New USPTO Rules, Legal Decision Signal Changes For US Patent Practices

By Dugie Standeford for Intellectual Property Watch
New rules by the US Patent and Trademark Office (USPTO) governing the continuation of patent applications will wreak havoc in the biotechnology and high-tech sectors, according to some experts. The regulations, announced in August as part of a USPTO effort to boost patent quality, and effective on 1 November, are already being challenged in court.

In addition, US patent practice changes could arise from a 20 August judicial decision setting a new standard for determining when patent infringement is wilful or done knowingly.

The rules were proposed last year, then modified in response to extensive public comments, the USPTO said. The final version allows applicants to file two new continuing applications and one request for continued examination (RCE) as a matter of right. Each application may contain up to 25 claims. Above those thresholds, however, patent-seekers must show why they need additional continuations or provide supplementary information in order to advance additional claims, the agency said. Existing rules permit unlimited continuation requests and RCEs.

Continuation applications are important because they are considered to refer back to the date of the original application, permitting applicants to claim various aspects of their invention while protecting their priority rights against would-be infringers, said Wolf Greenfield patent attorney Roque El-Hayek.

The USPTO said in issuing the rules that it wants to make the patent examination process more effective by “encouraging applicants to use greater precision in describing the scope of their inventions.” It also said that higher quality applications make for more efficient examinations.

Claims define the scope and boundaries of the intellectual property right an applicant wants to protect, El-Hayek said. The ability to seek unlimited continuations and claims is particularly important in the biotechnology, semiconductor and electrical sectors where patent applications are often filed in an early stage of an invention’s development and then amended as additional uses or technologies are discovered, he said. Limiting continuations and RCEs, however, will pose major problems for high-tech inventions, he said, but probably not for narrow, limited-in-scope inventions.

The rules make two other key changes in patent practice, El-Hayek said. Currently, applications may contain unlimited claims, all of which must be examined by the USPTO. After 1 November, however, anyone looking to file more than 25 claims per application must submit more documentation, do a prior art search, and explain to the USPTO why a particular invention is patentable over all the prior art – in effect, doing the agency’s work for it.

The patent bar (patent lawyers) is not convinced this will reduce the backlog of applications, El-Hayek said. With RCEs so restricted, the number of appeals of patent examiners’ decisions could increase dramatically, lowering the number of cases at examiner level but causing blockages in other areas.

A third change centres on the new requirement that applicants inform the USPTO of all applications that are commonly owned and have one common inventor and that are filed or claim a priority date within two months of each other, said El-Hayek. Under the new rules, for example, if an applicant has four applications on file, all of which have one inventor in common and substantially overlapping disclosures (descriptions of the invention and the manner of making and using it), and claim the same priority date, they will be treated as one for the purpose of counting claims, he said. That will push many more applications over the limit, he noted (as the USPTO will group formerly separate applications together if they meet the criteria, creating in effect a single application with more than 25 claims, and so pushing it over the 25-claim limit).

Patent-seekers have until February 2008 to notify the USPTO of such applications, El-Hayek said. The patent bar will “scramble” to identify them and to figure out how best to advise clients under the new rules, he said.

International applications filed under the Patent Cooperation Treaty that seek protection in the US will also be subject to the rules, El-Hayek said.

Rules Contested

The new rules had no sooner emerged than they were challenged. On 22 August, Connecticut inventor Triantafyllos Tafas asked a US federal court to stop the USPTO from implementing the rules and declare them void. (Tafas v. Dudas).

The rules “substantially change the regulatory landscape under which inventors, like Dr. Tafas, have traditionally operated,” the complaint stated. By cutting off future continuing applications, Tafas will lose potential rights to the numerous inventions that flow from his original work, it said. The USPTO exceeded its congressionally-delegated authority by, among other things, enacting retroactive regulations and unconstitutionally taking Tafas’s property, the complaint said.

But Foley & Lardner Partner Harold Wegner agued in an article on ipFrontline.com that, while some late stage continuation requests are proper, particularly in the biotechnology field, most are submitted too late in the game.

US case law denies priority to continuation claims unless the original patent application fully described the invention, Wegner said. It remains to be seen if Tafas can distinguish his situation from those earlier cases sufficiently to entitle him to a continuation, he said.

The new continuation rules “can be justly criticised as the worst rulemaking in the past thirty years,” Wegner wrote. But they may also “expose some weaknesses of continuation practice” and lead to a better understanding of the proper use of continuation applications in daily practice, he said.

Patent quality and efficiency are also behind a pilot program announced 4 September by the USPTO and the UK Intellectual Property Office. The Patent Prosecution Highway project lets in both countries obtain corresponding patents faster, and cuts agency workload by allowing the offices to benefit from each other’s work, the USPTO said.

Under the pilot, an applicant who receives a ruling from either office that at least one claim in an application is patentable may ask the other office to fast-track its examination of corresponding claims in corresponding applications. Participation requirements are available at www.uspto.gov/web/patents/pph/pph_index.html.

Wilful Infringement Test Changed

In another far-reaching development, the US Court of Appeals for the Federal Circuit on 20 August set a new standard for determining wilful infringement, making it more difficult for companies to prove their patents have been infringed and to collect higher damages. (In re Seagate Technology, LLC [.pdf]).

The new test requires “at least a showing of objective recklessness” in place of the existing “affirmative duty of care.” To establish wilful infringement, the court said, a patentee must “show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.” If that threshold is met, the patentee must then show that this risk was either known or so obvious that it should have been known to the accused infringer.

The decision “has implications far beyond the questions” presented to the court, Marshall, Gerstein & Borun attorney Donald Rupert wrote in a client memorandum. The court may have redefined the nature of wilful infringement but it gave no guidance on how the “objective recklessness” standard should be applied and “little suggestion as to what it means,” he said.

Dugie Standeford may be reached at info@ip-watch.ch.