Dudas: Continuation Rules are Dead / Surprised by Drop in Patent Allowances
Posted by Bob Sayre on Sat, Sep 26, 2009 @ 07:39 AM
Several recent posts on this patent blog have explored coming changes to the USPTO. This post, in part, looks back. The Patent Claims and Continuation Rules promulgated by the previous administration (limiting an applicant's right to file multiple patent applications with an adequate number of claims) was one of the most contentious USPTO initiatives under past-Director Jon Dudas. It's retrospective nature, in particular, sent many applicants into a frenzy to try to preserve as much of their then-endangered intellectual property rights as possible.
Yesterday (Friday, September 25, 2009), I had a chance to hear from and question past-Director Dudas at a forum at Suffolk Law School in Boston. To his credit, Jon Dudas made himself available and invited challenging and critical questions. Not wanting to miss the opportunity, I took him up on that invitation.
USPTO Claims and Continuations Rules Package:
But first, one of Dudas's most interesting comments pertained to the above-mentioned Continuation Rules. As you may recall, those Rules were challenged before implementation and, in a ruling that had the patent bar collectively on the edge of its seat, Federal District Court Judge James Cacheris ruled that the USPTO's proposed limitations to the number of continuation applications and claims per patent were improper extensions of PTO authority and, accordingly, struck down the Rules.
As the celebration ebbed, a three-judge panel of the Court of Appeals for the Federal Circuit surprisingly overtured the District Court Decision on March 20, 2009, holding only a limited portion of the Rules relating to continuation applications to be contrary to the Patent Act. Adding to the tumult, the full bench at the Court of Appeals for the Federal Circuit then vacated this panel decision and agreed to rehear the case en banc (i.e., with all 16 judges hearing the case).
Meanwhile, of course, the Bush administration was replaced by the Obama administration, and Director Dudas resigned on January 18, 2009; so implementation of the Rules package, if it ultimately survives the appeal process, would be left to the next Director. Current-Director David Kappos was not sworn in until this past month; so in a sense, the Continuation Rules ship has been sailing through the appeal process without a captain since the beginning of the year. My understanding is that new-Director Kappos is now unable to comment on the continuation rules given that he is now a party to the litigation, though I understand that he was against the rules when he previously served as counsel to IBM.
Accordingly, the fate of the Continuation Rules package has remained somewhat uncertain. Though, I was surprised to hear past-Director Dudas now concede on Friday, in his words, "I don't think there's a way in the world that the Rules package will go forward." Dudas further explained that he believed that if a new USPTO Director had been confirmed before the Court of Appeals for the Federal Circuit granted review, the Rules package would have been withdrawn. Past-Director Dudas would seem to be in a position to know, so it appears safe to say that even if the full panel at the Federal Circuit approves some or all of the rules, the claims-continuation rule package will never be implemented, at least not in its current form.
Drop in US Patent Allowance Rate:
Getting back to my questioning of past-Director Dudas, I asked him for his view as to what policies and initiatives led to the drastic plunge in patent allowance rates at the USPTO under his leadership. Dudas surprised me by telling me that he was surprised at the degree to which the allowance rate dropped. As to why the rate dropped so far and so fast, Dudas first indicated that he believed that the "second pair of eyes" review procedure of examiner Actions was implemented in overly onerous way at the USPTO.
Dudas also noted (correctly, I believe) that the focus on error rate (which seems primarily aimed toward ensuring that no questionable patents are issued) may have drove down allowance rates, just as the "quality is customer [applicant] satisfaction" mindset of the USPTO under the leadership of Commissioner Bruce Lehman in the mid-1990's corresponded with a rise in allowance rates. Dudas further indicated that he thought the Supreme Court's KSR decision, which raised the bar for establishing non-obviousness of an invention, drove the allowance rate down even further.
When Dudas was introduced, emphasis was placed on his achievements promoting intellectual property protection overseas; and Dudas's speech focused primarily on congressional patent reform efforts (Dudas was Senate Counsel before he was not nominated by Bush to lead the USPTO); and he seemed to have a stronger interest in the actions of the legislative branch (i.e., House and Senate) than on the executive branch (which is where the USPTO resides). Combined with his comments on how the USPTO functioned (including his indications of surprise), it appeared to me that Dudas may not have been primarily focused on directing the fine points of policy and the particulars of USPTO examination practice when he was Director. Note, however, that this was the first time that I had met Dudas, so my observation basis is limited.
If not Dudas, who drove these policies? I am not sure. Regardless, new-Director Kappos has indicated that he intends to focus more on US patent examination policy and less on foreign initiatives, except to the extent that foreign cooperation can help to make US patent examination more efficient.
What Next?
As for what happens next, past-Director Dudas indicated that he expected that, within the next year, the growing list of bilateral patent-prosecution-highway agreements between the US and foreign countries (aimed to streamline prosecution based on allowance of a corresponding application in another country) would grow into a common multi-lateral agreement among patenting bodies worldwide. He also expected fee increases for applicants and more time for examiners to conduct their examinations.