Tafas v. Dudas et al

Filing 141

Brief in Support to 135 MOTION for Summary Judgment filed by Triantafyllos Tafas. (Attachments: # 1 Affidavit Part 1# 2 Affidavit Part 2# 3 Affidavit Part 3)(Baden-Mayer, Joanna)

Tafas v. Dudas et al

Doc. 141

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 1 of 58

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA (Alexandria Division)
TRIANTAFYLLOS TAFAS, Plaintiff, v. JON W. DUDAS, in his official capacity as UnderSecretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, and the UNITED STATES PATENT AND TRADEMARK OFFICE, Defendants. SMITHKLINE BEECHAM CORPORATION, Plaintiff, v. JON W. DUDAS, in his official capacity as UnderSecretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, and the UNITED STATES PATENT AND TRADEMARK OFFICE, Defendants. CIVIL ACTION: 1:07cv846 (JCC/TRJ) and Consolidated Case (below)

PLAINTIFF TRIANTAYLLOS TAFAS' MEMORANDUM OF LAW IN SUPPORT OF SUMMARY JUDGMENT MOTION Steven Moore, Esq. (Pro Hac Vice) James E. Nealon, Esq. (Pro Hac Vice) William R. Golden Jr., Esq. (Of Counsel) KELLEY DRYE & WARREN LLP 101 Park Avenue New York, New York 10178-0002 Telephone: [phone] Facsimile: [phone] E-mail: [e-mail] [e-mail] [e-mail] Joseph D. Wilson, III, Esq. (VSB#43973) Joanna Baden-Mayer, Esq. (VSB#67920) Shaun Gehan, Esq. (Pro Hac Vice) KELLEY DRYE & WARREN LLP Washington Harbor, Suite 400 3050 K Street, NW Washington, DC 20007 Telephone: [phone] Facsimile: [phone] E-mail: [e-mail] [e-mail]

Counsel for Plaintiff Triantafyllos Tafas

Dockets.Justia.com

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 2 of 58

TABLE OF CONTENTS Page PRELIMINARY STATEMENT ................................................................................................... 1 STATEMENT OF UNDISPUTED FACTS .................................................................................. 2 STANDARD OF REVIEW ........................................................................................................... 3 ARGUMENT ................................................................................................................................ 5 POINT I THE REVISED RULES ARE CONTRARY TO THE PATENT ACT................ 5 a. b. c. d. e. The Final Rules Violate 35 U.S.C. § 120 which Mandates Unfettered Continuation Practice............................................................... 5 The Final Rules Are Impermissible Substantive Rules That Exceed the Scope of the USPTO's Authority Under 35 U.S.C. § 2....................... 8 The Final Rules Impermissibly Violate International Treaties................ 11 The Final Rules Violate 35 U.S.C. §§ 41 and 112 By Altering Congressionally Specified Definitions and Fees ..................................... 12 The Final Rules Violate 35 U.S.C. §§ 101, 111, 112, 131 and 151 By Impermissibly Altering the Burden Of Proof Between Applicants and the USPTO, and Causing a Loss of Substantive Rights Due to Claim Limitations ............................................................. 13 The Final Rules Violate 35 U.S.C. § 121 By Removing the Right of An Applicant to File a Voluntary Divisional Application................... 15 The Final Rules Violate 35 U.S.C. § 122 which Requires the USPTO to Keep in Confidence Information Pertaining to Applications that Will Not Publish Until Issuance. ................................. 16 The Final Rules violate 35 U.S.C. § 132 by Limiting the Right to Reexamination of an Invention After Rejection ...................................... 18 The Final Rules Violate the Bayh-Dole Act by Impermissibly Interfering with Government March-In Rights and the Statutory Goal of Promoting the Early Commercialization of Inventions Deriving From Public Funding ................................................................ 19 The USPTO Has Unlawfully Usurped Congress's Exclusive Authority under the Patent Clause to Enact Substantive Rules of Patent Law in Violation of Article I, Section 8, Cl. 8, of the United States Constitution ................................................................................... 21 The Final Rules Are Contrary to the Patent Clause................................. 22 The Final Rules Contravene the Due Process Clause and Takings Clause of Fifth Amendment of the U.S. Constitution.............................. 24 -i-

f. g.

h. i.

POINT II

THE FINAL RULES VIOLATE THE U.S CONSTITUTION........................... 21 a.

b. c.

CT01/MOORST/249163.17

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 3 of 58

TABLE OF CONTENTS (continued) Page POINT III THE FINAL RULES WERE PROPOSED AND PROMULGATED CONTRARY TO THE APA ............................................................................... 27 a. b. The Final Rules Are Invalid Under the APA Because They Are Retroactive. .............................................................................................. 27 The Final Rules Are Invalid under the APA Because the Public Was Not Given Adequate Notice and Opportunity to Comment and the Final Rules Are Not a Logical Outgrowth of the Proposed Rules. ....................................................................................................... 28 The Final Rules Constitute an Abuse of Discretion and are Arbitrary and Capricious.......................................................................... 33

c. POINT IV

THE FINAL RULES WERE PROMULGATED IN VIOLATION OF THE REGULATORY FLEXIBILITY ACT ....................................................... 36 a. b. The Applicable Standard of Review for a Regulatory Flexibility Act Claim. ................................................................................................ 36 The USPTO Unlawfully and Erroneously Certified that the Rules Would Have No Significant Economic Impact on a Substantial Number of Small Entities and Failed to Issue a Required Final Regulatory Flexibility Act Analysis. ....................................................... 39

CONCLUSION............................................................................................................................ 42

CT01/MOORST/249163.17

-ii-

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 4 of 58

TABLE OF AUTHORITIES CASES A.F. Stoddard & Co., LTD v. Dann, 564 F.2d 556 (D.C. Cir. 1977) .......................... 23, iii Airlines Traffic Offices, Inc. v. Department of Defense, 87 F.3d 1356 (D.C. Cir. 1996) ...................................................................................................................... 39, iii America Hospital Associate v. Bowen, 834 F.2d 1037 (D.C. Cir. 1987).................... 10, iii Amfac Resorts, LLC v. U.S. Department of Interior, 143 F. Supp. 2d 7 (D.D.C. 2001) ...................................................................................................................... 40, iii Bender v. Gutierrez, 2006 WL. 4877550 (E.D.V.A. 2006).................................................3 Bender v. Gutierrez, 2006 WL. 4877550 (E.D.V.A. 2006)............................................... iii Bowen v. Georgetown University Hospital, 488 U.S. 204 (1988) .............................. 22, xi Bowen v. Georgetown University Hospital, 488 U.S. 204 (1988) ("Bowen") ..................28 Bowen v. Georgetown University Hospital, 488 U.S. 204 (1988) .................................... iii Bowman Transport, Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281 (1974)...........................................................................................................................33 Bowman Transport, Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281 (1974)........................................................................................................................... iii Boyden v. Commissioner of Patents, 441 F.2d 1041 (C.A.D.C. 1971)....................... 12, iii Bragg v. Robertson, 54 F. Supp. 2d 653 (S.D.W.Va.1999).......................................... 8, iii Cammeyer v. Newton, 94 U.S. 225 (1876)........................................................................ iii Cammeyer v. Newton, 94 U.S. 225 (1876).......................................................................24 Campbell Plastics Engineering v. Brownlee, 389 F.3d 1243 (Fed. Cir. 2004)............ 20, iii Celotex Corp. v. Catrett, 477 U.S. 317 (1986) .................................................................. iii Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ....................................................................3 Chen Zhou Chai v. Carroll, 48 F.3d 1331 (4th Cir. 1995)........................................... 10, iii

-iii-

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 5 of 58

Chocolate Manufacturers' Association of the United States v. Block, 755 F.2d 1098 (4th Cir. 1985)..............................................................................................29, 31, iii Connecticut Light & Power Co. v. Nuclear Regulatory Commission, 673 F.2d 525 (D.C. Cir. 1982) .............................................................................................. 32, iii Consolidated Fruit-Jar Co. v. Wright, 94 U.S. 92 (1876)..................................................24 Consolidated Fruit-Jar Co. v. Wright, 94 U.S. 92 (1876).................................................. iii Eli Lilly & Co. v. Board of Regents of the University of Washington, 334 F.3d 1264 (Fed. Cir. 2003)................................................................................................8, 9, iv Esch v. Yeutter, 876 F.2d 976 (D.C.Cir.1989) ............................................................ 40, iv Ethyl Corp. v. EPA, 541 F.2d 1 (D.C. Cir. 1976).......................................................... 4, iv Ex parte Cooper, 143 U.S. 472 (1892)......................................................................... 11, iv Ex parte Cooper, 143 U.S. 472 (1892)...............................................................................11 Figueroa v. United States, Figueroa, 57 Fed. Cl. 488 (2003) ..................................... 22, iv Florida Prepaid Postsecondary Education Expense Bd v. College Sav. Bank, 527 U.S. 627 (2002)............................................................................................................24 Florida Prepaid Postsecondary Education Expense Bd v. College Sav. Bank, 527 U.S. 627 (2002)............................................................................................................ iv Godfrey, 68 U.S. 317 (1863) ............................................................................................. iv Godfrey, 68 U.S. 317 (1863) ...............................................................................................5 Graham, 383 U.S. at 5-6 ..............................................................................................21, 23 Graham v. Deere, 383 U.S. 1 (1966) .................................................................................23 Graham v. John Deere Co. of Kansas City, 383 U.S. 1 (1966) ......................................... iv Graham v. John Deere Co. of Kansas City, 383 U.S. 1 (1966) .........................................21 Guardian Federal Savingss & Loan Association v. Federal Savingss & Loan Insurance Corp., 589 F.2d 658 (D.C. Cir. 1978) ................................................... 10, iv

-iv-

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 6 of 58

Hanley v. Hand'N Heart, L.L.C., 2007 WL. 201088 (E.D. Va. Jan. 22, 2007) .................10 Hanley v. Hand'N Heart, L.L.C., 2007 WL. 201088 (E.D. Va. Jan. 22, 2007) ................. iv Hanover Potato Products, Inc. v. Shalala, 989 F.2d 123 (3rd Cir. 1992) ................... 31, iv In re Bogese II, 303 F.3d 1362 (Fed. Cir. 2002).............................................................6, 7, iv In re Henricksen, 399 F.2d 253 (CCPA 1968)..............................................................9, 22, iv In re Hogan, 559 F.2d 595 (CCPA 1977) .......................................................................6, 7, 9, 22, iv In re Oetiker, 977 F.2d 1443 (Fed. Cir. 1992) ............................................................. 14, iv In re Ornum, 686 F.2d 937 (CCPA 1982) ................................................................... 16, iv In re Piasecki, 745 F.2d 1468 (Fed. Cir. 1984)............................................................ 14, iv In re Schneller, 397 F.2d 350 (CCPA 1968)................................................................ 16, iv In re Wagner, 28 F. Cas. 1327 (D.C. Cir. 1857).......................................................... 15, iv In re Wakefield, 422 F.2d 897 (CCPA 1970) .............................................................. 15, iv Irons and Sears v. Dann, 606 F.2d 1215 (D.C. Cir. 1979).............................................18, v Irons v. Diamond, 670 F.2d 265 (D.C. Cir. 1981).........................................................17, v Jerri's Ceramic Arts, Inc. v. Consumer Products Safety Commission, 874 F.2d 205 (4th Cir. 1989).....................................................................................................8, v Kennecott v. U.S. Environmental Prot. Agency, 780 F.2d 445 (4th Cir. 1986), citing Chocolate Manufacturers Association v. Block, 755 F.2d 1098 (4th Cir. 1985) ........................................................................................................................29, v Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974) .....................................................v Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974) ...................................................25 Krichbaum v. Kelley, 844 F. Supp. 1107 (W.D.Va. 1994), aff'd, 61 F.3d 900 (4th Cir. 1995) ..................................................................................................................3, 4,

-v-

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 7 of 58

v Leland v. Federal Insurance Admin., 934 F.2d 524 (4th Cir. 1991)..............................28, v Mast, Foos & Co. v. Stover Manufacturing Co., 177 U.S. 485 (1900) .............................15 Merck & Co. v. Kessler, 80 F.3d 1543 (Fed. Cir. 1996) ................................................8, 9, 22, v Motor Vehicle Manufacturers Association of U.S., Inc., v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29 (1983) ..........................................................33 NAPHS, 120 F. Supp. at 43-44...................................................................................37, 38, v National Knitwear Mfr.'s Association v. Consumer Products Safety Commission, 666 F.2d 81 (4th Cir.1981) ........................................................................................8, v National Association for Home Care v. Shalala, 135 F. Supp. 2d 161 (D.D.C. 2001) ............................................................................................................................37 National Association of Home Builders v. United States Army Corps of Eng'rs, 417 F.3d 1272 (D.C. Cir. 2005) ...............................................................................37, v National Association of Psychiatric Health System v. Shalala, 120 F. Supp. 2d 33 (D.D.C. 2000) ..........................................................................................................37, v National Family Planning and Reproductive Health Association v. Sullivan, 979 F.2d 227 (D.C. Cir. 1992) ..........................................................................................9, v North Buckhead Civic Association v. Skinner, 903 F.2d 1533 (11th Cir. 1990) ..........37, v North Carolina Fisheries Association v. Daley, 27 F. Supp. 2d 650 (E.D. Va. 1998) .....................................................................................................................38, 42, v O Centro Espirta Beneficiente Uniao De Vegetal v. Ashcroft, 342 F.3d 1170 (10th Cir. 2003)...................................................................................................... 11, vi Ohio Valley Environmental Coalition v. U.S. Army Corps of Eng'rs, 479 F. Supp. 2d 607 (S.D. W.Va. 2007) ....................................................................................... 4, vi Pelissero v. Thompson, 170 F.3d 442 (4th Cir. 1999)................................................. 10, vi Penn Central Transport Co. v. City of New York, 438 U.S. 104 (1978)...........................25

-vi-

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 8 of 58

Prill v. NLRB, 755 F.2d 941 (D.C. Cir. 1985) ............................................................ 33, vi SOFA, 995 F. Supp. at 1435 .......................................................................................38, 42, 44, vi Sears v. Goltschalk, 502 F.2d 122 (4th Cir. 1974) ...................................................... 17, vi Shenandoah Ecosystems Defense Group v. United States Forest Serv., 144 F. Supp. 2d 542 (W.D.Va. 2001) ..................................................................................3, 4, vi Sperry v. Florida, 373 U.S. 379 (1962)..............................................................................23 Texaco, Inc. v. Federal Power Commission, 412 F.2d 740 (3d Cir.1969) .................. 32, vi U.S. Cellular Corp. v. F.C.C., 254 F.3d 78 (D.C. Cir. 2001) ...................................... 37, vi U.S. Telecom Association v. F.C.C., 400 F.3d 29 (D.C. Cir. 2005) ........................... 39, vi United States v. Lanier, 520 U.S. 259 (1997).................................................................... vi United States v. Lanier, 520 U.S. 259 (1997)....................................................................36 STATUTES 5 U.S.C. § 551(4) ......................................................................................................... 27, vi 5 U.S.C. § 551(6) ...............................................................................................................27 5 U.S.C. § 553(b) ............................................................................................................8, 9, 29, vi 5 U.S.C. § 553(b)(3) ...................................................................................................28, 29, 30, vi 5 U.S.C. § 601(2) ........................................................................................................38, 39, vi 5 U.S.C. § 601(b) ......................................................................................................... 36, vi 5 U.S.C. § 603(a) ......................................................................................................... 38, vi 5 U.S.C. §§ 603(a) & 604(a)........................................................................................ 39, vi 5 U.S.C. § 604(a) (2000)............................................................................................. 38, vii

-vii-

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 9 of 58

5 U.S.C. § 605(b) ........................................................................................................38, 39, 40, vii 5 U.S.C. § 611(a)(1)....................................................................................................38, 39, 5 U.S.C. § 702 .....................................................................................................................4 5 U.S.C. § 706 ...................................................................................................................39 5 U.S.C. § 706(2) ..........................................................................................................4, 33, 35 U.S.C. § 101..................................................................................................................13 35 U.S.C. § 102..................................................................................................................13 35 U.S.C. § 102..................................................................................................................15 35 U.S.C. § 103........................................................................................................... 13, vii 35 U.S.C. §§ 111(a)(2)................................................................................................ 15, vii 35 U.S.C. § 112........................................................................................................... 12, vii 35 U.S.C. § 112........................................................................................................... 12, vii 35 U.S.C. § 112 ..........................................................................................................12, 13, vii 35 U.S.C. § 120...............................................................................................................5, 6, viii 35 U.S.C. § 132.............................................................................................................1, 18, 35 U.S.C. § 132(a) .............................................................................................................19 35 U.S.C. § 132(b) .............................................................................................................18 35 U.S.C. § 151..................................................................................................................13 35 U.S.C. § 2 ................................................................................................................6, 14 35 U.S.C. § 200...........................................................................................................19, 20, 35 U.S.C. §§ 200-212 ........................................................................................................19

-viii-

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 10 of 58

35 U.S.C. § 201..................................................................................................................19 35 U.S.C. § 201 (d) ............................................................................................................20 35 U.S.C. § 201 (e) ............................................................................................................20 35 U.S.C. § 261..................................................................................................................24 35 U.S.C. § 2(b)(2) .......................................................................................................5, 11, 35 U.S.C. § 363..................................................................................................................11 35 U.S.C. § 365(c) ...............................................................................................................5 35 U.S.C. § 41 ...................................................................................................................12 35 U.S.C. §6(a) ...................................................................................................................9 36 U.S.C. § 154(a)(2)...........................................................................................................7 37 C.F.R. §1.104 ................................................................................................................30 37 C.F.R. § 1.265(a)...........................................................................................................30 37 C.F.R. § 1.704 ...............................................................................................................30 37 C.F.R. § 1.75(b)(1).................................................................................................28, 30, 31, 43, 37 C.F.R. § 1.78(d)(1)........................................................................................................30 28 U.S.C. § 2201 et seq........................................................................................................1 142 Cong. Rec. S3245 .......................................................................................................39 APA, 5 U.S.C. § 553............................................................................................................2 5 U.S.C. § 706................................................................................................................ 1, ix Fed. R. Civ. P. 56(c) ............................................................................................................3 Final Rule 37 C.F.R. § 1.114 .............................................................................................19 Final Rule 37 C.F.R. § 1.265 ......................................................................................12, 13, 14

-ix-

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 11 of 58

Final Rule 37 C.F.R. § 1.78(d)(1).................................................................................6, 14, 16, 17, 18, 20, Final Rules 37 C.F.R. §§1.75(b) .................................................................................11, 12, 13, 20, 28, 36, 35 U.S.C. § 132(a) .............................................................................................................18 35 U.S.C. § 2(b)(2) ..............................................................................................................8 RFA, 5 U.S.C. §§ 601-612............................................................................................2, 36, RFA, 5 U.S.C. § 601 ...........................................................................................................2 RFA, (5 U.S.C. § 605(b) ....................................................................................................38 Regulatory Flexibility Act ("RFA"), 5 U.S.C. §§ 601-612 ...............................................39 Regulatory Flexibility Act ("RFA"), 5 U.S.C. § 611...........................................................1 35 U.S.C. §§ 1 .....................................................................................................................2 Sections 553(b)-(c) and 706(2) of the APA (5 U.S.C. §§ 553(b)-(c) ..................................2 Small Business Regulatory Enforcement Fairness Act ("SBREFA") of 1996, Pub. L. No. 104-121, 110 Stat. 857......................................................................................39 U.S. Const. Amend. V .......................................................................................................25 U.S. Const. Art. I, Section 8 § 8 ........................................................................................21 35 U.S.C. § 203..................................................................................................................20

-x-

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 12 of 58

PRELIMINARY STATEMENT Pursuant to Rule 56 of the Federal Rules of Civil Procedure and Local Rule 56, the Plaintiff, Dr. Triantafyllos Tafas ("Tafas"), by and through his attorneys, KELLEY DRYE & WARREN LLP, hereby moves for summary judgment on all claims in his First Amended Complaint dated September 7, 2007 (the "Amended Complaint"). As set forth more particularly below and in the supporting Declarations of Tafas (the "Tafas Decl.") (Appendix A), Robert Fenili, Ph.D (the "Fenili Decl.") (Appendix B) and Michael Rueda, Esq. (the "Rueda Decl.") (Appendix C), and based on the administrative record1 filed by Defendants Jon W. Dudas ("Dudas") and the United States Patent and Trademark Office ("USPTO")(sometimes collectively referred to herein as "Defendants"), there are no genuine issues as to any material fact, and Tafas is entitled to judgment as a matter of law. Tafas brings this action for declaratory judgment pursuant to 28 U.S.C. § 2201 et seq., and for judicial review under the Administrative Procedure Act ("APA"), 5 U.S.C. § 706, and the Regulatory Flexibility Act ("RFA"), 5 U.S.C. § 611. Tafas seeks the seeks the entry of summary judgment, inter alia, to: (1) permanently enjoin Defendants from implementing sections 1.75, 1.78, 1.104, 1.105, 1.110, 1.114, 1.142, 1.265 and 1.704 of certain new federal regulations promulgated by the USPTO, with an effective date of November 1, 2007, which were published at 72 Fed. Reg. 46716, 4683543 (Aug. 21, 2007) and are to be codified at 37 C.F.R. Part 1 (the "Revised Rules" or "Final Rules"); and, declaring the Final Rules, in toto, null, void and without legal effect, inter alia, as beyond the rule USPTO's rule-making power and inconsistent

(2)

Tafas has challenged the sufficiency and completeness of the USPTO's administrative record and Tafas' Objection to Magistrate Thomas Rawles Jones, Jr. Order denying discovery is still sub judice with the Court. In the event that the Court should subsequently overrule Magistrate Jones and permit discovery, Tafas reserves the right to move to re-open and/or supplement his present summary judgment motion. 1

1

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 13 of 58

with various federal statutes and the United States Constitution, including Article I, Section 8, Cl. 8 and the Due Process and Takings Clauses of the Fifth Amendment; and, (3) vacating and remanding the Final Rules, including requiring Defendants to comply with the requirements of the APA, 5 U.S.C. § 553, and the RFA, 5 U.S.C. § 601 et seq., in promulgating any future regulations concerning the subject matter of the Revised Rules.

As set forth more particularly below, the Final Rules should be permanently enjoined and declared null and void, among other reasons, because they: (1) violate and conflict, in whole or in part, with Sections 2, 41, 101, 102, 111, 112, 120, 121, 122, 131, 132 and 151 of the Patent Act and Sections 200-203 of the Bayh-Dole Act (35 U.S.C. §§ 1 et seq.) and exceed the USPTO's rule making authority delegated by Congress and under the U.S. Constitution; violate Tafas' statutory and constitutional rights; violate and conflict with Sections 553(b)-(c) and 706(2) of the APA (5 U.S.C. §§ 553(b)-(c) and 706(2)), among other ways, due to the Final Rules' retroactive application; because the public was denied of a meaningful ability to be informed of and comment on the "the terms or substance of the proposed rule"; because they are not in accordance with the law or treaties, and, because Defendants rulemaking was arbitrary, capricious and an abuse of discretion; and, violate and conflict with the RFA, 5 U.S.C. §§ 601-612, because the USPTO erroneously certified under RFA Section 605(b) that the Final Rules would not have a significant impact on a substantial number of small businesses and, in reliance on this flawed certification failed to prepare a Final Regulatory Flexibility Analysis. STATEMENT OF UNDISPUTED FACTS Under the applicable legal standard, judicial review of this APA rule-making is largely confined to the administrative record. Since the issues for decision are primarily purely legal in nature and the Final Rules apply across the board to all patent applicants, a determination as to their validity should not turn on facts unique or peculiar to a particular plaintiff or, for that matter, any disputes that might subsequently become apparent as to such background facts.

(2) (3)

(4)

2

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 14 of 58

Thus, unlike a typical federal case in the summary judgment context, a statement of material facts in dispute is of little utility or bearing here. In any event, in addition to his Amended Complaint, Tafas has submitted a supporting Declaration (Appendix A) setting forth his standing to sue, as well as enumerating some of the different types of substantial harm and economic injury Tafas and the patent community at large are faced with as a direct result of the Final Rules. In the interest of brevity, Tafas begs leave to incorporate the factual statements made in the appendices herein by reference, to the extent the USPTO should subsequently elect to challenge as "material" any of the factual matter contained therein. STANDARD OF REVIEW Summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Shenandoah Ecosystems Defense Group v. United States Forest Serv., 144 F.Supp.2d 542, 547 (W.D.Va. 2001). "Rule 56 mandates entry of summary judgment against a party who `after adequate time for discovery and upon motion ... fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.'" 2 Bender v. Gutierrez, 2006 WL 4877550 *4-5 (E.D.V.A. 2006), quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In a case involving the review of a decision of an administrative agency, a motion "stands in a somewhat unusual light, in that the administrative record provides the complete factual predicate for the court's review." Krichbaum v. Kelley, 844 F.Supp. 1107, 1110

In Bender, the E.D.V.A. Court was deciding a motion for summary judgment in the context of a plaintiff challenging administrative rules that the NMFS (National Marine Fisheries Service) had enacted. Bender, at *3. The plaintiff in Bender claimed that the issued Rules violated the Administrative Procedure Act (APA) as "arbitrary and capricious" because they were based on insufficient data. Id. at *3. 3

2

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 15 of 58

(W.D.Va. 1994), aff'd, 61 F.3d 900 (4th Cir. 1995). Due to the Court's restricted review of only the administrative record and limited supplements thereto, the movant's "burden on summary judgment is not materially different than his ultimate burden on the merits." Id. In order, therefore, to prevail by summary judgment, the parties in an APA case, "must point to facts in the administrative record or to factual failings in that record which can support [their] claims under the governing legal standard." Id.; See generally, Shenandoah Ecosystems Def. Group v. United States Forest Serv., 144 F.Supp.2d 542, 547 (W.D.Va. 2001). The APA provides parties "suffering a legal wrong because of agency action" the right of judicial review. 5 U.S.C. § 702. Under the APA, the Court shall set aside agency action if it is "arbitrary, capricious ...; contrary to constitutional right ...; [or] in excess of statutory authority ...." 5 U.S.C. § 706(2)(A). APA's standard of review, while deferential, "in no way requires the Court to `rubber stamp' an agency action .... On the contrary, the Court must `immerse' itself in the evidence in order to `determine whether the agency decision was rational and based on consideration of the relevant factors.'" Ohio Valley Envtl Coalition v. U.S. Army Corps of Eng'rs, 479 F.Supp.2d 607, 621 (S.D. W.Va. 2007), quoting Ethyl Corp. v. EPA, 541 F.2d 1, 36 (D.C. Cir. 1976). Although the Court's review is based on "the entire administrative

record[,] it may, when necessary, consider evidence outside the record to determine whether the agency has considered all relevant factors or to explain technical terms or complex subject matter." Id. (footnote omitted).

4

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 16 of 58

ARGUMENT POINT I THE REVISED RULES ARE CONTRARY TO THE PATENT ACT a. The Final Rules Violate 35 U.S.C. § 120 which Mandates Unfettered Continuation Practice Neither the general grant of rulemaking authority to the USPTO in 35 U.S.C. § 2(b)(2), nor any other statutory provision expressly authorizes the USPTO to substantively regulate or limit long established continued examination practice. More than 150 years ago, in Godfrey v. Eames, the U.S. Supreme Court recognized the ability of an applicant to file a revised version of a patent application and withdraw the original while still retaining the original filing date. Godfrey, 68 U.S. 317, 323-325 (1863). Section 120 of the Patent Act codifies this principle as follows: An application for patent for an invention . . . filed by an inventor or inventors named in the previously filed application shall have the same effect, as to such invention, as though filed on the date of the prior application, if filed before the patenting or abandonment of or termination of proceedings on the first application or on an application similarly entitled to the benefit of the filing date of the first application and if it contains or is amended to contain a specific reference to the earlier filed application. * 35 U.S.C. § 120 (Emphasis added). Thus, so long as all other statutory conditions of patent eligibility are met, a patent application "shall have" or "shall be" entitled to the benefit of the filing date of previously filed patent applications. 35 U.S.C. § 120. The mandatory "shall have" and "shall be" language is similarly utilized in 35 U.S.C. § 365(c), which also mandates that the benefit of the filing date of an earlier filed application is mandatory -- not optional. * * *

5

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 17 of 58

Under the Final Rules, the USPTO will "refuse to enter, or will delete if present" the benefit of priority claimed to prior applications in all third or subsequent voluntary-divisional divisional and continuation-in-part applications if a showing is not made to the satisfaction of the Director that such claimed subject matter could not have been pursued earlier. Final Rule 37 C.F.R. § 1.78(d)(1). The Final Rules imply that the USPTO has some inherent authority to constrict long-standing continuation practice by setting an arbitrary fixed limit on the number of continuations that may be filed as at right. However, as noted in In re Hogan, 559 F.2d 595 (CCPA 1977), "a limit upon continuation applications is a matter of policy for the Congress." Id. at 604 n.13. Pointing to the doctrine of patent prosecution laches recently recognized by several Federal Circuit panels, Defendants assert that the USPTO has inherent authority under 35 U.S.C. § 2 to ensure that laches does not occur with respect to any patent application. The USPTO extrapolates from these cases that it is empowered to limit the number of continuing applications an applicant may file. 71 Fed. Reg. 48, 50 (Jan. 3. 2006). The USPTO asserts that In re Bogese II, 303 F.3d 1362 (Fed. Cir. 2002) ("Bogese II"), "stood for the broad proposition that 35 U.S.C. § 120 does not give applicants carte blanche to prosecute continuing applications in any desired manner." 71 Fed. Reg. at 50. Contrary to the USPTO's position, a careful reading of Bogese II indicates that the majority of the three (3) member panel did not suggest any unfettered power by the USPTO to limit continuation practice under 35 U.S.C. § 120. Instead, the Bogese II panel merely found that the USPTO has the power to reject the application in a case of unreasonable and extreme delay in prosecution (i.e., prosecution laches) as long as the applicant is afforded notice and an opportunity to correct the delay. Bogese II, 303 F.3d at 1369. The panel specifically

6

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 18 of 58

distinguished the applicant in Bogese II from an applicant who "maintain[s] pendency of an application . . .while competitor's products appear on the market. . .", implicitly accepting the later practice as being sanctioned under the law. Id. at 1369. In Bogese II, the applicant had acted egregiously by repeatedly filing continuations as a procedural ruse to circumvent the need to respond to USPTO actions without ever amending his claims in any substantive manner. Significantly, the dissenting judge argued against even the limited power urged by the majority stating, "nowhere however, has an agency been authorized to impose, in its discretion, restrictions contrary to the statute that governs agency action." Id. at 1371 (Newman, J., dissenting). Here, the USPTO has essentially taken a very limited exception (i.e., prosecution laches) -- intended to apply only in very narrow and extraordinary fact specific circumstances -and bootstrapped off it to presume in its Final Rules that an applicant seeking to file more than two (2) continuations is guilty of such laches. The USPTO shifts the burden of proof to the applicant to prove otherwise under the Final Rules. In sum, the USPTO's Final Rules would result in a very narrow exception (i.e., prosecution laches) totally swallowing the rule.3 As noted in the case of Ricoh Company Ltd. v. Nashua Corp., "[S]ection 120, governing continuation applications, does not contain any time limit on an applicant seeking broadened claims." 185 F.3d 884, 1999 WL 88969, *3 (Fed.Cir. Feb. 18, 1999). The court in this case approvingly cited to In re Hogan, "[A] limit upon continuing applications ... is a matter of policy for Congress, not for us." Id. (citing 559 F.2d 595, 604 n.13 (CCPA 1977)).

The USPTO asserts that the Final Rules serve to remedy abuses of unlimited continuation practice. 71 Fed. Reg. at 49. Continuing application filings are, however, already limited by statute. Applicants may not file an unlimited number of continuing applications. For example, utility patents are limited to a term "beginning on the date on which the patent issues and ending 20 years [or sooner] from the date on which the application for the patent was filed in the United States...." 36 U.S.C. § 154(a)(2). 7

3

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 19 of 58

Section 120 imposes no restrictions on the number of continuation statements that may be filed and the USPTO's attempt to essentially re-work Section 120 to impose such an arbitrary limitation is ultra vires and plainly contrary to the statute. b. The Final Rules Are Impermissible Substantive Rules That Exceed the Scope of the USPTO's Authority Under 35 U.S.C. § 2. Under section § 2(b)(2)(A) of the Patent Act, the USPTO has the power to "[E]stablish regulations, not inconsistent with law, which -- (A) shall govern the conduct of proceedings in the Office.... "35 U.S.C. § 2(b)(2)(A). Here, the USPTO has grossly misinterpreted and overreached the scope of its authority under Section 2. As stated in the Federal Circuit opinion of Merck & Co. v. Kessler, "the broadest of the PTO's rulemaking powers ... authorizes the Commissioner to promulgate regulations directed only to `the conduct of proceedings in the [USPTO]'; it does not grant the Commissioner the authority to issue substantive rules." Merck & Co. v. Kessler, 80 F.3d 1543, 1549-50 (Fed. Cir. 1996) (emphasis added). The holding in Merck & Co. has been cited to affirmingly in Eli Lilly & Co. v. Board of Regents of the University of Washington, 334 F.3d 1264, 1269 n. 1 (Fed. Cir. 2003). The USPTO has maintained that the Revised Rules are merely "changes to the rules of practice that concern the process for applying for a patent," that they are "interpretive rules" exempt from the APA's requirements for prior notice and comment under 5 U.S.C. § 553(b) and the RFA. 72 Fed. Reg. at 46830 (emphasis added). An agency's "characterization of its [rule] as an exposition of its policy or interpretation of the standard [however] does not preclude [a court's] finding that it is something more." Jerri's Ceramic Arts, Inc. v. Consumer Products Safety Comm'n, 874 F.2d 205, 207 (4th Cir. 1989) (citing Nat. Knitwear Mfr.'s Ass'n v. Consumer Products Safety Comm'n, 666 F.2d 81, 83 (4th Cir.1981); see also Bragg v.

8

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 20 of 58

Robertson, 54 F.Supp.2d 653, 665-66 (S.D.W.Va.1999). Indeed, courts owe no deference to an agency's resolution as to whether an agency action represents a "rule" and/or whether an agency is required to conduct rulemaking procedures pursuant to the standards set forth at 5 U.S.C. § 553(b). See Nat'l Family Planning and Reproductive Health Ass'n v. Sullivan, 979 F.2d 227, 230-31 (D.C. Cir. 1992) (Chevron deference inapplicable in determining "whether [the agency] followed proper procedure in implementing" a regulatory change). Only Congress has the power to pass substantive law setting down the terms and conditions for patent eligibility. See, e.g., In re Hogan, 559 F.2d 595, 604 n.13 (CCPA 1977)("[A] limit upon continuing applications is a matter of policy for congress, not for us."); In re Henricksen, 399 F.2d 253 (CCPA 1968) (finding the USPTO has no statutory basis to limit the number of continuation applications); Merck & Co. v. Kessler, 80 F.3d 1543, 1549 (Fed.Cir. 1996) ("As we have previously held, the broadest of the PTO's rulemaking powers ­ 35 U.S.C. §6(a) [now 35 U.S.C. § 2(b)(2)(A)] ­ authorizes the Commissioner to promulgate regulations directed only to `conduct of proceedings in the [USPTO]'; it does NOT grant the Commissioner the authority to issue substantive rules.") (emphasis in original) (decision reaffirmed in Elli Lilly & Co. v. Bd. Of Regents of University of Washington, 334 F.3d 1264, 1269 n.1 (Fed. Cir. 2003)). In this case, a review of the Final Rules demonstrates that the USPTO is simply wrong in its characterization that they are merely procedural, a fact of which the USPTO was undoubtedly aware, as it made a pro forma, but legally inadequate, attempt to comply with the APA and RFA. The Final Rules do not meet the definition of interpretive rules. Instead, they are plainly substantive requirements foisted on the community of inventors that have the force and effect of law. As such, the Final Rules are legislative or substantive rules, which the USPTO

9

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 21 of 58

simply does not have authority to pass. Furthermore, as substantive rules, the Final Rules are subject to the APA and RFA. "Interpretive regulations `clarify ambiguous terms found in the statute or explain how a provision operates.'" Hanley v. Hand'N Heart, L.L.C., 2007 WL 201088, at *3 (E.D. Va. Jan. 22, 2007) (quoting Pelissero v. Thompson, 170 F.3d 442, 446 (4th Cir. 1999). In contrast, substantive rules (also known as "legislative rules") "grant rights, impose obligations, or produce other significant effects on private interests ... or ... effect a change in existing law or policy." Am. Hosp. Assoc. v. Bowen, 834 F.2d 1037, 1045 (D.C. Cir. 1987) (citations omitted). Unlike substantive rules, "interpretive rules simply state what the administrative agency thinks a statute means, and only remind affected parties of existing duties." Chen Zhou Chai v. Carroll, 48 F.3d 1331, 1340-41 (4th Cir. 1995) (emphasis added) (citations omitted); see also Guardian Fed. Savs. & Loan Ass'n v. Federal Savs. & Loan Ins. Corp., 589 F.2d 658, 664 (D.C. Cir. 1978) ("[A]n interpretive rule is merely a clarification or explanation of an existing statute or rule."). Here, the Final Rules do not "clarify" or "explain" the Patent Act, nor do they merely purport to "remind affected parties of existing duties." Rather, they constitute significant and onerous new restrictions on inventors' statutory rights and effect a substantive change to existing law. Moreover, as set forth in the Tafas Declaration (Appendix A) and Fenili Declaration (Appendix B), the Final Rules' substantive impact is evidenced by their substantial economic impact on multiple levels. Along the same lines, the outpouring of Amici filings from a broad cross-spectrum of society further exemplifies that these Rules are widely perceived to be of great substantive import.

10

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 22 of 58

c.

The Final Rules Impermissibly Violate International Treaties 35 U.S.C. §2(b)(2) requires that the USPTO's regulations not be inconsistent with

the law, which includes law enacted through treaty. (See Ex parte Cooper, 143 U.S. 472, 501 (1892) ("The constitution of the United States places such [treaty] provisions ... in the same category as other laws of Congress"); O Centro Espirta Beneficiente Uniao De Vegetal v. Ashcroft, 342 F.3d 1170, 1884 (10th Cir. 2003) ("Treatises are part of the law of the land; they have no greater or lesser impact than other federal laws."). Final Rules 37 C.F.R. §§1.75(b) and 1.265 are ultra vires, because such laws violate Article 27 of the Patent Cooperation Treaty ("PCT"), in particular Article 27(1) which states: No national law shall require compliance with requirements relating to the form or contents of the international application different from or additional to those which are provided for in this Treaty and the Regulations. 28 UST 7645, TIAS 8733 (Jan. 24, 1978). 35 U.S.C. § 363 states that `[a]n international application designating the United States shall have the effect, from its international filing date ... of a national application for patent regularly filed in the Patent and Trademark Office ...." Final Rules 37 C.F.R. §§ 1.75(b) and 1.265 apply to patent applications filed under the PCT when they enter the U.S. national phase. PCT Rule 6.1(a) allows only for a formal objection against claims in a particular application on the basis of a lack of clarity or a lack of conciseness, and states in part that: "(a) The number of the claims shall be reasonable in consideration of the nature of the invention claimed." PCT Rule 6.1(a) does not allow, as Final Rule 37 C.F.R. § 1.75(b) mandates, the imposition of an arbitrary de facto maximum number of patent claims (i.e., 5/25) on any applicant. Further, Rule 51 bis.1 PCT specifies national requirements that may be allowed for

11

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 23 of 58

under Article 27 PCT. 28 UST 7645. Submission of an Examination Support Document ("ESD"), as required under Final Rule 37 C.F.R. § 1.265, is not among these requirements. Id. d. The Final Rules Violate 35 U.S.C. §§ 41 and 112 By Altering Congressionally Specified Definitions and Fees 35 U.S.C. § 112 sets forth what is meant by the terms "dependent claim" and "multiple dependent claim." A claim in dependent form is defined as a claim "contain[ing] a reference to a claim previously set forth [which] ... specif[ies] a further limitation of the subject matter claimed." 35 U.S.C. § 112, ¶ 4. A claim in dependent form is "construed to incorporate by reference all of the limitations of the claim to which it relates." Id. A multiple dependent claim, on the other hand, is defined as a claim containing "a reference, in the alternative only, to more than one claim previously set forth and [which] ... specif[ies] a further limitation of the subject matter claimed." 35 U.S.C. § 112, ¶ 5. A multiple dependent claims is required to be construed "to incorporate by reference all of the limitations of the particular claim in relation to which it is being considered." Id. at ¶ 5. Here, Final Rule 37 C.F.R. 1.75(b)(2) purports to engraft a further limitation onto the statutory definition of a dependent claim as set forth in 35 U.S.C. § 112, ¶ 4, by stating that "[a] claim that refers to a claim of a different statutory class of invention will also be treated as an independent claim for fee calculation purposes." Such rule is clearly designed to reach "product-by-process" claims that have long been counted as dependent claims. The USPTO has no right to alter fees set by Congress. See e.g., Boyden v. Commissioner of Patents, 441 F.2d 1041, 1044 (C.A.D.C. 1971). The USPTO acknowledges as much in its comments to the Final rules: "[c]laim fees are set by statute, not the Office." 72 Fed. Reg. at 46787 (emphasis added). Nonetheless, by changing the definition of "dependent claim" the USPTO has in fact changed the claim fees under 35 U.S.C. § 41.

12

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 24 of 58

Final Rule 37 C.F.R. § 1.75(b)(4) also engrafts another limitation on the statutory definition of "multiple dependent claim" (as set forth in 35 U.S.C. § 112, ¶ 5), by redefining such claims so as to be counted for purposes of its 5/25 rule as the number of claims to which direct reference is made. However, the USPTO does not have the right to alter statutory definitions to cause additional consequences to an applicant unforeseen by Congress. e. The Final Rules Violate 35 U.S.C. §§ 101, 111, 112, 131 and 151 By Impermissibly Altering the Burden Of Proof Between Applicants and the USPTO, and Causing a Loss of Substantive Rights Due to Claim Limitations 35 U.S.C. § 101 permits an applicant to obtain a patent with respect to any "new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof" if all conditions of the Patent Act are met including novelty (35 U.S.C. § 102) and non-obviousness. (35 U.S.C. § 103). Section 131 requires the Director "to cause an examination to be made of the application and the alleged new invention; and if on such examination it appears that the applicant is entitled to a patent under the law," mandates that the USPTO issues a patent therefor ("the Commissioner shall issue a patent thereof"). Likewise, Section 151 requires ("shall be given") the USPTO to issue "a written notice of allowance of [an] application" if "it appears that [an] applicant is entitled to a patent under the law." 35 U.S.C. § 151. The Final Rules impermissibly shift the burden of proving when an application should issue to the applicant by requiring the applicant to file an ESD. An ESD requires the applicant to argue for the patentability of each independent claim with respect to the prior art uncovered. (Final Rule 37 C.F.R. § 1.265). The Final Rules also create a rebuttable presumption of patentably indistinct claims in two (2) or more applications that are: (1) filed on the same date; (2) name at least one inventor in common; (3) are owned by the same person; and (4) contain

13

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 25 of 58

substantially overlapping disclosures. Final Rule 37 C.F.R. § 1.78(f)(2). This rebuttable presumption, which results in a shift of burden of proof, arises without consideration of the claims in the respective applications As remarked by the Federal Circuit in the case of In re Oetiker, "the examiner bears the initial burden, on review of the prior art or, on any other ground, of presenting a prima facie case of unpatentability. In re Oetiker, 977 F.2d 1443, 1444-45 (Fed. Cir. 1992) (emphasis added). If that burden is met, "the burden of coming forward with evidence or argument shifts to the applicant ... If examination at the initial state does not produce a prima facie case of unpatentability, then without more the applicant is entitled to grant of the patent." Id.; see also In re Piasecki, 745 F.2d 1468, 1472 (Fed. Cir. 1984). The USPTO simply does not have the right, pursuant to 35 U.S.C. § 2, to shift the burden of proof to an applicant. The specter of a shifted burden if an applicant files an ESD clearly forecloses the opportunity for an applicant to determine the optimum number of claims necessary to adequately protect his or her invention. Further, Final Rule 37 C.F.R. § 1.265 requires cancellation of claims if the claims exceed five (5) independent or twenty-five (25) total claims in an application in which an ESD was not filed before a first office action. If Section 1.265 is applied to second continuation applications in which an ESD was not filed before a first office action, and in which, upon examination, six (6) or more dependent claims are found patentable upon incorporation of all the limitations of one or more independent claims, an applicant will be required to forego patentable subject matter related to a new invention, although the claim to such invention has been found to meet all of the requirements of the patent law. This result violates Sections 101, 131, and 151 of the Patent Act because it allows the USPTO to withhold a patent on a new invention even though upon examination it is

14

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 26 of 58

determined that the applicant is otherwise entitled to a patent. It is only within the discretion of Congress to specify the substantive eligibility criteria and circumstances under which patents shall be granted. Mast, Foos & Co. v. Stover Mfg. Co., 177 U.S. 485, 494 (1900). This type of discretion, however, does not exist with respect to the USPTO. When the USPTO does not find any sufficient ground for rejection, and all conditions prescribed by the statute exist, the USPTO is duty-bound to issue a patent. In re Wagner, 28 F.Cas. 1327, 1329-30 (D.C. Cir. 1857); see also 35 U.S.C. § 102 ("A person shall be entitled to a patent unless . . .") 35 U.S.C. §§ 111(a)(2) and 112(2) allow for "one or more claims" in the specification of a patent and, indeed, mandate the same. The predecessor court to the Federal Circuit, the United States Court of Customs and Patent Appeal, made it eminently clear that "there is no statutory authority for rejecting claims as being `unnecessary' ... [and that] an applicant should be allowed to determine the necessary number and scope of his claims, provided he pays the required fees and otherwise complies with the statute." In re Wakefield, 422 F.2d 897, 900 (CCPA 1970). Here, the USPTO exceeded its authority under Section 2 and the Final Rules violate 35 U.S.C. §§ 111(a)(2) and 112(12). f. The Final Rules Violate 35 U.S.C. § 121 By Removing the Right of An Applicant to File a Voluntary Divisional Application Section 121 of the Patent Act defines what is meant by the term "divisional application." By implication, in authorizing the USPTO Director to dispense with formalities in divisional applications "directed solely to subject matter described and claimed in the original application as filed," Section (121) recognizes that the term "divisional application" includes situations wherein the divisional application is not "directed solely to the subject matter described and claimed in the original application as filed." Furthermore, Section 121 provides a special benefit for involuntary divisionals by providing that "[a] patent issuing on an application

15

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 27 of 58

with respect to which a requirement for restriction under this section has been made, or an application filed as a result of such requirement, shall not be used as a reference either in the [USPTO] or in the Courts against ... the original application ...," again emphasizing that a divisional application need not be due to a restriction requirement. That is, Congress understood in passing the statute that a divisional application could be directed to subject matter described but not claimed in the original application (a so-called "voluntary divisional"). No provision was made in the statute to allow the USPTO to change the definition of "divisional application" so that it no longer applied to voluntary divisionals. The right to file "voluntary divisionals" under the patent statutes has long been recognized by Federal Circuit. See In re Schneller, 397 F.2d 350, 353 (CCPA 1968) ("there is ... no direct indication before us of why appellant chose this voluntary division"); In re Ornum, 686 F.2d 937, 943 (CCPA 1982) (citing In re Schneller as pertinent because it involved a "voluntary divisional application"). No case has ever found voluntary divisionals are not permitted under the law. Lastly, Final Rule 37 C.F.R. § 1.78(d)(1)(iii) does not permit a continuation-inpart application to be filed seeking priority to a divisional application. Such requirement is contrary to Sections 120/121. g. The Final Rules Violate 35 U.S.C. § 122 which Requires the USPTO to Keep in Confidence Information Pertaining to Applications that Will Not Publish Until Issuance. Section 122 requires the USPTO to keep applications for patents in confidence with "no information concerning the same given without the authority of the applicant or owner unless necessary to carry out the provisions of any Act of Congress or in such special circumstances may be determined by the Director." Other than for allowing the publication of an application within eighteen (18) months if the applicant has not sought a waiver upon initial 16

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 28 of 58

filing wherein the applicant agrees not to file internationally, or if special circumstances exists with respect to a particular patent application, the Patent Act does not authorize or allow the USPTO to publicly disclose any information pertaining to applications. The constitutionality of this provision has been upheld by the Fourth Circuit. Sears v. Goltschalk, 502 F.2d. 122 (4th Cir. 1974), motion denied 420 U.S. 921, cert. denied 422 U.S. 885, reh'g denied 423 U.S. 885, cert. denied, 425 U.S. 904. There is nothing, however, in the Final Rules to prevent disclosure of information about an application that may need to be disclosed before the publication date of the application. This is in abrogation of Section 122's clear mandate that "no information concerning pending and abandoned applications shall be disclosed" except when the application has been published.4 See Irons v. Diamond, 670 F.2d 265, 267-68 (D.C. Cir. 1981) (recognizing that such information is not available even through a Freedom of Information Act request). Final Rule 37 C.F.R. § 1.78(f)(1)(i) requires that an applicant identify by series code and serial number each other commonly owned non-provisional applications filed within two (2) months of the claimed filing or priority date of the application. Such filing must be made even if the first filed application is to be published, but the second filed application is not to be published. As all filings made in an application to be published are made public, an applicant is faced with having information disclosed to the public which should be held confidential by the USPTO under Section 122 upon publication of the first application (i.e., information concerning the filing of the second application will be known through the first application). This disclosure is required even though the courts have found information concerning filing dates of patent Section 122(B)(i) permits an application not to be published if the applicant certifies upon filing the application that the invention disclosed in the application has not and will not be the
4

17

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 29 of 58

applications to be protected information for purposes of Section 122. Irons and Sears v. Dann, 606 F.2d 1215, 1218-19 (D.C. Cir. 1979). Further, Final Rule 37 C.F.R. § 1.78(f)(2)(i) sets forth a rebuttable presumption that two (2) non-provisional applications having the same filing date and at least one (1) common inventor, which is under an obligation of assignment to the same entity, contain at least one (1) claim that is not patentably distinct between one another. Under the Final Rules, to overcome such a presumption, an applicant is required to "rebut this presumption by explaining" in each non-provisional application how the applications contain claims that are patentably distinct form one another. Final Rule 37 C.F.R. § 1.78(f)(2)(ii)(2). Again if one of the applications is designated for publication, or has been published, while the other application is not to be published pursuant to a waiver under Section 122(B)(i), information pertaining not only to the application, but what is actually being claimed in the non-published application, becomes publicly disclosed. Such disclosure is in abrogation of the USPTO's obligations under Section 122 of the Patent Act. h. The Final Rules violate 35 U.S.C. § 132 by Limiting the Right to Reexamination of an Invention After Rejection 35 U.S.C. § 132(b) provides that the "Director shall prescribe regulations to provide for the continued examination of applications for patent at the request of the applicant." (emphasis added). No provision is made for the USPTO to deny an applicant to the right to file a continued examination and/or promulgate regulations having the practical effect of denying an applicant a continued examination of an application. Furthermore, 35 U.S.C. § 132(a) requires the Director to allow an applicant that "persists in his claim for a patent" after receipt of a

subject of an application filed in another country or under a multilateral international agreement that requires publication of applications eighteen months after filing. 18

Case 1:07-cv-00846-JCC-TRJ

Document 141

Filed 12/20/2007

Page 30 of 58

rejection to have his application reexamined ("the application shall be reexamined"). No provision is made for the Director to disallow re-examination simply because an applicant has run out of a mandated allotment of continuation or divisional applications. Final Rule 37 C.F.R. § 1.114 in restricting in a patent family by limiting an applicant to only one RCE, is invalid. Furthermore, the USPTO maintains that it has retained "a first action final rejection practice under which the first Office Action in a continuing application, or in the prosecution of a request for continued examination, may be made final" pursuant to MPEP §706.07(b) and 706.07(h). 72 Fed. Reg. at 46722. This is at odds with the plain