Tuesday, June 26, 2007

Hell Hath No Fury - Attack Launched on USPTO Continuation Rule Changes

On June 15, David Boundy from Cantor Fitzgerald and Mike Strickland from GlaxoSmithKline appeared at a White House meeting with the Office of Management and Budget (OMB) to discuss the PTO's rules to limit patent applications (link). Attendees included:

  • John Love - USPTO
  • Jennifer McDowell - USPTO
  • David Rostker - OMB/ Office of Information and Regulatory Affairs (Desk Office covering Commerce Dept)
  • Lisa Branch - OMB/ Office of Information and Regulatory Affairs, Counselor to Administrator Dudley
  • Aaron Flynn - Office of Science and Technology Policy
  • Peter Robbins - Dept of Commerce, Office of General Counsel
  • Carrol Barnes - Small Business Administration/Office of Advocacy
  • Rob Alderfer - OMB
  • Nikesh Jindal - OMB

The conference was in regard to numerous concerns over the implementation of the rule changes, namely:

  1. The USPTO’s alleged failure to adhere to the regulatory philosophy and principles of Executive order 12,866 (link)
  2. The USPTO’s alleged violation of the Information Quality Act and Office of Management and Budget’s implementing guidelines; and
  3. Significant discrepancies being found between the USPTO’s claimed savings in paperwork burden and the increase in actual burden specifically mandated by the Limits on Claims Rule.

These concerns were summarized in a letter to the honorable Susan Dudley, Office of Information and Regulatory Affairs (OMB), and signed on behalf of numerous organizations and companies that oppose the changes.

  • To download/view the cover letter, see here (link)

  • To download/view the joining signatories, along with opposition statements (attached as Appendix A), see here (link)

Attached to the letter are numerous exhibits, which contained detailed arguments against the implementation of the continuation rule changes. THe exhibits are arranged as follows

Appendix A - Public Comments Submitted by Signatories to USPTO on its Notices of Proposed Rulemaking

Appendix B - The Draft Rules are “Economically Significant” under Executive Order 12,866

Appendix C - The Draft Rules Are Not Required by Patent Law or Necessary to Implement Patent Law, and are Therefore Impermissible Under EO 12,866 § 1(a)

Appendix D- USPTO’s Written Rationale is Insufficient

Appendix E - The Rules Exceed the Authority Delegated to USPTO under the Administrative Procedure Act and Patent Act

Appendix F - Existing Regulations or Administrative Practices Created or Contributed to the Problems USPTO Seeks to Remedy (EO 12,866 Sec. 1(b)(2))

Appendix G - USPTO Did Not Rely on the Best Available Scientific, Technical, Economic and Other Information (EO 12,866 Sec. 1(b)(7))

Appendix H- USPTO’s Claimed Reduction in Backlog Is Unlikely to Materialize

Appendix I - USPTO Cannot Show that the Proposed Rules are the “Most Cost Effective” Solution

Appendix J - USPTO’s Promises of Procedural Remedies Against Substantive Harshness are Illusory

Appendix K - USPTO Failed to Comply with Applicable Information Quality Principles and Guidelines

Appendix L - USPTO Has Withheld Data and Analysis Essential for Evaluating its Proposals

Appendix M - USPTO’s Estimates of Paperwork Burden are Invalid and Unreliable (Paperwork Reduction Act)

Appendix N- Materials Received from USPTO in Response to FOIA Request,
Including Chicago “Town Hall” Slides

Appendices O-Q - Relevant Statutes/C.F.R./MPEP

To view the attachments (Appendices B-Q), click here (link) (91 pages)

The attachments total hundreds of pages and allege numerous improprieties with regard to the manner in which the continuation rule changes were implemented, including:

- The PTO apparently did not conduct any studies to identify the source of its backlog problem (Appendix C-4, footnote 24);

- The PTO breached its duties of candor and good faith (Administrative Procedure Act, Freedom of Information Act) by failing to disclose its data, assumptions, and models, refusing to provide them when required, and then further refusing to provide them in response to a FOIA request (Appendix C-3, and Appendices L, N(1) and N(2));

- The rationales provided by PTO are insufficient to meet the requirements of Executive Order 12,866 (Appendix D);

- The PTO violated both the Executive Order and Administrative Procedure Act by failing to discuss alternatives to the proposed rules in the Notices of Proposed Rulemaking (Appedix D, Appendix I-1 to I-6);

- The backlog may well be due to internal disincentives provided to examiners, and not any burden imposed on the office by applicants (Appendix F-8 to F-11);

- The Proposed Rulemaking breached statutory obligations, including the Information Quality Act (Appendix K);

- The paperwork burden estimated for the Examination Support Documents (ESD),
which were noted to be extraordinarily burdensome by many of the comment letters, were estimated by PTO to be zero (Appendix M). Interestingly, John Whealan, PTO Solicitor, stated at a Duke Symposium, that "If you want all your claims examined up front, you can have it done, but it's going to cost you, you're going to have to do some work, which in the current law of inequitable conduct, nobody's going to want to do" (Appendix M-6).

To view the FOIA requests click here (link1 - PTO budget, pendency, attrition (79 pages)) and here (link2 - request for files on rulemaking proceedings (continuation, claim examination, IDS) (117 pages)).

It is likely that this material will serve as a basis for a subsequent lawsuit if the USPTO decides to enact the proposed rule changes.

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