The Federal Circuit Provides Guidance for Obviousness Decisions at the PTAB: Provide an Explanation and be Consistent

By  Payal Majumdar


In Emerson Electric Co. v. SIPCO, LLC, No. 2017-1866 (Fed. Cir. August 29, 2018), the U.S. Court of Appeals for the Federal Circuit provides valuable guidance for panels of judges at the United States Patent Trial and Appeal Board (PTAB).  In this nonprecedential court decision, the Federal court has vacated and remanded a PTAB decision for being inadequate in explaining its reasoning on a point central to its analysis. In Emerson, further, the court found worth noting that the Board came to opposite conclusions on patentability on nearly identical facts.

Obviousness decisions in U.S. patent cases follow the U.S. Supreme Court’s opinion in KSR International Co. v. Teleflex Inc., 550 U.S. 398 (2007) (hereinafter “KSR”).  Under KSR, once the findings of fact for obviousness are articulated, USPTO personnel must provide a clear explanation of the reason(s) why the claimed invention would have been obvious. For example, the Supreme Court in KSR noted that an obviousness analysis must be made explicit and decisions cannot be sustained by mere conclusory statements.

In a recent nonprecedential opinion by the U.S. Court of Appeals for the Federal Circuit, the Federal Circuit provided similar guidance to panels of judges at the USPTO’s Patent Trial and Appeal Board (PTAB).  In Emerson Electric Co. v. SIPCO, LLC, No. 2017-1866 (Fed. Cir. August 29, 2018) (hereinafter “Emerson”), the Federal Circuit found inadequacy in one panel’s explanation for supporting a finding of nonobviousness.  In particular, the Emerson court noted that the PTAB panel reached a different obviousness conclusion from a prior panel of judges, despite considering nearly identical evidence in both cases.  Likewise, the Emerson court found that merely stating that a prior art combination did not “provide a rationale, separate from hindsight” was insufficient reasoning within a PTAB’s final written decision.

Turning to the factual and legal issues in the Emerson decision, Emerson Electric petitioned for inter partes review of claims 13, 14, 16-21, and 23-35 as being obvious over an IEEE article from 1978 authored by Robert E. Kahn (hereinafter “Kahn reference”) in view of patentee’s admitted prior art.  Specifically, Emerson Electric relied on the Kahn reference for disclosing a wireless packet radio that an ordinary skilled artisan would combine with a communication network for a prior art monitoring and control systems described in patentee’s specification.  In a Final Written Decision, the PTAB panel held that Emerson Electric had not proven by a preponderance of the evidence that the challenged claims were unpatentable.

On appeal, the Federal Circuit agreed with Emerson Electric only to the extent that the Board did not adequately explain and support its obviousness conclusion. The Federal Circuit concluded that the Board’s decision in this case does not adequately explain why an explicit statement in the Kahn reference regarding a potential motivation to combine was not enough, nor did it explain how it determined that impermissible hindsight would be required to conclude that the Kahn reference provided the requisite motivation to combine.  In particular, the court deemed relevant that the PTAB’s sparse reasoning was opposite another PTAB decision using nearly the same facts.

Accordingly, the Federal Circuit vacated the panel’s decision and remanded for further proceedings. In particular, the Emerson court quoted In re Vicor Corp. v. SynQor, Inc., 869 F.3d 1309, 1322 (Fed. Cir. 2017), stating that “where a panel simultaneously issues opinions on the same technical issue between the same parties on the same record, and reaches opposite results without explanation, we think the best course is to vacate and remand these findings for further consideration.”

In conclusion, patent applicants, patentees, and patent challengers should make sure to scrutinize any unfavorable decisions issued by the PTAB to confirm the respective panel properly did their job.  While the Emerson decision was focused on an AIA trial proceeding at the USPTO, the relevant legal principles here are also applicable to appeals in patent applications.  Accordingly, mere conclusory statements are not sufficient to support an obviousness rejection under 35 U.S.C. 103, and it is the responsibility of the PTAB to clearly articulate reasons with an explanation to support any obviousness determination.  Moreover, where multiple PTAB decisions are available for similar patents or patent applications, it is important to confirm that different PTAB panels have consistently articulated their reasons for or against patentability.