Patent Baristas

Another lawsuit has been filed in federal court against the United States Patent and Trademark Office (PTO) looking to block implementation of the new claims and continuation rules that are to go into effect on November 1, 2007 (Final Rules; 72 Federal Register 161 at 46716). This time, the plaintiff is pharmaceutical giant SmithKline Beecham Corporation (d/b/a GlaxoSmithKline).

In the suit filed October 9, 2007, in the United Stated Federal District Court for the Eastern District of Virginia, GSK is asking the court to preliminarily and permanently enjoin the PTO from implementing the Final Rules on November 1, 2007 or thereafter as the Final Rules were promulgated without proper legal authority. They also contend that the Final Rules are vague, arbitrary and capricious, and prevent GSK (not to mention everyone else) from fully prosecuting patent applications and obtaining patents on one or more of its inventions.

Believing that the PTO engaged in ultra vires rulemaking in limiting an applicant’s ability to file continuing applications by restricting an applicant to two such applications before the applicant is required to file a petition “showing that the amendment, argument, or evidence sought to be entered could not have been submitted during the prosecution of the prior-filed application.”

GSK gets to the heart of the matter in that the “could not have” standard poses a Hobson’s choice under the PTO’s rules of professional conduct, which bars a practitioner from knowingly making a false statement of law or fact. Violations may result in reprimand, suspension, or exclusion of practice before the PTO.

Because the PTO construes the term “could not have” in its ordinary sense of meaning, i.e., that one could not have physically presented the amendment, evidence or argument, an applicant would be at risk of violating the rules of conduct by merely filing a petition.

This conflict renders compliance impossible because it is unclear how you satisfy both the applicable ethical obligations as well as the “could not have” standard. As a result, the PTO’s petition and showing effectively creates a trap.

In another suit, Triantyfyllos Tafas vs. John Dudas and the United States Patent and Trademark Office, Plaintiff Tafas also alleged that the PTO’s promulgation of the Final Rules will cause him harm.

In filing a Partial Motion to Dismiss and a Memorandum in Support of Defendants’ Partial Motion to Dismiss, the PTO has taken the position that one may not be able to establish harm caused by the Final Rules except by demonstrating specific examples of harm caused to pending patent applications. GSK refutes this saying that it meets the two-part ripeness test established in Abbott Laboratories v. Gardner, 387 U.S. 136 (1967), which permits pre-enforcement review of agency regulations where the questions presented are fit for judicial review and would pose a hardship to regulated parties.

Summing up the dispute, GSK squarely spells it out that “an inventor has a statutory entitlement to a patent unless the invention that is the subject of the application for the patent is not new or is obvious. 35 U.S.C. §§ 102-03. To obtain a patent, an inventor must file a written application that contains a specification, an oath and ‘one or more’ claims. 35 U.S.C. §§ 111-12.”

In addition, the Final Rules apply retroactively to pending applications. Since everyone has prosecuted these pending applications under well-established rules and tailored its business accordingly, applicants have filed multiple continuations, continuations-in-part, and RCEs relying on these well-established rules. By forcing applicants to play by these new rules in the middle of the game, the retroactive application of Final Rules will cause irreparable harm.

GSK lists the following causes of action in the case:

The final rules’ various restrictions on patent application rights are all ultra vires because the PTO lacks the authority to issue substantive rules in this area.

The PTO especially lacks the authority to impose the final rules’ new restrictions concerning continuation applications.

The final rules are beyond the PTO’s power because they retroactively change the legal consequences of already filed continuation applications and patent prosecution strategies.

The PTO lacks the authority to restrict the number of claims that can be presented in a patent application.

Restrictions in the final rules on the rules for continued examinations are contrary to the patent act.

The final rules are procedurally defective in various respects for failure to provide a required notice and a comment opportunity before the proposed regulations were amended in ways that could not reasonably have been anticipated.

The final rules are vague and do not put GSK on sufficient notice of how to comply

The final rules work an unconstitutional, ultra vires, and arbitrary and capricious taking of GSK’s patent and patent application property rights.

GSK asks for judgment against Defendants as follows:

Maintain the status quo and grant a preliminary and permanent injunction enjoining and staying implementation of the Final Rules pending resolution of this lawsuit.Grant a permanent injunction enjoining Defendants from issuing new regulations limiting the number of continuing applications, requests for continued examination, and the number of claims that may be filed with the PTO that are deficient in any of the ways described in this complaint, or otherwise infringes GSK’s rights in the manner described in this complaint.

Enter a declaratory judgment that the Final Rules are, in the respects denoted above, vague, arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law (including but not limited to the Patent Act), contrary to constitutional right, power, privilege or immunity, and in excess of statutory jurisdiction, authority or limitations.

Vacate the Final Rules as arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law (including but not limited to the Patent Act), contrary to constitutional right, power, privilege or immunity, and in excess of statutory jurisdiction, authority or limitations.

Issue any writs of mandamus necessary to compel the PTO to perform neglected or unlawfully unperformed duties.

See the complaint here:  gsk-pto-suit.doc

See Gene Quinn’s take on the suit at the PLI blog here.

See also: Do the New Rules Exceed USPTO Rulemaking Authority?