Guest Post by Richard B. Belzer, Ph.D.
The Federal Circuit has before it an unusual petition for rehearing en banc. It involves an issue that, to my knowledge, has never before been heard by this court, and it's one that hardly anyone who practices patent law even knows about. Indeed, the reason that this issue is arising now is the U.S. Patent and Trademark Office has made an extraordinary (and heretofore successful) effort to prevent inventors and the patent bar from understanding it.
For this reason, my nonprofit organization has filed an amicus brief asking the Court to uphold statutory rights that, until recently, possibly no patent lawyer knew how to defend. If the Court acts favorably, it can undo decades of rogue agency practice at the PTO.
In In re Lovin, the key issue is whether an examiner's failure to state a prima facie case of obviousness, as required by MPEP Chapter 2100, is sufficient ground for the Board of Patent Appeals and Interferences to vacate or reverse a rejection. Lovin's brief alleges that the Board abandoned its longstanding practice of vacating rejections when the examiner had not made this case, and instead required the appellant to make a substantive showing of patentability in their appeal brief—that is, to prove a negative. The amicus brief of CFPH, LLC, a business unit of Cantor Fitzgerald, offered a complementary explanation of why the Board's interpretation of PTO Rule 41.37 was incorrect.
Regulatory Checkbook, the nonprofit I manage, seeks leave to intervene because the PTO lacked any legal authority to compel Lovin to provide this information. In fact, until December 22, 2009, the PTO had no legal authority to require any appellant to comply with any of the material information collections contained in 37 C.F.R. Part 41.
How could that be? To understand why, let's take a short trip to the Office of Management and Budget, which occupies the tall red brick building across Lafayette Park from the tall red brick building housing the Court of Appeals for the Federal Circuit.
The Paperwork Reduction Act
All federal agencies are required by the Paperwork Reduction Act (44 U.S.C. §§ 3501 et seq.) to obtain prior approval from OMB for every "collection of information" they direct to the public. OMB promulgated implementing regulations that agencies must follow (5 C.F.R. Part 1320). OMB's regulations place procedural requirements on agencies to provide OMB with sufficient information for OMB to evaluate and balance the "practical utility" of the information the agency wishes to collect (i.e., benefits) against the "burden" (i.e., costs). If OMB disapproves, the agency is forbidden from collecting the information.
Everyone reading this post knows well the Board's 2008 attempt to prescribe evermore arcane rules for appeals, including even font size and page numbering for briefs. Briefs are information "collected" under the Paperwork Act (44 U.S.C § 3502(3)), and the PTO is required to obtain OMB approval before seeking that information. If PTO failed to do so, by law it is forbidden from imposing any penalty for a person's failure to comply (44 U.S.C. § 3512).
This may seem weird, but actually there's nothing unusual about it. Every year, OMB approves over 6,000 requests for approval submitted by federal agencies. Agencies comply because they know they can't enforce their regulations if they don't. Congress wrote the law this way so as to not-so-subtly encourage agency compliance. It's been very effective for most agencies, but not the PTO.
The PTO's Persistent Violation of the Paperwork Reduction Act
For almost 30 years the PTO systematically failed to obtain OMB approval for the Board's information collection requirements. What the PTO did instead was masterfully disingenuous. At the end of every proposed and final rule notice, the PTO published a statement correctly acknowledging that the information it sought to collect was covered by the Paperwork Act. Then it made two egregiously false statements: first, that OMB had already approved this information; and second, that the proposed or promulgated regulatory changes would have no effect on public paperwork burdens.
To someone familiar with the Paperwork Act, these statements were easily disprovable. OMB had never reviewed, much less approved, the information collections contained in the Board's rules of practice. Why? Because the PTO had never submitted them to OMB for review. As for the notion that the Board could amend its rules of practice without altering paperwork burdens on the public, this is simply impossible. Every time an agency issues or amends a rule, or publishes a guidance document, or changes the way it interprets an existing procedure, it alters paperwork burdens. Only changes that reduce burden don't need prior OMB approval.
A few of us discovered these false statements in the Board's 2007 notice of proposed rulemaking. We alerted the PTO to the problem in public comments so that it could do the right and proper thing: restart the rulemaking procedure in compliance with the Paperwork Act. We treated the matter as honest error that could be easily corrected.
But the PTO ignored us. Worse, it tried to execute a cover-up in hopes of bamboozling OMB and the public. First it quietly published a low-ball estimate of the never-before acknowledged paperwork burdens for the Board's appeal rules—more than $250 million per year!—and invited 60 days' public comment on its accuracy. To compete its deceit, the PTO promulgated the final rule the very next day.
I reported these machinations to OMB, which is responsible for ensuring agency compliance with the Paperwork Act. Remember when the PTO inexplicably stayed indefinitely the effective date of the Board's revised rules of practice on December 10, 2008—the very date these rules were scheduled to go into effect? Now you know why.
I wish I could tell you that the PTO has repented from such misconduct and now treats the Paperwork Act and the public with proper respect. I can't. In every subsequent public notice taken with respect to the Board's rules of practice, the PTO has chosen to misrepresent the law and its history of noncompliance. And it has hidden from the public a deeply inconvenient truth: if you submitted an appeal brief or reply brief before December 22, 2009, the PTO was prohibited from rejecting your claims for any failure on your part to supply information.
The Paperwork Reduction Act Contains an Explicit Remedy for Agency Misconduct
Fortunately, this is not the end of the story. The Paperwork Act provides extraordinary protection from misbehaving federal agencies. It says "no person shall be subject to any penalty for failing to comply with a collection of information" for which an agency lacks a valid OMB approval. (The definition of "penalty" includes the "denial of a license, privilege, right, grant, or benefit" (§ 1320.3(j)), which clearly includes patents.)
Moreover, lest readers wonder, the Paperwork Act says this public protection applies "[n]otwithstanding any other provision of law." That means the Paperwork Act trumps the PTO's regulations in 37 C.F.R. Part 41.
When can a person claim this right? It's never too late. The Paperwork Act says the protection from an illegal information collection "may be raised in the form of a complete defense, bar, or otherwise at any time during the agency administrative process or judicial action applicable thereto."
This turns out to be a huge blessing just in the nick of time for Lovin. Had he known about the Paperwork Act years ago, he could have raised it at any time before the Board, or in the Federal Circuit where they appealed the Board's adverse decision. But it's clear that he didn't know about his rights, for two reasons. First, the PTO systematically misled the public, saying that it was in compliance with the law when it was not. Second, the Board affirmed the Examiner's rejections on the ground that Lovin had failed to provide information the Board knew it had no legal right to demand.
Our Amicus Brief Asks the Court to Enforce the Public Protection Provisions of the Paperwork Reduction Act
Lovin seeks a rehearing en banc to clarify the PTO's procedural obligations for examination, but also because they now know that the PTO acted illegally in their specific case. Our amicus brief speaks solely to the latter issue. In the public interest, Regulatory Checkbook has asked the Court to rehear the case specifically to ensure that Lovin's statutory rights under the Paperwork Reduction Act are upheld and validated. It's unfortunate that Lovin did not know about his rights earlier, and in that there is a lesson to everyone who practices patent law.
Still, no one should have to see past an agency's repeated false statements to learn about his legal rights. And no agency should be allowed to abuse the public the way the PTO did to Lovin, and to countless others on whom it has imposed penalties for failure to comply with unenforceable rules. Fortunately, the Paperwork Act contains strong public protections that give Lovin the unambiguous right to be heard on this crucial issue, even at this late stage of proceedings. It's now up to the Federal Circuit to enforce the law.
- Download FINAL Petition for Rehearing en banc
- Download FINAL Brief of Amicus Regulatory Checkbook
- Download FINAL Brief of Amicus CFPH
Richard B. Belzer earned his Ph.D. from Harvard in 1989. From 1988 to 1998, he was a staff economist in the Office of Information and Regulatory Affairs, the statutory office within the Office of Management and Budget that implements the Paperwork Reduction Act. Since 2001, he has directed Regulatory Checkbook, a nonprofit organization dedicated to maximizing the quality of scientific, technical, and economic information used in regulatory decision-making. A major part of its work involves monitoring federal agencies' compliance with the procedural laws and presidential directives that were enacted to advance these same goals. Dr. Belzer can be reached at Belzer@RegulatoryCheckbook.Org.