Patent Limitations

Halloween brought something monstrous for the PTO. The agency had worked for months to create new rules to streamline patent applications and allow the agency to process applications more quickly. But on Oct. 31--just one day before those new rules were to go into effect--a federal court in Virginia found the rules were probably unlawful.

Judge James Cacheris held that GlaxoSmithKline, which had filed suit to block the new rules, was likely to prevail on its arguments that the new regulations exceeded the agency's rulemaking authority, violated various provisions of the Patent Act and unlawfully had a retroactive effect.

He then issued a preliminary injunction forbidding the agency to put the rules into effect. Businesses and patent counsel across the country were relieved.

If they go into effect, the regulations would limit the number of claims in a patent application and dramatically restrict the number of times an application may be amended to revise claims or respond to examiners' objections. Many businesses and patent experts fear these new limits would make it far more costly and time-consuming to obtain patents and would prevent them from obtaining needed patent protection for their inventions.

The PTO maintains such concerns are misguided. The agency says its new Claims and Continuations Rules will push companies to submit better, more focused patent applications, which will enable the PTO to review applications more quickly and slash the multiyear backlog of pending patent applications.

Both the PTO and its critics, however, may share at least one opinion concerning the new rules. "It is probably the biggest change in patent practice since the current patent law was codified in 1952," says Michael Siekman, a patent attorney in the Boston-based law firm of Wolf, Greenfield & Sacks.

Continuation Limits
Under existing PTO regulations, there is no limit on the number of times a company can amend its patent application. Known as "continuations," these amendments enable an applicant to drop or narrow claims in response to an examiner's objections or add more claims to cover new uses. If the PTO rejects the application, the applicant can file a "Request for Continued Examination" (RCE) and revise its claims or add affidavits to overcome the examiner's objections. An applicant can file an unlimited number of RCEs so long as it is making a good-faith effort to get its invention patented.

All this allows companies to engage in lengthy, back-and-forth negotiations with the PTO about their patent applications. According to the PTO, these negotiations are getting out of hand. Continuations and RCEs increased to 29.4 percent of filings in fiscal year 2006 from 11.4 percent in fiscal year 1980.

So the PTO's new regulations would allow each application only two continuations and one RCE. An applicant could petition for an additional continuation or RCE, but the PTO most likely wouldn't grant it. "It is going to be a fairly high hurdle," says John Doll, the PTO's Commissioner of Patents. "You must explain why you couldn't have provided earlier this information or legal argument [that you want to put in the continuation or RCE]."

The limits on continuations would affect less than 3 percent of applications, according to the PTO. But critics allege the limits could prevent companies from obtaining appropriate patent rights if a long time elapses between creating a complicated invention and discovering many of the invention's applications.

Reducing Claims
The new rules also would affect the content of patent applications. Currently, there is no limit on the number of claims a company or individual can include in a patent application. This benefits companies wanting the broadest possible protection for their inventions but puts a heavy burden on the PTO. Applications containing large numbers of claims "absorb an inordinate amount of patent examining resources," the patent office states in its introduction to the new rules.

The PTO's new rules would limit the number of claims contained in an application to a maximum of five independent claims and 25 claims total. (An "independent claim" can stand on its own, whereas a "dependent claim" limits or further describes an independent claim.) This "5/25 rule" isn't as harsh as it sounds because an applicant could use a continuation to assert another set of claims. By using an application and two continuations, an inventor could assert up to
15 independent claims and 75 total claims. The inventor also could circumvent the 5/25 rule by attaching an "examination support document" to the application.

The vast majority of applications could easily meet the 5/25 rule, according to the PTO. More than 75 percent of applications filed in fiscal year 2006 satisfied the regulation, and if the excess claims had been put into continuations, approximately 95 percent of applications would have been in compliance, the PTO asserts.

Many patent counsel say the limit on claims creates serious problems for biotech and IT companies because they need large numbers of claims to protect all of an invention's applications and variations.

"This [new rule] creates a real dilemma for us," says Toby Kusmer, a patent attorney at McDermott Will & Emery. "My concern is that while disclosing this information in the patent application, we won't be able to claim it; so someone else could [freely] use it."

Consolidating Applications
If the new rules go into effect, applicants might be tempted to get around the new claim and continuation limits by filing multiple patent applications. For instance, because you can't put 20 independent claims into a patent application, you might think to file four separate applications with five claims each. But such a scheme wouldn't work because the PTO's new regulations would require applicants to identify multiple applications that contain patentably indistinct claims.

"If a company files different applications within several months, the company must see if these applications contain overlapping subject matter and if so must consolidate them. Otherwise, the patent office will reject the applications," says Lila Feisee, managing director of IP for the Biotechnology Industry Organization, an association representing biotech companies.

"The requirement to disclose related applications will be a logistical nightmare for companies that file many applications," Siekman says. "They will need to keep track of what applications are related, even when the applications are spread among law firms throughout the country."

Overall, the PTO says its new regulations will enable the agency to work faster and better. This, however, may not be enough to allow the regulations to go into effect. Judge Cacheris is expected to make a final decision in January on whether the PTO's new regulations are lawful.

Congress, meanwhile, is considering legislation that would increase the PTO's power to enact new regulations--and could allow the agency to adopt regulations that limit claims and continuations.

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Steven Seidenberg

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