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If you know any patent attorneys, you may wonder why we were acting more freaked out and depressed than usual in recent weeks, only to suddenly celebrate with our Vulcan “Live long and prosper” signs on Halloween. In short, the Patent and Trademark Office introduced new rules to make our lives miserable, effective Nov. 1, and these were enjoined by a federal judge in the Eastern District of Virginia on Oct. 31. [ 1] The court said the rules would change existing statute (and we all know that’s the court’s job � er, Congress’s job). Bear with me while I give you some background in patent attorney speak. When a patent application is examined, it can be approved or it can receive a so-called final rejection. If it’s the latter, the applicant has several choices. He or she can file a Request for Continued Examination (RCE), which would extend the applicant’s time to argue their points; ask for a continuation, which lets them file essentially a whole new application; or seek an appeal to a special PTO board. Because the PTO has more work than it can handle, it decided to impose limits on that process (wouldn’t we all like to do that!). The main thrust of the new rules was to limit applicants to one RCE and two continuations per application. The rules also limited the number of claims � which describe the rights and unique aspects of a patent � that could be included in every application. At the Halloween hearing, the court ruled that several arguments were likely to prevail if the issue proceeded to trial: that the limit on continuations contradicted statute, that portions of the rules were unfairly retroactive, and that the rules on petitions to exceed the claim limit were too vaguely defined. Most uses of continuations and RCEs are legitimate, and in fact, examiners force applicants to use them. Attorneys putting together patent applications for their clients get one shot to argue that a claimed invention is patentable. For example, an examiner will sometimes reject an application based on some kind of misunderstanding, and even if the applicant corrects that, the examiner will still give the applicant a “final” rejection. Basically, they force us patent attorneys to say bad words and file RCEs and continuations. Yet there was no plan to change this practice by examiners with the new limits, putting patent attorneys between a rock and a hard place. It is common knowledge that continuations are sometimes abused. They are filed so claims covering competitor design-arounds can be pursued through devious use of vague words � oops, I meant skillful lawyering. In other words, sometimes an inventor will file a continuation after getting a first patent to make sure his second patent on the same invention will ultimately encompass efforts a competitor has made to avoid infringing on the first patent. However, that isn’t the reason the PTO changed the rules. The reason is that they can’t keep up with the flood of applications even if they meet their objective of hiring 1,000 new examiners a year. The percentage of applications that are continuations (including RCEs) increased from 6 percent in 1980 to almost 21 percent in 2004. [ 2] The PTO did a study within the last two years that concluded the office could significantly reduce the backlog with a one continuation limit � a higher limit would simply not dent the workload. But after howls of protest during the comment period, they changed the new rules to allow two continuations and one RCE. So even under the PTO’s own analysis, the rules wouldn’t achieve the intended result. But like a dog with a bone, they wouldn’t let go. The PTO also knows that we patent attorneys are a sneaky bunch and would find ways around the rules, such as by filing multiple applications on the same thing instead of using continuations. So they came up with a convoluted set of rules designed to counter every trick we might try, including giving the new rules retroactive effect. This led to a huge amount of confusion. The core problem the PTO is trying to address is the explosion of patent applications. The number of patents issuing in the U.S. increased 1 percent a year from 1930 to 1982, then has increased at an annual rate of about 5.7 percent since.[ 3] Some say this is due to an increased rate of innovation (due to new fields opened by the PC, Internet and biotech). Two economists recently wrote a book saying it’s due to two procedural changes: (1) the establishment of the Federal Circuit Court of Appeals in 1982 to hear all patent appeals with what the economists say are pro-patent judges, and (2) the conversion from congressional funding of the U.S. PTO to dependence on application fees in the early ’90s. Congress thus inadvertently both made patents a more potent weapon, and simultaneously made them easier to get. As a patent prosecutor, I see all sorts of patents that shouldn’t have been issued, so I think the economists have a point. In 2003 and 2004, both the National Academy of Sciences and the Federal Trade Commission issued reports saying that the U.S. patent system as implemented had actually become anticompetitive and discouraged innovation. [ 4] Congress saw the photo-op and leaped into action with reform bills each year since 2004, but, of course, none was enacted. This is because industry is divided, and Congress doesn’t want to offend campaign contributors. The big electronics and software companies want reform � they make complicated products with thousands of components, each of which can have a patent asserted against them. They are like Gulliver with a bunch of trolls using patents to tie them up. The biotech and pharma companies make drugs and other products which usually are covered by one or only a few patents. They like their big patents like Paul Bunyan likes his big axe � he doesn’t want a smaller axe. Thus, we have the PTO obstinately continuing to fight the wrong war for the wrong reason, and Congress is impotent to do anything. Sound familiar? The only entity doing anything is the Supreme Court. The court has made it easier to show a patent is obvious and thus invalid[ 5], and has made it harder to get an injunction. [ 6] Here’s my advice to the PTO: Don’t appeal the Virginia court injunction � you’ll probably get slapped down by the CAFC. Instead, just say no to weak patent applications. Your workload has ballooned out of control because you grant patents on trivial and obvious “inventions.” These patents are valuable because people have to pay us attorneys a lot of money to fight them. When my clients’ competitors file and get weak patents, I have to advise my clients to file them too. But I know � it’s hard for the PTO to exercise judgment and say no � it’s easier to promulgate Byzantine rules. Paul Haughey is a partner at Townsend and Townsend and Crew and the author of “Undue Diligence,” a legal thriller about a patent attorney illustrating abuses of the patent.

[ 1] SmithKline Beecham Corp. et al. v. Jon W. Dudas et al., case number 1:07-cv-01008, US District Court, ED Virginian (10-31-2007). [ 2] USPTO presentation slides, “Washington and the West” Conference January 25, 2006. [ 3] Adam Jaffe & Josh Lerner, “Innovation and Its Discontents – How Our Broken Patent System Is Endangering Innovation And Progress, And What To Do About It,” (Princeton University Press, 2004). [ 4] To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy, A Report by the Federal Trade Commission, October 2003; A Patent System for the 21st Century, The National Academy of Sciences, 2004. [ 5] KSR Int’l Co. v. Teleflex Inc. et al.,127 S.Ct. 1727 (2007). [ 6] eBay v. MercExchange, LLC, 126 S.Ct. 1837 (2006).

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