United States Patent and Trademark Office Settles Litigation over Controversial Patent Rules but Backlog Remains an Issue

By: Tom Walsh - Intellectual Property Group Chair, Ice Miller LLP

On October 9, 2009, many patent applicants, patent owners and patent attorneys were delighted to hear that the United States Patent and Trademark Office (USPTO) had settled the litigation over the controversial patent regulations that were proposed in 2007. In particular, the news that the USPTO had agreed to rescind the regulations as a component of the settlement was met with a favorable reaction from a great majority of the patent community.

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David Kappos, Under Secretary of Commerce for Intellectual Property and Director of the USPTO, was quoted as saying at the time, "These regulations have been highly unpopular from the outset and were not well received by the applicant community."

But how did we get to this point? In an attempt to address the growing backlog of pending patent applications, the USPTO proposed a significant set of regulations that were intended to attack several of the root causes of the backlog as identified by the USPTO. The regulations generally were considered to reduce the flexibility and certain opportunities available to patent applicants, and to impose certain new duties on patent applicants and their attorneys. Director Kappos (who at the time was an attorney with IBM, annually the leading recipient of U.S. Patents) is correct that the new regulations immediately were criticized by a great majority of patent applicants, patent owners, patent attorneys and other commentators. Among the criticisms were claims that the regulations exceeded the USPTO's authority, were contrary to the existing patent statutes and may have been unconstitutional. Not to be deterred, the USPTO issued a final set of regulations in August 2007, with the new regulations set to take effect on October 1, 2007.

Patent attorneys and patent applicants scrambled to react to the new regulations. Because certain provisions of the new regulations would have applied only to patent applications filed on or after October 1, 2007, many patent applicants accelerated filing of their patent applications to beat this deadline. Because other provisions of the regulations would have imposed new duties on patent applicants and their attorneys, applicants and their law firms engaged in urgent discussions over budgets and modifications to existing fee arrangements.

Litigation to block the regulations ensued shortly after the final regulations were issued. In a fashion reminiscent of a television drama, just before the new regulations were to take effect, a preliminary injunction was issued to block the ability of the USPTO to enforce the new regulations. A permanent injunction subsequently was issued in April 2008.

The USPTO appealed the permanent injunction, and in March 2009 the U.S. Court of Appeals for the Federal Circuit (CAFC) reversed the decision of the district court in part, finding certain of the regulations to be valid. On petition from the plaintiffs, the CAFC agreed to re-hear the case en banc. Preparations for the en banc hearing were underway at the time the settlement was announced on October 9, 2009.

Although the specter of these new patent regulations is eliminated, the backlog of patent applications remains and is not letting up. As the table below will indicate, the number of new U.S. patent applications continues to grow year over year.

U.S. patent applications filed:
2003: 366,043
2004: 382,139
2005: 417,508
2006: 452,633
2007: 484,955
2008: 485,312

A patent remains a valuable asset for its owner, and the U.S. patent system is vital to our system of commerce. The demand for U.S. patents does not appear to be diminishing. However, the backlog of patent applications in the USPTO, and the period a patent application is pending in the USPTO, are aspects of the U.S. patent system that certainly can be improved. In a speech earlier this year at the annual conference of the Intellectual Property Owners Association, Director Kappos explained in broad terms some of the initiatives designed to increase efficiency and throughput in the USPTO, including worksharing with patent offices in other countries, and creating a nationwide network of patent examiners rather than relying only on patent examiners who live and work in the Washington, D.C. area. Hopefully, these and other productivity initiatives (rather than a new set of onerous regulations) will enable the USPTO to address the backlog and the application pendancy issues.

Tom Walsh is the chair of Ice Miller's Indianapolis Intellectual Property Group. He assists new companies and established businesses who face intellectual property issues. His experience includes patent prosecution in a variety of technology areas, licensing, intellectual property strategies, technology transactions, trademarks and franchising. Tom can be reached at: thomas.walsh@icemiller.com or 317-236-5946.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.

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