In Re Berwyn E. Etter

756 F.2d 852, 225 U.S.P.Q. (BNA) 1, 1985 U.S. App. LEXIS 14724

• Court: Court of Appeals for the Federal Circuit
• Decided: February 27, 1985
• Docket: 84-1213
• Status: Published

Opinions

MARKEY, Chief Judge.

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 nonpatenta-ble under 35 U.S.C. § 103 in view of prior art. We affirm.

Background

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.¹ The examiner refused to institute an interference because he found Goodfellow’s claims unpatentable in view of U.S. Patent No. 3,932,730 (Am-brosio), U.S. Patent No. 4,016,542 (Azure), and U.S. Patent No. 4,115,870 (Lowell). On February 4, 1982, Goodfellow requested reexamination of the ’034 patent, citing that prior art. That request was granted, and, on August 13, 1982 the examiner, having completed an ex parte examination, declared all claims of the ’034 patent nonpa-tentable. Etter asserts that all of the claims stand or fall together.

Claim 1 is representative:

A method of assimilating utility meter data at the meter locations, comprising,

accumulating on an input information electronic storage means customer profile information for a plurality of meter customers, said profile information including the customer identity and account information,

placing said input information electronic storage means in a portable computer capable of being manually carried to the site of a given meter, said portable computer having an output information storage means and having the capability of updating, printing and presenting various of said customer profile information for said meter customers before and after receiving current customer profile information,

actuating said computer to segregate and to visually present from the customer profile information for a plurality of meter customers stored on said input information electronic storage means at least the meter number and customer identity information of a given meter customer,

imposing into said computer the current meter reading of said given meter customer at the site of the meter being read,

actuating said computer to calculate the charge for utility usage based upon the previous meter reading and said current meter reading,

actuating said computer to print a bill for said meter customer at the site of said meter based upon said calculation and imposing on said output information storage means the updated customer profile information,

and depositing said bill at the service address of said given meter customer.

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 Am-brosio and Azure, which teaches use of a solid state memory as an input information electronic storage means for storing customer information for a plurality of customers.

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 Am-brosio 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 Am-brosio 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;² and (3) that affidavits of Ambrosio and Gray showed that the invention of the ’034 patent would not have been obvious.

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.”³

Issues

(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?

OPINION

(A) Presumption of Validity

Etter’s basic contention — that § 282 must be applied in reexamination proceedings — misconstrues the purposes for which that statute and the reexamination statutes were enacted. Review of the statutes, legislative history, regulations, and case law compels the view that § 282 is not applicable to claims about which “a substantial new question of patentability,” 35 U.S.C. § 305, is under consideration in a reexamination proceeding. Though the board decision here would be correct in any event, we discuss the issue because of its foundational relationship to Etter’s appeal and the need for clarification of guidance offered the board and bar.

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):

The presumption, like all legal presumptions, is a procedural device, not substantive law. It does require the de-cisionmaker to employ a decisional approach that starts with the acceptance of the patent claims as valid and that looks to the challenger for proof of the contrary. Thus the party asserting invalidity not only has the procedural burden of proceeding first and establishing a prima-facie case, but the burden of persuasion on the merits remains with that party until final decision____ With all evidence in, the trial court must determine whether the party on which the statute imposes the burden of persuasion has carried that burden. [Emphasis added.]

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-ex-isting 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 § 2258.⁴ The focus of the limited proceedings under Chapter 30 thus returns essentially to that present in an initial examination, i.e., to a time at which no presumption of validity had been created.

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 reexamine 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 substantia] 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 reque-stor (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.⁵

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 attacking the validity of a patent, but is conducting a subjective examination of claims in the light of prior art.

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:

[a]n applicant’s ability to amend his claims to avoid cited prior art distinguishes proceedings before the PTO from proceedings in federal district courts on issued patents. When an application is pending in the PTO, the applicant has the ability to correct errors in claim language and adjust the scope of claim protection as needed. This opportunity is not available in an infringement action in district court____

The same policies warranting the PTO’s approach to claim interpretation when an original application is involved have been held applicable to reissue proceedings because the reissue provision, 35 U.S.C. § 251, permits amendment of the claims to avoid prior art. [Citation omitted.] The reexamination law ... gives patent owners the same right ...

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 procedure placing the burden of persuasion on him who attacks a patent’s validity. There is no such attacker in a reexamination, and hence no one on whom that burden may be placed.⁶ In litigation, where a patentee cannot amend his claims, or add new claims, the presumption, and the rule of claim construction (claims shall be construed to save them if possible), have important roles to play. In reexamination, where claims can be amended and new claims added, and where no litigating adversary is present, those roles and their rationale simply vanish.

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.”⁷ The essence of all property is the right to exclude, and the patent property right is certainly not inconsequential. It is, nonetheless, created by a grant from the government. When a “substantial question” exists respecting the correctness of that grant, it does not conflict but coincides with the nature of the grantee’s right when the government reexamines the propriety of the grant it has made, and thereafter reaffirms the grant, substitutes a new grant (amended or new claims), or withdraws the grant in whole or in part (the last being subject to review in this court).

(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, 157 USPQ 277, 281 (COPA 1968). Review of the Ambrosio and Gray affidavits confirms the correctness of the board’s characterization as merely representing opinions unsupported by facts and thus entitled to little or no weight. See In re Piasecki, 745 F.2d 1468, 1472-1473 (Fed.Cir.1984), In re Rinehart, 531 F.2d 1048, 1052, 189 USPQ 143, 147 (CCPA 1976).

AFFIRMED.

1 . The '034 patent is involved in a civil action filed against a third party (M.D.Fla., Civil Action No. 81-1009. Cir. T-H). That action has been stayed, and an interference involving Etter and that party has been dissolved, in light of the examiner’s determination that the claims are unpatentable. Thus the outcome here could affect a civil action and two interferences.

2 . Etter filed a Rule 131 affidavit of prior inven-torship in respect of Lowell. The examiner withdrew Lowell, but held that Ambrosio in view of Azure remained sufficient to support rejection of all claims. Etter asserts that the issue on appeal is whether the claimed inventions would have been obvious under 35 U.S.C. 103 on Ambrosio in view of Azure.

3 . As intervenor, Goodfellow filed a brief on this appeal, arguing strenuously for non-application of a presumption of validity to claims undergoing examination and reexamination. His brief also supported the board’s view of the prior art and the affidavits.

4 . If a patent owner requests reexamination, but desires consideration of wider issues, e.g., prior public use or sale, he must obtain such consideration by filing a reissue application. 37 CFR 1.552; MPEP §§ 2212, 2258. The present case involves a non-patentee requestor; it should be remembered, however, that reexamination may be a boon to patentees whose patents may be thereby strengthened, and that the actual reexamination procedure itself should be the same whoever be the requestor.

5 . The inquiry occasioned by a request for reexamination is solely whether a reexamination order should issue and is not directed toward resolution of validity. The requestor’s burden is simply to show a basis for issuance of the order, a burden unrelated to that assigned in § 282. A refusal of reexamination leaves untouched the § 282 presumption to which the patent is entitled in the courtroom. Similarly, a reexamination may involve only certain claims, e.g., those in litigation, and the newly cited prior art may bear no relation to other claims, to which the presumption of validity would remain attached in future litigation involving those claims.

6 . No third party is involved when reexamination is requested by the patentee or initiated sua sponte by the Commissioner. When a third party (whether or not an alleged infringer, and whether or not suit has been filed) is the reque-stor, that party is heard only on whether “a substantial new question” exists. Absent a “substantial new question”, an alleged infringer cannot "force” a patentee back into the PTO. Contrary to indications in the concurrence, the reexamination per se of the claims is entirely ex parte. Whether a requestor, or other party, is permitted to intervene in an appeal to this court (the intervenor being thereby bound by the decision on appeal) is discretionary with this court. In all events, concentration on those instances when an alleged infringer is present at the requesting stage should not influence a decision on whether § 282 applies in the ex parte reexamination proceeding.

7 . A patent is not a "deed”, a term normally used to describe an attribute of real property.