy results in any such "inconsistency."

Of course, we both know that to be completely untrue (even to the point of Void for Vagueness - but that's a different topic for another day).

As to "Given the gray area set up by the courts on when non-preemption matters, it likely would not be "wrong" to go either way on the issue in a given case. I would vehemently disagree. In fact, that is the very notion of Void for Vagueness! It is not only NOT "would not be 'wrong'" - it could not possibly be right.

I think THAT alone swallows the attempt in the next part of your question. Your premise leads not to a viable question on "conflict," but rather shows that THAT underlying conflict presents an innate infirmity.

As to an attempt to merely decide a "proper" precedence (if you want to try to avoid the innate infirmity and imagine that the differences are merely differences of when each should apply and do NOT actually contradict each other), that type of legal analysis is rather plebian.

As to your last question: let's see how the requirements of PROPERLY providing the factual predicate to the legal question of 101 shakeout. The PTAB started down one path, then tried to reverse, and now that attempted reversal is quite clearly improper.

[Easwaran]

I hear you, and don't disagree on the court tension question. But like you say, it's an issue for another day.

In any event, I've found this discussion of using Examiner guidance against the Board very interesting, and I'm trying to figure out if there is some real-world strategy that can be extracted using it. To be honest, I'm sadly not seeing one (at least, not one broadly applicable to the garbage 101s I usually see). Seems like you aren't, either.

And to your final point, I do agree that the Berkheimer and Aatrix decisions should signal a return to reasonableness at the USPTO, but only time will tell, and practicing in the software/business methods area, I've learned never to get my hopes up.

[Skeptical]

I hear you Easwaran.

Sadly, an important driver for properly applying the law is missing in so far as the Supreme Court cannot seem to avoid its addiction to wax, and the mashing of noses made of same.