Many readers asked about the “suspicious procedures” at the USPTO regarding the Proposed Continuations Limit Rule, the Proposed Claims Limit Rule, the Proposed IDS Rule, and the Final Continuations and Claims Limits Rule.  See Tafas v. Dudas case to enjoin enactment of the USPTO’s new rules.

The question is, can’t things be explained by the ordinary course of business?  Let’s look at the Declaration of Richard B. Belzer, Ph.D., an economist previously in the Office of Management and Budget (OMB).

The Office of Information and Regulatory Affairs (OIRA), an office within OMB, is responsible for implementing presidential Executive Orders related to, among other things, the centralized review of draft proposed and draft final regulations prior to their publication for public comment or promulgation.

Agencies must provide OIRA with an assessment of the potential costs and benefits of a proposed regulatory action, including, an explanation of the manner in which the regulatory action is consistent with a statutory mandate.

Executive Order 12,866 § 1(b)(6) says:

Each agency shall assess both the costs and the benefits of the intended regulation and, recognizing that some costs and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.

It is important to note that Executive Order 12,866 § 6(b)(1) limits OIRA review to those draft rules designated as “significant,” for which “economically significant” is a subset.  OIRA does not review draft rules designated as “not significant”:

OIRA may review only actions identified by the agency or by OMB as significant regulatory actions under subsection (a)(3)(A) of this section. (emphasis added)

Data retained by GSA show that OIRA reviewed 124 draft regulations (an average of about 10 per year) submitted by PTO for review under Executive Order 12,291. Under Executive Order 12,866, OIRA has reviewed 36 draft regulations from PTO (an average of less than 3 per year).

GSA data indicate that none of these draft rules were designated as “major” or “economically significant.” With the new proposed rules, the PTO submitted the Final Continuations Limit Rule and the Final Claims Limit Rule to OMB.  In doing so, the PTO designated as “significant” under Executive Order 12,866 the Proposed Continuations Limit Rule (71 Fed. Reg. 57), the Proposed Claims Limit Rule (71 Fed. Reg. 66), and the Final Continuations and Claims Limits Rule (72 Fed. Reg. 46834), but did not designate any of them as “economically significant.” See here.

Hence, the PTO must have concluded that these rules were not likely to have effects exceeding $100 million in any one year, or have novel policy implications. The PTO designated the Proposed IDS Rule as “not significant” — a designation restricted to regulatory actions too insignificant to warrant OMB review.

Mr. Robert Bahr, Senior Patent Counsel in the Office of the Deputy Commissioner for Patent Examination Policy, stated that this was a typographical error. When asked if the PTO had published a correction in the Federal Register at any time during more than 15 months that had elapsed, and Mr. Bahr acknowledged that the Office had not done so.

In the Supporting Statements dated December 22, 2005, the PTO estimated that the Proposed Continuations Limits Rule and the Proposed Claims Limit Rule would increase paperwork burden by 75,200 hours. Using an hourly rate of $286, the value used by the PTO included in the Supporting Statement, the total cost of incremental paperwork burden attributable to these rules was $22 million.

In its September 2007 ICR submission, the PTO stated that in March 2006 OMB approved an increase in 196,800 burden hours “based on public comments received in response to the proposed rulemakings and further study”, for a total of 272,000 burden hours. Using the hourly rate of $304 in its September 2007 Supporting Statement, these paperwork burdens entail private sector costs exceeding $83 million per year.

The December 2005 Supporting Statement included no estimates of paperwork burden for the Proposed IDS Rule. The September 2007 Supporting Statements states that in July 2006 OMB approved an increase in 714,850 burden hours due to the Proposed IDS Rule. Using the PTO’s assumed hourly rate of approximately $304, these paperwork burdens entail private sector costs exceeding $217 million.

Doesn’t seem too “not significant” to us. 

Read more about the procedures from the Exhibits to the Polestar brief:

Declaration of Richard B. Belzer, Ph.D.

PTO’s Information Quality Guidelines as of January 3, 2006

Statistics Reflecting Dispositions of Appeals

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