Tafas v. Dudas et al

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Memorandum in Opposition re 125 MOTION for Summary Judgment Against Plaintiff Triantafyllos Tafas filed by Triantafyllos Tafas. (Attachments: # 1 Exhibit Ex 1# 2 Exhibit Ex 2# 3 Exhibit Ex 3# 4 Exhibit Ex 4# 5 Exhibit Ex 5# 6 Exhibit Ex 6# 7 Exhibit Ex 7# 8 Exhibit Ex 8# 9 Exhibit Ex 9# 10 Exhibit Ex 10# 11 Exhibit Ex 11# 12 Exhibit Ex 12# 13 Exhibit Ex 13# 14 Exhibit Ex 14# 15 Exhibit Ex 15# 16 Exhibit Ex 16# 17 Exhibit Ex 17# 18 Exhibit Ex 18)(Wilson, Joseph)

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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 OPPOSITION TO DEFENDANTS' 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) 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

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TABLE OF CONTENTS Page I. INTRODUCTION ................................................................................................................. 1 A. B. II. A. B. Plaintiff Dr. Tafas and the Present Action .................................................................... 1 Dr. Tafas's Disagreement With the USTPO'S "Undisputed Facts" ............................ 5 The USPTO'S Exercise Of Rulemaking Authority Is Substantive And Does Not Qualify For Chevron Deference ........................................................................... 11 The USPTO'S Final Rules Are Not Consistent With The Patent Act or Other Law.............................................................................................................................. 18 1. 2. 3. 4. C. D. E. F. G. H. I. 35 U.S.C. §120..................................................................................................... 18 35 U.S.C. §132..................................................................................................... 22 35 U.S.C. §§ 101, 111, 112, 131 and 151 ............................................................ 23 35 U.S.C. §§ 2, 41, 112, 121, 122, 200-212 & Patent Cooperation Treaty ......... 24

ARGUMENT....................................................................................................................... 11

The Final Rules Are a Result Of Arbitrary And Capricious Rulemaking................... 28 The Final Rules Are Not A Logical Outgrowth Of The Proposed Rules.................... 33 The Final Rules Are Retroactive And Result In An Unconstitutional Taking Under the Fifth Amendment and Due Process Clause of the Constitution ................. 34 The USPTO Has Violated Article I, Section 8 Of The U.S. Constitution In The Promulgation Of The Final Rules ............................................................................... 35 The Final Rules are Invalid in Not Providing Sufficient Notice to Applicants of How to Comply With An ESD.................................................................................... 36 The Final Rules Were Promulgated In Violation Of The Regulatory Flexibility Act ............................................................................................................................... 37 The USPTO's, And Its Amici, Assertions of Continuation Practice Abuse Is Not Supported By The Evidence................................................................................. 41

III. CONCLUSION.................................................................................................................... 45

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TABLE OF AUTHORITIES CASES A.F. Stoddard & Co. LTD v. Dann, 564 F.2d 556 (D.C. Cir. 1977) ...................................3 Adams Fruit Co. Inc. v. Barrett, 494 U.S. 638 (1990).........................................................8 Animal Legal Defense Fund v. Quigg, 932 F.2d 920 (Fed. Cir. 1991) ...............................3 Association of Data Processing Serv. Organizations v. Board of Governors, 745 F.2d 677 (D.C.Cir.1984) ................................................................................................1 Bowen v. Georgetown University Hospital, 488 U.S. 204 (1988) ......................................8 Centigram Communications Corp. v. Lehman, 862 F. Supp. 113 (E.D.V.A. 1994) .......8, 9 Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) 2, 3, 4, 7, 8, 9 Chocolate Manufacturers Association of the United States v. Block, 755 F.2d 1098 (4th Cir. 1985).......................................................................................................1 Christensen v. Harris County, 529 U.S. 576 (2000) ............................................................4 Dickinson v. Zurko, 527 U.S. 150 (1999), and In re .......................................................8, 9 Director, Office of Workers Compensation Programs v. Greenwich Collieries, 512 U.S. 267 (1994) 1, 7, 12

Eli Lilly & Co. v. Bd of Regents of University of Washington, 334 F.3d 1264 (Fed. Cir. 2003)..............................................................................................................3 Ex Parte John E. Maloney et al., 1999 WL. 33205694 (Bd. Pat. App. & Interf. 1999) ............................................................................................................................15 Formula v. Schweiker, 572 F. Supp. 862 (D.D.C. 1983).....................................................6 Graham v. John Deere Co. of Kansas City, 383 U.S. 1 (1966) ...........................................3 HLI Lordship Industrial Inc. v. Committee for Purchase from the Blind, 791 F.2d 1136 (4th Cir. 1986).......................................................................................................5 Heckler v. Campbell, 461 U.S. 458 (1983)........................................................................12 In re Bogese II, 303 F.3d 1362 (Fed. Cir. 2002)..........................................................11, 12 In re Henricksen, 399 F.2d 253 (CCPA 1968)...............................................................3, 10 In re Hogan, 559 F.2d 595 (CCPA 1977) ......................................................................3, 10 ii

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In re Oetiker, 977 F.2d 1443 (Fed. Cir. 1992) ...................................................................15 In re Piasecki, 745 F.2d 1468 (Fed. Cir. 1984)..................................................................15 In re Wakefield, 422 F.2d 897 (C.C.P.A. 1970) ................................................................14 Intellectual Property Committee on the Judiciary April 21, 2005 ( P. 9 ) ...........................1 Kingsdown Medical Consultants Ltd. v. Hollister Inc., 863 F.2d 867 (Fed. Cir. 1988) ............................................................................................................................11 Lacavera v. Dudas, 441 F.3d 1380 (Fed. Cir. 2006)............................................................6 Landgraf v. USI film Products, 511 U.S. 244 (1994) ..........................................................1 Merck & Co., Inc. v. Kessler, 80 F.3d 1543 (Fed. Cir. 1996) .........................................3, 7 Mistick PBT v. Chao, 440 F.3d 503 (D.C. Cir. 2006) .........................................................1 Moore v. U.S., 194 U.S.P.Q. 423 (Ct. Cl. 1977) ...............................................................12 Morganroth v. Quigg, 885 F.2d 843 (Fed Cir. 1989) ......................................................8, 9 Morton v. Ruiz, 415 U.S. 199 (1974) .................................................................................1 Motor Vehicle Manufactures Association of the United States, Inc. v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29 (1963)................................................2 NLRB v. Food and Commercial Workers, 484 U.S. 112 (1987) ........................................8 Ohio v. U.S.E.P.A., 997 F.2d 1520 (1993) ..........................................................................2 Paralyzed Vets. of America v. Secretary of Veterans Affairs, 308 F.3d 1262 (Fed. Cir. 2002) .....................................................................................................................12 Penn. Central Trans. Co. v. City of New York, 438 U.S. 104 (1978) .................................2 Ricoh Co. Ltd. v. Nashua Corp.., 185 F.3d 884, 199 WL. 88969 (Fed. Cir. 1999)...........10 Rubinfield, 270 F.2d 391 (CCPA 1959) ..............................................................................8 Ruley v. Nevada Board Of Prison Commissioners, 628 F. Supp. 108 (D. Nev. 1986) ..............................................................................................................................6 Skidmore v. Swift & Co., 323 U.S. 134 (1944)...................................................................4 Stevens v. Tamai, 366 F.3d 1324 (Fed. Cir. 2004)..........................................................6, 7

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Symbol Techs, Inc. v. Lemelson Medical Education & Research Foundation, 277 F.3d 1365 (Fed. Cir. 2002) ..........................................................................................12 United States v. Mead Corporation, 533 U.S. 218 (2001)...................................................3 STATUTES 5 U.S.C. §553...................................................................................................................1, 2 5 U.S.C. §553(b) .................................................................................................................8 28 U.S.C. § 2201 .................................................................................................................1 35 U.S.C.§ 2.........................................................................................................................2 35 U.S.C. §§ 101, 111, 112, 131...................................................................................1, 14, 15, 16 35 U.S.C. §120 ...............................................................................................................1, 8, 9, 11, 16 35 U.S.C. §121 ..................................................................................................................17 35 U.S.C. §121 35 U.S.C. §122 ..................................................................................................................16 35 U.S.C. §122. ...................................................................................................................1 35 U.S.C. §§131.................................................................................................................14 35 U.S.C. §132 ..............................................................................................................1, 13 35 U.S.C. §132(a) ........................................................................................................13, 14 35 U.S.C. § 154..................................................................................................................10 35 U.S.C. §154(d) ................................................................................................................1 35 U.S.C. § 200 .................................................................................................................17 35 U.S.C. §§ 2, 41, 112, 121, 122, 200-212 .................................................................1, 15 35 U.S.C. 2(b) .....................................................................................................................5 35 U.S.C. §2(b)(2) ..........................................................................................................4, 5, 14, 16 35 U.S.C. §41 ...................................................................................................................16 iv

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35 U.S.C. § 41, 112, 121, 122, 200-212 ............................................................................16 35 U.S.C. § 41(4)(2) ............................................................................................................1 35 U.S.C. § 41(a) .................................................................................................................8 TABLE OF EXHIBITS Exhibit 1 Exhibit 2 Exhibit 3 USPTO, Fee Proposal Comparison Chart, (02/04/2003). Letter and comments on USPTO rules filed by David E. Boundy with the Office of Management and Budget (July 3, 2007). USPTO's use of "Voluntary Divisional" and "Involuntary Divisional" terms in its own Administrative Record documents. (A00077, A00159, A00221, A08539, A08614, A08776, A08889, A09148, A09271, A09351, A09420). Record and presentation of a meeting with USPTO, the Office of Management and Budget and Biotechnology Industry Organization (May 16, 2007). Record and presentation of a meeting with USPTO, the Office of Management and Budget and the Innovation Alliance, represented by two of its members (June 14, 2007). Record and presentation of a meeting with USPTO, the Office of Management and Budget and parties including Cantor Fitzgerald, GlaxoSmithKline and Polestar (June 15, 2007). Record of a meeting with USPTO, the Office of Management and Budget and the Research and Manufacturers of America (PhRMA) (June 25, 2007). Record of a meeting with USPTO, the Office of Management and Budget and the Nano Business Alliance (June 25, 2007). Letter and comments on USPTO rules filed by Cecil D. Quillen, Jr. with the Office of Management and Budget (May 11, 2007). Letter and comments on USPTO rules filed by Marcia S. Wagner with the Office of Management and Budget (May 21, 2007). Letter and comments on USPTO rules filed by Eduardo E. Drake with the Office of Management and Budget (June 21, 2007). Letter and comments on USPTO rules filed by Ron D. Katznelson with the Office of Management and Budget (June 29, 2007). Richard Belzer, letter to Honorable Susan E. Dudley, Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget, with attachment "OMB Control Number: 0651-0031, ICR Reference Number: 2007070651-005, Alternative Burden Estimates," (Revised January 17, 2008). Ron D. Katznelson, Patent Continuations, Product Lifecycle Contraction and the Patent Scope Erosion ­ A New Insight Into Patenting Trends, Southern California Law Associations Intellectual Property Spring Seminar, Laguna Niguel, CA, v

Exhibit 4 Exhibit 5

Exhibit 6

Exhibit 7 Exhibit 8 Exhibit 9 Exhibit 10 Exhibit 11 Exhibit 12 Exhibit 13

Exhibit 14

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(June 8-10, 2007), as made available in comments filed at OMB: http://www.whitehouse.gov/omb/oira/0651/comments/460-patent.pdf . Exhibit 15 Exhibit 16 Exhibit 17 Exhibit 18 E-mail from John Collier to Jennifer McDowell and Robert Bahr, "Bottom up analysis of ESD", (May 8, 2007), (A08249 A08250). USPTO internal memorandum "Relevant Data regarding USPTO filings", (August 3, 2006), (A04546 ­ A04553). Patrick Doody, The Patent System Is Not Broken, Intellectual Property & Technology Law Journal, Vol. 18, No. 12, pp. 10-24, (December 2006). USPTO, "Continuing applications over time", (June 5, 2007) (A05061 ­ A05062).

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I. A.

INTRODUCTION

Plaintiff Dr. Tafas and the Present Action. Dr. Triantafyllos Tafas ("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 brought this action to permanently enjoin the USPTO 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, having an effective date of November 1, 2007, which were published at 72 Fed. Reg. 46716, 46835-43 (Aug. 21, 2007) and were to be codified at 37 C.F.R. Part 1 (the "Revised Rules" or "Final Rules"). Tafas requests a declaration that the Final Rules are in toto, null, void and without legal effect, inter alia, as beyond the USPTO's rule-making power and inconsistent 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. Tafas seeks an order 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 Final Rules. Tafas, an inventor and proprietor of certain energy recovery patent applications, and a named inventor on numerous robotic microscopy patents and patent applications, filed his complaint and his motion for preliminary injunction within twenty-four (24) hours of the publication of the Final Rules. Thereafter, despite enormous opposition to the Final Rules throughout the patent and technology communities, Tafas stood alone in this action for almost two (2) months .

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Tafas filed this action based on principle and the strong moral conviction that the Final Rules would seriously hamper the American Dream for future inventors and emerging companies. Tafas has proceeded in this case always with the highest of intentions, not for fame or fortune, even foregoing his own preliminary injunction motion, irrespective of the time and effort expended by his counsel in preparing it, and the public acclaim that he knew would ensue if he proceeded with the motion, to allow another plaintiff, which he felt could demonstrate significantly more harm deriving from the Final Rules than he could, to make the motion on substantially identical grounds (and then having to further wither the blows of the USPTO who chastised him in open court for joining GSK's motion in purported contravention of an agreed scheduling order when the motion for preliminary injunction was heard).1 Tafas is a founder of Ikonysis, Inc. ("Ikonysis"), which manufactures a technologically-complex robotic microscope designed to automatically read microscope slides and proffer tentative diagnoses. Tafas started his company with very little capital. After many years of unsuccessful attempts to raise funds in Europe, Tafas turned to the United States, where he joined a colleague from the University of Connecticut, to raise the funds necessary to support the significant research and development needed to develop such a complex instrument. Tafas found this country exceptional in that it provided strong patent protection affordable not only by large corporate entities, but also by individuals. Based on the patent applications which he filed after coming to this country, Tafas and his colleagues were able to raise the needed seed funding to start their microscopy company. After many painstaking and lean years, Ikonysis now manufactures and sells a fully automated microscope. Similarly, Tafas vigorously fought for limited discovery in this action due to his strong belief in open government.
1

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Tafas is not a "patent troll" who obtains patents solely to bring infringement lawsuits. In fact, Tafas has never filed suit under any of his patents or patent applications nor has he ever licensed any of his intellectual property to a third-party. Tafas is not some unsophisticated "basement inventor." Tafas' ultimate goal is to use his robotic microscope to detect early stage cancers, on a wide scale, using proprietary biological markers. His theory is this could be accomplished through monitoring of blood samples taken at routine physician visits. This is possible because Tafas' automated microscope will allow for rapid, twenty-four (24) hour screening of blood samples. This is something that is not presently feasible on any large-scale absent the automated microscope due to the limited number of histologists available in the medical field. Early results obtained in this project have been extremely promising. Of course, cancer treatment success rates are substantially greater when cancers are detected early before they have time to grow and metastasize. As would be known by anyone who suffers from, or knows anyone one who has suffered from, or died, due to cancer (which unfortunately encompasses almost everyone), Tafas' research holds out the potential to revolutionize the field of early cancer detection and treatment. Tafas brings this suit in substantial part so that he and others are not thwarted by the Final Rules from pursuing such life saving medical advances. Additionally, Tafas owns and is presently prosecuting as a sole proprietor several patent applications related to energy recovery from an automobile's internal combustion engine manifold. Tafas filed these patent applications in connection with inventive concepts he had concerning different methods to reduce emissions, and resultant global warming. Again, actual research is being undertaken by Tafas with respect to these inventions and again he is seeking venture capital to support such research.

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Tafas agrees with co-plaintiff GSK, whose case has been consolidated into the present action, and amici BIO, Pharma, Monsanto, Croplife America, Pennsylvania Greenhouses, Human Genome Sciences, and Elan Pharmaceuticals that the Final Rules will have a draconian adverse effect on life science industries including, without limitation, impairing the development of future diagnostics and treatments. Absent strong and affordable patent protection, Tafas is justifiably fearful that new medical technologies and biotechnology advances will be copied and sold by others who have not incurred the research investments borne by the innovators. Life science companies (such as Ikonysis) and medical research universities will be less willing or unable to undertake the huge investments and substantial risks necessary to bring life saving technologies and pharmaceuticals to the public if the Final Rules ever become effective. Tafas also strongly concurs with the Minnesota amici, TELES AG Informationstechnologien, and the R&D Licensing Companies, that the Final Rules will have a dramatic negative impact on many other technology companies including, without limitation, those that concentrate on the development of software, mechanical, electrical, and chemical inventions. Tafas shares the serious concerns expressed by amici CFPH, LLC and Washington Legal Foundation that the Final Rules will dramatically restrict the ability of emerging companies to obtain the patent protection they need to raise capital funds and that the Final Rules -- if not permanently enjoined -- portend the death knell of the small individual inventor, who has been the lifeblood for many of the truly technological breakthroughs of the past in the United States. 2

2

For example, the telephone (Alexander Graham Bell), the airplane (the Wright Brothers) and the television (Filo Farnsworth). 4

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B.

Dr. Tafas's Disagreement With the USPTO'S "Undisputed Facts". Tafas disagrees with many of the USPTO's purported "Undisputed Facts." In

particular, Tafas disagrees with all of the USPTO assertions of "undisputed fact" to the extent the USPTO does not "cit[e] the parts of the record relied on to support the listed facts as alleged to be undisputed" pursuant to Local Civil Rule 56(b). Tafas also objects to the USPTO simply restating prior ipse dixit statements the USPTO made in its Federal Register publication of the Proposed Rules and Final Rules (which were submitted as part of the administrative record) without any support for a reasonable and good faith analysis of actual data found in the administrative record. See, HLI Lordship Indus. Inc. v. Committee for Purchase from the Blind, 791 F.2d 1136, 1141 (4th Cir. 1986)(finding that while the "APA does not require an exhaustive explanation of an administrator's reasoning" it does require "evidence" that the administrator undertook "examin[ation] [of] relevant data" which should form part of the administrative record). Tafas also disagrees with certain legal conclusions/argument made by the USPTO, which do not properly belong in a statement of undisputed facts and, as such, need not be specifically controverted. These argumentative statements include the USPTO's contention that a "substantial portion of [its] backlog" is attributable to the filing of continuations or multiple claims (Def. Mem. at pp. 7-8); that without the new rules the USPTO "risks being swamped by continuation filings" (Def. Mem. at p. 8); and, that the "USPTO structured the Final Rules to Ensure that Applicants Could Receive the Patent Protection They Seek" (Def.. Mem., pp. 12-13). Similarly, the USPTO's description of how the Final Rules work and/or interpretation of the Final Rules throughout the undisputed facts section do not constitute statement of fact, but rather the USPTO's self-serving interpretation of law (i.e., mere legal argument by the USPTO). (See Def. Mem., "Overview of Final Rules Concerning Claims and 5

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Continuation Practice" at pp. 9-13). For example, Tafas objects to the USPTO's legal conclusion in its statement of undisputed facts that the Final Rules are "procedural" or "interpretive" rather than substantive in nature. (Def. Mem. at 8). As concerns the USPTO's assertions of "undisputed facts" (made at pages 7­13 of its brief in support of its motion for summary judgment), only the facts specifically enumerated below (as qualified) are truly undisputed. Except as expressly admitted and subject to the caveats set forth below, Tafas controverts and/or objects to the balance of the USPTO's purported undisputed facts: (a) The USPTO proposed and ultimately promulgated and published its so called Final Rules (both reflected in the Federal Register) in January 2006 and August 2007 and Tafas refers the Court to the Proposed Rules and Final Rules for their terms. (b) A05072 indicates that continuing applications, exclusive of divisional applications, increased from fiscal year 1980 to fiscal year 2006 (see Def. Mem at 7). However, as CIP applications necessarily disclose, and nearly always claim new matter, such applications are not appropriately included in USPTO's statement with respect to continuation applications. Without counting of continuation-in-part applications and divisional applications, the data focused on in A05072 indicates continuation applications have risen from about 1.5% of applications in 1980 to about 4% in fiscal year 2006; (c) A07099 indicates that the number of claims per application grew from an average of 14.4 claims in fiscal year 1990 to about 21 claims in fiscal year 2005 (Def. Mem. at p. 7); (d) The USPTO represents in its Federal Register publication of its Final Rules that it had a backlog of 701,147 applications (Def. Mem. at 7); (e) Proposed Rule 78 would have restricted applicants to only one (1) continuation application, while Proposed Rule 75 would have required applicants to provide an Examination Support Document (ESD) for any applicant that requested examination of more than ten (10) representative claims (Def. Mem. at 8); (f) The USPTO received more than 500 comments from the public after publication of its proposed rules (Def. Mem. at 9), provided however, that Tafas disputes that the USPTO took the overwhelming and unprecedented outpouring of negative comments into account in formulating its Final Rules;

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(g) Final Rules 78 and 114 regulate continuation and RCE filing in accordance with their words (Def. Mem. at 9); (h) Final Rules 75 and 265 require the filing of an ESD if the applicant seeks protection in any one (1) application of more than five (5) independent claims and/or twenty-five (25) total claims (Def. Mem, at 10), provided however, Tafas disagrees: (i) that such number of claims are "unusually large,"; (ii) that the ESD was designed to "assist the examiner"; (iii) that requirements for an ESD are set forth in "supplemental guidance issued by the USPTO"; and, (iv) that an applicant may invariably present 15 independent claims and 75 total claims for each invention without an ESD; (i) Final Rules 75 and 78 contain other requirements (Def. Mem. at pp. 10 11). Tafas disagrees, however, that such other provisions merely overcome "confusion as to how the other provisions apply," or that 78(f)(2) may properly legally set forth a rebuttable presumption of patentably indistinct claims; (j) Final Rule 142 allows for a suggested restriction requirement (Def. Mem. at 11), but Tafas disagrees that he has not challenged the validity of Rule 142; (k) The Final Rules did permit applicants to file continuation or continuationin-part applications for approximately two (2) months after the Final Rules were published (Def. Mem. at 12); provided however, Tafas notes that the USPTO published materials that indicated to the public that such filings could not be made, as well as published materials indicate that if they were filed would be subject to serious negative repercussions (See e.g., slide 33 of "Claims and Continuations Final Rule" ­ Webinar August 23, 2007) 37 CFR 1.75(b)(4) and 1.78(f)(2); (l) 72 Fed. Reg. at 46736-37 asserts that an applicant under the Final Rules could file "one more continuation or continuation-in-part application" if the applicant had already filed two or more of such applications and the applicant did not file any application in any such patent family between August 21, 2007 and the effective date (Def. Mem. at 12). However, Tafas asserts no knowledge as to the intent of the USPTO with respect to applicants who file a continuation between August 21, 2007 and a new effective date of the Final Rules if they are not permanently enjoined and disputes the USPTO's allegation as to its intent. (m) The Final Rules allow for the filing of a divisional application if the USPTO agrees to issue a restriction requirement in response to a Suggested Restriction requirement (SRR), from which an applicant can file two (2) continuation applications without presenting any petition or showing (Def. Mem. at 12). Tafas disagrees with this statement, however, to the extent that it is implied that the USPTO has any requirement to or intention to actually issue such restriction requirements in actual practice.

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In particular, Tafas notes no factual support in the USPTO's administrative record for the entire purported raison d'etre of the Final Rules ­ the USPTO's assertion that such rules are necessary to ameliorate the USPTO's backlog: These filings [continuation applications and applications with more than 25 claims] are hindering the Office's ability to examine newly-filed applications and maintain quality examination. ... (Def. Mem. at 7) * * * *

The growing number of such continuation filings are hobbling the Office's efforts to examine new filings. ... (Def. Mem at 8) * * * *

Applications containing large numbers of claims also present difficulties for the Office; they absorb an inordinate amount of patent examining resources because they are extremely difficult to properly process and examine. (Def. Mem. at 10) Rather, Tafas notes that applications with more than 25 claims, and continuation applications filed pursuant to 35 U.S.C. § 120, carry substantial extra filing fees, at a level that the USPTO itself requested from Congress.3 Therefore, any resources absorbed may not logically be asserted to be "inordinate," as they are already bought and paid for by patent applicants. For RCE continuations, the USPTO has both the authority and obligation to set fee

Compare http://web.archive.org/web/20030618051735/www.uspto.gov/web/offices/com/ strat21/feeproposalcomparison.htm (listing PTO's requested fee levels) with 35 U.S.C. § 41(a) (2004 statute setting fees at exactly the level requested by the PTO for the classes of examination services at issue in this litigation) for claims over 3/20 threshold, at levels from $25 to $200 each) ­ all fee levels ("This legislative proposal [establishes] a new schedule of patent fees ... realigning fees so they better reflect the needs of customers and better correlate fees with the extra effort required to meet the demands of certain kinds of patent requests. This proposal would generate the levels of patent and trademark fee income needed to implement the goals and objectives of the strategic plan."). A genuine copy of the relevant website pages are attached hereto as Exhibit 1. 8

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levels at a cost-recovery level.4 The only evidence in the record on this point is that continuation and multi-claim applications tend to keep the PTO financially afloat, because of the larger fees paid relative to a relatively small amount of examining effort.5 This issue and incongruity was raised in a number of public comment letters. In response, the USPTO stated "revenue" was outside the agency's "view" in the rulemaking (see 72 Fed. Reg. 46757, Comment 39). Thus, the USPTO admitted that it had not and would not develop any contrary evidence that would have undercut the rationale for the Final Rules by demonstrating that there were ample financial resources available to the USPTO for the express purpose of adequately dealing with an extra "burden" imposed on the office by continuation or multiple claim filings. One of the reasons Tafas believes that the USPTO fought Tafas' efforts to take limited discovery with such ferocity is that there are so many alternative explanations for any "hindrance of the Office's ability to examine" that better fit the facts than those posited by the USPTO. The USPTO's irrational allocation of examination resources (which was discussed in

several of the comment letters, for example in Polestar Ex. 9.2, Docket No. 174-3, P000287-292 and has long been an issue raised by the Examiners' Union) and the USPTO's poorly-chosen and poorly-implemented efforts at automation are prime examples of reasons the USPTO has failed to deal effectively with its "backlog." As concerns automation, both the patent community and the Examiners' Union told the USPTO's management that certain tasks are better done on paper than by computer (Exhibit 3 of Polestar amici brief). Nonetheless, the USPTO's management didn't listen, and took the USPTO's paper search resources away from examiners in 2003 and 2004. See 35 U.S.C. § 41(4)(2) (USPTO is required to set fee for all services not specified earlier in § 41 at a cost-recovery level, a residual class that includes RCE's).
4

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The USPTO has continually argued that continuation applications are inappropriately adding to its backlog as they comprise nothing more than "rework." (See Testimony of Jon W. Dudas before the subcommittee on Intellectual Property Committee on the Judiciary April 21, 2005 (p. 9), Ex. 26 to Rueda Declaration dated December 20, 2007 ("Rueda Decl."). Nonetheless, the USPTO cites no evidence to support this assertion in the record other than rehashing Mr. Dudas' own earlier unsupported assertion, which type of ipse dixit statement does not become fact through mere repetition. At one of the public "Town Hall" meetings concerning the Proposed Rules6, Commissioner Doll confirmed that the USPTO did not analyze its data to ascertain the underlying cause of "rework" in respect of the USPTO's backlog: Question: Commissioner Doll, did you do any studies to identify where these rework applications are coming from? Do you have any sense for whether they're caused by the examiner screwing up or the applicant screwing up? ... Commissioner Doll: No, I didn't differentiate between whether it was an applicant error or an examiner error. Likewise, as demonstrated in the amicus brief of Polestar Capital and Norseman, the USPTO admitted in its FOIA Reply letters to others that it had done no assessment of whether its assertions as to "rework" had any true factual basis.7

Letter to Office of Management and Budget from David Boundy July 3, 2007, commenting on relative revenues and costs. (A genuine copy of this letter is attached as Exhibit 2).
6

5

Transcript of afternoon session of AIPLA meeting in New York, April 7, 2006. Original CD on request, pursuant to the USPTO's request that transcripts be submitted, rather than originals. Paper No. 85 (Nov. 26, 2007).

7

Polestar amici brief dated December, 2007, ¶ 1, Ex. 7, Docket No. 173-8 (USPTO admits is has "no documents" relating to "any factual investigation or analysis of underlying causes for 'rework' applications used in developing the proposed 'Continuations,' 'Examination of Claims,' or 'IDS' rules"). 10

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II. A.

ARGUMENT

The USPTO'S Exercise Of Rulemaking Authority Is Substantive And Does Not Qualify For Chevron Deference Irrespective of the USPTO's comments to the contrary and the amicus brief of the

Law Professors8 in Support of the USPTO's motion for summary judgment,9 as stated in the amicus brief of William Mitchell College of Law, the elevated deference to agency determinations set forth in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984)("Chevron") does not apply in the present case. The USPTO has asserted that the Final Rules are not substantive, but rather are "interpretive rules, or rules of agency practice and procedure." 72 Fed. Reg. 46830 at col. 3, ¶ 1. From this the USPTO argues that the Final Rules are "exempt from the Administrative Procedure Act's notice and comment period" under 5 U.S.C. 553(b)(A) "or any other law." 72 Fed Reg. at 46830, Col. 3, ¶ 1. Along the same lines, the USPTO asserts that the so-called "logical outgrowth" doctrine is inapplicable as to whether the public received adequate notice as to provisions in the Final Rules that were not in the Proposed Rules. (See Def. Mem. at 59).

8

It is notable that only three (3) of these professors are registered to practice before the USPTO and only one (1) has more than one year of patent experience in private practice, but apparently little experience in patent prosecution. There is no indication from USPTO records that any of the these three (3) professors ever filed and prosecuted a patent application through to issuance. Consequently, Tafas respectfully submits that their views on patent prosecution and the effect of the Final Rules of the patent prosecution process should be given no or little consideration.

Based on telephone calls seeking Tafas's consent for the filing of an amicus brief, the Law Professor amici effort appears to be spearheaded by Professor Arti K. Rai, who is also a member of the Board of Directors of the Public Patent Foundation, a foundation whose Board members also sit on the boards of at least the Computer & Communications Industry Association, Initiative for Medicines, Access & Knowledge, Software Freedom Law Center, Prescription Access Litigation, Research on Innovation, all of which are named as amici on the brief of the Public Patent Foundation in Support of the USPTO. 11

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Of course, it is not surprising that the USPTO would seek to masquerade its Final Rules as non-substantive10 given that the Federal Circuit and its predecessors have ruled that the USPTO does not have substantive rule making authority. Merck & Co., Inc. v. Kessler, 80 F.3d 1543, 1549-1550 (Fed. Cir. 1996)("Merck"); Eli Lilly & Co. v. Bd of Regents of Univ. of Washington, 334 F.3d 1264, 1269 n. 1 (Fed. Cir. 2003)("Eli Lilly")(reaffirming Merck); Animal Legal Defense Fund v. Quigg, 932 F.2d 920, 927 (Fed. Cir. 1991)("ALDF"); see also 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 us."); In re Henricksen, 399 F.2d 253 (CCPA 1968)(finding no statutory basis to limit the number of continuation applications); see also Tafas Mem. In Supp. of Motion for Summary Judgment dated December 20, 2007 at pp. 8-10. While the USPTO (Def. Mem. at 15) and the Law Professor amici (at page 3 of their brief) reach for dicta in United States v. Mead Corporation, 533 U.S. 218 (2001) for the proposition that interpretative rules are due Chevron deference, neither concentrates on the actual holding of the court: We hold that administrative implementation of a particular statutory provision qualifies for Chevron deference when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of such authority. Mead, 533 at 218. 11

10

The USPTO admitted that it did not have substantive rule making authority in one of its earlier memoranda. (See Def.'s Mem. In Opposition to Preliminary Injunction dated October 28, 2007 at pp. 20-21). Justice Scalia in his dissent describes the ruling as "the Court collaps[ing] [the Chevron] doctrine, announcing instead a presumption that agency discretion does not exist unless the statute, expressly or impliedly, says so." Id. at 240. 12
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Neither the general grant of procedural rulemaking authority to the USPTO in 35 U.S.C. §2(b)(2), nor any other statutory provision, expressly or impliedly authorizes the USPTO to make rules that "carry the force of law" -- that is provide for substantive or legislative rulemaking authority, with respect to long established continued examination practice or claim practice provided for under the Patent Act. Thus, Chevron deference cannot apply to the Final Rules if they are adjudged as interpretative or procedural. As noted by Professors R. Carl Moy and Jay Erstling of the William Mitchell College of Law in their amici brief,12 instead of granting Chevron deference to interpretative rules, the Supreme Court has found interpretative rules to generally not warrant Chevron-style deference, but rather only to be "entitled to respect" under its Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944) decision to the extent that the interpretations have the "power to persuade." Christensen v. Harris County, 529 U.S. 576, 587 (2000). The Law Professor amici implicitly recognize the lack of deferential treatment in acknowledging that Congress has not given the PTO notice-and-comment rulemaking authority in the area of interpretative/procedural rulings (See, footnote 4 of the Law Professors amici brief at p. 5). More importantly, Section 2(b)(2) of the Patent Act does not empower the USPTO to restrict patent applicants' statutory rights to file continuation statements and/or multiple claims. Instead, it merely authorizes the USPTO to implement rules -- not inconsistent with law -- to facilitate and expedite the processing of patent applications:

Professor Erstling, who received his B.S. and J.D. degrees from Cornell University, was the Director of the Patent Cooperation Treaty (PCT) and Advisor to the Director General of thw World Intellectual Property Organization. Professor Moy, who received his B.M.E. from University of Minnesota and his J.D. from George Washington University of Law, was a former Patent Examiner of the USPTO (1978-1982), a clerk for the Daniel M. Friedman of Washington, DC and the former Chair of the Committee on Patent Litigation for the American Bar Association (1993-1995). 13

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§ 2 Powers and Duties (b) Specific Powers. The Office ­ * (2) (A) (B) (C) * *

may establish regulations, not inconsistent with law, which shall govern proceedings in the Office; shall be made in accordance with Section 553 of Title 5; shall facilitate and expedite the processing of patent applications...

35 U.S.C. § 2(b)(2)(A)-(C)(Emphasis Added). Section 2(b)(2) is not an open ended license to the USPTO to re-write the Patent Act to suit its own administrative convenience. Rather, Section 2(b)(2)(A)-(C) merely grants the USPTO procedural rule-making authority obviously intended to facilitate the processing of patent applications through the patent office. It cannot reasonably be deemed an open-ended license for the USPTO to engage in rule-making admittedly calculated to restrict the number of continuation applications and/or the filing of multiple claims as the USPTO admits that it is seeking to accomplish: Unrestricted continued examination filings and multiple applications...., however, are now having such an impact on the Office's ability to examine new applications that it is now appropriate for the Office to clarify the applicant's duty to advance the application to final action by placing some restrictions on the filing of multiple continuing applications, requests for continued examination, and other multiple applications to the same invention. See 35 U.S.C. 2(b) (authorizes the Office to establish regulations, not inconsistent with law, which shall govern proceedings in the Office, and shall facilitate and expedite the processing of patent applications). This would permit the Office to apply the patent examining resources currently absorbed by these applications to the examination of new applications and thereby reduce the backlog of unexamined applications.

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A.00011 (71 Fed. Reg. 49)(Emphasis Added). In short, the USPTO is saying that it intends to reduce its backlog by restricting and/or denying patent applicants the ability to make filings (e.g., continuations and multiple claims) expressly contemplated by various provisions of the Patent Act. It is only a small exaggeration to say the USPTO's approach would be akin to the manager of an amusement park seeking to reduce lines for rides by not admitting anyone to the park. Only applying the most extreme bootleg logic could such an approach be characterized as reasonably calculated at "expediting" or "facilitating" a reduction in amusement park lines. The same is true here. In any event, the USPTO may not do so because the Final Rules abridge and are inconsistent with various provisions of the Patent Act. It is well established that no deference is mandated with respect to rule-making that is contrary to or inconsistent with a statute. Regulations may not serve to amend or to modify a statute or to add something to the statute that is not already there and must always be consistent with the statutes they are promulgated under. See e.g., Formula v. Schweiker, 572 F.Supp. 862, 866 (D.D.C. 1983); Ruley v. Nevada Bd. Of Prison Commissioners, 628 F.Supp. 108, 111 (D. Nev. 1986). Lacavera v. Dudas, 441 F.3d 1380 (Fed. Cir. 2006) (also cited by the Law Professors)("Lacavera") and Stevens v. Tamai, 366 F.3d 1324 (Fed. Cir. 2004)("Stevens"), relied upon by the USPTO for the proposition that the Federal Circuit has recognized plenary rule making authority having been provided to the USPTO by Congress, are inapplicable and otherwise readily distinguishable. Lacavera did not address whether the USPTO had the power under Section 2(b)(2) to enact regulations inconsistent with rights afforded to applicants under the Patent Act. Rather, Lacavera dealt with whether the USPTO properly applied the standard for determining

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the qualifications as to who was permitted to practice before the USPTO, which included interpretations found in the USPTO's General Requirements Bulletin. The USPTO's rulemaking power in this specific area, however, is specifically provided in Section 2(b)(2)(D). Moreover, unlike here, there was no complaint in Lacavera that the USPTO abridged substantive rights afforded to applicants under specific provisions of the Patent Act. In fact, the Patent Act was entirely silent as to whether the USPTO could impose the visa restriction at issue in Lacavera. Stevens is likewise distinguishable and dealt with a simple procedural question raised during the course of an adjudicatory proceeding as to whether an English translation of a foreign document could be required as part of an interference proceeding. Moreover, unlike

here, the Stevens court found it significant that Section 372(b)(3) of the Patent Act gave express authority to the USPTO to require verification of foreign language documents and none of the parties argued otherwise. Id. at 1333. The statement of "plenary authority" at p. 1333 of the Stevens case simply related to the USPTO's rulemaking authority with respect to purely procedural matters in respect of patent interference process. Such is clearly shown by the Federal Circuit's approving citation to Merck with respect to Merck's characterization of USPTO rule making authority. Id. The USPTO further argues that if the Final Rules are found to be substantive (which they must be, simply because as set forth below, they assign a new burden of proof to a patent applicant ­ See, Director, Office of Workers Compensation Programs v. Greenwich Collieries, 512 U.S. 267, 271 (1994) which states "the assignment of the burden of proof is a rule of substantive law"), then Chevron deference stands on a much stronger footing as "Congress

16

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has expressly authorized the USPTO to promulgate rules using APA notice and comment procedures" pursuant to 5 U.S.C. §553(b) (Def. Mem. at 20). As stated in Tafas' motion for summary judgment, the problem with the USPTO's argument is that the Federal Circuit has made it clear that the USPTO does not have any substantive rulemaking authority. The Supreme Court has made clear that an agency cannot claim Chevron deference when promulgating a regulation outside of the authority actually granted to them. See, Adams Fruit Co. Inc. v. Barrett, 494 U.S. 638, 649 (1990) ("A precondition to deference under Chevron is a congressional delegation of administrative authority"); see, also, Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988); NLRB v. Food and Commercial Workers, 484 U.S. 112, 123 (1987) (Chevron review of agency interpretations of statutes applies only to regulations "promulgated pursuant to congressional authority"). Finally, Centigram Communications Corp. v. Lehman, 862 F.Supp. 113 (E.D.V.A. 1994)("Centigram"), Morganroth v. Quigg, 885 F.2d 843 (Fed Cir. 1989)("Morganroth"), Dickinson v. Zurko, 527 U.S. 150 (1999)("Dickinson"), and In re Rubinfield, 270 F.2d 391 (CCPA 1959)("Rubinfield"), all relied upon by the USPTO, are likewise distinguishable and not helpful to the USPTO.13

The holding in the case of In the Application of Don L. Rubinfield, 270 F.2d 391 (C.C.P.A. 1959) does not imply, as suggested by the USPTO at page 29 of its brief, that the USPTO "certainly can require applicants who file more than five independent claims or more than twenty-five total claims to submit additional information to assist in examination without contravening Section 112." The Rubinfield court only dealt with the very narrow question of whether the USPTO's rule to allow only one (1) claim in a design patent case was valid under then existing statutes pertaining to design patents. The limitation to one (1) claim in design patent applications was upheld solely because the court deemed the design patent statute to limit presentation to only a single inventive concept (Id. at 396) and, therefore, "no useful purpose [that] could be served by the inclusion of more than one claim in a design application or patent." Id. at 395. 17

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In Centigram, the Court never reached the second part of the Chevron test because the court found that the statute in that case expressly clothed the commissioner with the authority to deal with the exact question at issue through regulation. That is not the case here. Morganroth did not address whether an exercise of rule-making power was valid and instead simply found, in an adjudicatory setting, that the USPTO's interpretation of Section 41 of the Patent Act in the context of dealing with very narrow and technical questions within the USPTO's expertise was reasonable and entitled to some deference. Morganroth is very distinguishable from the instant case, which poses the very different question as to whether the USPTO may utilize rule making to effectively modify and restrict statutory rights provided to applicants under the Patent Act under the guise of "facilitating" and "expediting" patent applications. Dickinson likewise is an adjudicatory case and distinguishable because deference was given to the agency's fact-finding and not rule-making. B. The USPTO'S Final Rules Are Not Consistent With The Patent Act or Other Law 1. 35 U.S.C. §120

The USPTO asserts that "[n]othing in the text, history, or case law interpreting Section 120 ... deprive[s] the USPTO of authority to make regulations." (Def. Mem. at 20). Again, as first set forth in his preliminary injunction motion, Tafas respectfully submits that there is nothing in Section 2(b)(2) of the Patent Act or otherwise that authorizes the USPTO to engage in substantive rule making limiting the rights and benefits afforded Congress afforded to patent applicants under Section 120. (See Tafas Mem. In Supp. of Motion for Summary Judgment dated December 20, 2007 at pp. 5-8). As set forth in the amicus brief of the Bar Association of the District of Columbia, Federal Circuit Judge Giles S. Rich, in his 1952 commentary as a member of the drafting

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committee that promulgated Section 120 of the Patent Act, clearly indicated that Section 120 was intended to provide for unlimited continuations to be filed: "Section 120 ... on careful reading ... [indicates] that the number of generations of the lineage is unlimited." Transcript of Address of Giles S. Rich on the Patent Act of 1952, publication of the New York Patent Law Association (1952). 35 U.S.C. § 154 was amended in 1995 to effectively constrain the unlimited nature of such filings to the number of filings that could be made to a term of 20 years from the filing date of the earliest application from which priority was sought. The USPTO urges that the cases cited by Plaintiffs are inapplicable because some of them issued before 1952. (Def. Mem. at 22). That is simply not the case as courts have consistently acknowledged that "a limit upon continuation applications is a matter of policy for the Congress." In re Hogan, 559 F.2d 595, 604 n. 13 (CCPA 1977); Ricoh Co. Ltd. v. Nashua Corp.. 185 F.3d 884, 199 WL 88969, *3 (Fed. Cir. 1999)("[S]ection 120, governing continuation applications, does not contain any time limit on an applicant seeking broadened claims"); In re Henriksen, 399 F.2d 253, 254 (C.C.P.A. 1968) (there is "no statutory basis for fixing an arbitrary limit to the number of prior applications'). Respectfully, the USPTO's argument that such a reading of Section 120 would conflict with Section 112, 121, and 251 is simply unsupportable given that all these statutes existed when Judge Giles issued his commentary (and the Federal Circuit, and its predecessor court, ruled otherwise). Furthermore, the USPTO's assertions in this regard are contravened by the USPTO's own long practice since 1952 in not reading such statutes so narrowly as to suggest that all inventions possibly disclosed in an invention must be claimed at the time of the initial filing. The words of the statutes cited by the USPTO simply do not support the interpretation posited by the USPTO.

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The USPTO and amicus Micron Technology, Inc. ("Micron") assert that the majority of the three-member panel in In re Bogese II, 303 F.3d 1362 (Fed. Cir. 2002) ("Bogese II") (Judge Newman, vehemently dissenting that the statutes even provided for the USPTO to have the limited power to regulate extreme cases of prosecution laches ), "opined that the USPTO's power went beyond mere enforcement of prosecution laches." While both cite to isolated statements made in the Bogese decision to the effect that "[t]he USPTO has inherent authority to govern procedure before the USPTO," neither demonstrates that the Bogese decision grants the USPTO the power to ab initio limit continuation practice. To the contrary, 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 such an application in a case of unreasonable and extreme delays 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 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. Irrespective of the USPTO's public policy rhetoric, the courts have consistently held"[T]here is nothing improper, illegal or inequitable in filing a patent application for the purpose of obtaining a right to exclude a known competitor's product from the market; nor is it in any manner improper to amend or insert claims intended to cover a competitor's product the applicant's attorney has learned about during the prosecution of a patent application." Kingsdown Medical Consultants Ltd. v. Hollister Inc., 863 F.2d 867, 874 (Fed. Cir. 1988).

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Many continuations are filed simply to expedite issuance of claims, or to overcome rejections which may not have basis. For example, in the case of Moore v. U.S., 194 USPQ 423, 435 (Ct. Cl. 1977), the court found that the filing of six continuations to the same invention not to be unconscionable as the applicant had made good faith efforts to move prosecution forward with amendments, affidavits, new arguments, etc., and in recognition that the route to allowance can be "arduous." In all events, the Bogese II court made it clear that the prosecution laches doctrine was limited and reserved for extreme circumstances14 and implied that the USPTO would not have a similar power to adopt a broad across the board rule applicable to all patent applicants. Bogese II, 303 F.3d at 1368 n. 6. 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 any 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, although it has no statutory authority to do so.15 As discussed on p. 12 of amicus CFPH, LLC, the addition of a factual presumption is substantive rulemaking. See Paralyzed Vets. of Am. v. Secretary of Veterans Affairs, 308 F.3d 1262, 1266 (Fed. Cir. 2002). Similarly, Symbol Techs, Inc. v. Lemelson Med. Educ. & Research Foundation, 277 F.3d 1365 (Fed. Cir. 2002)("Symbol II"), relied upon by the USPTO, merely upheld the application of the judicial doctrine of prosecution laches in an action between private parties where there were claims of resulting prejudice. The APA does not permit an administrative agency to change the burden of proof unless explicitly permitted by statute. See, Heckler v. Campbell, 461 U.S. 458, 468 (1983); accord, Director, Office of Workers Compensation Programs v. Greenwich Collieries, 512 U.S. 267, 271 ("the assignment of the burden of proof is a rule of substantive law). 21
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2.

35 U.S.C. §132

The USPTO asserts that Final Rule 114 is consistent with 35 U.S.C. § 132. More particularly, the USPTO contends that its power to limit an applicant to file one RCE derives from Section 132(b), which "expressly directed the UPSTO to `prescribe regulations to provide for the continued examination of applications for patent at the request of the applicant.'" The problem with the USPTO's argument, as set forth in the excellent brief by amicus Federation Internationale, is that the statutory language "provide for" in Section 132(b) implies only the power to enact procedural rules to provide for and facilitate such filings -- not to prohibit or restrict the filings themselves or the number of filings that may be made. Furthermore, the American Inventors Protection Act of 1999, Pub. L. No. 106113, § 4405(b)(1) (1000) makes it clear that Section 132(b) was to apply to all applications filed after June 8, 1995 -- not just one application per family. The USPTO itself has acknowledged this in its own prior interpretation of the statute, stating that "an applicant ... is not limited in the number of times" the applicant can file an RCE. (See Request for Continued Examination Practice and Changes to Provisional Application Practice, 65 Fed. Reg. 50,092, 50,095 (Aug. 16, 2000). 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 statutory language of 35 U.S.C. §132(a), which specifically mandates both a notification and a reexamination of the application without exception: Whenever, on examination, any claim for a patent is rejected, or any objection or requirement made, the Director shall notify the applicant thereof, stating the reasons for such rejection, or 22

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objection or requirement, together with such information and references as may be useful in judging of the propriety of continuing the prosecution of his application; and if after receiving such notice, the applicant persists in his claim for a patent, with or without amendment, the application shall be reexamined. No amendment shall introduce new matter into the disclosure of the invention. 35 U.S.C. § 132(a)(Emphasis Added). The Final Rules essentially re-write Section 132(a) by imposing impose conditions precedent on the USPTO's statutory obligation to engage in reexamination upon request. Id. In short, Tafas agrees with amicus Mitchell College of Law's argument (pp. 13­20) that first action final reject practice in continuing applications is in itself contrary to existing law. 3. 35 U.S.C. §§ 101, 111, 112, 131 and 151

The USPTO urges the Court to "uphold Final Rules 75 and 265 as a reasonable exercise of the USPTO's Section 2(b)(2) authority." (Def. Mem. at 27). The USPTO claims that 35 U.S.C. §§ 111, 112, 131, and 151 do not prohibit the USPTO from imposing an absolute limit on the number of claims nor do they preclude the USPTO from requiring an Examination Support Document (ESD) if an artificial threshold number of claims set by the USPTO are exceeded. Again, the USPTO purports to derive its rule making power from the generic language in 35 U.S.C. § 2(b)(2)(A)-(C) authorizing the USPTO to "facilitate and expedite the processing of patent applications." (Def. Mem. at 29). The USPTO's arguments are plainly unsupported. As admitted by the USPTO at A07333, the "patent statute and rules of practice do not limit the number of claims (independent or dependent) that may be presented in an application." This is because, as stated i