The Court of Appeals for the Federal Circuit had recent occasion to remind the U.S. Patent and Trademark Office (“USPTO”) to be rigorous in its examination of patent applications. Patent practitioners should take note of In Re: Stepan Company and use its teachings to rebut improper rejections.
Stepan had filed a patent application claiming a water-based herbicidal concentrate including an herbicide (glyphosate salt) in solution with a surfactant system having a “cloud point” above at least 70°C. Surfactants are known to enhance glyphosate’s herbicidal efficacy by providing better adherence to plant leaves, and a high cloud point (the temperature below which a solution becomes cloudy due to the surfactants becoming insoluble) facilitates production of the herbicidal concentrate.
Stepan attributed its desirable cloud point to the unexpected synergy of three ingredients of its surfactant system and their specified quantitative ranges.
The patent examiner rejected Stepan’s application as obvious over a previous patent to Pallas, even though Pallas does not teach a formulation with the same ingredients or claimed quantitative ranges, and fails to teach a cloud point above 70ºC.
The examiner took a shortcut familiar to many patent practitioners: Rather than finding Stepan’s invention in the prior art, the examiner concluded that it would be “routine optimization” to select and adjust the surfactants to the claimed range since (a) Pallas teaches that the surfactant component comprises “any combination of surfactants,” and (b) achieving a cloud point above 70ºC would be a simple matter of optimizing such a formulation since Pallas teaches that the ideal cloud point should be above 60ºC.
The Patent Trial and Appeal Board (“Board”) affirmed the rejection by adopting the examiner’s argument and determining that Stepan failed to rebut the examiner’s prima facie case of obviousness.
The Federal Circuit disagreed, vacated the Board’s decision, and remanded, finding that “the Board failed to adequately articulate its reasoning . . . and improperly shifted to Stepan the burden of proving patentability.” The opinion makes several noteworthy points.
First, even when an obviousness rejection combines multiple embodiments from a single prior art reference, the rejection still requires a motivation to make the combination and a reasonable expectation that such a combination would be successful.
More specifically, the court said in a footnote that “Whether a rejection is based on combining disclosures from multiple references, combining multiple embodiments from a single reference, or selecting from large lists of elements in a single reference, there must be a motivation to make the combination and a reasonable expectation that such a combination would be successful, otherwise a skilled artisan would not arrive at the claimed combination.”
Second, when rejecting a claim for being a mere “routine optimization” of the prior art, the USPTO must explain why it would have been routine by presenting fact-based reasoning “in sufficient detail that the court may conduct meaningful review of the agency action.” Citing its own precedent, including the Sunstein firm’s victory in Arendi S.A.R.L. v. Apple Inc., the Federal Circuit held that the USPTO falls short when it states a bare conclusion without providing a rationale for why a person of ordinary skill in the art would have arrived at the claimed invention through routine optimization. In Stepan, the Board failed to explain why it would have been “routine optimization” to select and adjust the claimed surfactants to achieve a cloud point above at least 70ºC, and its rejection was “insufficient to support a conclusion of obviousness.”
Third, when making an obviousness rejection the USPTO must articulate why a person of ordinary skill in the art would have had a reasonable expectation of success. To support this expectation, “one must be motivated to do more than merely to vary all parameters or try each of numerous possible choices until one possibly arrived at a successful result.”
Here, Pallas’s teaching that “the surfactant component comprises any combination of surfactants” and that “the ideal cloud point should be above 60[ºC]” does not tell us that a person of ordinary skill in the art would have had a reasonable expectation of success, and fails to meet the required standard. The USPTO failed to explain why a person of ordinary skill in the art would have selected the claimed combination of surfactants, and why that person would have reasonably expected a cloud point above 70ºC.
Fourth, the USPTO fails to establish a prima facie case of obviousness where it fails to articulate its reasoning. As patent practitioners know, the USPTO bears the initial burden of proof in rejecting a patent claim, but the burden shifts to the applicant to rebut the rejection once the USPTO establishes a prima facie case. In Stepan, the examiner and the Board attempted to shift to Stepan the burden of showing the criticality of Stepan’s claimed ranges. That shift is inappropriate, said the Federal Circuit, where the USPTO failed to articulate its reasoning and thus failed to establish a prima facie case.
Finally, arguments by USPTO lawyers on appeal do not cure failures by USPTO examiners or the Board even if the court finds, as it did in this case, that the lawyers’ arguments might have merit. The court “may not accept appellate counsel’s post hoc rationalization for agency action.”
Despite its victory at the Federal Circuit, Stepan is not out of the woods just yet. The panel majority acknowledged that the arguments made by the USPTO’s appellate counsel could be relevant to assessing motivation to combine and reasonable expectation of success. Moreover, Judge Lourie argued in dissent that the recited 70ºC cloud point is not a limitation of Stepan’s claim that must be considered by the examiner, but is a result or a property included only for the purpose of distinguishing Stepan’s claim from the prior art.
Stepan should be prepared to face those issues on remand. The court may have given the USPTO a road map for saddling Stepan with a rejection that will stick.