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Guest article

Court blocks patent office claims & continuation rules

By Courtenay Brinckerhoff , 16-Nov-2007

The patent community breathed a collective sigh of relief on October 31 when the US District Court for the Eastern District of Virginia granted a preliminary injunction blocking the US Patent Office's Claims and Continuations Rules from taking effect.

The rules would have implemented substantial changes to US patent practice, including strictly limiting the number of continuation applications and claims that can be filed to a given invention, and imposing other requirements that would increase the difficulty and costs of obtaining patents, particularly in the field of biotechnology, chemistry and nutraceuticals.

 

 

 

While the rules are on hold, they are not dead yet, and nutraceutical companies need to remain informed so they can make decisions that will maximize the value of their patent portfolios during these uncertain times.

 

 

 

The district court ruling came in a legal challenge brought by Smithkline Beecham Corporation (GSK) that was joined with an earlier challenge brought by a sole inventor, Triantafyllos Tafas. GSK charged that the rules are illegal for a number of reasons and asked the court to block them while it evaluates their validity.

 

 

 

The court granted the preliminary injunction literally hours before the rules were to take effect.

 

 

 

The order specifically bars the Patent Office from implementing the rules or any other limits on continuation applications or claims, until the trial is completed and the court reaches a final decision on their legality. Such a decision is not expected until early 2008, at the soonest.

 

 

 

In order to obtain the "extraordinary" remedy of a preliminary injunction, GSK had to show, among other things, that it was likely to succeed in invalidating the rules. Because the court's basis for granting the preliminary injunction may foreshadow its final decision, nutraceutical companies should be interested to know the court's reasoning. Indeed, while the court determined that GSK was likely to succeed generally, it did not find for GSK on each issue. Thus, some of the rules may survive GSK's challenge.

 

 

 

An summary outline of some of GSK's arguments, the court's decisions, and the possible impact on nutraceutical companies is provided below:

 

 

 

-Did the Patent Office exceed its rulemaking authority by issuing rules that have substantive impact on patent rights?

 

 

 

The court decided that GSK "created a colorable question" that the rules are substantive, and thus beyond the Patent Office's rulemaking authority, which is largely limited to rules that govern proceedings within the Patent Office.

 

 

This decision is tied to the continuation limits. The court may find that the Patent Office has authority to issue the other rules. Also, patent reform legislation pending in Congress might give the Patent Office authority to make substantive rules and/or limit continuation applications.

 

 

-Do the continuation limits conflict with 35 U.S.C. § 120, which provides for the filing of continuation applications?

 

 

 

The court cited case law that had rejected arbitrary limits on the number of continuations that can be filed, and found that this aspect of GSK's challenge was likely to succeed. The court acknowledged that the rules did not create an absolute bar to additional continuations, but noted GSK's arguments that the difficulty of obtaining a petition for an additional continuation imposed a de facto limit on additional continuations.

 

 

The court is most likely to invalidate the continuation limits.

 

 

-Do the Request for Continued Examination (RCE) limits conflict with 35 U.S.C. § 132(b), which provides for continued examination?

 

 

 

The court found that neither party's arguments on this issue were very strong, and that neither had shown a likelihood of success on the merits.

 

 

The court may uphold the RCE limits, but if there are no continuation limits, nutraceutical companies could use continuation applications as vehicles to continue patent prosecution. Thus, the impact of RCE limits would be minimal.

 

 

-Do the limits on the number of claims conflict with 35 U.S.C. §§ 111 and 112, which relate to claims?

 

 

 

The court doubted the Patent Office's argument that it was entitled to deference on this issue, but found that the party's arguments on this issue were limited, so that neither had shown a likelihood of success on the merits.

 

 

The court may uphold the claim limits. Nutraceutical companies may want to prepare patent applications with the understanding that they may have to reduce the number of pending claims should the claim limits take effect.

 

 

-Are the rules improperly retroactive?

 

 

 

GSK argued that the rules were retroactive, in part because they impact applications already on file. The Patent Office argued that the rules were not improperly retroactive, because the filing of a patent application does not itself create any vested rights. The court found that GSK was likely to succeed on this issue, because the rules impose new duties on applications that already have been filed, and change the terms of the bargain that was made when GSK gave up its right to keep its inventions as trade secrets and filed its patent applications.

 

 

The Patent Office could overcome this issue by making the rules apply to new applications only. In that case, nutraceutical companies would have to adjust their patent prosecution strategies for new applications covered by any rules the court upholds.

 

 

 

 

While many nutraceutcial companies were glad to see the Claims and Continuations Rules blocked, they should not rest too easy. The court may uphold some of the rules, including rules that will require nutraceutcial companies to re-think their current patent prosecution strategies and invest more resources in patent procurement. Nutraceutcial companies should keep in touch with their patent counsel to remain informed about the status of the rules, and determine if there are any steps that they want to take to remain ready for their implementation.

 

 

Courtenay Brinckerhoff is a partner in the Intellectual Property Department of Foley & Lardner LLP, and counsels clients in the chemical, biotechnological and pharmaceutical fields.

 

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