United States court issues decision on patent rule changes

Date: 2009-03-31

Around 18 months ago, GlaxoSmithKline lead a pharma industry challenge to the validity of four new patent rules (collectively referred to as Final Rules) proposed by the United States Patent Office (USPTO). If implemented, the Final Rules would significantly increase the costs for Australian patent applicants in the United States. The challenge prevented the USPTO introducing the rules, and resulted in a court ruling finding the Final Rules invalid. Now in the latest instalment three of the Final Rules have been held to be potentially valid and returned to the lower court for further consideration.

On 20 March 2009 the United States Court of Appeals for the Federal Circuit issued its opinion on the validity of the Final Rules.1


The decision was an appeal from a district court decision2 that found the Final Rules were invalid because they were substantive changes outside the legislative rule making power of the USPTO. The Final Rules were originally to come into effect on 1 November 2007. However, the district court decision prevented the USPTO from introducing them.

In essence, the Final Rules:

  • restrict the number of continuation applications that may be filed to only two, unless strict requirements are met (Final Rule 78)
  • entitle applicants to only one request for continued examination (RCE) for each entire family of related applications, although an applicant could petition for further requests (Final Rule 114), and
  • require an applicant to submit an examination support document if their application contains more than five independent claims or 25 claims total (Final Rules 75 and 265). The examination support document includes a prior art search and list of references, identifying the claim limitations disclosed by each reference and explaining the patentability of each independent claim.

Federal Circuit decision

On Appeal, the Federal Circuit considered (by 2:1 majority) that the rules were procedural rather than substantive, overturning the district court’s determination that they were outside the USPTO’s rule making authority. The Federal Circuit then considered whether the Final Rules were consistent with the United States Patent Act.

Final Rule 78 was found to be inconsistent with the Patent Act. However, Final Rules 114, 75 and 265 were found to be consistent with the Patent Act. The Federal Circuit based its finding on a uniquely American doctrine, under which it will accept a plausible legislative interpretation of the Patent Act made by the USPTO.

Validity and implementation of the Final Rules remains uncertain

The Federal Circuit remanded the case to the district court to decide whether the Final Rules are arbitrary or capricious, conflict with the Patent Act in ways not specifically addressed by the Federal Circuit, or are impermissibly vague or retroactive; and whether the making of the Final Rules was subject to other procedural requirements.

If Final Rules 114, 75 and 265 are found to be valid, the invalidity of Final Rule 78 creates opportunities to avoid the impact of these rules, for example by filing continuation applications rather than RCE’s. However, the judgment does leave open the risk that the USPTO may try to limit continuation applications by other means, effectively filling this gap.

Alternately, this decision may be further appealed to a full sitting of the Federal Circuit and ultimately to the Supreme Court.

The principal motivators for introducing the Final Rules, including an examination backlog and perceived procedural abuses of the patent system, remain. However, given the change in administration brought through the election of President Obama, and a significant downturn in USPTO revenue, there is possibility that the USPTO may resile from its position on the Final Rules. On 23 March 2009 the USPTO acknowledged the decision, but stated that the Final Rules ‘will not be implemented until further notice.3

Managing your United States patent portfolio

Given the continuing uncertainty over the validity of the Final Rules, and the timing of their implementation, if ever, the potential ramifications of the Final Rules should be kept in mind when devising United States patent strategy, both when prosecuting existing applications and preparing applications that will enter the United States in the future. We will be monitoring further developments closely.

Requests for continuing examination should be made with caution, as they may retrospectively prevent future applications being made, and the value of having multiple parallel continuation applications (especially compared to serial continuations) should be considered. The potential limitations to claim numbers should also be borne in mind.

We recommend you contact your patent advisor if you would like further information on the potential impact of this decision on your patent portfolio.

This article was written by Louise Dumbrell, Solicitor and Debra Tulloch, Consultant Patent Attorney, Melbourne.


1. Tafas v Doll, No. 2008-1352, at *4 (C.A.Fed. (Va.), Mar. 20, 2009).
2. Tafas v. Dudas, No. 07cv0846 (E.D. Va. April 1, 2008)
3. Federal Circuit Upholds USPTO's Authority to Issue Claims and Continuations Final Rules and Concludes that Certain Final Rules Are Consistent with the Patent Act