Patent Baristas

The Enlarged Board of Appeal of the European Patent Office gave a second (and final!) rejection of the human embryonic stem cell patent by University of Wisconsin’s Wisconsin Alumni Research Foundation (WARF). See Wisconsin Alumni Research Foundation, Case Number: G 0002/06.

Deciding that it would be against the “public order” to grant the patent since it requires the destruction of an embryo to apply the method for preserving pluripotent stem cells in vitro without the cells losing the ability to differentiate subsequently. The court stated that the European Patent Convention prohibits patents that involve the use of human embryos, “for commercial or industrial purposes.”

The EPO did not, however, say the decision means human stem cell lines cannot be patented. But, the ruling leaves things unclear about any products based on banked embryonic stem cell lines that did not involve the destruction of an embryo as the starting point but that originate back to a destroyed embryo, are also unpatentable. Also, it is left unclear if cell lines based on fetal stem cells also would be considered contrary to public order.

At the time that Wisconsin Alumni Research Foundation’s Patent Application number 96903521.1 was filed in 1995, the only way of obtaining pluripotent stem cells was through the destruction of an embryo. Now, it is possible to isolate stem cells without destroying an embryo.  Claim 1 of Application No. 96903521.1 reads:

. .”1. A cell culture comprising primate embryonic stem cells which (i) are capable of’ proliferation in vitro culture for over one year, (ii) maintain a karyotype in which all chromosomes normally characteristic of the primate species are present and are not noticeably altered through culture for over one year, (iii) maintain the potential to differentiate to derivatives of endoderm, mesoderm, and ectoderm tissues throughout the culture, and (iv) are prevented from differentiating when cultured on a fibroblast feeder layer.”

In addition, with research into induced pluripotent stem cells, in which adult somatic cells are transformed back into pluripotent cells, and also the use of therapeutic cloning, it is becoming possible to produce human embryonic stem cells through other routes.

Since some European countries, including the UK, allow patenting of products based on human embryonic stem cells, the decision will make it more complex to market any cell therapy products based on human embryonic stem cells.  Also, it will not be possible to file for a single European patent for such products.

The Examining Division refused the application because, as regards the generation of human embryonic stem cell cultures, the use of human embryos as starting material was described in the application as originally filed as being indispensable. The description provided only one source of starting cells, namely a pre-implantation embryo. It was therefore irrelevant that the claimed subject-matter related to cell cultures and not to a method of production of said cultures.

In its decision, the Technical Board of Appeal posed the following questions to the Enlarged Board of Appeal:

Q1. Does Rule 23d(c) [now 28(c)] EPC apply to an application filed before the entry into force of the rule?

It has not been argued that Rule 28 (formerly 23d) EPC took away the possibility to patent anything which had previously been regarded as patentable under Article 53(a) EPC, nor that the Directive did so (see in this respect the reference in Art. 6(1) to what is contained in Article 53(a). … There is no indication that the commercial exploitation of human embryos was ever regarded as patentable.

In view of the above, the answer to referred Question 1 must be that Rule 28(c)(formerly 23d(c)) EPC applies to all pending applications, even those filed before the entry into force of the rule. As the Appellant itself agrees with this answer, as does the President of the EPO and the vast majority of the amicus curiae briefs, nothing more need be said.

Q2. If the answer to question 1 is yes, does Rule 23d(c) [now 28(c)j EPC forbid the patenting of claims directed to products (here: human embryonic stem cell cultures) which – as described in the application — at the filing date could be prepared exclusively by a ‘method which necessarily involved the destruction of the human embryos from which the said products are derived, if the said method is not part of the claims?

Rule 28 (formerly 23d) EPC provides, inter alia: “Under Article 53(a), European patents shall not be granted in respect of biotechnological inventions which, in particular, concern … (c) uses of human embryos for industrial or commercial purposes”. The question thus is whether the present invention falls under the prohibition of this provision:

1. Inventions shall be considered unpatentable where their commercial exploitation would be contrary to public policy or morality; however, exploitation shall not be deemed contrary merely because it is prohibited by law or regulation.
2. On the basis of paragraph 1, the following shall be considered unpatentable: a). . . b). . . c) methods in which human embryos are used; d) . . .

In a case like the present one, where the teaching to obtain the embryonic human stem cells claimed is confined to the use (involving their destruction) of human embryos, the argument raised by the Appellant, namely that the exclusion from patentability would go much too far if one would consider all the steps preceding an invention for the purposes of Rule 28(c) (formerly 23d(c)) EPC, is not relevant.

A claimed new and inventive product must first be made before it can be used. Such making is the ordinary way commercially to exploit the claimed invention and falls within the monopoly granted, as someone having a patent application with a claim directed to this product has on the grant of the patent the right to exclude others from making or using such product. Making the claimed product remains commercial or industrial exploitation of the invention even where there is an intention to use that product for further research. On the facts which this Board must assume in answering the referred question 2, making the claimed product involves the destruction of human embryos’. This use involving destruction is thus an integral and essential part of the industrial or commercial exploitation of the claimed invention, and thus violates the prohibition of Rule 28(c) (formerly 23d(c)) EPC.

In view of this result, it is not necessary nor indeed appropriate to discuss further arguments and points of view put forward in these proceedings such as whether the standard of ordre public or morality should be a European one or not, whether it matters if research in certain European countries involving the destruction of human embryos to obtain stem cells is permitted, whether the benefits of the invention for humanity should be balanced against the prejudice to the embryo, or what the point in time is to assess ordre public or morality under Article 53a EPC.

Q3. If the answer to question 1 or 2 is no, does Article 53(a) EPC forbid patenting such claims?

Question 3 does not need answering, since the Enlarged Board has held that Rule 28(c) (formerly 23d(c)) EPC is applicable, that it is within the scope of Article 53(a) EPC, and that it forbids the patenting of products which at the filing date could be prepared exclusively by a. method necessarily involving the destruction of human embryos from which said products are derived, so that the answers to questions 1 and 2 is yes.

Q4. .In the context of questions 2 and 3, is it of relevance that after the filing date the same products could be obtained without having to recur to a method necessarily involving the destruction of human embryos (here: e.g. derivation from available human embryonic cell lines)?

When assessing whether a claim contravenes Rule 28(c) (formerly 23d(c)) EPC, technical developments which became publicly available only after the filing date cannot be taken into consideration. It cannot be relevant whether later either the applicant himself or others, made something further available that would then have allowed the product to be made in an innocuous manner. Similarly to the case of an invention which is insufficiently described in the application as filed to be carried out, lack of any disclosure in the application as filed putting the skilled person in possession of a way to carry out the invention complying with Rule 28(c) (formerly 23d(c)) EPC cannot be cured by the occurrence of subsequent technical developments. Any other conclusion would lead to legal uncertainty, and risk being to the detriment of any third party who later provided an innocuous way to carry out the invention.

Thus question 4 must be answered to the effect that it is not of relevance that after the filing date the same products could be obtained without having to recur to a method necessarily involving the destruction of human embryos.

In view of the questions referred, this decision is not concerned with the patentability in general of inventions relating to human stem cells or human stem cell cultures. It holds unpatentable inventions concerning products (here: human stem cell cultures) which can only be obtained by the use involving their destruction of human embryos.

This decision leaves open the question of patentability of stem cell technology that makes use of human embryos but does not necessarily involve the destruction of embryos.

The Ex Parte Appeal Rule which was set to go into effect December 10, 2008 is officially DELAYED.  The Rules will not go into effect tomorrow as originally posted.  A notice to be published in tomorrow’s Federal Register reads as follows:

The proposed information collection request is currently under consideration for approval by OMB.  The review by OMB has not been completed.  Therefore, the effective and applicability dates of the BPAI final rule 2008 will not be December 10, 2008.  The Office will notify the public when the revised effective and applicability dates are set.  In the subsequent notification, the Office will provide at least a 30-day time period before the BPAI final rule 2008 becomes effective.

The outcome is likely the result of OMB disapproval of the ICR as it was submitted.  It is possible that the OMB simply gave the USPTO a face saving option of delaying the rules on its own so that OMB would not have to be on record as publicly disapproving the ICR.

This outcome was probably known to USPTO on November 20th when it issued its Federal Register notice “clarification” on the “applicability” of both rules.  In this “clarification,” the USPTO is essentially inviting parties to submit appeals under the new rules, even though these rules are not in effect.  See here.

Tomorrow’s notice reaffirms the notice from November 30, that briefs may be filed under either the new rules or the old rules.  Prudent patent attorneys will need to consider the estoppel and inequitable conduct effects of complying with the new rules.

Our advice for the moment is that practitioners should not follow USPTO’s invitation to use the new rules’ option when filing an appeal and that practitioners make perfectly clear in their transmittal that the appeal is being filed under the 2004 rules.  Because the public record on the extent of burdens imposed by the new appeal rules is incomplete, Ron Katznelson believes that this is important for three reasons:

(a) The USPTO will likely use the fact that some filings are made under the new rules to later argue that the public does not really care much which rules are used – thereby making a false point about lack of incremental burdens.

(b) It is also clear that appeal cases that would be most negatively impacted by the new rules would naturally be filed under the old rules and therefore the voluntary filings under the new rules would be heavily biased towards the simple and short cases.  The USPTO will most likely use their “junk science” methods to characterize the ensemble of appeals filed under the new rules based on this voluntary highly biased population.  This will enable the USPTO to falsely characterize all appeals if filed under the new rules.

(c)It is unlikely that the new appeal rules will survive proper OMB PRA review.  As numerous comments show, certain features of the new rules would have to be withdrawn or modified substantially.  Therefore,  practitioners’ “learning curve benefits” from attempting to follow rules that may never survive are doubtful at best.

According to Ron Katznelson:

My recommendations above would not have been made had I not experienced the clearly intentional USPTO deviations from procedures of law and its attempts to use “junk science” to support its rulemaking actions in the last two years.   Appellants should therefore ignore USPTO’s new appeal rules and use only the rules that are currently in effect – the 2004 rules, the rules they are familiar with.

Today’s result is likely due to the tireless efforts of David Boundy, Vice President of Intellectual Property for Cantor Fitzgerald L.P., Rick Belzer of Regulatory Checkbook and Ron Katznelson, of Bi-Level Technologies. Furthermore, the Office has posted a list of questions and answers on the USPTO Web site regarding the implementation of the BPAI final rule 2008.  These questions and answers will be revised accordingly.

The “day ahead” display of the notice to be published tomorrow is available here.

On June 10, 2008, the USPTO published new Rules of Practice Before the Board of Patent Appeals and Interferences in Ex Parte Appeals (73 Fed. Reg. 32937-32977, June 10, 2008; Final Rule). The new rules apply to all appeals in which an appeal brief is filed on or after December 10, 2008.

However, before these rules can go into effect, the PTO must obtain clearance from the Office of Management and Budget under the Paperwork Reduction Act.  The PTO published two notices in the Federal Register inviting public comments on paperwork burdens associated with the Ex parte Appeal Rule.  The notice that was required no later than the Notice of Proposed Rulemaking (that is, July 31, 2007), was published on June 9, 2008, 73 Fed. Reg. 32559, and the notice that was required to be published at least 60 days before the final rule notice (that is, April 10, 2008) was published on October 10, 2008, at 73 Fed. Reg. 58973.  The bottom line? Time’s up.

The Paperwork Reduction Act (44 U.S.C. § 3501-3519) and implementing regulations (5 C.F.R. §§ 1320.1-1320.18)  require that the USPTO to submit to OMB an “Information Collection Request” or ICR, basically a paperwork “invoice” that an agency proposes to give the public.   An ICR must include “an objectively supported estimate of burden”   The Act and Regulations set out timelines for agency publication and submission to OMB, public comment, and OMB evaluation.  By law OMB has 60 days to either approve or disapprove the ICR, that deadline is now.

According to one of David Boundy’s letters to OMB, the PTO did not give a lot of consideration was given to public comments on the published rules:

The public comments in reply to the so-called 60-day notice dated June 9, 2008, suggested a number of ways in which burdens could be reduced or practical utility improved. The PTO paid no attention whatsoever to these comments in preparing the final rule. How do you know?  The PTO could not have given them any attention because it promulgated the final rule on June 10, 2008 — one day after seeking public comment. The final rule went on display at the Office of the Federal Register the same day the request for comment was published.

Letters by Dr. Richard Belzer describe the PTO’s pervasive failure to follow the most basic requirements of rulemaking procedure –

• illegally splitting paperwork accounting for appeals off from the rest of patent processing, apparently in order to avoid accounting for burdens of the Continuations and Claims rules
• falsified certifications
• omitting filings
• giving the public one day for a comment period
• circumventing OMB’s ability to oversee a crucial rule making
• mischaracterizing the procedural stage of filings, in order to cover up previous breaches
• failing to break out burdens of the 2004-vintage rules from burdens of the new 2008 rules, apparently in an attempt to cover up the new burdens
• requiring illegal “duplicative” submissions of information that the PTO already has
• failing to include required information in the Notice of Proposed Rulemaking and the final rule notice

It’s truly ironic to see this magnitude and character of legal breach in a procedural rulemaking originating with the Board of Patent Appeals, whose members are required to be “persons of competent legal knowledge.”

Several public comment letters estimate the burdens of the appeal rule:

• A number of burdens – some several hundred million dollars per year – were simply ignored by the PTO (Boundy letter 2; Hoover Letter)
• The burdens for which the PTO did provide estimates are remarkably understated (Belzer 2, Intellectual Ventures, Katznelson, Stein Letter)
• The PTO’s errors stem from simple – but concerted and repeated – failures to follow procedural law (Belzer 1, Boundy letter 1, Boundy letter 2, Boundy letter 3, and Boundy letter 4, Katznelson)
• The need for the appeal rule arises largely from the PTO’s failure to implement procedural law during ordinary examination, and the burden for the PTO’s bad housekeeping should not be shifted to the public (Boundy letter 2 , Katznelson)

In the 28 year history of the Paperwork Reduction Act, the  PTO has never before submitted an ICR addressing appeals.  The Information Collection that governs post-filing “patent processing,” ICR 0651-0031 only covers the Notice of Appeal form and the Request for Oral Hearing.  The 50-100 hours of substantive work for an appeal have never been disclosed to or approved by OMB.

Get ready for an additional workload the USPTO admits could be an extra $250 million per year in burden (although the PTO states it “determined” that the modifications it proposed to make to the existing appeal rules were “not significant for purposes of Executive Order 12866”).  See the USPTO Appeal Checklist here.

While the public comments to the OMB are not yet available on the web site, we’ve posted some of them here:

• Boundy letter 1 – reversal on ‘new ground’ in examiner’s answer burden of proof 081110 2330 FINAL 1.pdf
• Boundy letter 2 re PTO failure to consider alternatives 081113 FINAL.1.pdf
• Boundy letter 3 – falsified certifications 081113 FINAL.pdf
• Boundy letter 4 re ambiguity in change ‘new ground of rejection’ FINAL.pdf
• Comments by Intellectual Ventures
• Comments by Katznelson-Appeal-ICR-Comments -Nov-17-2.pdf
• Kelmachter Letter (Practicing Attorney)
• Roberts Letter (Practicing Attorney)
• Stein Letter (Practicing Attorney)
• Belzer Comment Letter to OMB
• Belzer Burden Estimates of Info Collection
• Allen Hoover Letter to OMB

In the meantime, see the Comments on July 2007 Rules of Practice Before the Board of Patent Appeals and Interferences in Ex Parte Appeals.  The rules under the USPTO Paperwork Reduction Act page are here.

If you have comments or if you have prepared an appeal brief for submission under the new rules and have found the preparation to be onerous, please relate your experiences to David Boundy, Vice President of Intellectual Property for Cantor Fitzgerald L.P.

Also see:  Unhappy with the Ex parte Appeal Rule? Speak Now.

Dear editor,

Your blog at https://patentbaristas.com/archives/2008/12/05/new-uspto-patent-appeal-procedures-still-on-for-december-10-2008/#respond has a quote from an OMB spokesperson who was asked about the appeal rule’s review:

“The Paperwork Reduction Act gives OMB 60 days to review agency information collections. While every effort is made to conclude reviews within this time-frame occasionally reviews take longer in order to gather and analyze the necessary data to make an informed decision.”

This predictive statement is perplexing, given the time that was still left for the conclusion of the 60-day period. OMB is known to typically conclude its reviews on the last day. If the ordinary OMB practice is to conclude by 60 days, why should a public statement focus predictively on the extraordinary when there is another week to go? What the spokesperson did not tell you is that failure to act within 60 days has the same effect as approval.

As the comments widely show, the USPTO violated the PRA and none of OMB’s regulations permit it to proceed with information collection unless it starts all over with proper public notice and comment. The USPTO may believe that its ICR falls somehow within any one of the three subsections of OMB’s PRA regulations. But in all three of such paths, OMB’s failure to complete the ICR review within 60 days would permit it to say that it approved nothing but the result would be a temporary collection authority under a control number that the OMB must provide to the USPTO:

5 C.F.R 1320.10(c): “If OMB fails to notify the agency of its approval, instruction to make substantive or material change, or disapproval within the 60-day period, the agency may request, and OMB shall assign without further delay, an OMB control number that shall be valid for not more than one year“.

5 C.F.R 1320.11(i): “If OMB approves the collection of information or if it has not acted upon the submission within the time limits of this section, the agency may request, and OMB shall assign an OMB control number“.

5 C.F.R 1320.12(b)(2): “The agency may continue to conduct or sponsor the collection of information while the submission is pending at OMB. In the case of a collection of information not previously approved, approval shall be granted for such period, which shall not exceed 60 days, unless extended by the Director for an additional 60 days, and an OMB control number assigned“.

5 C.F.R 1320.12(e)(2): “If OMB fails to notify the agency of its approval, instruction to make substantive or material change, or disapproval within the 60-day period, the agency may request, and OMB shall assign without further delay, an OMB control number that shall be valid for not more than one year“.

If OMB takes the “comfortable” position of not acting at all by December 10 and issuing a control number to USPTO anyway, OMB would not be on the record of approving the ICR. USPTO will get their temporary 60-day clearance, and off they go with the new rule. OMB’s action at a later date would be too late and therefore of less import and out of public focus.

It is important for your readers to know that this ICR review by OMB is not a regulatory review by OMB of the appeal rules. The appeal rules were concealed from OMB’s regulatory review in 2007 through their designation as “insignificant” by USPTO. This ICR approval request is for paperwork burdens associated with the appeal rules. The USPTO violated the PRA by not submitting this ICR for review during the 2007 rulemaking process. OMB’s disapproval of this ICR would not mean that the appeal rules are not in effect. Rather, it would only mean that USPTO would not be able to enforce the imposition of particular burdens by the appeal briefs and reply briefs on the public. In this case, it would be up to the USPTO to recognize that under such circumstances, it should withdraw the rules to avoid confusion and avoid making illegal decisions of holding briefs non-compliant.

If your readers are unaware of the details above, fewer flags would be raised on December 10 in the event of no action by OMB, as most in the patent bar may think that nothing has happened yet and that they should just wait for OMB’s later action of disapproval. In that event, it should be clear that OMB will have actually approved the collection temporarily and that no later action can repeal the rule.

Best regards,

Ron Katznelson

The European Commission has published its preliminary report on the competition inquiry into the pharmaceutical sector, which concludes that competition in this industry does not work as well as it should. According to the preliminary findings there is evidence that brand name companies engaged in delaying or blocking market entry of competing medicines.

Delaying tactics included multiple patent applications for the same medicine (so-called patent clusters), initiation of disputes and litigation, conclusion of patent settlements, which constrain market entry of generic companies and interventions before national authorities when generic companies ask for regulatory approvals. The EU thinks that, when successful, these practices result in significant additional costs for health care – and ultimately taxpayers and patients – and reduce incentives to innovate.

The report takes a sample of medicines that faced loss of exclusivity in the period 2000 to 2007 in 17 Member States and estimates that additional savings of around € 3 billion would have been possible on that sample over this period if generic medicines had entered the market without delay. The report also finds that companies applied defensive patenting strategies, primarily aimed at blocking competitors in the development of new medicines.

Delays or blocks to market entry

The preliminary report shows that originator companies (that develop and sell new medicines) used a variety of methods with the objective of delaying or blocking market entry of generic companies (that sell medicines equivalent to original medicines once patents have expired) and other originator companies, and therefore maintain high income streams for the originator companies.

Documents found by the Commission during the sector inquiry included such declarations as:

• “We identify options to obtain or acquire patents for the sole purpose of limiting the freedom of operation of our competitors… Rights covering competitive alternatives are maintained in major markets until risk of competing products appearing is minimal.”
• “I suppose we have all had conversations around ‘how can we block generic manufacturers.’ (…) Don’t play games in patenting new salt forms too late, the generics are starting earlier and earlier. Get (…) claims on key intermediates that cover a number of routes. Process patents are not the biggest block but can put generics off if a superior chemistry job is done.”
• “Interchangeability issues were used in (several countries) to limit generic erosion. (…) Outcome: extra (…) sales of USD 61 m compared to expected generic erosion.”

The preliminary report highlights several different specific delaying strategies, including the following aimed at generic companies:

1. originator companies filed so-called “patent clusters” – a large number of EU-wide patents (in one case 1300) filed for a single medicine
2. there were also nearly 700 cases of reported patent litigation with generic companies, which on average lasted nearly three years. The generic companies ultimately won more than 60% of these cases.
3. originator companies also concluded more than 200 settlement agreements with generic companies in the EU, in which they agreed on the terms for ending an ongoing litigation or dispute. More than 10% of the settlements were so-called “reverse payment settlements” which limited the entry to the market of the generic medicines and provided for payments from the originator to the generic companies. These payments amounted in total to more than €200 million.
4. originator companies intervened in national procedures for the approval of generic medicines in a significant number of cases, which on average led to four months of delay for the generic medicine.

Based on a sample of medicines that faced generic entry in the period from 2000 to 2007, average price levels for medicines decrease by almost 20% after the first year following generic entry. In rare cases, the decrease in price levels can be as high as 90%. For the sample under analysis, total savings gained by generic entry amounted to at least € 14 billion over the period. Without these savings, total expenditure for the medicines analyzed would have been over 25% higher.

On average it took about seven months for generic products to enter the market on a weighted average basis and even the top-selling medicines faced an average delay of four months. This amounted to a (possible) lost savings of about € 3 billion for the health systems during 2000 to 2007 for the chosen sample of medicines facing patent expiry in 17 Member States.

The preliminary report also found evidence that originator companies also practice defensive patenting strategies to fence off competition from other originator companies. This may obstruct innovation, lead to higher costs for competing pharmaceutical companies and delay consumers’ access to innovative medicines.

Both generic companies and originator companies called for a single Community Patent and the creation of a unified and specialized patent judiciary in Europe. These calls are supported by the preliminary findings of the sector inquiry, that discovered 11% of contradictory final judgments in litigation cases and total direct costs associated with the patent litigation of €420 million

EU Competition Commissioner Neelie Kroes said the EU Commission would not hesitate to launch antitrust cases against companies that may have violated EU rules — even generic companies who took money to agree on curbing competition.  The EU is yet to charge any pharmaceutical company formally but regulators raided the offices of several drug makers in different EU states on Nov. 24.

For further information, see also MEMO/08/746.

The preliminary report and more information on the pharmaceutical sector inquiry will be available here.

The quarterly customer partnership meeting of the biotechnology, chemical, and pharmaceutical (BCP) technology groups at the U.S. Patent and Trademark Office, provided an update on the training and development of Examiners.  Janet Gongola, Associate Solicitor for the Office of the Solicitor, presented a new training module for teaching patent examining corps about case law.

According to the presentation:

Q:  Why is the structure of a decision relevant to examiners?
A:  Helps examiners navigate a decision to more quickly and easily identify examination tips

The new training module is supposed to enable examiners to better understand what case law is, how to find it, and how to respond to it in Office Actions when raised by Applicants.  According to the presentation, the examiners are to compare or contrast facts in case law with those in an application and then apply the reasoning from the case law to application under examination.  But, is it realistic to ask examiners to act as lawyers after a few hours of training?

The presentation is supposed to provide examiners with a basic understanding of case law, the meaning of precedent, and how to cite cases, so that examiners will be better able to respond to the use of case law by patent practitioners.  The case law training module being used by the Office consists of a pair of two-hour sessions, the first session constituting a lecture by an attorney from the Office of the Solicitor and the second session constituting a series of four laboratory exercises in which trainees split off into small groups to address hypothetical situations involving §§ 101, 102, 103, and 112 rejections.

The examiners are supposed to consult the MPEP first when attempting to ascertain the Office’s policy regarding the meaning of a cited case and then, if necessary, look to case law in BNA’s USPQ database.  According to the USPTO’s “dirty little secret”, examiners don’t have to read the whole case but instead can just read the portion(s) of the case that has been cited by the practitioner, and then, if it seems relevant, read other parts of the case.  The training module also is to help examiners understand holdings v. dicta, the difference between the headnotes and the opinion and the difference between majority opinions, plurality opinions, concurrences, and dissents.

Under justifications for the program, Ms. Gongola presented recent USPTO statistics:

• 448,003 applications examined
• 332,617 new utility application filed
• 25.6 months average first action pendency
• 32.2 months average total pendency
• 1,765 new applications for Accelerate Examination (186 days to final action or allowance)

Ms. Gongola noted that the new training module had been first used on November 18th, and that the examiners in Tech Center 1600 (biotechnology and organic chemistry) would receive their case law training sometime in December.

What’s your take?  Will this help avoid examination mistakes or will it give practitioners more headaches with applications under the old adage that a little knowledge can be dangerous?

Well, oral arguments were held yesterday at the U.S. Court of Appeals for the Federal Circuit to hear the matter of the Tafas v. Dudas and the US Patent Office, an appeal of the claims and continuations rules promulgated by the USPTO which were preliminarily enjoined and ultimately permanently enjoined by the District Court effect (Final Rules; 72 Federal Register 161 at 46716).  See Tafas v. Dudas and the United States Patent and Trademark Office.

The court heard oral arguments from the GlaxoSmithKline representative, Attorney John M. Desmarais and the representative of the USPTO, James Toupin, who is also the General Counsel for the USPTO.  You can hear the complete oral arguments yourself here: http://oralarguments.cafc.uscourts.gov/mp3/2008-1352.mp3

One critical piece here is whether Congress provided the USPTO the rule making authority explicitly for the purpose of expediting patent applications.  Judge Rader asked whether the real issue in this case is whether the PTO is entitled to Chevron deference and whether the rules were procedural or substantive.

 That is, the rules of statutory construction dictate that “the agency’s interpretation as long as it is based on a permissible construction of the statute’” would control the case.  Chevron U.S.A. v. Natural Resources Def. Council, 467 U.S. 837, 843 (1984). However, “not all statutory interpretations by agencies qualify for the level of deference afforded by that step.” United States v. Mead Corp., 533  U.S. 218, 227-31 (2001)(deference to the agency’s interpretation is appropriate only where Congress has  ‘delegated authority to the agency generally to make rules carrying the force of law, and … the agency interpretation claiming deference was promulgated in the  exercise of that authority’”).

If the Patent Office were entitled to deference under the Supreme Court’s decision in Chevron, the Patent Office rules would most likely be allowed.  The Court will need to determine whether the Patent Office acted within the authority given by Congress.

Gene Quinn of IPWatchdog attended the hearing and offered this insight:

Judge Rader also was interested in the text of 35 USC 112, which requires that the specification of an application “shall conclude with one or more claims.”  Judge Rader simply asked “how many is ‘or more’?”  To which the gallery erupted in laughter for the first time.  In my experience when the judges are being comedians and the gallery is laughing without any scolding from the bench it is not a good thing for whoever is standing at the podium, and repeatedly that person was Attorney Toupin.

We think the Patent Office may have an uphill battle with this panel.  You could almost sense a collective chuckle when Mr. Toupin explained that the proposed rules would not act retroactively since applicants of any currently pending applications would be given an opportunity to comply with the new rules by merely filing an Examination Support Document (ESD) for patent applications containing 5 or more independent claims, or 25 or more total claims.

From Hal Wegner’s account:

The [PTO] General Counsel was asked whether – if he were counsel to a pharmaceutical client – he could recommend the ESD: He answered unequivocally in the affirmative. To this answer, and accompanied by laughter from the packed courtroom, the presiding judge advised the General Counsel to seek employment in the electronics or other industries.  [Ouch!]

We’ll keep you posted on updates as they happen.  If you want to see the firestorm of comments already generated by these arguments, see the comments at Dennis Crouch’s Patently-O (what Hal Wegner has dubbed the Crouch Army).  More commentary at Peter Zura’s 271 Patent Blog and Intellectual Property Watch.

More here:
Briefs Flying In Patent Office Appeal of Continuation Rules
Is the USPTO Trying to Put Itself In A Better Light On Appeal?
Tafas v. Dudas: The Continuation Wars

On June 10, 2008, the USPTO published new Rules of Practice Before the Board of Patent Appeals and Interferences in Ex Parte Appeals (73 Fed. Reg. 32937-32977, June 10, 2008; Final Rule). The new rules apply to all appeals in which an appeal brief is filed on or after December 10, 2008.

The Board of Patent Appeals and Interferences’ two main responsibilities include: (1) the review of ex parte appeals from adverse decisions of examiners in those situations where a written appeal is taken by a dissatisfied patent applicant and (2) the review of interferences to decide who is the first inventor whenever an applicant claims the same patentable invention which is already claimed by another applicant or patentee.

Since the Board is getting a flood of ex parte appeals — in FY2007, the Board received 4639 ex parte appeals, in FY 2008, the Board expects to receive more than 6000 ex parte appeals — they are looking for ways to get out of work. Interestingly, the new Appeal Rules were submitted to OMB just two weeks after the OMB passed the Continuation and Claim rules on the basis that applicants could always just appeal their case.

As you know, the PTO published a notice in the Federal Register inviting public comments on paperwork burdens associated with the Ex parte Appeal Rule.  The Information Collection Rule requires that the USPTO to develop and disseminate “an objectively supported estimate of burden.”

Since by law OMB has 60 days to either approve or disapprove the ICR, that deadline will run out very close to December 10, 2008, the effective date of the Appeal Rules.  So, I contacted the OMB to try to confirm whether or not things were a go.  In checking with OMB on the status, Ms. Abigail Tanner of OMB Communications reported that:

“The Paperwork Reduction Act gives OMB 60 days to review agency information collections.  While every effort is made to conclude reviews within this time-frame occasionally reviews take longer in order to gather and analyze the necessary data to make an informed decision.”

For now, it looks like we will need to be prepared for the new rules next week. In the meantime, if you have prepared an appeal brief for submission under the new rules and have found the preparation to be onerous, please relate your experiences to David Boundy, Vice President of Intellectual Property for Cantor Fitzgerald L.P.

According to the Notice, the primary changes in this rule are:

1. The requirements for an appeal brief include new sections for jurisdictional statement, table of contents, table of authorities, statement of facts, new format for arguments in the appeal brief and for claim support and drawing analysis section and means or step plus function analysis section in the appendix of the appeal brief, new section for table of contents in the evidence section of the appendix, new format in 14-point font, and 30-page limit for the grounds of rejection, statement of facts, and argument sections;
2. The requirements for a reply brief include new sections for table of contents, table of authorities, statement of additional facts, new format for arguments in the reply brief, new format in 14-point font, and 20-page limit for the statement of additional facts and argument section;
3. The requirements for a request for rehearing include new sections for table of contents, table of authorities, new format for arguments in the request for rehearing, new format in 14-point font, and 10-page limit for the argument section;
4. New grounds of rejection are no longer permitted in an examiner’s answer,
   the examiner’s response to a reply brief is eliminated;
5. Petitions to exceed the page limit for an appeal brief, reply brief or request for rehearing are made under Rule 41.3 which requires a $400 fee;
6. Petitions for an extension of time to file a reply brief, request for oral hearing, or request for rehearing are made under Rule 41.3 which requires a $400 fee, and
7. A list of technical terms or unusual words to be provided to the transcriber at the oral hearing.

In addition, the new rules require:

A ‘‘statement of facts’’ section where the appellant is required to set out the material facts relevant to the rejections on appeal. The ‘‘statement of facts’’ shall set out in an objective and non-argumentative manner the material facts relevant to the rejections on appeal. A fact shall be supported by a reference to a specific page number of a document in the Record and, where applicable, a specific line or paragraph, and drawing numerals. A general reference to a document as a whole or to large portions of a document does not comply with the requirements of this paragraph.

An ‘‘argument’’ section where an appellant shall explain why the examiner is believed to have erred as to each rejection to be reviewed. Any explanation must address all points made by the examiner with which the appellant disagrees and must identify where the argument was made in the first instance to the examiner or state that the argument has not previously been made to the examiner. The ‘‘argument’’ shall explain why the examiner erred as to each ground of rejection to be reviewed. Any explanation must address all points made by the examiner with which the appellant disagrees. Any finding made or conclusion reached by the examiner that is not challenged will be presumed to be correct.

For each argument an explanation must identify where the argument was made in the first instance to the examiner or state that the argument has not previously been made to the examiner. Each ground of rejection shall be separately argued under a separate heading. Unless a response is purely legal in nature, when responding to a point made in the examiner’s rejection, the appeal brief shall specifically identify the point made by the examiner and indicate where appellant previously responded to the point or state that appellant has not previously responded to the point. In identifying any point made by the examiner, the appellant shall refer to a page and, where appropriate, a line or paragraph, of a document in the Record.

The rules do not amend any of the rules relating to inter partes reexamination appeals. Except for citation of authorities, the rules do not amend any of the rules relating to contested cases.  Note that the rules also allow for sanctions which may be imposed against an appellant for failure to comply with an applicable rule.

See detailed comments provided by the American Intellectual Property Law Association (AIPLA) and by David Boundy of Cantor Fitzgerald L.P.

See also:
Unhappy with the Ex parte Appeal Rule? Speak Now.
As Approval Rate for U.S. Patents Drops, Applicant Shift to Appeals