By Donald Zuhn --
Yesterday, we reported on a second letter that was sent to the Office of Management and Budget (OMB) criticizing the IDS rules proposed by the U.S. Patent and Trademark Office on July 10, 2006 (see "Changes to Information Disclosure Statement Requirements and Other Related Matters," 71 Fed. Reg. 38,808). The letter was prepared by Dr. Richard Belzer on behalf of clients he declined to identify, and accompanying Dr. Belzer's letter was a 21-page Declaration from a unidentified registered patent attorney having over 20 years of experience in the field of intellectual property. The Declarant estimates that the cost of complying with the proposed IDS Rule will be between $7.3 and $7.9 billion per year.
In addition to this cost of compliance estimate, the Declarant provides a number of other interesting "observations." For example, the Declarant presents a significantly different picture regarding the percentage of applications that would be impacted by the proposed IDS rule. While the Patent Office analyzed allowed applications over an unidentified six-week period of time and then concluded that 15% of all patent applications would be affected by the "more than 20 reference" provision of the IDS rule, the Declarant analyzed a random sample of 25 patents selected from the 2,896 patents that issued during the week of the report and found that 44% contained citations to more than 20 references. As a result of this discrepancy, the Declarant urges the OMB "to examine the PTO data supporting the comment in the rule proposal very carefully, including checking its methodology for possible bias."
The percentage of affected applications rises even higher when the "+25 page/foreign-language reference" provision of the IDS rule is considered. Among the 25 patents from the Declarant's random sample, only three of the fourteen patents that were not impacted by the "more than 20 reference" provision were also not impacted by the "+25 page/foreign-language reference" provision. Thus, 85% of the 25 patents from the Declarant's random sample would have been required to comply with one of these two provisions (a far cry from the Patent Office's estimate that only 15% of all patent applications will be impacted).
Moreover, the Delcarant suggests that when faced with the consequences of performing a search (i.e., complying with the above provisions):
some practitioners might respond . . . by adopting a "head in the sand" approach and failing to search for or find possibly pertinent references, to avoid the risk of filing reports of this nature. To the extent that this occurs, there would be extra costs [for the proposed IDS rules] as well. Such costs include the extra cost arising from the examiners needing to search for references without applicant searches, extra costs to the public from some patents issuing unjustifiably because less searching was done, and extra costs on applicants arising from unprotected inventions (temporarily or permanently) or wasted application fees because applications were written without adequate investigation of prior art to focus them on the true inventive aspects.
In opining on the Patent Office's "Certification Analysis Under the Regulatory Flexibility Act" of June 29, 2007, which relates to cost estimates for the preparation of Examination Support Documents (ESDs), the Declarant "consider[s] that report's quality as easily falling within the term 'junk science' (to the extent that the report qualifies for use of the term 'science' at all)." [The Declarant offers an analysis of the ESD cost estimate because the Patent Office failed to provide a cost estimate for the preparation of Patentability Justification Documents (PJDs) under the proposed IDS rule.] In addition, the Declarant notes (not surprisingly) that:
[t]he PTO's consultant who sought to estimate practitioner costs for ESDs did not report speaking with or gathering information from any practitioners, much less taking any valid and reliable sample of practitioners who have studied the nature of the tasks they would be required to perform under the proposed IDS rule.
According to the Declarant, the Patent Office's flawed methodology does not end with its failure to consult with patent practitioners and applicants. In fact, the Declarant points out numerous instances in which the Office failed to present or identify data or information that the Declarant deems necessary to a proper analysis of the proposed IDS rule's impact, including the Office's failure to:
- identify the dates of the allowed applications in its six-week study (see above);
- report the average number of independent or total claims found in the 15% of applications in its sample in which applicants cited more than 20 references;
- report the average number of dependent claims in applications;
- produce actual data on the number of applications that are amended and the percentage of patents that are the subject of litigation;
- determine the amount of time examiners expend reviewing large IDS's;
- estimate the fraction of references cited that exceed 25 pages and the fraction of references cited that are in a foreign language;
- determine the percentage of foreign-language references submitted in IDS statements that have been translated in full;
- provide data as to how often references are cited after a first Office action;
- provide the amount of revenue the Office collects for the filing of late IDS's.
With respect to the impact of the IDS rule on allegations of inequitable conduct (a topic on which the Declaration provides a thorough analysis), the Declarant states that:
based on my experience with inequitable-conduct litigation, it is my opinion that, for those applications that result in patents that are litigated, inequitable conduct would be alleged in essentially 100% of cases in which a "patentability justification" document was filed. This is perhaps the easiest estimate that I have made in this declaration.
Finally, in summarizing the impact of the proposed IDS rules, the Declarant concludes that:
[t]his is a particularly cumbersome set of rules that the public is being asked to follow. The paperwork requirements are extreme and quite expensive. The PTO's entire strategy is flawed, because (a) it seeks to shift duties from the examiners, who can perform such duties cheaply and without paperwork, to applicants, who are positioned to perform such duties more expensively and who must submit the paperwork only in the most careful fashion, and (b) it places applicants and practitioners in a "Catch-22" situation by, under an existing rule, mandating disclosure of material, known prior art references, while simultaneously, under the proposed new rule, mandating high extra cost and grave risks in instances where there is a duty to disclose many references or references that are relatively lengthy or written other than in English.
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