On January 20, 2010, the Patent Office is hosting a 3-hour “roundtable” to discuss the Advanced Notice of Proposed Rulemaking (ANPRM) regarding Rules of Practice Before the Board of Patent Appeals and Interferences. USPTO published this ANPRM on December 22, 2009. The roundtable will be held at the USPTO’s Madison Auditorium located at 600 Dulany Street, Alexandria, Virginia.
The public event is a major step forward for the Office in terms of transparency and willingness to consult. USPTO has been sharply criticized for failures in these areas over the past few years, so it is extremely important for inventors and the patent bar to meet them halfway by participating. If you cannot attend the roundtable in person, be sure to submit comments by 5 o’clock Eastern Standard Time February 25, 2010. Submit by email to BPAI.Rules@uspto.gov.
On the other hand, I am disturbed that the Patent Office is allowing just one month to comment. Normally, agencies give the public 60 or 90 days to respond to ANPRMs. That’s especially so when the public comment period occurs during the holidays. There is no obvious urgency to this matter, so it’s hard to come up with a good reason why USPTO is being miserly with respect to the deadline.
If you care about the BPAI Rules if Practice, you should send an email today to BPAI.Rules@uspto.gov asking USPTO to extend the public comment period another 90 days. The more requests for extension the Patent Office receives, the less legitimacy it has ignoring them.
I’m neither an inventor not a patent lawyer. My interest lies in ensuring that federal agencies abide by proper statutory and administrative procedures. I’ve been involved since 2007 in a campaign to motivate the USPTO to do this. The Patent Office has shown a persistent inclination not to follow these procedures, and in the BPAI Rules of Practice ANPRM it continues to do so. For that reason, the most important thing commenters can do is remind the Patent Office of these obligations.
USPTO NONCOMPLIANCE WITH EXECUTIVE ORDER 12,866
USPTO proposed to amend the BPAI Rules of Practice regulations on July 30, 2007, and finalized them on June 10, 2008. In the preambles to both actions, USPTO was required to provide a certification regarding compliance with Executive Order 12,866. This Order, which was issued by President Clinton in 1993, requires agencies to submit draft proposed and final rules to the Office of Management and Budget (OMB) for review prior to publication unless in OMB’s opinion the action is a trivial one.
The Order also requires agencies to make a reasonable effort to ascertain the action’s likely costs, benefits, and other effects. If these effects are likely to exceed $100 million in any one year, agencies are required to prepare a Regulatory Impact Analysis in accordance with guidelines published by OMB and invite public comment on the analysis. The purpose of this analytic requirement is to ensure that agencies carefully identify the problem they are trying to solve through regulation, examine an array of reasonable alternatives–including the alternative of not regulating–and select the alternative maximizes net benefits to society (§1(b)). It is impermissible under the regulatory principles set forth in Executive Order 12,866 to promulgate a regulation whose purpose is to reduce costs to the government at the expense of the public.
In the preamble to the proposed regulation, USPTO stated that it was a trivial action. This claim was false, and moreover it is inconceivable that the Patent Office honestly believed otherwise. The proposed regulation was designed to discourage applicants from appealing examiner decisions and raise the costs of those who did so. Public commenters pointed this out, noting that the proposed rule’s costs were likely to exceed $100 million, thereby triggering the requirement to prepare a Regulatory Impact Analysis.
The Patent Office ignored these comments. Like the draft proposed regulation, USPTO did not submit the draft final regulation to OMB for review and continued to misrepresent the action as trivial.
The December 2009 ANPRM shows that USPTO remains in denial. The preamble says nothing about the rule’s likely costs, benefits, and other effects. There is no mention of Executive Order 12,866.
In public comments on the ANPRM, the patent community should specifically insist that USPTO admit that the BPAI Rules of Practice regulation is economically significant and agree to perform a Regulatory Impact Analysis that adheres to OMB guidance. Securing agreement from USPTO to perform a Regulatory Impact Analysis is the first step. The second is to get agreement to perform the Analysis competently.
If the Patent Office lacks the in-house expertise in economics, there is no shortage of competent firms who can do it for them. The Analysis must provide a clear explanation for and documentation of the problems the revised rules are intended to solve, include several reasonable alternatives (i.e., no “straw men”), and prepare unbiased estimates of the likely costs, benefits, and other effects of each alternative.
USPTO NONCOMPLIANCE WITH THE PAPERWORK REDUCTION ACT
Since 1981, agencies have been required by the Paperwork Reduction Act to adhere to certain regulatory standards and procedures promulgated by OMB. These procedures include disclosing within the preamble to a proposed rule a notice alerting the public to paperwork burdens the rule is expected to create, and a request for comment on this notice. “Burden” has a specific regulatory definition found at 5 C.F.R. 1320.3(b)(1). The statutory purpose of notice and comment in the Paperwork Reduction Act is to give the public ample opportunity to affect the paperwork burdens in a final regulation. For that reason, agencies are required by 5 C.F.R. 1320.11(a) to provide at least 60 days for public comment at the proposed rule stage.
Instead, USPTO denied that revising the BPAI Rules of Practice regulations would impose any paperwork burden. Several commenters pointed out that this claim was false, too.
Instead of starting over as it should have, USPTO published what it hoped would qualify as “notice” on June 9, 2008–exactly one day before promulgating the final rule. This was an obvious sham. Clearly, the USPTO intended for the public comment period to be a mere formality. I’ve witnessed a lot of agency skulduggery in my 20+ years dealing with federal regulation, but this may be the most cynical abuse of Paperwork Reduction Act procedures I’ve ever seen.
Thirteen individuals and entities tilted with this windmill and submitted comments anyway. They objected to the notice’s sham timing, of course, but also because the notice included only estimates of paperwork burden associated with the existing rules promulgated in 2004, Thus, the Patent Office was making the literally incredible claim that the 2004 rules impose $263 million per year in paperwork burdens (p. 13), but the 2008 rules did not add or subtract anything. Ron Katznelson (pp. 7-8) estimated these incremental paperwork burdens exceeded $100 million per year, meaning that the paperwork burdens alone were enough to trigger the Executive Order 12,866 requirement for a Regulatory Impact Analysis. In short, USPTO’s notice was procedurally defective on multiple margins: it was not published at the prescribed time; it was published one day before the final rule; and it failed to include the information required by law.
On October 8, 2008, USPTO published notice that it was submitting the Information Collection Request to OMB and inviting the public to send comments to OMB, as required by law. In this submission, USPTO was required to give credible responses to public comments it had received on the first notice; it didn’t. OMB was required to allow the public no less than 30 days to submit comments and is normally required to act on ICRs within 60 days. This 60-day period expired on December 8, 2009–two days before the final rule would have become effective. Failing to respond to public comments, and delaying submissions to OMB until the last minute in hopes of jamming it up against a hard deadline, are both old agency tactics.
OMB’s record for the ICR submission is here, and the 11 public comments that were submitted to OMB are at the bottom of this list. I submitted comments on October 14 (documenting the raft of procedural errors committed by USPTO) and November 17 (providing limited independent estimates of paperwork burden). Katznelson confirmed his previous burden estimates (which USPTO had ignored); his estimates are clearly superior in quality to mine.
In response to our efforts, OMB declined to issue a Control Number authorizing USPTO to collect the information that the 2008 BPAI Rules of Practice regulation required. That meant USPTO would have been acting illegally if it rejected any appeal for failing to adhere to the Board’s paperwork requirements. Faced with this dilemma, the Patent Office issued an indefinite stay on December 10, 2008–the very day that the 2008 regulation was scheduled to go into effect. It remains in effect today.
But USPTO continues to ignore the Paperwork Reduction Act. In the December 2009 ANPRM, the Patent Office says nothing at all about the rule’s likely paperwork burdens. There is only a useless boilerplate notice informing the public that these burdens exist.
In public comments on the ANPRM, the patent community should specifically insist that USPTO provide objectively supported estimates of paperwork burden associated with the changes proposed in the notice. Unless and until the Patent Office provides this information, all public comments will be incomplete because they will not be fully informed.
By law, USPTO must include this information along with any re-proposal that might come out of the ANPRM process. Because of its prior lack of compliance with the law, and the likelihood that a re-proposal will have economically significant effects, it is imperative that the Patent Office develop these burden estimates now and invite the public to comment on them as part of the ANPRM. That will slow down the process, to be sure. But the Patent Office has only itself to blame.
It’s a welcome change that USPTO is beginning to be more transparent and to consult with the public, as it is doing with the ANPRM and the January 20th roundtable. However, the Patent Office has a long way to go to make up for its knowingly illegal previous conduct. The way to start is to admit error and treat public commenters respectfully and seriously. It has yet to do either one.
Belzer RB. 2008a. Letter to Nicholas A. Fraser, Desk Officer for the U.S. Patent and Trademark Office, Office of Information and Regulatory Affairs, Office of Management and Budget RE: ICR 0651-00xx. Available: http://www.reginfo.gov/public/do/DownloadDocument?documentID=90554&version=1.
Belzer RB. 2008b. Letter to Nicholas A. Fraser, Desk Officer for the U.S. Patent and Trademark Office, Office of Information and Regulatory Affairs, Office of Management and Budget RE: ICR 0651-00xx: ICs and Burden Estimates. Available: http://www.reginfo.gov/public/do/DownloadDocument?documentID=93894&version=1.
Katznelson R. 2008. Letter to Nicholas A. Fraser, Desk Officer for U.S. Patent and Trademark Office, Office of Information and Regulatory Affairs, Office of Management and Budget. Available: http://www.reginfo.gov/public/do/DownloadDocument?documentID=95757&version=1 (November 17).
Office of Management and Budget. 1995. Controlling Paperwork Burdens on the Public, 5 C.F.R. Part 1320.
Office of Management and Budget. 2003. Circular A-4: Regulatory Analysis. Available: http://www.whitehouse.gov/OMB/circulars/a004/a-4.pdf.
Paperwork Reduction Act (as amended). 44 U.S.C. 3501 et seq), http://www.archives.gov/federal-register/laws/paperwork-reduction/
U.S. Patent and Trademark Office. 2009. Rules of Practice Before the Board of Patent Appeals and Interferences in Ex Parte Appeals; Delay of Effective and Applicability Dates. Federal Register 73(238): 74972 (December 10)
U.S. Patent and Trademark Office. 2009. Rules of Practice Before the Board of Patent Appeals and Interferences in Ex Parte Appeals; Request for Comments on Potential Modifications to Final Rule and Notice of Roundtable During Comment Period. Federal Register 74(244): 67987-68004 (December 22).
ABOUT THE AUTHOR
Richard Belzer is an economist and risk analyst located in the greater Washington DC area. From 1988-98, he worked in OMB’s Office of Information and Regulatory Affairs. He holds four academic degrees including a Ph.D. from Harvard. He’s an expert on the administrative processes of regulation, including both the presidential review of rulemaking provided for by Executive Order 12,866 (1993) and the Paperwork Reduction Act (4 U.S.C. § 3501 et seq., 5 C.F.R. Part 1320). He provides objective information and analysis on a wide range of issues in regulatory science, economics and policy at www.neutralsource.org. He can be contacted by email at email@example.com.