Too Simplistic: How the USPTO measures outcomes for ex parte PTAB appeals

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A patent applicant usually decides to appeal a rejection as a last resort because of the substantial cost and time. When the applicant decides to overlook the substantial cost and time, it is because she believes independent judges will objectively overturn at least one of (but hopefully all) the rejections. These administrative patent judges (APJs) have experience, technical backgrounds, and are independent from Examiners. So if this body of judges were to sustain Examiners’ rejections most of the time, you would think that the Examiners are doing a good job of examining applications. And if the Examiners are doing well, it would appear that the U.S. Patent & Trademark Office (USPTO) is doing well. But it’s not.

Currently, the USPTO measures decision outcomes of ex parte appeals in three different ways: affirmed, affirmed-in-part, or reversed. This is highlighted by the USPTO’s recently released statistics on outcomes of ex parte appeals for FY2017. These stats show that the Patent Trial and Appeal Board (PTAB) very frequently upholds Examiners on appeal, with a 55% affirmance rate. This rate is consistent with previous years’ affirmance rates. These affirmed rates suggest a job “well done” by the USPTO. However, the way the USPTO counts affirmances yields counterintuitive and misleading results, especially with cases involving multiple grounds of rejection. Indeed for accountability purposes, this way of measuring appeals cloaks the USPTO’s Examining Corps failures.

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The USPTO currently measures ex parte appeals in relation to the total appealed claims—not the total pending rejections. If all of the appealed claims stand rejected under at least one ground of rejection, the decision is affirmed. Thus, only one ground of rejection affirmed for the appealed claims is required for a decision to be marked affirmed by the USPTO. Under this measuring system, assuming an Examiner rejects all claims under five different grounds, the decision is marked affirmed even if the Board reverses four of the five grounds.

This way that the USPTO measures appeals undermines use of ex parte appeals data for accurate accountability of the USPTO in two ways. First, the data do not show which grounds of rejections get overturned on appeal. As we have previously pointed out in this blog, several of the individual grounds are currently being completely reversed at rates over 50%. This means that for certain legal grounds of rejection, an Examiner’s rejections are bad over half the time. This is obviously not very favorable to the USPTO. But when bad rejections get overlooked because of one affirmed rejection, any accountability for an Examiner’s bad rejections is lost.

This way that the USPTO measures affirmances of ex parte appeals skews how often Examiners are truly upheld because not all grounds of rejection are equally critical for the application to move forward. In fact, some rejections require very minor claim amendments or Terminal Disclaimers that insignificantly affect the patent protection. So any system of measuring outcomes should take into consideration this actual effect of the specific grounds of rejection to provide true accountability. However, it becomes difficult to measure accountability of examiners, art units, tech centers, etc., when trivial affirmances by the Board mask substantive affirmances.

For example, a recent decision, Ex parte Lee et al., had two grounds of rejection on appeal: obviousness and double patenting for the same claims. The Board reversed the rejection on obviousness, but because the appellant did not argue the double patenting rejection, the Board summarily affirmed the double patenting rejection. The appellant did not fight the double patenting rejection because of an intention to file a Terminal Disclaimer, which would have rendered the rejection moot. However, because of the non-substantive affirmance of double patenting, the entire decision is marked as affirmed.   This, when all three Examiners involved with this case got, in the Board’s view, the substantive legal issue of obviousness completely wrong.

The outcome for Ex parte Lee is far from what one might expect. One would expect if the appellant won on the only issue it actually argued, then that outcome would be marked as “reversed.” Even being generous, you could permit an outcome “affirmed-in-part,” considering the Examiner did get affirmed on one issue (even if the affirmed ground was not on the merits). But you would certainly never consider this decision as affirmed—the application is going to issue as a patent. However, the bizarre outcome of “affirmed” is exactly how this decision is counted and reported to the public by the USPTO.

The second way that the USPTO’s measuring system is deficient is by not showing how many of the rejections get overturned. If the USPTO only needs one of the grounds of rejection to qualify an appealed decision as affirmed, the tracking system effectively ignores the outcome on appeal of all remaining rejections. This greatly skews the data in favor of counting affirmances of appeals. In fact, because most decisions involve more than one ground of rejection, including accurate one-ground decisions with inaccurate multiple-ground decisions make the USPTO’s affirmance statistics almost meaningless. It certainly does not accurately reflect the accountability of an Examiner’s rejections.

This is also true for the other senior Examiners also involved the appeal process. Before every appealed case, an appeal conference takes place consisting of the Examiner, the Examiner’s supervisor, and another primary examiner. For the appeal to proceed to the judge panel, this appeal conference must sign off that they agree that the Examiner’s current rejections would likely be affirmed by the APJs on the Board. In other words, before the judges even hear the case, the appeal conference has the authority not to take the case to the panel of judges. The appeal conferees can instead disagree with the pending rejections by issuing a Notice of Allowance or by reopening prosecution with a new Office Action. So for a decision that makes it to the judge panel, one might assume that for any ground of rejection issued by the Examiner, the supervisor and another primary examiner agree fully with all the rejections as they stand.

But with the current way of measuring appeal decisions involving multiple issues, if only one of those grounds of rejection sticks, the Examiner and this appeal board did a “good job”—they were affirmed! Thus, the appeal conference examiners really only care about one of the rejections being “good enough” for the appeal to proceed. Because of the variety of rejections, the appeal conference examiners can be sure they pick cases that they are sure have a “good enough” rejection which will not adversely affecting their reputation.

The USPTO’s practice of measuring outcomes would not necessarily be a skewed way of measuring were there only one ground of rejection per decision. Nor would this practice be skewed if decisions with multiple grounds of rejection were properly designated as “affirmed-in-part” when the decision reverses on one ground and affirms for another. However, since most decisions involve multiple issues, the outcomes data counts one ground as being a full affirmance, overshadowing the remaining grounds.

From the way that the USPTO currently advertises their appeals statistics, the agency seems proud of its affirmance rates. This, because the USPTO’s way of measuring affirmances happens to be favorable to the USPTO.  But if you accept the USPTO’s affirmance rates, you get counterintuitive and misleading results, especially with cases involving multiple grounds of rejection. The current measuring system of the USPTO lacks the necessary granularity, and the public only gets to see a roll up of all the flawed affirmance data.

Since certain rejections are reversed more often than others, and since there is wide variability across tech centers and art units, having additional granularity on appeals is critical to drawing meaning from the publicly available data. Without a more comprehensive way of measuring outcomes based on what substantively happened in each appeal, the USPTO Examining Corps is not truly held accountable.

A more accurate way of measuring appeals is keeping track of the outcome for each ground of rejection. This is exactly what Anticipat Research Database does. An important part of Anticipat’s mission is extracting value from appeals decisions by devising an intuitive way of processing decisions.

The Anticipat research database keeps track of all the rejection outcomes for each ground of rejection in ex parte appeals, for greater precision. You can see which specific rejections are being reversed across various art units, tech centers, etc. This more accurate data may not show up as a neat pie chart, but having the data is powerfully more useful for accurately holding the USPTO accountable. It is also helpful for setting expectations for patent prosecution strategies and evaluating the strength of rejections.  With the data, you can even see, for the very first time ever, how often the Board is agreeing with the Examiner’s supervisor.

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Looking at Abstract Idea Appeals by Tech Center

Anticipat Beta Research Database recently released the tech center search filter and the tech center column in the table display. Appeals data can now be examined for trends using tech center groupings. In this post, we will showcase one example of how this might be useful using the “abstract idea” ground of rejection.

In the past 7 months, 123 decisions have been decided on the “abstract idea” ground of rejection. Here is the breakdown for the “abstract idea” statutory subject matter rejection across all tech centers.

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1600 1700 2100 2400 2600 2800 3600 3700 3900
6 1 7 9 7 2 75 13 1

Tech center 3600 is software and business method-heavy. In the immediate aftermath of the Supreme Court deciding Alice, many suspected that these types of patents/patent applications would be on the chopping block. And many examiners have sought to enforce such an approach. Small wonder, then, that this tech center leads in abstract idea appeals.

To put context to these numbers, we looked at the intake number of appeals per tech center. This intake of FY17 is only a rough comparison of the decided appeals in FY17 since it takes many months for an appeal taken in to be decided.

intake

Comparing intake of appeals and abstract idea decisions, appeals of tech center 3600 are very much overrepresented compared to the decided abstract idea appeals. With the exception of the two lowest tech centers, the appeal intake of tech center 3600 is anywhere from 2-4 times the intake of other tech centers. But tech center 3600 decided appeals are a much different story–anywhere from 5-36 times the decided appeals.

An obvious reason for this overrepresentation is that the abstract idea doctrine does not affect all tech centers equally. Tech centers 1600 and 1700, for example, are focused primarily in the biotech and chemical arts, and other judicial exceptions to statutory subject matter are more applicable (e.g., law of nature, naturally-occurring phenomenon). Other tech centers are focused on physical inventions where the abstract idea ground of rejection is theoretically less applicable. For example, tech center 2800 includes inventions in semiconductors, memory, circuits, optics and printing. And as can be seen, the ratio of abstract idea appeals in tech center 3600 to tech center 2800 is far greater than the ratio of the corresponding intake.

Another reason for the overrepresentation stems from the large number of abstract idea rejections introduced as “new.” For the relevant time period, there were 16 new rejections in this tech center alone. This number is more than any of the other tech centers’ total number of abstract idea decisions of any disposition. This shows that the abstract idea doctrine is top of mind for judges deciding these types of cases, even if the Examiner did not apply an abstract idea rejection for the appeal.

A final reason for the overrepresentation may stem from the high volatility of the abstract idea doctrine. We generally assume based on anecdotal evidence that filing for an appeal is a (comparatively) arduous alternative to working with the Examiner through argument, interviews, and making amendments to overcome rejections. Thus, appealing a case requires a level of dedication that is born of coming to an impasse with the Examiner. Often times such an impasse can take place when the law is in flux—the Examiner can hold to one position and the applicant can hold to a contrasting position. And with software-focused inventions, such as those in tech center 3600, often times the impasse is the Examiner asserting that there is nothing patent-eligible in the application. Such a position leaves little room for any other procedure but appeal.

It would be discouraging if the judges in tech center 3600 supported this abstract idea chopping block attitude reflected by some. But the outcomes data show that they do not. We previously reported that the rate that abstract idea rejections are reversed are in line with other Section 101 nonstatutory rejections: 25% wholly reversed and 27% partially reversed. As we drilled into the abstract idea rates on a tech center level, we found that the same reverse rates hold true for tech center 3600. That is, 19/75 decisions (25%) in tech center 3600 were wholly reversed and 20/75 decisions (27%) were at least partially reversed. This shows that in the face of significant abstract idea rejections in tech center 3600, judges reverse at the same rate as other tech centers.

The above discussion shows that, by using tech center-focused appeals data, a quantitative assessment of how strong an Examiner’s position for a particular ground of rejection can be deduced by comparing that ground of rejection by technology center.  While we have done this for “abstract idea” grounds in this post, this same analysis can be done for the other grounds of rejection reviewed by the PTAB.  With this information, the odds of success on appeal can be better calculated based on which technology center is examining a particular case.

 

Section 101 – nonstatutory subject matter decisions: different categories = different reversal rates

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One of the sexiest topics in all of patent law has become §101, specifically, patent-eligible subject matter. Part of the recent appeal stems from high volatility and uncertainty in the law. But not all categories of patent-eligibility grounds are in such flux. Some §101 nonstatutory grounds of rejection (e.g., reciting a propagated signal) are relatively predictable and stable while the so-called judicial exceptions are more unpredictable. So we drilled deeper into the types of §101 rejection to get a more complete picture of reversal rates. We found a big difference in the observed reversal rates of particular categories.

The following chart shows a breakdown of the past seven months of decisions on grounds of §101 – nonstatutory subject matter. Data for this chart was pulled from the past seven months using Anticipat’s research database. Anticipat keeps track of issue-specific tags to allow for better identification of sub-issues within issues. So while the Examiner and PTAB may decide a particular issue on §101 – nonstatutory subject matter grounds, Anticipat goes a step further to delineate the specific type of §101 – nonstatutory subject matter ground.

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  1. Statutory Classes

Section 101 nonstatutory rejections include the statutory class variety (e.g., does the claimed invention fall within the statutory classes? recite more than one class? claim a human?). This is otherwise known as step 1 of the Mayo/Alice framework. Of the 186 substantively decided §101 decisions since July 25, 2016, these step 1 types accounted for 38 or 25%. Twelve were wholly reversed, a reverse rate of 32%.

This higher reversal rate for classes makes intuitive sense. Administrative patent judges must understand that statutorily, patent-eligibility is broad. A process, machine, manufacture, and composition of matter originally allowed almost any human innovation at that time of the enactment of the 1952 Patent Act to be patent-eligible. As technology has since changed, not all inventions fit into this framework, such as propagated signals and software per se. But for the most part, the courts have fit inventions into these categories—from non-transitory computer readable media to engineered bacteria. The observed reversal rate indicates that judges may reverse the Examiners in an attempt to be more faithful to the statute and to case law than the Examiners are.

  1. Judicial Exceptions

The judicial exceptions to patent-eligibility, such as abstract ideas, law of natures, and natural phenomena, have surged in popularity in recent years. And the appealed decisions show it. Of the 186 decisions within the past seven months, 146 have been judicial exceptions. The most popular of the exceptions is the abstract idea.

Of the 119 abstract idea cases, 30 were wholly reversed and two were reversed in part, or a complete reversal rate of 25% and an at least partial reversal rate of 27%. This falls squarely within the overall §101 rates that we previously reported. Natural phenomena/product of nature types are slightly higher at 31% while the law of nature ground reversal rate is markedly lower at 7%.

  1. Analysis

The number of decisions for some of these categories should be more reliable as the number of decisions increase, but some take-home lessons are clear. A judicial exception rejection has a lower chance of getting reversed than the statutory rejections. The PTAB judges are likely averse to overruling an Examiner’s finding of a judicial exception, especially when there is a great deal of uncertainty in the courts.

Furthermore, law of nature rejections are very infrequently reversed. Part of this may be a lack of positive case law to specifically support law of nature rejections being erroneous. By contrast, several Federal Circuit decisions have been decided within the past year that are positive for the patentee/applicant in showing that the claims are not an abstract idea.  Because of this, the judges have more material to work with in finding a particular claimed invention passes the Alice framework.

 

Rates for New Rejections on Appeal

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Opening up a can of worms is good practice on the lake–not in front of a PTAB judge panel. But when appealing a twice-rejected patent application, a can of worms can very well be opened when the Board newly introduces rejections. These new rejections are not extremely frequent, but understanding the risk of these new rejections is an important part of deciding to take a case on appeal.

In deciding rejections on appeal, the Board has discretion to sua sponte introduce a new rejection to the pending claims. In other words, an appeal is made to the Board seeking to overturn one rejection and in return the Board slaps a different, additional rejection. The Board can also designate existing rejections as new by using a different rationale than the Examiner, but this article focuses on the purely new type of rejection.

These entirely new rejections are introduced somewhat unpredictably. Thankfully, our appeals decisions data can help predict the risks of these new rejections.

A sample of 12,376 decisions over the past four years shows that purely new rejections are relatively rarely applied (1.7%). Data was gathered using Anticipat’s beta research database. It turns out that the Board overwhelmingly prefers to introduce some grounds of purely new rejection over others. Here is the breakdown:

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As can be seen, §112(b) is the most frequent purely new rejection with 78 decisions. Second place goes to §101 nonstatutory subject matter rejections with 74. Next are all the §112(a) rejections with 29. Then obviousness with 16, followed closely by §102 anticipation with 11, and then §112(d) with 3. Finally,  there is one obviousness-type double patenting new rejection.

Some of these numbers are intuitive. As seen from a previous post on the frequency of appealed rejections, §103 rejections are on appeal in 92% of the decisions. Thus it would not be expected that too many more new §103 rejections would be applied by the Board to cases that do not already have them.

Section 101 is an increasingly more frequent new rejection. Many of the newly issued appeals decisions were for cases with appeals filed before the Supreme Court decided Alice v. CLS Bank. The Board appears to be thinking about patent-eligibility much more proactively. In addition to formally issuing a new §101 rejection, we have seen the Board suggesting in its decisions in a number of cases that the examiner consider §101 as a possible new rejection.

Also important to note, even the most frequent of these purely new rejections are fairly rare. The most frequent, §112(b), is newly introduced in only 0.63% of the cases. However, even with this low possibility, getting a new ground of rejection from the Board is still a risk practitioners should consider when taking a case on appeal.

Which rejections are most frequently appealed to the Board?

Examiners typically have a favorite arsenal of grounds of rejection to apply to an application. In other words, not all grounds of rejection are applied evenly. Therefore it is a small wonder that the types of rejections appealed to the Board are non-uniform. Knowing which types of rejections are currently getting appealed (and seeing the results of those appeals) arms the patent prosecutor with an additional weapon against the Examiner. Here is a breakdown of the types of rejections appealed to the Board.

frequency

The big winner is obviousness. In a sample, 92.31% of the cases on appeal included an obviousness rejection. This means that almost every decision on appeal had an obviousness rejection.

Second place is anticipation. In the same sample, 28.08% had a §102 rejection. Since multiple issues can be appealed simultaneously, almost every case was appealing either a §102 or a §103 rejection.

Third place is §112(b), which includes indefiniteness and omission of essential elements. 7.05% of decisions had a §112(b) rejection.

Fourth place is §112(a), which includes written description, enablement, best mode and new matter. In the sample, 6.35% had a §112(a) rejection.

Fifth place is §101 – nonstatutory subject matter. In the sample, 3.57% had a nonstatutory subject matter rejection.

Next is obviousness-type double patenting. While technically 3.32% were on appeal, many of these were not argued by the appellant, suggesting that the appellant was in fact not appealing this particular rejection. Thus, obviousness-type double patenting may be even lower on the list in terms of issues actually being appealed.

Next is §112(d), which was included in 0.24% of the decisions.

Finally are the other §101 grounds, such as lack of utility and statutory double patenting. 0.22% decided on one of these rejections.

Data was gathered using Anticipat’s beta research database. The sample of decisions consisted of 12,358 decisions from December 26, 2012 to January 9, 2017, with the various rejections selected. Decisions that included issues that were only introduced by the Board (new rejections) were then searched for and removed from the data set to only show those decisions that were previously on appeal.

Knowing which rejections get appealed shows three things. First, the types of appealed rejections show which rejections the applicant is willing to bet significant time and money on that the Examiner is wrong. Second, the data show a correlation to the number of applied rejections in Office Actions. The greater the number of appeals, the more frequently the rejection is being applied in Office Actions. Third, if different from the Office Actions, the appealed data can show the likelihood that the area of law is in flux. As we have previously discussed, rejections are not uniformly successfully appealed. Indeed, knowing the results of the different types of rejections on appeal provides a practitioner with predictive analytics to know the likelihood of succeeding on an appeal.

Non-statutory Obviousness-Type Double Patenting Decisions by the PTAB

Non-statutory obviousness-type double patenting.  It is quite a mouthful, and as just as difficult to say quickly three times fast as it is to try to understand when slogging through the relevant sections of the Manual of Patent Examining Procedure (MPEP).  While the name and analysis are complicated, the principle is not–the courts have stated that a patent applicant should not be allowed to patent the same invention merely by filing a second patent application on it later in time.

Reviewing approximately the last six months of ex parte appeals decisions by the Patent Trial and Appeal Board (PTAB), the Board considered this issue in 197 decisions.  In 37 cases, the Board reversed the Examiner’s determination for at least one claim; in 29 of the decisions, the Board’s reversal was for all claims.

The total reversal rate (14.7%) for this issue is lower than that observed over the same period in even non-statutory subject matter cases (see our most recent posts).  We suspect there are likely many reasons for this result.  Here are some possibilities:

  1. Appellants may not be contesting this issue on appeal as it can be relatively easily handled later through filing a terminal disclaimer. This is supported by the large number of summarily affirmed dispositions, meaning the Board affirmed the rejection because the applicant failed to raise any arguments on the issue.
  2. The issue is a narrow, technical one that Examiners and the Board find more black and white.
  3. For many industries (other than biotech or pharmaceuticals), extra patent term is not as commercially important, so many applicants are choosing not to incur additional cost seriously contesting this issue on appeal. Instead, they are fine with filing a Terminal Disclaimer to render the rejection moot.

Current PTAB Decisions of §101 – Nonstatutory Subject Matter

Over the past 6 months, 144 ex parte appeals decisions involving 35 U.S.C. 101 have been handed down that specifically deal with the issue of whether the claims at issue are drawn to statutory subject matter. This subject is the most rapidly evolving area of IP law today, and from our experience one of the most ambiguous in view of what seems to be an “I’ll know it when I see it” approach of the Supreme Court’s two part test set forth in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. __, 134 S.Ct. 2347 (2014).

In the 144 decisions, the Board reversed the Examiner’s finding that the claims were directed to non-statutory subject matter in 37 cases–25.7% of the time.  Of these 37 cases, 36 involved a reversal as to all claims on appeal.

Compared to the reversal rates for obviousness and novelty (see our other posts), the Board is upholding non-statutory subject matter decisions by Examiners much more often.  However, the 25% total reversal rate indicates that even in the unsettled world of section 101, the Board does not agree with the Examiners in 1 out of 4 cases.

The data indicate that the patent-eligibility provision is not being treated by the PTAB as the exception that swallows the rule, which has been the fear of many practitioners observing the steady stream of invalidations on section 101 grounds flowing out of the courts.  Instead, the data indicates that a substantial number of cases are, in its judgment, passing the two part test.

 

Obviousness Appeals before the PTAB

Experience has shown that one of the most difficult issues for patent applicants to overcome during prosecution is a finding the invention is obvious. In 2007, the US Supreme Court freed USPTO Examiners to use many different reasons that one of ordinary skill would combine the teachings of prior art references. Since then, anecdotal evidence from practice suggests that applicants are less successful in overcoming obviousness rejections.

Examiners apply obviousness rejections all the time. How does one make sense of whether an obviousness rejection is reasonable? In the overwhelming majority of cases, one of two scenarios plays out. In the first scenario, the applicant wins after it presents the Examiner with compelling arguments showing that the claims would not have been obvious in light of the applied references. In the second scenario, the Examiner wins by not withdrawing the rejection until amendments are made or forcing the applicant to abandon the application. In a small minority of the time, the case is appealed, which turns out to be one of the most significant measures of the Examiner’s prima facie case for obviousness.

The appeal is a significant measure because both sides are willing to commit significant time and resources into a position. How are patent applicants doing when it comes to reversing obvious rejections on appeal?

The past six months of ex parte appeal decisions from the Patent Trial and Appeal Board (PTAB) show relatively high reversal rates:

In 41.8% of the decisions, the Board reversed the Examiner for at least one appealed claim.

In 32.6% of the decisions, the Board reversed the Examiner for all appealed claims.

The data set included the 3998 total decisions in which 35 USC 103(a) was an issue in an ex parte appeal.  Of the total number of decisions, 1302 were reversed in whole and 369 were partially reversed.  The exact timeframe measured was from 7/25/16 – 1/7/2017. Appeals from reexamination proceedings were not included in the data.

This data indicates that where the issue is obviousness, the practitioner has better than a 1 out of 3 chance that the Board will reverse the Examiner.

35 USC 102 Reversal Rates for PTAB

The doctrine of anticipation under Section 102 is one of the most settled areas of patent law. A reference either discloses the features of a claim or it does not. True, there are nuances to the doctrine, such as inherent disclosure of the applied reference and the broadest reasonable interpretation of claim terms. But for the most part, to support an anticipation rejection, an Examiner must point to where in an applied reference the features of a claim is disclosed and the anticipation rejection should be on solid ground.

Because the doctrine of anticipation is pretty straightforward, one would expect that the frequency that an Examiner is overturned would be relatively low. But the appeals decisions of such rejections tell a surprisingly different story. Looking back at the past six months of ex parte appeal decisions from the Patent Trial and Appeal Board (PTAB) for those decisions involving at least one section of 35 USC 102 reveals that anticipation rejections are among the highest reversed rejections:

In 58% of the decisions, the Board reversed the Examiner for at least one appealed claim.

In 49% of the decisions, the Board reversed the Examiner for all appealed claims.

The data set included the 976 total decisions in which 35 USC 102 (all sections) was an issue in an ex parte appeal. A total of 481 decisions wholly reversed the Examiner on anticipation grounds, and a total of 85 decisions partially reversed the Examiner on anticipation grounds. Appeals from reexamination proceedings were not included in the data.

These data indicate that where the issue is anticipation of the claims, the practitioner has better than 50% odds of having the Board reverse the Examiner.