Thursday, February 02, 2017

The "Rule 36" practice of the CAFC

In a post at PatentlyO titled Wrongly Affirmed Without Opinion , Dennis Crouch raises the issue that, as to Rule 36 Affirmances Without Opinion, "the Federal Circuit is required by statute to issue an opinion in these PTO appeals."

Within an SSRN article, Professor Crouch noted:

By 1989, however, members of the court [the CAFC] recognized the increasing potential
of a docket backlog and implemented local Rule 36 to allow for affirmances
without opinion.44 In discussing the rule change then Chief Judge Markey
offered this new “third form of disposition where it’s not necessary to
explain, even to the loser, why he lost.” 45

But, years later, Judge Plager stated in In re Packard, 751 F.3d 1307, 1314 (CAFC 2014) :
“I write separately because I am of the view that a petitioner to this court seeking
reversal of a decision is entitled to an explanation of why the arguments on which
he relied for his appeal did not prevail."

**The California Supreme Court in People v. Kelly (2006) observed:

Article VI, section 14, of the California Constitution provides that
"[d]ecisions of the Supreme Court and the courts of appeal that determine
causes shall be in writing with reasons stated."
As a result of the 1966 repeal and reenactment of article VI of the California Constitution,
the requirement of opinions in writing is now found in article VI, section 14, and reads:
"Decisions of the Supreme Court and courts of appeal that determine causes shall be in writing
with reasons stated." There is no indication in the background materials prepared in the 1960's
for the members of the California Constitution Revision Commission committee that was responsible
for proposed revisions to article VI, or elsewhere, that any change in substance was intended
with respect to the new wording of the "in writing" requirement. fn. 1 {Page 40 Cal.4th 117}
From this history, we discern a variety of purposes in the requirement that appellate decisions be in writing.
Of course, some decisions establish precedent for future cases. Others provide guidance only to the parties
and to the judiciary in subsequent litigation arising out of the same "cause." In all instances,
the requirement of a written opinion promotes a careful examination of the facts and the legal issues,
and a result supported by law and reason.

What if opinions of courts were held to the same standard as that applied to parties?
For example, from the blog docketreport , discussing Yodlee v. Plaid :

[T]he Court agrees with [defendant] that [the expert's] failure to expressly account for varying pricing structures and the lack of a sufficiently detailed explanation for how he reached the 'compromises' set out in Table 15 renders [his] reasonable royalty analysis, as presently articulated, insufficiently reliable."

Holmes once wrote:

“The language of judicial decisions is mainly the
language of logic. And the logical method and form flatter that longing for certainty and
for repose which is in every human mind. But certainty generally is an illusion, and
repose is not the destiny of man.”

**In passing, the CAFC in IN RE: JENNIFER SCHWEICKERT gives
an example where the factual findings of PTAB did not meet the
"substantial evidence" standard. The CAFC noted:

We review the Board’s factual findings for substantial
evidence and its legal conclusions without deference. Flo
Healthcare Solutions, LLC v. Kappos, 697 F.3d 1367,
1375–76 (Fed. Cir. 2012) (citing cases). Substantial
evidence “means such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion.”
Blue Calypso, LLC v. Groupon, Inc., 815 F.3d 1331, 1337
(Fed. Cir. 2016) (quoting Consol. Edison Co. of N.Y. v.
NLRB, 305 U.S. 197, 217 (1938)).
This record describes no problem in Birrell that
would be resolved by the semaphore in Cunniff.

The Board’s decision is deficient in another respect.
Even if the semaphore in Cunniff were readily applicable
to the RAM in Birrell, the Board has not explained why or
how a skilled artisan would further configure or manipulate
Birrell’s RAM such that there would be multiple
lockable buffers as claimed in the ’272 Patent. See ’272
Patent col. 10 ll. 42–563; see also KSR, 550 U.S. at 418
(stressing that it is “important to identify a reason that
would have prompted [a skilled artisan] to combine the
elements in the way the claimed new invention does”
(emphasis added)).
Given these findings, the Board needed to explain why a skilled
artisan would still have a reason to combine Birrell and
Cunniff to achieve the claimed invention. See, e.g., Intelligent
Bio-Sys., Inc. v. Illumina Cambridge Ltd., 821 F.3d
1359, 1368 (Fed. Cir. 2016). Although it asserts that
Birrell would have “benefitted from the advantages of . . .
Cunniff’s semaphore mechanism,” the Board did not
explain why this is so.
The PTO suggests that a skilled artisan would have
been motivated to combine Cunniff and Birrell despite the
difficulties of doing so because Birrell’s system would be
more cost-effective to manufacture with Cunniff’s semaphore.
See Appellee Br. at 24 (first citing J.A. at 536; and
then citing Cunniff col. 1 ll. 34–38). But the Board never
made this finding. And even if the Board did, the record
does not appear to substantiate it.

The Board, at best, merely posits that a skilled artisan
could combine Birrell and Cunniff, notwithstanding
any difficulties, and would do so because these references
were within the knowledge of a skilled artisan. But in
view of the foregoing, this broadly-stated conclusion
suffers from hindsight bias. See, e.g., In re Giannelli, 739
F.3d 1375, 1380 (Fed. Cir. 2014) (reversing affirmance of
examiner’s obviousness determination where the Board’s
analysis “contained no explanation why or how [a skilled
artisan] would modify” the prior art to arrive at the
claimed invention); In re Rouffet, 149 F.3d 1350, 1358
(Fed. Cir. 1998).

From a comment by David Boundy at PatentlyO:

As you briefly mention, all decisions of administrative agencies that are
adverse to a party must be supported by a “a brief statement of the grounds,”
5 U.S.C. § 555(e), sufficient to satisfy the “arbitrary and capricious”
standard of the Administrative Procedure Act, 5 U.S.C. § 706(2)(A).
“We have explained that a ‘fundamental requirement of administrative
law is that an agency set forth its reasons for decision;
an agency’s failure to do so constitutes arbitrary and capricious agency action.’”
Amerijet Int’l Inc. v. Pistole, 753 F.3d 1343, 1350 (D.C. Cir. 2014).
“The fundamental principle of reasoned explanation embodied in …
(agency) decisions serves at least three interrelated purposes:
enabling the court to give proper review to the administrative determination;
helping to keep the administrative agency within proper authority and discretion,
as well as helping to avoid and prevent arbitrary, discriminatory, and
irrational action by the agency; and informing the aggrieved person of the grounds
of the administrative action so that he can plan his course of action (including
the seeking of judicial review).” McHenry v. Bond, 668 F.2d 1185, 1192 (11th Cir. 1982).

As a separate matter, Boundy has a post on Cuozzo at PatentlyO, which includes

The heart of the majority opinion is a long paragraph toward the end of section II, beginning “Nonetheless.” The majority explains that most issues arising under patent law are precluded, but that issues arising under other bodies of law are not. Review remains available for constitutional questions, and most importantly, for issues slotted into one of the pigeonholes of APA § 706. The latter half of the “long paragraph” reads as follows:

[W]e do not categorically preclude review of a final decision where a petition fails to give “sufficient notice” such that there is a due process problem with the entire proceeding, nor does our interpretation enable the agency to act outside its statutory limits by, for example, canceling a patent claim for “indefiniteness under § 112” in inter partes review. Such “shenanigans” may be properly reviewable in the context of § 319 and under the Administrative Procedure Act, which enables reviewing courts to “set aside agency action” that is “contrary to constitutional right,” “in excess of statutory jurisdiction,” or “arbitrary [and] capricious.”[11]

The latter half of the long paragraph, especially the last sentence, opens a wide barn door. The Cuozzo majority’s long paragraph indicates that the full reach of § 706 applies to underlying issues in decisions to institute. Cuozzo tells us that issues that are losers when presented in patent law vocabulary become winners when wrapped in administrative law vocabulary.


and note: This paper is a short version of an article in the current issue of ABA Landslide, vol. 9, no. 3, electronic edition.

UPDATE on 6 Feb 2017

See article in National Law Review, Are Patent-Friendly PTAB Decisions On the Rise?


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