Archive for October, 2009

Mayo Asks Supreme Court to Review Another Patentable Subject Matter Case

October 30, 2009

The Mayo Clinic has filed a petition for certiorari to the Supreme Court asking them to review the Federal Circuit’s decision in Prometheus Labs., Inc. v. Mayo Collaborative Services.

In Prometheus, the Federal Circuit reversed a district court determination that method claims directed to methods for calibrating the proper dosage of thiopurine drugs by measurement of two metabolites were invalid as not directed to patentable subject matter.  The Federal Circuit analyzed the claims of the case under the Bilski test and found that they met the transformation prong.  The court did use rather broad language that seems to indicate that all claims that recite steps that include admistration of a drug contain patentable subject matter.  Further, determining metabolite levels requires a transformation of the substance being analyzed.

Mayo’s petition presents the following question to the Supreme Court:

Whether 35 U.S.C. § 101 is satisfied by a patent claim that covers observed correlations between patient test results and patient health, so that the claim effectively preempts all uses of these naturally occurring correlations.

Mayo argues that the Federal Circuit’s new Machine-or-Transformation Test as the sole determinant of patentable subject matter conflicts with Supreme Court precedent.  Mayo argues that the Supreme Court has held that when a patent claim preempts all uses of a natural phenomenon, the claim is invalid.

Mayo argues that Prometheus’s patent claims are so broad that they cover a physician’s mental determinations when evaluating a patient who has been given the drug.  The claims cover the recognition of a correlation between metabolite level and patient condition following administration of a drug and thus preempt all such recognized correlations.  These correlations are natural phenomena.  Mayo argues that the simple recognition of such is insufficient to warrant a patent.

Mayo also spends a great deal of time arguing that this case will resolve questions that were left open when the Supreme Court dismissed the LabCorp case after agreeing to hear it.

Will the Supreme Court Hear Two Patentable Subject Matter Cases?

Given that argument in Bilski is set for November 9, it seems unlikely that the Court would hear another subject matter case right on its heels.  It is true that the Court has done so in the past, deciding Chakrabarty and Diehr in consecutive terms, and deciding several prosecution history estoppel cases, Warner-Jenkinson and Festo, within a few terms of each other. 

In this case, however, it seems more likely that the Court will hold the cert. petition until after it decides Bilski.  It seems likely that the Court will change the Federal Circuit’s exclusive Machine-or-Transformation Test in some way (which way is another question).  Thus, I would predict that the Court will GVR (grant, vacate, remand) this case after Bilski is decided.  This means that the Federal Circuit will have to reconsider the Prometheus case in light of whatever new rule on the issue that the Supreme Court expounds in Bilski.

New Administration Seeks to Further Limit RCE Filings

October 22, 2009

Patently-O has reported on a memo from PTO Director Kappos that explains a change in docketing procedures for Requests for Continued Examiantion (RCEs).

Under current PTO procedure, RCEs are treated like a continuation of prosecution in a currently pending application.  By filing an RCE, an applicant can continue negotiations with the examiner in a pending application:  the applicant can get the examiner to consider amendments and arguments that were not previously considered and basically reopen prosecution after a final rejection.  Although requiring an additional filing fee, the procedure is much cheaper and faster than an appeal to the Board.  Currently, examiners are required to act on RCEs within two months of entry onto their docket.  Patently-O notes that over 100,000 RCEs were filed in FY2008 and FY2009.

Kappos’ memo notes a change in procedure that RCEs will now be placed on an examiner’s “Special New” application docket.  This is the docket that includes continuation and divisional applications.  Under the new procedure, which takes effect for RCEs filed after November 15, 2009, examiners will certainly have much more time to act on RCEs.  Although I’m not sure what the typical time to a first office action on continuation or divisional applications is, I guarantee you it is much greater than two months, probably closer to one year.  These applications are, however, taken up much sooner than a newly filed application.

This new docketing procedure, along with the recently approved changes to the count system, are meant to discourage RCE filings.  For situations where examiners seem to encourage or almost require an RCE in order to allow an application, I favor changes to discourage such behavior.  Incentivizing earlier action on applications and trying to address issues at an earlier stage in the prosecution are laudable goals to help reduce pendency and the PTO’s application backlog.  There are times, however, when an RCE is warranted and necessary.  It doesn’t seem right to delay the prosecution for a year in such cases.

Republican Senators Have Concerns About Post-Grant Review

October 19, 2009

Last week, twelve Republican senators have sent a letter to Senate Majority Leader Harry Reid (D-NV) urging him not to bring the patent reform bill, S. 515, to the Senate floor until further work is done on the post-grant review provisions.

Specifically, the letter calls the currently crafted post-grant review provisions “quite problematic.”

This language, which permits serial challenges at the U.S. Patent and Trademark Office and in the courts, threatens to diminish the value and enforceability of U.S. patent rights at a time when America’s economic recovery is dependent on the strength of U.S. innovation.

The Senators praise the provisions governing damage awards for proven infringement, but urge that the administrative review issues be resolved before the bill comes to the Senate floor.

HT:  Hal Wegner

Microsoft Asks Federal Circuit to Reconsider the Presumption of Validity

October 15, 2009

Microsoft has filed a petition for rehearing en banc in Lucent Technologies, Inc. v. Gateway, Inc., where it argues that the presumption of validity does not apply to prior art that was not considered by the examiner during prosecution.  Although the original panel opinion largely focused on the calculation of damages, Microsoft argues in its petition that the burden of proof for establishing invalidity in such a case should be a preponderance of the evidence (more likely than not) instead of clear and convincing evidence (a difficult to define standard that is higher than a preponderance, meaning substantially certain).

The presumption of validity of patent claims is based on 35 U.S.C. § 282:  “A patent shall be presumed valid.”  This statutory provision has been interpreted by courts to require the clear and convincing evidence standard be used to invalidate patents in litigation.  During reexamination, the PTO is not constricted by this standard, but instead uses the preponderance of the evidence standard.  Thus, it is easier to invalidate a patent at the PTO than in litigation.

In this case, a jury, using the clear and convincing evidence standard, had found the patent to be not invalid based on a prior art reference.  In reexamination, the PTO had invalidated the patent based on the same reference.  Microsoft argued in its petition that the difference was the lower burden of proof required at the PTO. 

Microsoft argues that the Supreme Court’s KSR decision noted that the rationale for the presumption of validity is diminished when the prior art was not considered by the PTO.  Deference should only be accorded to the agency for matters that it actually considered.  This deference hardly seems warranted for prior art that was not considered, given that patent examiners have a limited amount of time to examine applications and do so on an ex parte basis.

Microsoft also notes that the higher burden of proof for prior art not considered by the examiner would require the Federal Circuit to overrule a number of its cases, but aruges that the Federal Circuit created this rule in the first place.  Prior to the Federal Circuit’s creation, many of the regional circuits had taken Microsoft’s position on this issue.


It is difficult to predict if the Federal Circuit will agree to hear this case en banc to overrule a number of its precedents.  This does seem to be a case where it would be nice to have a conflict in the law to warrant the Supreme Court’s attention to review this legal issue.  The petition may be the first step toward preparing the case for Supreme Court review.

As noted, the purpose of requiring a higher standard of proof is to accord deference to the PTO and its work.  This deference does seem less warranted for work that the PTO did not actually do.  It would be another step to make it easier to invalidate so called “junk patents,” but shouldn’t have a great effect on strong patents.  This may be another step towards patent reform by the judiciary.

Continuation, Claim Limit Rules are Officially Dead

October 9, 2009

uspto_sealThe PTO issued a press release yesterday that Director Kappos has signed a new Final Rule rescinding the proposed continuation and claim limit rules that have given the PTO such a black eye over the last several years. 

The PTO will file a motion to dismiss the appeal in Tafas v. Kappos and a motion to vacate the district court’s decision.  GlaxoSmithKline, one of the plaintiffs in the case, has agreed to join the PTO’s motions.  Patently-O is reporting that the other plaintiff, Tafas, has not agreed to the motion to vacate the district court opinion.  He believes that the district court opinion will provide good limits on the PTO’s future substantive rulemaking authority.

Hal Wegner is reporting that the rules were actually killed a long time ago by the Office of Management and Budget (OMB).  OMB reviews newly proposed rules by federal agencies to determine the paperwork burden to comply with the rules.  David Boundy, one of the architects of the campaign against the claims and continuations rules, asserted via e-mail, OMB directed the PTO to withdraw the new rules no later than January 2008.  The PTO appears to have acquiesced to this directive by mid-April 2008.  This was during the time that Judge Cacheris was considering the parties’ cross-motions for summary judgment.  There is no record that Judge Cacheris or the Federal Circuit were ever informed of this OMB directive.  OMB’s final determination of the paperwork burdens of the rules was issued July 1, 2009.  The Federal Circuit does not appear to have been apprised of this development either.

Thus, even if the PTO had won all of its appeals and been permitted by the courts to implement the new rules, Boundy alleges, it would have been prohibited by law from implementing them.


Whether the district court opinion should be vacated is an interesting question.  On the one hand, that opinion was part of the risk undertaken by the PTO when it chose to litigate the highly unpopular rules package.  On the other hand, vacating the opinion puts us right back where we started had the rules not been proposed.  What a huge waste of PTO and government resources!

The OMB issues have been circulating for a while, but nothing more official has been said about them.  If Boundy is correct, this is a serious misuse of the judicial system by the PTO.  Arguably, the case was moot as of January 2008.  Certainly, Judge Cacheris and the Federal Circuit should have been apprised of these issues.  Notably, this all took place before Director Kappos took the helm at the PTO.  Thus, if true, the fault would lie with the previous administration.

Secretary Locke Pushes for Action on Patent Reform, Increase in PTO Fees

October 7, 2009

Gary LockeOn Monday, Secretary of Commerce Gary Locke sent a letter to the Senate Judiciary Committee expressing the Administration’s long-awaited views on S. 515 and patent reform in general.

The letter noted that the Administration has three goals for patent reform:

  • Improving the management of the USPTO and patent examination process;
  • Improving the quality of patentability decisions and harmonizing patent laws; and
  • Better managing patent litigation.

PTO Management

First, Secretary Locke is pushing for fee setting authority for the PTO.  Currently, many PTO fees are set statutorily and require congressional action for change.  The Administration believes that the PTO could better manage its resources and plan for future initiatives if it had the authority to set its own fees.

The Administration also requested the ability to enact a limited interim fee adjustment to get the PTO on better financial footing while the final schedule is developed.

The PTO is requesting at least procedural, and preferably substantive, rule-making authority for matters at the PTO.  The current state of this power is unsettled with the pending Tafas litigation.

The Administration supports the provisions in S.515 regarding inter partes reexamination and post-grant review.  It does note, however, that the PTO may not currently have the resources to undertake these provisions.  Thus, the PTO needs fee-setting authority and the ability to phase in these provisions to ensure that they work smoothly.  The Administration offers to work with Congress in this regard.

Patent Quality and Harmonization

The Administration supports the first-to-file transition.  Indeed, the Administration seems to support harmonization of patent laws generally, believing that it will reduce costs and increase predictability.

The Administration opposes the provisions in the bill that relate to search and examination, which limit these functions to U.S. citizens who are government employees.  There is language in the bill that these are “sovereign functions” of the USPTO.  The Administration believes that this will hamper the work-sharing proposals and arrangements that the PTO has with foreign patent offices, as well as with US-based vendors who provide patent-related services.

Patent Litigation

The Administration supports the compromise “gatekeeper” language on royalty damages.  The Administration would also like to work with Congress on language to clarify the willful infringement standard because it believes that willfulness is often unnecessarily pled and places a burden on defendants to defend against such charges.

Other Provisions

The Administration expressed its support for many other provisions in the bill, including teleworking of examiners, virtual marking, permitting applications to be filed by assignees, permitting pre-issuance submissions by third parties, expanding the prior use defense, eliminating sanctions for failure to comply with the best mode requirement, changes to venue, permission of interlocutory appeals, and the pilot program for district court judges with patent expertise.  The Administration did note that some changes to the language in the bill on these provisions are needed.


Sen. Patrick Leahy (D-VT), chairman of the committee, vowed to bring the patent reform bill to the floor of the Senate “before the end of the year.”

Regarding the phase-in request by the PTO for the post-grant opposition and inter partes reexamination provisions, Director Kappos suggested “a four year phase-in where we increase the number of new cases we can process every year, up to a limit.”  He further stated that this is a common approach used in business.

Interim Fee Increase

Of particular interest to the patent community is what the limited interim fee adjustment would entail.  Kappos indicated that the PTO is requesting a 15% increase in fees for one year or at most going into a second year.  He believes this increase is significant, but necessary, as the PTO is facing a projected $200 million shortfall for FY2010.  He believes that by the end of the year or so the PTO should be able to rely on fee-setting authority in the reform bill.

IP advocacy groups such as AIPLA have indicated that they will not support any fee increases or PTO fee setting authority unless it is tied to statutory language that prohibits PTO fee diversion.  Without such language, it is difficult for the PTO to budget more than a few years out as Congress may decide to appropriate PTO user fees for other government business as it did in the past.  The Administration has been completely noncommittal on this issue.

Kappos Drops Out of the Chopper Shooting

October 5, 2009

david_kapposThe Virginia State Bar, Intellectual Property section, held its 21st Annual Fall Weekend Seminar this past weekend.  PTO Director David Kappos was one of the speakers.  He had a number of prepared remarks and then he took some questions.  I attended this meeting and this post is based on the notes I took during his talk.

He began by noting that many had asked if he planned to hit the ground running when he took over the office.  He said no.  Instead, he planned to “drop out of a chopper shooting” to begin work before he hit the ground.  Several of the questions addressed the issue of how he has so much energy for the number of initiatives he is working on at the PTO.  As one example of how he has begun with a bang, the administration must review all news items coming out of the PTO before their release.  He has been told that the number of news items coming out of the PTO is overwelming the administration’s ability to review them.

Below are some specific changes that he discussed.  He wants to get feedback from practitioners on the the changes soon after they take effect.  While at IBM, he had often complained that the PTO has gone deaf to input from the patent community.  He is seeking to change this attitude at the office.  The changes are meant to be an iterative process, i.e., they intend further changes based on feedback to the original changes, but these are a start.

Changes to the Count System

Regarding the recent news on the proposed update to the “count” system, he described the current system as “byzantine.”  The system is recognized by all parties as an impediment to productivity at the PTO, but the interested parties have never been able to reach agreement on how to reform the system.  He stressed that he recognizes that examiners need more time to do a proper examination and that more of the issues need to be addressed early in the process, rather than pushing them to RCEs. 

He does not plan to abolish RCE or continuation practice because he recognizes that these procedures are needed in practice.  He did note, however, that third, fourth, and subsequent RCE filings are rarely needed for any case.  The PTO plans to raise the fees for later-filed RCEs after the first or second in order to discourage such serial filings.  The changes to the count system still need to be ratified by the examiners’ union.

Data Availability

Kappos addressed several “open government” initiatives where he hopes to make a great deal of additional PTO information and data available to the public.  Unfortunately, the PTO’s IT system is “hamstrung” and they do not currently have the financial resources to update the system to permit such data disclosure at this time.  He has begun a blog at the PTO that he hopes to take public in the near future.  Again, the PTO’s IT system has not permitted him to do so to date.

Accelerated Examination

Kappos hopes to increase the availability of the accelerated examination procedure.  He wants to relaunch the program with less onerous applicant requirements.  He realizes that the requirement of an examination support document (ESD) has been an impediment to many applicants using the procedure.

Work Sharing

Kappos addressed the international work-sharing initiatives that the PTO has been undertaking.  Currently, many foreign jurisdictions allow applicants to defer examination.  Thus, the US is becoming an examination clearinghouse for the world.  This cannot continue.  He plans a procedure where if an applicant’s first patent application is filed outside the US, the applicant will need to wait for the office where the application was filed initially to examine the application before the US PTO will do so.

Patent Quality

Kappos then addressed patent quality.  He noted that the PTO needs to completely rethink how it measures quality.  The current practice of policing quality by reviewing only allowances and using a stick to punish examiners who make an error in allowing a case has created the current environment in the office where examiners are afraid to allow applications.  Quality review needs to be at an earlier stage in the examination and must review not only allowances, but also rejections.  Examiners must feel free to allow applications without the fear of negative consequences.

Other Issues

Kappos stated that the PTO plans to rethink the current patent classification system.  He is going to speak to CEOs and general counsels to encourage them to have their outside counsel seek early examiner interviews for their applications.  The early interview program really works for getting applications through the office and he wants to increase its use.

The PTO intends to increase the availability of teleworking to the examining corps so that it can have a truly nation-wide workforce.  This would permit examiners to work in California or Texas or anywhere.

Kappos is a strong proponent of patent reform.  He characterized it as a 50 year reform.  The Administration will be releasing a position paper on the bills currently pending in Congress in the near future.

Relationship with the Bar

The PTO has great people.  They simply need to restore their relationship with the bar.  Lack of trust by the bar is a significant problem after situations such as those that led to the Tafas case.  He realizes that the bar does not trust giving the PTO substantive rule-making authority or even the ability to set its own fees at this time.  Once trust is restored, he hopes this will change.  He is working to reset the tone from the “Rejection Office” back to the “Patent Office.”  He wants the bar to work with him on these issues and to participate in changes at the office.

He did not address the Tafas case in detail because it is pending litigation, but he reminded the audience that during the early stages of the proceedings he personally signed an affidavit at the district court where he came out strongly against the rules.  He hopes they can resolve the issues they need to resolve shortly.

When asked about the $118 proposed annual renewal fee for attorneys and agents, he said that this was one of the first rules that he killed when he became director.  He will revisit the issue later, but he will need to be convinced that there is a purpose to the fee beyond simply keeping the rolls up to date.  So far, he hasn’t been convinced.

Overall Impression

My impression of Kappos could hardly be more positive.  He is such a breath of fresh air.  In recent administrations, applicants and the bar usually felt like they were virtually always adverse to the PTO on issues of policy.  It’s great to have someone in management who understands that inventors and the bar are actually on the same side as the PTO.  We are the PTO’s customers.  It’s very helpful that he has actually worked on the other side of the table. 

He has many great plans for change at the PTO, many of which he has already implemented or is in the process of doing so.  Hopefully, he doesn’t undertake more than he can handle in such a short time.

Patent Reform Update

October 5, 2009

The Virginia state Bar, Intellectual Property section, held its 21st Annual Fall Weekend Seminar this past weekend.  AIPLA Executive Director Q. Todd Dickinson was one of the speakers.  He provided an update on the Patent Reform initiatives in Congress.

He put the odds at slightly higher than 50% that patent reform will make it to the Senate floor during this session of Congress.  Pushing to get it to the floor are the Administration and Sen. Leahy (D-VT), who sees it as part of his legacy.  The health care debate, however, has been taking up significant floor time.  If that debate moves forward, it is unlikely that patent reform will get time; if that debate continues to stall, patent reform could be up soon.  It seems less likely that it will make it to the floor after Congress’ Thanksgiving recess that begins in mid-November.  They’ve made significant progress on many issues, but it also seems unlikely that it would pass during an election year in 2010.

Changes to the Count System

October 1, 2009

Patently-O is reporting on a briefing made to the patent examining corps yesterday that includes proposed changes to the count system.  As Prof. Crouch rightfully notes, the changes are incremental.


The upshot is that the changes will discourage examiners from churning RCEs.  Some examiners don’t seem to negotiate reasonably until an applicant files an RCE.  Under the current system, the examiner gets “counts” or credit for handling two applications when the applicant files an RCE.  After a response to the intial Office Action, the examiner issues a final rejection.  Once the applicant files an RCE (granting the examiner credit for a disposal of the first case), the examiner may then allow the application and thereby get 4 counts instead of 2.

The changes to the count system will only grant an examiner 1.75 counts for a first RCE and 1.5 counts for each subsequent RCE.  Thus, the examiner will have more incentive to examine a new application where he can get 2 counts than an RCE, although the case with the RCE still has the benefit of familiarity and previous search by the examiner.


The changes also encourage examiner-initiated interviews.  Examiners are granted an additional hour of non-examining time for each application, which is meant to be used to prepare for and conduct interviews.  As anyone who has prosecuted patents knows, greater progress can usually be made during examiner interviews than by simply ping-ponging arguments back and forth with the examiner.

The other thing that can get very irritating when prosecuting a patent is when you overcome the examiner’s rejection that he has clung to for several Office Actions only to be given a new non-final rejection.  The new system seeks to remedy this situation by granting additional credit and providing additional time for examiners to complete the first Office Action on the merits.  The goal would be to get a high quality first Office Action that includes all rejections that the applicant must overcome to get the application allowed.

Under the current system, an examiner gets 1 count for the initial Office Action and 1 count for a disposal (allowance, abandonment, RCE, etc.).  Under the new system, the examiner will receive 1.25 counts for the first Office Action, 0.25 counts for a final Office Action, and 0.5 counts for a disposal (less for RCEs as discussed above).

Examiner Mistakes

 There is also an initiative to try to change the culture where examiners are reluctant to allow cases.  No examiner will receive an oral warning based on a single clear error in patentability determination, nor shall an examiner be deemed to have failed an improvement period for a single error.  Multiple clear errors of patentability during two or more quarters in a fiscal year will still result in negative consequences to the examiner.

The steps are incremental, but they’re a start.  It may be good to implement small changes, see how they affect the system, and then determine what additional changes will result in further improvements.