By now most are likely aware of, or rapidly becoming aware of, the fact that the United States Patent and Trademark Office has finally done the right thing and has scrapped the claims and continuations rules that have divided the patent community for the last 26 months. It is impossible not to recognize the new and refreshing tone set by David Kappos, the new Director of the USPTO. Yes, there is a new Sheriff in town and it will not be business as usual. While I may have strong differences on the direction of substantive patent laws under the Obama Administration, even the sharpest PTO critics must acknowledge that from a process and administration standpoint the Patent Office is off to an exceptionally good start, perhaps even an unprecedented start. Between the appointment of competent, patent-qualified people to high level management positions within the USPTO, to taking a time out to collect more input from the community regarding the proposed Bilski internal guidelines, to withdrawing the center piece of the Dudas/Doll reforms that would have attacked the most commercially relevant innovations, Secretary of Commerce Gary Locke and his team lead by David Kappos is living up to the hype and delivering.
Here is an excerpt from the press release issued by the USPTO yesterday announcing the rescinding of the claims and continuations rules, which the press release itself acknowledged to be “highly controversial regulations”:
Under Secretary of Commerce for Intellectual Property and Director of the USPTO David Kappos has signed a new Final Rule rescinding highly controversial regulations, proposed by the previous administration, that patent applicants felt unduly restricted their capacity to protect intellectual property. The regulations, which addressed the number of continuation applications as well as the number of claims that could be included within each application, were published in the Federal Register in August 2007, but were enjoined and never came into effect.
The USPTO also announced that it will file a motion to dismiss and vacate the federal district-court decision in a lawsuit filed against the USPTO that sought to prevent the rules from taking effect. GlaxoSmithKline – one of two plaintiffs in the Tafas v. Kappos lawsuit – will join the USPTO’s motion for dismissal and vacatur.
“The USPTO should incentivize innovation, develop rules that are responsive to its applicants’ needs and help bring their products and services to market,” Kappos said. “These regulations have been highly unpopular from the outset and were not well received by the applicant community. In taking the actions we are announcing today, we hope to engage the applicant community more effectively on improvements that will help make the USPTO more efficient, responsive, and transparent to the public.”
“We are grateful to GlaxoSmithKline for working with us to file this joint motion to both dismiss the rules and vacate the district court’s decision. This course of action represents the most efficient way to formally and permanently move on from these regulations and work with the IP community on new ways to take on the challenges these regulations were originally designed to address.”
This is something that I have been suggesting for many months, starting at least as early as December 3, 2008, in USPTO v. GSK & Tafas Chronology (see paragraph 2), and then again when I wrote about my Patent Wishes for the New Year (see #5). I was also writing on a periodic basis back in October 2007 through March 2008 that then Director of the Patent Office, Jon Dudas, should do the right thing and withdraw the rules. All of this urging, and the urging of others, fell on def ears — until now. It is wonderful to know that the Patent Office is now being run by those who understand the consequences of their actions, understand the role that the Patent Office can and must play and realize that gratuitously and arbitrarily engaging in rules that less the burden on the Patent Office but which also destroy value is not in the best interest of the United States and our economy.
Now all eyes will turn and wait to see what the Federal Circuit will do. It seems virtually assured that the Federal Circuit will stand down and not continue on with the en banc hearing of the original three judge panel. The original panel ruling has been vacated, which means that presently the operative decision affecting the rules is the decision by Judge Cacheris of the Eastern District of Virginia, which can really only be characterized as a scathing indictment of how the Patent Office handled the rulemaking process and how the rules directly conflict with the governing patent statute. But what will become of the ruling of Judge Cacheris? Will it be vacated as if it never happened? This is why I wrote for months that Dudas should do the right thing leading up to the decision of Judge Cacheris.
After issuing his decision and ordering the rules enjoined no one believed for a moment that Judge Cacheris was going to reverse course, so the Patent Office forged ahead with the ill-conceived rules and forced Judge Cacheris to issue a decision that point by point explained what the PTO did that was wrong, which will hang around the neck of the USPTO and other agencies moving forward. Certainly a district court decision is not as bad, or precedent setting, as a ruling from a Court of Appeals, but Judge Cacheris’ opinion will be about as persuasive and compelling as precedent as any district court decision because he got it exactly right, both from a legal and logical standpoint. So it will be far better for the USPTO and for other agencies to have the Cacheris decision erased as if it never happened, but this is the sort of thing that the United States Supreme Court has ruled is typically inappropriate.
In U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18 (1994), Justice Scalia delivered the opinion for a unanimous Supreme Court and decided that mootness by reason of settlement does not justify vacatur (i.e, the vacating of an underlying, lower court decision) of a federal civil judgment under review. Justice Scalia observed:
To allow a party who steps off the statutory path to employ the secondary remedy of vacatur as a refined form of collateral attack on the judgment would–quite apart from any considerations of fairness to the parties–disturb the orderly operation of the federal judicial system.
Scalia, along with a unanimous Supreme Court concluded:
We hold that mootness by reason of settlement does not justify vacatur of a judgment under review. This is not to say that vacatur can never be granted when mootness is produced in that fashion. As we have described, the determination is an equitable one, and exceptional circumstances may conceivably counsel in favor of such a course. It should be clear from our discussion, however, that those exceptional circumstances do not include the mere fact that the settlement agreement provides for vacatur–which neither diminishes the voluntariness of the abandonment of review nor alters any of the policy considerations we have discussed. Of course even in the absence of, or before considering the existence of, extraordinary circumstances, a court of appeals presented with a request for vacatur of adistrict court judgment may remand the case with instructions that the district court consider the request, which it may do pursuant to Federal Rule of Civil Procedure 60(b).
Federal Rule of Civil Procedure 60(b) states:
(b) Grounds for Relief from a Final Judgment, Order, or Proceeding.
On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons:
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released, or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or
(6) any other reason that justifies relief.
The Department of Justice, on behalf of the USPTO, and GlaxoSmithKline have jointly asked the Federal circuit to “dismiss the appeal in the above-captioned matter and to vacate the injunction and judgment of the district court below.” It would seem that the Federal Circuit would not be on strong legal footing should they choose to vacate the district court opinion of Judge Cacheris, although they could follow the Supreme Court advice and return the matter to the district court for consideration pursuant to Rule 60(b). If that does happen it would seem that Rule 60(b)(6) is the only real grounds appropriate for Judge Cacheris vacating his previous decision, and I just don’t see Judge Cacheris or any other district court Judge in the Eastern District vacating that ruling. Time will tell what will happen, but the claims and continuations rules are dead, which is a good thing indeed!
Join the Discussion
9 comments so far.
patent leatherOctober 12, 2009 01:21 am
I love the wording of the USPTO announcement:
“…rescinding highly controversial regulations, proposed by the previous administration, that patent applicants felt unduly restricted their capacity to protect intellectual property….“The USPTO should incentivize innovation, develop rules that are responsive to its applicants’ needs and help bring their products and services to market,” Kappos said. “These regulations have been highly unpopular from the outset and were not well received by the applicant community. In taking the actions we are announcing today, we hope to engage the applicant community more effectively on improvements that will help make the USPTO more efficient, responsive, and transparent to the public.” We are grateful to GlaxoSmithKline….”
Obviously, Kappos is taking a shot at the previous administration.
Noise above LawOctober 11, 2009 09:22 am
My thanks to a poster at Patently-O who provided a case cite to another Supreme Court ruling:
U. S. BANCORP MORTGAGE COMPANY, PETITIONER v. BONNER MALL PARTNERSHIP 513 U.S. 18.
Therein lies additional reasoning why the Office should be denied vacatur. The Court should not reward the Office’s illegal power grab with a clean slate and a chance to do the whole thing over again.
The Office has chosen to rescind rather than face what an En Banc CAFC might decide. It would not be equitable to overturn the existing rule of law (the DC ruling which goes against them) as the circumstances of review are completely accountable and the flow of judicial review is not being stopped by an uncontrollable happenstance. There would be no equity in rewarding such behavior.
breadcrumbsOctober 11, 2009 12:46 am
Keep in mind that not all parties have stated the desir for vacatur – Taffas has not joined GSK, and it is reported at Patently-O that Taffas does NOT want vacatur – Taffas wants the Office foreclosed from the authority they sought.
Gene QuinnOctober 10, 2009 04:38 pm
I understand what you are saying, I really do, but the Supreme Court has made it clear that the fact that the parties ask for vacatur is irrelevant, as is a settlement agreement. I personally think the rules of equity weigh heavily against a vacatur. The Patent Office engaged in a lot of questionable behaviors, and clearly overstepped their bounds. This feeling is almost universally held, save the two judges on the CAFC (Bryson and Post) who overturned the Cacheris decision. Even David Kappos, when he was in the private sector, felt the USPTO overstepped their bounds. When an agency of the federal government acts in that way it seems to me that there is great cause for not acting like something never happened. Just my opinion. Time will tell.
Thanks for chiming in.
CAFC decisionOctober 10, 2009 04:19 pm
I think the CAFC would be well within the bounds of equity to vacate the District Court opinion. Here, we have both parties requesting vacatur, and we have a vacated panel decision (that would not have been vacated but for the en banc grant that will now be dismissed) reversing the District Court opinion. The wishes of the parties and the genuine legal question here make vacatur most equittable.
breadcrumbsOctober 10, 2009 06:36 am
Conversely, are sanctions appropriate against the Office counsel for pursuing a case even after the OMB dealt it a death blow? …for that counsel not appraising the court and opposing counsel of such material developments?
breadcrumbsOctober 10, 2009 06:33 am
Does INexcusable neglect (in the Office flaunting the OMB and other administrative steps) speak to NOT allowing vacatur in this case?
Dentist in prestonOctober 10, 2009 01:54 am
Informative article Gene
Noise above LawOctober 9, 2009 05:36 pm
Very Nice Gene