The Implementation of the new Patent Rules

David Kappos, Director of the USPTO recently participated in an hour and a half of Q&A with Eileen McDermott of Managing IP (webcast available here) , discussing how implementing the new patent rules will change Patent Office practice.

He was overall quite positive about the changes.  Below I summarize some the aspects of his comments that I thought were particularly relevant.  My comments are in italics.

Track One, which was stopped because of the fee diversion of $850M this year, will immediately be back on track when the new Patent Law comes in.

First Action Interviews statistically lead to more first action allowances, and significantly reduce RCEs.  Unfortunately no specific statistics were provided.

Peer-to-Patent Program enabling third parties to submit commentary & prior art, and considers it a “training” for patent reform.  Patent Reform will open up submissions after a patent application is published at 18 months.  Although it does not appear to address the request to not publish.

They’re planning on significantly shorter MPEP update cycles, effectively updating immediately upon any significant legislative or judicial update.

They are writing up the rules already, and expect to open it up to comments and suggestions to the IP community.  He says they intend to be “extremely open to changes” even after implementation, to change things that do not work, or do not have fidelity to the law.

In case of Continuing Resolutions (at the beginning of a fiscal period) the PTO can spend commensurate with their collections.  This is also his understanding of the House Bill, and he considers this a significant step forward.

Without access to all the fees we’re collecting, Kappos says they have no hope of implementing this legislation.  For example, in order to implement, they will need to hire more than 100 ALJs.

However, the 15% fee surcharge and Track One fees go into effect 10 days after legislation goes into effect.  It is written to be “immediately appropriated” which will give the PTO a cash infusion, which means they will have the money to hire the examiners and ALJs and the IT system.  Overtime will be turned on as well.

Immediately after the legislation comes into effect, the Patent Office will assume that they will get the money and the Office will move forward and begin racing ahead.  The acid test will be the end of September 2011, when the budget year ends, to see if the Office gets its full appropriations, and the Continuing Resolution law (which bases Patent Office budget on fees collected during such interim periods.)

First Inventor to File is “no different from the European process.”  It will get rid of the Hilmer Doctrine.

He claims that the $110 cost of filing a provisional application means that there is no significant cost, with respect to filing earlier.  Of course, this ignores the cost of preparing the application, and if you want to comply with best mode and enablement requirements, this is a significant cost.  The filing fee has never been the majority of the cost in preparing the application. The interviewer followed up with this question.  Kappos’ response is that if the inventor writes a good disclosure, it’s sufficient because no claims are required.  Of course, this ignores the limitations that a standard scientific write-up of an invention would place on the disclosure.  You don’t just hire a patent attorney to write claims.

He also suggests that since only one small inventor who was a junior inventor won an interference, it’s not likely to have any impact.  Of course this assumes that there is no change in behavior of companies, in light of the change in the law.

The updated US one year grace period was addressed as applicable as any time an inventor, or someone authorized by the inventor, makes a disclosure.  Suggesting that the only time there is an issue is if there is disclosure by another.  He suggests the only aspects removed from the grace period are those removed as well by First to File.  This appears to be his interpretation of the term “disclosure” which is not specified in the new law.

The new “post grant review” leaves ex parte reexamination in place, conducted by Central Reexamination Unit.  But the new “inter partes review” will move to the Board of Appeals (formerly BPAI) before a panel of ALJs.  So they will need to hire a lot of new ALJs.  Updated ex parte procedures will only be available after one year after issue.  There will be a new procedure, post grant review (PGR), available for the first year of patent’s life.  PGR includes all issues (not only the “prior art” based challenges).   He is planning on hiring these ALJs immediately, to work on training them and whittle down the current backlog at the BPAI.  This I think is an excellent plan, but it does mean that he will truly rely on the promises/statements made by Congress regarding funds allocation, that are not specifically in the law as currently written.  If Congress reneges on their promise, the PTO will be in a deep hole.

Transitional procedures for review of Business Method patents (for 8 years) which will provide a reexamination-like process on business method related patents (issued between State Street and Bilski).

Supplemental Examination Procedure allows an applicant to come back to the Patent Office for further examination, to get the art in front of the agency.  If so, it becomes a reexamination process.  Otherwise, it immunizes the patent from Rule 56 claims, with respect to these references.  In response to a question re Patent Reissue problems (lack of Examiner training, and slowness) they’re planning to fix it, and he is planning to get back to this topic.

He expects to have separate Rule Sets for each change, but keep the comment requirements simple and consistent across the various Rule Sets.

The requirement to open up three Satellite Offices was addressed.  Detroit is currently on hold, because of the budget issues.  Kappos believes that having such satellite offices will create a significantly enhanced examiner staff, of people who will have longer careers at the Patent Office.  This is needed to recoup expense of training (multi-year training).  He believes that he can hire experienced IP staff, which would put them into the examination loop within three weeks.  He claims “thousands” of practitioners who would like the Detroit office as well.  A quick search of the OEDCI database turns up 33 total registered attorneys and agents in Detroit.  There are a total of 1088 registered attorneys and agents in all of Michigan, and of course there is no information about what percent of these registered practitioners continue to practice.  On the other hand, unlike Silicon Valley’s job hopping engineers, Detroit may have a much more stable employee base, which has a significant up-side for the Patent Office.

Biggest budget item he’s hoping to use the extra money for is overtime, because it’s all productive, and total upside.  It also increases earning capacity for examiners, which may help retention.

He considers this legislation on the “one inch line” to use a football analogy.

2 thoughts on “The Implementation of the new Patent Rules”

  1. I’m an amateur inventor, and submitted earlier this year. I have been given ‘patent pending’ status, and my application is now at the stage (which can take years) where I wait for an examiner to go over my application, then accept and grant me full patent, or deny it and make all the money and time I spent up to now useless.

    How do the new rules affect ME specifically? Does it give them more power to turn me down and force me to appeal and/or hire a lawyer to appeal? If so, the rules seem more like a kickback for the legal profession which will force beginner inventors to pay more money at the risk of losing their application to the USPTO’s ‘reviewers’…

    1. I’m reviewing and summarizing the law now, and should be posting a post with a summary of effects on patent prosecution & on patent litigation within the next week or two.

      Overall, there should be little change for you personally. And if David Kappos is to be believed, the 15% fee increase that’s now in place (starting 9/26) should be used to hire extra examiners, which may reduce the backlog.

Comments are closed.