Medical Device Daily Washington Editor
The U.S. Patent and Trademark Office reported last week that it has dropped the proposed rules limiting the number of claims and continuations available for patents. The announcement came as no surprise, given that the Department of Justice had asked the Court of Appeals for the Federal Circuit (CAFC) in August to put a related lawsuit on hold (Medical Device Daily, Aug. 17, 2009).
Another augur of this outcome is that the new director of PTO, David Kappos, had filed a friend-of-court brief on behalf of the two entities that had filed suit against the proposed regulations, GlaxoSmithKline (London) and Triantafyllos Tafas, MD, founder of device maker Ikonisys (New Haven, Connecticut). PTO's Oct. 8 statement notes that it has also filed a joint motion with Glaxo and Tafas to dismiss the lawsuit.
Kappos said in the statement that the regulations "have been highly unpopular from the outset and were not well received by the applicant community." He adds that the agency's hope is that the withdrawal will allow PTO "to engage the applicant community more effectively on improvements that will help make the [PTO] more efficient, responsive, and transparent to the public."
Glaxo and Tafas had filed their suits shortly after the publication of the rule and won an injunction in U.S. district court based on the premise that the rules were substantive in nature rather than procedural. A three-judge panel for CAFC overturned that ruling this past March – with the exception of the rule on limits to patent continuations – but CAFC reconsidered and opted to hear the case again with all 12 justices. However, the hearing had not yet taken place.
Gene Quinn, a patent attorney and founder of IPWatchdog.com, told Medical Device Daily that the announcement doesn't obviate the need for some sort of tweak of the current rules for independent and total claims. "I don't know what they're going to do, but one of the problems PTO is facing ... is that over the years, applications have become much more complicated." He also said that those fees "are not enough to have a real and honest examination" of the more complicated applications. "These applications are so big that anything they can do to cut the size down makes sense" so long as patent protection is not watered down, he said.
Commerce backs gatekeeper function
The push for patent reform legislation seems to have stalled as healthcare devours Congress's time and energy, but the Department of Commerce has not forgotten about the subject. In an Oct. 5 letter to the chairman and the ranking member of the Senate Judiciary Committee (Vermont Democrat Pat Leahy and Alabama Republican Jeff Session), Commerce Secretary Gary Locke writes that his agency "strongly supports" the committee's work on patent reform and wants to get legislation passed "as soon as possible."
Locke may or may not have had in mind the Supreme Court's decision to hear the method patent case of Bilski when writing the letter, but one passage indicates that Commerce supports patent protections that "only [reward] truly innovative ideas."
Locke takes a definitive stance on PTO's authority to make substantive changes to rules, stating that it would "remove doubts raised regarding the PTO director's authority to adopt rules in light of Tafas v. Dudas." He adds that such authority would give PTO more flexibility "in the administration of patent rules and procedures."
Locke states his support for the provisions in the Senate patent reform bill (S. 515) for inter partes re-examination of patents, which purportedly would cut down on lawsuits and speed resolutions, but he notes that this would increase PTO's cost of doing business. He suggests that "intermediate steps" may be needed to deal with this "until a new fee schedule can take effect."
On the subject of fee setting, Locke indicates a favorable view of S. 515's provisions giving PTO more leverage to raise patent fees, but he says, "the administration would like to work with Congress to ensure that intermediate steps, such as a limited interim fee adjustment, can be taken while a longer-term fee schedule plan is developed."
The damages question is never far off, and Locke indicates sympathy to S. 515's gatekeeper approach in reference to a provision that would require judges to spend more time instructing juries as to which of the Georgia Pacific 15 factors should be applied in a damages calculation (Editors note: Georgia-Pacific v. United States Plywood enumerated fifteen factors, which have been repeatedly relied upon in subsequent patent law court rulings).
Still, Gene Quinn, a patent attorney and founder of IPWatchdog.com, noted that IBM (Armonk, New York) recently sent out a press release indicating that it could live with the gatekeeper function in lieu of apportionment, a seeming breach in the computer tech industry's wall on the issue. He said IBM's statement may indicate that big tech has come to terms with Senate Judiciary on the damages issue.
Regarding Locke's comment about "only rewarding truly innovative ideas," Quinn said the statement might be in reference to the Bilski method patent case, given that the newly appointed deputy director of PTO, Sharon Barner, might not object to a negative outcome for Bilski. "Her view is that ... we shouldn't just be giving patents away like they're candy," Quinn said. On the other hand, the statement might also be fueled by the fight over biotech patents.
"I suspect that it has more to do with gene patents," which Quinn acknowledged as a "hot-button issue," especially in light of a report filed last week by the Task Force on IP and Genetic Testing at the Department of Health and Human Services. The report is said to have concluded that patenting of genes does not encourage investment in genetic research into diagnostics or for therapeutic drugs.
As for Locke's discussion of substantive rule-making authority, Quinn described it as "absolutely ridiculous." He said that had PTO possessed such authority in 2007, "we would have had the claims and continuations rules thrust upon us." All the same, such ideas are not likely to gain much traction on Capitol Hill. "There has historically been zero support in Congress," for such a move, Quinn pointed out. "I think Locke knows that," because "the way I read that is that Locke was making that argument to make someone happy."
Quinn said that such an argument "would make the big tech industry very happy. They have had a lot of difficulty getting the reforms they want."
Mark McCarty, 703-268-5690