Archive for February, 2012

Confirmation Hearing: Richard Taranto

February 29, 2012

This afternoon, the Senate Judiciary Committee will hold a confirmation hearing for Richard TarantoTaranto was nominated in November by President Obama to fill Judge Michel’s seat.  He has significant appellate experience in intellectual property cases both at the Federal Circuit and the Supreme Court.

Taranto has already made it farther than Edward DuMont who withdrew from consideration for Judge Michel’s seat after his nomination stalled for over a year before the Judiciary Committee without so much as a scheduled hearing.


Claims to Method of Real Estate Investment are Invalid

February 27, 2012

The Federal Circuit affirmed the invalidity of claims to methods of creating real estate inventment instruments in Fort Properties, Inv. v. American Master Lease, LLC.

Claim 1 of U.S. Patent No. 6,292,788 recites:

A method of creating a real estate investment instrument adapted for performing tax-deferred exchanges comprising:

aggregating real property to form a real estate portfolio;

encumbering the property in the real estate portfolio with a master agreement; and

creating a plurality of deedshares by dividing title in the real estate portfolio into a plurality of tenant-in-common deeds of at least one predetermined denomination, each of the plurality of deedshares subject to a provision in the master agreement for reaggregating the plurality of tenant-in-common deeds after a specified interval.

The other claims were similar, although claim 32 included the additional limitation that the step of generating a plurality of deedshares was performed by a computer.

The court held these claims were directed to an abstract concept and that the claims were very similar to the claims at issue in Bilski

The court performed additional analysis of claims that include the requirement that certain steps be performed by a computer.  The court relied on CyberSource and several other precedents in holding these claims to also be invalid under § 101.  The broad and general limitation of “using a computer” does not “impose meaningful limits on the claim’s scope.”  The computer limitation is simply the addition of insignificant post-solution activity to method claims that are directed to an abstract concept.

Thus, all claims of the ‘788 patent are invalid as not directed to patentable subject matter.

Comments on Proposed Fee Structure Due to PPAC by Feb. 29

February 24, 2012

As part of its procedure to implement its proposed new fee structure, the PTO must consult with the Patent Public Advisory Committee (PPAC) prior to publication in the Federal Register.  PPAC conducted a hearing in Alexandria on Feb. 15 and in California yesterday where it heard from a number of interested parties. 

The PTO should publish the proposed rules in the Federal Register in June.  This will trigger a 60 day public comment period per the Administrative Procedure Act.  During the public comment period, PPAC will take the public comments into account that it receives during this initial comment period as it prepares a report that it plans to issue during the Federal Register public comment period.

The PTO is then supposed to consider all public comments and issue final fee setting rules in early December for implementation in February 2013.

The deadline for submitting comments to PPAC for inclusion in its report is Feb. 29.  Comments can be sent to:

PTO Numbers – January 2012

February 23, 2012

The following is a comparison of the PTO’s numbers from the end of FY2011 with the end of January.  This is mid-quarter for the PTO, so the numbers won’t exactly match up to other updates.  Time to refer again to the PTO’s Data Visualization Center to see how things are going. 

First Action Pendency – 22.8 Months

First action pendency has seen a rapid reduction during FY2012!  At the end of September, first action pendency was 28 months.  In January, it dropped under 2 years for the first time in recent memory!  This is an 18.6% reduction and is a good sign of things to come.

“Traditional” Total Pendency – 33.9 Months

Traditional pendency has been fairly flat, up from 33.7 months in September.  Good progress was made early in FY2011, but it has now flattened out.  Presumably, this will improve since first action pendency has improved so dramatically.

Application Pendency with RCEs – 40.6 Months

This number, like traditional pendency, saw good progress early in FY2010, but flattened out towards the end.  It was at 40.9 months at the end of FY2011.  A short term goal should be to get this number under 40 months; anything over 3 years is too long.  The 40 month goal seems elusive.

Applications Awaiting First Office Action – 657,378

The PTO continues its impressive performance in working through the backlog.  At the end of FY2011, the backlog of unexamined applications was 669,625.  By January, the backlog was reduced by another 1.8%.  It’s not a dramatic decrease, but is a good sign.   

Patent Application Allowance Rate – 49%, 65.8%

The first number counts RCE filings as abandonments, while the second number does not, but counts them as continuing prosecution.  These numbers are up from 48% and 64.4%, respectively, in September.  While these numbers continue to show slow, steady improvement from earlier record low numbers, they also continue to demonstrate that many patents are allowed by forcing applicants to file RCEs that are not allowed initially.  This is another area where the PTO could significantly improve efficiency.

Number of Patent Examiners – 6,815

This number is up from 6,690 at the end of FY2011.  It’s still tough for the PTO to budget properly with no guarantee that fee diversion won’t continue.  In February and March 2011, there were a few more examiners, but the number is nearing an all-time high.

Pendency from Application Filing to Board Decision – 81.9 Months

This crisis continues to get worse.   This number continues to climb–from 81.4 months in September.  It’s not a huge increase, but any increase here is unacceptable.  New technologies become obsolete prior to getting a patent or decision by the Board.  The PTO hired a number of additional patent judges and attorneys to deal with this issue, but the sharp increase in the number of appeals filed has made tackling this an impossibility. 

At the end of January, the Board had 25,498 pending appeals from ex parte application prosecution, up 6.4% from the end of FY2011.  Through January, 4,078 new appeals were filed during the fiscal year, a pace for 12,234.  During FY2011, 13,501 new ex parte appeals have been filed, so the filings are expected to show a 9.4% decrease.  Meanwhile, the Board has disposed of 2,543 through January, a pace for 7,629, an increase of 4.6% from FY2011’s 7,292 such cases.

In other types of cases before the Board, the number of new interferences is fairly steady with 22 through January compared to 64 during FY2011.  The Board has already disposed of 23 cases, while concluding only 51 during FY2011.  The number of new ex parte reexam appeals filed through January is 39 (a pace for 117), slightly fewer than the 125 filed during FY2011.  Meanwhile, the Board decided 51 of these cases, cutting its inventory from 26 to only 14 such cases.  It made good headway here.

The other area of significant increase is inter partes reexams.  While 114 appeals were filed in FY2011, 70 have already been filed through January.  This is on pace for a 84% increase.  The Board has decided 40 through January. 


The incredibly shrinking first action pendency, along with the decreasing PTO backlog is a really good sign, but most other numbers are not keeping pace.  There is no concomitant decrease in total pendency.  These numbers will hopefully follows once the PTO gets the oldest cases out of the way.

The PTO must come up with a plan to deal with its crisis at the Board.  Applicants deserve the ability to get a final agency decision on a patent application within a reasonable time frame, which 81.9 months is not.  It seems that the current answer is a significant increase in the appeal fees.  The PTO is working hard to try to hire more judges and patent attorneys to work on this situation, but Congress added to its workload as well.  The Board will soon need to deal with post grant oppositions and other procedures from the America Invents Act.

To truly fix these issues, Congress must end fee diversion permanently and permit the PTO to be fully funded so that it can be fully staffed to meet users’ needs.  Unfortunately, due to partisan politics and budget crises throughout the government, it missed the opportunity to do so this time around.  The patent community should continue to pressue congress to keep its hands off the PTO’s money.

PTO Publishes More Rules Packages

February 17, 2012

Last week, the PTO published a number of additional rules packages to implement the America Invents Act.

Technical Invention

Section 18 of the America Invents Act is a special transition program for challenging business method patents.  The section defines “business method patents” as

a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.

The bill directed the PTO to issue regulations as to what a “technological invention” is.  The PTO has now proposed a definition:

whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution.

This determination is to be made on a case-by-case basis.  The PTO supports this definition by reference to the legislative history of the AIA.  Unfortunately, this does not help very much.  What is a “technical problem”?  What is a “technical solution”?

Book Review: Patent Professional’s Handbook

February 13, 2012

A Training Tool for Administrative Staff

By Susan Stiles

Patent Professional’s Handbook is a training and reference guide for administrative support staff that work for a patent attorney or agent.  The book provides an overview of the patenting process, including summaries of the various documents that may be filed during prosecution.  The summaries provide a decent understanding of why various documents are filed without getting into the legal arguments or theory that is more appropriate for the patent attorney or agent.

The book details the various types of patent applications and other filings that need to be made during patent prosecution, such as IDS’s, amendments, assignments, priority documents, and others.  There are details on how to deal with applications after allowance, including payment of maintenance fees and the like.

The book covers how to conduct business with the PTO including how to file various papers.  There are details on hand delivery, fax submissions, mail submissions, and electronic filing.  The book does get a bit redundant in detailing the same procedures over and over for filing many different types of documents.

The book includes a number of checklists and charts that can be used by an administrative professional at various points in the process, such as when filing an application, an IDS, or an amendment, or when reviewing a notice of allowance.  There is a glossary of terms that can be helpful to newer professionals.

The handbook clearly took a lot of time to prepare.  It includes a large number of addresses, phone numbers, and web page links associated with the PTO.  I am worried that if the material is not updated regularly that much of the material will quickly fall out of date.  The risk of that happening is especially great at this time as the PTO is changing many rules and procedures to comply with the America Invents Act.

AIPLA offers a legal secretaries and administrators course, but I am not aware of any other reference book like this that is directed specifically to non-attorney administrative support personnel.  The book is quite detailed and can be used both as a training tool and a reference guide.  It does a good job in both respects and for those purposes, I would recommend it.


The author has informed me that she is currently working on a 2012 edition that should alleviate my concerns about the material becoming dated.  This edition should be available in the coming weeks or months.

PTO Fee Proposals

February 9, 2012

The America Invents Act granted the PTO the right, for the first time, to set its own fees.  Previously, PTO fees were set by Congress.

The PTO has now published its proposed fee schedule.  Not surprisingly, the fees are going up.  The PTO seeks to increase its funding to deal with backlog issues in applications and appeals.  But, as noted by Patently-O, the PTO is clearly also attempting to influence applicant behavior through its proposed fees.

Here are the PTO’s new fee proposals:

Basic filing, search, and exam fee:  $1,840 from $1,250 (up 47%);
More than 3 independent claims:  $460 each, from $250 (up 84%);
More than 20 toal claims:  $100 each, up from $60 (up 67%);
Request for Continued Examination (RCE):  $1,700 from $930 (up 83%);
Notice of Appeal:  $1,500 from $620 (up 142%), but the PTO proposes to waive the issue fee if the examiner withdraws the final rejection;
Proceeding with appeal:  $2,500 after examiner’s answer to move to board; there is no longer any fee for filing an appeal brief (was $620);
Issue and Publication fees:  $960 from $2,040 (DOWN 53%);
Maintenance fees:  $1,600, $3,600, $7,600 from $1,130, $2,850, $4,730 (up 42%, 26%, 61%, respectively).

The PTO notes that the combined filing/search/exam and issue/publication fees for obtaining a patent will actually decrease from $3,290 to $2,800.  Of course this means that rejected applications will be higher and issued patents lower.

These fees are a significant increase from the current system.  One could certainly argue that the basic filing fee should be raised to address the backlog, but a 47% increase seems a bit steep. 

The PTO’s count reform efforts to deal with RCE filings has obviously been a failure, such that it now proposes an 83% increase to the fee for filing an RCE in the hopes that this will discourage applicants from filing them.  Unfortunately, most RCE’s are dictated by examiners who refuse to consider anything after final rejection, so this will probably not help with that goal.  To truly reduce the number of RCE filings, the PTO needs to develop a better after final mechanism for handling amendments and finding patentable subject matter, as well as dealing with IDS submissions after the issue fee is paid.

The board is currently swamped with ex parte patent appeals.  To deal with this problem, the PTO proposes increasing the fees for filing a Notice of Appeal and proceeding to the board to $4,000, up from the current $1,240 ($620 for the notice and $620 for the appeal brief).  This is an increase of over 320%!  Again, that is unreasonable.  Perhaps the appeal problem should be attacked at the front end by improving examination and training examiners to work with applicants to find allowable subject matter during prosecution.  The one bone throne to applicants is that if the examiner withdraws the final rejection prior to the examiner’s answer (not an uncommon occurrence), the issue fee is waived.

The PTO is also proposing a significant increase in the maintenance fees due during the lifetime of the patent.  The stated reasoning is that by then the patent owner will know the true value of the patent and will have been able to reach the market for the patent.


The above stated fees are for large entities.  Small entities (companies with less than 500 employees) will pay 50% of the stated amount. 

The real winners here are the new category of micro-entities.  Micro-entities receive a 75% discount on the stated fees.

To qualify as a micro-entity, the application must not include any inventor that have been named on 5 or more U.S. non-provisional patent applications.  The application must not be licensed or the inventors must not be legally obligated to license or assign the application to any entity that does not meet the micro-entity requirements.  The assignee and each inventor must have an income of less than 3 times the average gross income reported by the Department of Labor for the previous calendar year.

One group that successfully lobbied to be added to this definition are universities and “institutes of higher eduction.”  Thus, large entities will subsidize not only small or individual inventors, but also enormous universities with operating budgets in the billions of dollars.  A big win for them.

Next Steps

The PTO has sent the proposed fee structure to the Patent Public Advisory Committee (PPAC) and they will begin a series of public hearings.  PPAC will hold hearings, gather feedback from the public and prepare a report to the PTO.  After the hearings, the PTO will publish the final proposed rules on fees in the Federal Register, probably in June.  This will begin a 60-day comment period on the rules which they hope to implement by fall.

Foreign Patent Protection

February 7, 2012

A patent permits its owner to exclude others from making, using, selling, offering for sale, or importing the patented invention without his permission.  A patent is, however, unique to the country where it is granted.  Thus, if a patent owner does business in more than one country, it would be necessary to obtain a patent in each country to protect the invention.

Some countries have restrictions on what can be patented.  For example, some countries do not permit patenting software, business methods, drugs, or methods of treatment for humans.

PCT Applications

One way to obtain patent protection in multiple countries is to file an application under the Patent Cooperation Treaty (PCT).  A PCT application is an international application that is filed through the World Intellectual Property Office (WIPO), where an applicant can designate a large number of countries in which he desires to file his patent application.  Currently, 144 countries are members of the PCT.

A PCT application does not give the applicant an “international patent”, as all patents are national in nature (although certain organizations like the European Patent Office (EPO) issue a “European Patent” that must be registered in each member country where the applicant desires the patent to be in effect).  Instead, the PCT provides a mechanism that gives the applicant 30 or 31 months from the earliest filing date (the first filed patent application) to determine whether to file the patent application in various individual countries.  A PCT application can either be the first filed application for an invention or it must be filed within 12 months of the first filed application.

The PCT also provides an International Search Report and an examination, if desired, so that the applicant can get an early search performed to see if the invention is patentable.  The delay also permits the applicant to determine whether the invention is commercially valuable and whether it is worth spending the money to obtain a patent in each country.  While applicants may designate all 144 countries at the time of the PCT filing, they can decide later in which individual countries they would like to pursue patent protection.

A PCT application can also save money on translation costs early in the process.  While most individual countries require patent applications to be filed in the native language of that country, PCT applications permit applicants to delay the cost of translating the application into the various languages.

Once the 30 or 31 month period from the first filing date elapses, a PCT applicant must “enter the national stage” in each country where a patent is desired.  Otherwise, the application is abandoned and patent protection cannot be obtained.  It is at this stage where translations must be obtained and filing costs for the various countries must be paid.

Each country usually requires that the applicant work through an attorney or patent agent who is registered to practice before that country’s patent office.  Thus, to obtain a patent in Brazil, the applicant must work with a Brazilian patent attorney or agent.  These attorneys and agents charge fees for their services, further adding to the costs of obtaining patent protection in various countries.

If the PCT procedure is not utilized, applicants must file in each individual country within a year of the filing date of the first filed application.  The translation, filing, and agent costs are due at that time.  A primary advantage of the PCT is the 18 to 19 month delay for these costs.

While 142 countries are currently members of the PCT, there are several significant countries that are not members; these include Argentina, Paraguay, Uruguay, Venezuela, Taiwan, and the Middle East.  To obtain patents in these countries, a patent application must be filed in each within 12 months of the first filed application.

Patent Prosecution Highway

The United States PTO has entered into an agreement with 21 other patent offices called the Patent Prosecution Highway.  Under this program, once a patent claim is found to be allowable by the patent office where the application was first filed, the applicant may request that other patent offices fast track examination of the application.  This is a type of work-sharing program intended to cut reduce redundancy in examination.