The Fate of Intellectual Property Under Trump

Through protecting his brand and rights of publicity, Trump has accumulated more experience with IP than any other president. He owns more than 100 trademarks and has not shied from enforcing them. He’s also expressed concern about theft of trade secrets by China, referencing a study by the ITC that claims putting a stop to it would create two million jobs in the US. 1

Yet, Trump has said very little about IP, so after reporting the few facts known we can offer only informed speculation and discussion of new and preexisting reform ideas that face better prospects under Trump than they would’ve under Clinton.

The Trump Team Is Pro-IP Overall

IP runs in Trump’s family. His uncle, John G. Trump, was an MIT professor, physicist, and inventor.2 Trump’s eldest son, Donald Trump Jr., has a lot of experience with patent litigation. He was involved in a large number of suits filed by MacroSolve over a single software patent. He also wrote an article arguing that some NPEs (e.g., MacroSolve) are legitimate innovators who deserve their day in court.3 In addition, Trump’s daughter, Ivanka, has her own clothing line and is now witnessing a rush on her trademarks by squatters in China and other foreign countries.

The most pro-IP people on Trump’s team appear to be domestic advisor Ken Blackwell and chief strategist Stephen Bannon. In 2014, Blackwell authored The Conservative Case Against Patent Reform.4 As editor of Breitbart News, Bannon published articles arguing for a stronger patent system, including one by James Edwards declaring inter partes review a “killing field for patents.”5

Vice President Mike Pence also appears to be fairly pro-patent. As Governor of Indiana, he supported the effort by the state and its academic institutions to license out its patents. As a Congressman, he served on the House Judiciary Subcommittee on Courts, the Internet, and Intellectual Property, where he argued against diversion of PTO fee revenue and expressed reservations about patent reform though he ultimately voted for the America Invents Act.

The IP views of Trump’s new Secretary of Commerce, billionaire investor Wilbur Ross, are largely unknown or unformed. He has, however, expressed a need for zero tolerance for theft of intellectual property.6

Trump’s tech advisor, Peter Thiel, is the co-founder of PayPal and a well-known venture capitalist who’s invested billions in biotech and other high-tech industries.7 When it comes to NPEs, however, he may not be a big supporter of patent rights. In an interview, he referred to a particular NPE as a “parasitic tax on the tech industry.”8

Although not part of Trump’s team per se, it’s worth mentioning here that Issa (R-Calif.) is the IP point man in Congress. As chair of the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet, he has the most direct influence on PTO operations and all reform bills must meet his approval. Issa holds of dozens of patents on vehicle anti-theft devices and is generally pro-patent. However, he favors legislation to curb patent litigation abuse,9 which does not bode well for forum shoppers.

New PTO Director? Rader Throws His Hat Into the Ring

Reports in January indicated that Trump was keeping Michelle K. Lee on as Director, but now it appears that is a temporary measure. In February, Issa indicated that Lee may be moved to another role in the government, such as one involving trade or technology policy.10

In addition, the position is listed as “vacant” on the leadership page of the Commerce website.11 And the PTO, citing “unusual circumstances, requested an extension of time to answer a FOIA inquiry into whether Lee is and will remain Director. 12.

Meanwhile, a few potential candidates for the position have tossed their hats into the ring.13 The candidate with the most name recognition is Randall Rader, the gregarious former chief judge of the Federal Circuit. Rader is a longtime champion of patent rights and a critic of the high patent kill rates in inter partes review. If appointed, said Rader, he’ll work to “make patents great again.”14

The other well-known candidate is Phil Johnson who retired last month as chief of IP at the healthcare giant Johnson & Johnson. Like Rader, Johnson is known as a strong supporter of patent rights. 15 He was reported to be Obama’s initial pick for Director in 2014 but lost out after the tech industry’s campaign for Lee.16

Supposing we end up with a Director more pro-patent than Lee, what could that Director do? One thing is to exercise rule-making authority to tweak PTO operation to, among other things, make it friendlier to patentees facing challenges in post-grant procedures such as inter partes review (IPR). For example, the Director could alter the Board’s practice of construing claims broadly during IPR. This and other IPR reforms are discussed further below.

The Director could also influence case law through PTO amicus briefs, which are likely to become more frequent and strategic if Rader or Johnson is appointed. In addition, the Director could influence legislation through PTO interactions with Congress. The Director could also enhance cooperation with foreign patent offices to share examination results, which could help shorten application pendency and keep down PTO operating costs. This list is non-exhaustive.

The End of Fee Diversion May Be Nigh

The Commerce Department has long diverted revenue generated by PTO fees to other concerns under the Department’s purview. Fee diversion was reduced but not eliminated by the America Invents Act. In 2013, for example, $120 million was diverted, which prevented the PTO from hiring additional examiners, updating its IT systems, and fully funding its satellite offices. 17

But there is reason to believe fee diversion may soon be sent to its final resting place. As mentioned above, when Pence served in Congress he argued against fee diversion. Never before has the issue been a preexisting concern of someone so high up in an administration. Furthermore, the case against fee diversion is easy to make as it operates in effect as a tax on inventors, which seems to be one of the most perverse taxes possible. Also, consensus should be readily achievable as the issue trips over no fault lines that divide the parties.

Reform of Inter Partes Review

The high kill rates in inter parties review have inspired calls for reform. Elimination of inter partes review (IPR) in its entirety is a long shot, but Senate bill S. 632, the STRONG Patents Act, proposes four moderate reforms that strike us as viable. Even if the bill goes nowhere, they could be implemented by the new Director.

One reform in S. 632 is to change the standard the Board uses when construing claims in IPR. Currently, the Board gives claims their broadest reasonable interpretation (BRI), which results in claims being construed more broadly in IPR than they are in federal court. This practice was recently approved in Cuozzo 18 where the Supreme Court deferred to the PTO’s long-standing practice of applying the same standard to patents during post-grant procedures that it applies to applications during examination.

Use of BRI during post-grant procedures makes less sense now than it did in the past. In the past, a stronger case could be made that the practice was efficient. Specifically, when post-grant procedures had less effect on the patent system as a whole and when it accounted for a smaller fraction of the Board’s total workload, it was more cost-justified to apply the familiar BRI standard instead of developing the procedures and devoting the effort to make the tougher judgment calls involved in applying a more nuanced standard. But post-grant procedures have gone from being a backwater to being a prime arbiter of the fate of the most important patents – those that are litigated.

Furthermore, in substance IPR is more akin to a validity attack in federal court than it is to examination. As in federal court, inter partes review is adversarial, and the patent in question has already survived an examiner’s scrutiny. Nowadays, when a patentee files suit, the defendant (or a party who expects to be a defendant) very often petitions for inter partes review and the co-pending suit is usually stayed. In these cases, the patents end up being subject to a broad construction for validity purposes (in IPR) but to a narrower construction for infringement purposes (in the copending suit).

Should the Board and the parties in an IPR devote as much effort to claim construction courts and parties devote to it in litigation?  It can be argued that devoting so much effort to claim construction would defeat the purpose of IPR – to provide a quick and efficient means to test the validity of patents. There should, however, be a middle ground whereby the Board construes claims under a standard closer to one used by courts but through a quicker and dirtier process that entails less input from and advocacy by the parties.

The second reform is to heighten the petitioner’s burden to prove invalidity from a preponderance of the evidence to the clear and convincing evidence standard used in federal court. If a robust assumption of validity is warranted in federal court, either because litigation is adversarial or because the patent in question passed an examiner’s scrutiny, why wouldn’t an equally robust assumption be warranted in IPR? In any event, we should not lose site of the big picture: because so many litigated patents are challenged in IPR, it has in effect largely eliminated the assumption long enjoyed by patents that they are valid absent clear and convincing evidence otherwise.

The third reform is to make it easier to amend patents in IPR. Currently, the Board allows amendments in only a tiny number of IPRs. That the Board generally forbids amendment seems a bit unfair given that the PTO previously granted the patent after a lengthy and costly examination in which the PTO failed to find or to assert the prior art asserted in the IPR. Forbidding amendment in IPR also seems backwards as it entails treating patents less favorably than applications.

The fourth reform is to require that the Board panels that reaches final decision differ from the one that decided to institute the IPR. Given the high kill rate for instituted claims that reach final decision, once a panel decides to institute the game is largely over. Insofar as different panels are apt to reach different conclusions on validity, then employing different panels for institution and final decision helps ensure that a patent’s fate turns on something besides the luck of the panel draw.

Should Very Obscure References Qualify as Effective Prior Art?

Patent law has long maintained the fiction that the person of ordinary skill in the art is omniscient in the sense that he is aware of all relevant prior art in existence anywhere in the world at the time the application was filed. Accordingly, in litigation and inter partes review, novelty and non-obviousness are assessed in light of the most technologically relevant prior art that a challenger can dig up, regardless of whether anyone who wanted to solve the problem solved by the patentee would’ve actually consulted that art.

For example, in In re Hall the Federal Circuit held that a copy of a doctoral thesis in a single library in Germany counted as a publication available against the patent.19 Similarly, in Titanium Metals v. Banner, the patentee claimed a titanium alloy having “good corrosion resistance in hot brine environments.” The Federal Circuit held that the claim was anticipated by a 1970 article in the journal Russian Metallurgy, which contained a graph with a data point that could, on close inspection, be recognized as representing a species within the claimed genus. It did not matter to the court that the article was concealed behind the Iron curtain or that its authors were unaware of the corrosion resistance.20

It has long been assumed that the fiction of omniscience is justified, but nowhere are the reasons for it elaborated. It may be time to determine whether the fiction is really warranted or whether it can be circumscribed.21 The problem with it is that it ignores the basic underlying rationale for patents – to enable the public to reap the benefits of inventions that it would not reap but for the promise of patent protection. The reality is that if a reference is highly obscure – in the sense that it’s very unlikely that anyone who was aiming to solve the same technological problem would’ve consulted the reference – then the reference in no way supplies the public with the benefit that the patentee supplied.

The notion that obscure prior art shouldn’t deep-six a patent is not as unprecedented as it may seem. Consider 102(g), under which prior invention doesn’t count as prior art if the prior invention was abandoned or suppressed. In other words, prior invention cannot defeat a patent under 102(g) if the prior invention did not inure to the public’s benefit.

The doctrine of inherency is to similar effect. Under the doctrine, prior art can invalidate a patent even if it does not explicitly teach the invention. The law of inherency has long been considered a muddle but there is one (and only one) way to make sense of the case outcomes on inherency: ask whether the prior art allowed the public to reap the benefit that the patented invention supplies.22 The case law shows that, if the reference allowed the public to reap the benefit, the prior art invalidates the patent. Otherwise the patent remains valid and the anticipation is characterized as merely accidental.

It may be time to extend the underlying principle of public benefit to encompass references so obscure that no one seeking what the inventors sought would’ve consulted them. This reform could be implemented by the courts, but legislation may be necessary to see it happen within our lifetime.  This reform will be discussed in more detail in an upcoming article on PatentAttorney.com.

Trump and the Political Will to Fight Digital Piracy

America’s comparative advantage lies not in competing on wages but in creativity and innovation. We supply the brunt of the world’s software, popular music, TV, movies, and videogames.23 We suspect the new Administration would be open to more aggressive anti-piracy measures. Trump has articulated a protectionist agenda and has promised to alter arrangements in which the US gets the short end of the stick. Anti-piracy measures fit this agenda because piracy comes largely at the expense of American creators whereas most mass piracy operations and the majority of illegal downloaders are in foreign countries.

Although the media doesn’t cover the issue like it did when Napster debuted in the late 1990s, digital piracy is not just alive and well but increasing.24 Today, almost any song, TV show or movie can be readily downloaded for free or very close to it – at essentially zero risk of being charged with copyright infringement. Absent new measures, piracy is likely to increase as more and more of the world gets the bandwidth to readily download and share movies and other large files.

In most cases, to download a copyrighted work all one has to do is type the name of the work and the word “torrent” into Google and up will come a list of sites from which the work can be downloaded at no charge or after paying a small price for unlimited access to the site. The same goes for many if not most videogames and software programs. Those not available on torrent sites are sometimes available on darknet sites, which can be accessed through a particular browser that makes it nearly impossible for anyone to identify the user’s identity or location.

The fact that most software and works of entertainment are readily available for free on the net is widely known but falls a hair short of being common knowledge. Perhaps the main reason it’s not quite common knowledge is that the prices the creative industries charge for legitimate access – e.g., to rent movies on Amazon.com or buy songs on iTunes – are low enough that the majority25 of people in first world countries never bother to spend the extra minutes it takes to download works for free.

But here’s the rub: the prices for legitimate access are not themselves legitimate; they’re artificially low. That is, they are as low as they are because, if they were higher, more people would choose to download illegally. The price an industry can charge depends on how consumers would react if faced with a higher price. Today, the option to download illegally tacitly determines the prices the market will bear – from Amazon.com’s $3.99 per movie, to Netflix’s $8-$10 per month for unlimiting viewing, to iTunes’ $1 or so per song, to Spotify’s $0-$10 per month for unlimited listening.

In the mid 1990s, a typical music consumer would pay about $20 for a CD and end up liking and listening to, let’s say, four songs on it, which implies an average value to the consumer of at least $5 per song consumed, or $8 per song in 2017 dollars. How do you think consumers today would respond if all legitimate sellers of music started charging $8 per song?

The larger point here is that the harm to creative industries from piracy comes not only from the illegal downloading that actually occurs but also from prices having to be kept so low that the majority of people in first-world countries will pay them rather than bother to download illegally.

Piracy also distorts the creative process by biasing it toward activity that can’t be pirated (such as live performances) and to the creation of works pirated at lower levels. In Nashville, the conventional wisdom is that musicians have the best chance of making a living in the industry if they pursue country or Christian music. Hence some Nashville musicians package themselves for those genres even though they don’t prefer or self-identify with them. We suspect these two genres hold out better career prospects because fewer of their fans download illegally. Statistically speaking, their fans are more likely to live in rural areas and less likely to have fast internet service or to be tech savvy. In addition, one would expect most Christian music fans to be disinclined to stiff Christian artists through illegal downloading.

Studies reinforce the common sense notion that piracy cuts into industry revenue. In the graph below, the red line shows album sales before and after Napster’s debut in 1999. 26 Note the overall upward trend until Napster’s debut. Note also the blue line, which suggests the upward trend would have continued but for Napster and subsequent piracy operations.

Although the creative industries still go after mass pirates and the US-based internet service providers who abet them, the industries seem resigned when it comes to the larger cultural and political fight against piracy. But if there ever was a time to get some fire in the belly, now seems like the time. The Trump Administration is likely to be more amenable to the fight than any previous administration previous and any in the foreseeable future.

Rampant piracy is not inevitable. Curtailing it is simply a matter of political will. Imagine if we fought piracy with even half of the intensity, resources and technology that we devote to the fight against terrorism. Imagine if the government started aggressively hacking piracy sites, tracking pirates, imposing sanctions on countries that harbor pirates, and reforming copyright law to impose liability on advertisers who fund piracy sites and on pirates who currently avoid liability by distributing files through a peer-to-peer system that enables pirates to coordinate file exchanges between the computers of site users such that the files are neither stored on nor pass through pirate servers.

Today, those who run mass piracy operations are rarely prosecuted or convicted and when they are the penalty is lax compared to the penalty for a less harmful but more traditional crime such as robbing a store. Suppose a thief busts out a store window to swipe a few necklaces in the storefront display and is later apprehended and prosecuted. Although the harm from this crime is relatively modest – e.g., on the order of a few thousand dollars to replace the window and necklaces – the thief could serve years for the crime.

Compare the robbery example to the harm caused by The Pirate Bay, the largest piracy site, with millions of files and users and in near continuous operation since 2003 until today. Over the years, this site must’ve caused tens of millions of dollars in lost sales, perhaps hundreds of millions. Yet, in 2009 its three founders were convicted and the one who served the most time served only seven months. 27 Granted, they were convicted in Sweden, but had they been convicted here the penalties still would’ve been extremely lenient relative to the harm caused.

Why are the penalties for piracy so lenient compared to penalties for much less harmful traditional crimes? Probably because the harm from piracy, unlike the harm from robbing a store, is indirect, diffuse, cumulative, statistical in nature, and invisible insofar as it results in works never coming into existence – in a word, abstract. But abstractness is not a good reason to go easy on pirates. On the contrary, it’s a good reason to assume that we are psychologically inclined to go too easy on them and that we should therefore revise the penalty in accord with reason and the logic of deterrence.

In addition to increasing the penalty for mass piracy, it’s also important – much more important than most people think – to go after some small-timers, i.e., users who participate in piracy at the consumer level by downloading pirated content for personal use. Going after small-timers is important for three reasons.

First, if we go after enough small-timers to make some headlines, it will probably generate a lot of deterrence bang for the deterrence buck. Cognitive psychologists have long known that people respond to low probability risks in a binary fashion. If a low probability risk is salient enough to appear on our radar, we treat it as if it’s more probable than it is. Conversely, if a low probability risk isn’t salient enough to appear on our radar, we do the opposite: we ignore the risk entirely and in effect treat its probability as zero.

This quirk of human psychology creates an opportunity to deter a substantial amount of illegal downloading with a relatively small investment in prosecutions or lawsuits. If we go after enough small-timers to make headlines, we can thereby create a blip on the radar of the other 100 million or so Americans who consume pirated content.28 Today, this quirk may be having the opposite effect as the legal risk to small-timers approximates zero or otherwise falls short of being salient enough to appear on their radar. Indeed, according to a recent survey, 31% of Americans think it’s legal to download pirated content!29

The second reason it’s important to pursue some small-timers is that it would beef up the cultural norm against piracy. Today the norm is frail and far from universally shared. Enforced laws affect norms. When an activity is banned and the ban is enforced, more people come to view the activity as something good citizens shouldn’t mess with.

The third reason to go after some small-timers is that it has become harder to go after the preferred target, those who mastermind mass piracy operations. Today most pirates are located outside the US and/or use peer-to-peer. Absent new counter-measures, we are left with no choice but to either go after some small-timers or sit back and let America derive less and less from its greatest comparative advantage.

Patents for Humanity – The perfect blend of social consciousness, technology, and incentives to create

In 2012, the Patents for Humanity initiative was started to encourage innovations and solutions to the numerous challenges of global development such as infrastructure, energy, and medicine to name a few. Under the program a potential applicant can submit an application to the USPTO and upon approval the applicant may be given an acceleration certificate applicable for application processing at the USPTO. Furthermore, past applicants have been recognized in an awards ceremony conducted at the White House. Previous years winning technology zones have includes areas such as Medicine, Sanitation, Nutrition, Energy, Clean Technologies, Information Technologies, and Living Standards Technologies. Notable, winners have included; Gilead sciences for its contributions towards making HIV medicines available by generics manufacturers in Asia and Africa, The University of California, Berkeley for low cost production methods of producing anti-malarial compounds, Sproxil’s part in the development of IT systems to identify counterfeit drugs, and Nokero’s incredibly interesting developments concerning solar power light bulbs and mobile phone charging systems. These technologies are tremendously benefiting disadvantaged people around the globe faced with constrained resources who are living in challenging political and economic environments. The Patents for Humanity initiative aims to provide a higher standard of living responsibly by providing a creative solution. That solution relies on a mixture of social consciousness, technology, and incentives to create – an impressive combination of several of humanities best attributes.

Socially conscious entrepreneurship and innovation are some of the hallmarks of the American marketplace and our patent system. One of the greatest challenges facing our intellectual property system is how to transfer the benefits of research and development of modern technologies to other less fortunate individuals and societies. The importance of robust patenting incentives, increased patent quality, socially conscious and morally focused technologies can leave lasting impressions on what types of characteristics a truly remarkable twenty first century inventor should embody.

The most recent Patents for Humanity initiative was renewed Friday May 27th, 2016 with notable improvements. Previously, Patents for Humanity projects incentivized business participation by the award of an “expedited processing certificate” that could be used to expedite patent application processing at the USPTO. The certificate was not transferrable so smaller companies that saw successes were not able to package their successes for further negotiations, partnerships, and sales. The Patents for Humanity Program Improvement Act allows the acceleration certificate and awards to be transferrable to other entities thereby attracting more small businesses to the initiative and increasing the rewards of recognition by the program. We can thank Senator Patrick Leahy, a notable legislative contributor to the field of Intellectual Property, who recognizes that – “The innovations that are recognized by the patents for Humanity Award program help underserved people throughout the world.”

Previous winners have identified that the holder of the acceleration certificate may be unable to use the certificate and that by “making the certificate transferable, we can ensure that the certificate will be put to full use” – Stephen Katsaros, Chief Executive Officer of Nokero. Nokero is responsible for technological inventions concerning off grid technologies, solar power light bulbs, and mobile charging stations.

Through refinement and further legislative implementation the United States Patent System continues to thrive. Notably, this Legislation serves as a laudable benchmark of what our Patent System can be with the right incentives and social awareness.

Authored by: Timothy J. Maier and P. Marshall Ticer of Maier and Maier PLLC

PTAB Designates Five Precedential Opinions aimed at establishing workable body of law

In a desperately needed release on Tuesday May 10th 2016 the USPTO designated five PTAB opinions as precedential in a laudable effort aimed at establishing a workable body of law for post grant proceedings. Per Standard Operating Procedure 2 (Revision 9) “a precedential opinion is binding authority in subsequent matters involving similar facts or issues.”

Since the launch of the AIA and the record speed creation of the PTAB many administrative patent judges and PTAB practitioners have relied on their own instincts and wit while navigating uncharted waters. The recently designated precedential opinions should guide practitioners on matters such as; additional discovery for IPR and CBM proceedings, when the one year time bar of 35 U.S.C. § 315(b) begins to toll, and guidance on a patent owners burden to show entitlement to substitute claims.

Garmin Int’l v. Cuozzo Speed Techs LLC discusses the factors considered in evaluating motions for additional discovery in IPR proceedings.

Bloomberg, Inc. v. Markets-Alert Pty, Ltd., the factors considered in evaluating motions for additional discovery in CBM proceedings.

Oracle Corp. v. Click-to-Call Techs, LP, pertains to interpretation of “served with a complaint” for purposes of triggering the one-year time bar set forth in 35 U.S.C. § 315(b).

MasterImage 3D, Inc. v. RealD Inc., provides guidance on patent owner’s burden to show entitlement to substitute claims.

Lumentum Holdings, Inc. v. Capella Photonics, Inc., interprets 35 U.S.C. § 312(a)(2).

The AIA stipulates that a decision to institute a post grant trial shall be final and non-appealable. There are good arguments for and against this proposition which won’t be discussed here but it is important to note that if the USPTO is going to serve the public interest they must emphatically embrace their role in designating precedential opinions because by statute they are the only body who can. Cuozzo Speed Technologies, LLC v. Lee was recently argued at The Supreme Court, has been watched closely for years, and is just now becoming precedential.

The issuance of an official statement blessing these opinions as precedential indicates that the USPTO is taking the notion that they are necessarily the defacto party to establish precedential opinions seriously. However, we should be asking ourselves what is taking so long? Why did the Board take so long to officially designate such an early case as precedential and what can the USPTO do to establish case law more quickly?

The Standard Operating Procedure 2 (Revision 9) of the USPTO indicates that any member of the board may nominate an opinion as precedential to the Chief Judge. The Chief Judge may then put the nomination to a vote for a stated time period (typically 10 days) in which all 270 or so Board Members may vote on an opinion they believe should be precedential. If a majority is reached the Chief Judge must then submit the findings in writing to the Director. Naturally, the Director has veto authority.

While it is easy to point fingers at the Office for untimely designation of precedential opinions it is important to note that perhaps we – as practitioners that is – also have a role to play. Notably, the Office makes clear that “the appellant, the patentee, a petitioner, or a third party member of the public may, within 60 days of issuance of the opinion, request in writing that an opinion be made precedential.” Perhaps the question we should be asking ourselves is not what the Office should do for us, but what we should do for the Office.

Termination of an OED Disciplinary Proceeding: How a SOL Defense may be Properly Construed

 

Steve Lipman – Guest Author of PatentAttorney.com

Steve Lipman has practiced for more than 40 years in intellectual property litigation, acquisition, and counseling in DC, VA, NY, and BOS.  Steve began in the Federal Government with the USPTO and then in private practice as an equity partner in four law firms. He has served many times as a legal expert witness, a prosecution and defense counsel, and a consultant, for more than 40 patent and trademark attorneys and practitioners in ethics, disbarment / disciplinary investigations and hearings, and registrations before the USPTO’s Office of Enrollment and Discipline (OED).

 

Introduction

Prior to the AIA’s 2012 amendment to 35 U.S.C. §32, disciplinary investigations from the Office of Enrollment and Discipline (OED) of the USPTO fell under the general Statute Of Limitations (SOL) provision stated in 28 U.S.C. §2462 (“[E]xcept as otherwise provided by Act of Congress, an action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise, shall not be entertained unless commenced within five years from the date when the claim first accrued …”). In enacting the AIA, Congress inserted the following language into 35 U.S.C. §32, i.e., the statute:

“A proceeding under this section shall be commenced not later than the earlier of either the date that is 10 years after the date on which the misconduct forming the basis for the proceeding occurred, or 1 year after the date on which the misconduct forming the basis for the proceeding is made known to an officer or employee of the Office as prescribed in the regulations established under the section 2(b)(2)(D).”

See generally “Implementation of Statute of Limitations Provisions for Office Disciplinary Proceedings”. (All emphases are added unless indicated otherwise). Thus, the USPTO through its OED could bring a Complaint against an attorney or practitioner within (a) 10-years after an alleged misconduct occurs, or (b) 1-year after an alleged misconduct is “made known to an officer or employee of the Office,” whichever of the two SOL sub-phrases (a) and (b) occurs earlier.

Eleven months after the AIA’s amended statute became effective, the USPTO then promulgated its own limiting regulation requiring that the 1-year SOL sub-phrase (b) does not start counting the 1-year until the OED Director “receives a grievance forming the basis of the [C]omplaint.” Federal Register Vol. 77, No. 147, July 31, 2012, at p. 45247 (effective Aug. 30, 2012); see also “Filing a Grievance”. The plain language of the amended statute above is broad: notice is accomplished when an alleged misconduct is made known to an “officer or employee” of the Office, i.e., a disjunctive construction. As such, the implication is clear that either an officer or an employee can satisfy the statute. The USPTO has contended that this statutory language somehow encompassed only the OED Director as per the regulation. In other words, the USPTO has read the statute that allows notice to an officer or employee to really mean only one officer, i.e., the OED Director himself. This is almost exactly the opposite of the statute’s actual wording, and would render the statute subservient to the regulation.

The article also describes the evidence how and what the USPTO already knew and understood the meaning of “made known to an officer or employee of the Office” and to be prior to the implementation of the regulation and provisions in the MPEP which requires certain conduct to be reported to OED by officers and employees – and such evidence as (i) blogs and non-commercially-based periodicals, and (ii) commercially-based periodicals and web services, like the well-known Law360. Certainly any referral evidence to OED by an officer or examiner prior to the OED Director himself becoming aware of an alleged misconduct would meet the four corners of the statute.

Stated clearly, the regulation cannot limit the statutory provisions of the AIA’s amended 35 U.S.C. §32. Again, it is the statute and not the regulation that can significantly strengthen a SOL Defense when supported by clear and convincing evidence “made known to an officer or employee of the Office” applied by the determinative legal arguments and conclusions discussed in the following SOL Decision reached at the Hearing stage of a OED Disciplinary Investigation.

Understanding and Appreciating a SOL Defense When Applied By the Determinative

Legal Arguments and Conclusions from a SOL Decision Reached

at the Hearing Stage of a OED Disciplinary Investigation   

The OED Director served a “Complaint and Notice of Proceedings under 35 U.S.C. §32” (37 C.F.R. §§11.32, 11.34) that the respondent stated affirmatively in the “Answer” with one of the following SOL “Special Matters of Defense” (§11.36(c)):

The OED Director is barred by the applicable Statute of Limitations set forth in 35 U.S.C. §32 (amended) to institute, conduct, or enforce this disciplinary proceeding against Respondent, or to have prepared and served the Complaint on and against Respondent because more than one year passed since Respondent’s alleged misconduct forming the basis for the proceeding [was] made known to an officer or employee of the Office as prescribed in regulations established under section 2(b)(2)(D).

As the Hearing stage of the OED disciplinary investigation had begun as a “contested case” (§11.38), the respondent filed a Motion to Dismiss based on the SOL “Special Matter of Defense” to the “Hearing Officer” (the “Judge”) appointed by the USPTO Director, that the Judge considered to be a Motion for Summary Judgment (“SJM”) (§§11.39(b),(c)). The Judge denied the SJM and, three days later, the respondent requested for a  reconsideration of the denial to which the Judge responded with an “Order on Respondent’s Motion for Reconsideration” (the “Hearing Order”). In between the SJM and the Hearing Order, the respondent also filed a Motion to (1) Compel the OED Director to comply with the Judge’s previous Discovery Order, and (2) Request an Order to the OED Director to have a substitute OED witness prepared and available to testify at the Hearing regarding respondent’s SOL Defense Discovery Requests.

The Hearing Order recognized the AIA’s amendment to 35 U.S.C. §32 to be of a significant concern and, prior to the amendment, that OED disciplinary cases fell under the general SOL provision stated in 28 U.S.C. §2462. In enacting the AIA, the Hearing Order also recognized that Congress inserted into 35 U.S.C. §32 the previously-cited language. Therefore, the Hearing Order stated that it considered the AIA amendment to be a dual Statute of Limitations as the USPTO may bring a Complaint within 10-years after a misconduct occurs, or one-year after the misconduct is made known to the USPTO, which is earlier. According to the Hearing Order, this consideration allowed the USPTO reasonable time to discover the alleged misconduct, but not so much time that evidence and memory of the misconduct had faded (Comments of Sen. Jon Kyl, Congressional Record S1372-73 (daily ed. March 8, 2011)).

The Hearing Order reflected further that the USPTO had moved to address regulatory questions. The initial “Notice of Proposed Rulemaking and Request for Comments (NPRM)” was published on Jan. 5, 2012. The final rule was issued on Jul. 31, 2012, with an effective date of Aug. 30, 2012. In the Supplementary Information section of the NPRM, the USPTO stated that the amended statute “directs the Office to establish regulations clarifying when misconduct forming the basis for a disciplinary proceeding is made known to the Office.” 77 Fed. Reg. 457 (Jan. 5, 2012). There were only five Comments of which only one Comment critically addressed the question of notice. Comment 3 contended that the USPTO’s proposed regulation was inconsistent with 35 U.S.C. §32 because it narrowed the acceptable notice recipient from any “officer or employee” of the Agency to “the OED Director.” In response to this comment, the USPTO cited legislative history from Sen. Kyl (R-AZ), who stated that “[a] section 32 proceeding must be initiated … within 1 year of when the misconduct is reported to that section of the PTO charged with conducting section 32 proceedings.” 72 Fed. Reg. 45247, 45249 (Jul. 31, 2012). The USPTO then adopted the final rule largely as proposed, and implemented it on Aug. 30, 2012 as §11.34(d). This did not resolve, however, the question of what SOL was operative between Sept. 16, 2011 (the date of the AIA’s amendment became effective) and Aug. 30, 2012 (when the regulation became effective). As the OED Director’s Opposition acknowledged, the Hearing Order considered that the statutory language to be ambiguous that the Judge “wrestles with here.”

In the absence of any operative regulation, the Hearing Order noted further that the USPTO contended there are “two reasonable interpretations of the ambiguity in §32.” First, the USPTO theorized that “there is no one-year provision until the USPTO establishes regulations. In other words, the 10-year repose was the only relevant time period until the August 30, 2012 effective date ….” The Hearing Order stated the amended statute cannot reasonably be read in this way as it is a fundamental canon of statutory interpretation that a statute should be construed “so as to avoid rendering superfluous” any statutory language. Astoria Fed. Sav. & Loan Ass’n v. Solimino, 501 U.S. 104, 112 (1991). The Hearing Order noted that the USPTO ignored the entire second half of 35 U.S.C. §32, simply wishing Congress’ words out of existence until it was ready to interpret them as there is nothing in the statute to suggest Congress would sanction such an action. In fact, the amended statute stated that it “shall apply in any case in which the time period for instituting a proceeding under section 32 of title 35, United States Code, had not lapsed before the date of the enactment of this Act.” Pub. Law 112-29, §3(k)(3). According to the Hearing Order, had Congress intended for the amendment to 35 U.S.C. §32 to become effective only upon interpretation by the USPTO, it would have said so in the “Effective Date” section of the statute, as it did elsewhere in the AIA. For example, the Hearing Order noted that the amendments to 35 U.S.C. §§ 6, 122, 301, and 303, among several others, all stated “[t]he amendments made by this subsection shall take effect upon the expiration of the 1-year period beginning on the date of the enactment of this Act ….” The Effective Date section amending 35 U.S.C. §41 stated that it became effective 10 days after the enactment of the AIA. The Hearing Order reflected that there is no such delaying language in reference to the 35 U.S.C. §32 amendment as this was evidence that Congress considered the various effective dates of its amendments and intended the SOL to be effective as of Sept. 16, 2011, subject to later revision by the USPTO.

The USPTO’s second theory was that “the one-year period begins to run when the OED Director receives a written grievance (i.e., exactly what established under 37 C.F.R. §§11.1 and 11.34).” OED Director’s Oppos’n. The Hearing Order believed to have determined that there was no merit to this argument as the USPTO merely twisted its own regulation around and imputed it back to the statute, thereby validating itself. The converse to the statutory canon described previously was applicable here. Not only must the reader give every word in a statute effect, one also cannot read words into the statute; particularly when doing so alters the statute’s meaning. Iselin v. United States, 270 U.S. 245, 250 (1926). The plain language of the AIA-amended statute is broad: notice is accomplished when the misconduct is made known to an “officer or employee” of the Office. The Hearing Order stated that this is a disjunctive construction. As such, the implication is clear that either an officer or an employee can satisfy the statute. The USPTO contended that this language somehow encompassed only the OED Director. (As discussed at length in an “Order on Cross SJM’s (vacated on other grounds), the Judge offered no opinion about the validity of the USPTO’s regulations. However, the USPTO attempted to claim that the statute itself limits notice to only the OED Director. The Hearing Order stated that this is “flatly incorrect.” Whether §§11.1 and 11.34(d) are reasonable interpretations of 35 U.S.C. §32 was considered a different question, but that is a question for another court at another time.). In other words, the USPTO reads a statute that allows notice to any officer or employee to really mean only one officer, the OED Director himself. The Hearing Order stated that this is almost exactly the opposite of the statute’s actual wording, and would render the statute subservient to the regulation. Indeed, the Hearing Order commented that allowing the USPTO to interpret the statute, then teleport that interpretation back onto the statute, would create precisely the sort of retroactive legislation the respondent complained of, and the OED Director tacitly acknowledged, is improper.

The USPTO contended further that both of these interpretations were reasonable, and thus warranted Chevron deference. Under Chevron and its progeny, an agency’s reasonable interpretation of a silent or ambiguous statute is given controlling weight. See Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984). However, the Hearing Order noted that Chevron is not applicable in this instance as the USPTO did not cite any interpretation of the statute other than §§11.1 and 11.34(d). In fact, in its SJM, the OED Director affirmatively stated that it is the USPTO’s interpretation of 35 U.S.C. §32 – as sets forth in §§11.1 and 11.34(d) – that the one-year limitations period commences when the OED Director (not a patent examiner or any other employee or officer of the USPTO) receives a written grievance. That interpretation is reasonable and entitled to substantial deference.

The Hearing Order seemed to determine that those regulations specify “who,” “how,” and “when” notice is achieved, now. But those regulations were not in effect at the time in question. The USPTO’s interpretations contained within them were therefore of no help in resolving the ambiguity at the time in question. The question here was: What limitations period controlled during the gap between Sept. 16, 2011, and the regulations’ effective date when there were no regulations? With regard to the regulatory gap, at best, USPTO’s position at bar was considered by the Hearing Order to be a litigation position which the Supreme Court has made clear deserves little deference, if any. Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 212-13 (1988). (“We have never applied [Chevron deference] to agency litigating positions that are wholly unsupported by regulations rulings, or administrative practice …. Deference to what appears to be nothing more than an agency’s convenient litigating position would be entirely inappropriate.”).

Given that neither of the USPTO’s proffered interpretations deserved deference, the Hearing Order stated that the Judge must weigh their persuasiveness against the language of the statute itself. The Hearing Order stated that the statute wins that contest easily. The Hearing Order stated further that the statute explains Congress’ intent to be in plain English, and can be easily understood without ignoring words or adding new words. The Judge therefore was understood to have found that, prior to the enactment of the regulations, i.e., §§11.1 and 11.34(d), the only operative SOL was the one expressed in the statute, i.e., 35 U.S.C. §32. Accordingly, the one-year statutory clock began when the misconduct was made known to a USPTO officer or employee of the Office. The Judge stated in the Hearing Order that this did not, however, automatically hand victory to the respondent as the respondent was believed to must still show that the misconduct was made known. [Emphasis in the original].

The respondent argued that a USPTO employee was aware of the circumstances giving rise to the original Complaint against the respondent. Moreover, the respondent claimed various USPTO personnel, including the OED Director, were made aware of the basis for disciplinary action due to ongoing public media coverage, a case involving the same family of patents at the heart of the disciplinary proceeding. The Hearing Order also noted that the USPTO contended, in essence, that 35 U.S.C. §32 cannot be read as broadly as the respondent suggested because it would render the notice requirement effectively unworkable. It is understood from the Hearing Order that the Judge considered there to be substantial meat to the arguments. That being said, the Hearing Order seemed to comment somewhat sardonically that those arguments could include that: (i) under a plain reading of the statute, an officer or employee would be expected to fish out pertinent information from any source at any time; (ii) an employee could click on a blog post at home, skim it offhandedly, and thus permanently frustrate the OED Director’s attempts at prosecution; and (iii) a person talking on the phone while waiting to catch a Washington D.C. metro train could trigger the statutory clock if, by happenstance, a USPTO employee was also on the platform. Then, the Hearing Order seemed to quickly confute its own arguments that they cannot be results that Congress intended.

The Hearing Order noted further that USPTO’s arguments must be weighed against the language of the statute, giving no deference to the USPTO as the notice arguments were merely made in a litigation posture. Here, a reading of “made known” is so broad as to encompass notice through publication would lead to an illogical result. The Judge was believed to have found that a reasonable interpretation of 35 U.S.C. §32 requires a written submission to an officer or employee. The Hearing Order also noted that this generalized attempt at communication is often little more than background noise, particularly in the Internet era where information is ever-present, whether or not is wished. The Hearing Order seemed that it was unconvinced that Congress intended USPTO officers or employees to be relentlessly vigilant in packing up chatter that is not directed at them.

The Hearing Order discussed further that, in reviewing a SJM, a review court must find “all ambiguities and draw all reasonable inferences in favor of the party defending against the motion.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986); Matsushita Elec. Indus. Corp. v. Zenith Radio Corp., 475 U.S. 574 (1985); see also Lujan v. National Wildlife Federation, 497 U.S. 871, 888 (1990) (“where the facts specifically averred by [the nonmoving] party contradict facts specifically averred by the movant, the motion must be denied”).

The Hearing Order remarked further that the respondent asserted that the SOL set forth by 35 U.S.C. §32 had run by the time the OED Director filed the original Complaint against the respondent. In support of respondent’s arguments, the respondent cited various events including a conversation between a USPTO employee and the respondent, and respondent’s disclosure of a filing of a USPTO document containing a copy of a pleading filed by a third party. The Hearing Order also remarked that the respondent seemed to have claimed that “the contents of that disclosure made abundantly clear any alleged misconduct which could have possibly given rise to the Complaint.” However, the Hearing Order noted that the OED Director claimed the original Complaint was timely filed because the misconduct was first “made known” to an officer or employee of the USPTO when the OED Director received a facsimile, from respondent, which included a letter and a copy of a district court’s decision.

The Hearing Order concluded that the parties raised sufficient issues of material fact to warrant a Hearing to determine when respondent’s alleged misconduct was actually “made known” to an officer or employee of the USPTO pursuant to 35 U.S.C. §32. Thus, the Hearing would afford the fact-finder the opportunity to assess the credibility of the witnesses and draw inferences from the facts. Further, as the parties were already prepared for the Hearing on the merits of the case, the Judge believed that he would entertain testimony on both the SOL issue and the disciplinary sanction sought by the OED Director. Thus, the Hearing Order determined that the Judge found issues of material fact existed as to when the misconduct forming the basis for the disciplinary proceeding was “made known” to an officer or employee of the Office.

On the same day the Judge entered and signed the Hearing Order, both the OED Director and the respondent signed-off on a “Proposed Settlement of Disciplinary Matter Pursuant to 37 C.F.R. §11.26” (the “Proposed Settlement Agreement”) to terminate the Hearing and the OED disciplinary proceeding. And, on the very next day the Proposed Settlement Agreement was presented to the USPTO Director who immediately signed the “Final Order” that same day terminating and settling the entire disciplinary proceeding, i.e., it took only two consecutive days from the entire submission of the sign-off of the Hearing Order, the Proposed Settlement Agreement, and the Final Order, which led shortly thereafter of the Final Order to the public on the OED’s electronic FOIA Reading Room designated as “Disciplinary Proceeding No. D2013-17”.

Thus, the Final Order jammed on the brakes of the respondent, the USPTO, and the OED within only two consecutive days after the Judge signed the Hearing Order. However, the “overnight” termination of the Hearing and the disciplinary proceeding left open whether and how the Hearing Order per se could be applied to a SOL Defense of another disciplinary proceeding even though the Hearing Order derived from a settled proceeding. Nevertheless, while it is believed that the determinative legal arguments and conclusions of the Hearing Order should be applied similarly in a SOL Defense of a different disciplinary proceeding, some of the following aspects of the Hearing Order can help find and prove what, when, and how an alleged misconduct could be “made known” successfully from an “officer or employee of the Office.”

Some of the Following Aspects of the Hearing Order That Can Help Find and Prove

What, When, and How an Alleged Misconduct Could be “Made Known”

Successfully from an “Officer or Employee of the Office”

Not surprisingly, the OED Director and others from OED engaged in concerted and aggressive efforts at the birth of the AIA amendments of 35 U.S.C. §32 to promote and deliver the new SOL and other OED investigative practices. Those efforts included public speeches, in-person presentations, slide shows, published articles, and other means of communication, externally and internally of the USPTO, so possible misconduct was made known to officers or employees of the Office through such following examples as “web searches,” “published decisions,” “news articles,” and “headlines” from blogs, and non-commercially-based and commercially-based periodicals:

  • The “Patent Corps, Trademark Corps, [and] Other[s],” as sources “[i]nternally within [the] USPTO,” “suggesting possible grounds for discipline” of practitioners, pursuant to the new compressed SOL of 35 U.S.C. §32 as amended by the AIA, “[o]ne year from when the misconduct was made known to the USPTO,” not made known only to the OED Director;

– “Professional Responsibility for IP Practitioners – OED’s Rules and Responsibilities in Handling Grievances and Disciplinary Matters Against Practitioners,” spoken and presented publicly by the OED Director at the Spring 2012 Annual Meeting of the American Intellectual Property Law Association;

  • “OED receives information that leads to grievances from outside the PTO — clients and colleagues of the attorney — and internally from [patent] examiners *** We also do our own investigations … and we do web searches [that] I am always surprised at the frequency of [the] headlines [outside of the USPTO] about patent attorneys;”

– “Patent Attorneys Can Take Steps To Avoid Grievances,” cited and reprinted in BNA’s Patent Trademark and Copyright Journal, Vol. 83, p. 180, Dec. 9, 2011, reprinted on Dec. 16, 2011 in BNA’s Life Sciences Law & Industry Report, and delivered publicly by the OED Director on Dec. 1, 2011;

  • Published Decisions [and] News Articles” also “suggesting possible grounds for discipline” of practitioners, pursuant to the AIA-amended SOL of 35 U.S.C. §32, “[o]ne year from when the misconduct was made known to the USPTO;”

– “Harmonization and Enforcement of USPTO Ethical Standards in the Post-AIA Era,” spoken and presented publicly by the OED Director through a slide-show on May 30, 2013; and

  • Web searches,” “published decisions,” “news articles,” and “headlines”:

– Blogs and non-commercially-based periodicals;

In such well-known, easily-provided electronic format as IPwatchdog, Patent Baristas, Patently-O, and many other randomly-listed examples from one of many Internet sites at the relevant time period, like “Most popular intellectual property and technology law blogs”; and

– Commercially-based periodicals and “web services;

In such well-known, easily-provided electronic format as Bloomberg’s “BNA Patent Trademark and Copyright Journal”, Portfolio Media’s “Law360”, and many others of such commercially-based periodicals and web services;

For example, two critical commercially-based periodicals of “published decisions” or “news articles” from Portfolio Media’s “Law360,” believed to be and still subscribed and received by the USPTO’s Office of the General Counsel (OGC) in which OED and its Staff Attorneys are a component of OGC, were published on the Internet at the relevant time period beyond the one-year period “suggesting possible grounds for discipline” for the Hearing Order (see “At Trial, HTC Says Intellect Wireless Patents Unenforceable” and “Favoring HTC, Judge Finds Wireless Patents Unenforceable”, in addition to other evidence in support of the SOL Defense beyond these two critical sources).

Indeed, it is believed that these latter two critical sources would have been significant in support of the Hearing Order, among other evidence, because the Order made clear that the parties raised sufficient issues of material fact to warrant the Hearing to determine when and what respondent’s alleged misconduct was actually “made known” to an “officer” or “employee” witness of the Office pursuant to 35 U.S.C. §32. Accordingly, the Hearing Order likely would have been applied at the Hearing as well for the fact-finder to assess the credibility of the employee/officer witnesses and to draw positive inferences from their testimony. Further, as the witnesses were already identified and teed-up for the Hearing on the merits, the Judge seemed in favor of a reasonable and limited number of concise, fact-based testimony, documents, and admissions at the Hearing. Those testimonial Hearing witnesses were also likely to have been at least the OED Director and one F.R.Civ.P. 30(b)(6) employee from inside of the OED pursuant to §11.52 (Discovery) and §11.51 (Depositions) through the following:

(a)     subpoenaed depositions duces tecum and ad testificandum for both SOL discovery and Hearing testimony (35 U.S.C. §24; 37 C.F.R. §§11.38, 11.43, 11.50, and 11.51(a)); and

(b)     minimal and concise written requests for SOL documents and admissions (§11.52).

In addition, the two aforementioned critical sources, among other evidence for the Hearing, could have been proffered and applied just as well through Office employees outside of the OED, such as a patent examiner. As known well, patent examiners are trained well and repeatedly from at least two periodic training programs through the “Office of Patent Training (OPT)”) supplemented with a multi-part “AIA First Inventor To File (FITF)” segment in large part from the Office’s “MPEP Staff”. The MPEP Staff ensures that revised policies and procedures of the Office are appropriately disseminated to USPTO personnel through MPEP revisions, the Federal Register or Official Gazette notices, or other official announcements. Thus, the MPEP contains instructions to patent examiners, as well as other substantive and procedural material in the nature of information and interpretation that outline the current Office procedures “which the patent examiners are required or authorized to follow in appropriate cases in the examination of a patent application.” Id.

On the “patent side” of OPT and FITF training, “officers” of the Office are also involved on that “side” as well. For example with “officers,” at times the Deputy Commissioner for Patent Examination Policy, believed to be an “officer” of the USPTO, is consulted through other appropriate Office “officers” to formulate recommendations to the Commissioner for Patents (another individual believed to be an “officer”) who may be necessary for others believed to be “officers” – such as the USPTO Director, General Counsel, Solicitor, Chief PTAB Judge, Commissioner for Patents, Deputy Commissioner for Patent Examination Policy, Deputy Commissioner for Patent Operations, and TC Directors. “Organizational Offices of the USPTO”. In addition, there are believed to be an Office “officer” within the three sections of the OGC – the Solicitor’s Office, the Office of General Law (OGL), and the OED. These and other Office “officers” review and discuss recommended guidance to enable the USPTO Director to decide how the Office should and will proceed. Ultimately, policy and other implications of other Office “officers” are officially incorporated into the MPEP and OPT resources from the “Office of Patent Legal Administration” (OPLA). To reflect changes in law, rules, procedures, and policies, OPLA recommends updates to the MPEP as well as forms used by the Patent Examining Corps and external Office customers delivered through training on specialized subjects, patent law, and procedure for OPT. Id.

Not surprisingly, therefore, the preceding extensive and substantive details learned and applied by the “employee[s] or … officer[s] of the Office” from their organized USPTO training (and day-to-day work) and from the MPEP have taught them to identify many variations of possible practitioner misconduct that should be communicated by them to OED. Those communications to OED can and might be developed into evidence for a formal allegation of misconduct – or for a SOL Defense. The following are just a few illustrations of possible misconduct to be communicated to OED:

– “… [PTAB] action may include a sanction in the interference or referral of a patent practitioner to the Office of Enrollment and Discipline;”

– “Office personnel (including the Patent Examining Corps) are instructed to: (1) not reply to or act upon any third-party inquiry or other submission in an application, except those in compliance with 37 CFR 1.290 or 37 CFR 1.291 … When refusing third-party telephone or oral discussions, examiners may call the party’s attention to the statutory prohibition on initiating protests, or 37 CFR 1.2 …  The Office may also refer third-party inquiries, or submissions not provided for in 37 CFR 1.290 or 37 CFR 1.291, by registered practitioners in applications to the Office of Enrollment and Discipline for appropriate action;”

– “An amendment signed by a practitioner who has been suspended or excluded from practice under the provisions of 37 CFR Part 11 is not entered. The file and unentered amendment are submitted to the Office of Enrollment and Discipline for appropriate action;”

– “Examiner Note: … Misuse of a Certificate of Mailing under 37 CFR 1.8 or improperly claiming the benefit of 37 CFR 1.10 which appears to be more than a one-time, inadvertent error should be brought to the attention of the Office of Enrollment and Discipline;” and

– “…Where the circumstances of an application or other proceeding warrant a determination of whether there has been a violation of 37 CFR 11.18(b), the file or the application or other proceeding will be forwarded to the Office of Enrollment and Discipline (OED) for a determination of whether there has been a violation of 37 CFR 11.18(b) ….

Conclusion

The regulation cannot limit the statutory provisions of the AIA’s amended 35 U.S.C. §32 and would render the statute subservient to the regulation. Again, it is the statute not the regulation that controls which can and should significantly strengthen a SOL Defense from an “officer or employee of the Office” who was “made known” of an alleged misconduct more than one-year prior to the OED’s filing of a Complaint when supported by clear and convincing evidence applied properly by the determinative legal arguments and conclusions of the Hearing Order.

USPTO Design Day 2016

On April 19, 2016, the United States Patent and Trademark Office (“USPTO”) hosted the 10th annual Design Day, a day-long seminar covering updates and developments in the design patent world.  The free event was well attended, drawing practitioners and designers from throughout the country and even internationally, in addition to a number of patent examiners from the design patent technology center, TC 2900.  The attendance speaks to the growing importance of design patents in the eyes of practitioners and inventors alike.

The day began with a presentation by Andrew Hirshfeld, Commissioner for Patents USPTO.  Mr. Hirshfeld noted the significant increases in design patent filings and the number of design patent examiners since he joined the office in 1987.  Historical data can be found here.  Notably, Mr. Hirshfeld mentioned that approximately 80 new design patent examiners have been added over the past three years, including 15 examiners in the Silicon Valley Regional Office.  On the international front, Mr. Hirshfeld mentioned that the USPTO will be issuing the first registration based on an International Application under the Hague System in the next week.

Next, Robert P. Olszewski, Director of TC 2900, discussed the make-up of TC 2900 and the statistical overview in more detail.  Specifically, Mr. Olszewski reported that TC 2900 currently includes 191 personnel: 1 Director, 12 supervisory examiners, 1 design practice specialist, 166 examiners, 1 technical support team lead, 9 technical support team members, and 1 office manager.  They expect to increase the number of examiners to approximately 195 by the end of 2016.  This growth is needed to overcome the current backlog of cases.  Mr. Olszewski stated that applications have increase by an average of 3% over the past three years.  They have closed the gap on matching the number of outgoing 1st actions with the number of incoming cases in 2015 and expect to begin reducing the current backlog of 41,055 cases with the increase in examiners. Mr. Olszewski also noted that there is currently an average of 13.7 months to 1st action, up from 8.5 in 2010, and an average of 19.7 months to issue, up from 14 in 2010.  In closing, Mr. Olszewski announced his planned retirement at the end of this year.

In his presentation, Mr. Olszewski took a moment to discuss an initiative to improve drawing quality in publications and issued patents.  There has been a degradation issue during reproduction due to a conversion from vector to raster graphics.  The process is being improved to avoid degradation and should take full effect by the end of the year.

David Gerk, Attorney-Advisor Office of Policy and International Affairs at the USPTO, took the podium next to speak about international developments.  He touched on the Industrial Design 5 (“ID5”) forum, the WIPO Standing Committee on Trademarks, and the Hague Agreement.  The ID5 forum included the 5 largest design offices and WIPO.  The ID5 make up for 90% of design filings in the world.  The forum covered a number of topics for harmonizing design law around the world.  Topics of note included priority document exchange and the implications of new technological designs.  Additionally, 40+ jurisdictions, including the ID5, have cooperated to create a centralized Design Search platform: DesignView.

Next, Gregoire Bisson from WIPO discussed the Hague System Implementation.  Mr. Bisson noted key aspects of protection through the Hague System, including the ability to file up to 100 different designs in a single application, the requirement for designated jurisdictions to issue any substantive refusals within 12 months of designation, and the 5 year renewal period. Mr. Bisson also highlighted differences between filing directly through WIPO and filing indirectly through the USPTO.  If filed directly through WIPO, an applicant is able to amend the filing electronically through WIPO’s online forms.  This is not possible for applications filed through the USPTO.  However, applications filed through the USPTO are automatically granted a foreign filing license, while those filed directly with WIPO are not.  Mr. Bisson reported that of the 256 US Hague filings, 114 have been filed directly to WIPO and 142 have been filed indirectly through the USPTO.  Mr. Bisson also noted that the USPTO turnaround time has improved from approximately 60 days in 2015 to around 10 days in 2016.  In closing, Mr. Bisson mentioned interesting statistics, including that the average US Hague application included 5 designs, 76% of indirect filings through the USPTO included a priority claim to a US application despite the automatic foreign filing license, and that the European Union was the most commonly designated jurisdiction at approximately 86%.

Bryce Rufener of Caterpillar Inc. followed Mr. Bisson with an update on recent MPEP changes and their implications.  He highlighted changes covering whether the title of a design application impacts the scope, the use of surface shading, and the acceptance of color drawings without meeting additional requirements.  Mr. Rufener pointed out several seemingly contradictory sections of the MPEP.  For example, section 1504.02 covering novelty states that the reference must be identical in all material respects to find anticipation, while also stating that the ordinary observer test is the sole test for anticipation.

Before lunch, a panel of examiners and practitioners discussed best practices.  The panel, which was moderated by Elizabeth Ferrill of Finnegan LLP, included Jeffrey Asch and Karen Kearney from the USPTO and practitioners Robert Katz of Baner & Witcoff Ltd and Margaret Polson of Polson IP Law.  The first topic of discussion was the use of generic titles.  All parties agreed that clear titles are helpful for examiner search purposes.  Robert Katz noted that there could be analogous art issues, 103 issues, and infringement issues caused by titles.  Next, the panel discussed elements of the specification, particularly broken line statements.  Ms. Ferrill mentioned the continually changing broken line statement requirements by examiners and how it is viewed by clients. From the audience, Perry Saidman expressed concern over the ability of examiners to amend the specification ex parte.  Mr. Saidman noted the potential litigation issues this can cause.  Mr. Ash commented that examiners are pressured to expedite examination, but only by changing non-substantive typographical and procedural miscues.  He noted that this could be a potential area for improvement.  Other topics included whether absolute language, such as “must,” should be used by examiners in office actions and the need for excessive Information Disclosure Statements.

The afternoon session started out with Brian Kelleghan, founder and owner of Bison Designs.  Mr. Kelleghan provided his personal experiences and observations as a designer and entrepreneur/business owner.

Daniel Martinage and Austen Angell of IDSA followed with an update from the Industrial Designers Society of America (“IDSA”).  Mr. Angell commented on recent trends in the design world.

After the IDSA update, Mesmin Pierre, Director of Copyright and Industrial Design Branch of the Canadian Intellectual Property Office, spoke on practice changes in Canada.  Of particular note, Mr. Pierre noted that Canada is joining 5 IP treaties and will implement the Hague System by 2018.

After a mid-afternoon break, Daniel Gajewski of Sterne Kessler Goldstein & Fox PLLC provided a look back at cases that have influenced design patent examination.  Mr. Gajewski covered cases concerning new matter, obviousness, and color.  With regard to new matter, Mr. Gajewski noted that In re Mann is often cited, but stressed that it is inapplicable for new matter rejections.  He contends that only experimental use was at issue in In re Mann, as noted in the opinion.  In re Salmon; however, remains applicable.  With regard to obviousness, Mr. Gajewski highlighted the famous In re Rosen case, which established the need for a “Rosen reference.”  Mr. Gajewski continued to point out two PTAB cases that provide non-precedential, but useful examples of how obviousness is applied.  These were Vitro Packaging v. Saverglass and Vanguard Identification Systems v. Bank of America.

Next, James Aquilina of Design IP PC discussed the much anticipated Apple v. Samsung case to be heard by the Supreme Court.  Mr. Aquilina discussed the issues to be considered, namely the award of Total Profits, the legislative history behind the Total Profits statute, and the arguments by each side.  Apple’s core argument will be directed to the plain language of the statute, which provides for total damages.  Samsung, on the other hand, will argue that an article of manufacture does not refer to the entire product.

Finally, William Seymour of Lando & Anastasi LLP concluded the day with a report on design patent litigation and case law over the past year.  His overview included key statistics and insight on the litigation landscape.  He noted 330 design patent cases were filed last year, which is down 3% from 2015, but up 21% since 2008, when the precedential Egyptian Goddess case was decided.  He noted the top venue for design patent litigation was the Central District of California, with 28% of the cases filed, and the top industry for design patent litigation was Apparel and Haberdashery with 10% of the cases.  Mr. Seymour also noted that, to his knowledge, Apple v. Samsung is currently the only case covering icons.  He reported that in 2016, 6 petitions for inter partes review were filed, 3 were instituted, and 1 final determination was made.  Mr. Seymour concluded with a brief summary of key cases over the past year spanning infringement, functionality and obviousness.