Patent Baristas

Abbott Labs had one of those days. The Court of Appeals for the Federal Circuit affirmed the District Court’s finding that Abbott infringed Innogenetics’ patented Hepatitis C Virus genotyping technology, U.S. Patent No. 5,846,704.

The Federal Circuit did reverse and remande the earlier judgment that claim 1 of the ‘704 patent was not anticipated by U.S. Patent No. 5,580,718 (the Resnick patent). The Federal Circuit also upheld the jury’s finding that Abbott has to cough up $10 million in damages to the Belgian biotech company as well as sanctions for making a baseless claim against Innogenetics.

The technology in this case pertains to diagnostic tools that detect and classify hepatitis C virus (HCV) genotypes in a biological sample, which facilitates tailoring the treatment of patients with different genotypes.

The ‘704 patent claims a method of genotyping HCV based on distinct genetic sequences that can be found in the 5 prime untranslated region (5′ UTR) of the HCV genome.  Abbott’s genotyping assay kits also involve specifically hybridizing probes to the nucleic acids of the HCV’s 5’ UTR.

Claim 1, the only independent claim on appeal, reads in its entirety as follows:

A method of genotyping HCV present in a biological sample comprising hybridizing nucleic acids in a biological sample with at least one probe and detecting a complex as formed with said probe and said nucleic acids of HCV, using a probe that s pecifically hybridizes to the domain extending from the nucleotides at positions -291 to -66 of the 5′ untranslated region of the HCV.

The district court granted Innogenetics’ motion to exclude testimony on obviousness by Abbott’s witness, Dr. Patterson. However, the written order commemorating the conference rulings inaccurately stated that defendant was precluded from entering any evidence of obviousness at trial. Abbott never moved for correction or reconsideration of the written order.

In a footnote, the CAFC took the Abbott team to task noting:

This case aptly demonstrates the pitfalls of playing fast and loose with rules of discovery. Conclusory expert reports, eleventh hour disclosures, and attempts to proffer expert testimony without compliance with Rule 26 violate both the rules and principles of discovery, and the obligations lawyers have to the court. Exclusion and forfeiture are appropriate consequences to avoid repeated occurrences of such manipulation of the litigation process.

The jury concluded that claim 1 of the ‘704 patent was not anticipated and awarded $7 million in damages to Innogenetics plus found Abbott’s infringement to be willful.

The Federal Circuit also did not buy Abbott’s defense that Realtime PCR was not known to the ordinary artisan at the time of the filing of the ‘704 patent application:

[T]he district court deemed this issue forfeited because Abbott “did not raise this issue before trial when it could have been given thorough consideration. Instead it raised the issue for the first time at 9:30 p.m. on the night before the start of trial and did so simply by submitting a proposed jury instruction, rather than by bringing the matter directly to the attention of the court and opposing counsel.”

Absent extraordinary circumstances, the Seventh Circuit has stated that it rarely reaches forfeited arguments in civil litigation. Ocean Atl. Dev. Corp. v. Aurora Christian Sch., Inc., 322 F.3d 983, 1005 (7th Cir. 2003). Abbott’s belief that “there was no need to raise [its argument] prior to the court adopting a claim construction not proposed by either party” falls well short of extraordinary.

It should be noted that, forfeiture aside, Abbott’s argument lacks merit. Essentially, Abbott argues that a patent can never be literally infringed by embodiments that did not exist at the time of filing. Our case law allows for after-arising technology to be captured within the literal scope of valid claims that are drafted broadly enough. See SuperGuide Corp. v. DirecTV Enters., Inc., 358 F.3d 870, 878-80 (Fed. Cir. 2004) (finding that the claim limitation “regularly received television signal” is broad enough to encompass digital signals even though no televisions that could receive digital signals existed as of the filing date).

It also didn’t help that Abbott itself has put in evidence that Realtime PCR did exist by the time the inventors filed their PCT application in 1992. In his expert report, Abbott’s witness stated that “Realtime PCR using 5′ to 3′ exonuclease activity was pioneered around 1991 .. . .”

Nice.

Because two of the three claims found to be infringed are unaffected by this ruling, this reversal will not affect either the determination that Abbott infringed Innogenetics’ HCV genotyping patent or the jury’s determination that Abbott must pay damages for its infringement.

See Innogenetics v. Abbott Laboratories, United States Court of Appeals for the Federal Circuit (07-1145).

As a source of amusement, Modern Mechanix has a piece about how the Patent Office has become a national disgrace (in June 1930!).

In the article, written for Popular Science Monthly, the author relates how, at the time it was written, there were nearly 118,000 applications for patents piled up in Washington in the greatest jam of history.  And new ones were pouring in at the rate of approximately 2,000 a week.

In the previous four years, the number of applications awaiting action had leaped from about 41,000 to nearly three times that number, about 118,000.  These piled-up applications contained more than twenty-three acres of paper.

At present, the staff of examiners is gaining on this accumulated mass of applications at the slow rate of about 250 a week.  Even if they continue to work at top speed, without vacations, it is estimated that it will take the present staff until 1942 to catch up with their work so they can give the inventor a reasonably prompt decision upon his application.  As it is now, forty-five percent of all patents, or approximately every other one, take longer than two years to obtain. Some take several times that period.

And, talk of patent anarchy was abundant as the “flood” of applications poured in and comparisons are made back 100 years:

During the last ten years, more patents have been granted in the United States than during the 100 years from President Washington’s inaugural in 1789 to President Harrison’s inaugural in 1889.  In 1929, 114,496 applications for patents, trade-marks, and designs poured into the Washington office.  And thus far in 1930, there has been a twelve percent increase over the record-breaking flood of last year.  Besides mechanical inventions, the Patent Office passes on about 5,000 designs and 20,000 trade-marks a year. Recently, the requests for trade-marks has increased 100 percent.

Sound familiar?

It is interesting to note that even then, the Patent Office collected more fees than it spent:

Yet, while the Patent Office has been giving poorer and poorer service and has been losing money for American inventors, it has been piling up for the Government a profit of more than six million dollars!

In fact, it is one of the few Federal bureaus that operates at a profit. Over a long period of years, its income has far surpassed its expenditures, although recently it has been running behind. However, from fees paid by inventors alone, $3,000,000 was collected by this office last year.

If the Patent Office is making money, why doesn’t it hire enough men to do its work? That is a natural question, one of many mystifying angles of this patent muddle for which I have sought the answer.  I have talked with the Commissioner of Patents, Thomas E. Robertson. I have discussed the situation with many men employed at the Patent Office.  I have interviewed lawmakers who have investigated the work of the Office and patent attorneys who have been dealing with it for years. And the result is the belief that the present disgraceful conditions will continue indefinitely unless the readers of Popular Science Monthly and others who are interested demand Congressional action that will give American inventors the service to which they are entitled.

In answer to the question above, I found that not one penny of the millions of dollars profit made by the Patent Office has been available for improving the service of the organization or for providing better equipment.  The law provides that any money surplus at the end of the year must be turned over to the United States Treasury. Thus the Patent Office has never been able to put its profits to work.  It has been dependent upon the whim of Congress for the amount of money it could spend.

The Patent and Trademark Office would receive $1.9 billion in fiscal 2008 under the budget plan by President Bush. This is the fourth year in a row the White House has recommended the Congress allow the agency keep fees collected from patent and trademark applications instead of diverting funding to other government programs.

In fiscal year 2006, the Patent Office received a total of 452,633 applications and granted a total of 196,404 patents. According to PTO, examiners examined 332,000 patent applications — the largest number ever — while achieving the lowest patent allowance error rate (3.5 percent) in more than two decades. At 54 percent, the amount of applications reviewed and approved also was the lowest on record.

All things old are new … again.

See the entire story here.

As we reported earlier, the Senate’s Committee on the Judiciary, has issued its draft report on the Patent Reform bill (S. 1145), to amend the patent laws currently in Title 35 of the United States Code.

These changes will have a dramatic impact (positive or negative depending on where you stand) on every patent applicant. One major item is that the Patent Reform Act of 2007 would change the U.S. patent system to a first-to-file system for the first time.

Section 2: Right of the first inventor to file

Every industrialized nation other than the United States uses a patent priority system commonly referred to as “first-to-file.” In a first-to-file system, when more than one application claiming the same invention is filed, the priority of a right to a patent is based on the earlier-filed application. The United States, by contrast, currently uses a “first-to-invent” system, in which priority is established through a proceeding to determine which applicant actually invented the claimed invention first.

Unlike the objective date of filing, the date someone invents something is often uncertain, and, when disputed, typically requires corroborating evidence as part of an adjudication.

The Senate noted three significant differences between the two systems:

The first concerns the rare instance in which two different people file patent applications for the same invention. In a first-to-file system, the application with the earlier filing date prevails and will be awarded the patent, if one issues. In the first-to-invent system, a lengthy, complex and costly administrative proceeding (an interference proceeding) must be conducted to determine who actually invented first. Interference proceedings can take years to complete (even if there is no appeal to the United States Court of Appeals for the Federal Circuit), cost hundreds of thousands of dollars, and require extensive discovery.

The second difference involves prior art. … In the first-to-file system, prior art includes all art that exists prior to the filing date – again, an objective inquiry. In contrast, in a first-to-invent system, prior art is measured from the more amorphous date of invention.

Third … the United States’ first-to-invent system provides the inventor a grace period of one year, during which an inventor’s prior disclosure of the invention cannot be used as prior art against the inventor’s application.

Recognizing the problems of allowing others to derive (read: steal) another’s invention and race to the Patent Office to get it filed first, the proposed change is to a “first-inventor-to-file” system. Under the bill, an applicant must still have independently invented the subject matter claimed in the application. This is different from many other countries, which have a literal “first-to-file” system that allows anyone to file as long as they are first.

Section 2 of the Patent Reform Act of 2007 would provide the following changes:

(1) Section 2 moves the U.S. system much closer to a first-to-file system by making the filing date that which is most relevant in determining whether an application is patentable.

In addition, Section 2 eliminates costly, complex interference proceedings since priority fights – who invented first – are no longer relevant. However, the new USPTO derivation proceeding is created to ensure that the first person to file the application is also actually a true inventor; someone who has not invented something will not be able to file a patent for the invention.

If a dispute arises as to which of two applicants is a true inventor (as opposed to who invented it first), it will be resolved through an administrative proceeding by the Patent Board.

(2) Section 2 maintains a one-year grace period for U.S. applicants. Applicants’ own publication or disclosure that occurs within one year prior to filing will not act as prior art against their applications.

Similarly, disclosure by others during that time based on information obtained (directly or indirectly) from the inventor will not constitute prior art. This one-year grace period should continue to give U.S. applicants the time they need to prepare and file their applications.

(3) Prior art will be measured from the filing date of the application and will typically include all art that publicly exists prior to the filing date, other than disclosures by the inventor within one year of filing.

Prior art also will no longer have any geographic limitations; thus in section 102 the “in this country” limitation as applied to “public use” and “on sale” is removed, and the phrase “available to the public” is added to clarify the broad scope of relevant prior art, as well as to emphasize the fact that it must be publicly available. Prior art based on earlier-filed United States applications is maintained.

Note, the Cooperative Research and Technology Enhancement Act of 2004, or CREATE Act, is preserved by including an exception for subject matter of a claimed invention made by parties to a joint research agreement.

Changing to a first-inventor-to-file patent system will require applicants to more carefully consider when they file their application. Since there is a great risk of losing patent rights to an earlier applicant, inventors will need to file their patent applications much earlier than they would under first-to-invent.

In addition, inventors may need to file many more applications as a means getting an application on file early and then capturing each incremental change in the invention in separate filings as they proceed along the development pathway.

Ironically, under the Law of Unintended Consequences, the combination of early filings of raw, unrefined applications along with the increase in the number of applications may have just the opposite effect of what the Patent Office would like. The Patent Office just may have an even greater backlog than the one that caused it to put forth its much-maligned proposed Continuations, Claims and IDS rules (Final Rules).

As the House has already passed a similar measure, expect to see the rules come into law in 2008 (albeit in some modified form).

Also see: Duality: Light and Dark Forces Light Up For and Against Patent Reform

The Senate’s Committee on the Judiciary, has issued its draft report on the Patent Reform bill (S. 1145), to amend the patent laws currently in Title 35 of the United States Code.

While the last comprehensive patent law reform by Congress was last major revision of the patent laws was the Patent Act of 1952, P.L. 82-593, there is intense pressure under a drumbeat that the U.S. patent system is broken and needs to be fixed.  The growing impetus towards modernizing and improving the patent system has come mainly from the high-tech industry, which feels under fire from too many patent infringement lawsuits.

But, the Supreme Court has also been involved in an ever-increasing number of patent cases while the United States Patent and Trademark Office (USPTO) has tried to enact its own regulatory changes through rulemaking.

Many believe corporations are trying to change the laws to fit their business model instead of trying to fit their business practices to conform to existing U.S. patent laws.  Taken together, the Patent Reform Act, the Supreme Court rulings and the proposed Patent Office rule changes tend to favor the high-tech industry over the biotech and pharmaceutical industries.

(See: Duality: Light and Dark Forces Line Up For and Against Patent Reform)

In S. 1145, the Patent Reform Act of 2007, the numbered sections of the Act do the following:

(1) title the Act the Patent Reform Act of 2007;

(2) change the system to a “first-inventor-to-file” system;

(3) make it simpler for patent applicants to file and prosecute their applications;

(4) codify and clarify the standard for calculating reasonable royalty damage awards, as well as awards for willful infringement;

(5) create a relatively efficient and inexpensive administrative system for resolution of patent validity issues before the USPTO;

(6) establish the Patent Trial and Appeal Board;

(7) provide for eventual publication of all applications and enhance the utility of third parties’ submissions of relevant information regarding filed applications;

(8) improve venue in patent cases and provides for appeals of claim construction orders when warranted;

(9) give the USPTO the ability to set its fees;

(10) remove the residency restriction for judges on the United States Court of Appeals for the Federal Circuit;

(11) authorize USPTO to require patent searches with explanations when a patent application is filed;

(12) codify and improve the doctrine of inequitable conduct;

(13) give the Director of the USPTO discretion to accept late filings in certain instances;

(14) limit patent liability for institutions implementing the “Check 21” program;

(15) end USPTO “fee diversion”;

(16) make necessary technical amendments; and

(17) set the effective date of the Act.

The Patent Office Professional Association (POPA) has weighed in on the patent reform fiasco with their own list of needed changes, stating:

A far simpler solution to the prior art problem is to retain experienced and highly skilled patent examiners and provide them with sufficient time and resources so they can uncover the relevant prior art during examination. The job should be done right the first time. Despite increasing complexity of applications and growing volumes of prior art, the time allocated to examining a patent application has not changed since 1976.

The 106-page draft report will be finalized and issued as the official committee report on the July 19 bill.  The draft report and other key documents related to current patent reform legislation can be found on the IPO website.

See also:

Patent Reform and the Ethos of the American Inventor (Patently-O)

Draft Report on Senate Patent Reform Bill Circulated (Patent Docs)

Many readers asked about the “suspicious procedures” at the USPTO regarding the Proposed Continuations Limit Rule, the Proposed Claims Limit Rule, the Proposed IDS Rule, and the Final Continuations and Claims Limits Rule.  See Tafas v. Dudas case to enjoin enactment of the USPTO’s new rules.

The question is, can’t things be explained by the ordinary course of business?  Let’s look at the Declaration of Richard B. Belzer, Ph.D., an economist previously in the Office of Management and Budget (OMB).

The Office of Information and Regulatory Affairs (OIRA), an office within OMB, is responsible for implementing presidential Executive Orders related to, among other things, the centralized review of draft proposed and draft final regulations prior to their publication for public comment or promulgation.

Agencies must provide OIRA with an assessment of the potential costs and benefits of a proposed regulatory action, including, an explanation of the manner in which the regulatory action is consistent with a statutory mandate.

Executive Order 12,866 § 1(b)(6) says:

Each agency shall assess both the costs and the benefits of the intended regulation and, recognizing that some costs and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.

It is important to note that Executive Order 12,866 § 6(b)(1) limits OIRA review to those draft rules designated as “significant,” for which “economically significant” is a subset.  OIRA does not review draft rules designated as “not significant”:

OIRA may review only actions identified by the agency or by OMB as significant regulatory actions under subsection (a)(3)(A) of this section. (emphasis added)

Data retained by GSA show that OIRA reviewed 124 draft regulations (an average of about 10 per year) submitted by PTO for review under Executive Order 12,291. Under Executive Order 12,866, OIRA has reviewed 36 draft regulations from PTO (an average of less than 3 per year).

GSA data indicate that none of these draft rules were designated as “major” or “economically significant.” With the new proposed rules, the PTO submitted the Final Continuations Limit Rule and the Final Claims Limit Rule to OMB.  In doing so, the PTO designated as “significant” under Executive Order 12,866 the Proposed Continuations Limit Rule (71 Fed. Reg. 57), the Proposed Claims Limit Rule (71 Fed. Reg. 66), and the Final Continuations and Claims Limits Rule (72 Fed. Reg. 46834), but did not designate any of them as “economically significant.” See here.

Hence, the PTO must have concluded that these rules were not likely to have effects exceeding $100 million in any one year, or have novel policy implications. The PTO designated the Proposed IDS Rule as “not significant” — a designation restricted to regulatory actions too insignificant to warrant OMB review.

Mr. Robert Bahr, Senior Patent Counsel in the Office of the Deputy Commissioner for Patent Examination Policy, stated that this was a typographical error. When asked if the PTO had published a correction in the Federal Register at any time during more than 15 months that had elapsed, and Mr. Bahr acknowledged that the Office had not done so.

In the Supporting Statements dated December 22, 2005, the PTO estimated that the Proposed Continuations Limits Rule and the Proposed Claims Limit Rule would increase paperwork burden by 75,200 hours. Using an hourly rate of $286, the value used by the PTO included in the Supporting Statement, the total cost of incremental paperwork burden attributable to these rules was $22 million.

In its September 2007 ICR submission, the PTO stated that in March 2006 OMB approved an increase in 196,800 burden hours “based on public comments received in response to the proposed rulemakings and further study”, for a total of 272,000 burden hours. Using the hourly rate of $304 in its September 2007 Supporting Statement, these paperwork burdens entail private sector costs exceeding $83 million per year.

The December 2005 Supporting Statement included no estimates of paperwork burden for the Proposed IDS Rule. The September 2007 Supporting Statements states that in July 2006 OMB approved an increase in 714,850 burden hours due to the Proposed IDS Rule. Using the PTO’s assumed hourly rate of approximately $304, these paperwork burdens entail private sector costs exceeding $217 million.

Doesn’t seem too “not significant” to us. 

Read more about the procedures from the Exhibits to the Polestar brief:

Declaration of Richard B. Belzer, Ph.D.

PTO’s Information Quality Guidelines as of January 3, 2006

Statistics Reflecting Dispositions of Appeals

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

The American Intellectual Property Law Association and the Intellectual Property Owners Association have filed briefs with the district court asking it to issue a summary judgment that the retroactive application of PTO rules on continuation and claiming practice is poor sportsmanship.

See Triantafyllos Tafas v. Jon W. Dudas, et al. consolidated with Smithkline Beecham Corporation, et al. v. Jon W. Dudas, et al. (1:07cv1008), 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).

According to the brief, the rules are improperly retroactive as issued because they impair existing rights and impose duties on completed transactions with the agency. The new procedures limit applicants to filing two new continuing applications and one request for continued examination. In addition, applications can only contain up to 25 claims and no more than five of them independent claims.

The impaired rights are not vested rights in issued patents but rights the applications themselves, which are assignable and which contain trade secrets. For many applicants, the filing of a patent application includes a decision to surrender those trade secrets. That decision, according to the brief, was made in reliance on longstanding law guaranteeing a full and fair opportunity to seek a spectrum of patent protection adequate to protect their investments in research and development, product commercialization, and in the patenting process itself.

The AIPLA believes that at least two parties are reciprocally affected by that act: (1) the public, which gets access to what formerly constituted trade secret property, and (2) the applicant, who seeks patent protection in lieu of relying on trade secrecy both in this country and abroad.

The new Rules restrict the ability of patent applicants to file continuation applications to seek adequate protection for the inventions they had elected to protect through the patent system, rather than relying on trade secrecy. Retroactive implementation of the new Rules will, as a practical matter, compel IP owners to (1) abandon pending patent claims, (2) abandon entire patent applications, and (3) surrender currently existing claim scope without adequate opportunity for consideration by the PTO. The kind of loss that patent applicants will face is significant and their substantive rights will be affected materially.

The AIPLA argues that retroactive application of the new Rules also will harm substantive rights in other ways:

There will be situations that result in applicants having to abandon patent applications containing allowable subject matter or face charges of inequitable conduct. One such situation will arise, for example, when prior art references come to light in foreign prosecution occurring years after the original United States application was filed. In the interim, if the applicant has exhausted its right to file continuing applications (even its “one more” application)6 and receives a notice of allowance, that applicant has no right to amend the claims to overcome the reference. The applicant, however, has an obligation to provide this invalidating art to the PTO; but the PTO has no obligation to consider the references, let alone reopen prosecution. The applicant must then choose between permitting issuance of potentially invalid claims and abandoning the application altogether (or filing a petition which is discretionary with the PTO).

The new Rules even punish applicants for previously having made purely procedural decisions fully authorized under then-existing law. For example, the new Rules cut off an applicant’s ability to obtain patent protection by further restricting continuing practice, simply because the applicant had filed a “divisional” application before filing a “continuation” application. See Questions and Answers Claims and Continuations Final Rule C12 (September 27, 2007).7 This formerly innocuous decision, having nothing to do with the substance of the invention, now will result in the loss of two continuation applications under the new Rules, a punishing sanction against the owner that cannot be justified.

The Intellectual Property Owners Association (IPO) also submitted and amicus brief regarding just the proposed changes to § 1.78(f)(2) of the Final Rules for two reasons. First, § 1.78(f)(2) will impermissibly be applied retroactively, imposing on applicants substantial new duties with respect to patent applications that have already been filed. Second, § 1.78(f)(2) contradicts applicants’ rights under the patent statute and case law.

Congress did not grant to the USPTO the power to promulgate retroactive rules. See 35 U.S.C. § 2(b)(2); Bowen v. Georgetown University Hospital, 488 U.S. 204, 208 (1988). Section 1.78(f)(2), however, imposes on applicants substantial new duties with respect to applications that were filed even before Section 1.78(f)(2) was published. See 72 Fed. Reg. at 46717 (listing effective dates of Final Rules provisions). The USPTO has long encouraged different inventions to be claimed in different patent applications. See 37 C.F.R. § 1.141(a). Section 1.78(f)(2), however, retroactively penalizes this innocent practice by requiring applicants to identify any such applications with overlapping filing dates or priority dates and to justify to the USPTO the very existence of these applications. See § 1.78(f)(2)(i)-(ii). Compliance is enforced with the threat of presuming claims in these applications to be unpatentable. See § 1.78(f)(2)(i). Because of this retroactive effect, § 1.78(f)(2) exceeds the rulemaking authority of the USPTO. Landgraf v. USI Film Prods., 511 U.S. 244, 280 (1994).

Section § 1.78(f)(2) also contradicts several provisions of the patent laws, including the statute requiring the USPTO to examine applications (35 U.S.C. §§ 131-132), the statute granting applicants the right to reconsideration and judicial review of rejections (id. §§ 134, 141), and the statute protecting applicants from inconsistent double-patenting rejections (id. § 121).

Second, § 1.78(f)(2) would defeat a patent applicant’s statutory right to de novo review of “double patenting” rejections by the Board of Patent Appeals and Interferences (hereinafter “the Board of Appeals”), see 35 U.S.C. § 134(a), and by the Court of Appeals for the Federal Circuit, id. at § 141. Under § 1.78(f)(2), the double patenting rejections are treated not as a question of law, but as a procedural failure, reviewable only under an “abuse of discretion” standard through an Administrative Procedure Act (APA) challenge. See Star Fruits S.N.C. v. United States, 393 F.3d 1277, 1285 (Fed. Cir. 2005).

Third, the presumption that claims are patentably indistinct contradicts § 121 of the patent statute by its application to “divisional applications” filed in response to USPTO restriction requirements. Divisional applications inevitably have overlapping disclosures, filing dates, and inventors with their respective parent applications. Section 121 of the patent statute was enacted specifically to prevent an application from being used against its corresponding divisional application, see 35 U.S.C. § 121, in direct conflict with the USPTO’s new presumption.

In addition, a collective Public Interest Amici was submitted by various organizations including the Public Patent Foundation (PUBPAT), Computer & Communications Industry Association (CCIA), AARP, Foundation for Taxpayer and Consumer Rights (FTCR) and others. The AARP is not typically for/against patents, they want cheap meds.

The Public Interest Amici believe that the public interest supports the USPTO’s final rules and that the public interest will be well served by the Final Rules because they will help the USPTO curtail [what the group perceives as] abusive behavior by exploitative patent applicants and improve patent quality.

The group believes that the public interest supports the USPTO’s Final Rules for the following reasons:

First, they will enable the USPTO to curtail abuses of the patent application process made by those patent applicants who seek to pervert the system to gain an unfair advantage. Second, the Final Rules will help the USPTO improve patent quality, which is a critical issue for ensuring the patent system benefits the American public. As a result, since the public interest overwhelmingly supports the Final Rules, they are unquestionably reasonable and rational.

Beating the long-dead horse of Lemley, the group claims that:

Continuation applications provide applicants who have had their patent applications finally rejected the ability to force the USPTO to revoke the finality of the rejection simply by paying a fee for a new filing. Thus, as one reference cited by the administrative record in this case found, it is impossible for an examiner to ever actually finally reject a patent application so long as the applicant has sufficient financial resources to keep paying for continuation applications. Final Rules at 46718-19 (citing Mark A. Lemley & Kimberly A. Moore, Ending Abuse of Patent Continuations, 84 B. U. L. Rev. 63 (2004)). This results in USPTO examiners who have repeatedly rejected an application facing the possibility of an endless stream of continuation applications being filed by the applicant that “may well succeed in ‘wearing down’ the examiner, so that the applicant obtains a broad patent not because he deserves one, but because the examiner has neither incentive nor will to hold out any longer.” Lemley & Moore, 85 B. U. L. Rev. at 65. Such “wearing down” of examiners is an abhorrent abuse of continuation applications.

Applicants also abuse the continuation application process in other ways. Some monitor commercial actors who attempt to design around a previously issued patent and then submit claims in a much later filed continuation application that are directed specifically at those design-around efforts. Id. at 7677. These applicants lie in wait until the commercial actor launches or otherwise commits to their design-around product and they then quickly get the USPTO to issue the continuation patent, which has a greater likelihood of ensnaring the commercial actor because its claims were written with the design-around product specifically in mind. As expressly discussed by the USPTO in the administrative record in this case, such perverse manipulation of the patent system is contrary to the public interest because it defeats the public notice function of patent claims, which in turn undermines investments made by commercial actors trying to avoid patent infringement. Final Rules at 46758 (citing To Promote Innovation: The Proper Balance of Competition and Intellectual Property Law and Policy, Ch. 4 at 26-31 (Federal Trade Commission 2003) and Lemley & Moore, 84 B. U. L. Rev. at 100).

To read the AIPLA brief supporting a summary judgment for SmithKline, click here. To read the IPO brief supporting a summary judgment for SmithKline, click here. To see the brief by the Public Interest Sector, click here.

See Also:
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

The European Patent Convention (EPC) has been revised for the first time since its inception in 1973. The revised version of the Convention, known as EPC 2000, will come into force on December 13, 2007.These changes will bring the EPC into line with recent developments in International Law. These changes will affect European patent applications both before and after grant.