IN RE: HODGES: February 12, 2018.  Before Lourie, O’Malley, and Wallach.

Takeaway:

• While the “broadest reasonable interpretation” standard is broad, it does not give the Board an unfettered license to interpret the words in a claim without regard for the full claim language and the written description.

• The Board must explain its factual conclusions so as to enable the appellate court to verify whether those conclusions are indeed supported by ‘substantial evidence’ contained within the record.

Procedural Posture:

Appellant Hodges appealed the Board’s affirmance of the examiner’s rejection of all claims as anticipated and/or obvious. The CAFC reversed the Board’s anticipation determinations, vacated its obviousness determinations, and remanded for further proceedings.

Synopsis:

• Invalidity – Anticipation: The CAFC disagreed with the Board that an unlabeled valve disclosed in a cited reference, Rasmussen, is connected to, and therefore allows or prevents flow into an inlet port, as required by the disputed claim. The CAFC further rejected the notion that the seat of the unlabeled valve would be an internal part of and contained within the outer casing of a drain valve. The CAFC found that these findings were unsupported by substantial evidence, because the drawing cited as a basis for the rejection showed that the valve is external to and outside Rasmussen’s casing. Moreover, the CAFC disagreed with the “similarity” reasoning provided by the Board, and found that even if Rasmussen’s unlabeled valve is ostensibly similar to the relevant claim feature in some respects, it is different in the only respect that is relevant to the claims at issue, namely, whether it discloses a contained or internal portion within the valve body. Regarding the second piece or prior art cited by the Board, Frantz, the CAFC reasoned that the Board’s anticipation finding is predicated on an erroneous construction of “signal,” because the Board’s construction is inconsistent with the application’s written description. Quoting its prior decision in TriVascular, Inc. v. Samuels, 812 F.3d 1056, 1062 (Fed. Cir. 2016), the CAFC held that“[w]hile the broadest reasonable interpretation standard is broad, it does not give the Board an unfettered license to interpret the words in a claim without regard for the full claim language and the written description.”

• Invalidity – Obviousness: The CAFC reversed the Board’s obviousness determination, because the Board did not explain how Rasmussen’s drain valve assembly could be modified as required by the rejected claim. The CAFC required of the Board to explicate its factual conclusions, enabling the appellate court to verify readily whether those conclusions are indeed supported by “substantial evidence” contained within the record. According to the CAFC, the Board failed to provide sufficient explanation to allow such review.

Judge Wallach, concurring-in-part and dissenting-in-part:

• Invalidity: Judge Wallach found that the majority opinion went too far in reversing the Board’s anticipation finding with respect to Rasmussen. According to Judge Wallach, when an agency fails to make requisite factual findings or to explain its reasoning, the proper course, except in rare circumstances, is to remand to the agency for additional investigation or explanation. By reversing the Board’s determination that Rasmussen anticipates the asserted claims, the majority engages in the very de novo inquiry against which the Supreme Court has cautioned, thereby exceeding its appellate authority. Judge Wallach further reasoned that, because neither the majority nor the Board supported their assumptions, which are already mutually exclusive of one another, joining any of the two factual assumptions would be improper.