The two-year old appeal of the United States Patent and Trademark Office's (USPTO) new rules regarding continuation applications, requests for continued examination (RCEs), and applications with a high number of claims (greater than 5 independent, 25 total claims) has finally been decided today.
Many patent attorneys have argued that the rules went beyond simple procedural instructions and into substantive lawmaking by dictating what could and could not be patented. The rules consist of three major areas. The first area regards the availability of continuations (Rule 78). Rule 78 prevents the filing of more than two continuations or continuations-in-part against a parent application without the filing of a petition to show why the substance of the continuation could not have been covered in the prior application.
The second area regards the availability of RCEs in an application. Typically, a patent application receives a first non-final Office action then a second final Office action. To keep the application alive and provide further argument to a final Office action, an applicant has to file an RCE. This two-Office-action-followed-by-RCE cycle can repeat several times before the USPTO either 1) is convinced by the attorney's arguments and allows the application, or 2) the applicant abandons the application (there is also the additional option of an appeal to the Board of Patent Appeals and Interferences (BPAI)). Rule 114 allows an applicant only one RCE without a similar petition to that described above for continuations.
The third area regards applications with high numbers of claims. Rules 75 and 265 require applicants that exceed a 25 claims to file an Examination Support Document (ESD) and conduct his/her own search of the prior art. Essentially, the applicant takes part of the burden off the USPTO examiner by searching and making arguments relative to each reference found as to why the application is patentable in light of the reference. This has been criticized as taking away the essential function of the examiner in examining applications as well as forcing the applicant to go on record with arguments that could later be damaging to the application.
The Federal Circuit Court of Appeals in its decision today made several holdings. First, the Court confirmed that the USPTO has no substantive rulemaking authority, but rather can only make procedural rules. Second, the Court finds the rules in this case to be procedural. Third, the Court finds that, "Rule 78 is invalid because it attempts to add an additional requirement — that the application not contain amendments, arguments, or evidence that could have been submitted earlier — that is foreclosed by the statute."
So what will really happen if these rules now go into effect? My opinion is that like so many recent decisions that fail to consider the additional burdens on inventors, the cost of getting a patent will just increase. To comply with Rules 75 and 265, most attorneys will urge their clients not to exceed 25 claims, and when they do exceed 25 claims will have to charge an additional premium for the additional searching and analysis involved (probably on the order of $5,000 to $10,000, potentially doubling the cost of filing the application). This only puts patents further out of the reach of small inventors, some of this country's main innovators. The costs related to applications will also go up because of Rule 114 for two reasons. First, patent attorneys will be reluctant to leave out any argument during prosecution of an application for fear that he/she will run into the limit against RCEs and will not be able to show that the argument could not have been raised earlier. Thus, Office action responses will become longer, cost will go up, and the USPTO will face even more paper to consider. Second, malpractice claims against attorneys will increase for failure to make arguments early enough, causing insurance premiums to go up (a cost that is ultimately paid by the attorney's clients through higher fees).
What is clear is that the USPTO's purpose behind these rules of reducing the current backlog almost certainly will not occur, since these rules primarily increase the burden on the Office to consume all of the new paper. The Obama Administration has yet to name a new USPTO Director, but we can only hope that new leadership will be able to find some more constructive suggestions for keeping our patent system strong and clearing the backlog.
The full opinion can be found here: CAFC Patent Rules Decision.