Tuesday, October 23, 2007

A *Second* Challenge to IDS Rules Filed in the OMB

A second challenge has been filed in the OMB, hot on the heels of last week's challenge submitted by David Boundy and 29 other signatories. The second challenge is authored by Richard B. Belzer, on behalf of undisclosed clients. Notes Belzer,

I decline to reveal the identity of my clients. They have persuaded me that there is a reasonable expectation that revealing their identities could result in financially devastating retaliation with respect to patent applications now in process or which they would submit to USPTO in the future.
One interesting fact about Belzer is that he previously served, for 10 years, as an economist with the Office of Management and Budget (OMB). He also had oversight of major regulatory initiatives by EPA, OSHA, FDA, USDA, and other agencies, and helped develop government-wide guidelines implementing the Paperwork Reduction Act, OMB directives concerning benefit-cost analysis, and various presidential directives.

Just like the previous challenge, Belzer's presentation doesn't mince words, and further submits that the PTO has provided "no useful information" for the contention that the IDS rule are "not significant"

USPTO does not disclose any analysis of benefits, costs, or other effects in the NPRM [other than baldly stating that "This rulemaking has been determined to be not significant for purposes of Executive Order 12866"]

"Not significant" under EO 12866 normally is limited to regulatory actions that have minor consequences and elicit little or no controversy, such as housekeeping actions, and matters for which the agency is willing and able to perform internal oversight equivalent to that of OMB . . . The NPRM is online at regulations.gov (PTO-P-2005-0024). However, no other USPTO documents or public comments are posted there . . . No estimates of cost, benefits, or other effects are posted on USPTO’s website.

* * *

From the number of public comments submitted to USPTO (65), it is clear that the proposed IDS Rule is at least "significant" under EO 12866. From the contents of these comments, there is a prima facie case that the proposed IDS Rule has effects exceeding $100 million in any one year, and thus is "economically significant." USPTO did not perform a Regulatory Impact Analysis (RIA), nor did it disclose the basis for its determination that the proposed rule is "not significant."

The presentation also has a redacted affidavit from a 20+ year
practitioner that provides some chilling data:
In this declaration, the affiant estimates that the cost of complying with the major provisions of the proposed IDS Rule is about $7.3 billion per year:
• Applications in which more than 20 references are cited: $3.4 billion per year
• Additional explanations of foreign-language or moderately long references: $2.4 billion per year
• Requirements for citation of references after first Office action on the merits: $2.1 billion per year.
The presentation concludes:
Based on my expertise in regulatory analysis, and more than 20 years’ experience reviewing such analyses (including 10 while employed as an economist at OMB), I am virtually certain that the proposed IDS Rule is economically significant . . . Furthermore, based on my governmental experience it is inconceivable that USPTO could be unaware of the approximate magnitude of these costs, or that it employed any reasonable economic method or logic to determine that the proposed rule was 'not significant'. . . . One can infer with reasonable certainty that USPTO deliberately evaded the requirements of Executive Order 12,866.

The USPTO is required, pursuant to OMB’s and is own information quality guidelines, to adhere to the principles of substantive and presentational objectivity . . . The proposed IDS Rule was covered by these guidelines, but USPTO did not disclose any credible information about its cost. This is per se a violation of both substantive and presentational objectivity. The agency could not reasonably have believed that the costs the proposed IDS Rule were trivial and thus not worth mentioning, and its failure to disclose an unbiased cost estimate was knowingly misleading.
Read/download the 2nd challenge (Belzer) here (link)

See First challenge (Boundy) here (link)

Special thanks to David for bringing this to my attention.

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