Successful Appeals of PTAB Decisions: In re Hodges

23 February 2018 PTAB Trial Insights Blog
Author(s): Oyvind Dahle

Obtaining a remand on an appeal from the Patent Trial & Appeal Board (PTAB) is of course a win for the Patent Owner, but may result in an ultimate loss when the case is revisited at the PTAB. The Feb. 12, 2018 Federal Circuit opinion, In Re Hodges, No. 2017-1434, (Fed. Cir. Feb. 12, 2018), highlights the importance of anticipating appellate review when developing the IPR record and choosing response strategies during patent prosecution to put the Patent Owner in the best position possible for a full reversal of the PTAB’s decision rather than a remand.

In general, it is appropriate for the Federal Circuit to reverse a PTAB decision when the Court can reach a decision on the ultimate issue of patentability without further development of the factual record. The dissent by Wallach in In Re Hodges points out the two circumstances where reversal of the PTAB decision is appropriate:

  1. When the PTAB has committed legal error and no further factual findings are required. See Ariosa Diagnostics v. Verinata Health Inc., 805 F.3d 1359, 1365-66 (Fed. Cir. 2015); or
  2. When the PTAB made erroneous factual findings and “only one permissible factual finding” exists. See Owens Corning v. Fast Felt Corp., 873 F.3d 896, 903 (Fed. Cir. 2017).

The tension between the majority, Lourie and O’Malley, and the dissent in In Re Hodges centers on the difficulty of determining when there is “only one permissible factual finding.” The particular issue that caused disagreement between the majority and the dissent was whether to remand or reverse the decision by PTAB to affirm that the Hodges application (U.S. Application No. 12/906,222) was anticipated by U.S. Patent No. 5,531, 241 to Rasmussen (“the Rasmussen patent”). The Hodges application was for a drain valve that is useful for draining contaminants, condensation, and other fluids that reduces the efficiency and function of a pressurized system, and the claim element at issue recites:

“A drain valve comprising:

  1. a valve body, wherein said valve body defines an inlet seat and a first outlet seat downstream of said inlet seat… .” (emphasis added)

The Examiner found that the “inlet seat” defined by “a valve body” as required by claim 1 in the Hodges application was inherently disclosed in Figure 7 (shown below) from the Rasmussen patent. To make this finding, the Examiner had to assume that the unlabeled valve (colored red in the figure below) is part of the invention, and that the valve is inside the outer casing of the valve assembly (labeled 11, and colored yellow in the figure below).

Figure 7 as annotated with color by Hodges’ counsel:


The Federal Circuit found that, if the inlet seat in Rasmussen is assumed to be within the valve region (red) then it cannot be “define[d] by the valve body” as required by the claims because the valve region (red) is outside the outer casing (yellow) of the valve assembly. According to the majority, the “inlet seat” of Rasmussen “is different in the only respect that is relevant to the claims at issue – i.e., it is not an internal part of or contained within the valve body.” Majority Op. 9.  Thus, the Federal Circuit reversed the Board’s decision that the Hodges application was anticipated by Rasmussen because the “only permissible finding that can be drawn from Rasmussen is that it does not disclose the claim limitation at issue.”  Id.

The dissent disagrees with the majority’s reversal of the decision to affirm the anticipation by Rasmussen rejection. According to the dissent, both the majority and the PTAB make assumptions about the relative position of the inlet seat and the valve body. Dissenting Op. 5-6.  Further, the dissent states that the only support for the majority’s finding is the counsel’s off record annotation of an in record figure, which according to the dissent should not be allowed into the record in the first place. Dissenting Op. 4.  Thus, the dissent asserts that the PTAB decision should have been remanded for further development because the majority’s finding is not the only one permissible.  Dissenting Op. 6.

It is difficult to imagine a circumstance when a factual finding is the only one permissible according to the dissenting opinion. As pointed out by the majority opinion, the finding by PTAB that the unlabeled valve is contained inside the housing is “plainly contrary to the only permissible factual finding that can be drawn from Rasmussen itself.” Majority Op.  fn. 7. Further, this case was from the relatively unambiguous field of mechanical engineering, and a Patent Owner in the biological field, where the factual findings can be more susceptible to different interpretations, would face additional hurdles when trying to secure a reversal of the PTAB’s erroneous factual finding.  Given the above, a Patent Owner would be wise to ensure that the record is robust during prosecution.  Every stage of prosecution should be seen as an opportunity to anticipate potential issues on appeal and to enter evidence into record that will allow the Court to find the “only one permissible factual finding” and reverse the PTAB decision.

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