USPTO Drops Controversial Rules Package

By Erin Coe

Law360, New York (October 08, 2009) -- The fiercely contested rules proposed by the U.S. Patent and Trademark Office under the Bush administration that sought to impose new restrictions on patent applicants and became the subject of a drawn-out court battle in Tafas v. Doll have been rescinded, the USPTO said Thursday.

Charting a new course for the agency, USPTO Director David Kappos said he signed a new final rule withdrawing the 2007 regulations that sparked outrage from many patent applicants and prosecutors as being unduly restrictive, and planned to file a motion to dismiss litigation brought by inventor Triantafyllos Tafas and GlaxoSmithKline PLC to prevent the rules from taking effect.

“These regulations have been highly unpopular from the outset and were not well received by the applicant community,” Kappos said. “We hope to engage the applicant community more effectively on improvements that will help make the USPTO more efficient, responsive and transparent to the public.”

The rules, published by the agency in August 2007 and intended to get the patent application backlog under control, put new limits on the number of continuation applications, requests for continued examination, and claims that an applicant could file.

But before the rules could take hold, they were challenged by Tafas and Glaxo in the U.S. District Court for the Eastern District of Virginia, which struck the regulations down in April 2008 after finding that the agency did not possess the proper authority to make them.

In a 2-1 ruling, the U.S. Court of Appeals for the Federal Circuit revived all of the rules except for the continuations rule earlier this year, but then decided in July to vacate its decision and grant a rehearing en banc.

Kappos said Thursday that Glaxo and the USPTO would file a joint motion with the Federal Circuit to dismiss the litigation and to vacate the Virginia district court’s April 2008 decision.

“This course of action represents the most efficient way to formally and permanently move on from these regulations and work with the IP community on new ways to take on the challenges these regulations were originally designed to address,” Kappos said.

Sherry Knowles, Glaxo’s chief IP counsel, hailed the decision by the USPTO, saying the company believed the regulations “would have harmed innovation across all industries, and specifically would have deprived GSK and other manufacturers of the patent protection necessary to promote medical research and innovation."

However, lawyers representing Tafas raised concerns about the move to vacate the lower court’s decision that declared the claims and continuations rules null and void, and anticipated that Tafas was likely to object to that bid for vacatur.

“The lower court’s decision may still have precedential weight if the USPTO tries to pass rules that are substantive again. Without it, we’re back at square zero,” said Steven J. Moore, a partner of Kelley Drye & Warren LLP, who is representing Tafas.

Patent attorneys closely following the case welcomed the USPTO’s decision.

“This is a great result for inventors and the U.S. patent system. It is good to see that Mr. Kappos recognized the unpopularity of the proposed rules and rescinded them,” said Timothy Lohse, a partner at DLA Piper.

The USPTO’s action was no surprise given Kappos’ public opposition to the rules before he was confirmed as the new USPTO head in August, according to Darin Snyder, chair of O'Melveny & Myers LLP’s IP practice.

“This decision appears consistent with Director Kappos' general focus on making the USPTO's handling of applications more efficient and improving the quality of issued patents, rather than putting seemingly artificial limits on applicants,” Snyder said.

Since Kappos’ appointment to the USPTO, the patent community has been hopeful that more constructive changes would be forthcoming, and Kappos’ commitment to implement improvements to make the USPTO more efficient, responsive and transparent was promising, according to Courtenay Brinckerhoff, a partner of Foley & Lardner LLP.

“Such improvements are needed to reverse the trends that were turning the patent prosecution process into fully adversarial proceedings, with some examiners seeing their role as primarily to protect the public domain from potentially invalid patents, rather than to work with applicants to allow valid patents,” she said.

Stuart Meyer, a partner of Fenwick & West LLP, said the withdrawal of the rules is a huge relief for patent attorneys, noting that it often takes attorneys a few rounds with USPTO examiners to get at the heart of the matter, and the rules would have restricted how often attorneys could explain their position on patentability.

“Now attorneys can be more engaging with the patent office and not have to worry about whether they are using up their allotted turns,” he said.

Meyer said he did not expect the USPTO to propose a new version of the rules and instead was likely to take a different approach to reducing the backlog.

Kappos has suggested giving incentives to examiners for conducting early interviews with applicants as well as implementing a program that allows applicants to accelerate an examination of a patent application in exchange for withdrawing another application that is no longer important, according to Meyer.

GlaxoSmithKline is represented by Kirkland & Ellis LLP and Sidley Austin LLP.

Tafas is represented by Kelley Drye & Warren LLP.

The case is Tafas et al. v. Doll et al., case number 08-1352, in the U.S. Court of Appeals for the Federal Circuit.