Post-GSK: Where Do We Go from Here? - Co-owned, Co-pending Applications
By Kevin E. Noonan --
The following is part of a continuing series on how to address the very real problems facing the U.S. Patent and Trademark Office.
A day after the day of rejoicing for inventors, patent practitioners, examiners, and seemingly all of civilization, fair-minded people will concede that the U.S. Patent and Trademark Office faces a daunting task. After years of neglect - from Congress raiding the users' fees, an inadequate number of examiners, technology-driven increases in the number of applications filed, and a "count" system that has not rewarded a style of examination that encourages prosecution to a definitive end point - the Office is facing a massive backlog of applications without sufficient resources to process them in a timely manner.
If the patent bar is gladdened by District Court Judge Cacheris' decision enjoining implementation of the new rules - representing an attempt, albeit a misguided one, on the part of the Office to address the pendency and backlog problems - it behooves us to propose alternatives. Patent Docs will be posting a series of such proposals, and we invite our readers to provide their own ideas. As they used to say in the days of the counterculture, "if you are not part of the solution, you are part of the problem." Patent Office management clearly thinks the patent bar is part of the problem; it would be satisfying to prove them wrong.
Identification of co-owned, co-pending applications
One of the little-discussed provisions of the new rules enjoined by Judge Cacheris of the District Court of the Eastern District of Virginia on October 31st were two disclosure provisions. 37 C.F.R. § 1.78(f)(1) required that applicants prosecuting an application must identify other commonly owned applications or patents having (a) an inventor in common with the application being prosecuted, and (b) a claimed filing or priority date within two months of the claimed filing or priority date of the application being prosecuted. This rule was comprehensive, in the sense that for an application having an actual filing date of December 1, 2006, claiming the benefit of a nonprovisional application filed on June 1, 2004 and a foreign application filed on June 1, 2003, an applicant would be responsible for identifying all co-owned applications naming one inventor in common that were filed within two months of each of the December 1, 2006, June 1, 2004, and June 1, 2003 dates, according to an example published in the Federal Register to illustrate the rules.
The impetus for this reporting requirement was to prevent an applicant from "cheating" on the new rules by filing related applications naming the same inventors. This aspect was most directly evidenced by subsection 78(f)(2) of the new rules, which created a rebuttable presumption that an application being prosecuted and other commonly owned application or patent contain at least one patentably indistinct claim when the application being prosecuted and the commonly owned application or patent have (a) an inventor in common, (b) substantial overlapping disclosure, and (c) the same claimed filing or priority date. Subsection 78(f)(1), however, was broader than was required to identify relevant co-owned and co-pending applications, since it did not encompass the requirement for "substantial overlapping disclosure" (which at least could be understood to be an indication that the applications were sufficiently related to raise the rebuttable presumption.
All this has been discussed at length in earlier posts (see, e.g., "An Analysis of the New Rules: 37 C.F.R. § 1.78(f): Commonly Owned Applications and Patents"), and with Judge Cacheris' injunction granted October 31st they are (at least for now) in abeyance. Assuming the preliminary injunction becomes permanent after the parties have had a chance to fully litigate the issue, the question becomes whether any part of these reporting requirements could or should survive? On the one hand, providing this information (particularly under the ministerial guise of submitting a pre-approved Patent Office form) would enable applicants to satisfy at least a good portion of the disclosure requirements implicated in the Federal Circuit's McKesson Information Solutions, Inc. v. Bridge Medical, Inc. decision (see Patent Docs report on that case). Absent the specific circumstances the Court noted in its decision to uphold a finding of inequitable conduct based on an applicant's failure to disclose the existence of co-pending applications, it should be difficult for an infringer to argue that a patentee committed McKesson inequitable conduct in the face of specific disclosure of such applications pursuant to 37 C.F.R. § 1.78(f)(2) (or some judicially-sanctioned equivalent).
Paradoxically, these disclosure requirements that so concerned members of the patent bar (and their clients) might be useful for reducing the backlog of unexamined patents. In order to comply with the identification requirement, practitioners would need to know about the existence, content, and priority claims of all commonly owned applications or patents having an inventor in common with the application the practitioner is prosecuting. This raised a burden under the now-enjoined new Rule 78(f) for practitioners who prosecute applications for larger assignees that employ the services of multiple outside counsel. For each application, Outside Counsel A prosecuting a first application would need to know the identities of all other applications being prosecuted by Outside Counsels B through Z (and, of course, the converse). This requirement to merely identify co-owned and co-pending applications is less burdensome in the absence of the more extensive analysis required to comply with now-enjoined new Rule 78(f)(2), but still could represent an administrative nightmare for a corporation such as IBM which has, according to its amicus brief filed in the consolidated Tafas v. Dudas and GSK v. Dudas case, 30,000 pending applications.
And this is where the convergence of the rule and the backlog might take place. It is at least possible that a company like IBM would conclude that a portion of these pending applications are not sufficiently valuable to justify the administrative costs incurred by complying with the notification rule. This does not imply that these applications were filed improperly or unnecessarily. However, it is the case that some applications lose value over time, either because the inventions they protect have not had the expected or hoped-for commercial success, or because these inventions have been overtaken by "new and improved" embodiments (that are the subject of their own applications), or for other business reasons. It is impossible to know the magnitude of this category of cases, but if it is as little as 10% of IBM's pending application, the backlog would be reduced by 3,000 applications from just this one applicant. If this pattern were to apply across the spectrum of just the large companies, by this one administrative device alone the patent backlog could be reduced by 75,000 applications. This is close to the number (11% of the backlog, or about 82,500 applications) that the Office has said contain more than 5 independent claims and 25 total claims, or more than the number of applications having more than 2 continuations.
There are several advantages to this approach. First, small, high-tech start-up companies and other small entities (including universities) would be relatively unaffected by the rule, since these companies typically do not have 30,000 pending applications, and the burden of complying with the rules is reduced exponentially the fewer the number of pending applications an applicant has. Second, it is voluntary. Third, it does not negatively impact patent rights or the ability to apply for as many patents as an applicant may want. Fourth, it is not merely an administrative device since it facilitates compliance with disclosure rules highlighted in the McKesson decision. And lastly, by eliminating the rebuttable presumption portion of now-enjoined new Rule 78(f)(2), it imposes no requirement that an applicant provide statements on the prosecution history record that could be (mis)interpreted later by an infringer to be an admission useful to support an inequitable conduct or invalidity challenge.
It is certainly the case that implementation of this rule would impose some costs on applicants, particularly those with large portfolios of pending applications. However, this aspect of the rule as a certain equitable attractiveness; although it is not the case that large portfolio applicants are "the problem" (as Patent Office sentiment would have it), these applicants are certainly part of the backlog burden. Encouraging them to do what they can to help ease the backlog is not unreasonable.
For additional articles in the "Post-GSK" series, please see:
- "Increased Fees for Continuations," November 8, 2007
- "Regional Patent Offices," November 7, 2007
- "Tailoring Protection and Examination," November 6, 2007
- "Annuities," November 1, 2007
