Sunday, March 22, 2009

CAFC Throws a Bone to the PTO in Tafas Case: Now What?

By now, most everyone has heard that the CAFC issued its opinion in Tafas v. Doll and upheld the PTO's authority to promulgate many (but not all) of the rules. After much hand-waving over what PTO rules are to be considered "procedural" versus "substantive", the CAFC essentially treated the rules as a substantive due process issue over a non-fundamental right.

While we do not purport to set forth a definitive rule for distinguishing between substance and procedure in this case, we conclude that the Final Rules challenged in this case are procedural. In essence, they govern the timing of and materials that must be submitted with patent applications. The Final Rules may “alter the manner in which the parties present . . . their viewpoints” to the USPTO, but they do not, on their face, “foreclose effective opportunity” to present patent applications for examination.
The only Rule change that was shot down was the "Rule 78" provision that set a 2 continuation limit without “showing that the amendment, argument, or evidence sought to be entered could not have been submitted during the prosecution of the prior-filed application.” Here, the CAFC stated:

[F]inal Rule 78 is inconsistent with § 120 . . . Section 120 unambiguously states that an application that meets four requirements “shall have the same effect, as to such invention, as though filed on the date of the prior application.” . . .

The use of “shall” indicates that these are the exclusive requirements, and that all applications that meet these requirements must receive the benefit provided by § 120. . . .Thus, Rule 78 is invalid because it attempts to add an additional requirement—that the application not contain amendments, arguments, or evidence that could have been submitted earlier - that is foreclosed by the statute. Because the statute is clear and unambiguous with respect to this issue, the USPTO’s [argument] is unavailing.

Regarding the remaining Rules, the CAFC majority opinion considered and acknowledged at least some of the headaches imposed by the rules, but nevertheless stated that the PTO will not be prevented from acting
simply because it requires the applicant to exert more effort to comply, so long as the effort required is not so great that it effectively forecloses the possibility of compliance.
So with that in mind, here's what the CAFC had to say about the remaining rules:

Rule 114: One RCE is provided as a matter of right provides for similar treatment of RCEs. Under the rule, an applicant is allowed one RCE as a matter of right per family. Each additional RCE would require a petition “showing that the amendment, argument, or evidence sought to be entered could not have been submitted prior to the close of prosecution in the application.”

Here, section 132 states that "if after receiving [a rejection], the applicant persists in his claim for a patent, with or without amendment, the application shall be reexamined" [section 132(a)]. Also, "“[t]he director shall prescribe regulations to provide for the continued examination of applications for patent at the request of the applicant” [section 132(b)]. While the CAFC noted that section 132 did not define the difference between “continued examination” and “reexamination,” teh court nevertheless found that nothing in the statute precluded the PTO from limiting RCE's in the proposed manner.

Rules 75 & 265: The "5/25 ESD Rules" - applicant submitting either more than five independent claims or twenty-five total claims must provide an examination support document (“ESD”) that includes a preexamination prior art search, a list of the most relevant references and limitations disclosed by each reference, an explanation of how each independent claim is patentable over the submitted references, and an analysis of how each limitation of the claims is disclosed and enabled by the specification.

Here, the CAFC flatly stated:
[W]e need not decide whether the USPTO may impose a limit on the number of claims an applicant can pursue because we do not find that the ESD requirement creates any such limit. Rather, it simply requires that an ESD be submitted if more than five independent or twenty-five total claims are included in certain sets of copending applications. Because we cannot, as discussed above, conclude that Final Rules 75 and 265, on their face, effectively foreclose applicants from successfully submitting ESDs, we similarly cannot conclude that these rules place an absolute limit on claim numbers in violation of § 112, ¶ 2.
In addition, the CAFC rejected the concerns over inequitable conduct when it came to ESD's:
We recognize that the drafting of an ESD will entail browsing many references, that mistakes and omissions will inevitably occur, and that the courts will be asked to determine if there was inequitable conduct. However, doubt about the judiciary’s ability to apply its own doctrine in a way that yields fair results and discourages frivolous allegations should not preclude the USPTO from promulgating rules that are within its statutory authority.
So now what? The CAFC affirmed-in-part, vacated-in-part and remanded the case back to the district court. While the issue of rulemaking authority was resolved, the CAFC made clear that other issues were still fair game, albeit harder to prove by plaintiffs:
Because of the complexity of this case and the numerous arguments presented on appeal and before the district court, we think it is important to expressly summarize what we believe remains for the district court on remand. This opinion does not decide any of the following issues: whether any of the Final Rules, either on their face or as applied in any specific circumstances, are arbitrary and capricious; whether any of the Final Rules conflict with the Patent Act in ways not specifically addressed in this opinion; whether all USPTO rulemaking is subject to notice and comment rulemaking under 5 U.S.C. § 553; whether any of the Final Rules are impermissibly vague; and whether the Final Rules are impermissibly retroactive.
Expect each of these topics to have a large bulls-eye on them for the remand.

While many are hopeful for en banc review, the odds don't seem in favor of it right now. Interestingly, Joe Miller from the Fire of Genius Blog noted on the Patently-O boards that
The court's internal operating procedures entail circulating a draft opinion, before it issues to the public, to the full court. At that time, a judge could initiate a poll of the judges to take the case en banc. (IOP #10(5).) There's no sign that such a poll happened here.

In any event, it seems clear that (a) the other judges of the court are not learning about this decision today (along with the rest of us), and (b) a majority of them already could have stopped it from happening if they had wanted to.
Another wrinkle is that the PTO director has not been named as of yet. It is possible that the new director will drop the case entirely.

In the meantime, the PTO released this statement after the decision:
The United States Patent and Trademark Office is pleased that the United States Court of Appeals for the Federal Circuit confirmed that the Final Rules are within the agency's rulemaking authority and that the rules regarding requests for continued examination, claims, and examination support documents are consistent with the law. We are further considering other aspects of the opinion, including the Federal Circuit's conclusion that the rule regarding continuations conflicts with the Patent Act.
The Office gave no word on the fate of the Appeal Brief Rules, which were delayed last December.


-- Patent Baristas: "Court Splits the Baby on Patent Office Continuation Rules. Expect More Tension" (link)

-- Patently-O: "Tafas v. Doll: Continuation Limits Invalid; Limits on Claims and RCEs are OK" (link)

-- Reuters: "Court mostly backs new patent office rules" (link)

-- BNET: "Mixed Results in Tafas v. Doll Appeal Over New Patent Rules" (link)

-- "Appeals Court Revives Some Patent Rules Attacked By Glaxo" (link)

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