The PTO’s proposed Final Rules relating to requests for continuation practice, continued examination (RCE) and the number of claims remain in limbo following the March 20, 2009 decision of the Federal Circuit in Tafas v. Doll, Appeal No. 2008-1352. These rules proposed to limit the ability of applicants to file continuation applications and RCEs. In addition, the rules would limit an application to 5 independent claims and 25 claims total unless the applicant provides an examination support document (ESD) in support of its claims. The District Court of the Eastern District of Virginia enjoined the implementation of these rules in late 2007 and later granted summary judgment that the rules were invalid. The Federal Circuit has affirmed in part the invalidity of the rule restricting continuations, but vacated the district court’s judgment with respect to the other rules.

Judge Prost’s majority opinion first concluded that all the proposed rules were procedural, rather than substantive, and therefore within the PTO’s rule making authority. In the second step of its analysis, the court considered whether each proposed rule was consistent with the Patent Act. The court concluded that only Rule 78, which would limit continuations, was inconsistent with Section 120 of the Patent Act. Judge Bryson concurred in the majority opinion, with added observations.

With respect to Rule 78, the court concluded that Sec. 120 provided four “exclusive” requirements for filing a continuing application. Because the proposed rule would impose additional requirements, it was inconsistent with the statute and thus impermissible.

However, the majority found that the other proposed rules do not conflict with the Patent Act, and thus were permissible. Unlike its treatment of Rule 78, restricting continuations, the opinion noted that the statutory provision providing for RCEs did not grant a right to submit an “unlimited number” of such requests. Then, with respect to the limit on the proposed number of claims, it found that the required examination support document (ESD) did not foreclose applicants from filing an unlimited number of claims. It rejected the arguments that the ESD would inevitably expose applicants to allegations of inequitable conduct and that the ESD impermissibly shifted the burden of examination onto applicants.

The decision orders remand for further consideration by the district court, saying “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.”

Judge Rader dissented, concluding “Because the Final Rules drastically change the existing law and alter an inventor’s rights and obligations under the Patent Act, they are substantive and the PTO exceeded its statutory rulemaking authority under 35 U.S.C. § 2(b)(2)".

It appears unlikely that the issues raised in this case will be resolved in the near future. A petition for rehearing en banc by the Federal Circuit seems likely. The split decision may encourage some judges to grant en banc review; however, the undecided issues might indicate the matter is not yet ripe. A petition to the Supreme Court for writ of certiorari also is possible. After this round of appellate proceeding is completed, further district court proceedings and another appeal seem likely.

The new administration could withdraw the rules proposals, which should moot the litigation; however, the government probably has an interest in resolving some of the basic issues, which might keep the litigation going regardless of what the PTO wants to do. Once the new leadership of the PTO is in place, we may see new rule-making or legislative activity, possibly after consultation with industry and IP organizations.

Please follow these links for more information:

PTO Rules
http://www.fr.com/news/71fr48.pdf

Rule Proposal
http://www.fr.com/news/articledetail.cfm?articleid=530

District Court Decision
http://www.fr.com/news/articledetail.cfm?articleid=879

For further information, please contact any Fish & Richardson attorney.


The PTO’s proposed Final Rules relating to requests for continuation practice, continued examination (RCE) and the number of claims remain in limbo following the March 20, 2009 decision of the Federal Circuit in Tafas v. Doll, Appeal No. 2008-1352. These rules proposed to limit the ability of applicants to file continuation applications and RCEs. In addition, the rules would limit an application to 5 independent claims and 25 claims total unless the applicant provides an examination support document (ESD) in support of its claims. The District Court of the Eastern District of Virginia enjoined the implementation of these rules in late 2007 and later granted summary judgment that the rules were invalid. The Federal Circuit has affirmed in part the invalidity of the rule restricting continuations, but vacated the district court’s judgment with respect to the other rules. Judge Prost’s majority opinion first concluded that all the proposed rules were procedural, rather than substantive, and therefore within the PTO’s rule making authority. In the second step of its analysis, the court considered whether each proposed rule was consistent with the Patent Act. The court concluded that only Rule 78, which would limit continuations, was inconsistent with Section 120 of the Patent Act. Judge Bryson concurred in the majority opinion, with added observations. With respect to Rule 78, the court concluded that Sec. 120 provided four “exclusive” requirements for filing a continuing application. Because the proposed rule would impose additional requirements, it was inconsistent with the statute and thus impermissible. However, the majority found that the other proposed rules do not conflict with the Patent Act, and thus were permissible. Unlike its treatment of Rule 78, restricting continuations, the opinion noted that the statutory provision providing for RCEs did not grant a right to submit an “unlimited number” of such requests. Then, with respect to the limit on the proposed number of claims, it found that the required examination support document (ESD) did not foreclose applicants from filing an unlimited number of claims. It rejected the arguments that the ESD would inevitably expose applicants to allegations of inequitable conduct and that the ESD impermissibly shifted the burden of examination onto applicants. The decision orders remand for further consideration by the district court, saying “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.” Judge Rader dissented, concluding “Because the Final Rules drastically change the existing law and alter an inventor’s rights and obligations under the Patent Act, they are substantive and the PTO exceeded its statutory rulemaking authority under 35 U.S.C. § 2(b)(2)". It appears unlikely that the issues raised in this case will be resolved in the near future. A petition for rehearing en banc by the Federal Circuit seems likely. The split decision may encourage some judges to grant en banc review; however, the undecided issues might indicate the matter is not yet ripe. A petition to the Supreme Court for writ of certiorari also is possible. After this round of appellate proceeding is completed, further district court proceedings and another appeal seem likely. The new administration could withdraw the rules proposals, which should moot the litigation; however, the government probably has an interest in resolving some of the basic issues, which might keep the litigation going regardless of what the PTO wants to do. Once the new leadership of the PTO is in place, we may see new rule-making or legislative activity, possibly after consultation with industry and IP organizations. Please follow these links for more information: PTO Rules http://www.fr.com/news/71fr48.pdf Rule Proposal http://www.fr.com/news/articledetail.cfm?articleid=530 District Court Decision http://www.fr.com/news/articledetail.cfm?articleid=879 For further information, please contact any Fish & Richardson attorney.
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