New U.S. Patent and Trademark Office Rules
By Audrey Millemann
The United States Patent and Trademark Office (“PTO”) has revised the patent rules in an attempt to reduce the PTO’s workload, although the stated purpose is to “allow the Office to conduct a better and more thorough and reliable examination of patent applications.” The rule changes were initially proposed in January 2006 and the final rules were published in the Federal Register on August 21, 2007. The changes will take effect on November 1, 2007, although some rules will apply to patent applications filed before November 1, 2007 as well as those filed after November 1, 2007.
The key changes in the rules limit the number of continuing applications and requests for continued examination (RCEs) and also limit the number of claims that an application can contain. These new rules were controversial as soon as they were announced. In fact, one inventor has already filed a lawsuit against the PTO, alleging that the new rules are unconstitutional.
The new rules permit an inventor to file only two continuation or continuation-in-part (CIP) applications in one application family. An “application family” consists of the initial (parent) application and all of its continuations or CIP applications. A CIP may be the basis for two continuations or CIPs if it does not claim priority to the original parent application and its claims are not supported by the original disclosure.
If an inventor wishes to file a third continuation or C-I-P application, then he or she must file a petition explaining why the amendment, argument, or evidence could not have been presented in an earlier application. It is not clear what test the PTO will apply in deciding whether to grant a petition; however, it is expected that few petitions will be granted.
This rule will go into effect for applications filed after November 1, 2007. If a pending application has two continuations or CIPs already filed in its family, one more continuation or CIP application will be permitted after November 1, 2007.
The PTO’s rationale for this change (and the change in the RCE rules) is that the volume of continuing applications that contain patentably indistinct claims is “crippling” the PTO and drastically limiting the PTO’s ability to handle new applications. As evidence of this problem, the PTO notes that in 1980, 11.4% of the new applications were continuing applications, compared to 29.4% in 2006. The PTO also states that the practice of filing multiple continuing applications that often do not get resolved results in the public being left uncertain as to what is covered by a patent. Lastly, the PTO believes that continuing applications hinder innovation by slowing down the PTO’s ability to examine (and presumably allow) new applications.
Under the new rules, divisional applications may be filed as long as the parent was subject to a restriction requirement and the claims are to a non-elected invention and have not been examined.
A divisional application starts its own family. Thus, an inventor may file two continuation or CIP applications and one RCE based on the divisional application as the parent. Additional continuing applications or RCEs may be filed if a petition explaining the need is granted.
The new rules limit the number of RCEs to one per family. Again, the “family” is the parent and all continuation or CIP applications. Thus, only one RCE can be filed in all of these applications. If the inventor wants to file a second RCE, he or she must file a petition justifying the RCE, as is required by the new rules on continuing applications.
The new rules prevent any further RCE being filed after November 1, 2007 if one RCE has already been filed in the application family. Thus, most experts recommend that if an RCE is desired in an application pending under a final office action as of November 1, 2007 that has one RCE already filed in the application family, then the inventor should file the response with the RCE by November 1, 2007. This results in the inventor being permitted two RCEs; if the response is not filed by November 1, 2007, then no further RCE can be filed.
Multiple Related Applications
The new rules limit the number of related applications that have patentably indistinct claims and a common assignee.
The rules require an inventor to list all other pending applications or patents that have a common inventor, a common owner, or a filing date or priority date within two months of the filing date or priority date of the new application. The PTO will presume that multiple applications include patentably indistinct claims if they have a common inventor, a common owner, the same filing date or priority date, and substantially overlapping disclosures.
The inventor can rebut the presumption be explaining why the claims are patentably distinct or by filing terminal disclaimers and explaining why two applications containing patentably indistinct claims should be permitted. Without a satisfactory explanation, the PTO will treat such multiple applications with patentably indistinct claims as one application and limit the claims to five independent claims and 20 dependent claims, for a total of 25 claims. The purpose of this rule is to prevent applicants from avoiding the new rule limiting the number of claims.
Number of Claims
The new rules limit the number of claims that can be filed in any application to five independent claims and 20 dependent claims, for a total of 25 claims. If a greater number of claims is filed, the applicant must file an Examination Support Document (ESD).
The ESD must address all of the claims and must be filed before a first office action. The ESD has to include a search, a list of references, and an explanation of the patentability of the claims over the references. The intent of the ESD is to “help focus examination” by aiding the examiner in understanding the invention and in obtaining the prior art before performing a search.
The ESD is so onerous that patent experts believe it should be avoided if at all possible, as it will likely have estoppel effects in the prosecution of the application and in future litigation.
Although this rule is not effective until November 1, 2007, it is retroactive in that it applies to all pending applications that have not received a first office action as of November 1, 2007.
The Pending Lawsuit
One day after the PTO published its final rules, an independent inventor filed a lawsuit against the PTO and its director in the federal court in the Eastern District of Virginia, challenging the new rules. The suit was filed by Dr. Triantafyllos Tafas, who holds eight patents and has 17 pending applications. He is represented by a law firm in Washington, D.C.
The complaint seeks a declaratory judgment and an injunction prohibiting the PTO from enforcing the new rules. The grounds are that the PTO exceeded its rulemaking authority granted it by Congress, that the new rules violate the Patent Act, that the PTO violated the Administrative Procedures Act, that the rules are impermissively retroactive, and that the rules are unconstitutional in that they violate the Fifth Amendment’s takings clause.
Tafas’ attorneys have stated that the new rules will force inventors to file multiple patent applications to cover what would formerly have been filed as one application describing multiple versions of the invention. They believe that this will limit the ability of independent inventors and small companies to obtain patent protection as it will be cost-prohibitive for them to file multiple applications, while large corporations who have the money will be able to do so. They argue that the overall effect will be a negative one on innovation.
While many practitioners and inventors alike agree that the patent process has become too cumbersome, the new rules are receiving far more criticism than praise. Most opinions are that the PTO has gone too far. It will be interesting to see what the court in Virginia does. There may well be other cases on file, and some will likely end up on appeal. In the meantime, patent applicants will have to struggle with the new rules or find the loopholes.