(5)    In this blog post, we consider the last three request for comments, relating to possible regulation changes, namely: to accomplish adequate and timely recording, are changes to agency regulations necessary?  What are the most effective and appropriate means for the USPTO to provide the public with a timely and accurate record of the assignment of patent rights and the assignee?

(6)    Would it help the USPTO’s goal of collecting more updated assignment information if 37 CFR1.27(g)(2) was amended to require identification of any new ownership rights that caused the application or issued patent to lose entitlement to small entity status?

(7)    Given the passage of the America Invents Act, is it proper for the USPTO to provide financial incentives for disclosure of assignment information by way of discounts in fee payments? 

In regard to what changes in regulation are likely to be necessary, if the purpose of the change in assignment practice is to provide proper notice to the public, such a change is not covered by any of the regulations in 37 CFR part 3.  If the public were to be provided a timely and accurate record of the changes in assignment from the time of allowance or grant forward, 37 CFR part 3 should be changed to provide rules allowing for providing a timely and accurate record of the changes in assignments.

In regards to whether 37 CFR1.27(g)(2) should be changed, 37 CFR 1.27 (g) (2) already imposes a duty on the practitioner and/or the applicants to notify the USPTO when a change of entity status occurs.  There appears to be no reason to modify 37 CFR 1.27 (g) (2).

In regards to providing an incentive for the disclosure of assignment information changes besides that negative incentive provided by 37 CFR 1.27 (g) (2), there are a number of possible ways of giving a financial incentive for discount if a change in assignment information is recorded.  The approach suggested in the request for comments, a discount in the maintenance fee payment, appears to be a workable one.

We look forward to how the USPTO implements the rule changes for assignments.  The USPTO should be lauded for proceeding according to the letter and spirit of the rule-making process.

The group of requests, including the second request through the fourth request reproduced below, relate to the requirement of information to be provided by the applicants:

2)      Would it be in the public interest for the USPTO to obtain from applicants, updated identification of the assignee at the time of allowance, e.g. in response to the Notice of Allowance?  Are there limitations on the USPTO’s rights and powers to require the reporting of such information?

3)      Would it be in the public interest for the USPTO to obtain from applicants, updated identification of the assignee during prosecution of the application?

4)      Would it be in the public interest for the USPTO to obtain from applicants, updated identification of the assignee after issue of the patent?   What are the appropriate consequences of non-compliance?

Because of the effect of information, the answer is different whether the information is provided after the notice of allowance or at the time of issue, during prosecution (before the patent is allowed), or after the patent has been issued.

Requiring reporting assignment information at the time of allowance, or preferably from the time of payment of the issue fee, could serve a public function of alerting the public as to who would be the damaged party if others made or used the patented invention.  Such notice would fall under the mandate of the USPTO to disseminate public information with respect to patents (see 35 USC 2).

On the other hand, obtaining updated identification of the assignee during prosecution can impose a burden on the small inventor since the assignee (typically the small inventor’s own company) could change during prosecution.  It is not atypical for small companies to dissolve and reform or change structure during the long time it takes today for patent prosecution.  There could also be no justification in the statute since, until the patent is granted, the claimed invention is not definite.  It would be harder to justify under the statute to disseminate the public information that is not significant.  Since the claims are not yet finalized, the claimed invention is not defined.  Therefore, the function of public notice is not served because the public does not know what claimed invention to avoid or invent around.

Obtaining from the applicants/patentees updated information of the assignee after issue of the patent and publishing that information in the Official Gazette, would serve the public since it would update the knowledge of the damaged party if others made or used the patented invention.  The assignment information could include the granting of exclusive licenses, which could give others besides the listed assignee the ability to sue.  Providing that information would definitely fall under the mandate of the USPTO to disseminate public information with respect to patents.  Such information, the update on the assignee and the listing of exclusive licensees (which is harder to obtain today), would be beneficial to the public.

Although we may not be able to influence the final decision, and some may consider this inquiry by the USPTO as an effort to update from small entity to large entity applications and thereby extract more fees, the present inquiry can also be viewed as the USPTO’s attempt to improve the performance of their duty to disseminate that information.  Viewed as the latter, such an attempt should be lauded.

The Federal Register notice issued on November 23, 2011, which details the proposed rules for assignments, documents requests comments in the following areas (provided as listed in the Federal Register):

(1)    Is there any reason why the mandatory disclosure of any assignee or assignees should not take place at the time of application filing?

(2)    Would it be in the public interest for the USPTO to obtain from applicants updated identification of the assignee at the time of allowance, e.g. in response to the Notice of Allowance?  Are there limitations on the USPTO’s rights and powers to require the reporting of such information?

(3)    Would it be in the public interest for the USPTO to obtain from applicants updated identification of the assignee during prosecution of the application?

(4)    Would it be in the public interest for the USPTO to obtain from applicants updated identification of the assignee after issue of the patent?  What are the appropriate consequences of non-compliance?

(5)     To accomplish adequate and timely recording, are changes to agency regulations necessary?  What are the most effective and appropriate means for the USPTO to provide the public with a timely and accurate record of the assignment of patent rights and the assignee?

(6)    Would it help the USPTO’s goal of collecting more updated assignment information if 37 CFR 1.27(g)(2) were amended to require identification of any new ownership rights that caused the application or issued patent to lose entitlement to small entity status?

(7)     Given the passage of the America Invents Act, is it proper for the USPTO to provide financial incentives for disclosure of assignment information by way of discounts in fee payments?

We look at the first request from the point of view of the small inventor who is starting a company.  Due to the long pendency of a patent application, by the time the application is allowed, in many instances the inventor has moved on to another venture.  The application could be useful in that second incarnation of the company because the entrepreneur is also typically the inventor, or one of the inventors.

Having the application assigned to the first venture, which is defunct by the time the application issues, will create unnecessary problems if the inventor has not taken funds from a third-party.  Creating these extra problems for an entrepreneur would not be in keeping with the spirit of the America Invents Act or with the constitutional basis for the patent system and the USPTO.  From the point of view of the small inventor starting a company, the proposed rules can result in “unnecessary roughness,” but the ombudsman is not a referee.  As one of my clients said recently, “It is getting so painful to apply for patents that I don’t know if I should bother.”  Since the proposed rule could result in more pain to the small inventor, we are inclined to object to its passage.

While innovation is the product of a creative mind, patents relate to property, although intangible property, and the decision to acquire property has a strong economic/financial component.  The questions to be asked in deciding whether to patent are not the “why?” of the scientist or the “isn’t this neat/cute?” of the creative mind, rather the two classical questions of marketing:”so what?” and “who cares?” In deciding which of the inventions to patent, the problem being solved (so what?) and the market being addressed by that problem (who cares?) should be strong considerations.

The relationship between patents and innovation was best described by President Lincoln, an American not known as an inventor although he did have one patent.  He said that patents “added the fuel of interest to the fire of genius, in the discovery and production of new and useful things.” The economic effect of innovation can be affected by the act of patenting; therefore, the America Invents Act should actually be called the “America Profits From Invention Act (or the APIA); however, the more accurate name would not have the same appealing effect.  I hope that we do not confuse that which we do for marketing impact as compared to the actual product.

The second question raised by the decision in Retractable Technologies, is whether some degree of deference should be given to the trial judge in regard to the claim construction.  Claim construction is a “mongrel” task – it includes both elements of law and of fact (a determination of obviousness falls in the
same category).  In claim construction however, as was stated in Phillips, the intrinsic evidence, specification, prosecution history and the claims themselves, are more important than extrinsic evidence, such as dictionaries and experts.  Ever since Cybor v.Fas, the Federal Circuit has reviewed claim construction de novo.  The question that has been posed by many litigators is whether some deference
should also be given to the trial judge in regard to claim construction.  While an en banc rehearing for Retractable Technologies would have provided an opportunity to revisit the standard for review of claim construction, both of these issues together would have generated a forest worth of amicus briefs.

In Duramed Pharmaceuticals Inc. v. Paddock Laboratories Inc., Duramed owns a patent for a formulation for estrogen that includes a moisture barrier coating, where the formulation is used in hormone replacement therapy.  During prosecution of the application, responding to a rejection, Duramed amended claim 1 to recite a specific moisture barrier coating and the application was allowed.  Subsequently, Duramed filed suit against Paddock, alleging infringement of the patent for the estrogen formulation.  The suit was based on Paddock’s Abbreviated New Drug Application (ANDA) for a generic version of a hormone replacement therapy product utilizing a moisture barrier coating which was different from the specific one recited in Duramed’s claim 1.  The District Court granted Paddock’s motion for summary judgment of non-infringement, holding that Duramed’s amendment to claim 1 estopped Duramed from claiming infringement based on the doctrine of equivalents.  Duramed appealed to the CAFC, which upheld the judgment of the District Court.  Duramed’s argument on appeal was based on the fact that the equivalent moisture barrier coating used by Paddock was not foreseeable at the time the amendment was entered.  The issue was whether, in order to be foreseeable, the barrier coating used by Paddock had to be known, at the time when Duramed made the amendment, as a barrier coating for use with estrogens rather than as a barrier coating for use in the field of pharmaceutical compositions.  The CAFC held that foreseeability does not require that degree of precision in the knowledge of how to apply the known characteristic. The decision continues to clarify the effects of the Supreme Court decision in Festo.

In the opinion, In re Lovin, Lovin appealed the decision of the BPAI that upheld the examiner’s rejection of Lovin’s and others’ patent application, due to obviousness.  Lovin had filed a patent application for method and system for friction welding.  The examiner had rejected the claims in the application due to obviousness.  During prosecution, Lovin had argued the patentability of the independent claims and did not provide separate argument for the dependent claims.  Lovin appealed the rejection to the BPAI, which upheld the examiner’s rejection.  Lovin appealed to the CAFC.  The CAFC upheld BPAI’s decision.  A principal issue in the appeal was whether Lovin, in the appeal brief, had provided arguments for the separate patentability of the dependent claims.  The CAFC opinion, which delved into the deference given to an agency’s interpretation of its regulations and the effect of prior court decisions on that deference, accepted the BPAI’s interpretation of 37 CFR 41.37, which states that a statement, in an appeal brief, that merely points out what a claim recites, will not be considered an argument for patentability.  The CAFC’s cited prior decision that was closest to supporting Lovin’s position, In re Beaver, was decided prior to the enactment of 37 CFR 41.37, and as the CAFC pointed out, Beaver had separately argued the dependent claims before the examiner.  This opinion should be of interest to those writing appeal briefs for the BPAI and also provides cautionary advice on separately arguing the dependent claims during prosecution.