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How Will the PTO Respond to Therasense?

May 31, 2011

Last week, the Federal Circuit issued its decision in Therasense v. Becton, Dickinson. The case did not exactly come out the way the PTO wanted.

In its amicus brief in the case, the PTO argued, quite sensibly, that the main cause of the problems dealing with inequitable conduct was that the Federal Circuit simply didn’t follow its own law. Although the court had quite forcefully stated in its seminal 1988 Kingsdown opinion that inequitable conduct required proof of specific intent to deceive the PTO, over time “specific intent” had come to mean something akin to negligence.

Regarding the materiality prong of the test, the PTO argued that its own Rule 56 standard for materiality is the correct one. In its current iteration, the Rule 56 standard is as follows:

(b) Under this section, information is material to patentability when it is not cumulative to information already of record or being made of record in the application, and

(1) It establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim; or

(2) It refutes, or is inconsistent with, a position the applicant takes in:

(i) Opposing an argument of unpatentability relied on by the Office, or

(ii) Asserting an argument of patentability.

A prima facie case of unpatentability is established when the information compels a conclusion that a claim is unpatentable under the preponderance of evidence, burden-of-proof standard, giving each term in the claim its broadest reasonable construction consistent with the specification, and before any consideration is given to evidence which may be submitted in an attempt to establish a contrary conclusion of patentability.

The Federal Circuit, however, held that it was exactly this standard for materiality that led to the problems with inequitable conduct. Ruling that it is not bound by PTO rules, the court chose a much stricter “but-for” materiality standard.

What will the PTO do?

The Therasense case dealt with the patent infringement defense of inequitable conduct, while PTO Rule 56 deals with the duty of disclosure to the PTO by patent applicants. While these two issues are inextricably linked, with the defense flowing from how applicants undertake their duty of disclosure, they are two separate issues. The PTO has indicated that it is studying the decision and will issue guidance to applicants soon. It is possible that the PTO could simply keep the Rule 56 standard for applicant disclosures and permit the Federal Circuit to use a different standard for violations of the duty. This could lead to a confusing hodge-podge of standards.

The stick (some would argue the in terrorem pressure) that forces applicants to follow the PTO’s duty of disclosure is the remedy for inequitable conduct, the holding of a patent or patent family to be unenforceable, plus possible attorneys’ fees and the like. By making it much more difficult to obtain such a remedy, the PTO’s rule would seem to be less burdensome and fearful. The PTO could still sanction attorneys for failure to comply with Rule 56, but the Office readily admits that it does not have the resources to adjudicate and enforce these issues.

Then, there’s the issue of whether the decision is indeed final. Perhaps the case will be appealed to the Supreme Court. It seems unlikely that the Court would agree to hear the case, but in any event, even that decision would not be made until early fall or later. If the Court does hear the case, it could be another year before a decision.

With these issues in mind, the question remains: what will the PTO do?

Posted in Court Decisions, Federal Circuit, PTO Rules, US Patent & Trademark Office | 4 Comments »

Here We Go Again

February 22, 2011

In 2007, the PTO attempted to jam through a set of rules that would severely limit the number of claims in patent applications and that would severely limit the number of Requests for Continued Examination (RCEs) and continuing applications. After a long, protracted fight where a court determined that the PTO did not have authority to implement such rules, the new PTO administration realized the error and dropped the rules.

The new PTO administration under Director Kappos believed that the problem with too many RCE filings is the fault, at least in part, of the examiners. The PTO sought to assuage the problem of too many RCE re-files by making it less advantageous to examiners to churn applications. This change was implemented by count reform where examiners get less credit for examining RCEs than for new applications. Unfortunately, it does not appear that RCE filings have been reduced in any appreciable way.

It must be time to eliminate RCEs by statute! Cecil Quillen, Jr., an IP Institute Research Fellow at the University of Richmond and former general counsel of Eastman Kodak, advocates this position in a letter to the editor of the New York Times (although he did not appear to write the letter on behalf of his current or former employer).

In his letter, Mr. Quillen argues that the problems at the PTO are not the result of insufficient number of examiners or inadequate funding. Instead, he believes that the practice of patent applicants “refiling” patent applications is the problem with the U.S. patent system as it imposes so much rework on the patent examiners. He cites statistics that 42% of applications filed during FY2010 were simply re-filed applications. Elimination of re-filed applications will increase PTO resources for original applications by more than 70% without the need to hire additional examiners and will increase patent quality as examiners will only need to focus on originally filed applications. The adoption of the Senate patent reform bill, S. 23, will somehow aggravate this problem.

Response

I wonder if banning RCEs and continuing applications will also cure cancer. If it’s so easy, why didn’t someone else think of this earlier. Let’s look at some typical cases:

A patent applicant files a new patent application with a set of claims that the applicant believes to be novel and non-obvious, and important to its business. Some time later, the applicant receives an office action. The applicant still believes that the invention is patentable as written and uses arguments and amendments to convince the examiner to that effect. Given our US adversarial system, we are told to fight for what we believe we are entitled to.

The examiner issues another office action, usually final, where the rejections are now more focused and the issues are narrowed. The applicant now agrees to narrow the claims. The examiner, however, indicates that such claim amendments “raise new issues” and won’t be considered after a final office action. In such cases, the applicant has no choice but to file an RCE to get the examiner to consider these amendments. Under Mr. Quillen’s system, the application must instead be abandoned.

By the time the examiner reviews the RCE, he does not have to “re-work” the application from scratch. He has already done a search (although it may need to be updated). The issues have been focused and narrowed. He is not working on a blank slate. Thus, examiners should get less credit for examining RCEs; they don’t require as much work as original filings. I don’t know where Mr. Quillen got his 70% number, but it is clearly an exaggeration.

Or, perhaps the applicant had amended some of the claims after the first office action, but kept others as originally filed. The final office action allows some of the amended claims, but not others. Is the applicant stuck with the allowed claims or can he file a continuing application to continue to prosecute the rejected claims?

The US also has a fairly unique system of requiring applicants to submit material prior art, such as foreign search reports, to the PTO. The applicant has a duty to submit such information during the entire pendency of the application. A patent application is pending from the time it is filed until it issues or is abandoned. Applicants will sometimes get foreign search reports after an application has been allowed. The only way to get this art considered by the examiner is to file an RCE. To permit the patent to issue without consideration of the art in the search report would cast a cloud over the patent. This situation is set to get worse when the Supreme Court changes the standard for challenging patents based on prior art that has not been considered by the examiner.

One answer to these problems is to conduct examiner interviews, early and often, to get applicants and examiners to agree on allowable subject matter early in the prosecution process. I am a huge proponent of interviews and believe that they nearly always advance prosecution. That being said, however, too often examiners will be non-committal. This is especially true for junior examiners. Junior examiners do not have authority to allow claims without review by a senior examiner or supervisor. Thus, examiner interviews with junior examiners require a senior examiner with such authority to also be present. The problem is that the senior examiner has his or her own docket and often is not familiar with the application and issues or prepared for the interview. Such interviews can be frustrating and maybe even unhelpful.

Situations can also arise where an applicant is required to present evidence to show non-obviousness of the invention. Such evidence can include comparative data, sales information, third party declarations, and others. Applicants usually do not know that such information will be required when they first file an application. Once the issue arises during prosecution, there may not be sufficient time to acquire the information prior to a final office action. An RCE or continuing application can be filed to permit time to acquire and present this evidence.

It is unclear from his brief letter what Mr. Quillen thinks about restriction/divisional practice. This is also a form of “re-work” or re-filing that is not the fault of the applicant.

The bottom line is that the patent community was rightfully outraged when the 2007 PTO rules package included a severe restriction on RCE/continuation filings. I believe that we should work with examiners to reduce RCE churning by permitting some “new issues” to be considered after a final office action.

This is simply another example of using the media to inflame public opinion on a complicated issue by making exaggerated claims.

Patent Prospector also has a response to Quillen’s letter.

Posted in Patent Reform, PTO Rules | 5 Comments »

Are You a Small Entity?

August 9, 2010

Under PTO rules, a “Small Entity” is entitled to pay certain PTO fees associated with patent prosecution at a reduced rate, usually 50%. As the PTO raises filing and post-issuance fees, it is important to determine just who qualifies as a Small Entity.

In the early 1980s, Congress substantially raised many of the PTO fees associated with patent prosecution and introduced some new fees that had not previously been charged, such as issue fees and maintenance fees. To help off-set the burden this would cause for smaller or non-profit parties, Congress also introduced the Small Entity Status.

PTO rules define a Small Entity as an individual inventor or inventors, a small business concern, or a nonprofit organization. In order to qualify as one of these three types of entities, none of the rights associated with a patent or patent application may have been assigned or licensed to any party that would not qualify for Small Entity Status, nor must there be any obligation on the part of the small entity to make such an assignment or license. All of the rights in the patent or patent application must be held by a small entity.

In other words, IBM cannot set up a small holding company for all of its patents in order to qualify for Small Entity Status if it wishes to retain any rights in the patents. Nor can IBM pay Small Entity Fees and wait until the patent issues to assign it to the company if the inventor(s) had an obligation to assign the invention to the company at the time of filing.

An individual inventor is anyone who has not assigned his patent application to a business or other organization. The rules define a Small Business Concern as a company having fewer than 500 employees. The rules define a Nonprofit Organization as a university, 501(c)(3) organization, or a scientific or educational organization under any state law or in a foreign country. If an individual inventor, small business concern, or nonprofit organization licenses the patent or patent application to a company that doesn’t qualify for Small Entity Status, the full price fees must be paid at the PTO.

Previously, the PTO required the applicant or assignee to sign a verification of Small Entity Status. Now, the simple written assertion of such status or even the payment of Small Entity Fees is sufficient. This puts more of the burden on the patent applicant and the patent attorney to verify Small Entity Status.

If a small entity pays large entity fees, the small entity may request a refund of the overpayment. Conversely, if Small Entity Fees are paid by an entity that is actually a large entity, it can usually be corrected by simply paying the required deficiency, if the incorrect amount was paid in good faith. The rules do warn, however, that fraudulently paying Small Entity Fees when the applicant is not entitled payment of such fees can result in the resulting patent being held unenforceable due to inequitable conduct.

The PTO notes applicants have a contiuing duty to conduct a thorough investigation of the facts surrounding a claim of Small Entity Status. The facts should especially be revisited at the times of paying the issue fee and maintenance fees. For example, a patent issued to a Small Entity may have been licensed to a non-small entity between the time of its issuance and the time to pay a maintenance fee, or the company itself might have grown to more than 500 employees, making Small Entity Status inappropriate.

Micro-Entity

The patent reform bills pending in Congress have provisions for a new entity called a “micro-entity” that would pay certain fees at a 75% reduction of the normal amount. To qualify as a micro-entity, certain conditions must be met.

For unassigned applications, the entity must not include any inventors that have been named on 5 or more patent applications. Thus, “micro-entities” are newer inventors. The application must not be licensed or the inventors must not be legally obligated to license or assign the application. Each inventor must have an income of less than 2.5 times the average gross income reported by the Department of Labor for the previous calendar year.

For assigned applications, the inquiry is similar. None of the inventors must be named on 5 or more patent applications. The application can only be assigned to an entity with 5 or fewer employees. And the assignee must have an income of less than 2.5 times the average gross income for the previous calendar year.

Thus, micro-entities will be a very small group of applicants, but it can result in significant savings on PTO fees if the new bills pass.

When paying PTO fees, it is important to stay up-to-date on whether the applicant qualifies as a Small Entity.

Posted in Patent Strategies, PTO Rules | 1 Comment »

New BPAI Rules Raised Again

January 4, 2010

Several weeks ago, the PTO published a notice in the Federal Register regarding the previously delayed final rules regarding procedures at the Board of Patent Appeals and Interferences (BPAI).

Many of the most controversial provisions of the previously proposed rules have been changed or deleted. Specifically, the Notice refers to deleting many of the highly technical requirements that would have added significantly to the cost of filing an appeal brief. The portions of the rule that would have required that briefs and other papers contain specific headings, that they be filed in specific fonts, that they not exceed a certain page limit, and that they include a glossary of terms for the Board have been deleted. The requirement that the appellant identify which arguments were presented to the examiner and which are new arguments has also been deleted.

The rules as now proposed would also affect an examiner’s conduct. The rules would continue to permit new grounds of rejection to be raised in examiner’s answers and also would no longer permit a supplemental examiner’s answer to a reply brief by the appellant.

The Notice cites as the purpose of the rules to “efficiently frame any dispute” between the appellant and the examiner and “to provide the best opportunity for resolution of the dispute without the necessity of proceeding with the appeal.” Hopefully this means that fewer cases will get to the Board because more of them will be remanded to the examiner to correct poor rejections or issue allowances.

There are still a number of technical requirements being added to appeal brief requirements, including those relating to providing specific specification and drawing support for each claim on appeal. In general, the worst requirements will be deleted.

The BPAI does need to take steps to reduce the crazy situation involving an appeal docket that is growing at an exponential pace. It is difficult to tell how much effect these rules would have on that situation.

The Notice refers to a roundtable discussion concerning the rules that the PTO will conduct on January 20. The PTO solicits public comments on the new rules until February 12 and hopes that the timing of the Roundtable will permit comments before and after that event. This should permit a more complete public participation than prior PTO procedures have.

It is quite refreshing that the new administration is seeking to work with the patent community in crafting new rules and solutions to its problems, rather than working against them.

Posted in PTO Rules, US Patent & Trademark Office | 8 Comments »

Final Federal Circuit Order in PTO Rules Case

November 16, 2009

Last week, the Federal Circuit issued an order in the PTO rules case, Tafas v. Kappos. The order granted the joint motion of the parties to dismiss the case as moot given the PTO’s decision to rescind the controversial rules. The court did, however, side with Dr. Tafas in denying the PTO’s motion to vacate the district court opinion. The district court’s opinion stated that the PTO does not have substantive rule-making authority and that the agency exceeded its power in promulgating the rules. This opinion will remain a precedent of that court.

The court’s order cited Supreme Court precedent that:

Vacatur . . . is appropriate if the mootness arises from external causes over which the parties have no control, or from the unilateral act of the prevailing party, but not when the mootness is due to a voluntary act by the losing party, such as a settlement.

The PTO argued that an intervening regulatory change is analogous to an intervening statutory change. In other words, the new PTO leadership decided the rules were not to be pursued, which is similar to Congress acting to prevent an agency from enacting rules. The Federal Circuit disagreed, holding that the unilateral act of the PTO to rescind the rules was not the same as an intervening statutory change. Thus, the PTO, as the losing party, should not benefit from vacatur of the district court opinion.

Posted in Federal Circuit, PTO Rules | Leave a Comment »

News Update

August 19, 2009

There are a number of news stories of note since my last post.

Kappos is Confirmed and Sworn in as PTO Director

The Senate confirmed David Kappos as Under Secretary of Commerce for Intellectual Property and Director of the Patent and Trademark Office. He was sworn in August 13. At the time of his swearing in, Kappos announced several key intiatives that he plans to undertake to improve operations at the PTO.

First, he announced an intention to cut application pendency dramatically while maintaining high examination standards. Next, he intends to listen to the domestic patent community and minimize overseas travel. He also pledged to improve the PTO’s financial footing for FY2010 and beyond. He implied that significant fee adjustments will be necessary. He couched these comments in reference to improving examiner job security. He also pledged to review and revamp the examiner “count” system.

Judge Schall to Take Senior Status in October

Next, IPO reports that Federal Circuit Judge Alvin Schall will take senior status in early October. This will give President Obama his first Federal Circuit vacancy. Judge Schall was appointed to the court by President Bush in 1992. Patently-O is reporting that several law professors may be considered for the opening, including Mark Lemley of Stanford, Arti Rai of Duke, and Beth Noveck of New York Law School. There is also considerable support for appointing an experienced district court judge to the Federal Circuit, something that’s never been done before.

Bilski Briefs

Patently-O has collected 44 briefs that have been filed in the Bilski case.

Tafas v. Kappos

The Federal Circuit granted the stay of en banc proceedings (motion reported earlier here) in the PTO rules case until 60 days after confirmation of the new PTO Director. Kappos was confirmed by the Senate August 7. This means that the proceedings should be stayed until October 6. By that time, we should know if the new Kappos Administration at the PTO plans to pursue the case or drop the ill-advised rules package.

Posted in Congress, Federal Circuit, PTO Rules, US Patent & Trademark Office | 3 Comments »

PTO Rules Litigation Schedule

July 10, 2009

The order by the Federal Circuit granting the petition to rehear Tafas v. Doll en banc has set the following schedule for the case:

Appellants may file additional briefs by August 5.
Appellees may file additional briefs within 20 days of service of the Appellants’ briefs.
Appellants may file reply briefs within 7 days of service of Appellees’ briefs.

Thus, briefing should be done by early to mid-September. Amicus briefs are to be filed pursuant to Federal Circuit rules.

The court has set argument for the case on Wednesday, October 7.

What does this mean? Given that the panel decision, now vacated, had three separate opinions and three separate rationales for the decision, it is really difficult to predict what the court will do with the case. It is possible that the court will follow Judge Bryson’s instructions for permitting the PTO’s continuation rules to remain in effect. Hopefully, the judges with experience in patent matters will understand the implications of the new rules better than Judge Prost’s opinion did. The new PTO Director should be confirmed by the time argument takes place in this case. It is still not clear what effect this will have on the PTO’s prosecution of the case.

Posted in Federal Circuit, PTO Rules | 1 Comment »

Tafas v. Doll Request for Extension of Time

April 24, 2009

IPWatchdog is reporting that Tafas and Glaxo have filed a joint motion to extend the time to file a petition for panel rehearing or a petition for rehearing en banc. According to the motion, the government is considering whether to request rehearing of the panel’s decision that the continuation rules are invalid because they conflict with § 120 and government lawyer’s need more time to consider the issues. Tafas and Glaxo also acknowledge that they too may file a request for rehearing of the issues that they lost.

Any such petitions are currently due May 4 and the motion requests an extension until June 3. Such motions are granted on a fairly routine basis, especially when the reasoning is that the government needs the additional time.

Gene Quinn of IPWatchdog seems to believe that an en banc petition will be granted by the Federal Circuit; he believes the case will not return to the district court. I tend to disagree. I believe the original panel decision to be bad law in that it grants the PTO a large amount of rule-making authority that it did not have previously: virtually any rule can be argued to be procedural, rather than substantive. While I would like to see en banc review to undo the panel opinion, I just don’t see it happening at this time.

As I noted earlier:

The case is certainly of sufficient importance to warrant further review by the entire court. Given the posture of the case, however, with so many unresolved issues that need to be decided by the district court, the case may not be ripe for such review at this time. The court may also not wish to expend additional judicial resources on the case given that we do not know whether a new PTO Director would support these rules. I believe en banc review to be doubtful at this time. Unfortunately, that means that Judge Prost’s opinion will continue to haunt us into the future on other issues.

My position seems to be the minority position. I hope that I’m wrong; the Federal Circuit has certainly surprised me before. Perhaps if a new PTO director is around when the court is considering any petitions, it may help to determine what the court will do with it.

Posted in Court Decisions, Federal Circuit, PTO Rules, US Patent & Trademark Office | 1 Comment »

Implications of PTO Rules Decision

March 24, 2009

The dust has settled a bit on the Federal Circuit’s terrible decision in Tafas v. Doll. As some others have noted, this decision came as quite a shock to the patent community because the PTO took a thrashing at oral argument.

As previously reported, the good news is that the PTO cannot yet implement any of these rules because the district court’s injunction remains in place, the Federal Circuit finally struck down the limitation on the number of continuations that may be filed, and the case has been remanded for the district court to consider a host of other arguments raised by the plaintiffs to challenge the rules.

The effect of upholding the claim limitation and RCE limitation rules is somewhat muted by the fact that applicants can still file an unlimited number of continuing applications to add additional claims of varying scope, at least for now. Judge Bryson’s concurrence seems to be an advisory opinion to the PTO to instruct them on how to craft a rule against serial continuations that will not conflict with the statute. And while RCEs are often a better choice for applicants, filing a new continuation is a second best alternative.

But, the implications of the court’s opinion go further. Even though the court stated that the PTO does not have substantive rule-making authority, it significantly broadened the type of rules that are considered procedural. If these rules are not substantive, what rules would be? As Judge Rader points out in his dissent, the PTO could issue a new rule that applications be limited to 5 pages in length. Under the majority’s opinion, this rule would also not be substantive. Are only rules that conflict with the Patent Act substantive? The PTO’s rule-making authority seems to have been greatly broadened.

The part of the court’s opinion regarding Examination Support Documents (ESD) is also very troubling. The court did not seem to grasp the implications of requiring applicants to conduct a search and to comment on the references that they must cite to the examiner. This type of requirement would create so much litigation material for potential defendants that it would be much more difficult to enforce such a patent. The Bush Administration was lobbying Congress for inclusion of an ESD requirement in the patent reform bills in the last several congresses. For now, the requirement has been dropped from the currently pending bills. This opinion seems to signal that the PTO could implement this requirement by rule at any time. This may be the scariest part of the court’s opinion.

En Banc/Supreme Court Review?

It isn’t yet clear if the plaintiffs will request review by the entire court or the Supreme Court or whether they will simply continue the fight at the district court. The case is certainly of sufficient importance to warrant further review by the entire court. Given the posture of the case, however, with so many unresolved issues that need to be decided by the district court, the case may not be ripe for such review at this time. The court may also not wish to expend additional judicial resources on the case given that we do not know whether a new PTO Director would support these rules. I believe en banc review to be doubtful at this time. Unfortunately, that means that Judge Prost’s opinion will continue to haunt us into the future on other issues.

I think the best we can hope for right now is for the case to remain tied up at the district court for some time and then for the new PTO Director to take a closer look at the rules and actually listen to the patent community on their effect. A fresh approach to the PTO’s leadership is certainly needed.

In the meantime, let’s hope the PTO doesn’t take this as carte blanche to enact additional onerous rules that would significantly alter patent practice and weaken our patent system.

Posted in Court Decisions, Federal Circuit, Patent Strategies, PTO Rules | 2 Comments »

Federal Circuit Decides Appeal of PTO Rules

March 20, 2009

The Federal Circuit has issued its long-awaited decision in Tafas v. Doll concerning the PTO’s proposed continuation and claim limitation rules. The good news is that this case is far from over. I have to admit that when I previously wrote about this case and the argument, I didn’t think that would be the good news.

In a 2-1 opinion written by Judge Prost, the Federal Circuit held that the PTO continuation rules are invalid as conflicting with 35 U.S.C. § 120, but reversed the district court’s ruling that the claim limitation rules and the RCE limitation rules were also invalid. The court, along with a concurring opinion by Judge Bryson and a dissenting opinion by Judge Rader, makes a number of interesting statements.

Judge Prost’s Opinion

First, the court agreed that the PTO does not have general substantive rule-making power. The court continues, however, by finding that the rules challenged in this case are procedural and not substantive.

[W]e conclude that the Final Rules challenged in this case are procedural. In essence, they govern the timing of and materials that must be submitted with patent applications. The Final Rules may “alter the manner in which the parties present . . . their viewpoints” to the USPTO, but they do not, on their face, “foreclose effective opportunity” to present patent applications for examination.

We do not believe that requiring applicants to raise all then-available amendments, arguments, and evidence by the second continuation application or the first RCE is so significant a burden that applicants will be effectively foreclosed from obtaining the patent rights to which they are entitled.

The court then makes some curious statements about the rules regarding filing additional continuations and RCEs.

Applicants who include in each continuation application all amendments, arguments, and evidence available at the time of filing will not be limited by Final Rule 78. Similarly, applicants who diligently present all of their amendments, arguments, and evidence as soon as possible during prosecution will be granted as many RCEs as they require.

In this instance, the court seems to be saying that the PTO will act reasonably and permit additional continuations and RCEs that applicants may need to fully protect their inventions.

One of the responses to this position that the court noted and that was raised by the district court is that the PTO, in answer to comments raised on the rules and in other public settings, has made it clear that it “intends to deny additional applications in almost all circumstances.” The court ignored this concern, stating that these statements are not binding on the PTO or on any court. Applicants are free to challenge the PTO’s determinations by filing lawsuits in specific circumstances (yeah, that’s going to happen).

The court also made another enlightening statement when responding to concerns about Examination Support Documents (ESDs), which were part of the claim limitation rules.

We are aware that some applicants attempt to say as little as possible during prosecution so that the precise boundaries of their claims will be open to argument as competitors’ products enter the market and new prior art references are found during litigation. However, we consider this practice to be a burden on the patent system, not a right that can be invoked to void the Final Rules.

Uh, could this be because every time the Federal Circuit gets the opportunity, it uses applicants’ statements during prosecution against them? See, e.g., Festo.

As noted above, the court did find that the continuation limitation rule conflicts with § 120. This section sets forth the requirements for filing a continuing application that shall have the same effect as though filed on the date of the prior application. None of these requirements includes that the application not contain amendments, arguments, or evidence that could have been submitted earlier. Thus, the rule is invalid.

As to the other rules, the court found the PTO’s interpretation reasonabe and granted the agency deference under Chevron.

Remand Instructions

The good news is found at the end of the court’s opinion.

Because of the complexity of this case and the numerous arguments presented on appeal and before the district court, we think it is important to expressly summarize what we believe remains for the district court on remand. This opinion does not decide any of the following issues: whether any of the Final Rules, either on their face or as applied in any specific circumstances, are arbitrary and capricious; whether any of the Final Rules conflict with the Patent Act in ways not specifically addressed in this opinion; whether all USPTO rulemaking is subject to notice and comment rulemaking under 5 U.S.C. § 553; whether any of the Final Rules are impermissibly vague; and whether the Final Rules are impermissibly retroactive.

Whoa! The district court sure does have a lot of work ahead of it.

Judge Bryson’s Concurrence

Judge Bryson filed a concurring opinion where he argues that whether the PTO rules are substantive or procedural is not important and not helpful to his analysis of the issues in this case. While he agrees with the court’s ruling on the particular rules, he provides the PTO with instructions on how it could draft a rule that, in his opinion, would limit “serial continuations”, i.e., continuations that are not co-pending with the original application.

Judge Rader’s Dissent

Finally, Judge Rader wrote a vigorous dissent where he argues that he would affirm the district court on all grounds. He argues that the rules are clearly substantive because they “affect individual rights and obligations, and mark a startling change in existing law and patent policy.” Although he relies on the same case as the majority opinion, he reaches a different conclusion on the test for procedural versus substantive rules.

To my eyes, this question of degree must guide this court’s assessment of the substantive nature of the PTO’s Final Rules.

In the remainder of his opinion, Judge Rader agrees with the district court that the rules conflict with numerous provisions of the Patent Act and should be struck down as invalid.

What’s Next?

The plaintiffs in this case may request rehearing before the entire Federal Circuit. It is difficult to gauge whether the court would take the case en banc, but just on this panel, the judges were split three ways on several of the issues in the case. While the case does involve statutory interpretation, it doesn’t seem likely that the Supreme Court would hear the case.

In any event, the Federal Circuit has remanded the case to the district court and provided a list of issues that must be addressed by that court. Is this list a compromise so that the Federal Circuit will not hear the case en banc at this time? Who knows?

The district court relied on the fact that the rules were substantive, and thus beyond PTO authority, when it struck them down. It didn’t address the many other arguments that the plaintiffs had raised to challenge them. Presumably, the court will need to address those arguments on remand.

The short answer is: the status quo remains in effect for now. It’s possible that the Obama Administration will drop this case and the new rules. If not, the district court is unlikely to lift the injunction while it continues to hear the arguments of the parties. Assuming further rulings and appeals, it could be more than a year before this is finally resolved.

Posted in Court Decisions, Federal Circuit, PTO Rules | 6 Comments »

INVENTIVE STEP