Appeals Court Invalidates Patent Office Rule

In a case decided on Mar. 20, 2009, the US Court of Appeals for the Federal Circuit invalidated a US Patent and Trademark Office (PTO) Final Rule that governed the number of applications that parties may file to seek continued examinations of patent applications. The court found that the PTO’s Final Rule 78 conflicted with 35 USC § 120 and upheld a finding by the US District Court for the Eastern District of Virginia that the rule was invalid. The PTO issued the rule to address a backlog of unexamined patent applications.

The Court of Appeals vacated the Disrtict Court’s judgment that three other PTO Final Rules were invalid, however, and remanded the case to that court for further proceedings. Final Rule 114 governed continuation applications. The two other rules, Final Rule 75 and Final Rule 265, required applicants to provide supplemental information and were intended to make it easier for the PTO to examine applications that contain a large number of claims, according to the Appeals Court decision.

Under Final Rule 78, if an applicant wished to submit more than two continuation applications, he or she was required to file a petition “showing that the amendment, argument, or evidence sought to be entered could not have been submitted during the prosecution of the prior-filed application,” according to the Appeals Court decision. If the applicant did not meet this requirement, the PTO would accept the application but disregard specific references to a prior-filed application. The application would thus not be governed by 35 USC § 120 or be granted the filing date of the prior-filed application.

After the PTO published the four Final Rules in the Federal Register on Aug. 21, 2007, two GlaxoSmithKline subsidiaries and a third party filed lawsuits in the US District Court for the Eastern District of Virginia. The plaintiffs asserted that the PTO was capricious and exceeded its authority in issuing the rules. The District Court agreed and struck down all four rules.

In its decision, the Court of Appeals explicitly listed the issues that the District Court must now determine. Those issues include whether any of the Final Rules, either on their face or as applied in specific circumstances, are arbitrary and capricious; whether any of the Final Rules conflict with the Patent Act in ways not specifically addressed in the Court of Appeals’s opinion; whether the PTO’s rulemaking is subject to notice and comment rulemaking; whether any of the Final Rules are impermissibly vague; and whether the Final Rules are impermissibly retroactive.

To view the Court of Appeals decision, click here.