Tafas v. Doll.

CAFC Finds the USPTO Final Rules Limiting Continuations to Conflict With 35 USC 120, But Final Rules Limiting Claims, RCEs, and ESDs are Within USPTO’s Rulemaking Authority.

(Fed. Cir. 2009, 08-1352)

Triantafyllos Tafas, SmithKline Beecham Corporation, and Glaxo Group Limited (collectively “Appellees”) originally filed suit against the USPTO in relation to Final Rules published by the USPTO that placed new limits on the claims and continuations.  On October 31, 2007, the district court preliminarily enjoined enforcement of the Final Rules.  Appellees then moved for summary judgment that the Final Rules are invalid and sought a permanent injunction against their enforcement.  Appellees’ summary judgment motions alleged that the Final Rules were impermissibly substantive, inconsistent with law, arbitrary and capricious, incomprehensibly vague, impermissibly retroactive, and procedurally defective.  The district court agreed with Appellees that the Final Rules were substantive rules that change existing law and alter the rights of applicants under the Patent Act.   Accordingly, the district court granted Appellees’ motion for summary judgment that the Final Rules are invalid and granted a permanent injunction.  The USPTO appealed to the CAFC. 

Four of the Final Rules 75, 78, 114, and 265 were at issue in the appeal.  Final Rule 75 requires an applicant who submits either more than five independent claims or twenty-five total claims to provide the examiner with information in an examination support document (“ESD”).  Final Rule 78 governs the availability of continuation and continuation-in-part applications.  Under the rule, an applicant is entitled to file two continuation applications as a matter of right.  If an applicant wishes to pursue more than two continuation applications, the applicant must file a petition “showing that the amendment, argument, or evidence sought to be entered could not have been submitted during the prosecution of the prior-filed application.”  If the applicant cannot make the requisite showing, the USPTO will accept the application  for examination but will “refuse to enter, or will delete if present, any specific reference to a prior-filed application.”  Final Rule 114 provides for similar treatment of RCEs, stating that the applicant must file a petition “showing that the amendment, argument, or evidence sought to be entered could not have been submitted prior to the close of prosecution in the application.”  The requirements for ESDs are set forth in Final Rule 265.  To comply with Final Rule 265, an applicant must conduct a preexamination prior art search, provide a list of the most relevant references, identify which limitations are disclosed by each reference, explain how each independent claim is patentable over the references, and show where in the specification each limitation is disclosed.

On appeal, the CAFC (majority of panel including Judges Prost and Bryson, with dissent by Judge Rader) concluded that the following USPTO Final Rules are procedural and within the scope of the USPTO’s rulemaking authority.

• Final Rule 75 – Claims – requiring an applicant who submits either more than five independent claims or twenty-five total claims to provide the examiner with information in an examination support document (“ESD”);
• Final Rule 78 – Continuations – requiring a “showing that the amendment, argument, or evidence sought to be entered could not have been submitted during the prosecution of the prior-filed application” for more than two continuations;
• Final Rule 114 – RCEs – requiring a “showing that the amendment, argument, or evidence sought to be entered could not have been submitted prior to the close of prosecution in the application” for more than one RCE; and 
• Final Rule 265 – ESDs – this rule setting forth the specific requirements for ESDs.

However, the CAFC further found that Final Rule 78 conflicts with 35 U.S.C. § 120 and is thus invalid.  Section 120 states, in part, that “[a]n application for patent . . . filed by an inventor or inventors named in the previously filed application shall have the same effect, as to such invention, as though filed on the date of the prior application”.  Final Rule 78 would allow the USPTO to accept a continuation application without the requisite showing, but the USPTO would “refuse to enter, or will delete if present, any specific reference to a prior-filed application.”  Accordingly, the effect of Final Rule 78 would be to impermissably remove the application from the scope of 35 U.S.C. § 120, which would otherwise entitle the application to the filing date of the prior-filed application.

The CAFC affirmed the district court’s grant of summary judgment that Final Rule 78 is invalid, vacated the grant of summary judgment with respect to Final Rules 75, 114, and 265, and remanded for further proceedings.

Leaving the door open to further mischief, the CAFC concluded:

Because of the complexity of this case and the numerous arguments presented on appeal and before the district court, we think it is important to expressly summarize what we believe remains for the district court on remand. This opinion does not decide any of the following issues: whether any of the Final Rules, either on their face or as applied in any specific circumstances, are arbitrary and capricious; whether any of the Final Rules conflict with the Patent Act in ways not specifically addressed in this opinion; whether all USPTO rulemaking is subject to notice and comment rulemaking under 5 U.S.C. § 553; whether any of the Final Rules are impermissibly vague; and whether the Final Rules are impermissibly retroactive.

Judge Rader notably dissented, stating:

. . .  I would affirm the district court’s conclusion that the PTO exceeded its statutory rulemaking authority in promulgating these rules. For that reason, I concur in part with this court’s ultimate conclusion regarding Final Rule 78, but dissent in part with respect to Final Rules 114, 75, and 265.

This case presents a threshold question about the nature of these rules—substantive or procedural . . . .  Because the Final Rules drastically change the existing law and alter an inventor’s rights and obligations under the Patent Act, they are substantive and the PTO exceeded its statutory rulemaking authority under 35 U.S.C. § 2(b)(2).

JW Note:  See also our previous posts relating to the USPTO Claims and Continuations Rules here.  The saga continues . . . .