Court Strikes Down Rules Issued by PTO

The U.S. District Court in Alexandria, Virginia has declared that a group of “Final Rules” proposed last year by the U.S. Patent and Trademark Office (PTO) are “null and void.” The rules would have restricted patent applicants’ ability to file continuing applications and imposed a burdensome requirement for explanation of prior art on many applicants. The April 1, 2008 order by Judge Cacheris held that the proposed rules were “not in accordance with law” and “in excess of statutory jurisdiction [and] authority.” It granted motions for summary judgment by plaintiffs Glaxo SmithKline (GSK) and Triantafyllos Tafas, and permanently enjoined the PTO from implementing those rules.

The court’s supporting opinion explained that the rules “are substantive in nature and exceed the scope of the PTO’s rulemaking authority under 35 U.S.C. 2(b)(2).” It explained that the case could be decided by determination of that single dispositive issue and, therefore, did not address the other issues raised by the parties and amicus briefs.

Judge Cacheris’ opinion cited Federal Circuit case law in concluding that the PTO’s authority to engage in rule-making was limited to procedural matters. It further noted that, since 2005, “Congress has debated and considered whether it should grant the USPTO substantive rulemaking authority but has declined to do so.” Judge Cacheris characterized the proposed rules as a “drastic departure from the terms of the Patent Act as they are presently understood,” pointing out that – because they impact pending patent applications – the rules would make changes in existing rights and obligations.

The “5/25” rule would have limited the number of claims that could be filed without a detailed discussion of prior art. In finding that rule substantive, the judge relied on the express language of Section 112, and a 1938 precedent that an inventor “has the right to … express the same invention in more than one claim”. He determined that the PTO’s requirement for an Examination Support Document (ESD) in applications that exceeded the “5/25” rule “would change existing law and alter the rights of applicants by shifting the examination burden away from the USPTO and onto applicants.” The judge noted that, under Federal Circuit case law, “Applicants have ‘ no duty to conduct a prior art search.’ ”

In concluding that the proposed restriction on continuing applications was also substantive, Judge Cacheris again referred to the permissive language of Section 120, and cases interpreting it. He concluded that “a limit upon continuing applications is a matter of policy for the Congress”. Finally, he said, the proposed limitation on a single Request for Continued Examination (RCE) in an application family was contrary to the “plain language of the statute” as well as the PTO’s own statements when the RCE provisions were enacted in 2000.

Although many applicants will generally welcome this ruling, it is not the end of the story. The PTO has 60 days to file an appeal of the decision, which is likely to be heard by the Federal Circuit. Also, the issue of whether to grant substantive rulemaking authority to the PTO is under consideration in the patent reform process, currently making its way through the Congress.