Patent Baristas

Another interesting brief filed with the district court asking it to issue a summary judgment that the retroactive application of PTO rules on continuation and claiming practice is foul play is by Polestar Capital Associates and The Norseman Group.

See Tafas v. Dudas case to enjoin enactment of the USPTO’s new rules, “Changes to Practice for Continued Examination Filings, Patent Applications Containing Patentably Indistinct Claims, and Examination of Claims in Patent Applications” (Final Rules).

Coming out with both barrels blazing, the brief states:

This Court has previously admonished the PTO to reexamine its “suspicious procedures.” But here, the PTO failed its procedural rulemaking obligations.

First, material data, analysis, and computer models were not disclosed as required by the APA. Because of the lack of disclosure, the PTO’s “10,000 page” record fails a number of APA requirements: the record lacks foundation, cannot be reliably understood, could not be fairly commented on during notice and comment, and could not receive proper executive branch review.

Second, documents that were in the record have now been expunged from the “administrative record” given to this Court. Third, in replies to Freedom of Information Act (FOIA) requests in 2006 and 2007, the PTO asserted that certain documents did not exist; yet now they have suddenly appeared in the administrative record.

The PTO’s procedures are “suspicious” at best, and suggest that the “administrative record” is not an accurate or representative record of open-minded and reasoned decision making, but rather an ex post collection of documents cherry picked for this litigation.

Pointing out that the PTO’s procedural failures render the new Rules “arbitrary and capricious” and “without procedure required by law”, the brief states that the PTO’s selective disclosure of material information denied the public a meaningful opportunity for notice and comment.

In addition, information that the PTO disseminated for public comment, and used as the foundation for its “Town Hall” presentations, did not adhere to the PTO’s own information quality rules. They claim the Agency failure to follow its own regulations, or to adhere to information quality principles, is symptomatic of decision-making that is incapable of reaching a reasoned outcome consistent with statutory confines.

After the agency published two Notices of Proposed Rulemaking, the Notices did not disclose the PTO’s estimates of burden for complying with the requirements of the new Rules, and did not disclose any estimate by the PTO of the economic burden of the loss of patent value that would be caused by the new Rules. There was no disclosure of any of the PTO’s data, assumptions, computer models, analysis methodology, or measurement protocols. Many of the factual assertions in the Notices lacked any disclosed support whatsoever.

In Spy-vs-Spy fashion, the PTO failed to make available any of the analytical methods, data or assumptions underlying its pendency projections despite numerous Freedom of Information Act (FOIA) requests.

Many commenters, including a peer-reviewed and sworn declaration provided to OMB, opined that the PTO’s stated cost burden estimates were in error by large factors, and that the burdens that the PTO overlooked or otherwise failed to analyze dwarfed the small fraction that it actually analyzed.

The brief then shows that the proposed rules flunk many State Farm tests designed to identify “arbitrary and capricious” agency action in that:

(a) the PTO did not disclose its data and assumptions during the rulemaking process; the PTO did not disclosed essential information about the computer models by which the PTO purported to analyze its data;

(b) the PTO’s backlog rationale cannot be affirmed because the PTO “failed to consider important aspects of the problem:” revenue losses to itself, and cost burdens on the public;

(c) the Final Rule notice frequently reiterates the PTO’s substantive judgment that “new” applications are more important than “old” applications even though Congress did not intend such discrimination given that § 120 provides that a continuation application “shall have the same effect” as a “new” application;

(d) documents are missing from the administrative record — the PTO’s 2005 certification to the SBA that the Claims Rule “would not have a “significant economic impact on a substantial number of small entities,” Communications to OMB, and Notice and comment letters; and

(e) the PTO violated its own regulations relating to information quality, therefore, the administrative record cannot be relied on by the PTO.

More importantly, the brief highlights the fact that the PTO conceded that it had made no attempt to diagnose the cause of its backlog or “rework” problem. In its June 2007 FOIA reply, the PTO admitted (Exhibit 7) that “[t]here were no records” relating to any investigation of the cause of its backlog or “rework” applications:

(1) … any factual investigation or analysis of underlying causes for “rework” applications used in developing the proposed “Continuations,” “Examination of Claims,” or “IDS” rules…;

At one of the public “Town Hall” meetings, Commissioner Doll confirmed that the PTO did not analyze its data to ascertain the underlying cause of “rework” to evaluate the PTO’s backlog:

Question: Commissioner Doll, did you do any studies to identify where these rework applications are coming from? Do you have any sense for whether they’re caused by the examiner screwing up or the applicant screwing up? …

Commissioner Doll: No, I didn’t differentiate between whether it was an applicant error or an examiner error.

To read the Polestar brief supporting a summary judgment for SmithKline, click here: Polestar Brief.

See Also:

Sides Line Up in Impending Patent Continuations Fight
Is the Public Interest Really Upheld by the New USPTO Rules?
Court Blocks New USPTO Rules on Continuations and Claims — For Now
Patent Wars Episode II: GSK Strikes Back
Inventor Challenges Patent Office Rules in Virginia