Appeal from a decision of the Board of Appeals (board) of the United States Patent and Trademark Office (PTO) affirming the examiner's final rejection in a reexamination proceeding of claims 1 through 9, all of the claims of United States Patent No. 4,133,034 (the '034 patent), issued January 2, 1979 to Berwyn E. Etter, as nonpatentable under 35 U.S.C. § 103 in view of prior art. We affirm.
The '034 patent concerns a method and device for assimilating utility meter data at meter locations. Anthony Goodfellow, who had applied for and been refused a license under the '034 patent, filed a patent application on a utility meter reading device, copying the claims of the '034 patent to provoke an interference.
Claim 1 is representative:
The Examiner's Rejection on Reexamination
The examiner held that the subject matter of the '034 claims would have been obvious in view of Ambrosio, which discloses the use of cards as input information storage means, and Lowell, which teaches use of random access memory (RAM) as an input information electronic storage means for storing customer information (identity, account information, etc.) for a plurality of customers, or alternatively, in view of Ambrosio and Azure, which teaches use of a solid state memory as an input information electronic storage means for storing customer
Finding that the environment of use for the devices of Ambrosio, Azure, Lowell, and the '034 patent (viz. on-site utility meter reading) was the same, and that Azure and Lowell discuss their inventions as being improvements over systems of the Ambrosio type, the examiner concluded that it would have been obvious to employ the memory system of either Azure or Lowell (i.e., solid state devices such as RAMs or ROMs) in place of the input information storage device taught by Ambrosio (i.e., billing cards). In effect, the rejection rested on the view that the teachings of Ambrosio and Azure or of Ambrosio and Lowell would have made the claimed inventions of the '034 patent obvious.
The examiner accepted Etter's contention that the '034 patent enjoyed a statutory presumption of validity, 35 U.S.C. § 282, during reexamination, but viewed the presumption as having been overcome. Further, he said the presumption had been weakened by prior art (Azure and Lowell) not earlier cited to nor considered by the PTO.
Azure and Lowell were considered by the examiner as not "merely cumulative" of the prior art cited during the original prosecution, but were clearly more pertinent because they taught use of input information electronic storage means to store customer meter information for a plurality of utility customers.
The Board's Opinion
On appeal to the board, as before this court, Etter urged three grounds for reversal: (1) that the presumption of validity attaches in reexamination proceedings, and the examiner failed to carry the heavier burden thus imposed; (2) that Azure was obsolete technology, and thus constituted less pertinent art than that cited to the examiner during prosecution;
Respecting the presumption of validity, the board noted numerous reasons for holding that it did not attach to claims undergoing reexamination. Saying that the burden of showing nonpatentability is the same on the examiner in any examination, and the board did not see how that burden would be increased in a reexamination proceeding. It further held that the evidence was such as to require affirmance of the rejection because it would sustain the examiner's burden, regardless of whether the presumption was or was not applied.
Concerning Azure, the board agreed with the examiner that it was more pertinent than the art considered during the initial prosecution, and concluded that "the collective teachings of Ambrosio and Azure would have provided a much stronger suggestion for combining the teachings to provide the subject matter" of the invention than would the teachings of the earlier cited art.
The board considered the Ambrosio and Gray affidavits unpersuasive because they showed "a total lack of appreciation of the legal concept of obviousness."
(1) Must the presumption of validity, 35 U.S.C. § 282, be applied to claims involved in reexamination proceedings?
(2) Did the board err in affirming the examiner's rejection?
(A) Presumption of Validity
Etter's basic contention — that § 282 must be applied in reexamination proceedings
Though the board and intervenor stated strong bases for denying applicability of the presumption in reexamination proceedings, the board did recognize that it must in any event show a basis for its rejection of claims in any type of examination. Apparently for that reason, the solicitor indicated a willingness to accept applicability of § 282 in reexamination proceedings. It is true that the question has "tempest in a teapot" overtones, for the PTO will reject or cancel claims it considers unpatentable, as is its duty, whether § 282 is or is not considered applicable. The need for clarity in the law and for avoidance of unnecessary disputes, however, has prompted this court to consider the question in banc.
Section 282 provides that "[t]he burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity." (Emphasis added.). As this court noted in Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 218 USPQ 718 (Fed.Cir.1983):
713 F.2d at 1534, 218 USPQ at 875.
The foregoing description in Stratoflex coincides with the inclusion of § 282 in Chapter 29 of title 35, entitled "Remedies for Infringement of Patent, and Other Actions". Both recognize that the presumption is operative to govern procedure in litigation involving validity of an issued patent. A statute setting rules of procedure and assigning burdens to litigants in a court trial does not automatically become applicable to proceedings before the PTO. Nor can it acquire an independent evidentiary role in any proceeding.
As said in the legislative history of Chapter 30 of title 35 ("Prior Art Citations to Office and Reexamination of Patents"), reexamination "will permit any party to petition the patent office to review the efficacy of a patent, following its issuance, on the basis of new information about pre-existing technology which may have escaped review at the time of the initial examination of the application." House Report No. 66-1307, 96th Cong., 2d Sess. (1980), 3-4, reprinted in 1980 U.S.Code Cong. & Ad.News 6460, 6462 (emphasis added). Reexamination is thus neutral, the patentee and the public having an equal interest in the issuance and maintenance of valid patents.
The statute, 35 U.S.C. § 305, provides that "reexamination will be conducted according to the procedures established for initial examination under the provisions of sections 132 and 133 of this title." The actual reexamination is conducted ex parte. 37 CFR 1.550(a) (1983). Patent claims are reexamined only in light of patents or printed publications under 35 U.S.C. §§ 102, 103, and only new or amended claims are also examined under 35 U.S.C. §§ 112, and 132. 37 CFR 1.552; MPEP
The innate function of the reexamination process is to increase the reliability of the PTO's action in issuing a patent by reexamination of patents thought "doubtful." House Report at 3. When the patent is concurrently involved in litigation, an auxiliary function is to free the court from any need to consider prior art without the benefit of the PTO's initial consideration. In a very real sense, the intent underlying reexamination is to "start over" in the PTO with respect to the limited examination areas involved, and to re examine the claims, and to examine new or amended claims, as they would have been considered if they had been originally examined in light of all of the prior art of record in the reexamination proceeding. That intent is reflected in 35 U.S.C. § 303, which requires the Commissioner to determine whether "a substantial new question of patentability" has been raised, and in 35 U.S.C. § 304, which provides for initiation of reexamination by the Commissioner sua sponte.
The intent that reexamination proceedings and court actions involving challenges to validity be distinct and independent is reflected in the legislative history of § 303, which notes that denial of a request for reexamination does not deprive the requestor (if not the patent owner) "of any legal right" to contest validity in subsequent court proceedings. House Report at 6466. That "legal right" may be exercised as a matter of right, but determination of whether a "substantial new question of patentability" exists, and therefore whether reexamination may be had, is discretionary with the Commissioner, and, as § 303 provides, that determination is final, i.e., not subject to appeal.
That a patentee may request reexamination, and has the opportunity in the PTO of distinguishing art newly cited by the examiner, 37 CFR 1.530(c), and may amend his claims under reexamination, 35 U.S.C. § 305, further distinguish reexamination from litigation. It is of no moment that the examiner's burden of showing a basis for rejection in the examination and reexamination processes is not described in the "clear and convincing" terms applicable under § 282 to a litigant challenging validity of an issued patent. During the examination processes, allowances of claims raise no presumption and may be withdrawn. That one challenging validity in court bears the burden assigned by § 282, that the same party may request reexamination upon submission of art not previously cited, and that, if that art raises a substantial new question of patentability, the PTO may during reexamination consider the same and new and amended claims in light of that art free of any presumption, are concepts not in conflict. On the contrary, those concepts are but further indication that litigation and reexamination are distinct proceedings, with distinct parties, purposes, procedures, and outcomes. In the former, a litigant who is attacking the validity of a patent bears the burden set forth in § 282. In the latter, an examiner is not
In In re Yamamoto, 740 F.2d 1569, 222 USPQ 934 (Fed.Cir.1984), this court said that claims subject to reexamination will "be given their broadest reasonable interpretation consistent with the specification, and limitations appearing in the specification are not to be read into the claims." 740 F.2d at 1571, 222 USPQ at 936. That standard is applied in considering rejections entered in the course of prosecution of original applications for patent. See In re Prater, 415 F.2d 1393, 1404-05, 162 USPQ 541, 550-51 (CCPA 1969). As noted in Yamamoto:
740 F.2d at 1572, 222 USPQ at 936.
Claims in a reissue application enjoy no presumption of validity. In re Sneed, 710 F.2d 1544, 1550 n. 4, 218 USPQ 385, 389 n. 4 (Fed.Cir.1983). Though reissue and reexamination proceedings are distinct, the focus of both is on curing defects which occurred during a proceeding in the PTO, which was responsible for original issuance of the patent.
Etter cites language in In re Andersen, 743 F.2d 1578, 223 USPQ 378 (Fed.Cir.1984), as appearing to require application of § 282 in reexamination proceedings. At oral argument, the PTO solicitor indicated that Andersen has been understood by and accepted in the PTO as establishing that requirement.
The court in Andersen dealt with Andersen's argument that any doubt must be resolved in his favor under (1) a judicially imposed "rule of doubt," or (2) as "part of the presumption of validity." The court rejected (1), citing In re Naber, 503 F.2d 1059, 183 USPQ 245 (CCPA 1974), and rejected (2), noting that the presumption does not embrace a rule of doubt. The court agreed with Andersen's statement that reexamination should not circumvent the burden "placed on an infringer during litigation." As above indicated, that is a truism, the litigation and reexamination processes being distinct. The court's discussion of the workings of the presumption in the face of new art, and the cases cited, all related to operation of the presumption in litigation.
Nonetheless, recognizing that Andersen may be and has been read as holding that claims must be presumed valid under § 282 in reexamination proceedings, the court has sua sponte taken this case in banc to clarify the law as set forth in this opinion.
No statutory language and no legislative history indicates any support for a requirement that the provisions of 35 U.S.C. § 282 must be applied in the consideration of claims involved in reexamination proceedings. Indeed, all available indications are to the contrary. We hold, therefore, that § 282 has no application in reexamination proceedings.
It is at best incongruous to apply a trial court procedural rule to the examination of claims in the PTO. Moreover, because this court and one of its predecessors has consistently held that the PTO examiner has the burden of showing a basis under the statute, 35 U.S.C., for each rejection, injection of the presumption into the examination process could add nothing but legalistic confusion.
This court has repeatedly pointed out that the § 282 presumption is a rule of
The patent right is a right to exclude. The statute, 35 U.S.C. § 261, says that "patents shall have the attributes of personal property."
(B) The Merits
The examiner and the board correctly determined that: (1) Ambrosio discloses all features of Etter's claims, except "input information electronic storage means [for accumulating] customer profile information for a plurality of customers;" (2) Azure discloses that feature; (3) the overall result of the inventions of Ambrosio, Azure, and Etter is the same; and (4) Etter's claimed inventions would have been obvious in view of the collective teachings of Ambrosio and Azure which would have provided "a much stronger suggestion for combining the teachings to provide the subject matter of claim 1" than would the prior art cited during the original prosecution.
Harking back to his § 282 argument, Etter says the claims were originally allowed over Ambrosio and Jones, and Azure is less pertinent than Jones. Azure and Jones each disclose electronic memory. The board correctly noted, however, that Azure, unlike Jones, discloses use in utility meter reading among possible uses of his input information electronic storage means and is therefore more pertinent. That Azure disclosure is not, as Etter says, mere "hearsay". Etter's arguments that Azure does not disclose calculation and does disclose obsolete technology were properly rejected as insufficiently founded. Etter admits that Ambrosio discloses calculation. Obsolescence, if established, need not necessarily defeat a reference for what it discloses in reference to a claimed invention. Further, Etter relies on the opinion affidavit of Gray for his assertion that Azure discloses obsolete technology. Etter's assertions that Azure cannot be incorporated in Ambrosio are basically irrelevant, the criterion being not whether the references could be physically combined but whether the claimed inventions are rendered obvious by the teachings of the prior art as a whole. Orthopedic Equipment Co. v. United States, 702 F.2d 1005, 1013, 217 USPQ 193, 200 (Fed.Cir.1983); In re Andersen, 391 F.2d 953, 958,
NIES, Circuit Judge, with whom SMITH and BISSELL, Circuit Judges, join, concurring.
While I agree with the result reached by the majority, I disagree with the majority opinion insofar as it holds that, in a reexamination proceeding, a patent is never accorded the presumption of validity. In this case it makes no difference whether the presumption is or is not applied, as the board itself stated. The holding that the claimed invention would have been obvious over art not previously considered is fully justified, had the presumption been recognized.
This case illustrates the advantage of the new reexamination procedure. It worked here precisely as proponents of the legislation envisaged. What has resulted, however, in my view, is an easy case making bad law, not unusual with dicta. The majority decision finds a negation of the statutory presumption that is not expressed in the statute. Further, the majority opinion cannot be justified on the grounds that it is necessary to achieve the statutory objectives. Indeed, this decision can only have a chilling effect on voluntary use of the new procedure by patent owners, which was to be one of its prime objectives. H.R.Rep. No. 1307, 96th Cong., 2d Sess. 4, reprinted in 1980 U.S.Code Cong. & Ad.News 6460, 6463.
After complying with the procedures promulgated by Congress for obtaining a patent, a patent owner is in a position comparable to the holder of a deed or title to property. 35 U.S.C. § 261 (1982); Connell v. Sears, Roebuck & Co., 722 F.2d 1542, 1548, 220 USPQ 193, 198 (Fed.Cir.1983); Schenck v. Nortron Corp., 713 F.2d 782, 784, 218 USPQ 698, 699 (Fed.Cir.1983). That government grant is not to be set aside unless the deciding tribunal is clearly convinced that the grant was in error, having been predicated on erroneous or incomplete facts or a wrong application of law.
The statutory provision in 35 U.S.C. § 282 is absolute:
A patent shall be presumed valid.
Nothing in the reexamination chapter, 35 U.S.C. §§ 301-307, states otherwise.
As explained in the legislative history:
H.R.Rep. No. 1307, 96th Cong., 2d Sess. 7, reprinted in 1980 U.S.Code Cong. & Ad.News 6460, 6466.
The presumption of validity places on the challenger of a patent the burden of coming forward with evidence to establish facts which may lead to the conclusion that the patent is invalid. SSIH Equipment S.A. v. U.S. Int'l Trade Comm'n, 718 F.2d 365, 375, 218 USPQ 678, 687 (Fed.Cir.1983). The challenger bears the burden of proof of such facts, as well as the ultimate burden of persuasion on the legal issue of validity. Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 1534, 218 USPQ 871, 875 (Fed.Cir.1983). The PTO acknowledges that it bears these burdens in examination of an original application or in reexamination of patent claims. The PTO does not accept, however, that the quantum of proof of facts is "clear and convincing" evidence, which this court has stated to be imposed by the presumption. SSIH, 718 F.2d at 375, 218 USPQ at 687.
Our precedent holds that the presumption of validity is not weakened or destroyed during litigation by presentation of more relevant art not considered by the PTO, but may be more easily overcome if such art is presented. American Hoist & Derrick Co. v. Sowa & Sons, 725 F.2d 1350, 1358-60, 220 USPQ 763, 769-71 (Fed.Cir.1984). This follows from the absence of a decision on such matter by the administrative expert, the PTO examiner, to which deference must be given. Id. at 1359, 220 USPQ at 770. The situation in reexamination falls precisely within this concept. If reexamination concerns only a question of patentability not previously considered by the PTO, a fortiori, there is no prior decision to which deference is due and the presumption can be more easily overcome. But deference should be required in reexamination with respect to a matter which was previously considered or is substantially the same, e.g., basing a rejection on a new reference which is not materially different from one which has been overcome. The legislative history quoted above expresses a clear intent, consistent with the presumption of validity, that patents are not to be examined de novo. The legislative history quoted by the majority relates only to previously unconsidered matters. However, concerning matters which are essentially the same as those previously considered which may be re-raised during reexamination, a patentee is entitled to more respect for his property than the majority decision recognizes. Indeed, the majority's analysis and certain statements in the legislative history which speak of enhancing the presumption of validity by reexamination
The majority justifies its position that the presumption does not apply in reexamination on the ground that reexamination is
I agree with the majority that reexamination should work in such a manner that it will be "neutral." However, the decision today, in my view, will make patent owners resistent to reexamination. The deck is stacked against them by this decision and by In re Yamamoto, 740 F.2d 1569, 1571, 222 USPQ 934, 936 (Fed.Cir.1984). The court has made reexamination into a proceeding which affords advantages to an infringer over his position in court.
Delay itself is an advantage to an infringer of greater economic power than the patent owner, and the lack of res judicata effect against the infringer gives that party two opportunities to attack the patent. These advantages are inherent in reexamination and must be accepted as the quid pro quo for the perceived benefits of reexamination. We need not, however, go further and, as a matter of statutory interpretation, also change the rules by which validity is to be judged to the infringer's benefit. An infringer may well have evidence which is sufficient to meet the low threshold of "a substantial new question of patentability", but not sufficiently persuasive in court to overcome the presumption of validity, including the burden of clear and convincing proof. This might be particularly true where evidence is submitted to the PTO in the form of affidavits of experts or others who thereby escape the testing of cross examination.
With respect to claim construction, claims in litigation are to be "so construed, if possible, as to sustain their validity." ACS Hospital Systems, Inc. v. Montefiore Hospital, 732 F.2d 1572, 1577, 221 USPQ 929, 932 (Fed.Cir.1984), citing Klein v. Russell, 86 U.S. (19 Wall.) 433, 466, 22 L.Ed. 116 (1874); Turrill v. Michigan, S. & N.I. R.R., 68 U.S. (1 Wall.) 491, 510, 17 L.Ed. 668 (1864). Claims in reexamination, on the other hand, "will be given their broadest reasonable interpretation." In re Yamamoto, 740 F.2d at 1571, 222 USPQ at 936. Thus, claims may be valid and infringed in court but invalid in the PTO and, a fortiori, not infringed. It is small solace to a patent owner in that situation that he may amend his claims in reexamination and secure narrower new claims. Upon amendment, his claims are subject to complete examination and an infringer has the benefit of intervening rights to the extent afforded under 35 U.S.C. § 252 pursuant to 35 U.S.C. § 307(b).
Given this court's interpretation of proper reexamination procedure, the obvious strategy of an infringer would be to force the patentee back to the PTO where the patentee's presumptive advantage, as well as claim construction advantage, is eliminated.
The majority's analysis focuses on the aspect of reexamination dealing with the threshold determination that "a substantial new question of patentability" has been raised. The majority then continues its analysis of this case as if reexamination itself is a "limited examination" directed to that question. However, our court has also analogized reexamination to reissue proceedings. In re Yamamoto, 740 F.2d at 1572, 222 USPQ at 937. In reissue, examination is not limited to the question
Reexamination, as interpreted by the PTO, is a two step process involving: (1) the determination that there is "a substantial new question of patentability", and (2) reexamination itself. The latter step is not constrained, in the PTO view, by the former. In a very real sense, once reexamination is ordered (an unreviewable decision), the patent holder "starts over" under the PTO view on all § 102 and § 103 issues with respect to all claims, amended or unamended, whether or not related to the new question.
With respect to the first step, i.e., determining whether there should be reexamination, PTO regulation 37 C.F.R. § 1.515 provides:
Turning to the Manual of Patent Examining Procedure (MPEP), one sees that examiners are instructed as follows, when considering a request for reexamination:
With respect to the scope of the examination on reexamination, the second step, 37 C.F.R. § 1.552(a) provides:
No limitation is found there, or is intended, to limit reexamination to the new question of patentability which started reexamination.
The MPEP example of the processing of a "typical" reexamination shows a request for reexamination of claims 1-4 of a patent (MPEP § 2214, at 2200-11); a decision that a new question is raised as to claims 1-3 and no new question as to claim 4 (MPEP § 2246, at 2200-29); and, finally, a decision (1) not to reexamine claims 1-3 because of a court decision; (2) a rejection of issued claim 4; (3) a determination of patentability of issued claim 5; and (4) a rejection of new claim 6 (MPEP § 2262, at 2200-41). Thus, issued claim 4 is lost — although no decision was made that a substantial new question of patentability existed to involve the claim in the reexamination.
Coupling this expansive view of the scope of reexamination with the denial of a presumption of validity gives carte blanche to the Office to "second guess" the original allowance on the basis of the art originally considered or, at least, not materially different. This unrestrained view of its power during reexamination was, indeed, expressed by the board in In re DeWitt, No. 581-71, slip. op. at 5 (Bd.App. May 30, 1984), the appeal of which is also decided today, No. 84-1555 (Fed.Cir. Feb. 27, 1985), in which the board opined:
This view is too simplistic. The questions of validity of patents over prior art are not clear cut. The conflicting testimony of responsible experts, which this court sees every day in the records of patent cases before it, belies the concept that determining an "error" was made will be readily apparent.
For the foregoing reasons, I believe it would be the correct and desirable interpretation of the statute to apply the presumption
Alternatively, I urge the majority to limit reexamination to "resolution of the question," that is, to the "substantial new question of patentability" which caused the reexamination to be ordered, in accordance with 35 U.S.C. § 304. Nothing in the statute constrains the Commissioner, of course, from finding more than one substantial new question of patentability. However, under the statute, the Commissioner is required to make such determination. He should not merely allow reexamination to proceed in any direction at the discretion of an examiner. Clearly, reexamination was not designed to allow the PTO simply to reconsider and second guess what it has already done.
1007 O.G. 31 (1981).
Thus, while "other" issues such as fraud, will not be considered, the only stated limitation on §§ 102 and 103 issues is that indicated above.