SpicyIP Tidbit: District Court in the US Voids New USPTO Rules


In what is universally seen as a thumping victory for patent applicants, a Virginia District Court, on April 1st, enjoined the USPTO from implementing the “Changes to Practice for Continued Examination Filings, Patent Applications Containing Patently Indistinct Claims, and Examination of Claims in Patent Applications”. The plaintiffs were GlaxoSmithKline and Triantafyllos Tafas.

These rules were due to come into effect last November and had certain controversial changes which limited the number of continuation or continuation-in-part applications in a patent family to two and restricted the applicant’s right to file a request for continued examination (RCE) to one per family. This was commonly referred to as the “2+1 rule”. 

Further, there was the 5/25 rule which required the applicant to restrict the number of independent claims to 5 or the total number of claims to 25. If the number of claims exceeded the prescribed limit, the applicant was required to submit an Examination Search Document (ESD) to assist the examiner in evaluating the patentability of the invention. Pursuant to applications for a review of these rules by Triantafylos Tafas and Smithkline Beecham Corporation, the U.S. District Court for the Eastern District of Virginia issued a temporary restraining order and preliminary injunction on October 31, 2007, preventing the rules from coming into effect and calling for briefing on the issues.

Subsequently, all the parties filed motions for summary judgments. The Court was asked to decide the following:
1. Were the new rules proposed by the USPTO substantive in nature?
2. If yes, was the USPTO empowered under 35 USC 2(b)(2) to make rules which are substantive in nature?

On April 1st, 2008, the Court held that:
Because the USPTO’s rulemaking authority under 35 USC 2(b)(2) does not extend to substantive rules, and because the Final Rules are substantive in nature, the Court finds that the Final Rules are void as “otherwise not in accordance with law” and “in excess of statutory jurisdiction [and] authority” 5 USC 706(2).”
The US law on judicial review as set out in 5 USC 706 (2), permits a court to hold the actions of an agency such as the USPTO unlawful and to set such actions aside if they are, inter alia, “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” or if they are “in excess of statutory jurisdiction, authority, …”. 
The Court noted that prior case law had drawn a distinction between the powers of the USPTO to make procedural rules and substantive rules, holding that the USPTO had no authority to make rules of the latter type. The Court also noted that Congress had considered and declined to give the USPTO the power to make substantive rules. Consequently in the present case, if the rules promulgated by the USPTO were deemed to be substantive, they would be null and void. The USPTO may appeal this decision to the Court of Appeals to the Federal Circuit.

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