In Icon, the Federal Circuit held that the Patent Trial and Appeal Board was permitted to incorporate the determinations and reasoning of an examiner by reference, but that it erred by relying on examiner determinations that did not make factual findings supported by adequate analysis or record evidence.
Strava is the owner of a patent directed to methods and systems for controlling an exercise device using a USB compatible portable remote. Icon challenged the patent in a pre-AIA inter partes reexamination. During the course of reexamination, Strava amended the patent to add 62 new claims. All of the claims were rejected by the examiner as obvious over the prior art. Strava appealed the rejection to the PTAB, which affirmed. Strava appealed again to the Federal Circuit.
On appeal, Strava argued that the Board erred by incorporating the examiner’s opinion by reference and affirming the examiner’s conclusions with little further discussion or independent analysis. The Federal Circuit upheld the Board’s right to rely on incorporation by reference. It is commonplace for a reviewing body within an agency to adopt a fact-finding body’s findings of fact. The Board need only identify the material with sufficient particularity so that it is clear what was incorporated, and where it was found. On appeal that material is treated as if it were a part of the reviewing body’s opinion.
But the Federal Circuit took issue with particular incorporations by reference in this case. With respect to some of the claims at issue, the Board rejected the patentee’s arguments as being the same as those “discussed above,” where the Board’s opinion provides no earlier discussion. In several places where the Board relied on the examiner’s findings and incorporated them by reference, the examiner had merely incorporated by reference the challenger’s arguments without independent analysis or conclusions. The Federal Circuit held that these incorporations fell short of the Board’s requirement to support findings of obviousness with reasoned analysis. Incorporation by reference cannot transform attorney argument into findings of fact.
Not all of the Board’s findings were rejected by the Federal Circuit. Where the Board conducted its own analysis of the rejected claims, its findings of fact were affirmed. Where the Board incorporated portions of the examiner’s conclusions by reference, and the examiner had made the requisite findings of fact based on adequate evidence, the Board’s findings were also affirmed. While the court stated that it was preferable for the PTAB to provide its own reasoned explanation, where the Court could discern that the examiner, and therefore the Board, had performed at least minimal analysis with respect to its determination of obviousness, its factual findings and legal conclusions could be affirmed.
Key Takeaway: The Federal Circuit encourages the PTAB to perform independent analysis of all matters before it, even where the Board acts as a reviewing body rather than a fact-finding one. However, a Board’s conclusions which merely incorporate by reference the conclusions of another fact-finding body within the agency will be affirmed if the underlying conclusions are supported by substantial evidence.