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Precedent, “arbitrary and capricious” decisions, and Zurko May 17, 2010

Posted by Brian Schar in Federal Circuit, General, Patent prosecution, USPTO.

Although proceedings in the USPTO of all kinds have their own idiosyncracies, they are all administrative proceedings governed by administrative law.  The Supreme Court confirmed this in Dickinson v. Zurko, which applies to the entire PTO – both the Trademark Office and the Patent Office.  Zurko requires that administrative reasoning behind particular actions not be arbitrary or capricious, and that such reasoning must be supported by substantial evidence.

Last week, the Federal Circuit handed down a decision in a trademark cancellation proceeding that has interesting implications for patent practice as well.  The TTAB denied appellant Fred Beverages’ Motion for Leave to Amend Appellant’s Petition to state new grounds of cancellation and add new classes, without submitting a fee with that motion.  The TTAB denied that motion on the grounds that no fee was submitted for the new classes to be covered by the amended Motion for Leave.  However, as the Federal Circuit pointed out, the TTAB has no stated rule that a Motion for Leave that adds classes to a cancellation action requires payment of a fee corresponding to each added class.  More importantly for our purposes on the patent side, the Federal Circuit looked to several cancellation proceedings that are freely available for public viewing via TTABVUE.  In those cancellations, the TTAB granted similar Motions for Leave and then gave the successful petitioner a set period of time to pay for the additional classes.  In the words of the Federal Circuit: “Where an agency departs from established precedent without a reasoned explanation, its decision will be vacated as arbitrary and capricious.”  The Federal Circuit did so here, remanding the case to the TTAB.

So what does this mean for patent practitioners?  Most significantly, the Federal Circuit did not hestitate to go to the documents available on the USPTO website for similar proceedings, and find the USPTO’s actions in those cases precedential with regard to the case at issue.  With regard to issues of procedure rather than law, the entire database of BPAI final decisions and of publicly-available Image File Wrapper (IFW) documents are now clearly precedential.  When appealing or petitioning a particular case, find two or more other applications in which an examiner or the Board ruled differently on a matter of procedure.  That difference may rise to the level where the PTO departed from established precedent in your particular case.  If so, that departure is arbitrary and capricious, and Zurko is clearly implicated.

Potentially more useful than the USPTO’s database of final decisions and IFWs is the practitioner’s own internal database of, and professional experience with, particular USPTO procedural actions.  For example, the PTO may have treated a certain procedural matter one way in your applications for a number of years, where that suddenly changes without a corresponding change to the MPEP or USPTO.  You will have personal knowledge of cases in which the PTO has acted differently in the past such that its new actions are a departure from established precedent, and at least one of those cases is likely to have published such that the IFW can be used to establish what that established precedent was.

Taking this tack in an appeal brief is confrontational, but an appeal is confrontational.  One can make the argument of arbitrary and capricious departure from established precedent in a non-inflammatory manner.  In addition, this argument is based in law, rather than technology, which increases the chances that the SPE and TC Director will simply pass your appeal brief up to the BPAI for a decision instead of mailing you back yet another final action in response to your appeal brief.  I will be curious to see if a case similar to Fred Beverages makes it to the Federal Circuit from the patent side of the PTO  in the near future.


1. Karen G. Hazzah - May 18, 2010


Interesting topic.

>find two or more other applications in which an examiner or the
>Board ruled differently on a matter of procedure.

Can you give an example of something that qualifies as “a matter of procedure” before the BPAI?

I can only think of a few:
o Board’s refusal to consider “new arguments” in a reply brief.
o Board’s decision to remand to Examiner rather than decide the issues on appeal.

Almost everything else I can think of that is procedural — entry of after-final amendment, withdrawal of finality, entry of an appeal brief, consideration of an IDS — is petitionable rather than appealable.

2. Brian Schar - May 18, 2010

That’s an excellent point; off the top of my head, none come to mind. I would think that the Fred Beverages case is equally applicable to petitions.

The biggest problem with petitions is that the final denial of a petition has to be appealed to a federal court and not to the BPAI. If I were in charge of the USPTO (and there is zero chance that will ever happen!), then one of the reforms I would consider is a single process for dealing with alleged PTO errors, or at least allowing final decisions on petition to be reviewed by the BPAI.

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