Under Secretary of Commerce for Intellectual Property and Director of the USPTO David Kappos has officially rescinded [1] the highly hated regulations that would have limited patented claims and continuations — with an emphasis on the fact that they were proposed by the previous administration. The regulations were published in the Federal Register in August 2007, but were enjoined and never came into effect.
The USPTO also announced that it will file a joint motion with GlaxoSmithKline – one of two plaintiffs in the Tafas v. Kappos [2] lawsuit – to dismiss and vacate the federal district-court decision in a lawsuit filed against the USPTO that sought to prevent the rules from taking effect.
In March, the Federal Circuit issued its 55 page decision in Tafas v. Doll [3] holding that aside from the rule limiting continuations, the other rule changes were procedural in nature and the PTO does have the rule-making authority to implement the rules limiting the number of claims in each application, providing for Requests for Continued Examination (RCEs) and requiring Examination Support Documents (ESDs).
Then, an eleven member en banc panel has voted to rehear the case en banc. Tafas v. Doll, 2008-1352 (Fed. Cir. 2009)(Order, per curiam) [4]. In its en banc order, the Federal Circuit vacated the panel decision, set up a briefing schedule and said it would announce an oral argument at a later date.
Kappos issued a statement showing that the Patent Office may be changing from its anti-patent stance:
“The USPTO should incentivize innovation, develop rules that are responsive to its applicants’ needs and help bring their products and services to market,” Kappos said. “These regulations have been highly unpopular from the outset and were not well received by the applicant community. In taking the actions we are announcing today, we hope to engage the applicant community more effectively on improvements that will help make the USPTO more efficient, responsive, and transparent to the public.”
The regulations would have permitted an applicant to file only two continuation applications and one request for continued examination (RCE) per application family as a matter of right. For a third or subsequent continuation application or RCE, the applicant would have had to make a case to the USPTO to show why the additional filing was needed. Another regulation would have permitted an applicant to file five independent claims and twenty-five total claims per application. If an applicant desired more than five independent claims or more than twenty-five total claims, then the Claims Rule would have required the applicant to supply information to the USPTO about the claimed invention to assist the Office’s examination.
The press release notes that “many in the applicant community felt the combination of these new requirements would ultimately have had an effect that was at odds with their intended purposes.” That huge understatement belies the fact that some estimates showed that put the minimum direct paperwork cost for only one part of the IDS Rule at $1.9 billion [5] – more than the PTO’s total budget of $1.7 billion.
There has also been speculation that the Continuations and Claims rules had been effectively killed nineteen months ago, along with the IDS rule, by the White House Office of Management and Budget (OMB). The rules came up for review under the Paperwork Reduction Act in September 2007, and this required a notice-and-comment period. Between November 2007 and January 2008, David Boundy, Ron Katznelson and Richard Belzer filed several letters with the White House Office of Management and Budget, showing that PTO had underestimated the paperwork burdens of the Continuations and Claims Rule by billions of dollars per year, and had failed to comply with numerous procedural requirements of the Act. Although the law requires an agency to respond to such comments, there is no public record that PTO ever did so. Many (though not all) of the submissions to OMB are here [6].
Recently OMB approved the PTO’s September 2007 Paperwork clearance filing. The PTO’s final version of its request for Paperwork approval [7] reads “At the direction of OMB, this renewal [for Paperwork clearance] is being resubmitted with all of the [requests for approval of the Continuations, Claims and IDS rules] removed.”
If it is correct that the Paperwork clearance was denied and/or revoked by the OMB, it would appear that even if the PTO had won the Tafas case, the PTO would have been forbidden by law from demanding this information from patent applicants.
Though the information on OMB’s web site is not clear on the point, it appears that the directive from the White House to PTO to withdraw the rules may have issued no later than late January 2008, and that PTO had fully acquiesced by mid-April.
Note that briefing on cross-motions for summary judgment were pending in the Tafas/GSK litigation during the time when PTO was “directed” to withdraw the rules. It is not clear if the PTO ever informed Judge Cacheris or the parties that it had made these changes in its paperwork filings.
OMB’s final determination on the Paperwork aspects of these three rules was issued on July 1, 2009 [8]. However, it is not shown if the PTO informed the Federal Circuit, even though a petition for en banc rehearing was pending. The en banc petition was granted July 6.
Biotechnology Industry Organization (BIO) President and CEO Jim Greenwood issued a statement on the decision, which had been opposed by BIO:
“BIO applauds the action by Under Secretary Kappos today to formally withdraw the controversial and harmful proposed rules that would have limited the ability of biotechnology applicants to secure full coverage of their inventions. This action is a positive sign that the new Administration wants to work in a constructive manner with the patent applicant community to address the serious challenges facing the PTO, and BIO stands ready to work with Under Secretary Kappos and others at the PTO to do so.”
GlaxoSmithKline’s press release is available here [9].