Inter partes reexamination is relatively new. The 1999 AIPA provides that it is available for "any patent that issues from an original application filed in the United States on or after" November 29, 1999. Cooper's original patent application was filed prior to the 1999 deadline, but a continuation application was filed after the deadline. The debate here was whether the continuing application should be considered an "original application" under the statute. The PTO argued that the continuation should be considered an original application and that its interpretation should be given a high level of deference.

On appeal, the CAFC affirmed. In doing so, the court first found that PTO's interpretation of "original application" is was a procedural determination leading the court to grant Chevron-level deference to the PTO's interpretation.

We have also previously held that 35 U.S.C. § 2(b)(2) does not authorize the Patent Office to issue "substantive" rules. See Merck & Co. v. Kessler, 80 F.3d 1543 (Fed. Cir. 1996). "A rule is 'substantive' when it 'effects a change in existing law or policy' which 'affect[s] individual rights and obligations.'" … In this case, the Patent Office's interpretation of "original application" does not effect any change in existing law or policy; rather, it is a prospective clarification of ambiguous statutory language regarding a matter of procedure. It is therefore "interpretive"--rather than "substantive"--under the definitions put forward in Animal Legal Defense Fund. We conclude that the Patent Office had the authority under 35 U.S.C. § 2 to interpret section 4608, because that interpretation both governs the conduct of proceedings in the Patent Office, not matters of substantive patent law, and is a prospective clarification of ambiguous statutory language.

….

Because the Patent Office is specifically charged with administering statutory provisions relating to "the conduct of proceedings in the Office," 35 U.S.C. § 2(a)(2)(A), we give Chevron deference to its interpretations of those provisions. See Lacavera ("Because the PTO is specifically charged with administering this statute, we analyze a challenge to the statutory authority of its regulations under the Chevron framework."); see also Bender v. Dudas, 490 F.3d 1361 (Fed. Cir. 2007) (applying Chevron framework to Patent Office regulations for the conduct of proceedings in the Patent Office); Ethicon, Inc. v. Quigg, 849 F.2d 1422 (Fed. Cir. 1988) (same).

Under the familiar two-step Chevron analysis, "[w]e always first determine 'whether Congress has directly spoken to the precise question at issue.'" Hawkins v. United States, 469 F.3d 993, 1000 (Fed. Cir. 2006) (quoting Chevron, 467 U.S. at 842). "We do so by employing the traditional tools of statutory construction; we examine the statute's text, structure, and legislative history, and apply the relevant canons of interpretation." Delverde, SrL v. United States, 202 F.3d 1360, 1363 (Fed. Cir. 2000). "If we find 'that Congress had an intention on the precise question at issue, that intention is the law and must be given effect . . . .'" Hawkins, 469 F.3d at 1000 (quoting Chevron, 467 U.S. at 843 n.9.) If we conclude that "Congress either had no intent on the matter, or that Congress's purpose and intent is unclear," Delverde, 202 F.3d at 1363, then we proceed to step two, in which we ask "whether the agency's interpretation is based on a permissible construction of the statutory language at issue," Hawkins, 469 F.3d at 1000.

….

We conclude that the Patent Office's interpretation of section 4608 is permissible and therefore entitled to deference.

This is a relatively minor case, and the true issue is whether it provides any indication of how the court will proceed in Tafas v. Dudas.

Limits on Patent Agents: The most notable portion of the rules may be Section 11.5(b)(1), which defines exactly what PTO registration authorizes. This includes: "preparing and prosecuting any patent application, consulting with or giving advice to a client in contemplation of filing a patent application or other document with the Office, drafting the specification or claims of a patent application; drafting an amendment or reply to a communication from the Office that may require written argument to establish the patentability of a claimed invention; and drafting a communication for a public use, interference, reexamination proceeding, petition, appeal to the Board of Patent Appeals and Interferences, or other proceeding." This also includes drafting patent assignments "if the practitioner is filing or prosecuting the patent application, and assignment does no more than replicate the terms of a previously existing oral or written obligation of assignment from one person or party to another person or party."

In a comment, the PTO makes clear that PTO registration does not authorize offering an "opinion of validity of another party's patent when the client is contemplating litigation and not seeking reexamination" because such activity "could not be reasonably necessary and incident to the preparation and prosecution" of a client's patent. Further, the PTO sees "no circumstance [where] practice before the Office [would] include the rendering of opinions on infringement."

Of course, these limits are directed to patent agents. When practicing within their state, patent attorneys have overlapping authority from state bar registration.

Notes:

• Effective Date, September 15, 2008
• Read the Rules
• These rules are a full revision of the disciplinary procedures. I have not yet read them all.

"USPTO is identifying the applicability date of those regulatory provisions relating to applications containing patentably indistinct claims which are enjoined in Tafas v. Dudas, 530 F. Supp. 2d 786 (E.D. Va. 2008). Should the injunction be lifted, those regulations will apply only to applications filed on or after any new effective date that would be published by the USPTO in the future.

. . . .

The USPTO anticipates that it will be some time before the litigation concerning the Claims and Continuations Final Rule is finally resolved. The USPTO is concerned that some applicants may be taking preparatory action anticipating the new requirements of 37 CFR 1.78(f)(1) and (2), as added by the Claims and Continuations Final Rule, due to the possibility that the injunction by the district court in Tafas will be removed. The purpose of this notice is to aid applicants who might otherwise feel the need to take such preparatory actions by identifying the applicability date of the provisions of 37 CFR 1.78(f) in the event that the injunction by the district court in Tafas is removed. Specifically, the changes in 37 CFR 1.78(f)(1) and (f)(2) will only apply to applications filed on or after any new effective date that would be published by the USPTO after the removal of the injunction. Thus, in the event the referenced injunction is lifted, applicants will only need to comply with the identification requirements of 37 CFR 1.78(f)(1) in applications having an actual filing date on or after this new effective date. Likewise applicants will only have to identify other commonly owned applications that satisfy the conditions set forth in 37 CFR 1.78(f)(1)(i) in applications that have a filing date on or after this new effective date. Similarly, the rebuttable presumption of 37 CFR 1.78(f)(2) will only apply to applications having an actual filing date on or after the effective date. Furthermore, the rebuttable presumption will only exist with respect to an application that satisfies the conditions set forth in 37 CFR 1.78(f)(2)(i) and also has a filing date on or after this new effective date.

After being rejected by the district court, the USPTO has appealed its case to the Federal Circuit. On appeal, the USPTO asks the appellate court to allow the patent agency to implement new rules that place limits on the number of claims filed with each patent application and the number of continuations that may stem from each patent application. [File Attachment: pto tafas brief (144 KB)]

The PTO asks the CAFC to review three specific issues:

1. Whether the PTO's new limits on claims and continuations are within the scope of the Office's statutory rulemaking authority;
2. Whether the new limits conflict with the Patent Act; and
3. Whether the PTO must provide additional notice and comment for its rule changes.

The PTO summarizes its arguments as follows:

1. The Final Rules are within the scope of the USPTO's rulemaking authority under the Patent Act. The Act's primary grant of rulemaking authority, Section 2(b)(2), authorizes the Office to issue rules that "govern the conduct of proceedings in the Office," "facilitate and expedite the processing of patent applications," and "govern the recognition and conduct of agents, attorneys, or other persons representing applicants or other parties before the Office." The USPTO correctly determined that the Final Rules fit within these grants of rulemaking authority. By setting filing and documentation requirements, the rules regulate the conduct of proceedings in the Office and the conduct of attorneys and other representatives, and by discouraging unnecessarily repetitive filings and providing examiners with needed information, they facilitate and expedite the processing of patent applications.

In holding that the Final Rules are ultra vires, the court made no effort to measure the Final Rules against the actual terms of Section 2(b)(2), nor did the court give the USPTO's interpretation of that provision the deference required by Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), and its progeny. Instead, the court held that the Office is confined to issuing procedural rules and that the Final Rules are impermissibly substantive. But the cases on which the district court relied do not engraft a rigid procedural/substantive distinction onto Section 2(b)(2). And even if they did, the Final Rules would still pass muster, for they regulate the procedures used in proceedings before the Office rather than the substantive criteria for the awarding of patents. The district court's conclusion that the rules are substantive rather than procedural rests on APA cases that do not involve that distinction at all, and the court's standards for measuring the "substantiveness" of rules are at odds with the Supreme Court's jurisprudence under the Rules Enabling Act.

The court compounded these errors by erroneously holding that Section 2(b)(2)(B), which provides for the USPTO to issue rules "in accordance with" 5 U.S.C. § 553, requires the Office to engage in notice-and-comment rulemaking even when Section 553 expressly provides that notice and comment are not required.

2. In the course of its ultra vires analysis, the district court held that the Final Rules are inconsistent with other provisions of the Patent Act. That holding is likewise incorrect. The court mischaracterized the effects of the Final Rules, misconstrued the statutory provisions, misunderstood the judicial precedents concerning those provisions, and failed to give the USPTO's construction of the provisions the deference required by Chevron.

The district court held that Rules 78 and 114 conflict with Section 120 and 132(b), respectively, because the rules place "hard limits" on the number of continuation applications and RCEs that an applicant may file, while the statutory provisions entitle applicants to make an unlimited number of such filings. But the rules do not in fact limit the number of continuation applications and RCEs that may be filed; they simply require an applicant to show the need for further filings once a threshold number of filings has been made. And even if the rules did impose fixed limits, they would not conflict with Sections 120 and 132(b). Section 120 was enacted by Congress simply to provide a statutory basis for continuation practice, not to vest applicants with the right to file an endless stream of continuation applications.

Likewise, Section 132(b), which directs the Office to issue regulations providing for continued examinations, does not entitle applicants to file an endless series of RCEs. The district court held that Rules 75 conflicts with Section 112 ¶2 by limiting the number of claims that may be included in a single application. But Rule 75 places no limit whatsoever on the number of claims in an application, and Section 112 ¶ 2 does not address the permissibility of such a limit in any event. The court also held that Rule 75 and 265 conflict with the provisions of the Patent Act that assign the USPTO the burden of examination and the burden of establishing a prima facie case of unpatentability. But there is no conflict between those provisions and the rules, which merely require applicants to provide information about their claims and prior art so examiners can discharge their burdens more accurately and efficiently.

The PTO is asking whether these numbers are accurate under the newly finalized Appeal Brief rules. (This will impact whether the Whitehouse allows the new rules to be implemented). Comments are due by August 8, 2008, to Susan Fawcett (Susan.Fawcett@uspto.gov), who will in turn be required to provide them to OMB. 

The numbers above include “the time to gather the necessary information, prepare the briefs, petitions, and requrests, and submit them to the USPTO.” 

Notes:

• UPDATE: Comments are due by August 8, 2008 (I had originally reported August 9).
• Thanks to David Boundy for supplying this information. (For some unknown reason, the USPTO did not post information about this request for information from the public).
• File Attachment: timing.pdf (56 KB) [This contains the PTO’s estimate of hours and costs]
• File Attachment: appeal rules.pdf (287 KB) [This contains the final PTO rules on appeal briefs]
• File Attachment: info collection.pdf (157 KB) [This contains directions on how the OMB requires information to be collected]