In re Hodges
882 F.3d 1107 (Fed. Cir. 2018)
Authored by Bennett Parker
Statement of Facts: Appellant Kenneth Andrew Hodges applied for a patent for a valve that drains contaminants, condensation, and other fluids that adversely affect the efficiency and function of a pressurized system (“the ’222 application”). The patent examiner held that two prior art references, U.S. Patent No. 5,532,241 to Rasmussen (“Rasmussen”) and U.S. Patent No. 3,262,464 to Frantz (“Frantz”), anticipated Hodges’s claims under 35 U.S.C. § 102(b) and that the Rasmussen and Frantz patents collectively rendered Hodges’s claims as obvious under 35 U.S.C. § 103.
Hodges’s claimed valve included a single “valve body,” downstream of which is an inlet seat and an outlet seat, two valves, and a sensor for measuring fluid pressure. Hodges’s application explains that “[t]he sensor generates a ‘signal’ 42 reflective of the fluid pressure in the chamber between the valves and transmits the signal to . . . a pressure gauge. The signal can then be compared to a predetermined limit to generate a control signal, which, in turn, can be used to control or adjust one or more of the two valves to drain fluid as appropriate. In re Hodges, 882 F.3d at 1110 (Fed. Cir. 2018) (internal citation omitted).
Rasmussen disclosed a “condensate removal device” that senses pressure levels within a system and purges condensate in response to high condensate levels. Id. A sensor within the device measures pressure changes corresponding to condensate levels in a reservoir. When such high levels are indicated, it provides a signal that causes a plunger to move away from a valve seat, thereby opening a drain path for the condensate. A sensor within the device measures pressure changes corresponding to condensate levels in a reservoir.
Frantz disclosed “valves for draining condensate from pressurized reservoirs…one valve automatic and the other, manual.” Id. at 1111. The automatic valve is activated by fluid or air pressure and a second element and seat enable it to limit the duration of draining. The combination of a piston stem and a piston head sense pressure which initiates a mechanical response; the release of a valve.
The ’222 application contains 20 claims, but the parties agree that the claims at issue on appeal are whether Rasmussen and Frantz anticipate the ’222 application. The United States Patent and Trademark Office Patent and Trial Appeal Board (the “PTAB”) affirmed the examiner’s findings that (1) Rasmussen’s unlabeled valve containing the inlet seat is properly considered a part of the drain valve body and was inherently disclosed; and (2) Frantz’s piston stem and head combination generates a signal in the form of mechanical force, similar to that of Hodges’s system. See id. at 1111–12, 14.
Procedural History: The patent examiner rejected the ’222 application under 35 U.S.C. § § 102(b) and 103 because it was both anticipated and obvious in view of two art references: Rasmussen and Frantz. Hodges appealed to the PTAB, which affirmed the examiner’s rejection of Hodges’s claims. Hodges appealed to the Federal Circuit.
Questions Presented: First, whether Hodges’s claims would have been anticipated in view of the cited references, Rasmussen and Frantz. Second, whether Hodges’s claims would have been obvious in view of the cited references, Rasmussen and Frantz.
Holdings: Reviewing both questions of law de novo, the Federal Circuit reversed the PTAB’s patentability determinations as to Rasmussen and vacated the PTAB’s obviousness rejections with regards to Frantz, remanding to the lower court for further factual findings consistent with the court’s decision.
Reasoning: Judge O’Malley, joined in part by Judge Wallach authored the Federal Circuit’s opinion. The court’s first holding rested on the assertion that the unlabeled valve depicted in Rasmussen, and therefore, the inlet seat inside, is not an “internal part of [or] contained within” the outer casing of the drain valve. Id. at 1112. Because the design clearly showed the unlabeled valve outside of the casing, the only permissible factual finding that can be drawn from Rasmussen is that the inlet seat inside the unlabeled valve is not defined by the valve body as required by the claims. The court rejected the PTAB’s claim that the positioning of Rasmussen’s unlabeled valve was similar to the positioning of the valve in Hodges’s application as simply unsupported. As such, the PTAB failed to meet its burden of showing that Rasmussen’s reference anticipated Hodges’s claims.
With regards to its second holding, the court found the Patent Office’s refusal to defend the PTAB’s anticipation finding as detrimental to the PTAB’s Frantz holding. The court also held that the PTAB’s anticipation finding was predicated on an erroneous construction of the term “signal.” By construing “signal” as “an act, event, or the like that causes or incites some action,” virtually any mechanical component within the valve drain that moves in response to the flow of fluid through the drain would be covered. Id. at 1114. While the PTAB must give terms their broadest reasonable interpretation consistent with the specification as understood by those of ordinary skill in the art, here, the court found that the PTAB’s definition was unreasonably broad. Under a more reasonable construction of “signal,” the court held that Frantz’s system could not be fairly characterized as a sensor that generates a signal, much less one that is “reflective of a pressure downstream of [the] inlet seat” and is matched against a predetermined limit, as claimed by Hodges’s ’222 application. Id. at 1115
Concurring/Dissenting Opinion: Judge Wallach agreed with the majority’s decision to: (1) reverse the PTAB’s Frantz anticipation holding and (2) vacate and remand the PTAB’s determination that the asserted claims of the ’222 application would have been obvious in view of both patents. However, Judge Wallach states that reversal of a PTAB decision may only happen in one of two rare circumstances under Federal Circuit precedent: (1) When the PTAB has committed legal error and no further factual findings are required; and (2) When the PTAB has made erroneous factual findings and only one permissible factual finding exists. See id. at 1117–18. Judge Wallach believed that the majority attempted to fit its reversal into the second of the two rare circumstances, but failed in doing so by making unsupported factual findings and by failing to demonstrate the no other factual finding would be permissible. He criticized the majority for engaging in a de novo review and exceeding its appellate authority in reversing the PTAB’s determination that Rasmussen anticipates the ’222 application by relying on an annotated version of Rasmussen’s valve which the appellant provided but was not included in the record. For these reasons, Judge Wallach respectfully dissented with the Rasmussen portion of the majority’s holding.