CAFC rejects BPAI’s “thrust of rejection” argument

Thomas Brown | December 1, 2011


(Reexamination Nos. 90/006,824 and 90/007,619)

(CAFC, October 5, 2011)


Before DYK, FRIEDMAN, and PROST, Circuit Judges. PROST, Circuit Judge.


Patentee appeals the Examiner’s final rejection on reexamination.  On appeal, the BPAI affirms the Examiner’s obviousness rejection for essentially the same reasons, but treats the primary reference as prior art under §102(a) in contrast to the Examiner’s reliance on the primary reference as prior art under §102(b) in the Examiner’s answer.  However, the BPAI does not issue a new ground of rejection, since the thrust of the rejection was the same as the Examiner’s rejection.  The Patentee appeals to the CAFC asserting the need for a full and fair opportunity to litigate the BPAI’s actual basis of rejection.  The CAFC rejects the BPAI’s thrust of the rejection argument, vacates the BPAI’s decision and remands with instructions to designate its rejection as a new ground of rejection.


The Stepan Company (“Stepan”) owner of USP 6,359,022, directed to foams used to make thermal insulation boards for walls of homes and buildings, appeals the Examiner’s final rejection in an Ex Parte reexamination of the Examiner’s obviousness rejection under 35 U.S.C. §103(a) based on the Singh reference in combination with other references.  In the final rejection, the Examiner only relies on the Singh reference as a §102(b) prior art reference.  Stepan argues in its appeal brief that Singh fails to qualify as a §102(b) reference and instead only qualifies as a §102(a) reference. Singh further argues that its Rule 1.131 Declaration removes Singh as a qualifying reference under §102(a).  In the final rejection, the Examiner never raised the question whether Singh was a §102(a) prior art, never expressed any concern as to any deficiencies with regard to the Declaration, and never issued a rejection using Singh as a §102(a) prior art reference.

On Appeal, the Board of Patent Appeal and Interferences (“Board”) affirms the Examiner’s rejection but treats Singh as a prior art under §102(a) and not §102(b) and addresses Stepan’s 1.131 Declaration as being “ineffective to remove Singh as a reference qualifying under 35 U.S.C. §102(a)” against certain claims.  Stepan does not file a request for rehearing and chooses instead to appeal the Board’s decision to the CAFC arguing that the Board should have made a new ground of rejection by newly relying on Singh as a §102(a) prior art reference.

Legal Standard

Full and fair opportunity to litigate actual basis of rejection

In a series of opinions, both this court and our predecessor court, the United States Court of Customs & Patent Appeals (“Patent Court”), have recognized that if the appellant has not had a full and fair opportunity to litigate the Board’s actual basis of rejection, the administrative validity proceedings before the United States Patent and Trademark Office (“PTO”) should be allowed to continue.

Notice Requirement-Administrative due process rights

Because the Board is limited to review of the examiner’s decisions during prosecution, the authority to issue a new ground of rejection, and the rights of the applicant that flow therefrom, ensure that the Board can fulfill its notice obligation to the applicant during prosecution.


On appeal, Stepan argues that the Board sustained the examiner’s obviousness rejection under a wholly different basis than that relied upon by the examiner, which constitutes a new ground of rejection.

Stepan asserts that the examiner never raised the question of the sufficiency of the 1.131 Declaration and that Stepan accordingly had no opportunity to respond to the alleged deficiencies in its Declaration that were identified by the Board for the first time in its opinion.  Thus, the Board’s failure to identify the new rejection and new rationale as a new ground of rejection, Stepan contends, violates its administrative due process rights.

The PTO responds that the Board’s decision is not a new ground of rejection because the thrust of the rejection was the same, i.e., obviousness.

The PTO argues that Stepan had a fair opportunity to be heard because it did in fact present argument and evidence, which was considered by the Board, to antedate Singh as a § 102(a) reference.

Alternatively, the PTO argues, that even if, the obviousness rejection based on Singh as § 102(a) prior art may be viewed as “new”, Stepan was required – by regulation – to seek rehearing to request that the Board designate the § 102(a) rejection as a new ground.  See 37 C.F.R. § 41.50(b)(2).  Because Stepan failed to request a rehearing, the PTO asserts that Stepan cannot now allege that it was deprived of its administrative due process rights.

CAFC rejects the “thrust of the rejection” argument and holds that:

Mere reliance by the Board on the same type of rejection or the same prior art references relied upon by the examiner, alone, is insufficient to avoid a new ground of rejection where it propounds new facts and rationales to advance a rejection – none of which were previously raised by the examiner.

The PTO’s alternative rationale is that Stepan waived its administrative due process rights by failing to exhaust all administrative remedies – namely– by failing request a rehearing.  The PTO argues that an applicant must request rehearing pursuant to § 41.50(b)(2) if the applicant believes the Board has relied on a new ground but has failed to designate that ground as such.

CAFC disagreed for two reasons.  First, the PTO’s regulatory interpretation is due no deference in view of the agency’s statutory obligation under the Administrative Procedure Act (“APA”) to provide prior notice to the applicant of all “matters of fact and law asserted” prior to an appeal hearing before the Board.

Second, the PTO’s argument that Stepan was obligated to request rehearing under § 41.50(b)(2) is contradicted by the plain text of the regulation, which states, “[w]hen the Board makes a new ground of rejection, the appellant, within two months from the date of the decision, must exercise one of the following two options ….” 37 C.F.R. § 41.50(b) (emphasis added).  Thus, the CAFC found that Stepan had no affirmative obligation to request a rehearing to ask that the Board designate its rejection as a new ground.

PTO’s new appeal rules

It is interesting to note that in the final rules of practice before to the Board and interferences in Ex Parte Appeals (published in the Federal Register/Vol. 76, No. 225/Tuesday, November 22, 2011) the PTO specifically relies on the “thrust of the rejection” doctrine for determining if a new ground of rejection is triggered, which appears to be at odds with the CAFC’s holding in this decision.

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