Intellectual Property Directions

Last week the CAFC decided that 3 of 4 rules changes that had been on hold since last October are merely procedural rules and are therefor within the purview of the PTO.

For those of us with short memories - last year the PTO set forth 4 new rules dealing with continuation applications and the number of claims that may be submitted under current procedures. The PTO was enjoined from putting the rules into action by the District Court, which questioned whether the rules were substantive or just procedural.

Last week’s decision sends 3 of the 4 rules back to District Court for trial, assuming the new administration wants to keep pushing them. The three rules in question are:

• Final Rule 114, which limits the Applicant to one Request for Continued Examination per patent application family. That is, when you have a string of continuation applications you can’t try to overcome a final rejection on each one. At some point final means final within the regular examination process.
• Final Rule 75, which limits a normal application to five independent claims or twenty-five total claims per application. Applicants who wish to file additional claims must submit an Examination Support Document (ESD).
• Final Rule 265 sets forth the ESD requirements. The Applicant is required to perform a prior art search and submit a summary of the search results with an explanation of how the independent claims are patentable over the prior art.

 If I were a betting man I’d guess that rule 114 and rule 75 make it though trial, but rule 265 fails (at least as currently written). Rule 114 is a change in procedure - you have to move on from dealing with the examiner sooner - as is rule 75 - it says you have to provide the examiner with additional material to make his or her job easier if you submit a lot of claims.

But rule 265, which requires you to perform a prior art search, is asking you to do something that you, an inventor, may not be capable of and further requires that you analyze your claims versus the prior art, something you are explicitly unqualified for (patent attorneys and judges spend hours in court doing claim construction and analysis). Rule 265 is not just a change of procedure (the steps to get a patent) but is a clear change in what is required of you to submit a patent.

This blog is not a newspaper of record like the Times or the Post, but in case you haven’t heard, the District Court has issued a permanent injunction barring the Patent Office from implementing the much maligned “administrative” rules changes it announced last year.

The court ruling essentially states that limiting the number of continuation filings, for example, is not an administrative change but instead is a substantive change to what had been allowed by law.

Although one can never tell the underlying thought processes of the parties to a legal proceeding, I have to wonder if the USPTO understands the difference between an an administrative change (a new format for a patent application form) and a substantive change (new limits on how many patent applications can be filed).

In any case, the sky has not fallen (no new PTO rules) but we are still waiting for the other shoe to drop (patent reform legislation).

I remember a cartoon I saw many years ago. It showed several inventors waiting on a bench outside the patent examiner’s office. Each inventor had an odd-shaped package on his lap, with bulges and protrusions and wrapped in brown paper and string to hide the details of the contents. Two adjacent inventors are holding identical packages and are eyeing each other with great suspicion. Welcome to “first-to-file”.

The United States’ virtually unique “first-to-invent” rule is likely to change if and when patent reform makes its way through Congress. Of the several reforms in the package to argue about, FTF is one that gets my vote without much worry. Some people suggest that FTF favors large companies over small entities, but I don’t see it, except in one very narrow sense.

Arguably, a large company has the resources to “run” to the patent office as soon as an invention is ready for patenting while a small entity has to shepherd its resources. I suppose that’s true, but my experience with both types of companies suggests that big companies, with many more potential patents to evaluate, are no less concerned about budgets than are small companies; have more bureaucratic red-tape to get past; and are less enamoured of any one invention (given the many technology areas they work in). In a large company, getting the okay to patent ”your” invention is often one battle in an internecine battle for resources. In a small company the focus is typically on the key technologies supporting one product or product line and management decisions can be made on a dime.

The reality is that patent interferences are relatively rare and, if memory serves, the senior party (the first to file) wins most of the time. Moving to FTF, aside from bringing us into alignment with the rest of the world, would eliminate a rarely used and costly procedure that usually ends up giving the patent to the first to file anyway. Without First-to-Invent, the need for evidence-quality lab notebooks is eliminated and without interferences the potential for a surprise legal expense is eliminated.

The one impact that FTF will have on both large and small businesses is that it increases the pressure to file a provisional application as soon as possible and then finish any improvements and/or market evaluation within the one year lifetime of the provisional application. But even this impact is minimal in its practical application. Under First-to-Invent it is a risky strategy to postpone filing a provisional application as soon as possible since it opens you up to the argument (in an interference proceeding) that you did not file in a timely manner. Our patent system is designed to reward inventors who share their inventions with society with the temporary “patent monopoly”; not filing in a timely manner (i.e., once your invention is reduced to practice) is just another weapon in the senior party’s arsenal.

If you’ve been paying attention to your IP development process and diligent in reducing your inventions to practice under First-to-Invent then you have little to fear from First-to-File. In general, interferences are rare and I see the odds of you losing a patent under FTF compared to winning a patent at just about 50:50.

McDermott Will & Emery reports in their January ‘08 IP Update (see Patent Reform Efforts Revitalized with Release of Senate Judiciary Committee Report) that:

Efforts to reform United States patent laws were revitalized on January 14, 2008, when the U.S. Senate Committee on the Judiciary issued its draft report about the proposed Patent Reform Act of 2007 (S. 1145), which urged the Senate to pass the bill.  The 106-page report summarized the key features and goals of the bill, but did not introduce new proposals.  The House of Representatives passed its version of the bill in September 2007.

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Supporters hope to bring the bill to a vote by February 2008, but it is unlikely to pass without substantive revisions.  While the House Judiciary Committee passed the bill unanimously last year, it eliminated the controversial post-grant review provision during mark-up.