The Board Must Provide Reasoned Explanation When Discarding Material, Unrebutted Evidence

Written by: Jae Jin Lee and Douglas B. Wentzel

CQV CO., LTD. v. MERCK PATENT GMBH

Before Cunningham, Chen, and Mayer.  Appeal from the Patent Trial and Appeal Board.

Summary: The Board erred by failing to explain why it discarded material and unrebutted evidence that a reference constitutes prior art.

CQV petitioned for PGR challenging claims of Merck’s patent, which is directed to transparent alumina flakes used as effect pigments in paints and coatings.  The specification of Merck’s patent explains that effect pigments based on alumina flakes are common and commercially available under the name Xirallic.  CQV alleged that various claims were obvious based on a particular lot of Xirallic called “Sample C” in combination with other references.  The Board found CQV failed to show Sample C qualifies as prior art and thus failed to show the unpatentability of any claim.

On appeal, the Federal Circuit held that the Board erred by failing to consider the whole record.  The court found that CQV presented “highly material and unrebutted evidence” that Sample C qualified as prior art, which the Board improperly “discarded without explanation.”  The court rejected Merck’s attempt to explain why the Board may have discarded such evidence because Merck’s arguments, while plausible, were not findings the Board made and there was no basis in the Board’s decision to infer the Board’s reasoning.  Because the Board never explained its reasoning for disregarding relevant and unrebutted evidence, the court noted “we cannot reasonably discern whether the Board followed a proper path.”  Thus, the Federal Circuit vacated and remanded, instructing the Board to carefully consider and explain whether the evidence, taken together, shows Sample C constitutes prior art.

Editor: Sean Murray