“Routine Optimization” Requires Articulated Reasoning

The Federal Circuit in In re Stepan vacated and remanded a PTAB decision that affirmed an examiner’s rejection of Stepan’s claims as obvious, stating that the Board “failed to adequately articulate its reasoning, erroneously rejected relevant evidence of nonobviousness, and improperly shifted to Stepan the burden of proving patentability.”¹

Stepan filed a patent application directed to herbicidal formulations containing glyphosphate salt and a surfactant system. The surfactant system comprises one or more of an dialkoxylated alkylamine, a water miscible solubilizer, and an amine oxide, the combination of which would result in the system having the desirable property of a cloud point (i.e., the temperature at which a solution becomes cloudy) above 70°C, or no cloud point.

The claims were rejected during prosecution as obvious over one reference, Pallas, which teaches a number of surfactant system components, including ingredients in Stepan’s formulation, that have a cloud point of “at least 50°C and ideally 60°C.”² The examiner supported the rejection by stating that while Pallas does not teach a cloud point above 70°C, “achieving this cloud point would be a matter of ‘optimizing the formulation’ because Pallas teaches the ideal cloud point should be above 60°C.”³ The Board affirmed the examiner’s rejection, and Stepan appealed to the Federal Circuit.

In vacating the Board’s decision, the Court found that the Board “failed to explain why it would have been ‘routine optimization’ to select and adjust the claimed surfactants and achieve a cloud point above at least 70°C.”⁴ Quoting In re Lee, the Board “must make findings of relevant facts, and present its reasoning in sufficient detail that the court may conduct meaningful review of the agency action.”⁵ A mere statement of “routine optimization is insufficient to support a conclusion of obviousness.”⁶

The Court found that the Board also erred because it disregarded evidence of nonobviousness presented by Stepan. Stepan argued that Pallas did not include all three of the claimed surfactants in any of the examples, and the closest example failed to achieve the desired cloud point of 70°C. The Board rejected Stepan’s arguments, stating that “neither example was relevant because they are ‘not comparative with Pallas’ disclosed preferred amine oxide surfactants.”⁷ The Court found that the Board’s basis for disregarding the evidence lacks support, because both examples presented by Stepan include two of the three claimed surfactants and tested for cloud point, making them relevant to whether a person of ordinary skill would have had a reasonable expectation of success.

Finally, the Court found that the Board erred in shifting the burden of proving patentability to Stepan. The Board cited case law in which a patentee claimed a range within the prior art and had to rebut a prima facie case of obviousness by showing criticality of its claimed range. However, the Court ruled that the case law did not apply for two reasons. First, the Board failed to establish a prima facie case of obviousness because it did not “adequately articulate its reasoning.”⁸ Second, while Stepan does claim a range of surfactants that overlaps with those disclosed by Pallas, Stepan also includes the limitation that the combination of the surfactants has a cloud point of above 70°C, which was not taught by Pallas. Thus, the Board erroneously shifted the burden to Stepan to show the criticality of the cloud point element.

Judge Lourie dissented, stating that the cloud point is “not a component of [Stepan’s] composition claim; it is a result, or a property.”⁹ He stated that when there is a single prior art reference, there does not need to be an express finding of reasonable expectation of success to make conventional modifications and look for improvements in some parameter.

Thus, when faced with an obviousness rejection based on routine optimization, it may be helpful to argue a lack of an articulated reason for why a person of ordinary skill would have arrived at the claimed invention through routine optimization. In addition, this decision illustrates that evidence of differences between the prior art and claimed elements or failure in the prior art to arrive at claimed elements cannot be disregarded by the PTO.