InsideCounsel » July 2008
Strike Out
Court finds PTO doesn’t have the power to enact new rules.
Although the ruling was issued April 1, it was no April Fool’s joke.
But even though the PTO wasn’t laughing, the decision in Tafas v. Dudas did bring grins to the faces of many business people and patent attorneys throughout the country. They were pleased that the Virginia Federal District Court struck down the PTO’s new Claims and Continuations Rules.
Promulgated last year, these regulations limit the number of claims in a patent application as well as the number of times an application may be amended (for instance, to revise the claims or respond
to examiners’ objections). Prior to these regulations, applicants were entitled to an unlimited number of claims and amendments.
The PTO said the new Claims and Continuations Rules were needed to speed up the process for obtaining patents and prevent many applicants from gaming the system to obtain overbroad patents. Critics said the regulations would cripple the ability of innovators to legally protect their inventions. Judge James C. Cacheris ruled the PTO did not have the power to enact these rules.
“The ruling was of fundamental importance for innovators all over the U.S. and the world,” says Sherry Knowles, senior vice president and global head of corporate intellectual property for GlaxoSmithKline, which successfully sued to overturn the PTO regulations. “The decision was in support of innovation across all industries. It will allow them to obtain protection for the full scope of their inventions.”
Not everyone is so sanguine. Tafas will help drug companies such as GlaxoSmithKline, but it will harm software and IT companies by exposing them to continued depredations from patent trolls, according to Matthew C. Schruers, senior counsel for the Computer & Communications Industry Association, which filed an amicus brief in the case.
More importantly, the ruling may eventually harm all users of the U.S. patent system because it effectively forbids the PTO from attempting meaningful improvements in the current troubled patent system. Tafas imposes a particularly constrained view of the agency’s rulemaking power, which will prevent it from attempting any significant reforms, says John F. Duffy, who teaches patent and administrative law at George Washington University Law School in Washington, D.C.
PTO Power
The Patent Act authorizes the PTO to issue only procedural regulations governing proceedings before the agency. Cacheris held the new rules were substantive because they “constitute a drastic departure from the terms of the Patent Act as they are presently understood” and “alter the rights of applicants.”
For instance, the Patent Act states an applicant can file “one or more claims” covering an invention and sets no limit on the number of claims that can be filed. The new rules, by contrast, limit an application to a maximum of five independent claims, unless the applicant performs work
that would otherwise be the responsibility of the PTO.
The applicant also must thoroughly search for prior art and explain in detail why each independent claim is patentable over the relevant prior art. (For a more complete discussion of the regulations, see “Patent Limitations,” InsideCounsel, December 2007, p. 20.)
