Tafas v. Dudas et al

Filing 222

Amicus Brief in Support of Plaintiffs' 135 MOTION for Summary Judgment, 133 MOTION for Summary Judgment filed by CFPH, LLC. (Attachments: # 1 Declaration of Dean Alderucci# 2 Attachment A to Declaration of Dean Alderucci)(klau, )

Tafas v. Dudas et al

Doc. 222 Att. 2

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ATTACHMENT A

Dockets.Justia.com

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----Original Message---From: Alderucci, Dean - Cantor Fitzgerald (mailto:DAlderucci(Qcantor.com)
Sent: Wednesday, May 03, 2006 6:30 PM

To: AB94Comments; AB93Comments

Subject: Comments to Proposed Rules

These comments are submitted in response to the Proposed Rules of the U.S.

Patent and Trademark Office at 71 Fed. Reg. 48 (January 3, 2006) and 71 Fed.
Reg. 62 (January 3, 2006).

SUMMARY OF ISSUES

The proposed rules violate several tenets of Administrative Law and, if
promulgated, would be clearly in violation of Supreme Court jurisprudence and in
excess of statutory authority.

First, those proposed rules which would either shift the burden of proof or the

burden of production to patent applicants is in direct violation of Supreme Court

jurisprudence. See, e.g., Director, Offce of Workers Compensation Programs,
Dept. ofLaborv. Greenwich Colliers, 512 U.S. 267,275-81 (1994).
Second, critical factual evidence on which the U.S. Patent and Trademark Office

would have had to have relied upon in formulating the new rules either does not
exist or has not been subjected to informed comment by the public.

Third, the U.S. Patent and Trademark Office lacks the required statutory authority
to pass the proposed rules limiting continuation applications. Fourth, the proposed rules fail to reflect reasoned decision making because the
reasoning is extremely flawed.

Please note that if a reasoned response is not provided to every comment, then

the proposed rules, if passed, would be subject to invalidation as arbitrary and

capricious.
Please also note that a promulgated rule which is not a "logical outgrowth" of a

proposed rule would likewise be subject to invalidation for not having been
subjected to notice and comment.

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1. Requirements for reasoned agency

decisionmaking and standard of review.
The PTO must follow administrative law requirements, including the
Administrative Procedure Act (APA) reasoned decisionmaking requirements,

under the APA's judicial review standards of 5 USC § 706. See Dickinson v.
Zurko. 527 U.S. 150, 164 (1999) ("Moreover, if the Circuit means to suggest that
a change of standard could somehow immunize the PTO's fact-related

'reasoning' from review, 142 F.3d, at 1449-1450, we disagree. A reviewing court
reviews an agency's reasoning to determine whether it is 'arbitrary' or
'capricious,' or, if bound up with a record-based factual conclusion, to determine

whether it is supported by 'substantial evidence.' Eg., SEC v. Chenery Corp.,
318 U.S. 80, 89-93, 63 S.Ct. 454,87 LEd. 626 (1943).").
Relevant APA requirements in regard to rulemaking by the PTO are that for
substantive (or "legislative") rules, the PTO must follow notice and comment procedures under 5 USC 553(b) and (c), including providing a reference to the legal authority under which the rule is proposed to be promulgated and a concise

statement of basis and purpose for the rule. In response to public participation,
the PTO must provide a reasoned response to any comments received
("reasoned decisionmaking" under the APA judicial review standards discussed Canada v. F:A.A., 254 F.3d 251,278 below). See, e.g., Air Transport AssÍ7 of

(D.C. Cir. 2001) ("the agency must examine the relevant data and articulate a satisfactory explanation for its action including a "rational connection between the facts found and the choice made." Burlington Truck Lines, Inc. v. United States,
371 U.S. 156, 168,83 S.Ct. 239, 9 L.Ed.2d 207 (1962). In reviewing that explanation, we must "consider whether the decision was based on a consideration of

the relevant factors and whether there has been a clear error of judgment."
Bowman Transp., Inc. v. Arkansas-Best Freight

System, Inc., 419 U.S. 281, 285,

95 S.Ct. 438, 42 L.Ed.2d 447 (1974); Citizens to Preserve Overton Park v.
Volpe,

401 U.S. 402, 416,91 S.Ct. 814, 28 L.Ed.2d 136 (1971).")

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Any changes to a proposed rule must be a "logical outgrowth" of the proposal (if
the final rule is responsive only to comments and not to the proposal, the PTO
may need to "renotice" the changes to the proposal for additional comment).
See, e.g., Environmental Integrity Project v. EPA, 425 F.3d 992, 996 (D.C. Cir.
2005) ("'(The APA's n)otice requirements are designed (1) to ensure that agency

regulations are tested via exposure to diverse public comment, (2) to ensure fairness
to affected parties, and (3) to give affected parties an opportunity to develop

evidence in the record to support their objections to the rule and thereby enhance
the quality of judicial review.'

(International Union, United Mine Workers of America v. Mine Safety & Health
Administration, 407 F.3d 1250,1259 (D.C.Cir.2005)) (citing Small Refiner Lead

Phase-Down TaskForce v. EPA, 705 F.2d 506, 547 (D.C.Cir.1983)). Given the strictures of notice-and-comment rulemaking, an agency's proposed rule and its final

rule may differ only insofar as the latter is a "logical outgrowth" of the former. See
Shell Oil

Co. v. EPA, 950 F.2d 741,750-51 (D.C.Cir.1991); NortheastMaryland
uth.

, 358 F.3d at 952 (stating a final rule is a "logical outgrowth" of a proposed rule only if interested parties" 'should have anticipated' that the
Waste Disposal A

change was possible, and thus reasonably should have filed their comments on the
subject during the notice-and-comment period") (quoting City of Waukesha v. EPA,

320 F.3d 228,245 (D.C.Cir.2003)). The "logical outgrowth" doctrine does not

extend to a final rule that finds no roots in the agency's proposal because
"(s)omething is not a logical outgrowth of nothing," Kooritzky, 17 F.3d at 1513, nor does it apply where interested parties would have had to "divine (the agency's) unspoken thoughts," Arizona Pub. Servo CO. V. EPA, 211 F.3d 1280, 1299
(D.C.Cir.2000) (quoting Shell

OiL, 950 F.2d at 751), because the final rule was

"surprisingly distant" from the Agency's proposal. International Union, 407 F.3d at

1260.").
Thus, the agency must provide sufficient facts in the record for its proposal to
allow for meaningful comment. See, e.g., Chamber of Commerce of

the U.S. v.

S.E c., 2006 WL 890669, at *8 (D.C. Cir. 2006) ("In essence, the question is
whether "at least the most critical factual material that is used to support the

agency's position on review'" (has) been made public in the proceeding and Data Processing, 745 F.2d at 684; see Air Transp. exposed to refutation." Assn of
Assn, 169 F.3d at 7. By requiring the "most critical factual material" used by the agency be subjected to informed comment, the APA provides a procedural device to ensure that agency regulations are tested through exposure to public comment, to

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afford affected parties an opportunity to present comment and evidence to support
their positions, and thereby to enhance the quality of judicial review. See Intl Union,

United Mine Workers of Am. v. Mine Safety & Health Admin., 407 F .3d 1250,
1259 (D.C.Cir.2005)." The requirement to provide in the docket for the proposed rule sufficient facts to support informed comments for evaluating the final rule on judicial review is critically important given the potential for preclusion of judicial review under the theory of
"administrative exhaustion." See, e.g., Advocates for Highway and Auto Safety v.

Federal Motor Carrier Safety Administration, 429 F.3d 1136, 1148-50 (D.C. Cir.

2005) ("t is black-letter administrative law that '(a)bsent special circumstances, a
party must initially present its comments to the agency during the rulemaking in

order for the court to consider the issue.''') (quoting Appalachian Power Co. v.

EPA,251 F.3d 1026 (D.C.Cir.2001) (quoting Tex Tin Corp. v. EPA, 935 F.2d

1321,1323 (D.C.Cir.1991)). Although litigants are not precluded from challenging
rules in regard to clear points that an agency must consider sua sponte (like its statutory authority) or issues actually considered by an agency - see, e.g., id. at 1150 (citing Motor Vehicle Mfrs. Assn v. State Farm Mut. Auto. Ins. Co., 463 U.S.
29, 51 (1983)); Engine Mfrs. Ass'n v. U.S. Environmental Protection Agency, 88 F.3d

1075, 1084 (D.C. Cir. 1996) - the administrative rulemaking process of notice and comment and subsequent deference to reasoned agency determinations depend on
agencies providing a clear factual basis and adequately articulated its reasoning for proposed rules. See, e.g., Motor Vehicle Mfrs. Ass'n, 463 U.S. at 43 ("The scope of

review under the 'arbitrary and capricious' standard is narrow and a court is not

to substitute its judgment for that of the agency. Nevertheless, the agency must
examine the relevant data and articulate a satisfactory explanation for its action
including a 'rational connection between the facts found and the choice made.''')

(quoting Burlington Truck Lines v. United States, 371 U.S. 156, 168 (1962)); In
re Lee, 277 F.3d 1338, 1342 (Fed. Cir. 2002) ("Judicial review... is thus founded
on the obligation of the agency to make the necessary findings and to provide an administrative record showing the evidence on which the findings are based,

accompanied by the agency's reasoning in reaching its conclusions."). Thus, even without comments on an issue in the docket, an agency "retains a duty to
examine key assumptions as part of its affirmative burden of promulgating and

explaining a nonarbitrary, non-capricious rule," and therefore must justify its basic
"assumption(s) even if no one objects during the comment period." Appalachian
Power

Co. v. EPA, 135 F.3d 791,818 (D.C.Cir.1998) (quoting SmallRefinerLead

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Phase-Down Task Force v. EPA, 705 F.2d 506, 534-35 (D.C.Cir.1983)) (internal quotation marks omitted). Rules promulgated by the PTO are generally subject to judicial review under the

"arbitrary, capricious, an abuse of discretion, or not in accordance with law"

standard of the APA, 5 USC 706(A). Although the standard is deferential, the
agency must meet the requirements of reasoned decision

making. See, e.g., In

re Gartside, 203 F.3d 1305, 1312 (Fed. Cir. 2000) (under the "arbitrary and capricious" standard, "a reviewing court 'must consider whether the decision was

based on a consideration of relevant factors and whether there has been a clear
error of judgment.''') (quoting Citizens to Preserve Overton Park, Inc. v. Volpe,

401 U.S. 402,416,91 S.Ct. 814,28 L.Ed.2d 136 (1971)). See generally Air
TransportAssÍ7 of

Canada v. F:A.A., 254 F.3d 251, 278 (D.C. Cir. 2001) ("The

scope of review under the "arbitrary and capricious" standard is narrow and a court is not to substitute its judgment for that of the agency. Nevertheless, the agency
must examine the relevant data and articulate a satisfactory explanation for its

action including a "rational connection between the facts found and the choice made." Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168,83 S.Ct.

239, 9 L.Ed.2d 207 (1962). In reviewing that explanation, we must "consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment." Bowman Transp., Inc. v.
Arkansas-Best Freight System, Inc., 419 U.S. 281,285,95 S.Ct. 438, 42 L.Ed.2d
447 (1974); Citizens to Preserve Overton Park v. Volpe,

401 U.S. 402, 416, 91

S.Ct. 814, 28 L.Ed.2d 136 (1971). Normally, an agency rule would be arbitrary and capricious if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of

agency expertise. The reviewing court should not attempt itself to make up for such
deficiencies; we may not supply a reasoned basis for the agency's action that the

agency itself has not given. SEC v. CheneryCorp., 332 U.S. 194, 196,67 S.Ct.

1575,91 L.Ed. 1995 (1947)."); Tripoli Rocketry Assn, Inc. v. Bureau of AlcohoL,
Tobacco, Firearms, and Explosives, 437 F.3d 75, 76 (D.C. Cir. 2006) ("This court routinely defers to administrative agencies on matters relating to their areas of

technical expertise. We do not, however, simply accept whatever conclusion an agency proffers merely because the conclusion reflects the agency's judgment. In
order to survive judicial review in a case arising under § 7006(2)(A), an agency

action must be supported by 'reasoned decisionmaking.' Allentown Mack Sales &

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Serv., Inc. v. NLRB, 522 U.S. 359, 374,118 S.Ct. 818,139 L.Ed.2d 797 (1998)
(quoting Motor Vehicle Mfrs. Assn of

the United States, Inc. v. State Farm Mut.

Auto. Ins. Co., 463 U.S. 29, 52,103 S.Ct. 2856, 77 L.Ed.2d 443 (1983)). 'Not only must an agency's decreed result be within the scope of its lawful authority, but
the process by which it reaches that result must be logical and rationaL. Courts

enforce this principle with regularity when they set aside agency regulations which,
though well within the agencies' scope of authority, are not supported by the reasons that the agencies adduce.' Id The problem in this case is t~at ATFE's explanation for

its determination that APCP deflagrates lacks any coherence. We therefore owe no deference to ATFE's purported expertise because we cannot discern it."). Similarly, agency action constitutes an "abuse of discretion" "when a decision is based on
an erroneous interpretation of law or ... factfinding (lacking substantial evidence), or if that "'decision represents an unreasonable judgment in weighing relevant

factors.''' In re Gartside, 203 F.3d at 1315-16 (quoting A.C. Aukerman Co. v. R.L.

Chaides Constr. Co., 960 F.2d 1020,1039,22 USPQ2d 1321, 1333

(Fed.Cir.1992) (en banc)).
The Administrative Law standards which the U.S. Patent and Trademark Office must adhere to in all rulemaking are different than those standards (perhaps more familiar to most patent attorneys) which are applicable to "adjudications" (e.g., examination

of patent applications). In contrast to rules, PTO decisions adopted in the context

of and reviewed on a complete record are "adjudications" subject to review under the "substantial evidence" standard of 5 USC 706(E), i.e., "unsupported by

substantial evidence in a case subject to sections 556 and 557 of this title or
otherwise reviewed on the record of an agency hearing provided by statute."

See In re Gartside, 203 F.3d at 1315 (holding that the closed-record nature of

judicial review of appeals from the Board of Appeals and Interferences dictates

application of the "substantial evidence" standard) (citing Association of Data

Processing Serv Orgs., Inc. v. Board of Governors of Fed Reserve Sys., 745

F.2d 677,683-84 (D.C.Cir.1984)). The '''substantial evidence' standard asks
whether a reasonable fact finder could have arrived at the agency's decision....
'substantial evidence' review involves examination of the record as a whole,

taking into account evidence that both justifies and detracts from an agency's

decision." lei at 1313 (citing Consolidated Edison Co. v. NLRB, 305 U.S. 197,

229,59 S.Ct. 206, 83 L.Ed. 126 (1938), and Universal Camera Corp. v. NLRB,

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340 U.S. 474, 487-88, 71 S.Ct. 456,95 L.Ed. 456 (1951)) Adjudications are
defined in 5 USC 551 (7) as "agency process for the formulation of an order,

which is defined in 5 USC 551 (6) as "the whole or a part of a final disposition,

whether affirmative, negative, injunctive, or declaratory in form, of an agency in a

matter other than rule making but including licensing." See Gartside, 203 F.3d at
1313 (referring to "Board adjudication" reviewed under 35 USC § 145 for appeals

and 35 USC § 146 for interferences).

2. APA and other limits on shifting burdens of
production and persuasion by rulemaking.
Significantly for the present proposal, the burden of proof or persuasion for an agency rule is conceptually distinct from whether the rule adopted is arbitrary and

capricious or not authorized by the statute. See, e.g., Allegheny Power v.
Federal Energy Regulatory Commn., 437 F.3d 1215, 1219 (D.C. Cir. 2006) ("The arbitrary and capricious standard speaks, of course, to the degree of deference that we owe the agency, not to burden of proof or persuasion."). The APA prohibits an

agency from shifting by rulemaking the burden of proof or persuasion of issues for adjudications. In such cases, the rule is invalid under 5 USC. § 556(d) ("Except

where otherwise provided by statute, the proponent of a rule or order has the
burden of proof."). See, e.g., Director, Offce of

Workers Compensation

Programs, Dept of

Labor v. Greenwich Colliers, 512 U.S. 267, 275-81 (1994)

(unless superseded by statute, Section 556(d) prohibits an agency from shifting

the burden of persuasion regarding issues the agency is required to prove in

order to grant or deny an order). St. Mary's Honor Center v. Hicks, 509 U.S. 502,
510-11 (1993) (a rebuttable presumption, "having fulfiled its role of forcing the
(other party) to come forward with some response, simply drops out of the

picture").

In contrast, where the rule is intended to shift only a burden of production, it
remains subject to challenge as being contrary to law and arbitrary and capricious, as failing to accord procedural due process (e.g., if it adopts

procedures that do not afford a meaningful opportunity to be heard or are subject

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to substantial risks of error), or as denying equal protection or other constitutional

rights. See, e.g., Heckler v. CampbelL, 461 U.S. 458, 465-70_(1983) (discussing
arbitrary and capricious review under the AP A of agency "guidelines" adopted by

rule that shifted the burden of production, where the underlying statute provided
authority to "adopt reasonable and proper rules and regulations to regulate and lex Corp. v. provide for the nature and extent of the proofs and evidence"); Pat

Mossinghoff 771 F.2d 480,484 (Fed. Cir. 1985) (due process requires courts to
consider "(f)irst, the private interest that will be affected by the official action;

second, the risk of an erroneous deprivation of such interest through the procedures
used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function involved

and the fiscal and administrative burdens that the additional or substitute procedural
requirement would entaiL. (citing Matthews v. Eldridge, 424 U.S. 319, 335 (1976));

Lacavera v. Dudas, 441 F.3d 1380, 1383-84 (Fed. Cir. 2006) (equal protection

challenge) (citing See Mathews v. Diaz, 426 U.S. 67, 78,96 S.Ct. 1883,48
L.Ed.2d 478 (1976), and CityofCleburne, Tex. v. Cleburne Living Center, Inc.,

473 U.S. 432, 439,105 S.Ct. 3249, 87 L.Ed.2d 313 (1985)). Significantly, the
shifting of a burden of production requires both that the agency address a legislative (not an adjudicative) fact and similarly that the facts presumed "may
be resolved as fairly through rulemaking" as through evidence in adjudication.

Heckler, 461 U.S. at 468. See id at 467 (agencies may rely on rulemaking
authority to determine "issues that do not require case-by-case consideration")

(citing See FPC v. Texaco, Inc., 377 U.S. 33,41-44,84 S.Ct. 1105, 1110-1112,

12 L.Ed.2d 112 (1964); United States v. Storer Broadcasting Co., 351 U.S. 192,
205,76 S.Ct. 763, 771,100 L.Ed. 1081 (1956)). And even then, the rule
determining the issues (even presumptively) is subject to review for lack of
statutory authority and arbitrary and capricious review to determine if the record

reflects sufficient factual support and a reasoned decision for adopting the

production-burden-shifting presumption. lei at 465,470 n.14 (citing Herweg v.
Ray, 455 U.S. 265, 275, 102 S.Ct. 1059, 1066,71 L.Ed.2d 137 (1982);

Schweiker v. Gray Panthers, 453 U.S., 34, 44,101 S.Ct., 2633, 2640 (1981)).

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In ex parte prosecution (which is an adjudication), the U.S. Patent and Trademark Office has the burden of persuasion to demonstrate, with evidence,

that a claim is unpatentable. See, e.g., In re Warner, 379 F.2d 1011, 1016, 154

USPQ 173,177 (CCPA 1967) (Graham (v. John Deere Co., 383 U.S. 1,86 S.Ct.
684, 15 L.Ed.2d 545,148 USPQ 459 (1966),) is interpreted as continuing to

place the "burden of proof on the Patent Offce which requires it to produce the
factual basis for its rejection of an application under sections 102 and 103").

When an agency bears the burden of persuasion in an adjudication, it wil thus
also bear the burden of producing evidence to create a prima facie case (unless

the burden of production also is shifted by statute). In such a situation, a rule
that seeks to shift the burden of production on an issue wil also be a violation of
the APA if it allows an agency to meet its burden of proof of an issue without ever

providing evidence to support proof of a prima facie case. See, e.g., Greenwich
Colliers, 512 U.S. at 278-79 (""That the proponent of a rule or order has the
burden of proof means not only that the party initiating the proceeding has the
general burden of coming forward with a prima facie case but that other parties,

who are proponents of some different result, also for that purpose have a burden

to maintain. Similarly the requirement that no sanction be imposed or rule or
order be issued except upon evidence of the kind specified means that the

proponents of a denial of relief must sustain such denial by that kind of
evidence.") (quoting S. Rep. No. 752, 79th Cong., 1st Sess. 22 (1945) (emphasis

added)); id at 279 (""In other words, this section means that every proponent of a
rule or order or the denial thereof has the burden of coming forward with

sufficient evidence therefor; and in determining applications for licenses or other
relief any fact, conduct, or status so shown by credible and credited evidence
must be accepted as true except as the contrary has been shown or such

evidence has been rebutted or impeached by duly credited evidence or by facts

offcially noticed and stated."") (quoting H.R.Rep. No. 1980, 79th Cong., 2d
Sess., 36 (1946) (emphasis added)). For an agency to shift its burden of
production, it must adopt an evidentiary

presumption ,that provides a prima facie

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case of the required issue to be proved, and the administrative record for an

evidentiary presumption adopted by rule must contain a sufficient evidentiary

basis for its application to adjudications in which the presumption wil be applied.
Without such evidence, the burden-of-production-shifting rule is arbitrary and

capricious as it would provide a presumption that would allow the agency to
"make" a prima facie case without any (or without an adequate) evidentiary basis

for the issue on which the agency must produce such evidence and bear the

burden of persuasion where the prima facie case is rebutted. See, National
Mining Assn v. Babbitt, 172 F.3d 906, 910 (D.C. Cir. 1999):

"Although we recognize that at a certain point along an evidentiary
continuum a shift in the burden of production can become de facto

a shift in the burden of persuasion, we do not think it is necessary
in this case to draw the line. For a factual presumption that causes

a shift in the burden of production must be reasonable (as we
explain below, this means essentially that the circumstances giving

rise to the presumption must make it more likely than not that the
presumed fact exists, see Secretary of Labor v. Keystone Coal

Mining Corp., 151 F.3d 1096, 1100-01 (D.C.Cir.1998)). For two

reasons, the agency's presumption fails that test. The first is that the nature of subsidence evidence that triggers the presumption
has become hopelessly confused in this litigation, and the second is that the geographical boundary in which the presumption obtains-

the angle of the draw-is irrationally broad."

The proposed continuation rules thus would improperly shift the burden of
production to applicants, in regard both to: (1) demonstrating some new criteria
regarding why the claims could not have been or were not presented earlier in

the prosecution (which criteria, as discussed below, even if clarified would be
contrary to law as Section 120 of the Patent Act defines the relevant criteria); and
(2) demonstrating that claims presented in a continuation application having

overlapping disclosures are not invalid for double patenting (according to criteria

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that the Patent Office has not identified and thus may also be contrary to existing

law regarding double patenting). The ilegality of the additional restrictions on
continuation practice and the potentially ilegal and ambiguous standards for
shifting the burden of production on double patenting are discussed in detail in
Sections below.

Note that the proposed continuation rules are, both legally and logically, very different from the authorization in 37 CFR Section 1.105 under which the

examiner may shift to the applicant the burden of producing prior art and other
information already in applicant's possession that the examiner believes is

relevant to determining patentability. Requests under Section 1.105 not only
must have reasonable grounds to believe the information is relevant to
patentability determinations, but also are premised on the examiner meeting her

burden of production in adjudication. See Star Fruits N. C. v. United States, .393
F.3d 1277, 1284 (Fed. Cir. 2005) ("So long as the request from the examiner for

information is not arbitrary or capricious, the applicant cannot impede the
examiner's performance of his duty by refusing to comply with an information
requirement which proceeds from the examiner's view of the scope of the law to

be applied to the application at hand. To allow such interference would have the
effect of forcing the Office to make patentabilty determinations on insufficient

facts and information. Such conduct inefficiently shifts the burden of obtaining
information that the applicant is in the best position to most cheaply provide onto

the shoulders of the Office and risks the systemic inefficiencies that attend the

issue of invalid patents. Examination under such circumstances is neither fair
and equitable to the public nor efficient."). CL id at 1285-88 (Newman, J.,
dissenting) (noting that Section 1.105 requests are also subject to the "contrary

to law" standard of 5 U.S.C. § 706(2)(A) and that the Patent Office cannot

demand information that cannot lead to a rejection on the merits). In contrast,
the proposed continuation rules shift the burden of production from the examiner

without regard to any particularized determination of the need for or relevance of

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the information, and without a factual record to support this production shifting by

rule.

3. Lack of Evidentiay Support for the Proposed

Rules
In regard to the evidentiary basis in the record for the agency's proposed

continuation rules, the rules can only be based on assumptions or beliefs that are
supported by evidence in the record, and the agency must take into account and

appropriately consider any contradictory evidence. See, e.g., Northeast
Maryland Waste Disposal Authority v. EPA, 358 F.3d 936,953-54 (D.C. Cir.

2004) ("In Sierra Club v. EPA, 167 F.3d 658 (D.C.Cir.1999), the court rejected
EPA's similar use of state permit limits to set the MACT floor for medical waste incinerators (MWIs). The court recognized that CAA § 129 may permissibly be construed "to permit the use of regulatory data" but only" if they allow EPA to make

a reasonable estimate of the performance of the top 12 percent of units." 167 F.3d
at 662. The court rejected the use of such data in that case because "(a)lthough EPA

said that it believed the combination of regulatory and uncontrolled data gave an
accurate picture of the relevant MWIs' performance, it never adequately said why it
believed this." Id at 663. EPA fares no better here. ... As in Sierra Club, EPA here

stated only that it "believes" state permit limits reasonably reflect the actual
performance of the best performing units without explaining why this is so. There is also evidence here that the MWCs, like the MWIs in Sierra Club,"might be

substantially overachieving the permit limits," that is, "the regulatory limits are in fact much higher than the emissions that units achieve in practice,"167 F.3d at 663.
SeeSierra Club's Br. at 22 (asserting, with record evidence, that EPA's testing data

show MWCs in general (and small MWCs in particular) "routinely overachieve their
permit limits"). Given the absence of evidence that the permit levels reflect the emission levels of the best-performing 12 percent of existing MWCs and the affirmative evidence that they do not, we cannot uphold the MACT floors for existing
units under the CAA."). Mistick PBT v. Chao, 440 F.3d 503, 512 (D.C. Cir. 2006)

("An agency's "failure to respond meaningfully to the evidence renders its decisions

arbitrary and capricious. Unless an agency answers objections that on their face
appear legitimate, its decision can hardly be said to be reasoned." Tesoro Alaska

Petro. Co. v. FERC, 234 F.3d 1286, 1294 (D.C.Cir.2000) (citing Int' Harvester
Co. v. Ruckelshaus, 478 F.2d 615, 648 (D.C.Cir.1973); City of

Vernon v. FERC,

845 F.2d 1042,1048 (D.C.Cir.1988)).")

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The extent of the "evidence" recited in the proposed rule regarding the reasons
for shifting the burden of production in regard to "(u)nrestricted continued

examination filings and multiple applications containing patentably indistinct
claims," moreover, either is facially insufficient or wholly irrelevant to the decision

to shift the burden of production, given the lack of agency authority to impose
additional restrictions on continuation practice or to alter the standards for double

patenting rejections. 71 Fed. Reg. at 49. The principle evidence cited is a law

review article analyzing continuations, a Presidential Commission report,
unsupported discussions of burdens on agency examiners and excessive
backlogs allegedly caused or exacerbated by continuation applications, and unsupported discussions of failures by applicants (or their attorneys) to

particularly point out and distinctly claim their inventions or of "a small minority of

applicants (who) have misused continuing examination practice with continued

examination filings in order to simply delay the conclusion of examination." lei at

49. See id at 49-51. The law review article cites empirical evidence for the
large numbers of continuation applications and the burdens such applications
place on examiners (who lack sufficient time to adequately review all pending

applications), and explains some good reasons (such as adding late-drafted

claims to track changes in the marketplace) and some less "good" (but legally

permitted) reasons why such applications may be filed. See Mark A. Lemley &
Kimberly A. Moore, Ending Abuse of Patent Continuation, 84 B.U. L. Rev. 63, 6981 (2004) (citing, inter alia, Kingsdown Medical Consultants v. Hollister, 863 F.2d

867,874 (Fed. Cir. 1988); id at 95-97 (discussing four "good" reasons why
patentees private interests are served by pursuing continuations, although

society as a whole may be worse off - to extend effective life of patents, to avoid
having to disclose technology too early, to change claims to cover competitors' products, and to continue to seek protection for which applicants believe they are entitled); 71 Fed. Reg. at 49 (citing PIN/NIP, Inc., v. Platt Chemical Co., 304 F.3d

1235, 1247,64 USPQ2d 1344, 1352 (Fed. Cir. 2002), for authority to fie
continuations to be able to add claims to cover "developments in similar or

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parallel technology"). Similarly, the proposed rule cites to data regarding the total
numbers of continuations and their additional burdens for examiners, but
provides no analysis whatsoever of the grounds for filing any of these

applications and whether those grounds constitute "abuse." See 71 Fed. Reg. at
50.
But the proposed rule and the cited article are devoid of any evidence regarding

whether any, many, or most applications are fied for improperreasons, much
less for reasons (if any exist) in regard to which the agency may refuse to

process an application. As the proposed rules themselves concede, the proposal
is not an attempt to codify In re Bogese, 303 F.3d 1362, 64 USPQ2d 1448 (Fed.
Cir. 2002) (Bogese II) "or to simply combat such extreme cases of prosecutions
laches." 71 Fed. Reg. at 50. See Lemley & Moore, 84 B.U. L. Rev. at 111-12

(noting that the equitable defense of "continuing prosecution laches" has been a district court and is "not, at present, well defined," and applied only once by

"courts lack clear standards and hard evidence upon which to base a decision on

reasonableness."). Rather, Lemley & Moore themselves dispute the evidentiary
basis for determining that any significant abuse of continuations has occurred or

wil occur that would warrant adopting an evidentiary presumption that shifts the
burden of production that a continuation is not abusive (under a standard that is
nowhere specified).

Similarly, Lemley and Moore note that numerous means have already been
adopted to limit what they characterize as "abuse" of continuation rules, 84 B.U.

L. Rev. at 84-93, but conclude without data that the remaining continuations

continue to pose "the problem of continuation abuse." Id. at 93. This analysis
(and that of the proposed continuation rules) reflects an unjustified terminological bias, as the remaining "problems" that they refer to of social costs are imposed

by legitimate and statutorily justified filings that have private benefit and thus do

not constitute "abuse." Rather, in many cases they constitute legitimate conduct
of which the courts have expressly approved (as recognized in the proposed

rules), such as filng continuations to cover competitors products (when the

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continuations have adequate support in the earlier applications for the new

claims). See, e.g., id. at 108 ("One of the most egregious abuses of continuation
applications described above is the use of the process to change patent claims to

track inventions first made by one of the applicant's competitors."). The
proposed continuation rules similarly refer to "abuse" without defining what

constitutes abuse of providing any evidence that abuse actually occurs. Thus,
the proposed continuation rules attempt to address an undefined "problem" of unspecified proportions in regard to conduct that the agency itself has not
identified (and lacks authority to identify) as abusive or otherwise illegal, in a

transparent effort to reduce the agency's workload. Again, as Lemley and Moore
note, the principal reasons for such a rule is to assure that applicants do not
"wear down" examiners into making improper allowances of claims, see, e.g., 84

S.U. L. Rev. at 97, notwithstanding that the Patent Office already charges fees

for filng continuation applications and requests for continued examination. In
short, the Patent Office is proposing these rules simply to find some way to improve the performance of its own examiners in examining applications by

reducing their workload. Such lack of an evidentiary basis or reasoned analysis
of the grounds for adopting the presumptions that a continuation application is unjustified must be arbitrary and capricious; it has no rational relation to the
reasons why applicants file and prosecute continuing applications.

The proposed continuation rules similarly lack any evidentiary justification for
shifting the burden of production in regard to demonstrating a double patenting

grounds for rejection. The proposed rules simply state the conclusion - without
tying it to any supporting evidence - that "current continued examination practice
and the filing of multiple applications containing patentably indistinct claims are

impairing the Office's ability to examine new applications without real certainty

that these practices effectively advance prosecution, improve patent quality, or

serve the typical applicant or the public." 71 Fed. Reg. at 50 (emphasis added).
What is missing is any evidence and reasoned analysis that such filings often,

much less typically, contain patentably indistinct claims that would warrant

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shifting the evidentiary burden. Instead, the proposed rules substitute a policy
preference to avoid receiving such applications for evidence.

Significantly, these evidentiary failures of the proposed rules also demonstrate

why the proposed rules improperly seek to shift the burden of production

regarding adjudicatory and not legislative facts. See, e.g., Committee for
Effective Cellular

Rules v. F:G.C., 53F.3d 1309, 1319 (D.C. Cir. 1995) (citing

TelocatorNefworkv. FCC, 691 F.2d 525, 551 (D.C.Cir.1982) (rulemaking powers

are appropriately employed when issues "involve legislative rather than adjudicative
facts, and have prospective effect and c1asswide applicability." (footnotes omitted)). The facts regarding whether any continuing application is justified or might be prohibited under applicable law or regarding whether it contains patentably indistinct

claims are invariably particular to the application and do not have c1asswide applicability. They are thus not the kind of facts that are succeptible to shifting a burden of production under Heckler, as discussed above. American Airlines, Inc. v.
Civil Aeronautics Board, 359 F.2d 624, 633 n. 25 (D.C. Cir. 1996) ("'Adjudicative

facts usually answer the questions of who did what, where, when, how, why, with

what motive or intent; adjudicative facts are roughly the kind of facts that go to a

jury in a jury case. Legislative facts do not usually concern the immediate parties
but are general facts which help the tribunal decide questions of law and policy

and discretion.''') (quoting 1 Davis, Administrative Law § 7.02, p. 413 (1958));

Broz v. Schweiker, 667 F.2d 1351,1357 (D.C. Cir. 1982) (substantive rulemaking
powers may be exercised in regard to statutory rights to an adjudicative hearing

in regard to legislative, but not adjudicative, facts: "adjudicative facts, however,
must be determined at a hearing").

Another assumption which purports to justify the need for the proposed rules is
an unsupported judgment that the value of a "continued examination filing" is

somehow less than the value of a "new application". 71 Fed. Reg. 48. This
assumption is completely unexplained, so a response that addresses this

assumption is specifically requested. A continued examination filng includes, by
definition, a set of claims which have already been subjected to scrutiny by both

the applicant and the PTO. Thus, continued prosecution by the applicant means
that the applicant considers the application to be valuable in light of the costs and

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impediments that continued prosecution presents. By contrast, a large number of

"new applications" wil be summarily rejected and left abandoned by the applicant
after the PTO determines that the claimed subject matter is unpatentable (e.g., in

light of prior art the applicant was unaware of). These abandoned applications
give nothing to the applicant, and in light of the publication of virtually all

applications well before examination, are already disclosed to the public whether

or not any examination occurs. Thus, absent some evidence to the contrary, it is
more logical to assume that "continued examination filings" represent the most
valuable inventions and thus the applications which are most critical to examine.

Another assumption which purports to justify the need for the proposed rules is
an unsupported judgment that "the exchange between examiners and applicants

becomes less beneficial and suffers from diminished returns as each of the

second and subsequent" applications is filed. 71 Fed. Reg. 48. Similarly the
proposed rules are intended to "make the exchange between examiners and

applicants more efficient and effective". 71 Fed. Reg. 48. These assumptions
are completely unexplained, so a response that addresses this assumption is

specifically requested. The exact parameters for the "benefits" and "returns" of
such exchanges are unspecified, as are the measurements of "efficient" and "effective", and so one can only speculate as to what criteria are assumed in

these value judgments. However, it is shocking to propose that somehow an
applicant and examiner would spend MORE resources discussing something

they have already discussed than something they have NEVER discussed. If, on
the other hand, the assumption is that the "diminishing returns" result from a lesser probability of reaching agreement as discussions progress, then it must be pointed out that protracted discussions (rather than appeal) are in the applicants

control and must therefore reflect a higher value invention to the applicant. Also,
the assumption of "diminishing returns" assumes that the claims on the continuing application are somehow very similar to the claims of prior-filed

applications (i.e. discussions on the same issue are not progressing). However,
there is no evidence that most, or even a significant number of, continued

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examination filngs have claims which are "very similar" to prior applications (Le.

similar enough to yield "diminished returns" in discussions). In fact, it is more
likely that the expenditure of resources in continued examination filings is

directed protecting a wide variety of claims, not a narrow set of essentially similar

claims.
Another assumption which purports to justify the need for the proposed rules is
an unsupported judgment that "the possible issuance of multiple patents arising

from such a process (of continued examination filngs) tends to defeat the public

notice function of patent claims in the initial application". 71 Fed. Reg. 48. This
assumption is completely unexplained, so a response that addresses this

assumption is specifically requested. What is clear, and contrary to the
assumption, is that the public notice function is in fact served by the issuance,

not filing, of claims. The issued claims describe what the applicant has the right
to exclude, and since claims rarely remain unamended after filing, and since new
claims may be added to any application after filing, the claims as filed have

nothing to do with public notice. Further, the public notice function may be
achieved by any member of the public who reviews the application and
determines the subject matter that is described and enabled by the application,
and therefore might be claimed in the future.

Another assumption which purports to justify the need for the proposed rules is
that the proposed continuation rules should "improve the quality of issued

patents, making them easier to evaluate, enforce, and litigate". 71 Fed. Reg. 48.
This assumption is completely unexplained, so a response that addresses this

assumption is specifically requested. The measurement of "quality" is
unspecified. If quality reflects the probability that a correct results is reached (Le.
valid claims are issued and invalid claims are rejected with a higher probability

that without the proposed rules) then the quality goal is a non sequitur. The
proposal does nothing to increase the ability of examiners to, for any given claim,

have a higher probability rejecting invalid claims and allowing valid claims. The
proposal merely seeks to shift resources away from certain types of claims

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(claims in continued examination filings), and there is no evidence or even logical
reason why those claims somehow lead to "lower quality" decisions by examiners

(i.e. examiners are no more likely to improperly allow or improperly reject claims

in a continued examination filing). In fact, it is more likely that, being more
familiar with the subject matter of a continued examination filng, an examiner wil
be more knowledgeable in the relevant prior art and level of ordinary skill, and

wil render more "quality" decisions on such claims.
Another assumption which purports to justify the need for the proposed rules is
that "the public is left uncertain as to what the set of patents resulting from the

initial application wil cover" when multiple applications with patentably indistinct

claims are filed. 71 Fed. Reg. 49. This assumption is completely unexplained,
so a response that addresses this assumption is specifically requested. The

public is ALWAYS uncertain on filing what claims wil ever issue, since claims
may be added and freely amended, even in "new" applications. Moreover, the
fact that such "indistinct" claims are filed in multiple applications rather than all in

a single application has no effect on the public. Applications per se are merely
an arbitrary vehicle for claim examination.

Another assumption which purports to justify the need for the proposed rules is
that "these practices (of filing multiple applications) impose a burden on

innovation". 71 Fed. Reg. 49. A response that addresses this assumption is
specifically requested. The impact of such practices on innovation, and the
believed impact of the proposed rules on innovation, has never been measured

or estimated. Further, exactly what would be measured by "innovation" is

unspecified. For example, if the aggregate market value of all issued claims per
year the measure of "innovation"?

Another assumption which purports to justify the need for the proposed rules is
that "a small minority of applicants have misused the continued examination

practice.. to simply delay the conclusion of examination". 71 Fed. Reg. 49. A
response that addresses this assumption is specifically requested. The number
of such a minority of applicants is unspecified, as are the resources of the U.S.

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Patent and Trademark Office purportedly diverted to such a minority of

applicants. Were three applicants over five years the extent of the "misuse"?

Similarly, the assumption is that this small minority of applicants "prejudices the

publicly permitting applicants to keep applications in pending status while awaiting developments in similar or parallel technology and then later amending

the pending application to cover the developments". 71 Fed. Reg. 49. A
response that addresses this assumption is specifically requested. Not only has
this practice specifically been approved by the statute and Federal Circuit
decisions, there is no stated measurement of the extent of such "prejudice" to the

public. For example, is this prejudice any greater than the prejudice that befalls
any member of the public who commercializes a product before a pending

application publishes and issues? If so, how much more is such prejudice, and

what is the basis for such a qualitative judgment? The Federal Register notice
recognizes the authority for this current practice of applicants, but then states
that such a practice is "not calculated to advance prosecution before the Office".

This is inaccurate because it assumes the SOLE PURPOSE of the series of

continuing applications is awaiting future developments. However, that is often

only be a side effect or secondary benefit of such a practice - the primary benefit
for most applicants is to (1) avoid protracted appeals from an examiner by
instead issuing claims which are not in dispute, and then filing other claims which

are closer to the prior art and thus require the examiner to acquire more

. education in the prior art and the invention, (2) avoid overwhelming the examiner
with too many claims in a single application since examiners get no additional
credit for examining, and are thus reluctant to examine, many claims in a single application, (3) claim inventions in different manners as new prior art becomes

available to the applicant (e.g., through subsequent publication or issuance of
U.S. and foreign patent applications), and (4) claim inventions in different

manners to avoid myopic assumptions as to commercial value on the first days of
an application.

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Another assumption which purports to justify the need for the proposed rules is

that claims wil issue faster. 71 Fed. Reg. 50. A response that addresses this
assumption is specifically requested. It is far more likely that the claims wil issue
slower, since appeal will become much more attractive and even necessary to
virtually all applicants wishing to preserve their rights in their inventions.

Another assumption which purports to justify the need for the proposed rules is

that "the applicant... is in a far better position than the Office to determine
whether there are one or more other applications or patents containing

patentably indistinct claims". 71 Fed. Reg. 50. A response that addresses this
assumption is specifically requested. This assumes that the applicant's attorney
is in a better position to render a legal opinion, on behalf of his client, as to

whether two claims are patentably indistinct in light of the prior art. Such a legal
opinion requires that (1) the factual inquiries set forth in Graham v .John Deere

that are applied for establishing a background for determining obviousness under
35 U.S.C.1 03 are employed when making an obvious-type double patenting

analysis. The factual inquiries that must be made are:
(A) Determine the scope and content of a patent claim and the prior art

relative to a claim in the application at issue;
(8) Determine the differences between the scope and content of the patent
claim and the prior art as determined in (A) and the claim in the application at

issue;
(C) Determine the level of ordinary skil in the pertinent art; and
(D) Evaluate any objective indicia of nonobviousness.

Even if an attorney were not ethically barred from rendering and disclosing the result of such an analysis, legal opinions are cost intensive and could not be
"short changed" by including anything less than a full

legal analysis of the

relevant factors. It is unlikely that this would be less resource intensive than the
examiner, after being informed of all potentially relevant applications, conducting

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a lesser analysis (not being subject to the same constraints as a patent attorney
rendering an opinion against his client).

The U.S. Patent and Trademark Office did not otherwise make publicly available

any evidentiary support for the proposed rules in the "rules docket". See
attached Exhibit A, in which Deputy Director Robert Clarke acknowledges that

there is no publicly available information, e.g., in the "rules docket". If there is
information potentially supporting the PTO's decision

making that has not been

made available to the public for review, it cannot form part of the rulemaking record, cannot be relied upon to justify the rule, and should not subsequently be

placed in the docket or otherwise used to justify the rule without providing
another opportunity for public comment on the information.

4. The Patent Office lacks statutory authority to

promulgate the continuation rule.
Courts have repeatedly referred to the ability of applicants to file a series of
continuation applications that meet the statutory requirements of Section 120 as

a "right," "statutory right," or "entitlement." "In our view, ~ gives to any
applicant for a patent complying with its terms the right to have the benefit of the

filing date of an earlier application. The language is mandatory." Racing Strollers, Inc. v. TRI Industries, Inc., 878 F.2d 1418, 1421 (Fed. Cir. 1989) (emphasis in
original). See also, e.g., Transco Products, Inc. v. Performance Contracting, Inc.,
38 F.3d 551,557 (Fed. Cir.1994) (citing Weilv. Fritz,

572 F.2d 856,865 n.16,

196 USPQ 600,608 n. 16 (CCPA 1978); Wagoner

v. Barger, 463 F.2d 1377,

1380,175 USPQ 85,86 (CCPA 1972); In re Van Langehoven, 458 F.2d 132,
136,173 USPQ 426,429 (CCPA 1972); In re Lukach, 442 F.2d 967, 968, 169

USPQ 795, 797 (CCPA 1971); In re Shaw, 202 USPQ 285, 293
(Comm.Pat.1978)); In re Bauman, 683 F.2d 405,409 & n.10, 410 (C.C.P.A.
1982) (citing United States v. American Bell Telephone Co., 167 U.S. 224, 247,

17 S.Ct. 809, 813,42 L.Ed. 144 (1897), and Ex parte Solomons, 201 U.S.P.Q.42

(PTO Bd. App. 1978)). Accordingly, the Patent Offce cannot without statutory
authority issue legislative rules that would impair or condition this right, and it is
obvious from the case law that there is no existing statutory authority that would

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allow it to do so. Nor is there any intervening development in the statutory or
case law on which the Patent Office could purport to ground continuation rules

that would impair or condition this right as interpretive rules.
the 1952 Patent Act codified Section 120 in order to legislatively ratify the

practice of the Patent Office in response to the decision in Godfrey v. Eames, 68
U.S. 317,325-26 (1864), which treated continuing applications as an amendment

to an existing application. See Transco Products, Inc., 38 F.3d at 557 (Fed. Cir.
1994) ("The Supreme Court's explanation illuminates the meaning of "shall have the same effect" and clearly requires that we view appellants' applications as "parts of the same transaction" and "as constituting one continuous application" for the

continuing subject matter recited therein.) (citing In re Hogan, 559 F.2d 595, 603

(C.C.P.A. 1977) (emphasis in Transco)).; In re Henriksen, 399 F.2d 253,258-60

(C.C.P.A. 1968). As noted in the comments of Harold Wegner filed on March 14,
2006, Congress in the 1952 Patent Act rejected a preliminary draft of Section 120

that would have treated continuing applications like a real amendment to a
pending application (by limiting the term of any patent issuing on the continuation

application to that of any patent issuing on the earlier application). Instead,
Congress expressed an intention to permit continuations under Section 120 even
when to do so would permit multiple patents having terms extending a full

17

years from issue of the continuation (subject to judicially created double
patenting restrictions).

Significantly, Godfreyaddressed the situation where the public had the benefit of

an invention for more than the statutory grace period prior to the filng of a
renewed (but not an original) application claiming priority to a pending application

that had not been abandoned (by withdrawing the original application - which
had been rejected "for want of novelty" - and submitting the new application in
regard to which "the claims of novelty, and the models, were in some respects different" but which could have been patented if "'engrafted as an amendment to
the first application"'). 68 U.S. at 317-18. Godfrey

thus recognized the potential

to file new claims (even a new disclosure) after the original application and to
claim priority to the original, even though the subject matter would have been

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irrevocably dedicated to the public domain if such priority were lacking. The
Court specifically held that the Patent Act of 1839 had "relieved the applicant
from this consequence" and "gave him the right to apply for a patent at any time

within two years after the use and sale of his invention." Id. at 325. The Court
also was told that significant time might pass before the filng of the continuing
application. See id at 320 ("and although he should afterwards withdraw that

application and some time should elapse before he renewed it" (emphasis in
original).

Specifically, the Court in Godfreyheld that if an applicant withdraws an
application intending to file a new petition drawn to the same inventive subject
matter so that there was no abandonment of the invention to the public (although potentially with different descriptions or claims), "the two petitions are to be

considered as part of the same transaction, and both as constituting one

continuous application, within the meaning of the law." Id. at 326. As a result of
this decision, continuation application arose. As later noted in In re Henriksen,
the lack of abandonment of the disclosed subject matter to the public was the
critical aspect of the requirement adopted in 1952 for the prior application to be
"co-pending," and why the continuation right applied to a chain of pending

applications. See 399 F.2d at 257 (discussing the copendency requirement and
Committee Print preliminary draft Section 35, which was later amended to

become Section 120); id (the copendency requirement "is found in the
requirement that 'the later application' must be fied before the 'prior application'

is patented or abandoned or proceedings thereon terminated."). Further,
Henriksen made clear that the statute imposes "no restriction on the number of applications which may be so involved" and specifically rejected the arguments of
the Patent Office that although continuations might extend to four applications in
a chain, it did not create an "'inference() of unlimitedness'" regarding how many

continuations could be filed. Id at 257,259. See id. at 261 ("We agree with
appellant's analysis to the effect that the statute provides no limit to the number

of applications that may be copending."). The Court also noted the policy

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concern "that a patent should be granted on an application depending upon

another application filed over 20 years ago" but held that that was an issue that

only Congress could address. Id at 262. Other cases have affirmed the right to
file continuations, even when they broaden claims in issued patents. See In re
Vogel, 422 F.2d 438 (C.C.P.A. 1970) (finding '''obvious variation' type" double

patenting subject to a terminal disclaimer in regard to a copending application in
light of applicants issued patent).

The legislative history of the 1952 Act also makes clear that applicants were

given a statutory right to file an unlimited series of continuing applications. As
the relevant House and Senate reports noted, "Sections 120 and 121 express in the statute certain matters which exist in the law today but which had not been
before written into the statute, and in so doing make some minor changes in the

concepts involved." H.R. Rep. No. 1923, 82d Cong., 2d Sess. (1952), at 7; S.
Rep. No. 1979 (1952), at 6. Section 120 enacted a right to the priority filing date

in any continuation that met these new statutory requirements. "When these
three conditions obtain the second application is entitled to have the same effect

as though filed on the same date that the first application was fied, with respect
to an invention disclosed in both applications. The first two requirements

specified are substantially the same as existed under the prior case law... The
third requirement of the statute is that the second application must contain a
specific reference to the first application."

Since 1952, Congress has repeatedly confirmed the right to file and receive
priority to earlier applications for a continuation application filed at any time and

meeting the specific statutory requirements (typically to make the relevant
identification and priority claim, and to provide written description support in the

earlier application). In fact, Congress has expanded it to include continuations
claiming priority to the (no longer new) provisional applications, to various foreign

applications (including "subsequent regularly filed applications(s) ... instead of
the first filed foreign application"), and where not all the inventors are the same.

See, e.g., 35 U.S.C. §§ 119(a)-(e), 120; Act "To carry into effect certain provision

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of the Patent Cooperation Treaty, and for other purposes", P.L. 94-131; Patent
Law Amendments Act of 1984, P.L. 94-131; Consolidated FY2000 Appropriations

Act, P.L. 106-113 (enacting S.1948 The Intellectual Property and
Communications Omnibus Reform Act of 1999, Title IV American Inventors

Protection Act of 1999). Similarly, Congress has effectively extended
continuation practice without the need to file a new application, recodifying the
"right" to file continuation applications by permitting requests for continued

examinations in which new claims may be added to a pending application (and

which obviously wil continue to maintain any priority claim they may possess).

See 35 U.S.C. § 132(a) & (b); P.L. 106-113. Congress was certainly aware of
and thus expressly extended its coverage, in the process impliedly ratifying the

long-standing interpretation given to Section 120 by the courts. See, e.g.,

Central Bank of Denver v. First Interstate Bank of Denver, 511 U.S. 164, 185
(1994) (ratification is implied when Congress "reenact(s) statutory language that

has been given a consistent judicial construction"). Thus, there can be no doubt
that Section 120 (and 132(b)) do not admit of any limitations on the right to file a

continuing application seeking priority, and the right of an applicant to a patent
based on such a continuing application even if claims are presented "late."

As noted earlier, 35 U.S.C. § 2 is not a grant to the Patent Office of substantive

rulemaking power. See, e.g., Merck & Co., Inc. v. Kessler, 80 F .3d 1543, 154950 (Fed. Cir. 1996) ("As we have previously held, the broadest of the PTO's

rulemaking powers--35 U.S.C. § 6(a)--authorizes the Commissioner to
promulgate regulations directed only to "the conduct of proceedings in the

(PTOl"; it does NOT grant the Commissioner the authority to issue substantive rules. Animal Legal Defense Fund v. Quigg, 932 F .2d 920, 930, 18 USPQ2d
1677, 1686 (Fed.Cir.1991 )."). And if Congress were to delegate any substantive

lawmaking authority in regard to continuation applications (which it has not), it
would likely do so to the courts (as it has historically done with patent law, unlike

other laws administered by federal agencies) and not to the Patent Office. Thus
the proposed continuation rules would arrogate to the Patent Office and

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

Document 222-3

Filed 01/08/2008

Page 28 of 41

administrative branch powers confined to the legislative or judicial branches.

Such arrogation would raise constitutional concerns regarding separation of
powers, and thus a construction of the statute that would authorize substantive

rulemaking powers under the guise of Section 2 procedural rulemaking authority

should be avoided. See, e.g., I.N.S. v. St. Cyr, 533 U.S. 289, 299-300 (2001) ("if
an otherwise acceptable construction of a statute would raise serious constitutional problems, and where an alternative interpretation of the statute is "fairly possible,"

... we are obligated to construe the statute to avoid such problems.") (citing

Ashwander v. TVA, 297 U.S. 288, 341,345-348, 56 S.Ct. 466,80 L.Ed. 688
(1936) (Brandeis, J., concurring)). Much though the Patent Office stil may

wish

that Congress would delegate rulemaking authority to limit continuation

applications, Congress has not done so and only Congress may address any

"problem" that may exist (as Henriksen recognized).
Nor was substantive rulemaking authority to limit the number of continuations

filed or create new requirements to limit continuing applications provided to the
Patent Office in the 1999 American Inventors Protection Act, which granted authority to the Patent Office to establish "such time during the pendency of the

application as required by the Director" for submitting priority claims and to
"establish procedures, including the payment of a surcharge, to accept an

unintentionally delayed submission of an amend