In response to the U.S. Supreme Court’s decision in Bilski v. Kappos (see our post here), the USPTO issued a memorandum to provide interim guidance to the Patent Examining Corps (see our post here).  Some commentators (here) have criticized the new policy because the interim guidelines state if there is no “clear indication” that the invention is something other than an abstract idea, the examiners should reject the application. At this point, applicants have the burden to explain why the invention is not an abstract idea.  This approach to examination appears to be contrary to Oetiker, where the Federal Circuit held that “the examiner bears the initial burden, on review of the prior art or on any other ground, of presenting a prima facie case of unpatentability.”  In re Oetiker, 977 F.2d 1443, 1445 (Fed. Cir. 1992) (see MPEP 2106(IV)(D)).

Today, at the National Association of Patent Practitioners (NAPP) 2010 Annual Meeting in Alexandria, Virginia, Robert L. Stoll, Commissioner for Patents at the USPTO, told the audience that updated, more detailed interim guidance was in the review and approval process and that he hoped to have it available for use within the next few weeks.  He also emphasized that it was never the intent of the current interim guidance to shift the burden of proving patentability to the applicant and that examiners still have the burden of presenting a prima facie case of unpatentability.

Going forward, Stoll said that the USPTO would be soliciting public comments and closely monitoring court decisions in an attempt to create and maintain up-to-date examination guidance regarding patentable subject matter.

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Following the Supreme Court’s decision in Bilski v. Kappos (see our post here), the USPTO issued a memorandum to provide interim guidance to the Patent Examining Corps.  For now, the USPTO will continue to use the Federal Circuit’s machine-or-transformation test as the benchmark for patentability determinations under Section 101.

The pertinent part of the memo reads:

Examiners should continue to examine patent applications for compliance with section 101 using the existing guidance concerning the machine-or-transformation test as a tool for determining whether the claimed invention is a process under section 101. If a claimed method meets the machine-or-transformation test, the method is likely patent-eligible under section 101 unless there is a clear indication that the method is directed to an abstract idea. If a claimed method does not meet the machine-or- transformation test, the examiner should reject the claim under section 101 unless there is a clear indication that the method is not directed to an abstract idea. If a claim is rejected under section 101 on the basis that it is drawn to an abstract idea, the applicant then has the opportunity to explain why the claimed method is not drawn to an abstract idea.

The USPTO is reviewing the decision in Bilski and will be developing further guidance on patent subject matter eligibility under 35 U.S.C. § 10 1.

To read the Bilski memo to the Patent Examining Corps, click here.

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The U.S. Supreme Court, on June 28, 2010, decided the long-awaited Bilski case, affirming the Federal Circuit’s judgment.  The Court ruled that business methods are eligible subject matter but declined to accept the Federal Circuit’s machine-or-transformation test as the exclusive test for the Section 101 determination.  Most of the Court’s opinion is supported by 5 votes, and other parts are supported by only 4 votes.  All nine justices agreed that Bilski’s risk management method claims related to hedging against weather-related losses in the energy industry were too abstract, and thus not patentable subject matter.  Four justices, led by retiring Justice John Paul Stevens, said that methods of doing business should never be patentable.  They expressed “serious doubt” that business innovators need patents to succeed.

The Court held that the machine-or-transformation offers “a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under §101. The machine-or-transformation test is not the sole test for deciding whether an invention is a patent-eligible process.”

This decision is a win for financial institutions.  It is also a win for e-commerce and software companies, especially start-ups, who often rely heavily on business method and software patents to attract investors.

The following language is supported by a majority of the Court:

“Today, the Court once again declines to impose limitations on the Patent Act that are inconsistent with the Act’s text. The patent application here can be rejected under our precedents on the unpatentability of abstract ideas. The Court, therefore, need not define further what constitutes a patentable “process,” beyond pointing to the definition of that term provided in §100(b) and looking to the guideposts in Benson, Flook, and Diehr.

“And nothing in today’s opinion should be read as endorsing interpretations of §101 that the Court of Appeals for the Federal Circuit has used in the past.  See, e.g., State Street, 149 F. 3d, at 1373; AT&T Corp., 172 F. 3d, at 1357. It may be that the Court of Appeals thought it needed to make the machine-or-transformation test exclusive precisely because its case law had not adequately identified less extreme means of restricting business method patents, including (but not limited to) application of our opinions in Benson, Flook, and Diehr. In disapproving an exclusive machine-or-transformation test, we by no means foreclose the Federal Circuit’s development of other limiting criteria that further the purposes of the Patent Act and are not inconsistent with its text.”

What’s next?  The Supreme Court left unanswered exactly what would be needed for a business method to be considered patentable subject matter. Also left open are the questions of patentable subject matter for software patents and medical diagnostic methods.  Thus, while business method patents are still alive – or have at least survived – the district courts and Federal Circuit will be using the next several years to develop “other limiting criteria that further the purposes of the Patent Act and are not inconsistent with its text.”

To read the full Bilski v. Kappos opinion, click here.

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David Kappos, Director of the United States Patent and Trademark Office (USPTO) will host a roundtable for independent and small entity inventors on Monday, March 29 from 4:30 to 5:30 pm.  The event will be held in the Madison Auditorium on the agency’s campus in Alexandria, Virginia.  It will also be webcast live on www.uspto.gov.  Director Kappos will make opening remarks and then invite questions from the audience and those watching on the web.  The roundtable will address current issues of concern to the independent and small entity inventor community including patent reform legislation.

Directions for logging on to the webcast will be posted on the homepage of the agency’s website the day of the roundtable.  If you plan to attend in person please RSVP to independentinventor@uspto.gov.

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The Trilateral Offices (European Patent Office (EPO), Japan Patent Office (JPO) and U.S. Patent and Trademark Office (USPTO)) agreed on November 13, 2009 to begin a pilot program in the Patent Prosecution Highway (PPH) framework utilizing PCT work products (international search reports, written opinions, and international preliminary examination reports).

Under the PPH, an applicant receiving a determination from an office of first filing that claims in an application are allowable may request that the corresponding application filed at a second office be advanced out of turn for examination as to those allowable claims. To date, the PPH program, begun in 2006 and now the subject of bilateral agreements among a number of IP offices, has proved valuable in increasing efficiency (efficient, yes, for the second patent office; this procedure doesn’t accelerate examination in the first office).

Until now, the PPH program has been limited to cross-filings of national applications under the Paris Convention. This new agreement among the Trilateral Offices greatly expands the potential of the PPH program. By providing the re-use of positive results from PCT work products, the PPH will now be available to applicants using these offices.

It’s not clear at this point what effect, if any, the use of PCT work products will have in causing the EPO, JPO or USPTO to examine applications any sooner than they ordinarily would once they enter the national stage. The details of this new pilot program, scheduled to begin on January 29, 2010, will be available in the near future and posted at on the Trilateral website as well as at the respective websites of the Trilateral Offices.

In related news, the EPO and the JPO also announced on November 13, 2009 that they intend to launch a bilateral PPH pilot with effect of January 29, 2010.

Further information

• Trilateral website
• International relations: Trilateral co-operation

Source:  http://www.epo.org/topics/news/2009/20091113.html

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On November 5, 2009, USPTO Director David Kappos delivered the keynote address at the 14th Annual Independent Inventors Conference held at USPTO’s headquarters in Alexandria, Va.

During the address, Director Kappos announced a new initiative that is specifically designed to accelerate the patent process for independent inventors.  He called it a “backlog reduction pilot project” that will be made available only to small and medium-sized entities and will give them the opportunity to receive special, accelerated status for a new application if they abandon a pending, unexamined application.

The program is designed to allow independent inventors and innovators to advance an application in the queue by swapping out one they are willing to abandon.  According to Kappos, independent inventors are in a better position to help prioritize the PTO’s workload and he wants them to tell the PTO what matters most to them.  Kappos said this gives inventors the option to accelerate protection for their innovation while also reducing the overall backlog of unexamined patent applications.

The USPTO provided few other details last week, promising to put the start date and other information on its web site and in the Federal Register in the coming weeks.

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Agency Files Joint Motion with Plaintiff GlaxoSmithKline to Dismiss Lawsuit Related to Proposed Claims and Continuation Rules

Today, Under Secretary of Commerce for Intellectual Property and Director of the USPTO David Kappos signed a new Final Rule rescinding highly controversial regulations, proposed by the previous administration, that patent applicants felt unduly restricted their capacity to protect intellectual property.  The regulations, which addressed the number of continuation applications as well as the number of claims that could be included within each application, were published in the Federal Register in August 2007, but were enjoined and never came into effect.

The USPTO also announced that it will file a motion to dismiss and vacate the federal district‐court decision in a lawsuit filed against the USPTO that sought to prevent the rules from taking effect. GlaxoSmithKline ‐ one of two plaintiffs in the Tafas v. Kappos lawsuit ‐ will join the USPTO’s motion for dismissal and vacatur.

“The USPTO should incentivize innovation, develop rules that are responsive to its applicants’ needs and help bring their products and services to market,” Kappos said.  “These regulations have been highly unpopular from the outset and were not well received by the applicant community.  In taking the actions we are announcing today, we hope to engage the applicant community more effectively on improvements that will help make the USPTO more efficient, responsive, and transparent to the public.”

“We are grateful to GlaxoSmithKline for working with us to file this joint motion to both dismiss the appeal and vacate the district court’s decision.  This course of action represents the most efficient way to formally and permanently move on from these regulations and work with the IP community on new ways to take on the challenges these regulations were originally designed to address.”

Background on Rules

In August 2007, the agency published new rules intended to help improve examination efficiency, enhance the quality of examination, and manage the growing backlog of unexamined applications. Two regulations, commonly referred to as the “Continuation Rule” and the “RCE Rule,” would have permitted an applicant to file only two continuation applications and one request for continued examination (“RCE”) per application family as a matter of right.  For a third or subsequent continuation application or RCE, the applicant would have had to make a case to the USPTO to show why the additional filing was needed. A third regulation, referred to as the “Claims Rule,” would have permitted an applicant to file five independent claims and twenty‐five total claims per application.  If an applicant desired more than five independent claims or more than twenty‐five total claims, then the Claims Rule would have required the applicant to supply information to the USPTO about the claimed invention to assist the Office’s examination.  The specific information that would have been required was outlined in another regulation, termed the “ESD Rule.” Many in the patent community felt the combination of these new requirements would ultimately have had an effect that was at odds with their intended purposes.

History of Litigation

In the fall of 2007, GlaxoSmithKline and Dr. Tafas brought suit against the USPTO in the U.S. District Court of the Eastern District of Virginia and sought a preliminary injunction to stop the Claims and Continuations Rules from becoming effective, which the district court granted.  In April 2008, the district court ruled in favor of GlaxoSmithKline and Dr. Tafas on the merits and permanently enjoined the rules, preventing the agency from implementing them.  The agency appealed to the U.S. Court of Appeals for the Federal Circuit.

In March 2009, a panel of the Federal Circuit concluded that the Claims and Continuations Rules were procedural in nature and within the agency’s rulemaking authority.  The Court also concluded that the rules, except for the Continuations Rule, were consistent with the patent law.

In 2009, the Federal Circuit vacated its earlier decision, granted rehearing en banc, and ordered additional briefing that would have commenced in the coming weeks.

Initial Reaction

Initial reaction in online social media such as Twitter was swift and positive. A statement was also quickly released by the American Intellectual Property Law Association (AIPLA). “AIPLA applauds the decision of Director Kappos to rescind this hugely unpopular rules package,” stated AIPLA’s Executive Director Todd Dickinson. “And we certainly hope the courts will act quickly and favorably on this motion. We view this as a significant step by Director Kappos towards rebuilding the relationship between the USPTO and the user community. Hopefully, we can now continue to move forward and work with the Director in a constructive way to address the challenges facing the USPTO.”

The rescission of the rules will be effective as of the publication of the decision in the Federal Register, expected early next week.

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The World Intellectual Property Organization (WIPO) announced a new report monitoring recent trends in intellectual property (IP) activity.  The report shows that demand for IP rights continued to increase prior to the onset of the global economic crisis, with 1.85 million patent (+3.7% increase over 2006), almost 3.3 million trademark (+1.6%) and approximately 0.62 million industrial design (+15.3%) applications filed worldwide in 2007.  The report, World Intellectual Property Indicators 2009, available here, points to a slowdown in demand for IP rights in 2008 (based on preliminary figures), when the global economy experienced a sharp decline.  The report also documents an increased level of unprocessed (pending) patent applications, reaching 4.2 million applications in 2007.

In the Report’s Foreword, WIPO Director General Dr. Francis Gurry said “History has shown … that companies and countries which continue to invest in new products and innovation during times of economic recession will be those that will be best positioned to take advantage of the recovery, when it arrives.”  He noted that “IP statistics help us to understand the role of the IP system in stimulating and diffusing innovation, promoting markets for new products, and rewarding creativity.  They also contribute to discussions and to the formulation of effective IP policies for addressing a wide range of public policy concerns.”

The report offers a comprehensive overview of the use of IP rights, taking into account the often wide variation in national IP systems.  Based on 2007 figures (the last year for which complete worldwide statistics are available), the report analyzes trends in demand for IP rights relating to patents, utility models, trademarks and industrial designs.

Patents and Utility Models

In 2007, patent filings increased by 3.7%, down on the 5.2% growth recorded in 2006, in line with an already weakened world economy in 2007. Approximately 59.2% of total patent applications in 2007 were filed in China, Japan and the United States.  Preliminary data for 2008 suggest weaker growth in patent filings, though the depth of the slowdown remains unclear.

Reflecting the integration of the world economy, many companies continued to seek IP protection outside their domestic markets.  In 2007, non-residents accounted for 43.3% of the patents filed worldwide, maintaining a level that was established in 2001.

The report also shows that the number of patents filed in emerging economies is increasing rapidly.  Non-residents account for the largest shares of patent filings in most emerging economies, with China and several countries in Eastern Europe and Central Asia constituting notable exceptions.

In 2007, the number of patents granted worldwide rose to an estimated 764,700, representing a 1.6% growth rate (compared to an exceptionally high rate of 19.4% in 2006).  This slowdown is attributed to a substantial decrease in patents granted by the United States Patent and Trademark Office (USPTO) and the European Patent Office (EPO).

The USPTO, which has issued the highest number of patents since 1998, was overtaken in 2007 by the patent office of Japan.  The patent office of China replaced the EPO as the fourth largest office in terms of issuing grants.  The five largest patent offices (the patent offices of Japan, the US, the Republic of Korea, China and the EPO) accounted for 74.4% of total patent grants.

Some 6.3 million patents were in force in 2007, with residents of Japan and the US owning approximately 47% of this total.

In 2007, at least 4.2 million patent applications were pending around the world. The USPTO accounted for around 28% of this backlog, followed by Japan, the EPO and the ROK.

In 2008, approximately 163,600 Patent Cooperation Treaty (PCT) applications were filed, representing a 2.3% increase on 2007 figures.  Applicants from the US accounted for around 32.7% of all PCT filings.  The PCT is an international treaty administered by WIPO, which makes it possible to file patent applications in a large number of countries by filing a single PCT application.  Growth rates for PCT applications have decreased since 2005.

Utility models are an important alternative to patents in certain jurisdictions, typically entailing a less stringent inventive step requirement.  China received and granted the majority of utility model applications in 2007.  Germany, Japan, the ROK and the Russian Federation also had a notable level of utility model activity.

Trademarks

The report also offers an overview of trends in trademark activity up to 2007.  In that year, some 3.3 million trademark applications were filed worldwide reflecting a 1.6% increase over 2006.  Preliminary data available for 2008, however, point to a possible decrease in trademark applications.

China received over one-fifth of all trademark applications filed in 2007 and the US received nearly one-tenth of such applications, followed by Japan and the ROK.

Global trademark registrations rose in 2007 to approximately 2.2 million, representing a 6% growth rate.  Increased registration activity in Brazil is largely responsible for the stronger growth in 2007 compared to the previous year.

Residents of China and the US each accounted for around 11% of global trademark registrations in 2007.  However, only a small proportion of trademarks registered by residents of China are protected in other jurisdictions, whereas about 43% of trademarks registered by US residents are protected abroad.  Non-resident applicants accounted for some 35% of trademarks registered worldwide.

In 2007, around 16.4 million trademarks were in force worldwide with Japan and the US together accounting for around one-fifth of these, followed by France and Germany, each having around 1 million trademarks in force. Approximately 125,000 of the trademarks in force in 2007 were first registered prior to 1960, reflecting their sustained commercial value.

Use of the WIPO-administered Madrid System for the International Registration of Marks rose in 2008 by 6.5% with nearly 41,000 registrations.  The Madrid System makes it possible to register and renew international trademarks in up to 84 jurisdictions by means of a single application.

Industrial Designs

At 15.3%, the growth rate of industrial design applications (some 621,000) in 2007 outpaced growth rates recorded for other IP rights.  Since 2005, industrial design applications worldwide have experienced double-digit growth thanks largely to increased activity in China which accounted for 43.1% of worldwide applications.

In 2007, the share of total industrial design registrations by non-residents amounted to just 19.8%, which is below the equivalent shares for patents and trademarks. Industrial design protection is sought less frequently in foreign markets, because the products in question are geared mainly toward domestic commercialization.

Of the 2.7 million industrial design rights in force in 2007, residents of France accounted for the largest number (406,225). More than 250,000 such rights were also in force in China, Germany and Japan, respectively.

In 2008, the use of the Hague System, which makes it possible for an applicant to register an industrial design in multiple countries by filing a single application with the international bureau of WIPO, saw exceptionally high growth (32.8%) in registrations due to the accession of the European Community to the System.

Notes:

1. The World Intellectual Property Indicators 2009 is a new publication and successor to the World Patent Report.
2. According to WIPO, because of the time required to collect and process data from national and regional IP offices, the impact of the economic recession in 2008/09 is not fully reflected in this report.

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The U.S. Senate Committee on the Judiciary conducted a nomination hearing on July 29, 2009 from 10:00 a.m. to 11:14 a.m. for David J. Kappos to be Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office.  Beverly Baldwin Martin (to be United States Circuit Judge for the Eleventh Circuit) and Jeffrey L. Viken (to be United States District Judge for the District of South Dakota) also appeared before the Committee.

Here are some of the Kappos highlights:

• Kappos stated that he is familiar with all of the constituencies of the PTO and vowed to serve all of their interests.  He expressed appreciation for all of the employees of the PTO.

• Kappos admitted that an important mission is advancing innovation in these trying economic times.

• Of course, he stressed that PTO reform is a big issue, especially solving the backlog of pending patent applications.  Somewhat lower on the list appeared to be patent reform legislation, but he was careful not to offend Senators Leahy and Hatch.

• Senator Franken asked about IP counterfeiting in the entertainment industry, e.g., piracy of movies in China.  Kappos gave polite answers.  Apparently, Stuart Smalley isn’t interested in the patent system.

• Kappos hates fee diversion and believes the entire patent community feels the same (in other breaking news, scientists discover water in the Atlantic Ocean).  He would like to have the ability to set fees as Director.

• Senator Specter had a good question about expediting applications directed to helping the environment (green/clean tech).  Applicants formerly could use a petition to make special to expedite examination, but this category went away when the PTO started the accelerated examination program (the same happened with the anti-terrorism-related inventions).  Kappos stated that he would like to do more to expedite applications that would help the environment but would provide more details to the Committee in writing.

Note to Mr. Kappos:  please restore the original categories for petitions to make special so applicants won’t have to trudge through the claim-limiting and estoppel-producing process that is accelerated examination.  Is that too much to ask to help applicants who want to help the environment and keep crazy people from blowing us up?

• Kappos reassured the senators that his career at IBM would not create conflicts as PTO Director (“my job is to watch out for the U.S., not IBM”).

• Senator Klobuchar asked about improving efficiency at the PTO.  Kappos replied that “many things need to be done” and that a “major morale issue” is the count system.  Kappos vowed to work with the unions to re-make the count system (“priority 1 of several priority 1s”).  He has support from Commerce Secretary Locke.

• Besides giving the Director the ability to set fees, Kappos also wants to “refashion the fee system.”  This was said in view of the decrease in application and maintenance fees that the PTO is experiencing.  Such a system would look at the relationship between fees and the work being done (can you say EPO-like excess claim fees?).

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The plaintiffs and the government in the litigation challenging the PTO continuation and claim rules have jointly asked the Federal Circuit for a stay of en banc proceedings until 60 days after David Kappos is confirmed as the new PTO Director.  Tafas v. Doll, Fed. Cir., No. 2008-1352, motion filed 7/24/09.

In the “Joint Consent Motion For A Stay of En Banc Proceedings,” the parties noted the June 18, 2009 nomination of Kappos to be PTO Director and the July 29, 2009 confirmation hearing set by the Senate Judicary Committee.  The motion states:

A stay of proceedings before the en banc court is requested to give the new Director, if confirmed, an opportunity to examine the rules at issue in this case and determine what course the USPTO should take in the future with respect to those rules, including whether to rescind the rules.  Depending on how the Director decides to proceed, the legal issues currently before the en banc Court may be significantly altered or may even be rendered moot, making it unnecessary for the Court to take further action.

To read the joint motion for the stay, click here.

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