Federal Circuit to Hear Patent Office Appeal

Tomorrow, December 5, 2008 at 10:00am the United States Court of Appeals for the Federal Circuit will hold oral arguments regarding the appeal by the United States Patent & Trademark Office of the ruling issued by Judge Cacheris of the Eastern District of Virginia, which permanently enjoined the claims and continuations rules from going into effect.  You will probably recall that Judge Cacheris issued a preliminary injunction enjoining the rules on October 21, 2007, and then ultimately issued a permanent injunction on April 1, 2008.  For those interested in the history of this case see USPTO v. GSK & Tafas Chronology.  I will be attending the arguments and plan on reporting my initial thoughts by the close of business tomorrow.  Obviously, there will be a lot to write and comment on, so this will be something that I will continue to write on and follow in the days, weeks and months to come as we await a decision from the Federal Circuit.

When you read the brief filed by the USPTO you can just start to imagine what it is that will be argued to the Federal Circuit tomorrow — the backlog of pending cases at the Patent Office is choking the patent system and we absolutely must stop the abuse of continuation practice which is contributing to this massive number of cases that remain pending and unaddressed.  That is a great argument, but only if it were true. 

The Patent Office Brief explains:

The excessive use of continuation and continuation-in-part applications and RCEs has contributed to one of the most serious problems now facing the USPTO – the large and growing backlog of unexamined patent applications.  In recent years, the backlog of unexamined applications has more than tripled, growing from 224,446 in 1998 to 701,147 in 2006. The growing backlog has had a crippling effect on the Office’s ability to examine new applications. The average time that an application remains pending before first Office action has grown to 22.6 months, and up to 43.9 months in certain areas. Such delays have a particularly acute effect on industries such as computer software and hardware technologies, where product life cycles are short and new improvements can quickly make the technology obsolete. Continuation and continuation-in-part applications and RCEs play a major role in this problem. As a percentage of all filings, continuation applications and RCEs increased from little more than a tenth (11.4%) in 1980 to nearly a third (29.4%) in 2006. As the USPTO spends more time reviewing applications that are a repetition of prior applications that have already been examined, it is necessarily diverted from reviewing new applications disclosing new technology and innovations.

The truth is that what the Patent Office wrote in its brief back in July of 2008 is not the whole picture.  When the Annual Report for 2008 was published recently we learned that the backlog of patent applications continues to get worse at an alarming rate.  As of the end of Fiscal Year 2008 there are 1,208,076 patent applications still pending at the Patent Office. At the end of Fiscal Year 1997 the number of pending applications left over was only 275,295, so over the last 11 years there has been a 439% increase in the number of pending applications left over that could not be resolved. Each year since 1997 this number has gone up, first going over the 1 million mark in 2006. As patent applications continue to pile up the US patent system is plunging further and further into irrelevance, and that is not a good thing for our economy or for the future of innovation. Something needs to be done immediately to reverse this trend, but limiting continuations and RCEs is certainly not what needs to be done.

If you look at the number of continuations and RCEs filed over the last 10 years you will notice that the number has indeed risen and risen significantly, but merely focusing on the number of continuations and RCEs, which is what the Patent Office would prefer to do, misses the point.  If you look at the chart provide in by Patently-O you see that the real number has risen, but that the percentage of filings of continuations and RCEs has largely remained constant when compared to the overall number of applicatons filed at the Patent Office.  So while the Patent Office would like to say that continuation and RCE practice is out of control, that is just not the case.  As the number of applications filed per year rises it is logical to assume that the number of continuations and RCEs filed would also rise by similar percentages.  In other words, the Patent Office is simply pointing to facts and figures that simply do not suppor their theory.

To the extent that continuation practice and RCE practice has become a problem that has caused issues at the Patent Office the blame lies squarely with Jon Dudas and other upper-level management leaders at the USPTO.  While the current PTO Administration would like to blame patent attorneys and inventors for abusing the system, the truth that we all know to be correct is that the examiners are the ones who are abusing the system.  Gone are the days where career PTO employees saw their role as integral to the US patent system.  Gone are the days when examiners prided themselves on the output of the Office.  Today we have a structure in place where speed is honored and quality has become laughable.  Dudas continues to laud the great work he has done at the Office, but there is simply no evidence that this is the case.  Yes there are some excellent career people at the USPTO, and these folks should be promoted and encouraged to get the Office working again, but so much damage has been done by those who want to be able to testify to Congress that allowance rates are down and that average time to closure of an application is down.  What do you think is causing the need to file more continuations and RCEs Mr. Dudas?  Do you for a minute believe it has anything to do with the extraordinarily low quality of the patent examinations your examiners are providing the industry?  Do you for a minute think that it is the nonsensical rejections we receive?  The system is being gamed, and there are a lot of abuses, but for those responsible you need to look within the four corners of the USTPO building and stop blaming patent attorneys, corporations and inventors.

Let’s be honest for a minute.  When Dudas started trying to make quality and speed the hallmarks of his Administration we have seen things increasingly spiral out of control at the Office and for the US Patent System.  With examiners being given 10 or 12 hours to examine applications and then being forced to issue rejections in order to protect their own bonuses it is no surprise that the issue rate has dropped off a cliff and that those who have serious innovations feel the need to file continuations and RCEs in order to rightfully obtain what ought to be given as a matter of right.  For some light reading why not try reading 35 U.S.C. 102, which starts out by saying that a patent shall issue “unless.”  That means that the presumption is that a patent should issue and that the examiners bear the burden, not the other way around.

How many times since 2005, when appeals and continuations and RCEs really seem to have spiked, have patent attorneys and agents had to file either an appeal, or a continuation or an RCE because the examiner refused to do their job?  We all know of cases where the examiner would refuse to allow something to be done After Final when we knew we had a right to have it considered, forcing us to file an RCE.  We also all know of cases where the RCE filing was then rejected by the examiner because there was nothing new presented.  Well you cannot have it both ways.  Either there is nothing new presented and the amendment needs to be permitted After Final or there is something new requiring an RCE.  So much for meaningful quality or quality control at the Patent Office.

By the way Mr. Dudas.  I wish you and your other policy-level leaders at the PTO were as concerned with independent inventors and invention scams as you are with killing continuation practice and limiting RCEs.  The truth is you do not file a continuation or an RCE unless the invention is valuable, so you are trying to strike a blow to the most commercially viable inventions that the PTO sees.  At the same time your Office made Final new rules regarding the unauthorized practice of law at the USPTO on both the patent and trademark side of the building.  Yet no one at the USTPO is at all interested in preventing the numerous fraudulent companies that simply openly violate Rule 11.5(b).  So you are letting them and others openly violated the rules by representing trademark applicants, preparing applications, giving advice on international classifications and then ultimately filing the applications.  Your Office has also allowed them and others who are not patent attorneys or patent agents to file and prosecute patent applications.  In the last few weeks you have on the job why don’t you stop worrying about denying patent protection to those inventions that are the most commercially relevant and start worrying about those that are engaging in the unauthorized practice of law and preying upon independent inventors, individuals and small businesses.


About the Author:

Gene Quinn is a patent attorney and the founder of IPWatchdog.com.  He is also the Editor and chief contributor to the PLI Patent Practice Center and is on the PLI Patent Bar Review faculty.

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Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com.

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