Scott Daniels, partner in the firm Westerman, Hattori, Daniels & Adrian, and the primary author of Reexamination Alert™, recently happened across a rather rare reexamination story. See PTO Director Initiates Reexamination Against Gift Tax Patent. Earlier this month, on January 12, 2010, the United States Patent and Trademark Office ordered a Director Initiated Reexamination pursuant to 37 CFR 1.520. See also MPEP 2239. The patent in question, U.S. Patent No. 6,567,790, relates to a patent on a method of minimizing tax liability.
“Director-initiated reexaminations constitute less than 1% of all reexaminations since 1981, and a much lower percentage in recent years,” said Daniels. “Reexamination is intended to give the Patent Office a chance to consider issues regarding the validity of claims, that had not been considered by the examiner during the original prosecution of the patent — specifically the issues of anticipation and obviousness based on prior patents and printed publications. It can be a less expansive, and sometimes more effective, alternative to litigation of those issues.”
Indeed, the reexamination statute and rules permit any person to file a request for an ex parte reexamination, which is the more common type of reexamination. The Office initially determines if “a substantial new question of patentability” is presented. If such a new question has been presented, reexamination will be ordered. In the Director-Initiated scenario, however, there has been no request for reexamination made by either the patent owner or a third party, which is why they are so rare.
Typically the Patent Office allows patent owners and third parties to sort out whether a reexamination is necessary. The thought process is that there is no need to waste precious examining resources to reexamine a patent that no one cares about or is enforcing. Thus, something out of the ordinary happened here, although what exactly is impossible to tell. Perhaps the Patent Office was taking some heat on Capitol Hill for these types of patents or perhaps someone just stumbled on something that made them scratch their heads and wonder. It is all just a matter of speculation.
In any event, once reexamination has started there is no way to stop the process. The reexamination proceedings are very similar to regular examination procedures in patent applications; however, there are notable differences. For example, there are certain limitations as to the kind of rejections which may be made, special reexamination forms to be used, and time periods set to provide “special dispatch.” When the prosecution of a reexamination proceeding is terminated, a reexamination certificate is issued which indicates the status of all claims following the reexamination.
Like any other examination it can be expected that all the claims will initially be rejected, otherwise there wouldn’t have been the requisite substantial new question of patentability. The patent owner will have the ability to respond, amend and make arguments to the Patent Examiner. If the patent owner does not meaningfully participate it is all but certain that the reexamination certificate will issue with all claims gone.
The reexamination order, signed by Robert Bahr, Senior Counsel in the Office of the Associate Commission for Examination Policy, is extremely detailed and comes complete with claim charts. In fact, the order is over 58 pages of text explaining why it is believed there is a substantial new question of patentability.
Time will tell, but these types of tax limiting methods have been under fire on Capitol Hill in some circles for some time. While that isn’t a justification for denying patent claims, it does appear as if the applicant here is going to face an uphill battle to retain the patent claims.
As with all things, time will tell. Stay tuned!