On August 21, 2007, the United States Patent and Trademark Office ("USPTO") released a set of final rules that presented extensive changes to the filing and examination procedures for patent applications in the United States. Before the rule changes were scheduled to take effect on November 1, 2007, an individual inventor, Mr. Triantafyllos Tafas, filed a Complaint challenging the authority of the USPTO to enact the rule changes. A similar suit was filed by SmithKline Beecham Corporation and others, and all the actions were consolidated for hearing as Tafas v. Dudas in the U.S. District Court for the Eastern District of Virginia.
Initially, the court issued a preliminary injunction on October 31, 2007, blocking implementation of the new rules pending a summary judgment hearing. On April 1, 2008, the court found in favour of Tafas and SmithKline Beecham, granted summary judgment, and imposed a permanent injunction preventing the USPTO from implementing the rule changes.
At issue was whether the USPTO has "substantive rulemaking authority" under 35 U.S.C. 2(b)(2) and whether the proposed changes are "substantive rules." The court found that the USPTO does not have substantive rulemaking authority, and that the provided authority is limited to rules governing the "conduct of proceedings" in the Patent Office. The court further found that the proposed rules are substantive rules, defining a substantive rule as any rule that "affects individual rights and obligations."
Particular rule changes in contention include the proposed "2+1" rule, which limits the number of continuations of a patent application to two, and the number of Requests for Continued Examination ("RCEs") for a patent application and its continuations to one. Currently, an applicant can file a theoretically unlimited number of continuations and RCEs to extend prosecution and argument in a patent application.
Another contentious change is the proposed "5/25" rule, which limits the number of claims in a patent application to five independent claims and 25 total claims unless the applicant files an Examination Support Document ("ESD"). The proposed ESD resembles a substantive patentability search, and would require full documentation describing and supporting the search protocol, as well as a detailed analysis of every single claim's patentability in light of the search results. Currently, there is no limit to the number of claims that can be filed in a patent application, although a surcharge does apply for each claim after the twentieth.
Additionally, both rules were proposed to apply retroactively to existing applications that were filed before the date the final rules take effect.
Notably, the court did not rule on any other grounds or discuss any of the further submissions by the parties or any of the substantial amici curiae briefs filed (in excess of 20). Additionally, the court did not consider other sections of the rule changes to determine if the other changes are "substantive," electing rather to treat all the rule changes as a single block, and granting the injunction on the basis that the proposed 2+1 and 5/25 rules would effect changes in existing rights and obligations of patent applicants, and are thus substantive rules which are beyond the scope of the USPTO's authority.
While the present outcome is seen in a positive light by many patent owners and practitioners who were displeased with the scope of the rule changes, the situation remains far from settled. Significantly, patent law changes remain pending before the House and Senate which, if enacted, could render the decision moot by granting the USPTO substantive rule-making authority. However, this bill has now been withdrawn from the Senate floor, suggesting that it will not be passed before the Senate session ends in advance of the November 2008 U.S. election period.
Most recently, following the permanent injunction, the USPTO filed a Notice of Appeal with the United States Court of Appeals for the Federal Circuit on May 7, 2008. The appeal might have been expected since the USPTO still has pending two additional sets of extensive rule changes (concerning procedures related to Information Disclosure Statements and "Markush" claims) – changes which may be just as contentious as the recently enjoined ones. No date has yet been set for hearing the appeal.