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PTO Overhauls Procedures For Patent Interferences

The U.S. patent office has the reputation of being a fair institution. Some would even complain it is overly lenient, having granted many questionable Internet, software and business method patents over the years.

However, one part of the office is anything but lenient. And if you want to know how difficult it is to get assistance--or even justice--from the PTO's Board of Patent Appeals and Interferences (BPAI), just ask Stuart Edwards.

The PTO granted Edwards a patent on a medical device for electrosurgery in October 1995. One month later, Robert Leveen filed a patent application for a similar device. The devices were so alike, Edwards claimed they were the same invention and that he had come up with this invention first. He presented his argument to the BPAI and asked the administrative patent judges to throw out Leveen's patent application. Instead, the BPAI threw out Edwards' suit--because the legal papers his lawyer presented to the administrative tribunal were held to be "sloppy."

Among the problems that were fatal to Edwards' case: His motion papers used parallel columns to quote the patent claim language at issue, instead of putting the quoted language in French brackets; and they failed to repeat the arguments that were set forth in two declarations from experts which were attached to his motion papers. Instead, Edwards' motion papers incorporated those arguments by reference.

In its written opinion, the three-judge panel admitted that "[t]he difference between the required procedure and the Edwards effort may seem trivial to a casual observer. Triviality, however, is not the point." The point, according to the tribunal, was that the BPAI had mandated that motion papers for this type of proceeding--known as an "interference"--must satisfy certain formatting requirements, and Edwards' papers had failed to meet these requirements.

The most unfortunate part of this case, however, is that it isn't unique. Interference proceedings have been subject to bewildering, arcane procedural rules for years, and the BPAI has used these rules as traps for the unwary. The tribunal often disposes of interference proceedings on narrow grounds--and thus "does a gotcha, rather than rule on the substantive issues in the case," says Matthew Kreeger, a litigator at Morrison & Foerster.

Fortunately, there's reason for hope. New regulations went into effect Sept. 13, 2004, which set out new, simpler procedural standards for patent interferences.

But what the BPAI is giving with one hand, it is taking away with the other, according to critics. They say that the regulations get rid of some procedural traps, but replace them with other, more powerful tools that allow the board to sidestep its duty to rule on who first came up with an invention--and thus, who is entitled to the patent.

Invention Battles

Interference proceedings are at the heart of what makes the U.S. patent system exceptional. Unlike other countries, where officials award patents to whomever first submits a patent application on an invention, the United States awards the patent to whomever created the invention first. And if there is a dispute over whether a patent applicant was really the first to invent, the BPAI conducts an administrative trial, known as an interference.

Interferences allow companies to resolve their patent disputes quickly and at approximately one-tenth the cost of litigation. And because administrate judges with extensive patent and scientific experience make the BPAI's decisions, the BPAI "is more likely to accurately apply the law," says Charles (Chico) Gholz, who heads the interference section of Oblon, Spivak, McClelland, Maier & Neustadt.

In some circumstances, a company can't go to court, and only can get relief in an interference proceeding. Suppose, for instance, that a large pharmaceutical company named Gnu discovers a very promising new drug, but the drug may run afoul of a patent on a very similar drug, owned by a competitor named Olde.

Gnu believes it was actually the first to invent the drug, but the company can't seek a court ruling on this unless and until Olde has threatened to sue for infringement. And in all likelihood, Olde won't issue such a threat until it appears as if Gnu is poised to put the new drug on the market. Gnu would thus have to expend millions of dollars in further developing the drug, testing it and seeking FDA approval--all without knowing whether it had the patent rights to produce and sell it. Not surprisingly, companies and investors often are unwilling to make such a large financial commitment if the legal rights to the drug remain undetermined.

So, in order to resolve the patent issues that are clouding the future of this promising drug, Gnu and companies like it must turn to interference proceedings. Gnu can file a patent application on the drug and then ask the BPAI to determine whether Gnu or Olde was the first to invent it. However, if the BPAI tosses out the interference on a technicality, Gnu is faced with a stark choice: give up on the drug, or risk millions of dollars on a future court battle that could easily drag on for years.

Tweaking The Rules

The new rules do away with many of the complex and arcane procedures that have bedeviled companies seeking relief from the BPAI. Instead, the rules adopt simpler and easier-to-understand procedures and evidentiary standards, which are similar to ones the federal courts use. For instance, under the old rules, a party seeking to depose an opponent's witness couldn't file a notice of deposition; the opponent had to file the notice of deposition concerning his own witness--which is the reverse of ordinary court practice. The new rules fix this odd procedural requirement, and bring interference proceedings in line with standard practice.

The new rules make a variety of other changes, including giving the BPAI's administrative judges the power to "waive or suspend" the application of various procedural rules. This will make interference proceedings even faster, cheaper and more efficient, by enabling the judges to focus on the substantive issues before them, rather than getting bogged down in procedural matters, according to Richard Torczon, an administrative patent judge with the BPAI. Critics, however, fear the judges will misuse this added power to throw out even more cases on procedural grounds.

The most controversial change may be the adoption of the two-way test to determine whether the parties can commence interference proceedings. Under this test, an interference exists only if both inventions' patent claims potentially invalidate the other's claims. If this test isn't met, the BPAI refuses to hear the dispute, and the parties have no remedy but the courts.

The BPAI claims there's nothing new about the two-way test.

"The test for declaring an interference has always been two-way," Torczon says. "The new rule states the two-way test requirement more clearly to counteract misinterpretations by some practitioners of the old rule as a one-way test."

But plenty of experts see things differently. They say that the BPAI first shifted from a one-way test to a two-way test in 1999; the Federal Circuit tacitly OK'd this shift in 2003; and now the new regulations codify the new, higher standard.

Under the one-way test, an interference proceeding could be held if either party's invention potentially invalidated the other's claims. This test was significantly easier to satisfy, allowing companies to have their disputes resolved in interference proceedings.

New And Improved?

Critics claim that the BPAI's shift to the two-way test is simply the latest attempt by the agency to reduce the availability of interference proceedings. For instance the BPAI instituted a rule in 1989 that if an interferent said the claim of the other party was unpatentable because of a third party's prior art, this was a binding admission by the interferent that its own claim was also unpatentable. The Federal Circuit rejected this standard in 1990, and the BPAI subsequently backed away from the rule.

"The Patent Office tries any avenue it can to avoid declaring an interference, because it's a big burden on the office," Kreeger says. "The office has to act as a court, deal with motions--and all this is completely different from what the office does the rest of the time."

Interferences aren't just a drain on PTO personnel; they also are a big expense for the agency. The PTO has to put a lot of work into an interference proceeding, but it doesn't collect any fees for its efforts. This is a significant problem for a government agency that sustains itself on user fees.

Also, it is a problem for companies that rely on patent rights because if the BPAI denies companies access to interference proceedings, the businesses involved have no other way to protect their interests.

Unfortunately, it's unclear whether the new regulations will make interferences faster and more efficient, or whether the regulations will make it harder for companies to gain access to interference proceedings--or whether both might occur.

So what is a business to do? How can it best protect its patent rights? The answer, some say, is not to rely on interference proceedings for protection. "File your patent applications early and prosecute them quickly," Kreeger says. "That way you won't have to be the one trying to provoke an interference."


Steven Seidenberg

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