Intellectual Property Policy Developments AND Domestic Litigation

Under USC (U.S.C.) § 2, the Under Secretary of Commerce for Intellectual Property and Director of the USPTO advises the President and other agencies on both domestic and international intellectual property policy.

In domestic litigation, the USPTO advises the Solicitor General of the United States on intellectual property matters before the Supreme Court in addition to defending cases in which the USPTO is sued for decisions it has rendered. This year, the USPTO assisted the Solicitor General in formulating the government’s position before the Supreme Court in several important intellectual property cases. First, in eBay Inc. v. MercExchange, L.L.C., 126 S.Ct. 1837 (2006), the USPTO prepared a memorandum to the Department of Justice, recommending that the traditional four-factor injunction test should be applied in the patent context and helped the Solicitor General’s Office prepare the government’s amicus curiae brief advocating that position in favor of the petitioner. The USPTO also helped prepare the Solicitor General’s Office for oral argument. The Supreme Court issued a unanimous decision and, as advocated by the government, reversed the Federal Circuit and remanded the case to the district court for application of the four-factor test.

Second, in KSR International Co. v. Teleflex, Inc., No. 04-1350, the Supreme Court's invited the views of the government regarding whether to grant a petition for writ of certiorari to address whether the Federal Circuit misapplies the motivation-suggestion-teaching test for combining prior art references under 35 USC § 103 in light of the Supreme Court’s precedent on obviousness. The USPTO assisted the Solicitor General’s Office in formulating a recommendation, which the Supreme Court followed in granting certiorari. Thereafter, the USPTO assisted the Solicitor General’s Office in preparing the government’s amicus curiae brief on the merits, arguing that the Supreme Court should reverse Federal Circuit precedent and its application of the motivation-suggestion-teaching test as too stringent. Oral argument is presently pending and will be heard in FY 2007.

Third, in SmithKline Beecham Corporation v. Apotex Corporation, No. 05-489, the Supreme Court invited the views of the government regarding whether to grant a petition for writ of certiorari to address whether the Federal Circuit’s finding of inherent anticipation conflicted with Supreme Court precedent. The USPTO provided a memorandum to the Department of Justice, indicating that the Federal Circuit decision did not conflict with precedent and thus recommending against the grant of certiorari. The USPTO also helped the Solicitor General’s Office prepare the government’s brief reflecting that position. The Supreme Court, following the government’s suggestion, denied certiorari.

Fourth, in Federal Trade Commission v. Schering-Plough Corporation, No. 05-273, the Federal Trade Commission filed a petition for writ of certiorari pursuant to its independent litigating authority without the participation of the Solicitor General’s Office. The Supreme Court invited the views of the government regarding whether to grant certiorari to address whether a settlement of pharmaceutical patent litigation wherein the patent holder makes a payment to a potential generic competitor violates antitrust laws. Upon request, the USPTO gave input to the Solicitor General’s Office, and the Solicitor General’s Office in turn filed a brief recommending against certiorari. Following the government’s recommendation, the Supreme Court denied certiorari.

In addition to the USPTO’s work before the Supreme Court, the USPTO appeared as a party in several important patent cases before the U.S. Court of Appeals for the Federal Circuit. As one example, the USPTO appeared as an appellee in In re Kahn, 441 F.3d 977 (Fed. Cir. 2006), a case involving the issue of obviousness, specifically, whether the BPAI correctly found that there was motivation to combine the prior art. In affirming the BPAI, the Federal Circuit addressed the origins of the motivation-suggestion-teaching test, noting that it was developed by the Court of Customs and Patent Appeals to pick up where the analogous art test set forth in Graham v. John Deere Co., 383 U. S. 1 (1966), left off. The Federal Circuit also explained that the purpose of test is to guard against hindsight and to ensure predictable patentability determinations. Patent scholars have commented that the Federal Circuit’s discussion of the motivation-suggestion-teaching test was made in reaction to the Supreme Court’s grant of certiorari in KSR International.

Lastly, the Office of the Solicitor defended the USPTO in several civil actions before the trial courts. For example, in Sony v. Dudas, No. 05-1447, 2006 WL 1472462 (E.D. Va. May, 22, 2006), the USPTO defended the Office’s decision (1) to suspend the inter partes reexamination of two patents, given that the validity of the two patents was pending before the Federal Circuit as a result of private litigation; and (2) not to reexamine every claim of a patent when the request for reexamination is for less than all the claims. The USPTO filed a motion for summary judgment before the U.S. District Court for the Eastern District of Virginia and argued the case. The District Court granted the USPTO’s motion. It held that the USPTO did not abuse its discretion in finding “good cause” to suspend the inter partes reexamination. It also held that the USPTO, in its discretion, may review claims for which reexamination was not requested, but that the USPTO is not required to do so when the request identifies less than all the claims.

As a further example, in Michels v. United States, No. 06-290, 2006 WL 2524040 (Fed. Cl. Sept. 1, 2006), plaintiffs sued the United States for an unconstitutional taking of their patents without just compensation in violation of the Fifth Amendment when their patents expired because they failed to pay the statutorily required maintenance fees under 35 USC § 41(b). The USPTO prepared a memorandum for the Department of Justice, recommending a motion to dismiss for failure to state a claim upon which relief could be granted. The USPTO in turn helped the Department of Justice to file the motion. The U.S. Court of Federal Claims granted the government’s motion, agreeing with the government that the expiration of plaintiffs’ patents for failure to pay maintenance fees did not constitute an unconstitutional taking.

Registration

Office of Enrollment and Discipline

The Office of Enrollment and Discipline (OED) had a very successful FY 2006. In the last three months of the fiscal year, OED experienced a 23 percent increase in applicants taking the fully implemented computerized testing of applicants for registration to practice in patent cases before the USPTO. Several important advantages of computerized testing that were expected have been realized. These include: steady-state, non-cyclical workflow in processing applications and preparing examination questions; and greater convenience for applicants scheduling examinations. Turnaround time for processing applications and examination results has been reduced. Applicants who take the examination via computer obtain their unofficial results on the day of the examination. In FY 2006, OED processed 3,662 applications concerning the registration examination. OED admitted 3,490 applicants to take the computerized registration examination and 31 applicants who took the examination in a paper format. OED registered 1,089 individuals as agents and 505 individuals as attorneys.

Sixty-two limited recognition numbers were issued to non-citizens of the United States. During the course of the year, OED also supported USPTO’s Patents organization, with emphasis on assuring quality patent examination, by successfully administering promotion examinations for patent examiners and patent manager candidates. In FY 2006, OED continued to effectively protect members of the public. Upon OED’s review of the applications for registration that were received, OED determined that information in 62 applications raised the issue of an applicant’s present moral character. Three applicants were denied registration in decisions by the OED Director for lack of good moral character. One applicant withdrew the application after the OED Director issued a Show Cause requirement. OED either dismissed or closed the investigations regarding 35 candidates and proceeded with their registration. During the course of the year, OED received 155 grievances concerning possible misconduct by registered practitioners. OED opened 82 investigations. Forty-one grievances were dismissed, after thorough review and analysis, without investigation. OED closed 65 pending investigations through a combination of warning letters, memorandums for the Committee on Discipline, and closure for lack of probable cause to determine that a USPTO Disciplinary Rule had been violated.

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