Scheduled to take effect November 1^st, the Patent Office's "Changes to Practice for Continued Examination Filings, Patent Applications Containing Patentably Indistinct Claims, and Examination of Claims in Patent Applications" has been temporarily shelved after Judge James Cacheris of the US District Court for the Eastern District Court of Virginia issued a Preliminary Injunction. Why are so many top corporations and IP associations opposed to the changes?

US District Court Judge James C. Cacheris recently stopped the United States Patent and Trademark Office (USPTO) in its tracks as it sought to implement its new claims and continuation rules. Here's the story behind the story…

Everyone seems to agree that the United States Patent and Trademark Office (USPTO) faces a massive backlog of applications without sufficient resources to process them in a timely manner. Anticipating an increase of appeals to the Board of Patent Appeals and Interferences (BPAI), the Patent Office has proposed a new set of rules governing practice before the Board with the purpose of making the process more time-efficient.

In summary, the four aspects of the new rules are: 1) publication of U.S. patent applications by the USPTO, 2) adjustment of patent term due to delays in prosecution, 3) introduction of an inter partes patent reexamination procedure, and 4) establishment of the Electronic Filing System (EFS), which provides for the electronic submission of certain patent documents and applications to the USPTO.

Some law bloggers see an upside: The limits on continuations under the final rules allow applicants two continuations or CIPs (continuation in part) and one RCE (request for continued examination) per application family as a matter of right – an improvement over the initial rules; the USPO also removed the provision requiring applicants to select 10 "representative" claims for examination if more than 5 independent claims or 25 claims total were presented.

A number of leaders in the patent and trademark world, however, beg to differ and consider the above as a misguided attempt to address the pendency and backlog issues. The gist of the fierce opposition from the public – including patent attorneys, brand owners and IP organizations – is that the extra rules seem to serve mainly as a roadblock to appeals (through increased costs and procedural barriers). They were also deemed unnecessary because the vast majority of appeals filed never reach the BPAI and, even after the applicant files an appeal brief, most cases are re-opened by the Examiner who either allows the case or re-opens prosecution.

Here is what some of the leading lights in the patent and trademark world are saying:

IBM: Even though we agree that the commitment to patent quality is a shared responsibility, we believe that some of the proposed rules are of questionable benefit and impose substantial, unjustified burdens on appellants.

Microsoft: Of equal or greater concern is the significant time and cost increases imposed upon an appellant to comply with the proposed rule changes without any showing or metrics in the explanation of the proposed changes of how the changes make the appeal process more effective and timely.  With all the very specific formatting and additional requirements to be incorporated into a brief and the appendix content, the cost of a brief will be at least double today’s cost.

Eastman Kodak: …the proposed rule changes substantially would increase our cost to prosecute appeals…increase pendency of our applications…would cause the creation of unnecessary and potentially harmful prosecution history that, in turn, would yield a significant increase in the issues to be resolved and costs incurred in patent litigation…

AIPLA: "…until the PTO improves the work of examiners so that needless appeals to the Board are eliminated or substantially reduced, it is inappropriate to increase the burdens and costs to applicants of filing an appeal brief in an attempt to control the increasing number of ex parte appeals, particularly when more than half of the appeals never reach the Board.

Cantor Fitzgerald, LP: Some of the proposed Appeal Rules place disproportionate burdens on appellants that undermine the statutory right to have an efficient, full and fair adjudication of patentability. The Rules repeatedly set out a double standard, in which examiners are permitted to raise new grounds and adduce new evidence, while appellants’ rights to fully and fairly reply are cut off.

And a US federal court in Virginia agreed with them, temporarily blocking the USPTO from implementing the controversial new rules relating to claims and continuations that were set to take effect on November 1.

When GlaxoSmithKline (GSK) filed a motion for preliminary injunction, the Court found for the plaintiff, basing its decision on these four factors:

·         The likelihood of the plaintiff’s success on the merits – Judge Cacheris, believing that GSK raised serious concerns as to whether the Final Rules comport with the Patent Act and that GSK has created a real question as to whether the Final Rules are truly substantive, found that there is a genuine possibility that GSK will succeed on this issue.

·         Irreparable harm if the injunction is not granted - The court found that although GSK cannot pinpoint an exact figure of monetary loss, the uncertainty caused by the regulations will harm their investments and may discourage their filing of new patent applications for new pharmaceutical products.

·         The balance of hardships between the parties - While the PTO would suffer hardships related to "sunk costs already incurred by training personnel and changing the computer systems"  and would merely maintain the status quo, the harm to GSK would be "immediate" once the rules were implemented court.

·         The public interest – The Court agreed with the position of GSK and that of the amicus briefs filed by organizations from a wide array of industries that maintaining the status quo while the litigation proceeds is important for maintaining stability for patent holders. When patent holders and applicants have certainty about how their patents will be treated, they are more likely to continue innovating.

The court - and the lawyers, the brand owners and associations - have spoken. Next step? Implementation has now been put off for at least a couple of months while a US court reaches a final decision. Stay tuned.