PolarityTE stock tumbles, harassed by activist short seller misrepresenting Public PAIR data

By Gene Quinn
July 11, 2018

Whether the Citron report is intentionally wrong for the purpose of causing PolarityTE stock to tumble, which it has, or whether it is recklessly wrong, or just ignorant is impossible to tell. But what Citron says can without question be characterized as absolutely incorrect.

Yesterday, Law360 published an article that gave unjustified credence to what in my opinion is an extraordinarily frivolous lawsuit against PolarityTE (NASDAQ: COOL), a commercial-stage biotechnology and regenerative biomaterials company located in Utah.

Unfortunately for Polarity, they have found themselves in the cross-hairs of Citron Research, who on their website proclaim that they have “amassed a track record identifying fraud and terminal business models second to none”. On June 25, 2018, Citron published a report on PolarityTE, charging the company with committing fraud relating to its patent prosecution endeavors. Citron is written and edited by Andrew Left, an activist short seller.

Citron does not allege, and could not credibly allege, that the PolarityTE has been lying to the United States Patent and Trademark Office. Nor did Citron allege subterfuge surround the technology or science underlying the patent application in question. Indeed, Citron specifically says in the report that they “will not discuss the science behind PolarityTE”. Instead, the astonishing claim is made that PolarityTE has committed fraud because it did not notify shareholders that the patent examiner issued a non-final rejection in a patent application.

The problem with the Citron report is it is completely wrong.

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Clear Error in the Citron Report

First, it is blatantly obvious that Citron does not understand patent prosecution, or that they cannot properly read a file history, or that they are misrepresenting what the file history actually shows. For example, Citron says that the non-final rejection was made known to PolarityTE on March 31, 2017, which they find to be conclusive proof of fraud because PolarityTE closed a transaction with shareholders on April 7, 2017. The problem, however, is the non-final rejection was mailed by the USPTO and sent to the law firm representing PolarityTE on April 7, 2017. See Non-Final Rejection Dated April 7, 2018.

Assuming for a moment that the receipt of a non-final rejection is at all relevant – which it is not – there is no way it could have been received by the law firm representing PolarityTE until after the mailing date. Then there would have been at least several days, perhaps a week or several weeks between receipt and the law firm notifying the client.

It seems Citron flat out misunderstood the importance of the difference between the Transaction History and the Image File Wrapper in Public PAIR, conflating the dates the patent examiner worked on the First Office Action on the Merits – which necessarily had to be before it was finalized and transmitted to PolarityTE – and when the law firm representing PolarityTE received the non-final rejection (i.e., First Office Action on the Merits).

This same mistake was made by Citron with respect to the date of the final rejection. The USTPO sent the law firm representing PolarityTE the final rejection on June 14, 2018. Citron erroneously claims the final rejection was sent to PolarityTE on June 4, 2018, which is simply false. Again, it would have taken days, or weeks for the lawyers representing PolarityTE to notify the company that they had received this final rejection. See Final Rejection Dated June 14, 2018.

Alarming Unfamiliarity with Patent Prosecution

Aside from the obvious errors, the Citron report demonstrates an alarming unfamiliarity with the basics of patent prosecution. A non-final rejection in a patent application is commonplace. Indeed, if a first action allowance is obtained the patent applicant should ask the patent attorney why broader claims were not sought in the first place. So, to say or suggest that there is fraud, or even anything peculiar about a non-final rejection in a patent application is simply wrong.

The patent applicant has an absolute right to respond to a non-final rejection, can conduct a private interview with the patent examiner to discuss the application to attempt to resolve the rejection with mutually agreeable claim language, and can argue with the examiner both in person and in writing to attempt to convince the examiner that they are mistaken about either what the prior art says, or what the invention is, or both. Indeed, inventors spend many thousands of hours working on their inventions, patent attorneys will spend many dozens of hours reading the prior art and drafting the patent application that is filed, and patent examiners will spend several hours reviewing the application before issuing a First Office Action on the Merits (i.e., a non-final rejection). It is absolutely ordinary, and understandable, that the First Office Action on the Merits would ordinarily result in all claims being rejected. See Understanding U.S. Patent Prosecution.

Citron also claims that PolarityTE has engaged in fraud because they received a final rejection from the patent examiner and did not notify shareholders. Again, only those who are completely unfamiliar with patent practice and procedure could possibly make such an erroneous claim. A final rejection is anything but final in the everyday meaning of the word.

The name “final rejection” is a bit of a misnomer. Receiving a final rejection does not mean that a patent application has been completely and forever rejected by the USPTO and cannot be saved. Instead, a final rejection means a final six (6) month clock has started on the current patent application. See 35 U.S.C. § 133. Thus, time is winding down for the applicant on this filing once a final rejection is received. But even after a final rejection the applicant can still file an Amendment and Response, they can still ask for and receive an interview with the patent examiner, and they can and sometimes will still convince the patent examiner to issue a Notice of Allowance.

Even if the patent examiner cannot be persuaded after a final rejection the applicant still has MANY options. For example, a very common option is to file a Request for Continued Examination (RCE) pursuant to 37 C.F.R. 1.114. By doing this and paying a fee the applicant receives additional consideration from the patent examiner. And if Citron were at all familiar with patent practice they would know that many – if not most – patent examiners require a minimum of 3 or 4 written correspondences to be filed before they are prepared to issue a patent. That means a minimum of one RCE filing. Sometimes more RCEs are filed. And since by rule you can only file an RCE after prosecution is closed, the most typical RCE filing occurs AFTER there has been at least one final rejection, sometimes more than one final rejection.

So, had Citron been interested in getting the facts straight, they would have learned that many patents are issued after a final rejection. A great many.

Conclusion

Whether the Citron report is intentionally wrong for the purpose of causing PolarityTE stock to tumble, which it has, or whether it is recklessly wrong, or just ignorant is impossible to tell. But what Citron says can without question be characterized as absolutely incorrect. There is no shade of gray, or room for discussion. Citron is wrong.

Frankly, I see no way the attorneys bringing this case should be able to survive without being sanctioned. Either the diligence performed pre-lawsuit was very weak, or this is just a nuisance lawsuit that they will seek to settle for less than defense costs. Either way, any respectable attorney or firm should steer well clear of this nonsense. In opinion, this reeks of market manipulation.

 

Image Source: Deposit Photos.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 22 Comments comments.

  1. Bud Rodgers July 12, 2018 8:05 am

    The problem here is that it’s now less likely the patent (the company’s first and only patent applicaton so far) will be approved, now that the company has been rejected twice, the second time following revisions PolarityTE made in response to the initial rejection.

    I’d say this is certainly a material development, even though the company may technically be correct in still saying in their general materials that the patents (three were rolled into one) are pending. One would have to search the patent office datebase to learn of the rejections. How many investors are going to do that? The investing public is entitled to material information which may be influential on the company’s value and/or share price.

    Yes, there’s still a chance this

  2. Gene Quinn July 12, 2018 9:21 am

    Bud Rodgers-

    You say: “it’s now less likely the patent… will be approved, now that the company has been rejected twice…”

    That is false. Either you are completely unfamiliar with patent practice, or you are making this egregiously incorrect statement without informing yourself, or you are making the statement in order to manipulate the stock price of PolarityTE in order to short the stock.

    Let me be loud and clear — MANY patents are issued after being rejected multiple times. It happens every week. It is extremely common. Anyone who says or suggest otherwise is just wrong, period.

  3. Matt Fitzgerald July 12, 2018 10:07 am

    Gene, Are you also saying Citron’s disclosure of percentage “low single digits” of “non-final rejection” patents is also wrong? Or that his table of failed companies by those involved is also incorrect? Or that Dr Lough was actually surprised or had no indication of outcome?

  4. Gene Quinn July 12, 2018 10:23 am

    Matt Fitzgerald-

    I’m not sure what about my article is confusing. Citron makes statements about PolarityTE having knowledge of rejections at times when there is no possibility that they could have had any knowledge because the rejection had not yet even been transmitted to the attorney representing the company. A patent examiner does not contact the inventor or the company or the company when they are working on the Office Action. They prepare the Office Action and then they transmit the Office Action. It is impossible to have knowledge of a rejection before it is transmitted. It is also impossible to have knowledge of a ejection even on the day it is transmitted to the law firm. Patent attorneys have many clients. It would take at least days, more likely 10 days to a couple weeks for the firm/attorneys to review the Office Action and report it to PolarityTE. So when Citron says that there was knowledge BEFORE the rejection was transmitted that is categorically false. It is wrong, period.

    Was he surprised? That requires someone to know his state of mind. But the reality is a rejection from a patent examiner is as commonplace as paying taxes on April 15. EVERYONE expects a rejection. As the article explains, if all claims are not rejected in a first office action questions MUST be raised as to why the patent attorneys did not ask for broader protection and settled only for the most narrow protection that an examiner would issue on a first action. First action allowance are EXTREMELY rare and are not in the best interest of a client.

    Those who think a rejection is meaningful, or material, and must be communicated to shareholders just don’t understand patent practice. Such a rule is untenable and will NEVER be adopted by any court on any level and has ZERO chance of being adopted by the SEC. There are 600,000+ applications filed every year and over 90% of them will have all claims rejected in a first action. Multiple rejections and multiple final rejections before a patent issues is EXTREMELY common. It happens all the time.

    Those who followed the advice of Citron and shorted PolarityTE, or sued PolarityTE based on being rejected are going to be very sorry (in my opinion). If this is the only reason this stock tumbled it will quickly bounce back. A federal district court judge is almost certain to sanction any attorneys and plaintiffs bringing such a frivolous lawsuit.

  5. Francesca Monte July 12, 2018 11:30 am

    Gene, you may be right that Citron doesn’t understand the details of patent procedures and that lawyers couldn’t win this case.

    However, your article here is (to me) a bit suspect. Why?

    1) Things “reek” of market manipulation, they don’t “wreak” of it. This is not an error I’d expect from a highly literate lawyer.

    2) In an effort to make your argument, you “spun” something from the Citron report. Citron clearly said that the “final rejection” decision was finalized on June 4th. They also mention that they suspect management knew that it would happen. You try to suggest that they deliberately confused the June 14th mailing date with the June 4th decision date. That feels a lot like spin on your part. If you are so sure of yourself here, why stretch to spin Citron’s comments?

    3) Citron’s report also mentions 2 highly relevant facts, which you ignore while trashing their report:
    i) Insiders have registered to sell tons of shares of this company….BEFORE it makes any revenue.
    ii) The people behind this company have been associated with many similar situations….selling stock in highly speculative pre-revenue companies that ended up being worth much less than expected. Repeated losses of 90% plus.

    Given those two factors, Citron is clearly right to alert investors to the likelihood that this whole situation may be one in which insiders enrich themselves at the expense of gullible buyers. That’s the stock in trade of the people behind COOL.

    Your article focuses on a very small point, one part of the overall warning to investors. But you extrapolate what you see as Citron’s error to attempt to discredit the whole report, while remaining silent on the above two key concerns.

    Do you have any relationship to COOL or the people involved with it?

  6. Anon July 12, 2018 12:31 pm

    Gene and Bud,

    Perhaps what Mr. Lawi (the “jilted” investor bringing suit) should do is consider taking his complaint to be against Citron (does what Citron did rise to “tortious interference?”) INSTEAD of showing a lack of understanding of the patent process by aiming at Polarity TE Inc itself.

    There was a recent “pharma-induced” bill introduced in Congress that WOULD make the “shorting” actions (co-relating IPR actions and stock actions) to be considered illegal in and of themselves.

    This case then would be arguably merely a colorable adaption of that manipulation.

    But this (the Pharma-induced change) is NOT being aimed AT the company affected, but instead is being introduced to help protect that company.

    Aiming (as here by the investor Lawi) AT the company already damaged by the shorting actions of others is like adding insult to injury and “piling on.”

    While this is a securities law complaint, the long and short of the story is that the patent process is being misrepresented.

    The law firm handling the issue for Mr. Lawi is NOT doing anyone any favors by not properly vetting the matter and advising Mr. Lawi just where his misperceptions are, and just why the proffered arguments are so misaligned with reality (of patent law).

    Perhaps the law firm(s) DID do so, and fully advised Mr. Lawi of the poor strategy being embarked upon. The complaint lists three different law firms and I find it hard to believe that all three have not done enough due diligence to understand how poor the understanding of the main position is.

  7. AD July 12, 2018 12:55 pm

    Thank you for the detailed analysis and quick synopsis of how the patent timing process works.

    Perhaps as a necessary disclosure to further support your position, would you mind confirming that you have never owned a position in the company or planned to do so, been compensated by or been contacted by anyone related to the company. If not, please share your relationship.

    Again thanks for the insight into the process.

  8. JCD July 12, 2018 1:00 pm

    To follow up on Gene’s point with some specific stats: the particular examiner that is examining this case appears to have a 36.2% allowance rate prior to a first final rejection, and a 52.8% allowance rate after a first final rejection – that is, for this examiner there is a much higher chance of allowance after a first final rejection than prior thereto. The examiner appears to have a 64% allowance rate in cases in which a request for continued examination (RCE) is filed (these are frequently filed after a final rejection to request further examination). (All stats via examiner.ninja).

  9. JCD July 12, 2018 1:20 pm

    Matt Fitzgerald –

    As far as I can tell, you are referencing the comment in the letter offering a strawman argument that “‘It was only a preliminary rejection and we thought we could win on appeal’ (despite the odds being in the low single digits).”

    Although an appeal is an option, there is no strict need to appeal. There are other options, such as filing of an Request for Continued Examination (RCE). There is even the option to file a response without filing of either an appeal or an RCE.

    If the appeal approach was to be taken, it would be an appeal to the Patent Trial and Appeal Board. The statistics for a PTAB appeal vary per art unit and technology area, but I am not aware of any technology area for which the odds are in the single digits. The most recent stats I pulled up for the PTAB (10/01/17 – 05/31/18) indicate examiner rejections were fully reversed in 28.1% of appeals, and only partially affirmed in another 10.3% of appeals. (See https://www.uspto.gov/sites/default/files/documents/appeal_and_interference_statistics_may_2018.pdf). Notably, with respect to cases before this particular examiner, examiner.ninja shows a 100% allowance rate for cases in which an appeal is filed.

    The author of the document may have been confused and looking at ex parte appeal statistics to the Court of Appeals for the Federal Circuit, which have a much lower success rate, but this case is far from that point.

  10. Gene Quinn July 12, 2018 2:57 pm

    AD @7-

    I do not own any stock or interest of any kind in PolarityTE. I have no plans to purchase any PolarityTE.

    I have never done any legal work for PolarityTE, I have never done any business or consulting work of any kind for PolarityTE. I have no offer of work, and no intention to do any work for PolarityTE.

    With respect to investing, I have a financial advisor and invest in various index funds as per her recommendations as a part of my retirement planning. All other investments are either in real property or made in IPWatchdog, Inc.

    -Gene

  11. Gene Quinn July 12, 2018 3:02 pm

    Francesca Monte @5-

    Thanks for pointing out the spelling mistake. Believe what you want, but I am a patent attorney and an electrical engineer. Believe what you want about me, and if making a mistake makes you distrust what I say that would be your error.

    You say that that I spun things in the report and ignored other things. Well, I linked to the report. Frankly, in my opinion, the report is extraordinarily shoddy work. It is very brief, full of errors (as I point out), not well researched, full of innuendo and wrong. Whether you want to believe it or not, Citron is wrong. But do what you want. I will be be proved correct when the dust settles, as is virtually always the case.

    Please also see my response at Comment #10 and please read JCD @ Comment #8, which will further explain why Citron is wrong.

  12. Bud Rodgers July 12, 2018 7:25 pm

    So explain this, Gene Quinn: “Experienced patent professionals know that receiving a non-final rejection from the USPTO on a patent application can often be addressed by fixing an unintentional error or by providing more detailed information. Each subsequent office action received in connection with that patent, however, correlates more strongly with the likely eventual failure of the patent prosecution effort.”

    https://www.lexisnexisip.com/knowledge-center/when-to-request-a-uspto-examiner-interview/

  13. Anon July 13, 2018 7:59 am

    Mr. Rodgers,

    The relationship is not purely linear. You appear to want to apply a “logic” that is too simple. The mere fact that chances diminish is not reason enough to proclaim a material effect at either a first action on the merits (as you acquiesce) or even a second action (which is typically – but not always – final). The long and short of it is that anyone familiar with patent prosecution can immediately see that the jilted investor’s legal premise is without merit.

    That is why I find it surprising that all three law firms involved with this filing have gone ahead with such a faulty premise.

    Mr. Monte,

    Would you be interested in knowing how many times Edison failed in his ventures?

    You seem to want to see ill intent where there is but serial attempts to create an ongoing business from different innovations. This also bespeaks that you may not have a grasp on the difference between the negative right nature of patents and the positive “rights” aspect of running a business. I suggest that you may want to check your animus.

  14. Gene Quinn July 13, 2018 8:42 am

    Bud Rodgers @12-

    Easy explanation. What you quote is wrong. It is also plainly inconsistent with the data available from the LexisNexis product called Patent Advisor, which clearly and unequivocally demonstrates that many, if not most, patent examiners require an average of 3 to 5 Office Actions prior to allowing a patent. That being the case it is absolutely required that there will be at least one or two final rejections prior to an allowance.

    You can try and twist and deny, but it doesn’t change the fact that I am correct and Citron is wrong.

    Frankly, if you took the time to read the Citron report how could you even think what they write is correct? It reads like fake news from the first line to the last sentence. It is shoddy, poorly written, horribly researched and factually incorrect.

  15. Anon July 13, 2018 8:59 am

    Mr. Monte,

    Rereading your comment, I have to wonder if YOU have any relationship to any of the parties under discussion.

  16. Night Writer July 13, 2018 9:07 am

    @5 Francesca Monte 1) Things “reek” of market manipulation, they don’t “wreak” of it. This is not an error I’d expect from a highly literate lawyer.

    Seriously? You have to use as your number one argument that he made a spelling mistake? No substantive argument, but that a spelling mistake was made. Really weak arguments Francesca. Pretty hard to read your number two reason when your number one reason is so weak and has nothing to do with substance.

  17. Anon July 13, 2018 10:43 am

    Night Writer @ 16,

    I agree. The fact of the matter is that this forum (blogging) is simply NOT to be held to the type of scrutiny and exactness that Mr. Monte wants to see. Anyone involved in interacting in this type of forum on any regular basis would understand that.

    Given that (apparent) lack of understanding, given the hyper-critical nature of the comment (when what is being criticized is substantively correct), and given the insinuation with the request to deny any connection – at the same time that Mr. Monte himself appears to be connected to the proceedings – all indicate that Mr. Monte is advancing a particular agenda regardless of what has actually been posted.

    Mr. Monte,

    As to the highly relevant facts that you want to point to as some type of indicator of “spin,” I cannot agree that the relevance of such facts (taken as true) exists, let alone is relevant. THIS is a patent blog. The relevance here is the core of the use of patent law in the arguments being presented. Your facts are not relevant to that issue, nor to the fact that the argument – based on the patent prosecution angle – is simply beyond weak (and is something that an attorney – let alone attorneys from three different firms) SHOULD have identified and brought to the attention of the client bringing the action.

    Whether or not a warning (by Citron) was proper for other reasons is simply NOT the point here. IF Citron had engaged in a warning based on those other reasons – and had not made the errors being discussed – then there would be no discussion here. You make the mistake of wanting to ignore the patent angle being discussed on a patent blog (which again, makes me wonder about YOUR ties to the case).

  18. Bemused July 13, 2018 11:36 am

    Francesca Monte@5: Pirsonally, I think your arguments are stoopid.

    Given the quality of the journalism and the quantity of highly insightful germane patent practitioner information put out by this blog and Mr. Quinn, I could care less about an occasional misspelling. Moreover, in light of the fact that IPW is the #1 read patent blog in the world, I strongly suspect my perspective is shared by lots of other folks.

    And if you are serious about learning a little bit (or a lot) about patent prosecution and patent law, you shouldn’t care either.

  19. Bud Rodgers July 13, 2018 11:44 am

    Gene Quinn: Thanks for your take on this. I hope you’re right.

  20. Anon July 19, 2018 12:34 am

    U.S. patent application No.: 14,954,335
    1. Polarityte’s U.S. patent application No.: 14,954,335 is closer to allowance after the 06-14-2018 final rejection than before the final rejection. It does not mean that it will be allowed, however the prosecution has moved forward and its 1st Final Rejection status is typical of many patent application where the applicant seeks broad claim protection within which the applicant, or some who pays the patent holder money for a licensed, might practice the invention. Both sides (Polarityte and the USPTO) appear to merely be feeling out each other’s position at this stage in the prosecution (that maybe why 64 claims have been filed and a good number of non-withdrawn claims have been retained in the application). There has not been an RCE (request for continued examination after final office action) filed as of 06-14-2018. Expect one or two RCEs in this application before this is over. After a third RCE perhaps two or three years from now, the prosecution might be getting long in the tooth.

    2. The public PAIR transaction history page is an incomplete, not-so-reliable look into some of what is going on inside the USPTO for a particular patent application.

    03-31-2017 Non-Final Rejection
    3. Just because the applications PAIR transaction history says “03-31-2017 Non-Final Rejection” does not mean that text was published on the PAIR transaction history on 03-31-2017. The USPTO could have published “03-31-2017 Non-Final Rejection” on or after 03-31-2017, including on or after 04-07-2017. Also, the USPTO could have change the dates and text on the PAIR transaction history page after they make a posting, presumably to match what actually happened inside the USPTO. It is unusual for patent practitioners to monitor the information on the PAIR transaction history page since nothing is settled until after the USPTO mails out an action. “03-31-2017 Non-Final Rejection” likely means that examiner Pyla finished the response on 03-31-2017 and sent it on its merry way within the black box USPTO system to be checked, etc. before being mailed out (which may take 7-8 business days from when the examiner finishes a response).

    4. “Notice” is a term of art in patent prosecution and means that a Patent Office communication was sent by the USPTO to the applicant or the applicant’s representative via ground mail or email.

    5. Dr. Lough could not have received the “03-31-2017 Non-Final Rejection” webpage posting from the USPTO since the USPTO did not send it to Dr. Lough or to the applicant’s representatives. The USPTO merely published the text “03-31-2017 Non-Final Rejection” on, before, or after 03-31-2017 and it was available to all the public after it was first published (assuming the USPTO did not unpost and repost it after first posting it).

    6. The “03-31-2017 Non-Final Rejection” post has no information other than “03-31-2017 Non-Final Rejection.” “03-31-2017 Non-Final Rejection” doesn’t tell you anything. You have to see the actual rejection to figure out what is going on. A 1st non-final rejection can allow all the claims but be a non-final actions to address non-substantive issues (other than 102 or 103) such as 101, 112, terminal disclaimer, etc..”03-31-2017 Non-Final Rejection” might or might not inform that the examiner has finished the response and, if you happen to see such a posting, it likely would be by happenstance and you can suspect that the response might or might not be mailed out a week or two later.

    7. If the 04-07-2017 action was an allowance and not a Non-Final Rejection that rejected the independent claims, the thinking would be that the claims were too narrow. The claims were broader than that. Rejection of all the claims on the 1st Office Action is very common.

    8. If you look at the cover sheet (the first page) of the 06-14-2018 Final Rejection, you will see a statement “Notice of the Office communication was sent electronically on the above-indicated “Notification Date” to the following e-mail address(es):”. That means that the patent practitioners handling the case received the 06-14-2018 notice on 06-14-2018. If you look at the 04-07-2017 Non-Final Rejection, you will see that it does not include the statement “Notice of the Office communication was sent electronically on the above-indicated “Notification Date” to the following e-mail address(es):” That means the 04-07-2017 Non-Final Rejection was sent out only via ground mail, which takes at least three to five days from the mailing. This means that the patent practitioners handling the case could only have received the 04-07-2017 ground-mailed Non-Final Rejection after an April 7, 2017, Cool-Majesco-Dr. Lough transaction. Also, there was an effort on 04-13-2017 to change the attorneys handling the case, so there may have been a delay in the attorneys getting information during April 2017 to pass on to their client.

    06-14-2018 Final Rejection

    9. The PAIR transaction history shows, “06-04-2018 Final Rejection” and “06-14-2018 Mail Final Rejection (PTOL – 326)” That may mean the examiner finished the final rejection and sent it into the USPTO mailing system on 6/4 and the USPTO got around to mailing out the rejection on 6/14. There is no reason a patent practitioner with many clients would monitor the unreliable PAIR transaction history with bated breath for a particular patent application.

    10. 6/14 was the mailing date and the date the applicant could have had of the mailed final rejection. “Final” is a term of art and the final Office Action was made final on 6/14, not 6/4. Until the UPSTO issued the 6/14 mailing date, the rejection could not be deemed final. Even if the examiner finalized the final rejection on 6/4, all the claims could have been allowed and only non-substantive issues remained, making the next applicant filing resulting in allowance. You have to see the actual rejection to figure out what is going on.

    11. Looking at the 06-14-2018 Final Rejection, the examiner withdrew the 112(a) and 112(b) rejections, meaning the case is advancing in prosecution. This is a good thing. 101 and 112 rejections sometimes dog a patent application throughout the prosecution. Now, its a matter of zeroing in on the 103 rejection of Claim 19.

    12. At present, the claim to follow in the prosecution is Claim 19. Claim 19 in the 02-06-2018 claim set reads fine, no inconsistencies, no grammar errors, short preamble, has a logical flow that results in a composition that can do something (no lurking 101 abstract rejection). Claim 19 is narrower than before, but that appears to have been needed to advance the prosecution towards allowance. An approach is to get an allowance on Claim 19 to see what is and is not allowable, and then file a continuation application to try to obtain a broader version of Claim 19 while retaining the features indicated as allowable in the patent case.

    13. On pages 6-7 of the 6-14-18 final Office Action, the examiner rejected Claim 19 in view of four references: Snippert, Ohyama, Stern, and Zanzottera (w Dictionary.com). As a rule of thumb, a 103 rejection having more than three references may raise impermissible hindsight issues. The rejection using four references + dictionary.com makes it likely that the examiner handling the case is not a primary examiner. Looking on page 17 of the 06-14-2018 Final Rejection, the examiner handing the case is not a primary examiner. The Dictionary.com reference may have a publish date after the 11-30-2015 filing date, so there likely won’t be a reference to Dictionary.com in the future.

    14. Looking at page 6 of the 06-14-2018 Final Rejection, the rejection is identified as new grounds. In view of that and amend any finally rejected claims, add new claims after a final rejection is not a matter of right, odds are about 80/20 – 80% chance that the applicant will have to file an RCE and 20% chance for allowance. With a little luck, patent attorney Mary Bram might be able to bring this one home during the 1st Final Rejection period, but usually that does not happen in situations similar to this.

    15. If the USPTO sends out a 2nd Non-final OA after the 1st RCE is filed (which has not yet happened), then it may be time for an interview with the patent examiner and, due to the use of four references + dictionary.com, the patent examiner’s supervisor. Because patent attorney Mary Bram works within walking distance to the USPTO, she can easily have an in-person interview, which is more effective than a telephone interview.

    16. Along with potential continuation applications, the withdrawn claims can be pursued in divisional patent applications, so there may be more patent application coming.

    Appeal
    17. Appeals are not desirable, essentially stopping the prosecution for 2-3 years until there is an appeal decision. Even if the appeal is not successful, you then can just continue with the regular prosecution. The application in its current state does not appear ready for appeal.

    The players
    18. If you look at the Address & Attorney/Agent tab on public PAIR, it shows the well-known patent prosecution firm Merchant & Gould P.C. as the law firm handling the case, certainly not evidence of trying to get a patent at low cost. . The application is in good hands.

    19. If you look at the 02-06-2018 Amendment/Req. Reconsideration-After Non-Final Reject, it list patent attorney Mary Bram as handling the case. The page _https://oedci.uspto.gov/OEDCI/practitionerDetails?regisNum=59556 shows she has been doing this since 2006 (12 years). Also, the page info lets you know that she works within walking distance from the USPTO.

    20. Examiner Ninja (_https://examiner.ninja/search?q=PYLA%2C+EVELYN+Y) shows a 45% allowance rate for the examiner handling the matter, examiner Pyla, which is about average for the art group, but somewhat low for the USPTO. There doesn’t seem to be an allowance issue with the examiner (an allowance rate in the 20%s is cause for concern), but the art area is a more difficult one that the typical art area. In any event, the 45% is a rate and patent prosecution is unique to each patent application.

    What may happen next
    21. After the 06-14-2018 Final Rejection, the applicant may next file a response to final office action with an after final consideration program (AFCP) request probably by 08-14-2018 (re there advantages to filing a response within two months of final office action). The AFCP may lead to a telephone interview. If that applicant filing does not result in allowance, the patent office then may send out an Advisory Action and the applicant then may file an RCE (request for continued examination) probably by 10-14-2018 (to avoid a 2-month extension fee). Typically, if the patent office issues an allowance, they do so after the filing of an RCE and before issuing a next action. The examiner usually is authorized to spend more time on the case after an RCE is filed than during the final rejection period.

    The conclusion
    22. I saw Gene’s July 11, 2018 post about Public PAIR data and learned of those involve, e.g., Cool, Majesco, Dr. Lough, PolarityTE, Citron, Lawi only through Gene’s July 11, 2018 Public PAIR data post. Don’t know of any financial connection, Gene’s or otherwise, don’t care. But I do care about the patent process and its portrayal.

    23. Yea, nothing to see here. Just ordinary patent practice for a patent application that still is on a typical prosecution track.

  21. Anon July 19, 2018 11:39 am

    Sister Anon @ 20,

    W A Y too long, and not likely to be read at this stage of the game.

    Be that as it may, I am puzzled by your comment 2, and wonder what source you may have in mind that would 1) give you more information, and 2) allow you to conclude in the first instance that information was missing.

    Just a general note though (which may be in relation to what you are alluding to: the transaction history tab is NOT one that I would use as anything but a “quick view.” Much better to go to the Image File Wrapper tab and look at the actual documents.

    Otherwise, I enjoyed your “walk-through,” and agree with your take-away. I just wonder why the THREE law firms involved in filing the complaint appear to not have done their own due diligence.

  22. Anon July 24, 2018 5:11 pm

    Regarding the references to ExaminerNinja, anyone else notice that the USPTO data does not appear to be updating? Examiner workloads in the History section are 4 years old

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