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Biomedical, University Sectors Score Win as Court Temporarily Bars USPTO Rule Changes

The US District Court for the Eastern District of Virginia last week sided with GlaxoSmithKline in its suit against the US Patent and Trademark Office, temporarily barring the agency from enacting a set of recently proposed changes in US patent rules.
The preliminary injunction was handed down on Oct. 31 by Judge James Cacheris, one day before the new patent rules were originally set to go into effect.
As part of the decision, the court also denied the USPTO’s motion to strike from the record a declaration of support for GSK’s case from a former US commissioner of patents and trademarks; and said it would consider several amicus briefs filed by various GSK supporters.
The court’s decision resonated through various industries, especially the pharmaceutical, biotechnology, and university technology transfer communities, which view the rule changes as being hasty and potentially stifling to innovation. Several representatives from these communities last week lauded the court’s ruling as an early victory in what could be a lengthy process to determine whether the rule changes go into effect at all.
In August, the USPTO published new rules in the Federal Register that it said were designed to improve patent quality and improve the effectiveness and efficiency of patent examination. Specifically, according to the court’s written opinion, the “USPTO justified the proposed changes on the ground that the growing number of continuing applications and increasing number and complexity of claims in applications had crippled [its] ability to examine newly filed applications.”
The USPTO originally proposed the rule changes in January 2006, but continued to shape them following a four-month public comment period during which it received a significant amount of negative feedback.
Under the proposed rules, patent applicants would have been able to file two new continuing applications and one request for continued examination as a matter of right. In addition, each patent application would have been allowed to contain no more than 25 separate claims, with no more than five of them independent, without any additional effort on the part of the applicant.
Beyond these thresholds, the rules would have required applicants to show why an additional continuation is necessary or to provide supplementary information relevant to the claimed invention to present additional claims.
Current rules allow applicants to file an unlimited number of continuing applications, requests for continued examination, and claims.
Early last month, GSK filed a complaint against the USPTO with the US Federal Court for the Eastern District of Virginia to challenge the published rules, claiming that the changes would irreparably harm the firm because of the large number of patents it has in continuation or pending. An inventor named Triantafyllos Tafas, who founded medical imaging firm Ikonisys, had sued the USPTO in August for similar reasons, and the court consolidated the two complaints.
Specifically, GSK’s complaint sought a “preliminary injunction staying the implementation of the final rules until the resolution of the lawsuit, a permanent injunction against the implementation of the final rules, a declaratory judgment that the final rules are contrary to law, and a request that the final rules be vacated,” according to court documents.
The spokesperson for GSK told BTW that the new rules would not only stifle innovation at GSK and other pharmaceutical and biotechnology companies, but that they are “not within the legal purview” of the USPTO.
The changes “would restrict the number of the claims that could be added to an open patent application, and you would then have to file an examination support document if you wanted to add any more than that,” the spokesperson said. “For the first time, they would require that you would do a far-reaching search across US and foreign patents and literature to prove that your claim deserves to be added.
“The problem is they don’t define what the scope of that search is, so it would be very hard to do that effectively,” she added. The spokesperson also saidthat the new rules would have particularly “severely limited” the pharmaceutical industry’s ability to claim inventions.
“We’re particularly vulnerable because we have a long discovery and development period for inventions, so it could be 10 to 12 years or more that we’re working with a medicine to bring it to market,” the spokesperson said. “Through that 10 or 12 years, or whatever it takes, we’re pouring a lot of money into the development process, and of course the assumption is that your invention is going to be protected so you can bring that to market. If we don’t have that confidence, you could potentially be in the situation of limiting the innovations that will then be available to patients.”
‘Blow to the Head’
Since many pharmaceutical drug candidates are spawned from university research, academic technology transfer offices would have also been stung by the new rules.
John White, a patent attorney with Virginia-based patent law firm White and Quinn who was covering the hearing for the Patent Practice Center blog sponsored by the Practising Law Institute, told BTW that the new rules would have “absolutely gutted” innovation in the biomedical and university communities.
White also said that the USPTO has always engaged in some level of regulation with patent applicants and holders by instructing them how to best file applications, requests for examinations, continuations, and claim compositions. However, he added that the new rule proposals were “a blow to the head” in that they were totally unexpected and overstepped the office’s bounds.
In support of GSK’s complaint, the American Intellectual Property Law Association, engineering firm Hexas, the Roskamp Institute, Tikvah Therapeutics, and Elan Pharmaceuticals all filed amicus briefs; and Harry Manbeck, former commissioner of patents and trademarks and assistant secretary of commerce, filed a declaration of support. The court said it would admit these documents to the case.
According to GSK’s spokesperson, other organizations such as the Biotechnology Industry Organization and Pharmaceutical and Research Manufacturers of America have also filed amicus briefs supporting GSK.

“Given that patent reform legislation is also on the table, everyone in our community is saying, ‘Change is a good thing.’ We realize that. There are things that we can support in both topics. But the pace at which this is happening is causing concern.”

Following last week’s decision, BIO released a statement calling Cacheris’ ruling “a sound decision that reflects the concerns expressed in BIO’s recent submission in the case,” and said it hoped the injunction signified “recognition of the unintended consequences of these rules and will ultimately result in a permanent stay.”
Delaying the Inevitable?
Whether BIO and others’ wishes are granted remains to be seen. The GSK spokesperson told BTW that the preliminary injunction “will delay implementation of the rules until such time that there can be a hearing on the merits of the case,” although it was uncertain when that hearing might take place.
According to James Barta, a patent attorney and partner at St. Louis law firm Armstrong Teasdale, the temporary injunction is designed to give the parties involved in the lawsuit and the court more time to consider the facts and issues in the case. Barta wrote in an e-mail to BTW that a final decision from the court is expected at the earliest sometime in December or January.
“However, the injunction is a decision on the merits [of the case], and the court did find a genuine possibility that the Patent Office might ultimately be unsuccessful in the litigation,” Barta wrote. In its final decision, the court could decide to lift the injunction or make it permanent, he said.
“Some members of the patent community are viewing the preliminary injunction as merely a delay to the implementation of the proposed rules with the expectation that the proposed rules will become effective eventually,” Barta’s e-mail continued.
He added that a provision in the patent reform bills currently moving through Congress (see BTW, 9/10/2007) would expand the rule-making authority of the Patent Office, and, if passed, “might provide the Patent Office with sufficient authority to enact the proposed rules thereby sidestepping the current litigation.”
Nevertheless, the injunction has thus far been seen as a positive development across many US business sectors – in particular the pharmaceutical, biotech, and university technology-transfer communities, all of which depend on open applications to add new claims surrounding an invention as they are discovered over months or years.
“Similar to the patent reform legislation, the PTO administrative rules and regulations are very complicated and complex,” John Fraser, executive director of the office of IP development and commercialization at Florida State University, told BTW.
“Given that patent reform legislation is also on the table, everyone in our community is saying, ‘Change is a good thing.’ We realize that. There are things that we can support in both topics. But the pace at which this is happening is causing concern,’” added Fraser, who is also the immediate past president of the Association of University Technology Managers.
“With GSK basically saying that this is so threatening that they’re going to hit [the USPTO] with a lawsuit … it has slowed it down,” Fraser said. “This is allowing everyone to have a chance to really understand what the PTO is doing.”
It appears as if the USPTO will, for the time being, stay the course. The office declined to comment on the situation, but issued a statement of continued support for the rule changes.
“Interest shown by the US Supreme Court and the US Congress in patent modernization indicates that the system needs change,” the USPTO said. “The USPTO continues to believe that the rules are an important component of modernizing the patent system. They are part of a package of initiatives designed to improve the quality and efficiency of the patent process and move American innovation and our economy forward.

“This multi-pronged approach is already showing results,” the statement continued. “Patent examination quality is at a record high. Nearly 97 percent of the patents issued in [fiscal year] 2007 met stringent independent quality standards, up from about 93 percent in FY 2000. Additionally, last year [the] USPTO’s board of patent appeals upheld examiners’ decisions to reject patents nearly 70 percent of the time, compared with only 51 percent of the time in FY 2000.”

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