Many patent applicants doing business in the United States must have celebrated on April 1st, 2008 when they learned that Judge James C. Cacheris, Senior Judge sitting in the U.S. District Court for the Eastern District of Virginia, issued his much-anticipated decision voiding the sweeping new United States Patent and Trademark Office (USPTO) rules of practice, primarily directed to claims and continuation applications (the New rules)1.

Briefly, the New rules issued by the USPTO on August 1st, 2007 were crafted to significantly limit the number of continuation applications, continuation-in-part applications and requests for continued examination (RCE) that could be filed by an applicant2. The New rules were also designed to strongly discourage applicants from filing more than five independent claims or more than 25 total claims. Initially set to come in force on November 1st last year, the New rules had not been implemented because Dr. Triantayllos Tafas, an independent inventor, and the pharmaceutical company GlaxoSmithKline (GSK) successfully obtained at the last minute a temporary order preventing the USPTO from implementing its contentious changes3.

On April 1st, the District Court granted Tafas' and GSK's motions for summary judgement and declared the New rules "null and void" as "otherwise not in accordance with law" and "in excess of statutory jurisdiction [and] authority." The Court thus permanently enjoined the USPTO, its director and employees from implementing the New rules.

The Court ruled that the proposed New rules were substantive rather than procedural, as the USPTO had argued, and that the Office therefore did not have the authority to promulgate them. Although the U.S. Patent Act empowers the USPTO to "establish regulations, not inconsistent with law", and to "govern the conduct of proceedings in the Office", the USPTO is not vested with any "general substantive rulemaking power", the Judge said. The Court then found that the proposed New rules are "substantive rules that change existing law and alter the rights of applicants such as GSK and Tafas under the Patent Act". According to the Judge, the New rules "constituted drastic departure from the terms of the Patent Act as they are presently understood".

In particular, the Court found that the changes affecting continuation practice are substantive because they impose a "hard limit" that "deprives applicants of their valuable rights [...] to an unlimited number of continuation and continuation-in-part applications as a matter of right", With respect to the rule limiting RCEs, the Court determined that "limiting RCEs based on application family is a clear departure from the language of the statute, which states that the USPTO must provide for the continued examination of each application". The Court also found substantive the New rules on the number of permissible claims because it would require filing of an Examination Support Document (ESD) containing detailed and specific information about the "prior art" and the patentability of the invention. According to the Judge, this obligation "[goes] far beyond merely requiring additional information". Instead, "the ESD requirement changes existing law and alters the right of the applicants under the current statutory scheme by shifting the examination burden away from the USPTO and onto applicants".

Patent applicants and practitioners largely expressed relief with the publication of this decision because an adverse ruling may have had a profound negative effect on applicants' patent practice, especially for those in the chemical, biotechnology and pharmaceutical industries4.

Because this ruling could be considered to restrict the ability of the USTPO to issue new rules in the future, many observers expect an appeal. Therefore, depending on whether the decision is appealed, it may be months, or more than a year, before the ultimate fate of the New rules is determined.

Footnotes

1. A copy of the twenty-six page decision is available at http://www.patentdocs.net/patent_docs/files/Opinion.pdf.

2. See United States Patent & Trademark Office website, Changes to Practice for Continued Examination Filings, Patent Applications Containing Patentably Indistinct Claims, and Examination of Claims in Patent Applications, Final rule http://www.uspto.gov/web/offices/com/sol/notices/72fr46716.pdf.

3. As reported earlier in our annual synopsis of the year's significant IP-related decisions Intellectual Property: The Year 2007 in Review available at http://www.fasken.com/ip_the_year_2007_in_review/.

4. Serge Lapointe, The Disproportionate Negative Impact for the Biotech and Pharma Industries of the New U.S. Rules of Practice on Claims and Continuation Applications, Life Sciences Newsletter, April 2008, pp14-15. http://www.fasken.com/life_sciences_newsletter_april08/.

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