Archive for March, 2009

More Ways for Inventors to Reduce the Cost of Patenting and Get a Better Patent Application

March 31, 2009

Patent attorney Mark Bergner provided a great post on Patently-O last week about ways for independent inventors to reduce costs when working with a patent attorney to prepare a patent application.  I second everything that he included in that post and add a few more points that I believe are worth emphasizing.

Mark’s point about the costs of obtaining a patent and the costs of commercializing a product is worth repeating.  Even if you get a patent for your invention, this does not mean that you will be able to successfully commercialize or market the invention.  There are numerous inventions that have been patented that have never seen the light of day.  Spend a bit of time going through patents at the PTO website,, and you will see that this is true.

Prior Art Search

This leads to a point that Mark did not cover.  If an inventor plans to develop and market a product, it is important that a clearance search be performed prior to his doing so.  This will help determine whether the invention may run into problems with patents owned by third parties.  In trying to save cost, it would be better to know that the product can be developed and commercialized without running into these other patents.  Otherwise, a great deal of time and money could be spent to develop the product and file a patent application that the inventor can not even practice.

A search also provides the benefit of determining whether it is worthwhile to file a patent application and what type of protection may be available.  Most inventors are not skilled at searching the PTO databases or foreign patent resources.  It is not cost-effective to have an attorney perform such a search.  A company that specializes in such searches can perform such searches efficiently and can save a great deal of time and money down the road.

This is not to say that inventors should not spend time searching on the internet.  A few hours on Google can certainly save time and money as well.  And the inventor should let the attorney know the closest products and patents of which he becomes aware.  For one thing, the PTO requires disclosure of material information of which the inventor may be aware, but this also assists in the preparation of a patent application by knowing what the inventor considers the closest competitive product or patent.

Provide the Best Description and Drawings that You Can

I do want to emphasize Mark’s points about preparing a written description and drawings of the invention.  Take some time to review some other patents to see the level of detail that is generally required in such a document.  The more the inventor can prepare, the less time the patent attorney will need to spend on the application.  Try to include as many alternative ways of practicing the invention as you can think of.

If you’ve been following this blog, you know that the courts (especially the Federal Circuit), the PTO, and even Congress are making preparing patent applications more difficult and expensive.  One of the take-away lessons from this trend is that the more detail and information that is included in the description of the invention and the more alternatives that are described, the greater the chance of obtaining a strong patent.


And then, you have to be patient.  Once the application is filed, it will take over a year and potentially several years before the PTO will examine the application.  And no, a provisional application will not be significantly cheaper than preparing a non-provisional application.  I covered this issue in an earlier post.

As Mark states in his post, the inventor knows a great deal more about the invention and related technology than the patent attorney does.  The more help and assistance the inventor can provide, the more efficiently the patent attorney can do his part.


Allowance Rates Continue to Drop

March 25, 2009

In a press release issued last week, the European Patent Office announced that in 2008 the grant rate for patent applications dropped to 49.5%, the first time the rate has been below 50%.  Meanwhile, in statistics from 2007, the Japanese Patent Office reported an allowance rate of 48.9%.  This is actually in line with JPO numbers from recent years, ranging from 48.5% to 50.5% since 2003.  Add this to the 44.2% number for FY2008 in the US, and one begins to wonder why applicants are continuing to file applications at all.

One can speculate on the reasons for these decreases in allowance rates.  IPWatchdog gives a Perspective of an Anonymous Examiner that indicates that previous PTO Director Jon Dudas was a strong proponent of a “reject, reject, reject now” policy.  Examiner training and pay seems to be tied to this policy.

IPWatchdog has also reported that the numbers are getting worse in the US.  For the first quarter of FY2009, the allowance rate was down to 42%.

The EPO did report a 3.6% increase in application filings from 2007 to 2008 (141,400 to 146,600), but the JPO reported a 3% decline in filings from 2006 to 2007, which follows a 4.3% decline between 2005 and 2006.  I have already reported on the US PTO’s significant decrease in filings during 2009, here and here.

Of course, all of this further exacerbates the PTO’s budget problems.  This cannot be good for the US economy that is already in dire straits.  We really need Pres. Obama to fix the mess that is getting worse and worse at the PTO.

Patent Filings Down More Significantly Than Previously Thought

March 25, 2009

James ToupinPatently-O is reporting that patent filings at the PTO are down much more significantly than previously reported by Acting Director John Doll.

A reader of that blog reports that PTO General Counsel James Toupin, speaking at a conference last week sponsored by USC Law School, stated that “[n]ew patent filings are down 16% so far in 2009.”  Prof. Crouch attributes this to a confluence of four issues:

(1) downturn in the US economy reducing cash-on-hand and a strong dollar discouraging foreign investment; (2) increased PTO bureaucracy making it more difficult to obtain a patent with a valuable scope; (3) increased patentability standards making it more difficult to obtain patent protection; and (4) decreased potential returns in litigation.

There is nothing the PTO can do about the first issue, but it can certainly take a hard look at (2) and (3).  Issue (4) is the result of the work of the Federal Circuit and other courts.

Patently-O is further reporting that all legal and technical studies at the PTO have been suspended because of “budget constraints.”

As I noted earlier, these numbers affect more than the PTO’s current budget.  They also have a significant effect on the PTO’s future budgets for years to come.  Moreover, they have a strong effect on the economy and the US’s position as an innovation leader (circular, I know).  Further efforts to weaken patents by Congress, the Federal Circuit, and the PTO could have even more devastating effects on patent filings.

Is this a perfect storm to end the golden age of innovation and patenting?

Implications of PTO Rules Decision

March 24, 2009

The dust has settled a bit on the Federal Circuit’s terrible decision in Tafas v. Doll.  As some others have noted, this decision came as quite a shock to the patent community because the PTO took a thrashing at oral argument.

As previously reported, the good news is that the PTO cannot yet implement any of these rules because the district court’s injunction remains in place, the Federal Circuit finally struck down the limitation on the number of continuations that may be filed, and the case has been remanded for the district court to consider a host of other arguments raised by the plaintiffs to challenge the rules.

The effect of upholding the claim limitation and RCE limitation rules is somewhat muted by the fact that applicants can still file an unlimited number of continuing applications to add additional claims of varying scope, at least for now.  Judge Bryson’s concurrence seems to be an advisory opinion to the PTO to instruct them on how to craft a rule against serial continuations that will not conflict with the statute.  And while RCEs are often a better choice for applicants, filing a new continuation is a second best alternative.

But, the implications of the court’s opinion go further.  Even though the court stated that the PTO does not have substantive rule-making authority, it significantly broadened the type of rules that are considered procedural.  If these rules are not substantive, what rules would be?  As Judge Rader points out in his dissent, the PTO could issue a new rule that applications be limited to 5 pages in length.  Under the majority’s opinion, this rule would also not be substantive.  Are only rules that conflict with the Patent Act substantive?  The PTO’s rule-making authority seems to have been greatly broadened.

The part of the court’s opinion regarding Examination Support Documents (ESD) is also very troubling.  The court did not seem to grasp the implications of requiring applicants to conduct a search and to comment on the references that they must cite to the examiner.  This type of requirement would create so much litigation material for potential defendants that it would be much more difficult to enforce such a patent.  The Bush Administration was lobbying Congress for inclusion of an ESD requirement in the patent reform bills in the last several congresses.  For now, the requirement has been dropped from the currently pending bills.  This opinion seems to signal that the PTO could implement this requirement by rule at any time.  This may be the scariest part of the court’s opinion.

En Banc/Supreme Court Review?

It isn’t yet clear if the plaintiffs will request review by the entire court or the Supreme Court or whether they will simply continue the fight at the district court.  The case is certainly of sufficient importance to warrant further review by the entire court.  Given the posture of the case, however, with so many unresolved issues that need to be decided by the district court, the case may not be ripe for such review at this time.  The court may also not wish to expend additional judicial resources on the case given that we do not know whether a new PTO Director would support these rules.  I believe en banc review to be doubtful at this time.  Unfortunately, that means that Judge Prost’s opinion will continue to haunt us into the future on other issues.

I think the best we can hope for right now is for the case to remain tied up at the district court for some time and then for the new PTO Director to take a closer look at the rules and actually listen to the patent community on their effect.  A fresh approach to the PTO’s leadership is certainly needed.

In the meantime, let’s hope the PTO doesn’t take this as carte blanche to enact additional onerous rules that would significantly alter patent practice and weaken our patent system.

Orrin Hatch on Patent Reform

March 23, 2009

Orrin HatchSen. Orrin Hatch (R-UT) spoke last week at a symposium on the Federal Circuit at the National Press Club.  In the speech, Sen. Hatch addressed not only the contentious damages reform provision, but also spoke about how inequitable conduct reform is important for the new bill.

Regarding damages, Sen. Hatch believes there was agreement at the recent Senate hearings on several points.  These include the judge acting as a gate-keeper in instructing juries on the issues to consider for damages calculations and that damages should be calculated based on the economic value of the invention to the infringed product or process.

On the inequitable conduct issue, Sen. Hatch noted that the defense is “frequently pled, rarely proven, and always drives up the cost of litigation.”  Every mistake by the patent owner is painted as fraud.  There is virtually no downside for an accused infringer to raise the issue.  Examiners are buried in references by patent applicants for fear that they will be found to have withheld something.  If the applicant does anything to try to focus the examiner on the closest prior art, this is also considered fodder for inequitable conduct claims.

Rather than codification of the current practices, Sen. Hatch argued that an objective and clearer standard for what consitutes inequitable conduct is needed.  He also referred to the potential of different sanctions from simply holding the patent unenforceable as under current law.

[S]anctions should be commensurate in scope with the misconduct.  Reform to the inequitable conduct defense should focus on the nature of the misconduct and not permit the unenforceability of a perfectly valid patent on a meritorious invention.

Sen. Hatch believes that once agreement is reached on the damages and inequitable conduct issues, the other issues relating to patent reform will quickly fall into place.

PTO Budget Shortfall Could Have Profound Effect on Patent System

March 23, 2009

After finally winning a lengthy battle over fee diversion, in recent years the PTO is now able to keep all of its fees that it takes in from patent applicants and patent owners.  The PTO is a fee-based entity that is supported by user fees and not by tax dollars from the general budget.

John DollAt the February PTO Roundtable on Deferred Examination, Acting Director John Doll confirmed that PTO filings were down about 1% from the previous fiscal year, about 6% below the PTO’s budget.  Well, it’s apparently getting worse for the PTO.  Director Doll is now projecting that filings will be down about 2% from FY2008.  Other industry experts are putting the number as high as 10%.

“I talked to a large corporation today and they’re going through their patent portfolio to see what’s core,” said Doll, adding that the company could decide to abandon much of its portfolio.

The good thing about the number of filings going down means that the PTO will be able to cut into the current application backlog of over 800,000 applications, right?  Not so fast.  Because the PTO must pay the examiners to examine applications filed 2-3 (or more) years ago with revenue it receives today, it can no longer afford to hire additional examiners.  Director Doll reported that the PTO has stopped hiring at this time.

“If we closed our doors today, it would take us almost two years to clear out our backlog.”

One has no choice but to question whether the PTO will ever be able to solve the pendency and backlog problems.  If filings are down significantly this year, that, combined with the large reduction in the allowance rate, means that the PTO will be suffering from a lack of funds for a long time into the future.  Fewer filings and lower allowance rates means less revenue from issue fees, maintenance fees, reexamination fees, and the like.

The PTO gets a significant amount of its revenue from maintenance fees due at 3.5, 7.5, and 11.5 years after a patent’s issuance.  These fees have increased dramatically in recent years (currently, they are $980, $2480, $4110).  Add that to the issue fee of $1510 and the PTO is losing $9080 for every application that does not issue and over $10,000 for every application that  is never even filed and does not issue.

Maybe the PTO needs a bailout.

Federal Circuit Decides Appeal of PTO Rules

March 20, 2009

The Federal Circuit has issued its long-awaited decision in Tafas v. Doll concerning the PTO’s proposed continuation and claim limitation rules.  The good news is that this case is far from over.  I have to admit that when I previously wrote about this case and the argument, I didn’t think that would be the good news.

In a 2-1 opinion written by Judge Prost, the Federal Circuit held that the PTO continuation rules are invalid as conflicting with 35 U.S.C. § 120, but reversed the district court’s ruling that the claim limitation rules and the RCE limitation rules were also invalid.  The court, along with a concurring opinion by Judge Bryson and a dissenting opinion by Judge Rader, makes a number of interesting statements.

Judge Prost’s OpinionJudge Prost

First, the court agreed that the PTO does not have general substantive rule-making power.  The court continues, however, by finding that the rules challenged in this case are procedural and not substantive.

[W]e conclude that the Final Rules challenged in this case are procedural. In essence, they govern the timing of and materials that must be submitted with patent applications. The Final Rules may “alter the manner in which the parties present . . . their viewpoints” to the USPTO, but they do not, on their face, “foreclose effective opportunity” to present patent applications for examination.

We do not believe that requiring applicants to raise all then-available amendments, arguments, and evidence by the second continuation application or the first RCE is so significant a burden that applicants will be effectively foreclosed from obtaining the patent rights to which they are entitled.

The court then makes some curious statements about the rules regarding filing additional continuations and RCEs.

Applicants who include in each continuation application all amendments, arguments, and evidence available at the time of filing will not be limited by Final Rule 78. Similarly, applicants who diligently present all of their amendments, arguments, and evidence as soon as possible during prosecution will be granted as many RCEs as they require.

In this instance, the court seems to be saying that the PTO will act reasonably and permit additional continuations and RCEs that applicants may need to fully protect their inventions.

One of the responses to this position that the court noted and that was raised by the district court is that the PTO, in answer to comments raised on the rules and in other public settings, has made it clear that it “intends to deny additional applications in almost all circumstances.”  The court ignored this concern, stating that these statements are not binding on the PTO or on any court.  Applicants are free to challenge the PTO’s determinations by filing lawsuits in specific circumstances (yeah, that’s going to happen).

The court also made another enlightening statement when responding to concerns about Examination Support Documents (ESDs), which were part of the claim limitation rules.

We are aware that some applicants attempt to say as little as possible during prosecution so that the precise boundaries of their claims will be open to argument as competitors’ products enter the market and new prior art references are found during litigation. However, we consider this practice to be a burden on the patent system, not a right that can be invoked to void the Final Rules.

Uh, could this be because every time the Federal Circuit gets the opportunity, it uses applicants’ statements during prosecution against them?  See, e.g., Festo.

As noted above, the court did find that the continuation limitation rule conflicts with § 120.  This section sets forth the requirements for filing a continuing application that shall have the same effect as though filed on the date of the prior application.  None of these requirements includes that the application not contain amendments, arguments, or evidence that could have been submitted earlier.  Thus, the rule is invalid.

As to the other rules, the court found the PTO’s interpretation reasonabe and granted the agency deference under Chevron.

Remand Instructions

The good news is found at the end of the court’s opinion.

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.

Whoa!  The district court sure does have a lot of work ahead of it.

Judge Bryson’s Concurrence

Judge Bryson filed a concurring opinion where he argues that whether the PTO rules are substantive or procedural is not important and not helpful to his analysis of the issues in this case.  While he agrees with the court’s ruling on the particular rules, he provides the PTO with instructions on how it could draft a rule that, in his opinion, would limit “serial continuations”, i.e., continuations that are not co-pending with the original application.

Judge Rader’s DissentJudge Rader

Finally, Judge Rader wrote a vigorous dissent where he argues that he would affirm the district court on all grounds.  He argues that the rules are clearly substantive because they “affect individual rights and obligations, and mark a startling change in existing law and patent policy.”  Although he relies on the same case as the majority opinion, he reaches a different conclusion on the test for procedural versus substantive rules.

To my eyes, this question of degree must guide this court’s assessment of the substantive nature of the PTO’s Final Rules.

In the remainder of his opinion, Judge Rader agrees with the district court that the rules conflict with numerous provisions of the Patent Act and should be struck down as invalid.

What’s Next?

The plaintiffs in this case may request rehearing before the entire Federal Circuit.  It is difficult to gauge whether the court would take the case en banc, but just on this panel, the judges were split three ways on several of the issues in the case.  While the case does involve statutory interpretation, it doesn’t seem likely that the Supreme Court would hear the case.

In any event, the Federal Circuit has remanded the case to the district court and provided a list of issues that must be addressed by that court.  Is this list a compromise so that the Federal Circuit will not hear the case en banc at this time?  Who knows?

The district court relied on the fact that the rules were substantive, and thus beyond PTO authority, when it struck them down.  It didn’t address the many other arguments that the plaintiffs had raised to challenge them.  Presumably, the court will need to address those arguments on remand.

The short answer is:  the status quo remains in effect for now.  It’s possible that the Obama Administration will drop this case and the new rules.  If not, the district court is unlikely to lift the injunction while it continues to hear the arguments of the parties.  Assuming further rulings and appeals, it could be more than a year before this is finally resolved.

Update: Leahy Delays Action on Patent Reform Bill

March 20, 2009

Under pressure from other members of his committee, Sen. Patrick Leahy (D-VT) postponed action on his patent reform bill (S. 515).  He acknowledged that calculation of damages remains a difficult issue in the bill, but noted that “the time for posturing has ended, and the time for reaching agreement has arrived.”

I’m not sure how the senator plans to force his colleagues to reach agreement on this contentious issue.  We’ll have to wait and see.

Federal Circuit Provides Guidance on Patent Drafting

March 19, 2009

The Federal Circuit provided additional guidance for patent drafting in several recent decisions.

Written Description

In ICU Medical v. Alaris Medical Systems, the court held that certain claims were invalid for failure to comply with the written description requirement.  The patentee had filed its original application relating to valves in medical IV setups in December 1991.  The description and claims in this application referred to valves that included “spikes.”  In 2001, the applicant added claims to valves that did not require spikes (which the court improperly classified as “spikeless” claims; “spikeless” was not a limitation of the claims, they simply didn’t require “spikes”).

Presumably the court was influenced by the fact that these claims were only added after the accused infringer’s products were in the marketplace and the patent owner wrote the claims to specifically cover the products that did not include spikes.  The court held that, without the spike limitations, the claims were invalid as failing to comply with the written description requirement.  None of the embodiments disclosed in the patent’s specification described a valve that did not include a spike.

Based on this disclosure, a person of skill in the art would not understand the inventor of the [] patents to have invented a spikeless medical valve.


In Crown Packaging Technology v. Rexam Beverage Can, the patentee did not require its licensee to mark the patent number on the patented products.  Under 35 U.S.C. § 287(a), this normally this means that the patentee is not entitled to infringement damages prior to the infringer receiving notice of the patent.

Because a method is not an article and technically cannot be marked, the Federal Circuit held in Hanson v. Alpine Valley Ski Area, 718 F.2d 1075 (1983), that the marking requirement does not apply when only method claims are asserted against an infringer.  The court reaffirmed that holding in Crown Packaging.


These cases give a couple of lessons on patent drafting and claim drafting in particular.  First, include as many embodiments of varying scope in the application as possible.  Although not always foreseeable, this should include each claim limitation for which broader protection could be acquired.  If the patentee in ICU Medical had included disclosure of valves that did not include spikes, his claims that did not include the spike limitation might have been saved.

Obviously, patent owners and their licensees should comply with § 287(a)’s marking requirement.  When preparing an application, however, include article and method claims in the application if at all possible.  Not all inventions lend themselves to this type of claim, but most do.

Judge Linn Calls for En Banc Review of the Standard for Inequitable Conduct

March 19, 2009

The Federal Circuit reversed a finding of inequitable conduct in Larson Manufacturing v. Aluminart Products, finding that the allegedly withheld prior art was cumulative of prior art already of record during a reexamination proceeding at the PTO.

LinnJudge Richard Linn filed a concurring opinion where he suggested that “the time has come for the court to review the [standard for inequitable conduct] en banc.”  He also noted that the Federal Circuit’s precedent

has significantly diverged from the Supreme Court’s treatment of inequitable conduct and perpetuates what was once referred to as a “plague.”

Although the Federal Circuit sought to correct this “plague” in Kingsdown Medical Consultants v. Hollister, 863 F.3d 867 (Fed. Cir. 1988) (en banc), Judge Linn argued that recent cases have diverged significantly from the rules set forth in that case.  In Kingsdown, the court set forth the standard that both materiality and intent to deceive the PTO had to be proven by clear and convincing evidence.  Something more than “gross negligence” was required to prove intent to deceive.

He argues that a lower standard than gross negligence seems to be the law.  Deceptive intent can now be inferred when

(1) highly material information is withheld; (2) “the applicant know of the information [and] . . . knew or should have known of the materiality of the information; and (3) the applicant has not provided a credible explanation for the withholding.”

Praxair, Inc. v. ATMI, Inc., 543 F.3d 1306 (Fed. Cir. 2008).

Judge Linn is highly critical of this test.  He argues in his concurrence that the first prong simply repeats the materiality requirement and the second prong’s “should have known” element requires less than gross negligence, maybe just simple negligence.  The third prong shifts the burden of proving no intent to deceive to the patentee, forcing him to prove a negative.

Aventis v. Amphastar

Inequitable conduct is also at issue in Aventis Pharma v. Amphastar Pharmaceuticals, which is currently in the briefing stages on a petition for certioriari at the Supreme Court.  The question presented in Aventis is:

Whether a court may refuse to enforce an otherwise valid patent on the basis of an inequitable conduct determination premised on a sliding scale between intent and materiality, effectively permitting a finding of fraudulent intent to be predicated on gross negligence.

In Aventis, the Federal Circuit held a patent to be unenforceable due to inequitable conduct. The behavior in question was the failure to include material information in a declaration submitted to the Patent Office, but the intent of the patentee to deceive the Patent Office was shown only circumstantially at best.  Judge Rader dissented, suggesting that the court take a closer look at the intent necessary to find inequitable conduct, noting that “inequitable conduct has taken on a new life as a litigation tactic” and that it should be limited to “only the most extreme cases of fraud and deception.”  The court declined to hear Aventis en banc.

While the issue of inequitable conduct has been featured in the patent reform bills in Congress, perhaps the Federal Circuit will fix the issue itself and remove this issue from the congressional debate.  At least two judges on the Federal Circuit seem to believe that it is time to reign in the “plague” of inequitable conduct.