“Even assuming the confidential nature of the SAWS program may have prevented Plaintiffs from disputing the classification of their patent applications and pretermitting the delay and additional layers of review attendant to SAWS review, prosecution delay and additional quality checks are not ‘adverse determinations.’ At most, they are ‘adverse effects’ of SAWS materials remaining confidential.” – USPTO Motion to Dismiss
On September 26, the U.S. Patent and Trademark Office filed a motion to dismiss a class action complaint filed by two inventors alleging violations of the Privacy Act created by the agency’s handling of its Sensitive Application Warning System (SAWS). The USPTO is seeking a Rule 12(b)(6) dismissal for failure to state a claim, arguing that application flags under the SAWS program don’t concern individual patent applicants and that omission of those flags from patent application files isn’t the proximate cause of adverse determinations such as increased scrutiny holding up patent grants.
The case was first filed this June in the U.S. District Court for the District of Columbia by Paul Morinville and Gil Hyatt, two inventors who allege that they have filed patent applications on inventions that they believe to have been flagged by the SAWS program. Morinville is an inventor on nine patents who has had 26 patent applications pending at the USPTO since February 2000. Hyatt is listed as an inventor on 70 patent applications and has had patent applications pending at the agency since 1990. Hyatt was first informed that he had patent applications flagged by the SAWS system in June 2017, more than two years after the USPTO officially retired the SAWS program.
SAWS Flags: A Scarlet Letter Worn by Patent Applications
“A SAWS flag served as a scarlet letter for patent applications, alerting PTO personnel that a flagged application was considered to be an abusive ‘submarine’ application or otherwise objectionable,’” the original complaint reads. Scrutiny under the SAWS program has led to delays in the issuance of patent grants on purported bases that have never been disclosed to patent applicants, rendering applicants unable to dispute the grounds on which their applications have been included in the SAWS program. By withholding documents pertaining to SAWS flags and reports from application files, plaintiffs allege that the USPTO has violated the Privacy Act’s mandate that federal agencies maintain records related to determinations made about individuals that are required to assure fairness to those individuals. Plaintiffs Morinville and Hyatt are representing the class of all patent applicants whose applications have been flagged by SAWS at any time since the program was developed in 1994 until it was retired in March 2015.
Inventors who have encountered the SAWS program’s impacts on their own patent applications have understandably been vexed by the situation. One inventor’s account published on this website in December 2014 explained that he was told by his patent examiner that a patent couldn’t be granted on his patent application because it was flagged by the SAWS program. Despite being told by USPTO officials that the flag only meant that his examiner was receiving help for applying examination standards on the flagged patent application, his patent examiner was receiving no such help. In fact, despite the examiner granting an allowance that was approved by that examiner’s supervisor, the USPTO rejected the patent application because of its inclusion in the SAWS program. Further digging into the reasons behind the SAWS flag indicated that the patent application was rejected because the claimed invention read on Apple’s iTunes Store despite the fact that the patent application claimed a priority filing date in 1999, several years before Apple introduced the iTunes Store service.
USPTO Refutes Inventors’ Privacy Act Claims
In its recent motion to dismiss, the USPTO noted that patent applications could be deemed “sensitive” under SAWS if they claimed subject matter that could be considered politically or ethically controversial. Reasons for shuttering the SAWS program included the facts that the SAWS program had only been “marginally utilized and provide[d] minimal benefit,” said the USPTO. The Office contends that Morinville and Hyatt have failed to state a claim because SAWS flags and reports provide information on the substance of patent applications, not the individual inventors themselves, and that the SAWS information itself, and not the omission of that information from patent applicant files, is what plaintiffs allege have caused the adverse determinations of patent grant delay and inability to receive patent grants.
The USPTO’s arguments that the SAWS flags and reports aren’t “record[s] concerning an individual” are premised on two previous cases: Tobey v. NLRB, decided by the U.S. Court of Appeals for the District of Columbia Circuit in December 1994; and Fisher v. National Institutes of Health, decided by the District Court for the District of Columbia in August 1996. Under Tobey, the USPTO argues that “records” under the Privacy Act must be about an individual and contain that individual’s name “or other identifying particular.” Fisher further limited determinations regarding information “about an individual” when it held that annotations in medical literature databases maintained by the NIH were about the articles themselves and not their authors, even when those annotations indicated information about the authors themselves. Following this precedent, the USPTO alleged that patent application files are about the inventions and not the inventors themselves, thus they don’t constitute “records” under the Privacy Act. Although the USPTO includes a Privacy Act notice in the patent application files, the agency contends that the notice primarily relates to the inventor’s oath and excludes the scope of the other parts of the files that describe the claimed invention. Because the SAWS flags were issued due to the identity of the invention and not the inventor, the USPTO argues that the plaintiffs don’t have a Privacy Act claim, regardless if the reasons for an invention being flagged could be seen as pejorative to inventors.
The USPTO further alleges that, to make a claim for damages under the Privacy Act, a plaintiff must show that agency reliance on inaccurate records “was the proximate cause of an adverse determination;” the agency claims that the harm shown by Morinville and Hyatt neither amounts to the adverse determination nor was it caused by reliance on the patent application file without the SAWS flags and reports. Although the plaintiffs have numerous claims about how the SAWS program prejudiced the prosecution of their patent applications, the USPTO contends that they haven’t claimed that the lack of adequate records was itself the cause of an adverse determination. The agency notes that it’s plausible that plaintiffs could claim that the omission of SAWS information from the patent application files prevented them from contesting their classification as “sensitive,” but that the plaintiffs didn’t allege such determinations in their complaint but rather delays and procedural burdens in the prosecution process.
“Even assuming the confidential nature of the SAWS program may have prevented Plaintiffs from disputing the classification of their patent applications and pretermitting the delay and additional layers of review attendant to SAWS review, prosecution delay and additional quality checks are not ‘adverse determinations.’ At most, they are ‘adverse effects’ of SAWS materials remaining confidential.”
How Can an Inventor Adequately Challenge a Secret Determination?
That a SAWS flag creates serious adverse effects on a patentee is a fact that is little in doubt. Keeping such information confidential from prospective patentees renders them unable to challenge the SAWS determination, which can be fatal to their case if that determination is the reason why their patent application has been rejected. Morinville appealed the rejection of one of his patent applications that was likely targeted by SAWS to the U.S. Court of Appeals for the Federal Circuit. In July 2018, he filed an opening brief in which he noted that the patent at issue, first filed in December 2004, had survived nine prior rejections: once under Section 101; twice under Section 102; four times under Section 103; and twice under Section 112. Morinville appealed another Section 101 rejection, arguing that the patent examiner had already found an inventive concept to survive the earlier 101 rejection and that the invention logically couldn’t cover a “well-established business practice” if it survived Section 102 novelty and Section 103 obviousness challenges. This April, the Federal Circuit affirmed the Patent Trial and Appeal Board’s rejection of Morinville’s patent claims. Although it’s not confirmed that this particular patent application has been flagged by SAWS, the long delay in examination and questionable basis for rejection would seem to fit the fact pattern.
If the inability to challenge a SAWS determination is a detriment to patent owners, that issue is greatly exacerbated by the incredible delays caused by a process that becomes ever more expensive just to maintain a patent application that the USPTO doesn’t want to grant, as Morinville’s July 2018 opening brief at the Federal Circuit makes clear:
“To put this long and tortured prosecution history into real-world perspective, when I filed the ‘557 Application, my daughter had just started kindergarten. As of the date of this brief, my daughter has completed her first year as a freshman at Baylor University. I have spent more money on the prosecution and appeals of this patent application than I will spend on my daughter’s entire college education.”
Of course, in the USPTO’s view, an interminable delay in the issue of a patent grant is a reality that any patent applicant must be prepared to handle. “There is no legal right to a decision on patentability within a certain time frame, or to a particular set of PTO procedures in the review of patent applications,” the USPTO argued in its motion to dismiss. The agency noted that Hyatt himself had previously failed on similar arguments in a separate case on unreasonable examination delays that was brought under the Administrative Procedures Act. “The Court explained that ‘PTO is under no legal obligation to cause an expeditious—or even an efficient— examination of a patent application,’” the USPTO’s motion reads.
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