In re Dbc

• Decision Date: 03 November 2008
• Docket Number: No. 2008-1120.,2008-1120.
• Citation: 545 F.3d 1373
• Parties: In re DBC.
• Court: U.S. Court of Appeals — Federal Circuit

545 F.3d 1373

In re DBC.

No. 2008-1120.

United States Court of Appeals, Federal Circuit.

November 3, 2008.

Lawrence M. Jarvis, McAndrews, Held & Malloy, Ltd., of Chicago, IL, argued for appellant. With him on the brief were Yufeng Ma and Consuelo Garcia Erwin.

Thomas V. Shaw, Associate Solicitor, Office of the Solicitor, United States Patent and Trademark Office, of Arlington, VA, and Michel S. Raab, Attorney, Appellate Staff, Civil Division, United States Department of Justice, of Washington, DC, argued for the Director of the United States Patent and Trademark Office. With them on the brief were Sydney O. Johnson, Jr., Acting Solicitor; Mary L. Kelly, Associate Solicitor; Gregory G. Katsas, Assistant Attorney General; and Kelsi Brown Corkran, Attorney.

Before LINN and DYK, Circuit Judges, and STEARNS, District Judge.^*

LINN, Circuit Judge.

DBC, LLC ("DBC") appeals from a final decision of the United States Patent and Trademark Office Board of Patent Appeals and Interferences ("the Board"), which affirmed the examiner's rejection of all pending claims as obvious under 35 U.S.C. § 103. Ex parte DBC, No.2007-1907, 2007 WL 2433106 (B.P.A.I. Aug. 24, 2007) ("Decision"). Because substantial evidence supports the Board's determination that the claims would have been obvious, and because DBC has waived challenging the appointment of the administrative patent judges who presided over its appeal, we affirm.

I. BACKGROUND

This case involves juice made from the fruit of the mangosteen tree (known scientifically as the Garcinia mangostana L. tree), an exotic plant thought to originate from Southeast Asia. The mangosteen fruit, which is botanically unrelated to the mango, is reputed to be one of the best tasting of all tropical fruits. U.S. Patent No. 6,730,333 ("the '333 patent"), col. 1, ll. 22-23. The '333 patent states that the pericarp or rind of the mangosteen fruit— although very bitter—is known in folk medicine to treat conditions such as intestinal and skin ailments. Id., col. 1, ll. 33-34, 48-53. As a result of its use in folk medicine, the medicinal properties of the mangosteen tree have been studied in numerous pharmacological and clinical studies. Id., col. 1, l. 58 — col. 2, l. 18. According to the patent, these studies have isolated in the mangosteen tree and its fruit chemical constituents known as xanthones, biologically active compounds that are receiving increased attention as potentially able to provide a variety of health benefits. Id.

DBC is the owner of the '333 patent, which issued on May 4, 2004. The patent is directed to a "nutraceutical composition[] comprising a mixture of the pulp and pericarp of the mangosteen fruit." Id., col. 1, ll. 11-13. A nutraceutical is defined in the patent as "any compound[] or chemical[] that can provide dietary or health benefits when consumed by humans or animals." Id., col. 3, ll. 59-61. Claim 1 is representative of the invention:

1. A nutraceutical beverage comprising:

pericarp from fruit of a Garcinia mangostana L. tree; a first juice from fruit of a Garcinia mangostana L. tree; and at least one second juice selected from the group consisting of fruit juice and vegetable juice.

On October 14, 2004, the United States Patent and Trademark Office ("PTO") granted a third party's request for ex parte reexamination of the '333 patent. During reexamination, the examiner rejected all claims of the '333 patent as obvious over a combination of seven prior art references: (1) Japanese Patent 11043442 ("JP '442"); (2) Japanese Patent 08208501 ("JP '501"); (3) James A. Duke & Judith L. duCellier, CRC Handbook of Alternative Cash Crops (1993) ("Duke"); (4) J.F. Caius, The Medicinal and Poisonous Plants of India (1986); (5) Keigo Nakatani et al., Inhibition of Cyclooxygenase and Prostaglandin E₂ Synthesis by y-mangostin, a Xanthone Derivative in Mangosteen, in c6 Rat Glioma Cells, 63 Biochemical Pharmacology 73 (2002); (6) K.R. Kirtikar & B.D. Basu, Indian Medicinal Plants (1999); and (7) Othman Yaacob & H.D. Tindall, Mangosteen Cultivation (1995) ("Yaacob"). Of these seven references, JP '442 was the only reference not before the original examiner who found the claims of the '333 patent application patentable.

In response to the examiner's rejection of the claims during reexamination, DBC submitted three declarations pursuant to 37 C.F.R. § 1.132 to provide objective evidence of nonobviousness. These declarations attempted to demonstrate the success of the commercial embodiment of the patented invention, known commercially as XanGo™ juice. The examiner was not persuaded by DBC's evidence, however, and following a telephonic interview, made the rejection final.

DBC appealed the examiner's final rejection to the Board. The Board agreed with the examiner that the seven prior art references in the record rendered obvious all pending claims. The Board also concluded that DBC's proffered evidence of commercial success was not sufficient to overcome the prima facie showing of obviousness. As a result, the Board affirmed the examiner's rejection of the pending claims as obvious under 35 U.S.C. § 103.

DBC timely appealed. We have jurisdiction under 28 U.S.C. § 1295(a)(4)(A).

II. DISCUSSION

A. Standard of Review

A claimed invention is unpatentable if the differences between it and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the pertinent art. 35 U.S.C. § 103(a); see also generally KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 127 S.Ct. 1727, 167 L.Ed.2d 705 (2007). The ultimate determination of whether an invention would have been obvious is a legal conclusion based on underlying findings of fact. In re Dembiczak, 175 F.3d 994, 998 (Fed.Cir.1999), abrogated on other grounds by In re Gartside, 203 F.3d 1305, 1316 (Fed.Cir.2000). We review the Board's ultimate determination of obviousness de novo. Id. We review the Board's underlying factual findings for substantial evidence. Gartside, 203 F.3d at 1316.

B. Analysis

DBC challenges the Board's decision on three primary grounds.¹ First, DBC contends that the Board erred in finding a prima facie case of obviousness based on a substantial new question of patentability. Next, it contends that even if the Board properly found a prima facie case of obviousness, it erred by concluding that the submitted evidence of commercial success was insufficient to rebut the prima facie case. Finally, DBC argues that even if the Board correctly affirmed the examiner's rejection of the claims as obvious, its decision must nevertheless be vacated because two members of the panel that heard the appeal were unconstitutionally appointed. We address each contention in turn, beginning with DBC's challenge under the Appointments Clause.

1. Appointments Clause

DBC argues that regardless of the merits of the underlying rejection, the decision of the Board must be vacated because two of the administrative patent judges on the panel were appointed unconstitutionally.² The government counters that DBC waived this issue by failing to raise it either before the Board or in its opening brief in this appeal.³ We agree with the government that DBC waived the issue by failing to raise it before the Board.

In an article published in 2007, Professor John F. Duffy of the George Washington University Law School contended that legislation enacted in 2000 and delegating the power to appoint administrative patent judges to the Director of the PTO ("the Director") instead of the Secretary of Commerce ("Secretary") was constitutionally infirm under the Appointments Clause, U.S. Const. art. II, § 2, cl. 2. See John F. Duffy, Are Administrative Patent Judges Constitutional?, 2007 Patently-O Patent L.J. 21, 21 (2007). Professor Duffy argued that the Director may not constitutionally be delegated the power to appoint administrative patent judges, who are "inferior Officers" in the words of the Appointments Clause, because the Appointments Clause vests that authority only to "the President alone, in the Courts of Law, or in the Heads of Departments." Id. at 21-25. DBC relies upon Professor Duffy's theory here in arguing that because the administrative patent judges were unconstitutionally appointed, the Board's decision must be vacated. As noted above, DBC did not raise its objection to the manner of appointment to the Board itself. The threshold question thus presented is whether its failure to do so resulted in a waiver of the challenge.

It is well-established that a party generally may not challenge an agency decision on a basis that was not presented to the agency. See Woodford v. Ngo, 548 U.S. 81, 90, 126 S.Ct. 2378, 165 L.Ed.2d 368 (2006) ("As a general rule ... courts should not topple over administrative decisions unless the administrative body not only has erred, but has erred against objection made at the time appropriate under its practice.") (quoting United States v. L.A. Tucker Truck Lines, 344 U.S. 33, 37, 73 S.Ct. 67, 97 L.Ed. 54 (1952) (emphasis omitted)). In L.A. Tucker, for example, the Interstate Commerce Commission approved an application to extend a motor carrier route. An examiner of the agency recommended that the application be granted, and a division of the Commission approved the recommendation. L.A. Tucker, which had opposed the application, requested, but was denied, reconsideration by the full Commission. L.A. Tucker then petitioned for further relief, which was also denied. It then filed suit in district court challenging the agency's grant of the application. Before the district court, L.A. Tucker raised for the first time the argument that the Commission's action was invalid because the examiner had not been properly appointed pursuant to the Administrative Procedure Act. The district court permitted L.A. Tucker to make the argument, and invalidated the agency's action on that basis.

The Supreme Court appeal raised the...