In a twenty-six page opinion, District Court Judge Cacheris has granted GSK’s and Tafas’s Motions for Summary Judgment — finding the PTO’s proposed limitations to the number of continuation applications and claims per patent to be improper extensions of PTO authority:
“Because the USPTO’s rulemaking authority under 35 U.S.C. § 2(b)(2) does not extend to substantive rules, and because the Final Rules are substantive in nature, the Court finds that the Final Rules are void as ‘otherwise not in accordance with law’ and ‘in excess of statutory jurisdiction [and] authority.’ 5 U.S.C. § 706(2).”
==== Discussion ====
PTO Has No Substantive Rulemaking Authority: 35 U.S.C. § 2 provides various specific powers to the PTO. However, Section 2 does not provide the PTO with any “general substantive rulemaking power.” According to the Court, “Section 2(b)(2)’s authority is limited to rules governing the ‘conduct of proceedings’ before the Office, the USPTO does not have the authority to issue substantive rules, and it does not have the authority to make substantive declarations interpreting the Patent Act.”
Substantive Rulemaking is Broadly Defined: The district court defines a “substantive rule” as any rule that “affect[s] individual rights and obligations” (Quoting Chrysler Corp. v. Brown, 441 U.S. 281 (1979))
PTO’s Proposed Rules are Substantive: Applying the broad definition of substantive, the court then easily found that the proposed rules are “substantive rules that change existing law and alter the rights of applicants such as GSK and Tafas under the Patent Act.”
“The 2+1 Rule and the 5/25 Rule, which limit continuing applications, RCEs, and claims, and the ESD requirement, which shifts the examination burden onto applicants, constitute a drastic departure from the terms of the Patent Act as they are presently understood. By so departing, the Final Rules effect changes in GSK’s and Tafas’s existing rights and obligations.”
Limits on Continuations are Substantive: In particular, the court found that the continuation rule is runs contrary to the law because it imposes a “hard limit” that “deprives applicants of their valuable rights under 35 U.S.C. § 120 to an unlimited number of continuation and continuation-in-part applications as a matter of right.” Likewise, the limitations on RCE filings is a “clear departure from the plan language” of 35 U.S.C. § 132 (the PTO “shall … “at the request of the applicant …”).
Limits on Claims are Substantive: For over eighty years, the courts (CCPA) have blocked the PTO from placing any “mechanical limits” on the number of claims. Although the PTO may object to duplicate claims, the court found that the law prevents any strict limit on the number of claims. The Court saw the ESD requirement substantive because it shifts the burden of examination from the PTO to the Applicant:
[T]he ESD requirement changes existing law and alters the rights of applicants under the current statutory scheme by shifting the examination burden away from the USPTO and onto applicants. . . . [T]he Federal Circuit has stated that applicants have “no duty to conduct a prior art search” and “no duty to disclose art of which an applicant could have been aware. . . . It is only after the USPTO makes a demonstration of unpatentability that the burden shifts to the applicant to rebut that showing. . . . Thus, by requiring applicants like GSK and Tafas to perform prior art searches and by shifting the examination burden away from the USPTO, the ESD requirement manifestly changes existing law and alters applicants’ rights under Sections 102, 103, and 131.”
Holding: “Because the USPTO’s rulemaking authority under 35 U.S.C. § 2(b)(2) does not extend to substantive rules, and because the Final Rules are substantive in nature, the Court finds that the Final Rules are void as “otherwise not in accordance with law” and “in excess of statutory jurisdiction [and] authority.” 5 U.S.C. § 706(2).
From the order: “Defendants Jon W. Dudas and the United States Patent and Trademark Office and their agents, servants, and employees are permanently enjoined from implementing the Final Rules”
The court made no attempt to carve-out portions of the rules that may be legal.
Although numerous other issues were raised by the parties and amici, the Court decided only on the substantive ground.
Weak points in the decision: TBD.