October 2007 NEW USPTO RULES A POTENTIAL MINEFIELD FOR THE UNWARY

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1 October 2007 BALTIMORE 10 LIGHT STREET BALTIMORE, MD T F CAMBRIDGE 300 ACADEMY STREET CAMBRIDGE, MD T F COLUMBIA LITTLE PATUXENT PARKWAY SUITE 300 COLUMBIA, MARYLAND T F EASTON 101 BAY STREET EASTON, MD T F FREDERICK 30 WEST PATRICK STREET FREDERICK, MD T F ROCKVILLE 11 NORTH WASHINGTON STREET SUITE 700 ROCKVILLE, MD T F TOWSON 1 WEST PENNSYLVANIA AVENUE SUITE 900 TOWSON, MD T F TYSONS CORNER 1751 PINNACLE DRIVE SUITE 500 MCLEAN, VA T F UMB BIO PARK 800 WEST BALTIMORE STREET SUITE 101 BALTIMORE, MD T F NEW USPTO RULES A POTENTIAL MINEFIELD FOR THE UNWARY On August 21, 2007, the United States Patent and Trademark Office (USPTO) published a set of revised rules of practice that will significantly affect how patents are obtained in the United States. 1 The new rules are effective November 1, 2007, although certain provisions affect currently pending patent applications as discussed further below. This memorandum will alert you to some of the pitfalls and suggest our approach to steer you through the minefield. SUMMARY The USPTO has revised certain rules regarding patent application prosecution in a stated effort to reduce the large backlog of pending patent applications. However well-intentioned, the new USPTO rules effectively place limits on the rights of patent applicants. The size of the new rules package is immense, and the interaction between the new rules and certain non-changing provisions is complicated. Furthermore, the new rules may not operate consistently among themselves, suggesting that the prospective impacts are not yet fully understood even by the USPTO. Indeed, on October 10, 2007, the USPTO issued a clarification to the new rules aimed at correcting some of the known problems observed thus far. The new rules are effective as of November 1, 2007, at which time the following three changes will occur: 1) No more than two continuation applications will be available for any new or pending patent application, 2) the number of claims permitted in a family of related patent applications will be limited to twenty-five, of which no more than five can be independent, and 3) applicants must identify related patent applications to the USPTO by certain specified deadlines. 1 See 72 Fed. Reg (August 21, 2007).

2 CHALLENGES TO THE NEW RULES The new USPTO rules have the potential to affect patent practice more profoundly than any other change in recent history, and arguably since passage of the Patent Act of The new rules are a current topic of controversy for both patent owners and patent practitioners. In that respect, two federal lawsuits have been filed seeking to stop the new rules from taking effect. In particular, GlaxoSmithKline filed suit against the USPTO on October 9, 2007, seeking an injunction and temporary restraining order against the new rules. 2 As of the time of publication of this article, a hearing on GlaxoSmithKline s Motion for Preliminary Injunction was scheduled to be held on October 31, An earlier lawsuit was filed on the day following the publication of the final rules. 3 Both cases argue, among other things, that the new USPTO rules violate the U.S. Constitution, the Administrative Procedures Act, and the Patent Act. RECOMMENDATIONS The ultimate effect of the rules is in question. In the meantime, however, we offer the following recommendations in response to the new rules and in consideration of the Federal Circuit s decision in McKesson. Each situation may deserve a different response. Thus, you should consult with your patent counsel to determine the most preferable course of action consistent with your particular facts and circumstances. 1. In-house counsel with budgetary responsibility should become familiar with the process and attendant costs and fees associated with patent appeals before the USPTO. The appeal option is likely to become used much more often than in the past due to the lack of alternative options for continuing prosecution of a given application. Indeed, the PTO commentary suggests a strategy that includes pursuing an appeal in the original application in a given patent family, and filing continuations later, if the appeal is unsuccessful or if other claims are desired. This is directly contrary to current practice, where most attorneys file continuations and RCEs if they believe that any further progress can be made with the examiner, and only file an appeal as a last resort. 2. Coordinate response strategies in all related applications throughout prosecution, because any claim added or canceled in one related application may affect the number of claims that can be presented in the other related application. 3. For new applications, avoid ESDs and SRRs if at all possible: File multiple applications each in compliance with the 5/25 rule, but with each application claiming distinct inventions so as to avoid the need for an ESD. Alternatively, in each new 2 See SmithKline Beecham Corp. v. Dudas, No. 07CV1008 (E.D. Va.). 3 See Tafas v. Dudas, No. 07CV846 (E.D. Va.).

3 application, include radically different claims directed to different claim classifications of subject matter to encourage the examiner to enter a restriction requirement. 4. Begin immediately to plan for and identify the administrative resources needed to meet the new reporting requirements for commonly-owned applications. Be aware that if you engage more than one law firm or attorney for patent legal services, there can arise the possibility that any one particular law firm or attorney may be unaware of the existence of each and every one of your potentially related applications for patent for a given invention(s). Thus, for corporations and other patent owners who use more than one law firm for patent prosecution, begin immediately to address how to track and maintain this information internally, or how to share information for commonly-owned applications with one or more law firms serving as outside patent counsel. 5. Disclose in all pending patent applications, via, for example, an Information Disclosure Statement (IDS) submission, the existence and content of any Office Action received in a related or commonly-owned case, whether the Office Action is favorable or adverse, that deals with the merits of the claims pending in the related patent application. 6. When a single law firm or attorney is engaged, the possibility of overlooking related applications may be less, but the importance of full disclosure is not minimized. Several options for complying with the disclosure requirements are set forth below. One option is to submit to the USPTO, via an IDS letter and accompanying Form PTO-1449, the existence and content of any Office Action received in a related application for patent, whether favorable or adverse, that deals with the merits of the claims pending in the related patent application. In this instance, submitting a physical copy of the Office Action from the related application for patent would provide a clear record that the Office Action was submitted to the USPTO. Furthermore, listing the submitted Office Action as an express entry on the IDS Form PTO-1449 will provide evidence that the examiner considered the Office Action submission, upon receiving the copy of the Form PTO-1449 bearing the examiner s initials next to the corresponding entry. This option, while burdensome, would appear to clearly satisfy the criteria in McKesson. A second option is to clearly identify in the Remarks submitted in any Amendment filed in an application for patent the existence of any Office Action received in a related application for patent prior to submission of the Amendment.

4 7. The prosecution histories of any issued patents should be reviewed for potential weaknesses in light of McKesson prior to initiating enforcement activities related to those patents. While it may or may not be possible to completely insulate a patent against a McKesson-based allegation of inequitable conduct, reexamination of the patent may be a viable consideration depending on the circumstances. 8. Accept and encourage reasonable restriction requirements. Under the new rules, a restriction requirement will support a divisional application to each non-elected invention, and each divisional application can be the basis of two continuations and one RCE. A restriction requirement can provide an opportunity for additional prosecution via divisional applications. 9. Make greater use of Examiner interviews, including telephonic interviews, particularly early on in prosecution, instead of waiting to interview the Examiner after a final office action has been issued (when a continuation or RCE may be required to obtain entry of any amendments or evidence discussed during the interview). Early requests for interviews before responding to the first office action will allow amendments and evidence to be entered as a matter of right. 10. Front-load prosecution efforts by responding to first office actions with all available amendments, arguments, and evidence. This will likely result in increased costs for responses, but the increased costs should outweigh the risk that arguments alone will not sway the examiner. The new USPTO rules clearly impose new limitations on patent prosecution strategies. Please contact your patent counsel to discuss how you can best protect your patent rights in view of these new challenges.

5 This Article is not intended to be and should not be taken as legal advice, and is not intended and does not create any attorney-client relationship. If you have any questions about the impact of cited cases, or would like additional information on the material covered in this Article, please feel free to contact any of the lawyers in our Intellectual Property Group, listed below: Gianna J. Arnold Stephen W. Aycock II Robert S. Brennen James T. Carmichael Michele L. Cohen George W. Cox Martha Lessman Katz Eric G. King Edward J. Kondracki John E. McCann Patrick Miller Micheal A. Minter John E. Prominski David R. Schaffer Mitchell W. Shapiro Nelson H. Shapiro Ronald E. Shapiro George W. Swenson