Victory to the Patent Office in Claims & Continuations Appeal

By Gene Quinn
March 20, 2009

I knew it was bad news when I saw that Judge Rader did not write the opinion, but rather concurred in part and dissented in part.  But, as I predicted, the Federal Circuit issued its decision while I am in Chicago teaching the PLI Patent Bar Review Course and unable to devote real time to writing about the GlaxoSmithKline and Tafas challenge to the claims and continuations rules.  Suffice it to say that I am surprised by the decision. It seems that the only thing that the Patent Office couldn’t do was limit the number of continuations that can be filed. They can, however, limit the number of claims to 5 independent claims and 25 total claims unless an Examination Support Document is filed. The Patent Office can also limit the number of Requests for Continued Examination (RCEs). In the long run, I am not sure what benefit the rules will be to the Patent Office without a limitation on continuations. It seems that what will happen is that there will be a move toward smaller, more focused patent applications. This will lead to many more applications, with the applications having fewer claims so as to not require an ESD. I am not sure that is what the Patent Office wanted. Additionally, many of the best arguments were simply not considered by the panel. So the district court will once again ahve to take up this matter and determin, for example, whether the rules are arbitrary and capricious and whether the retroactivity is impermissible. So the fight will seemingly continue, at least back to the district court or maybe even to a rehearing en banc or to the Supreme Court.

I will, of course, have much more to say about this case when I get some time to digest the opinion, but in the meantime, here is what the Federal Circuit, per judge Prost, concluded:

For the foregoing reasons, we conclude that the Final Rules 75, 78, 114, and 265 are procedural rules that are within the scope of the USPTO’s rulemaking authority. However, we find that Final Rule 78 conflicts with 35 U.S.C. § 120 and is thus invalid. Accordingly, we affirm the district court’s grant of summary judgment that Final Rule 78 is invalid, vacate its grant of summary judgment with respect to Final Rules 75, 114, and 265, and remand for further proceedings consistent with this opinion.

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.

For the full text of the decisionis at:

http://ipwatchdog.com/GSK_v_PTO/tafas_v_dudas.pdf


About the Author

Eugene R. Quinn, Jr.
President & Founder of IPWatchdog, Inc.
US Patent Attorney (Reg. No. 44,294)

B.S. in Electrical Engineering, Rutgers University
J.D., Franklin Pierce Law Center
L.L.M. in Intellectual Property, Franklin Pierce Law Center
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Gene is a US Patent Attorney, Law Professor and the founder of IPWatchdog.com. He teaches patent bar review courses and is a member of the Board of Directors of the United Inventors Association. Gene has been quoted in the Wall Street Journal, the New York Times, the LA Times, CNN Money and various other newspapers and magazines worldwide

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Gene Quinn

Gene Quinn is a Patent Attorney and Editor and President & CEO ofIPWatchdog, Inc.. Gene founded IPWatchdog.com in 1999. Gene is also a principal lecturer in the PLI Patent Bar Review Course and Of Counsel to the law firm of Berenato & White, LLC. 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.

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Discuss this

There are currently 11 Comments comments.

  1. EG March 20, 2009 2:59 pm

    Gene,

    Pretty grim I must say at the moment. After reading Prost’s and Bryson’s opinions, may be we should believe now that the “moon is made of green cheese.” Their opinions are astonishing, distressing and naive in the extreme. How these 2 judges can rationally believe that these God-forsaken Rules are anything other than “substantive” and beyond the authority of the PTO enact is incredible, as well as ignore the gameship (and procedural abuse) engaged in by the PTO in enacting these Rules which is well-documented by David Boundy, Ron Katzelson, and others.

    Judge Rader is the only one on this panel who realistically understands why these Rules are “substantive” and beyond the authority of the PTO to enact. We can only hope and pray that the Federal Circuit grants an en banc hearing, and affirms Judge Cacheris’ careful and well-reasoned opinion. Prost’s and Bryson’s opinions have badly shaken my faith in the the ability of the Federal Circuit to keep the PTO from misapplying and misusing its Rule-making authority. We may be heading for the “Dark Ages” in patent examination before the PTO.

    For example, using Prost’s and Bryson’s naive and nonsencial logic, the PTO could just as easily turn the ESDs into mandatory Applicant Quality Submissions (AQSs) (the “Documents of Doom”) that would be required for all patent applications filed. If Prost’s and Bryson’s view is accepted by the rest of the Federal Circuit (despite Judge Rader’s protest), what’s to stop the PTO from enacting AQSs as “procedural,” and turning the PTO into “patent prosecution hell”?

  2. patent leather March 21, 2009 11:32 pm

    It’s all moot anyway. The trial court will have to make its further determinations, which should take about another year. Then no doubt, those determinations will be appealed back up to the CAFC, which should take about another year. Meanwhile, since the continuation limitations were clearly shot down, these other rules don’t make sense on their own. If an application is only limited to 5/25 claims, then the Applicant could still file multiple continuations with additional claims, thereby avoiding the ESD. I suppose the USPTO could circumvent this by issuing a new rule stating that the 5/25 claim limitations applies to patent families (and hence requiring an ESD in the family when this limit is exceeded), but this would be a brand new rule, with a new comment period, which would all happen after all other proceedings have terminated (>2 more years). Thus, we are all safe for at least 3 or so more years. Hopefully by then, the leadership at the PTO will not be so blindsided and will just table this line of thinking altogether and focus on more constructive approaches.

    I always thought hiring more examiners would be the way to address the backlog. But since the allowance rates are now so low, the PTO can’t even afford to do that any more. The USPTO really got themselves into a pickle now.

  3. Breadcrumbs March 22, 2009 9:20 am

    Substance or procedure mental exercise:

    An application with 4 independent claims is written, the fourth independent claim has 20 dependent claims. No ESD required, none prepared.

    During prosecution, first three independent claims dropped, fourth rejected but all 20 dependent claims allowed but objected to for depending from a rejected base claim.

    Applicant (a large entity) wants the twenty allowed claims to pass to issue by rewriting each in independent form.

    How does the Office apply the ESD rule?

  4. M. Slonecker March 22, 2009 6:36 pm

    I have read the CAFC decision several times, and am quite frankly surprised at the additional nuances I note with each reading. If I read it a few more times I fear I may very well go into “nuance overload”.

    I am a simple man, at times perhaps even being susceptible to the characterization of being “simple minded”. It is a characterization I readily embrace, for in my experience all too often it is quite easy to “lose sight of the forest for the trees”.

    As I think about this case, I do have to wonder if the level of detail associated with practitioners and jurists examining the plethora of perceived issues exemplifies the aformentioned loss of perspective?

    Of particular interest to me is that in the process of exploring this issue so little thought appears to have been placed on examining the ebb and flow of the structure associated with Title 35. Merely by way of example, I note that Section 111 declares, if for the moment one resists the temptation to verbally joust over the term “includes”, what constitutes an application sufficient under the law. You must have a specification. You must have drawings. You must submit an oath. You must pay the requisite fee. Curiously, failure to submit an oath and pay the fee are specifically noted as the grounds for abandonment.

    The subsequent sections each proceed to elaborate in greater detail on the requisite components of an application. Section 112 speaks to the specification, Section 113 to the drawings, and Section 115 to the oath. Of course, one must jump back to Section 41 to ascertain the fees (assuming, of course, they have not been raised to yet another dizzying height during one’s trip from 112/113/115 to 41).

    Curiously, in viewing the structure of Title 35 from “on high” (and by this I mean altitude, and not one’s then mental state), I am struck by the conspicuous absence of any other requirements imposed by Congress pertaining to what constitutes an application sufficient for examination by the USPTO. Surely, if Congress intended Section 111’s identification of what comprises an application to embrace more that the four enumerated items, then I would expect some other statutory provision(s), somewhere…anywhere, elaborating/suggesting that additional items (such as an EDS) are A-Ok with it. The strange thing, however, is that for the life of me I cannot put my finger on any such provision(s). Dare I say it, but it appears to me almost as if Congress was quite satisfied with just the four items it enumerated in Section 111.

    Disclaimer: I am deliberately omitting any discussion concerning continuations, RCEs, etc. My simple mind can only absorb one issue at a time.

    Now, I am no fan of those who feel the need to present for examination applications with claims bordering in number on the amount of the “stimulus packages” being tossed out like candy by our illustrious members of Congress. Even so, it simply does not jump out at me why, if additional prerequisites, such as an IDE, could be created by the simple expediency of a rule under Section 2, Congress would remain so quiet.

    Then again, what do I know? Apparently, a lot less than the Tafas majority…

  5. Just sayin' March 23, 2009 12:38 am

    With Rule 78 stricken down, and more bad news possibly to come from the EDVA, I don’t see how or why this case is being spun as a victory for the PTO.

  6. Gene Quinn March 23, 2009 12:41 am

    Just-

    I agree that there will likely be bad news on the horizon from Judge Cacheris, but this is a huge win for the PTO because if these rules are procedural then virtually anything they could ever want to do would be procedural and within their right to require. Cacheris has probably made up his mind how he is going to rule based on the tone of the first decision, but even if he rules that the claims and RCE rules are indefinite, vague and ambiguous all the PTO has to do is tighten them up and there would be nothing anyone could really do to stop them.

    -Gene

  7. EG March 23, 2009 7:54 am

    Gene,

    Before I forget, and as astutely pointed out on another blog, let’s not forget the “Trojan Horse” in modified 37 CFR 1.104(a) to add “and other requirements” to the phrase “the examination shall be complete with respect both to compliance of the application or patent under reexamination with the applicable statutes and rules” which would allow the PTO to apply the requirements of the MPEP, even though the MPEP can and is modified without any “notice or comment” required by the APA.

  8. WB March 23, 2009 12:21 pm

    Whether it is a victory for the PTO or not, it is certainly a victory for big companies over small companies, universities and solo inventors. Big companies will be able to absorb the cost much more readily, which means that they can afford much more comprehensive and enforceable portfolios.

  9. David B March 24, 2009 8:44 am

    I do not see this as a victory at all for the USPTO. There were three issues on the table – the right to file unlimited continuations, the number of RCEs that could be filed, and whether the USPTO could require ESDs for applications including more than 5/25 claims.

    As you can see from the courts conclusion, there were many issues not resolved in the opinion that were left to be decided at the district court level. So, while the USPTO lost for certain on the issue of continuation practice, they did not win for certain on the RCE and ESD issues.

    Since the number of continuations cannot be limited, the remaining rules lose most of their impact.

    In terms of the number of RCEs that can be filed, the cost to file an RCE is substantially the same as the cost to file a continuation. The USPTO has a goal of increasing efficiency, and, since RCEs are reviewed by the Examiner faster than continuations, it would go against the goal to limit the number of RCEs now that the number of continuations cannot be limited. Indeed, it might be seen as arbitrary and capricious should the USPTO decide to do so, which would provide a ground (as articulated in the conclusion of the opinion) to overturn the rule.

    In terms of the 5/25 rule, Examiners will no doubt continue to issue onerous restriction requirements. Given the current restriction practice, there are few inventions (as narrowly defined by the current restriction practice) that cannot be described in 5 independent and 25 total claims. I have practiced for 16 years and have never seen a case with 5 independent claims that did not receive a restriction requirement. So, I truly believe this is much ado about nothing.

    Should one take issue with the 5/25 rule, one could simply file a PCT application before filing a U.S. non-provisional, and use the PCT International Search Report and Written Opinion to satisfy the ESD requirement for a search. The PCT ISR would certainly satisfy the rules, at least as the meaning of “search” was articulated in the opinion.

    In theory, the truly small inventor won’t be able to afford the PCT filing fee. In such a case, one could simply pick the top 5 “inventions” to include in the five independent claims, limit the total claim number to 25, and wait for the inevitable restriction requirement to cancel certain claims and add new ones.

    In conclusion, since the USPTO lost on the issue of limiting the number of continuations, they effectively lost on everything else. This is a major victory for patent applicants.

  10. Gene Quinn March 24, 2009 9:47 am

    David-

    I think you are taking a very short sighted view of this decision. Patent applicants won the battle but are going to lose the war. With these rules being procedural that means that the PTO can do whatever it likes. Just wait for the requirement that an ESD be filed in every case, which will come no doubt. Additionally, if this is such a major victory for patent applicants why are pharma, biotech and chemical companies so upset?

    We will soon get Markush rules and the IDS rules that were waiting in the wings. The PTO will likely tighten up anything that could be perceived to be indefinite, and heap on a lot of new rules packages. Also, don’t forget what EG explains above about the trojan horse. Now the PTO will be able to modify the MPEP, which they can do without engaging in rulemaking, and change whatever procedure, process or substance they want.

    -Gene

  11. EG March 24, 2009 10:43 am

    Gene,

    Another thought to consider. Having gotten over my initial (and very emotional) reaction to Judges Prost and Bryson having “precedential amnesia”, the fact is with the continuation limitation portion of this Rule package blocked by even the Federal Circuit, the PTO has no choice but to modify this package to take that block into account, or else the package won’t be internally consistent, and thus highly vulnerable to further legal attack. That being said, you have to wonder whether the PTO has the energy (and the backing of the current Obama administration) to continue this fight if Tafas/GSK pursue this suit (likely) in district court, including renewing the other arguments that Cacheris chose not to address.

    Any reissuing of these Rules (Cacheris may even block any attempt to reissue these Rules until the current Tafas/GSK suit is over), which the PTO dare not do without offering “comment and notice” to the public, would create another “firestorm” of comments where those commenting will be watching the PTO carefully as to how they cross the “t”s and dot the “i”. Any slip here by the PTO will certainly draw fire, including potential additional suits (now that blood has already been drawn) challenging the reissued Rules. That potentially means a drawn out battle taking years to resolve, which leaves you wondering whether the Obama administration would expend its political capital to let such “blood letting” occur for an issue that didn’t start on its watch. More significantly, given the current budget crisis facing the PTO (and of its own making by causing the allowance rate to dive to close to 40%), one must wonder whether the PTO has the resources to push these Rule packages much farther.