In re Lovin: The Examiner’s Answer is Too Late To Make a Proper Rejection of Dependent Claims

The Federal Circuit is considering whether to hear In re Lovin en banc, and indeed they should rehear Lovin en banc.  The Federal Circuit should defend the applicant’s right to receive a meaningful explanation of claim rejections before the applicant is required to rebut the rejections.

Lovin has received exceptional attention in the patent law blogosphere.  The facts of Lovin are discussed here at Ryan Alley’s blog.  In short, Lovin permits an examiner to wait until an examiner’s answer to explain how and why dependent claims are rejected.  What’s worse, Lovin permits the examiner to require the applicant to provide a substantive reason for patentability before the examiner explains the rejection.  There have also been prominent discussions of Lovin regarding the PTO’s compliance with administrative law at PatentlyO and at IPWatchdog.

I want to discuss Lovin from a different angle: I think that the panel decision contradicts numerous patent decisions of the Federal Circuit and its predecessor court.  The decision also undermines the value of dependent claims to both patentees and the Patent Office, thereby making the case exceptionally important.

There are four important issues intertwined in Lovin:

1. What must an examiner do to properly reject a claim?
2. Is the examiner permitted to do something less for dependent claims than for independent claims?
3. What must the applicant do to trigger the examiner’s duty to properly reject a claim, including a dependent claim?
4. If the examiner fails to properly reject claims in the final office action, how late is too late for the examiner to provide an explanation?

What Must an Examiner Do to Properly Reject a Claim?

Procedurally, the law requires that an examiner explain a rejection sufficiently to allow the applicant to know how to respond.  In Lovin, the examiner designated three references and § 103 for dependent claims, but did not make findings of fact, as required by Graham v. John Deere, to indicate which claim elements are present in which references, and which are missing.  The examiner simply indicated that the dependent claims were rejected without saying anything further about them.

It is contrary to law to require applicants to substantively rebut rejections before the examiner gives a meaningful explanation.  The requirement for the examiner to first explain the rejection derives from (a) Federal Circuit precedent on the prima facie case, which requires the examiner to explain the rejection before applicant responds (without requiring applicant to “shoot arrows into the dark”), (b)  case law on “new grounds of rejection” which requires the PTO to give the applicant a “fair opportunity to respond” to new facts and legal rationales (which, in Lovin, were untimely made in the examiner’s answer), (c) Office regulations that require that:

When a reference is complex or shows or describes inventions other than that claimed by the applicant, the particular part relied on must be designated as nearly as practicable. The pertinence of each reference, if not apparent, must be clearly explained and each rejected claim specified.

and (d) Supreme Court precedent interpreting the Administrative Procedure Act, which requires government agencies to explain the bases for their decisions.

May an Examiner Give Dependent Claims Less Attention than Independent Claims? 

Is an examiner allowed to give dependent claims less attention than independent claims?  On the surface, one is tempted to say yes.  After all, applicants are usually focused on independent claims, not dependent claims.  Also, the PTO is strapped for cash, but examining dependent claims takes up precious time and resources.  As discussed below, however, both policy and binding precedent show that claims are not inferior just because they are dependent.  Dependent claims must receive equal attention during examination.

The PTO previously tried to implement regulations almost identical to the rule that the Federal Circuit endorses in Lovin.  In January of 2006, the PTO wrote in a Notice of Proposed Rulemaking that it was proposing to delay consideration of dependent claims until the independent claims are in condition for allowance.

However, the PTO never adopted this proposed regulation, because in January 2008 the Office of Management and Budget “directed” the PTO to “remove” the proposal.[i]  Thus, in Lovin, the PTO is attempting to implement a rule almost identical to one that the Office of Management and Budget barred the PTO from promulgating.

The practical problem with the PTO’s proposal is that it fails to consider the value of dependent claims as backup strategies.  The efficiency boost that the PTO described would only occur if the examiner agrees with the applicant about the independent claims.  But, as in Lovin, examiners typically fail to agree with the applicant about independent claims.  In those cases, the failure to fully consider and address those dependent claims results in less efficiency, not more.  The prosecution of Lovin’s application has been anything but efficient.

Both Congress and the PTO have long recognized the utility of dependent claims to both inventors and the PTO.  Congress itself expressly provided for dependent claims in 35 U.S.C. § 112.  Similarly, in MPEP § 714.12, the PTO has for a long time stated the benefit of fully examining dependent claims:

Many of the difficulties encountered in the prosecution of patent applications after final rejection may be alleviated if each applicant includes, at the time of filing or no later than the first reply, claims varying from the broadest to which he or she believes he or she is entitled to the most detailed that he or she is willing to accept.

MPEP § 714.12 observes that prompt examination of dependent claims makes prosecution more efficient.  Dependent claims allow multiple examinations to proceed in parallel.  Instead of a claim being examined and amended through a series of twenty (or more) rounds of prosecution, all twenty (or more) claims are examined in parallel in a single office action.  Also, the dependent claims focus the examiner’s attention on the best prior art for the entire application, including independent claims, as required by MPEP §§ 706.02 and 904.03.

The “begin by ignoring dependent claims” policy that the PTO proposed in 2006, and seeks in Lovin, is directly contradicted by the “carefully examine dependent claims and explain their rejections to streamline prosecution” policy of MPEP § 714.12 and Rule 1.104(c)(2).  But if the PTO and Federal Circuit permit examiners to effectively ignore dependent claims until the examiner’s answer, as in Lovin, then the utility of dependent claims to both inventors and the Patent Office will be undermined.

What Must an Applicant Do to Trigger the Examiner’s Duty to Explain Rejections of Claims, Including Dependent Claims?

The answer to this question is: nothing more than file the application.  The law on the “prima facie case” makes the order of the dance clear: the examiner must lead by going first, and only then must the applicant respond.  Most recently, the Federal Circuit held that the examiner fails to make a prima facie case when “a rejection is so uninformative that it prevents the applicant from recognizing and seeking to counter the grounds for rejection.”  In re Jung, 637 F.3d 1356, 1362 (Fed. Cir. 2011).  Many in the patent bar regarded Jung as contradicting the higher standard for a prima facie case set in precedential decisions of the Federal Circuit and its predecessor court, including In re Oetiker, In re Piasecki, and Application of Warner.  Nevertheless, saying absolutely nothing about the dependent claims, as the examiner did in the final rejection in Lovin, does not even satisfy the lower standard of Jung.

Curiously, although the prima facie case clearly puts the initial burden on the examiner, Judge Dyk in Lovin repeatedly implies that the applicant failed to trigger the examiner’s duty to examine.  For example, Judge Dyk writes that throughout prosecution, Lovin “did not provide separate arguments for the dependent claims.”  He writes that “[Lovin’s] arguments for the dependent claims […] were not [well developed].”  Judge Dyk also writes that “[Lovin] declined to submit a reply to the examiner’s answer.”

Although Judge Dyk refers to these alleged failings by Lovin, the result in Lovin does not hinge on any of them.  The decision in Lovin depends on deferring to the PTO’s interpretation of its own appeal regulation (37 CFR § 41.37(c)(1)(vii)), and not on the applicant’s failure to preemptively argue dependent claims or file a reply brief.  Indeed, the clear implication of Lovin is that Lovin’s brief was defective at the time it was filed for failing to “substantively” address dependent claim rejections that the examiner had never explained—regardless of whether the examiner later tried to cure that deficiency.

The problem is that the PTO interprets 37 CFR § 41.37(c)(1)(vii) in a manner that eviscerates the obligations of examiners under Rule 1.104, the law on the prima facie case, new grounds of rejection, and administrative law requirements for agencies to explain their decisions.  In Lovin, Judge Dyk endorses an interpretation according to which, if the examiner has not explained rejections, the applicant must go first in the appeal brief, and then the examiner can explain in the examiner’s answer.  But that is not the law of the Federal Circuit.  Under binding precedent on the prima facie case (i.e. Oetiker, Piasecki, Warner, and Jung), the examiner must go first without the applicant doing anything at all.  The examiner must go first, regardless of whether the applicant preemptively argues claims, makes “well developed” arguments, and/or files a reply brief.

The decision in Lovin is exceptionally important because the longstanding assignment of the initial burden to the examiner makes perfect sense.  The applicant cannot read the examiner’s mind.  It is impossible for applicants to meaningfully rebut an examiner who is stonewalling by remaining silent.  Yet the result in Lovin allows examiners to “sit mum” and force applicants to “shoot arrows into the dark”—precisely what the prima facie case rule is designed to prevent.

When must an examiner explain a rejection?  Is a first explanation in an examiner’s answer too late?

Now that we have determined that the examiner must go first, by making a prima facie case, the question remains: when must the examiner go first?  How late is too late?  Clearly, the final rejection in Lovin, which was silent about the dependent claims, did not make a prima facie case of unpatentability.  However, the examiner’s answer did contain some discussion of the dependent claims (albeit still in a haphazard manner that does not comply with MPEP § 1207.02(A)(9) and (10)).

The examiner’s answer is far too late for an examiner to properly reject any claim, even a dependent claim.  By statute, an appeal is taken from the examiner’s “decision,” not from the examiner’s answer.  The final rejection of an application—which in Lovin contained no discussion of the dependent claims—represents the end of prosecution, not the beginning.

Lovin and its departure from established law are exceptionally important because the practical consequences of permitting examiners to remain silent until the examiner’s answer are staggering.  By the examiner’s answer, the applicant typically has received one office action, filed a response to that action, received a final office action, filed a response to that action, filed a notice of appeal, and filed a full appeal brief.  The government fees for filing the application, notice of appeal, and appeal brief total at least $2,490.  The legal fees for reviewing each of the office actions and preparing the responses could easily be $10,000.  Thus, the applicant will often have spent over $12,000 by the time that the examiner bothers to explain why most of the application’s claims are rejected.  Across the more than 100,000 patent applications examined each year, the rule in Lovin could result in a tax on the inventing community on the order of tens of millions of dollars.

Thus, although the Federal Circuit requires the PTO to provide an applicant with a “fair opportunity to respond” when the PTO raises new facts and rationales, there is nothing “fair” about waiting until an examiner’s answer to spring new facts and rationales on the applicant, and then limiting the applicant to mere attorney argument in a reply brief.  Rather, if the examiner waits until the examiner’s answer to explain how claims are rejected, a fair opportunity to respond would permit applicants to freely reopen prosecution under 37 C.F.R. § 1.111, which is all that Lovin requests here.  That remedy would place Lovin in the same position as if the examiner had fulfilled the duty to explain the rejections in the first office action.

The panel in Lovin made a number of errors that the Federal Circuit should correct by en banc rehearing, including incompatibility of the panel decision with the court’s own precedent, including In re Beaver or In re Nielsen, as well as In re Jung,  In re Stepan, and Application of Kronig.  Although the PTO is endorsing the outcome in Lovin for the admirable purpose of increasing efficiency during examination, it is not clear that efficiency will be increased.  Moreover, an examiner’s answer is too long to wait, and the wait is too expensive, to learn why and how an examiner is rejecting any claim in an application.