The GSK Case: An Administrative Perspective

By, Arti K. Rai*

 

The already voluminous discussion of GSK[1] has not focused sufficiently on the court’s reasons for concluding that the PTO continuation rules (for reasons of brevity, I focus here only on continuation rules) probably violate the patent statute.  This reasoning is important because the court ruled against GSK’s argument that the rules were a bad idea as a policy matter (or, in the language of administrative law, “arbitrary and capricious”).  The court’s reasoning about the alleged conflict between the statute and the rules contains several errors of administrative law. 

 

With respect to the prospective application of the continuation rules (the very thorny issue of retroactivity in administrative law is best left for another day), analysis of whether the rules are contrary to the patent statute turns on two issues that should be decided sequentially.  First, do the rules fall within the scope of the PTO’s procedural rulemaking authority?  Second, do the rules violate the statute?

 

One mistake in the court’s opinion is that it appears to assume that analysis of the second question can be done without a complete answer to the first.   After equivocating briefly on the first question, the court jumps immediately to the alleged inconsistency with section 120 of the Patent Act.  In agreeing that GSK has “raised serious concerns” about whether the restrictions on continuations conflict with the Act, the court’s opinion relies heavily on In re Henriksen.[2]  That 1968 decision by the CCPA overturned a PTO limit on the number of continuation applications entitled to an earlier filing date under Section 120.

 

But Judge Cacheris should not have avoided deciding the question of substance vs. procedure.  If the PTO’s rules are in fact procedural, then the question of alleged inconsistency with statutory language does not turn on a 1968 CCPA case that makes no mention of administrative law principles (and, indeed, was decided at a time before it was clear that the Administrative Procedure Act even applied to the PTO).  Rather, it turns on the enormous case law that the Supreme Court has developed under its 1984 decision in Chevron v. Natural Resources Defense Council.[3]  Under Chevron and its progeny, an agency acting pursuant to authority delegated to it by Congress (here, procedural rulemaking authority under Section 2(b)(2) of the Patent Act) is entitled to interpret its organic statute so long as Congress has not “directly spoken to the precise question at issue” (Chevron step 1) and the agency’s interpretation is reasonable (Chevron step 2).

 

Assuming that Chevron applies, it is far from clear that Section 120 “speaks directly” to the limits enunciated in the PTO’s continuation rules.  Even if we assume that Section 120 does speak directly to the issue of whether the PTO can impose a bright-line bar, the PTO has argued that it does not intend an absolute limit.  According to the PTO, it will evaluate requests for a third continuation application on a case-by-case basis. Importantly, the PTO interpretations of its own regulations are entitled to very strong deference under the Supreme Court decision in Bowles v. Seminole Rock.[4]  Seminole Rock deference, which was recently reaffirmed in the 1997 Supreme Court case Auer v. Robbins,  says that an agency interpretation of its own rule is “controlling unless plainly erroneous or inconsistent with the regulation.”[5]

 

Indeed, the very strong deference of Seminole Rock is relevant even if the rules in question are substantive and thus not entitled to the application of Chevron.  Yet the opinion by Judge Cacheris does not even cite Seminole Rock.

 

These are more than fine lawyerly arguments about details.  Given the highly uncertain prospects for patent reform, and the reality that Section 2(b)(2) already gives it some rulemaking authority, the PTO has an understandable desire to engage in “self-help.”  Its current and future efforts at self-help must be judged according to the appropriate legal standards.

---

* Professor, Duke Law School.  Professor Rai’s 2003 Columbia Law Review article on patent reform focused on the balance of power between the PTO and the Federal Circuit. Arti K. Rai, Engaging Facts and Policy: A Multi-Institutional Approach to Patent System Reform, 103 Colum. L. Rev. 1035 (2003).

 

Preferred citation: Arti K. Rai, The GSK Case: An Administrative Perspective, 2007 Patently-O Patent L.J. 36, http://www.patentlyo.com/lawjournal.

 

[1] Tafas v. Dudas, 2007 U.S. Dist. LEXIS 80474 (E.D. Va. Oct. 31, 2007).

[2] In re Henriksen, 399 F.2d 253 (C.C.P.A. 1968).

[3] Chevron U.S. A. Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984).

[4] Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945).

[5] Auer v. Robbins, 519 U.S. 452 (1997)

Comments

[MaxDrei]

Everywhere's lament that "We've only got on Patent Office" set me thinking. Europeans all have a choice of Patent Office, local or EPO. Most choose EPO. When it comes to litigation, Europeans also have a choice. They can litigate up to the Supreme Court in whichever European country they choose. Common law or civil law: take your pick. Meanwhile, in USA the CAFC is your only choice. Isn't competition a wonderful thing?

[step back]

Also Curious,

I'm with you in spirit, in your belief that inventors should receive property rights and just compensation for their contributions to society.

However, we need to stop repeating this nonsense about "Constitutional rights" to a patent. There is no such thing in the US Constitution.

Article 1, section 8, clause 8 is one of the "enumerated powers" that vest exclusively in the US Congress the "power" (not the obligation") to "promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries;"

Look here:
http://www.law.cornell.edu/constitution/constitution.articlei.html

Congress has elected to exercise this enumerated power by passing patent and copyright laws.

One of the laws, 35 USC 131, says the Director "shall" cause an examination to take place.

It doesn't say the Director "may, if he feels like it" cause an examination to take place.

Title 35 of the United States Code (USC) is not the only law that Congress passed. There is something called the Administrative Procedure Act (APA). See generally Title 5 of the USC and more specifically 5 USC 706.

What we are talking about here (GSK v. Dudas) sits at the intersection between substantive patent law (35 USC) and administrative agency law (the APA).

Not too many patent attorneys or agents know much about administrative agency law. You can see that in the every day decisions of the USPTO Board of Appeals. The attorneys/agents defend their clients with "opinion of counsel", which is pretty much worthless. The Board of Appeals says so over and over again. But nobody listens.

Not too many admin law attorneys know much about patent law. You can see that in Professor Rai's opinion (no disrespect intended) that the CAFC resists the mandates of Zurko. That's pure BS. If you study the actual decisions of the CAFC since In re Gartside, you will see that pretty much every patent applicant who fails to have "substantial evidence" on his or her side goes down in flames at the CAFC. Zurko requires the CAFC to give "substantial evidence" deference to findings of fact made by the BPAI during examinations of patents and the CAFC has been doing so.

[step back]

Sorry. I should have said, during examinations of patents and trademarks. (In re Gartside was a trademark case.)

[Just an ordinary inventor(TM)]

Dear step back,
Re:
“I'm with you in spirit, in your belief that inventors should receive property rights and just compensation for their contributions to society.
“However, we need to stop repeating this nonsense about "Constitutional rights" to a patent. There is no such thing in the US Constitution.”

I also agree with you in spirit, and I’d like to carry your Constitutional point further lest there be critical misunderstanding:
The Patent Clause 8, in Article I, §8 of The Constitution, which has never been amended, reads (emphasis added): “The Congress shall have Power [whether or not]…
“To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;”

Thus, Congress has Constitutional discretion – Congress may or may not – enact patent laws. However, if Congress elects to do so, as it has, it must grant “…the exclusive Right…” This is also consistent with the red ribbon cover of United States patents, which are “granted under the law” by the Director of the USPTO, with the following covenant:

“Therefore, this United States Patent Grants to the person(s) having title to this patent THE RIGHT TO EXCLUDE OTHERS FROM MAKING, USING, OFFERING FOR SALE, OR SELLING THE INVENTION …” (emphasis added)

Thus, a patent does not grant the patentee the right to make, use or sell his invention. Rather, a patent grants the patentee THE RIGHT TO EXCLUDE EVERYONE ELSE from making, using or selling his invention.

The Exclusive Right Yes, But Only for a Limited Time. The Framers give Congress the means and the Power UP FRONT to regulate the “exclusive Right.” By including in Clause 8, “securing for limited Times,” Congress can pass patent statutes that grant more or less time to a patent, and, by statute, Congress has done so. And, also by statute, Congress has the Power to create different types of patents with different lifetimes, as they have done for Design Patents. Congress has also created Trademark statutes that live somewhere between Copyrights and Design patents.

Thus, Congress has absolute Constitutional Power to administer our patent system, and it has rightly done so. Further, within the Constitution itself, one finds authority for Congress to exercise its Power to moderate “the exclusive Right” under certain constitutionally certified circumstances:

“To regulate Commerce” (Article I, §8, Clause 3), to “provide for the common defense, promote the general Welfare” (the Preamble).

Thus, in its body of antitrust statutes, Congress imposes certain limits when exercising a patent’s “exclusive Rights” in order to regulate Commerce. And eminent domain power may be exercised over a patent’s “exclusive Rights,” for national security and defense, as is consistent with the Preamble (e.g., military appropriations bills in peacetime and wartime routinely include allocations for patent royalties).

35 USC 283, however, is in direct conflict with patent Clause 8:
“The several courts … may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.”

35 USC 283 would cede discretion to “the several courts” to diminish the Power the Constitution gave Congress. Of course, a fundamental change of this nature may be made by formal amendment in accord with Article V, the procedure to amend the Constitution, but certainly not by mere statute. When such conflict exists, the Supremacy Clause, Article VI, says there is no contest -- the Constitution wins.

Most remarkably, in its eBay v MercExchange Decision, the Supreme Court made the mistake to rely, essentially solely, on what they called a presumption in 35 USC 283!

“Indeed, the Patent Act itself indicates that patents shall have the attributes of personal property ‘[s]ubject to the provisions of this title,’ 35 U. S. C. §261, including, presumably, the provision that injunctive relief ‘may’ issue only ‘in accordance with the principles of equity,’ §283.” (the USSC eBay Opinion, page 3).

This mistake is truly sad for the US economy. Whether intended or not intended, the implication of the faulty eBay Decision will plague American innovation and the IP profession henceforth. Put Simply in 25 Words, the Lopsided Net Result of the USSC’s eBay Decision is this:

The Supremes’ eBay ruling reserves a patent’s “exclusive Right” for big businesses while denying a patent’s grant of “the exclusive Right” to self-employed inventors.

A patent without the Right to stop infringement is like a revolver without ammunition. Without the Right to stop infringement, the eBay effect is to condone compulsory licensing, or even worse; the USSC’s eBay decision is a license to steal intellectual property from self-employed inventors.

Thus, based merely on a faulty patent statute, the Supreme Court’s eBay v MercExchange ruling is a corruption of our Constitution. In attempting to defend the eBay Decision, some have pointed out that other corruptions to our Constitution have also occurred, as if that makes for binding precedent - - such arguments are nonsense! Each corruption becomes more threatening to our way of life. Our country and our patent system are on a slippery slop.

Our Constitution is unrivaled and supreme, and essential to our freedom and democracy - - few would deny that. It is our duty, everyone’s duty, to tackle those corruptions, even when the Supreme Court makes a mistake and issues a faulty decision.

My point, which is becoming increasingly important, is that we all should fight to regain our Constitutional footing every time we see a slip. By doing so, perhaps only by doing so, can we begin to reverse the increasing decline of our beloved country.

[Also Curious]

Further to my comments at 7:23 on Nov 5, I further find curious, or more particularly, "dubious", the USPTO's having lumped different-specification continuation-in-part applications together with same-specification continuation and divisional applications for purposes of calculating whether the three-continuation limit has been reached.

There is no good reason I can think of why this should be done.

CIPs are by definition different from their respective parent applications, both in terms of the at least incrementally increased content of their disclosures, and the different subject matter of their claims (focusing on the new subject matter). By lumping CIPs together with continuations and RCEs, the USPTO is plainly trampling all over the rights of applicants to receive separate, individualized consideration with respect to distinct potential inventions.

I believe the USPTO should be forced to keep things separate that clearly merit separate treatment. The present rules are only as complicated as they are because the USPTO has confounded itself by conflating multiple concepts and things that were never meant to be grouped together.

To win the GSK case, the USPTO will need to convince the Article III judiciary that each and every CON, DIV, RCE, and CIP is but a part of the same pack of wild, interbreeding animals that only they can be trusted to control. But as I indicated above, it is relatively easy to demonstrate that these are actually biologically separate animals that can easily be cared for in an orderly way as long as the zoo is organized appropriately. In other words, there is no need whatsoever to elevate the USPTO from zookeeper to all-powerful deity deserving of Chevron-level deference.

[John Roberts]

Ms. Rai taught my "intro to IP" class about 9 years ago at USD, and I took admin. law from her husband. I have been a patent lawyer and IP litigator ever since. Looking back from the trenches, I remain convinced that these are two of the smartest folks from whom I've had the opportunity to learn. When it comes to opining on cutting-edge legal issues arising from the intersection of IP and admin law, these are the experts. One certainly need not agree with their opinions to benefit from their insightful analyses. Please cast your pearls this way again, Professor Rai. I hope you are well, and thank you for your article.

And I agree with the comment that articles on this blog should not be arbitrarily constrained, especially when their purpose is legal analysis rather than simple news or announcements.

[Just Visiting]

"By lumping CIPs together with continuations and RCEs, the USPTO is plainly trampling all over the rights of applicants to receive separate, individualized consideration with respect to distinct potential inventions."

If the PTO wants to crank down on RCEs, they cannot succeed without cranking down on continuations and CIPs to prevent continuing applications from being used as RCE substitutes. In fact, they current rules invite you to use a continuation as an RCE when you run out of RCEs.

[Edwin D. Schindler]

The noticed depositions of Dudas and other PTO officials can only help the PTO!

The issues involved are strictly legal ones, and raising irrelevant "factual" disputes will create a situation in which the PTO is entitled to deference. The PTO can probably not wait to "spin" its story at the depositions.

[Anthony Diepenbrock]

"First, do the rules fall within the scope of the PTO’s procedural rulemaking authority? Second, do the rules violate the statute?"

Bifurcating these questions seems problematic. If the PTO makes rules that violate the statute, sure they cannot be within the PTO's rule making authority. Seems like the second question is more important than the first.

[anon]

The sequence in which the rules are addressed is dependent upon how one views the Constitutional Republic. Like you, I view the first question as paramount, because I believe that the defacto position of Executive Agencies is that they have no authority to act. Therefore, the first thing we must ascertain is if they have authority to act. Thereafter, we determine whether their actions violate any statutes. If not, then we determine whether the executive agency acted within the scope of its authority, because even is the executive agency acts within the scope of its authority its regulations must yield to Congress. After we determine that the agency has acted within the scope of its authority, we must ascertain whether the agency's action is in furtherance of its goals. Then we move to see whether the agency comported with the APA in advancing the regulation.

[Anthony Diepenbrock]

Chevron involved a regulatory agency (EPA) interpreting a term in a statute, the Clean Air Act.

The Court stated the test.

“When a court reviews an agency's construction of the statute which it administers, it is confronted with two questions. First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute.”

The Court further stated the limits of the agency’s authority.

“If Congress has explicitly left a gap for the agency to fill, there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation. Such legislative regulations are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute. Sometimes the legislative delegation to an agency on a particular question is implicit, rather than explicit. In such a case, a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency. We have long recognized that considerable weight should be accorded to an executive department's construction of a statutory scheme it is entrusted to administer, and the principle of deference to administrative interpretations.”

Clearly the agency’s authority to interpret a statute is limited in that such interpretation cannot be arbitrary, capricious, or manifestly contrary to the statute.

Here the agency is promulgating a construction of the statute that is manifestly contrary to the statute according to the CCPA’s ruling of Congress’s intent regarding section 120. In In re Henricksen, the CCPA held, after examining the legislative history, that Congress intended that there be no limit to the number of applications in a chain under section 120. I quote from the case:

“The absence of case law to the contrary prior to 1953 is still another factor to be considered in concluding that the decision of the board was erroneous. Insofar as we can determine from our independent research, and from the fruits of the research of the parties and the able briefs of amici, the case law contains no limitations on the transmission of the effective date of a first filing through a chain of copending applications.

The decisions of the Supreme Court do not prescribe a result contrary to ours. From as early as Godfrey v. Eames, 68 U.S. 317 (1863), to Crown Cork & Seal Co. v. Gutmann Co., 304 U.S. 159, 37 USPQ 351 (1938), and General Talking Pictures Corp. v. Western Electric Co., 304 U.S. 175, 37 USPQ 357 (1938), the Supreme Court has not seemed to question the right of the later-filed application to rely on an earlier-filed application, nor has it questioned—although the point does not seem to have arisen—the right to rely on more than two successively preceding applications.

No case has been cited to us, decided since the 1952 Act was passed, which leads to the result reached here by the majority of the board.”

Therefore, regardless of any subtle substantive and procedural distinctions, the PTO has clearly acted contrary to the statutuory provisions and it has substituted its own interpretation of the statute for the clear intent of Congress. This it cannot do.

“If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.”

[Who cares]

To Kevin E. Noonan | Nov 04, 2007 at 10:55 PM

"IF YOU DON'T LIKE THIS WEBPAGE, YOU DON'T HAVE TO READ IT! YOU SEEM UPSET THAT DENNIS IS NOT HELPING YOU ENOUGH, AS A PATENT PRACTITIONER. I GUESS YOU'LL JUST HAVE TO READ THE CASES ON YOUR OWN."

[Just Visiting]

"Therefore, regardless of any subtle substantive and procedural distinctions, the PTO has clearly acted contrary to the statutuory provisions and it has substituted its own interpretation of the statute for the clear intent of Congress. This it cannot do."

I think the analysis is slightly more subtle than that. For example, I believe the PTO could in full compliance with CAFC case law regarding 35 USC 120, implement a procedural review of continuation filings that would disallow continuations that involved prosecution laches of the type Lemelson's patent ran afoul of. I believe the PTO could also do a review to make sure that the claims in a continuing application are not "unduly duplicative" of claims earlier in the chain, using some definition of "unduly duplicative" such as identical perhaps. To me that suggests that at a minimum the analysis requires at least some review of the actual procedures the PTO wants to implement.

We know of course that the PTO wants to provide more strict limits on continuations than can be justified under the law, but we know that because we've looked at the rules and the PTOs interpretation of the rules, and not because the statute does not allow any scrutiny of priority claims by the PTO.

[Mark Bellermann]

Ms. Rai urges the PTO should be afforded deference under Seminole Rock and cites Lacavera v. Dudas (CAFC 2006) as an example of when such deference was afforded.

However, Lacavera is not on point. Dethmers v. Automatic Equipment (CAFC 2001) is on point and illustrates why courts should not defer to the PTO's interpretation of how to implement 35 USC 120.

Lacavera, a Canadian citizen and nonresident alien, sued the PTO because she wanted to become a registered agent or attorney but could not because of the PTO's rules forbidding aliens from registering with the PTO. She lost because the CAFC deferred to the agency's interpretation of 35 USC 2 authorizing the PTO to establish rules to govern the recognition and conduct of attorneys representing applicants at the PTO. The PTO's rules related to the procedure of recognizing attorneys, and therefore affording deference to them was easy.

In Dethmers, the PTO granted a reissue certificate based on a declaration filed in the reissue proceedings. At the relevant time, reissue declarations were governed by 37 CFR 1.175, which the CAFC had interpreted in Nupla v. ____. In Dethmers, the CAFC held that some claims of the reissued patent were invalid because the reissue declaration failed to meet the requirements of Rule 175. Importantly, the majority opinion did not give any deference to the fact that the PTO had interpreted its own Rule 175 as being satisfied by the declaration that was filed in the reissue proceedings. The issue of whether deference should have been granted under Seminole Rock was raised explicitly by Judge Dyk’s dissent, in the petition for re-hearing en banc, in the PTO’s amicus brief supporting en banc rehearing, and in the petition for cert. Yet, deference was not afforded to the PTO’s interpretation of Rule 175.

The majority decision not to give deference can be justified as a holding that the PTO’s interpretation of Rule 175 is a substantive decision that would determine whether a reissue claims would be valid or invalid. This is quite different from giving deference to a decision whether to allow Canadians to practice before the PTO.

The PTO’s continuation rules are interpretations of what is (or should) be required under 35 USC 120. Thus, the CON rules and the claim number rules affect substantive rights to protection under the patent laws and I believe they are more like the situation in Dethmers than in Lacavera.

Of course, the climate is different now in 2007 than in 2001. Judge Dyk’s views of the role of traditional admin law were somewhat novel six years ago, but they have gained traction at the court. And even in 2001 there were five votes to hear Dethmers en banc. Judge Moore’s vote would make six, which could make the issue a close one.

Nevertheless, I really think that Lacavera is a red herring here, and that there is strong authority to support a finding what the PTO is doing with its new rules is substantive and therefore not entitled to deference.

[real anonymous]

Who cares, you seem upset. Try meditating on a cool evening breeze, outside in the mountains, where the crickets make a melodious sound, gently calling all of creation to a quieter, simpler, and kinder existence. It's so good to just release all the stress, and let peace overcome all the troubles of today. See, isn't it working already. Just close your eyes, friend, concentrate, that's it... be at ease, steady, steady, close 'em, that's good, uh oh, careful now or you'll step in it, the new rules are like meadow muffins (you know, buffalo pancakes, wilson pie, cow patties).

[Kevin E. Noonan]

Who cares?

You're not related to Dennis, are you?

[what the???]

BigGuy:

I am not personally bothered that Prof. Rai is not a patent attorney. What does bother me, and I suspect riles many of the people attacking her here, is her arrogant presentation while at the same time making naive assumptions if not outright misstatements of law.

If Prof. Rai is going to preach, she at least owes us the courtesy of doing some research and educating herself as to how this disfunctional system really works. Conveniently ignoring facts and making silly assumptions to promote an argument is not helpful.

[Kevin E. Noonan]

More substantively, didn't Judge Cacheris address the "outside the scope of the Patent Office's authority" part of the issue by noting that Congress, with or without the PTO's prompting, has attempted to affirmatively grant substantive rulemaking power to the Office since at least 2005? And that such a provision is part of HR1908, the latest patent "reform" measure before Congress? How does the Professor, or anyone else, refute the logic that Congress must not have intended to give the Office substantive rulemaking authority in its enabling statute, if Congress thinks they must affirmatively give it to them now? Particularly in a situation that is different than, say, Portollo Packaging, where the CAFC interpreted the statute and Congress afffirmatively changed the law to make it clear what their intent was.

Which brings me back to the academic v. practitioner issue. Interesting discussion but seems premature at best.

[what the???]

Rai:

"Whether it is "reversible" error not to decide the question of Chevron step 0 is anybody's guess. But it is questionable opinion writing when the agency is making that argument as its major argument.

Deciding the procedure vs. substance question is also important for writing an opinion will be useful precedent for future cases."

This was a PI, remember? The court stated that it had a very serious concern whether the rules were procedural, among other things.

I have every confidence the court will dot the i's and cross the t's in the final opinion. The bottom line is that the detailed analysis you demand is not necessary to issue a PI. The court found enough evidence to conclude that GSK would be likely to succeed on the merits. End of story.

Professor, your posts remind me of perhaps the most important thing I learned in law school. There is always a counter argument. It may not be a good argument, but there is ample opportunity to blow smoke.

[Malcolm Mooney]

"How does the Professor, or anyone else, refute the logic that Congress must not have intended to give the Office substantive rulemaking authority in its enabling statute, if Congress thinks they must affirmatively give it to them now?"

A fair question.

[what the??]

Kevin:

He did. I thought that Judge Cacheris more than amply covered the topic considering the circumstances and the fact that this was a PI. I too am looking forward to a more thorough opinion, but to suggest that the Judge committed a procedural error in not providing a "Cheveron analysis," as interpreted by Prof. Rai, is just silly. If there was any legitimacy to that point of view the PTO would have appealed the decision the same day.

[real anonymous]

A fair question, but not one that has escaped the intellectual elite at the USPTO. You see, Congress isn't "giving" them substantive rulemaking authority in the Reform Act, but rather only "clarifying" (like that word, Malcolm?) the rulemaking authority they've always had since AIPA of 1999. (And they got it past one house of Congress.)

From the House Bill:

SEC. 14. REGULATORY AUTHORITY.

(a) Regulatory Authority- Section 2(c) is amended by adding at the end the following:

`(6) The powers granted under paragraph (2) of subsection (b) include the authority to promulgate regulations to ensure the quality and timeliness of applications and their examination, including specifying circumstances under which an application for patent may claim the benefit under sections 120, 121 and 365(c) of the filing date of a prior filed application for patent.'.

(b) Clarification- The amendment made by subsection (a) clarifies the scope of power granted to the United States Patent and Trademark Office by paragraph (2) of section 2(b) of title 35, United States Code, as in effect since the enactment of Public Law 106-113.

[Kevin E. Noonan]

Dear Real:

I appreciate the ex post facto nature of the attempt. So I guess I'd just say that it is clear as mud what Congress wanted the statute to say, which impacts the Office's presumption that they have the authority in the first place.

Perhaps we had all better call our Senators. S.1145 does not seem to have this provision (according to the IPO).

[Ender]

"I am not personally bothered that Prof. Rai is not a patent attorney. What does bother me, and I suspect riles many of the people attacking her here, is her arrogant presentation while at the same time making naive assumptions if not outright misstatements of law.

If Prof. Rai is going to preach, she at least owes us the courtesy of doing some research and educating herself as to how this disfunctional system really works. Conveniently ignoring facts and making silly assumptions to promote an argument is not helpful."

Yes, just for once, I would like to see an academic article that addresses how the new rules and patent reform actually address the causes of poor quality patents and the examination backlog. The Patent Reform Act and the new rules do not exist in some hermetically sealed lab. They exist against the background of a dysfunctionally managed USPTO. But for the USPTO being mis-managed, many of the so-called "bad patents" would not have issued and there wouldn't be a 700,000 application backlog, and USPTO management would not need to cover up its deficiencies by trying to distract the public, Congress and Law Professors with the new claim and continuation rules, IDS rules, Markush rules, Appeal Rules.

Given the scathing review of USPTO management in the GAO report in October 2007:

http://www.gao.gov/new.items/d071102.pdf

why would anyone, including a law professor, assume that the new rules were necessitated by abusive behavior on the part of the applicants and would address the root causes of the examination backlog and the issuance of bad patents by the USPTO?

Given the Richard Belzer's submission to OMB

http://www.whitehouse.gov/omb/oira/0651/meetings/663.pdf

that details point by point how the USPTO "fudged the numbers" in estimating the cost to applicants of implementing the new rules, why would accept at face value anything the USPTO says regarding the new rules without looking for evidence to back up the USPTO's claims?

Where is the outrage among IP professors about how the USPTO trampled on both procedural and substantive due process in creating the final claim and continuation rules? The USPTO basically ignored the 500 comments on the new rules other than those comments that described how the new rules could be circumvented. The USPTO has argued that the new rules are need to decrease the examination backlog significantly, yet admits that continuations are only a small fraction of he backlog. During the last two years, has assumed that some version of the new rules were the "only solution" to the backlog and bad patent problems, despite ample evidence to the contrary (see the GAO report above, for example). The USPTO published "Final Rules" on August 21, 2007 are so different from the rules that were originally subject to comment, that even the USPTO doesn't know what they mean, as evidenced by the various corrections the USPTO has had to make since the rules issued, including the OG Notice that was published this week.

I'm sure others have their own favorite example of how the USPTO ignored the requirements of "due process" in creating the claim and continuation rules.

Even if every one of Prof. Rai's legal arguments is correct, how could anyone, who understood the background history of the USPTO rulemaking possibly say that "the PTO has an understandable desire to engage in “self-help." No matter how bright Prof. Rai may be, this statement shows a complete ignorance of what has been happening at the USPTO for the last 15 years.

[Edwin D. Schindler]

"I am not personally bothered that Prof. Rai is not a patent attorney. What does bother me, and I suspect riles many of the people attacking her here, is her arrogant presentation while at the same time making naive assumptions if not outright misstatements of law."

Well said!

Further, the GSK case is strictly a patent law case - NOT an "administrative law" case. The entire issue is a legal one: Whether the PTO's proposed continuation and claims Rules conflict with the patent statute, Title 35, U.S.C. Prof. Rai can frame this as an "administrative law" case, but that doesn't make it so.

The PTO has clear authority to promulgate Rules of Practice "not inconsistent with law." The "law" in this case is the "patent law."

All discussions regarding administrative law, or procedure, are either ignorant or advanced by those having a hidden agenda.

At present, patents are "politically incorrect." It probably hasn't gone unnoticed that the "big, evil drug companies" require patents for their continued existence and are at the forefront in challenging the PTO's ridiculous proposed Rule changes.

It is probably no coincidence that PhRMA and Elan, but not Microsoft, Intel or Google, have indicated a desire to file amicus briefs in support of GSK, a member of PhRMA. If patents are politically incorrect, then it can be expected that what eminates from "The Academy" will be hostile to patent holders and present roadblocks to proper patent prosecution.

[Malcolm Mooney]

"It probably hasn't gone unnoticed that the "big, evil drug companies" require patents for their continued existence "

You forgot to mention that if those big evil drug companies stop being profitable that we'll all die within 10 years because nobody will have any incentive to develop the drugs that cure us from the illnesses caused by eating too much deep-fried macaroni and cheese.

This is an important part of the Patents Make the World Go Round script!

"All discussions regarding administrative law, or procedure, are either ignorant or advanced by those having a hidden agenda."

[rolls eyes]

If the PTO had provided for one RCE per *application*, three or four continuations per application family, limited the claims to 50 instead of 25, dropped the silly ESD garbage, and allowed 9 months between the publication of the final rules and their implementation, I suspect that relatively few people would be flipping out on the 35 USC 120 issues.

[step back]

Whoa Mr. Schindler,

Never a good idea to spout absolutisms here:
"Further, the GSK case is strictly a patent law case - NOT an "administrative law" case."

(My sarcastic hypocrisy is intentional here :-)

The "promulgation of rules" is an act of administrative agency law. It is what agencies do under the APA. They promulgate and they adjudicate.

I know it's upsetting to find out that there is this whole branch of law out there that you may have not heard about before. 35 USC is not the be all and end all to all the law you need to know. Sorry. Now you're going to start hearing all these strange noises: Skidmore, Mead, Chevron, substantial evidence rule, yadah, yadah yadah.

Get used to it. It was going to be part of patent law ever since 1999 when the US Supreme Court declared in Zurko that the USPTO is an administrative agency subject to the APA just like all other agencies are.

[real anonymous]

"Perhaps we had all better call our Senators. S.1145 does not seem to have this provision (according to the IPO)."

It most certainly is in the Calendar Version 348 of the Senate Bill read on September 10, 2007 and placed on the calendar September 11, 2007:

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h1908pcs.txt.pdf

One thing the USPTO intellectual elite know how to do is work Congress. When our laws start INCORPORATING LIES at the REQUEST or GOVERNMENTAL OFFICIALS, you can say GOOD NIGHT to the U.S.A.

[real anonymous]

Sorry Kevin... I accidentally linked to the House Bill... I hope you're right about the Senate (though I know how the USPTO wants to "work" it). Yes, contact your Senators!

[Michael L. Slonecker]

Mr. Crouch and Ms. Rai:

Just curious your views on the fact that rulemaking authority is conferred by 35 USC 2 directly to the PTO, and not to the Office of the President. I find it unusual that the authority to make rules having the force and effect of law (whether characterized as procedural or substantive or interpretive or legislative, etc.) appears to bypass the normal "chain of command". In my experience dealing with other agencies I have noted the typical "delegation of legislative power" is to the Office of the President, with the extent to which the delegation can be sub-delegated downward being stated in the enabling statute.

Again, just curious...

[Mark Protsik]

U.S. Constitution
Art. I, Sec. 1: "All legislative Powers herein granted shall be vested in a Congress of the United States..."
Art. II, Sec. 1: "The Executive Power shall be vested in a President of the United States..."
Art. II, Sec. 3: "...he shall take Care that the Laws be faithfully executed..."

My understanding is that neither 35 USC 2 nor the Administrative Procedures Act extend to giving the Executive Branch of our government authority to legislate. Such legislative power cannot be delegated by Congress, nor arrogantly assumed by the President or his officers. Except in those few areas (foreign affairs and the military) where the Constitution expressly gives the President shared authority with the Congress, the rulemaking authority is strictly limited to faithfully executing the Laws, which includes construing the intent of Congress and filling in those details essential to carrying out those laws. But it doesn't go so far as enacting rules inconsistent with law, no matter what procedure is followed.

[Michael L. Slonecker]

Mr. Protsik:

The authority for the executive branch to engage in rulemaking having the force and effect of law via the delegation of legislative power from Congress was long ago recognized by the Supreme Court, though I must note that cases concerning this power by the Supreme Court have more twists and turns that my golf balls whenever I swing.

My comment was meant to merely query how it is that this particular delegation of legislative power (assuming, of course, that the USPTO does have, as it asserts, some degree of substantive rulemaking power) came to be vested in the executive branch at a level well below that of the President.

[anon]

I believe what Mr. Protsik is stating is a simple truism. The agencies of the Federal Government operate in violation of the Constitution. It matters not what the Supreme Court says, because it too is embodied as never intended by the original designs of the architects of the United Staets of America. Each judge would operate in a circuit of the United States to convene in Washington every so often to harmonize inconsistencies in the law. It other words it was never intended that the Justices of the Supreme Court would derive legal experience outside of the local districts from whence they came. Instead, we have Justices who have never had state law adjudicatory experience. So, in short, one may honestly question the competence of the Justices of the supreme court due to their lack of state law adjudicatory experience.
Even in a Time magazine three weeks ago the front cover questioned the relevance of the Supreme Court of the United States.

[Malcolm Mooney]

Okay, since the thread has officially jumped the shark I might as well add that Hitler would have loved the new rules.

[Mark Protsik]

I believe the Supreme Court cases are relevant [Field v Clark, 143 U.S. 649 (1892); In re Kollock, 165 U.S. 526 (1897); Butterfield v Stranahan, 192 U.S. 470 (1904); J.W. Hampton, Jr. & Co. v United States, 276 U.S. 394 (1928); A.L.A. Schechter Poultry Corp. v United States, 295 U.S. 495 (1935); Yakus v United States, 321 U.S. 414 (1944); American Power & Light Co. v. SEC, 329 U.S. 90 (1946); Mistretta v. United States, 488 U.S. 361 (1989)] in that, while they permit agency rulemaking, they also recognize limits to the agency-assigned responsibilities, which are defined by those standards and directives that are set forth in the law to which an agency's rules must conform. I concur with Justice Scalia in Mistretta v US, 488 US 361 (1989) that there is not actually a delegation of legislative authority to an executive agency, but merely the assigning of responsibility to apply the law. Congress provides a framework of intelligible principles and general directives in its legislation, and an executive agency (such the PTO) is given the responsibility of fleshing these out, filling in the blanks as it were, provided it doesn't directly contravene the law as enacted. Faithfully executing the laws is not legislation. I'm not sure whether the PTO rules are actually inconsistent with 35 USC 120 or 35 USC 131 or any other statute. There are reasonable arguments either way. But if they are inconsistent, then the PTO has exceeded the limits of its rulemaking authority. The remedy is to seek amendment of the patent law.

[curious]

Mark Protsik:

You write that "the remedy is to seek amendment of the patent law." I disagree. The remedy is for the PTO to withdraw the rules.

[anon]

Actaully Hitler did alright by patent attorneys and he knew the value of patents. In fact it was Junkers who invented and patented in germany, some of the first jet engines. However, he was a socialist so Hitler simply took his patents, due to the political differences. Apparently, the patent system was good in germany, if however, you backed Hitler contiuents. Sounds kinda similar doesn't it?

[real anonymous]

There's probably no comparison between Dudas and Hitler.

The USPTO had in its examiners' shoes one of the DOD reports on the first magnetic tape recorders that were secretly developed in Germany during WWII for use in propaganda dissemination. At that time, only had magnetic wire recorders that far inferior to their German counterparts in both sound quality and practical use.

The quantity of German patents you used to see in the shoes with the emblem of the Third Reich (now blotted out from many official copies of the documents) was a testimony that despite his many and varied faults Hitler knew the value of protecting (and presumably rewarding) innovation. (In the 1940s, the U.S. also published "Alien Registrations" of foreign inventions for European countries that could no longer operate their patent systems effectively because of the war.)

[johng]

I grabbed a few Bosch patent copies with swastikas that were being thrown out. I don’t know why, maybe morbid curiosity. When I was in the shoes and came across these, I used to wonder how things like patents carried on through the war years.

[MaxDrei]

Hitler's patent law OK, but can Iraq perhaps go one better? After all, Iraqi civilisation is thousands of years old, and amongst Iraqis you can count many and many illustrious scientists. Just a question. Does that fortunate country now also have kindly bestowed on it all those patent law features, unique to USA, such as First to Invent, best mode and continuations (which correspondents here assert are what has made America great) in order that it too shall have a competitive edge over the rest of the world?

If not, why not? As I recall, it was some famous US patent lawyer's daughter who flew out there to write Iraq's shiny new patent statute.

[Just an ordinary inventor(TM)]

Dreadful Maxdead

There you go again ...

[Edwin D. Schindler]

"Step Back" -

"The "promulgation of rules" is an act of administrative agency law. It is what agencies do under the APA. They promulgate and they adjudicate.

"I know it's upsetting to find out that there is this whole branch of law out there that you may have not heard about before. 35 USC is not the be all and end all to all the law you need to know. Sorry. Now you're going to start hearing all these strange noises: Skidmore, Mead, Chevron, substantial evidence rule, yadah, yadah yadah."

No, I don't agree! If an agency's regulations are in conflict with the statute under which it operates, then the agency's rules are preempted by the statute. It does not matter what reason or deference the PTO, or any agency, is otherwise entitled to, particularly, when the statute, as held by the courts (CAFC) have ruled that the agency lacks substantive rule making authority.

There is little doubt that the PTO can enact the proposed continuation/claims Rules as a matter of administrative law and procedure. This has been the PTO's mantra. GSK, correctly, challenged the Rules, not as a procedural violation of the APA, regardless of how the particular claim was framed, but as being inconsistent with substantive patent law, as set forth by Title 35, USC.

Chevon et al. have no relevance in the judicial challenges brought against the PTO, unless there is some suggestion that a federal agency has the "right" to act contrary to statute. Administrative law aside, this proposition would be a violation of the constitutional principle of "separation of powers."

[Edwin D. Schindler]

"Step Back" -

It's not a question of what's "upsetting" or otherwise and, yes, I am familiar with the administrative case law cited in your posting, however, it is simply wrong to argue that there are no "absolutisms here."

It is a "absolutism" that no federal agency can promulgate regulations that conflict with either federal constitutional law or federal statutory law. Whether a regulation, as interpreted, may or may not, conflict with a higher body of law is a matter of judicial interpretation, however, it is an "absolutism" that the PTO cannot promulgate regulations - regardless of so-called "deference" - if those regulations conflict with the patent statute.

Even the PTO does not argue otherwise: Instead, the PTO argues, quite unsuccessfully, that its proposed Rules on continuations, for example, are consistent with Symbol Technologies and related CAFC case law.

GSK readily disposed of the PTO's argument that it was entitled to "Chevron deference." The District Court's Opinion supporting its prelminary injunction order turns on the patent statute and the case law interpreting those statutes - not, in any way, shape or form - on whether the PTO acted consistently with the requirements of administrative law.

The reason for this is fairly obvious: If the PTO failed to comply with administrative procedures, as defined by the APA, then the PTO would have simply withdrawn the proposed Rules and re-stated the process for their re-issue. This didn't happen - and won't, because the Rules changes are contrary to statute - and the entire judicial challenge turns on whether there is a conflict between the PTO's proposed Rules and the patent statute.

The GSK/Tafas case raises "substantial" issues of federal patent law and, for this reason, is unquestionably within the exclusive appellate jurisdiction of the CAFC.

Putting to one side the dubious logic, if any, of Tafas seeking to take depositions from PTO officials, the only "material" issues in the GSK/Tafas judicial challenge pertain to: (a) interpreting the proposed Rules; (b) interpreting the patent law, Title 35, USC; and (c) determining whether a conflict between the two exists.

I "appreciate" the reality that there are those, particularly in the "publish or perish" environment, who wish to opine about the administrative law and procedure that they perceive to exist in the GSK/Tajas case, however, no such issues exist. Tafas, for his part, is seemingly doing little more than giving the PTO an opportunity to "muddy" the record in the case, and, perhaps, searching for some personal "relevance," after GSK entered the action and proceeded to gain what Tafas could not.

In sum, PTO regulations, as an absolute matter of law, cannot conflict with the patent statute, and the GSK/Tafas challenge will be exclusively decided on whether any such conflict exists. Administrative law "buffs" will have to look elsewhere for their jollies!

[Edwin D. Schindler]

The Court's Opinion explaining the grant of GSK's motion for preliminary injunction, at Pages 19 - 21, clearly disposes of the PTO's arguments under federal administrative law, and that the issue before the Court is strictly whether the PTO's proposed Rules are inconsistent with the patent statute.

The Court, in a respectful way, held that the PTO's administrative law arguments were without legal merit.

[stepback]

Edwin,

I see that you are taking all this to heart.

Let's "step back" and look at the "law" that governs how a court "must" (shall) review the acts of an administrative agency:
5 USC 706:

§ 706. Scope of review

To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall—
(1) compel agency action unlawfully withheld or unreasonably delayed; and
(2) hold unlawful and set aside agency action, findings, and conclusions found to be—
(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
(B) contrary to constitutional right, power, privilege, or immunity;
(C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;
(D) without observance of procedure required by law;
(E) unsupported by substantial evidence in a case subject to sections 556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by statute; or
(F) unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court.
In making the foregoing determinations, the court shall review the whole record or those parts of it cited by a party, and due account shall be taken of the rule of prejudicial error.

[Edwin D. Schindler]

No, no, I'm not "taking it to heart" (and I actually have to get some work done), however, there is no serious question that the PTO can issue regulations regarding, for example, claims. The very fact that claim structure must be a single sentence and that every claim element should have a proper antecedent basis, are just two examples of PTO regulations or internal rules regarding claims, which the PTO bases on 35 U.S.C. §112, second paragraph, as its statutory authority. These requirements of claim drafting are procedural, by virtue of the very fact that they to do not change the ultimate right to a patent or how the patentable subject matter is actually claimed.

If the new continuation/claims rules were "arbitrary, capricious, [or] an abuse of discretion," they would be "re-done" by the PTO in a manner that would avoid this pitfall.

At the end of the day, the PTO can regulate procedures regarding claims and continuations, because it already does(!), and the final determination will be whether it does so contrary to law.

The proposed rules are substantive by virtue of the very fact that, if a petition for a third continuation was not granted - and almost certainly would not be! - then the published version of the same application, either in the U.S. or, more likely, under the PCT, EPO or the law of a foreign country, then the applicant's own published application would ultimately be cited against the applicant's "continuation" under §102(b), thereby making it impossible to obtain a patent on the "continuation." This is a substantive change, not a procedural one, and is inconsistent with law, which will be the standard applied in the GSK/Tafas litigation.

Citing to 5 U.S.C. §706 is like citing to U.S. Const., Art. I, §8, cl. 8, and discussing the founding of the Republic. It's there under everything, but it will not be material to the decision: GSK is not seriously contesting the PTO's right to issue procedural regulations concerning claims and continuations or RCE's, only changes that are substantive and affect the statutory right to a patent on an invention and how that invention is claimed.

Tafas might be raising APA issues, but is wasting his time, since these issues will change nothing at the end of the day. Neither the District Court, CAFC nor, if it comes to it, the Supreme Court, is going to hold that the PTO acted contrary to 5 U.S.C. §706, but not contrary to Title 35, U.S.C. If the PTO loses, as it will, it will be exclusively because it promulgated Rules that conflict with the patent statute, and for this reason, the District Court's Memorandum reads as it does at Pages 19 - 21.

(As a practical matter, Tafas should seek dismissal of his case, without prejudice, since his presence is no longer needed, in view of GSK's, and probably a hinderance.)

Later . . .

[Edwin D. Schindler]

As a sidenote: I've brought an APA case against the PTO on one occasion, Heinl v. Godici, 143 F.Supp.2d 593 (E.D. Va. 2001).

(Thomas Heinl was a German client of mine and I was lead counsel, though I am not listed as counsel on the published opinion; solely listed is local counsel from Lyon & Lyon.)

[Edwin D. Schindler]

Here's probably the most direct reason why the District Court did not involve itself in the APA and why it is entirely immaterial:

The PTO would not raise an objection to its perceived right to promulgate Rules governing PTO patent prosecution practice, and GSK did not challenge the PTO under the APA, because to have had the Rule changes enjoined for procedural reasons, rather than as a matter of statutory patent law, would not achieve permanent victory for GSK.

Since the requirements of the APA are clearly not those relating to the Article III jurisdiction of the federal court, the District Court has neither the obligation, nor right, to consider an issue raised by neither of the parties for their own reasons, and, again, ultimately, the case will be decided on the sole basis of whether the proposed Rule changes are preempted by (conflict with) the patent statute.

[CaveMan]

Simple question:why is this article in a non-Patently-O standard font?

[anon2]

anon-
GS level is 9.
No EE bonus.
40 hours of overtime a bi-week.

Overtime cap is about $36 per hour.
26 bi-weeks in a year.
40 hours a week.
70k Salary + (40*36*26) = 107k.

Yeah right good sir anon, I'd like a pdf of your bank statement if you do not mind substantiating your claim, blackout where needed.

Also, I'd like to add, that if, that is if, you can actually do this, it is because you are writing horrible OA's in an art that has grossly misrepresented its time per disposal, gets rediculous apps, and are likely riding continuations all at the same time.