Patent Docs

USPTO Drops Proposal to Change Terminal Disclaimer Practice

By Joshua Rich and Andrew Velzen --

On May 10, 2024, the U.S. Patent and Trademark Office published a Notice of Proposed Rulemaking (NPRM) regarding terminal disclaimer practice.  The proposed rule would have required any terminal disclaimer filed to obviate nonstatutory (obviousness-type) double patenting to include provisions tying the validity and enforceability of the claims of that patent to the validity and unenforceability of each of the claims in the other patent.  The NPRM drew over 300 comments, including a highly critical open letter from former USPTO Directors and others.  Now, in light of the vociferous criticism, much like Drake[1] or Nirvana[2] (or for an older audience, Gilda Radner[3]), the USPTO has said "Nevermind."[4]

The NPRM announced a proposed change to 37 C.F.R. § 1.321 that would have added an additional requirement for a terminal disclaimer to be used to overcome nonstatutory double patenting rejections (in addition to the common ownership requirement).  Namely, under the proposed rule, the terminal disclaimer would also have needed to:

[I]nclude an agreement . . . that the patent in which the terminal disclaimer is filed, or any patent granted on an application in which a terminal disclaimer is filed, will be enforceable only if the patent is not tied and has never been tied directly or indirectly to a patent by one or more terminal disclaimers filed to obviate nonstatutory double patenting rejections in which:

any claim has been finally held unpatentable or invalid as anticipated or obvious by a Federal court in a civil action or by the USPTO . . . or

a statutory disclaimer of a claim is filed after any challenge based on anticipation or obviousness to that claim has been made."[5]

The proposed rule would purportedly "promote innovation and competition by allowing a competitor to avoid enforcement of patents tied by one or more terminal disclaimers to another patent having a claim . . . held unpatentable."[6]

There were a raft of potential problems with the proposed rule, ranging from conflicts with codified law and precedent to policy concerns, as we noted in previous posts.[7]  Following in our footsteps, several former high-ranking USPTO officials (including former Directors) signed onto an open letter to Director Vidal.[8],[9]  In fact, the Directors found the NPRM so inflammatory, that they called for not only a non-enactment of the proposed rule, but also an immediate withdrawal of the NPRM, itself.

The letter argued that the proposed rule was an improper -- indeed, illegal -- exercise of rulemaking authority on two basic grounds.

First, it argued that the proposed rule would constitute a "substantive" rule and, therefore, was beyond the USPTO's statutory authority to implement (i.e., illegal).  Under 35 U.S.C. § 2(b)(2)(A), the USPTO "may establish regulations, not inconsistent with law, which . . . shall govern the conduct of proceedings in the Office."[10]  This is frequently interpreted as giving the USPTO the authority to make procedural rules, but not substantive ones.[11]  Notably, both the proposed rule and former Directors' letter preceded the overturning of Chevron deference by the Supreme Court in Loper Bright Enterprises v. Raimondo.[12]  That decision shifted the ground beneath the USPTO's feet, robbing it of deference in rulemaking, and arguably making the proposed rule even further outside the USPTO's purview.

Second, the Directors' letter argued as we had before that the proposed rule conflicted with the Patent Act because it would render entire families of patents invalid or unenforceable whenever a single claim in an entirely different patent tied to it by a terminal disclaimer was found invalid or unenforceable.  It did not seem like a close question, since 35 U.S.C. § 282(a) requires that:

A patent shall be presumed valid.  Each claim of a patent (whether in independent, dependent, or multiple dependent form) shall be presumed valid independently of the validity of other claims; dependent or multiple dependent claims shall be presumed valid even though dependent upon an invalid claim.  The burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity [emphasis added].

The proposed rule would have turned that presumption on its head and linked the validity of all members of a terminal disclaimer family together.  If one claim had fallen, it would have been an anchor around the neck of all the others, sinking them with it.

The Directors' letter also attacked the proposed rule on policy grounds.  It argued the NPRM relied on an insufficient investigation of the need for the proposed rule and that the proposed rule "seeks to solve a problem that does not exist."  Indeed, even the data presented in the NPRM, itself, seemed to undercut the necessity of the proposed rule.  Furthermore, the letter set forth a parade of horribles that could result as unintended consequences of the proposed rule.

In light of the former Directors' letter (and many other negative comments), the USPTO has now announced that it "has decided not to move forward with the proposed rule at this time and to withdraw the proposed rule," citing "resource constraints."[13]  In a note of grace in withdrawing the proposed rule, the USPTO noted that:

Despite the decision not to move forward with the proposed rule at this time, the USPTO appreciates and takes seriously the thoughtful perspectives raised by commenters.  The USPTO will continue engaging with its stakeholders as it works to foster a balanced, robust, and reliable intellectual property system.

Regardless, the final result is the one suggested by the authors and the former Directors alike:  the withdrawal of the proposed rule requiring changes to terminal disclaimer practice to obviate nonstatutory double patenting.

[1] https://en.wikipedia.org/wiki/Honestly,_Nevermind
[2] https://en.wikipedia.org/wiki/Nevermind
[3] https://www.youtube.com/watch?v=fZLeaSWY37I
[4] https://public-inspection.federalregister.gov/2024-28263.pdf
[5] https://www.federalregister.gov/documents/2024/05/10/2024-10166/terminal-disclaimer-practice-to-obviate-nonstatutory-double-patenting.
[6] https://www.federalregister.gov/documents/2024/05/10/2024-10166/terminal-disclaimer-practice-to-obviate-nonstatutory-double-patenting
[7] For in-depth discussions of the problems with the proposed rule, see https://www.patentdocs.org/2024/05/uspto-proposed-rule-change-to-terminal-disclaimer-practice.html, https://www.patentdocs.org/2024/05/the-usptos-proposed-terminal-disclaimer-rule-a-litigators-perspective.html
[8] The letter was signed by former directors Andrei Iancu, David Kappos, and Drew Hirshfeld and former deputy directors Laura Peter and Russell Slifer. A copy of the letter can be found here: https://patentdocs.typepad.com/files/2024-05-28-letter.pdf
[9] For an extensive discussion of the letter, please see https://www.patentdocs.org/2024/06/former-directors-request-rescission-of-proposed-rule-change.html.
[10] https://www.law.cornell.edu/uscode/text/35/2.
[11] See also Merck & Co. v. Kessler, 80 F.3d 1543 (Fed. Cir. 1996); Animal Legal Def. Fund v. Quigg, 932 F.2d 920 (Fed. Cir. 1991).
[12] No. 22–451, 603 U.S. __, 144 S. Ct. 2244 (2024).
[13] https://public-inspection.federalregister.gov/2024-28263.pdf

USPTO Institutes Additional Fees for Large Information Disclosure Statement Filings

By Michael Borella and Joshua Rich --

The advice to practitioners faced with marginally relevant prior art has long been "when in doubt, cite it."  There was a small cost for the applicant (or practitioner) to cite such art by filing an information disclosure statement (IDS), but substantial potential risks that could arise if the art was not cited.  On the other hand, examiners had to consider tangentially-related art along with the most relevant art.  The USPTO has now decided to institute a fee for filing large IDSs, which may very well have unintended, adverse consequences for the patent system as a whole.  It will create greater ethical challenges for practitioners and may degrade patent quality.  That is, the USPTO's cure may be worse for everyone involved than the problem has been for examiners.

The duty to disclose prior art on an IDS is unique to U.S. patent law practice.  While some other jurisdictions have prior art disclosure procedures (for example, in Canada, applicants can identify prior art voluntarily or do so in response to an examiner's request) or require identification of co-pending applications in other jurisdictions (such as in India, where the art cited in these applications may be used for evaluation of patentability), the U.S. requirements are both obligatory and more extensive.  As set forth in 37 C.F.R. § 56(a), the duty of disclosure requires that:

Each individual associated with the filing and prosecution of a patent application has a duty of candor and good faith in dealing with the Office, which includes a duty to disclose to the Office all information known to that individual to be material to patentability as defined in this section [emphasis added].

§ 56(b) adds some clarity on whether art is "material", stating that "information is material to patentability when it is not cumulative to information already of record or being made of record in the application."

The duty applies to a surprisingly large number of individuals -- all patent practitioners (whether in house or outside counsel) working on the application, all inventors, and any other individuals "associated with the filing and prosecution of a patent application."

A failure to discharge the duty of disclosure can have severe consequences for both the patentee (a finding of inequitable conduct can render the patent unenforceable) and practitioners (who can face professional discipline).  That is, the cost of failing to disclose a material, non-cumulative reference is potentially devastating.  Accordingly, it is critical for an applicant to thoroughly disclose all such references.

But the rub with the duty to disclose is that there is no clear definition of what is material to patentability or cumulative.  Both of these terms have a degree of subjectivity, and will be fiercely litigated based on facts unique to each case.  Given that, the aforementioned individuals are incentivized to disclose all known art when filling out IDSs because the cost of an incremental disclosure is far lower than that of even just being accused of inequitable conduct.

The USPTO contends, however, that "[in] many instances, these large IDS submissions contain clearly irrelevant, marginally relevant, or cumulative information."  To battle this perceived problem, on November 20, 2024, the USPTO published its final rule for "Setting and Adjusting Patent Fees During Fiscal Year 2025" in the Federal Register.  While the final rule includes a number of fee increases and new fees, the IDS-specific fees are set forth in Table 10 and excerpted below.

Notably, while Table 10 provides the large entity (undiscounted) fees, the final rule makes no mention of small or micro entity discounts for these fees.  Thus, it appears that the new IDS payment rules are as follows for all applicants:

a first amount ($200) in § 1.17(v)(1) for a cumulative number of applicant-provided or patent owner-provided items of information in excess of 50;

a second amount ($500) in § 1.17(v)(2) for a cumulative number of applicant-provided or patent-owner-provided items of information in excess of 100 but not exceeding 200, less any amount previously paid under § 1.17(v)(1); and

a third amount ($800) in § 1.17(v)(3) for a cumulative number of applicant-provided or patent owner-provided items of information in excess of 200, less any amounts previously paid under § 1.17(v)(1) and/or (v)(2).

The USPTO justifies these fees by noting that "[a]bout 5% of applications contain 51 to 100 applicant-provided items of information, about 4% of applications contain 101 to 200 applicant-provided items of information, and only 4% of applications contain more than 200 applicant-provided items of information."  While this means that the new IDS fees are expected to only impact about one of every eight applications, the USPTO states that it has provided examiners with "approximately 80,000 additional hours each year to consider large IDS submissions in applications, costing the agency $10 million annually."  The USPTO further asserts that "this cost is subsidized generally by patent fees, primarily maintenance fees collected for patents that resulted from applications that did not contain large IDS submissions."

At first blush, this seems to be a reasonable justification for the fees.  However, upon deeper reflection it is not clear how the USPTO has calculated these numbers and whether they reflect actual costs in practice.  For example, it is common practice for applicants to file continuation applications with an IDS citing all art from all parent applications.  This can easily break the new 50-reference limit on free IDSs, especially if the application family has foreign counterparts where art has been cited or is perhaps the 3rd or 4th continuation (or more).

This is less of a burden than meets the eye because the USPTO typically assigns the same examiner to all U.S. applications in a family.  So the majority of references in an IDS for a continuation may have already been considered by the examiner, and the examiner can proceed through the cited references much more quickly than references that are actually new.  If the USPTO's analysis does not take this factor into account, it is misleading and could dramatically overestimate the actual cost of handling large IDSs.

Regarding continuations and the like, the USPTO writes:

The cumulative count is determined for each application or patent separately.  That is, the count from an application does not carry over to any continuing applications, CPAs, reissue applications, or any post-issuance proceedings such as supplemental examinations or reexamination proceedings.  Instead, continuing, CPA, and reissue applications and post-issuance proceedings will start with a count of zero.[1]

This means that references cited in a parent application do not count against any of its child applications unless those references are re-cited in the children.  But the USPTO reiterates its policy that examiners must "consider items of information that were considered in a parent application when examining a child application (e.g., a continuation, continuation-in-part, or divisional application) without any action required on the applicant's part."  It continues by clarifying that "applicants who wish to avoid paying the IDS size fees in a child application for items of information considered in a parent application may do so by not resubmitting the items."  That is, for the examiner, an applicant citing the same references makes essentially no difference in the scope of art that must be considered, but the applicant may face substantial fees for re-citation of those references.

The USPTO's statements suggest a fee-reducing solution for applicants -- do not cite any references in child application if those references were cited and considered in any of its parents.  The applicant will still need to cite any references that were not cited in the parent applications, but that number is likely to be significantly smaller.  The downside to this strategy is that the uncited references from the parent application will not appear on the face of the any patent that issues from the child application.

The value of the cited references being so clearly set forth in the patent is debatable, but it is clear that it provides some benefit.  On one hand, whether references are printed on its face has no material impact on the validity of a patent.  On the other hand, it may be helpful to show a jury (and perhaps certain judges) this crystal clear evidence that the examiner found the issued claims patentable over the references.  And for the public, it provides immediate notice that the cited art was considered by the examiner without requiring a dive into the prosecution history.

To simplify its enforcement of the IDS fee plan, the USPTO is also requiring that "an IDS contain a clear written assertion by the applicant and patent owner that the IDS is accompanied by the appropriate IDS size fee or that no IDS size fee is required."  While "[t]here is no specific language required for the written assertion, . . . it should be readily identifiable on the IDS and clearly convey the applicable IDS size fee by specifying the particular paragraph in § 1.17(v) that applies (e.g., ''the fee due under 1.17(v)(2)''), if any."

The USPTO will update its standard IDS form to incorporate this language, but there is a trap for the applicant.  Unlike other fees, the applicant cannot generally authorize the office to charge the appropriate IDS fee to a deposit account.  Instead, "authorization to charge fees to a deposit account is not a compliant written assertion under the new § 1.98(a) requirement, unless the authorization clearly identifies the particular IDS size fee that should be charged for submission of a particular IDS."

This means that the applicant needs to maintain an accurate count of applicant-submitted references per application.  Doing so is an onerous task that the USPTO is pushing on to applicants.  While there may be software tools to help an applicant do this bookkeeping, these tools are not free and the labor cost of using them is not cheap.  So, for the privilege of paying the USPTO more fees, applicants have do more work.  And the burden will fall most heavily on small and micro entities and lower-cost practitioners who have less ability to spread the cost of calculation over numerous applications.

The USPTO states, to the contrary, that "the fee should not disproportionately impact small and micro entities."  We disagree.  All USPTO fees disproportionately impact small and micro entities.  The largest entities are multi-billion and trillion dollar companies.  While their patent budgets are finite, they are often quite large and can be adjusted for inflation and fee increases.  On the other hand, small and micro entities are often startups, small businesses, or individual inventors.  These entities are self-funded or funded through loans, angel investors, and/or venture capital, and every dollar counts.  Patent filing and prosecution (not to mention inter partes reviews) are significant costs that are harder to absorb than for larger entities.  As a general premise, bureaucracy favors the powerful.  Here, the USPTO's increase in the bureaucratic process required to comply with the duty to disclose will disproportionately impact those with fewer resources.

In any event, what is an applicant to do in light of the final rule and its new IDS fees?  Here are a few concrete suggestions to reduce the impact of these fees and the time-cost of associated labor.

• As noted above, refrain from filing previously-cited art in IDSs in continuations and other forms of child applications.  While doing so results in the references not appearing on the issued patent, they are still of record in the file wrapper of the parent(s).

• The new fees are based on the number of applicant-cited references per application, but not the size of these references.  To the extent that the applicant can cite to longer, more comprehensive references in lieu of multiple shorter references containing the same content, the applicant should do so.[2]  For example, a product manual (if it qualifies as prior art) is often one of the most detailed and relevant references available to applicants and could (in principle) replace several other references that are cumulative.

• Many applicants use third-party prior art search firms.  Applicants may wish to instruct these firms to provide search results for no more than the very most relevant references found.  Applicants have no duty to disclose references of which they are not aware and do not have in their possession.  Of course, this may make the examiner's job more difficult and decrease patent quality, but it is a problem the USPTO is buying for itself.

• Applications with corresponding academic publications may be the type that most easily run afoul of the new fees.  Modern academic papers routinely cite dozens or even hundreds of non-patent literature references.  Some of these are quite lengthy (e.g., book chapters or entire books).  Moreover, it may be difficult for patent practitioners to reasonably determine the relevance or cumulative nature of such references in highly sophisticated, complex sciences and technologies.  Current practice is to cite all references in a corresponding paper in an IDS, and there may not be a way to avoid doing so without incurring more actual cost than the USPTO fees themselves.

• While applicants should avoid citing references of marginal relevance, they need to remember the subjective nature of such an analysis.  When push comes to shove, it is better for both the applicant and practitioner to pay the USPTO a few hundred dollars than risk any eventual patent being found unenforceable due to a known but uncited reference.

In short, there may be steps that applicants can take to minimize the effect of the new fee rules.  But we are going to see prosecution practices change in unpredictable ways that may not benefit applicants, practitioners, examiners, or the public.

[1] Given that the cost of Requests for Continuing Examination (RCEs) are going up significantly, the cost of an IDS citing additional references may factor heavily into whether an applicant files a continuation application or an RCE.  This is another unintended consequence of the USPTO’s fee changes, but it is unclear how it will change prosecution practice.

[2] It should go without saying that the applicant must never engage in gamesmanship, such as combining multiple references into one file and submitting it as a single reference or citing a later-dated, more comprehensive document instead of an earlier publication.

USPTO Director Announces Resignation

By Kevin E. Noonan --

As has been expected, the Director of the U.S. Patent and Trademark Office, the Honorable Kathi Vidal, has announced her resignation.  Deputy Director Derrick Brent will assume her position (at least temporarily) starting in the second week of December.

As Director, Ms. Vidal (at right) has been involved in a variety of efforts unlikely to survive the change in administration and her letter exhibits her awareness of these changing tides.  Her announcement relates her intentions to go back to the private sector.

Regarding her tenure, Ms. Vidal provides praise for the PTO workforce and called the Office during her tenure an "agency of opportunity."  While citing a number of the Office's accomplishments while she was Director she expressly calls out the agency's Strategic Plan Accomplishments Page, the National Strategy for Inclusive Innovation, and National Entrepreneurship Strategy and creation of "the new Office of Public Engagement."  The Office's continuing mission, she states, is "to drive U.S. innovation, inclusive capitalism, and global competitiveness for the benefit of all Americans," and calls for a peaceful and orderly transition" of administrations.

The message itself is set forth below, including her personal e-mail address.

Message to my USPTO friends and colleagues:

It has been an honor and a true joy to be with you on our collective journey these last few years.  Together we have transformed the USPTO.  We have executed on our mission to proactively defend and promote strong intellectual property to lift communities, create better jobs, and foster the American innovative spirit in everyone.  And we have been successful because of our commitment to putting employees first.

Though our work is not done, it is time for me to turn the reins over to Deputy Director Derrick Brent, who has worked alongside me every step of the way.  My last day at the USPTO will be in the second week of December.  I will be moving back into the private sector and working with individuals and companies directly, committed to our same mission.

Know that the work we have done—from weaving employee experience and inclusion into the fabric of our operations, to focusing on the USPTO as not only America's Innovation Agency but as an agency of opportunity—will persist.

Thank you for your dedication, service, and support of one another.  You have challenged me, and each other, to be better.  And you have showed up every day with ingenuity and thoughtfulness to meet that challenge!  You are not only some of the most skilled and innovative people I've ever worked with, you are my friends and treasured colleagues, and I will be forever grateful for your work, which powers our communities and country.

Our record of accomplishments during the Biden-Harris Administration is unprecedented (Strategic Plan Accomplishments Page).  Together we pointed the USPTO in a new direction focused on employees and customers.  We united under the mission to drive U.S. innovation, inclusive capitalism, and global competitiveness for the benefit of all Americans.  We sat at the table with our union representatives to enshrine our people-first approach into updated collective bargaining agreements for Patents and Trademarks employees, and for support staff to come.  And we created the new Office of Public Engagement to expand and strengthen our outreach.  I am very proud of the amazing progress we've made together.

We would not have gotten this far without the strength of our people at the USPTO.  We have developed processes, procedures, and policies to improve the employee experience and inclusion.  Thousands of you contributed to those changes through my small listening sessions, with questions and ideas in the employee portal, and in conversations at events.  And as a result, we were named one of the most inspiring places to work in government this year.  That is an accolade I know I am very proud of and that agency leadership is committed to maintaining.

As we approach the end of the Biden-Harris Administration, please keep up the good work and continue to execute on our mission for innovators and creators.  And please stand ready to work with the incoming administration's team.  As President Biden said last week, the American people deserve a peaceful and orderly transition.

Even though I will be moving on in the next few weeks, I am committed to finding new ways to work alongside and support you, including founding a new ChIPs USPTO chapter, working to foster our alumni network that we launched here together, supporting you through the Patent and Trademark Office Society and the American Association of Patent Judges, advancing our National Strategy for Inclusive Innovation and National Entrepreneurship Strategy, and so much more!

I will remain a click away at [email protected] and will see you on socials.

With gratitude,

Kathi

USPTO Publishes Updated Subject Matter Eligibility Guidance Focusing on AI

By Michael Borella --

As required by President Biden's Executive Order 14110 ("Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence"), the U.S. Patent and Trademark Office has published an update to its subject matter eligibility guidance for examiners regarding inventions employing artificial intelligence (AI).  As this is the first update to the USPTO's subject matter eligibility guidance in almost five years, there was some hope that it would address stakeholders' long-held concerns.  These include the difficulty of crafting claims and a specification directed to an invention that incorporates AI, especially in view of the dramatic disparity in how examiners apply the law in view of the USPTO's previous guidance.

However, the updated guidance is remarkably non-substantive at best, and at worst appears to take the position that advances in AI and uses of AI are ineligible unless they are implemented in specific hardware circuitry or cause a significant change to the state of an ancillary system.  Moreover, the updated guidance largely reads as general eligibly guidance with few actual AI-specific considerations.

Indeed, the updated guidance makes it painfully clear that it (like the USPTO's previous guidance on the topic) "does not create any right or benefit, substantive or procedural, enforceable by any party against the USPTO."  In other words, examiners are free to ignore the updated guidance as they see fit, which is how examiners have approached the USPTO's previous subject matter eligibility guidance over the last decade.

In any event, it is not until the halfway point of the updated guidance that it addresses the USPTO's currently eligibility test.  In particular, the updated guidance focuses on Step 2A, prong one (determining whether a claim recites a judicial exception) and step 2A, prong two (determining whether the claim integrates the recited judicial exception into a practical application of the exception).  Unfortunately, the USPTO largely employs hypothetical examples in doing so.

Regarding Step 2A, prong one, the USPTO reminds us that "USPTO personnel must draw a distinction between a claim that 'recites' an abstract idea . . . and one that merely involves, or is based on, an abstract idea."  In the former case, the claim requires further eligibility analysis and in the latter case the claim is eligible.

The USPTO sets forth three hypothetical examples of claims that do not recite an abstract idea: (i) custom and specific circuits designed to implement arrays of neurons and synaptic weights, (ii) a processor, livestock herd monitor, and transmitter collectively arranged for monitoring health and activity in a herd of dairy livestock animals, and a "treatment method comprising administering rapamycin to a patient identified as having Nephritic Autoimmune Syndrome Type 3."  Notably, only the first of these examples even relates to AI.

The USPTO goes on to state that examiners should identify specific claim limitations that fall within the three groupings of abstract ideas:  mathematical concepts, certain methods of organizing human activity, and mental processes.  This leads to the rather absurd result that more specific recitations in a claim (which are encouraged by a large number of Federal Circuit eligibility opinions) can ultimately render a claim ineligible, whereas broader recitations of the same invention (which are discouraged by these Federal Circuit eligibility opinions) can result in a claim being eligible because it does not recite an abstract idea.

Regarding math, the USPTO essentially repeats it's thin and unworkable distinction between claims that recite mathematical concepts and claims that are based on or involve a mathematical concept.  In practice, examiners do not understand this distinction and the USPTO's terse discussion in the updated guidance suggests that they are not alone.  To state what should be obvious, all science and engineering advances involve mathematical concepts in one way or another -- a claim that recites "taking the sum of a first output and a second output" should not be subject to more scrutiny than a claim that recites "determining a result based on a first output and a second output."

The certain methods of organizing human activity category has been viewed expansively by the courts and some examiners to include anything remotely related to human activity.[1]  Here, the USPTO relies on three recent Federal Circuit eligibility opinions to flesh out the category.  The problem is that all three examples found claims to be ineligible.  It would be nice if the USPTO could provide at least a hint of what might not fall within this gaping chasm of a category.

On mental processes, the USPTO continues to apply what can only be considered a legal fiction.  In essence, the current practice is that any invention that, even in theory, could be performed by one or more human beings with thought, pencil and paper, or other tools, is a mental process even if it would take millions of years to obtain a useful result.  Indeed, the mental process category encompasses processes that are not performed mentally.

Here, the USPTO at least gives us one example of an invention that (in its view) does not recite a mental process ("a specific, hardware-based RFID serial number data structure [that is] uniquely encoded").  However, when compared to the other examples that do recite a mental process (e.g., "the collection of information from various sources and understanding the meaning of that information"), the USPTO appears to be slicing the bacon transparently thin.[2]

Moving on to Step 2A, prong two, the USPTO reiterates that examiners should determine whether "there are any additional elements recited in the claim beyond the judicial exception(s), and [evaluate] those additional elements individually and in combination to determine whether they integrate the exception into a practical application of that exception."  Despite the USPTO's reminder that claims are to be considered "as a whole" in this inquiry, such language is, in practice, a paper tiger.  Neither the USPTO nor the courts have ever explained what it means to consider claims as a whole, and both have routinely considered claims piecemeal while contending that they are actually considering claims as a whole.

There are three ways to find a claim non-abstract under Step 2A, prong two -- where the claim (i) improves the functioning of a computer, (ii) improves another technology or technical field, or (iii) is meaningfully limited to a particular technological environment.  But none of these have been defined in the case law, much less clearly defined.  The USPTO notes that specific solutions to specific problems are more likely to be eligible, but provides little insight that fleshes out this notion.  Instead, the USPTO again falls back on case law examples.

These examples demonstrate that an eligible invention may look ineligible if you tilt your head three degrees to the left and vice-versa.  For example, a very specifically-worded claim for determining haplotype phase based on pedigree data in human genetic sequences was an improvement over prior attempts to do so, but not a "technical" improvement because the entire claim was putatively a mathematical process that ran on general-purpose computers.

While the USPTO touted the claims of McRO, Inc. v. Bandai Namco Games America Inc. as an example of eligibility (which it is despite a lot of math being calculated by a general-purpose computer driving the thrust of the claimed invention), in practice it is rare that making an analogy to these claims will sway an examiner.  Instead (tilting their heads three degrees to the left), examiners typically conclude that any claim similar to McRO actually recites an ineligible abstract idea executing atop a non-specific chunk of silicon.[3]  In other words, there is little or no appreciable difference between the haplotype claim and those of McRO despite one being eligible and the other not.

Toward the very end of the updated guidance, the USPTO addresses AI-assisted inventions.  It states:

For the subject matter eligibility analysis under 35 U.S.C. 101, whether an invention was created with the assistance of AI is not a consideration in the application of the Alice/Mayo test and USPTO eligibility guidance and should not prevent USPTO personnel from determining that a claim is subject matter eligible.  In other words, how an invention is developed is not relevant to the subject matter eligibility inquiry.

Thus, the words of the claim matter but the use of AI in developing the underlying invention does not.  Aside from this clear statement, the updated guidance is cagey in general and surprisingly thin on AI-specific content.[4]

Practitioners have looked forward to iterations of the USPTO's subject matter eligibly guidance to add clarity and expedite prosecution.  After a decade of such guidance, it is clear that the USPTO's example-based approach has failed.  The chosen examples do not clarify the murky principles and distinctions that the words of the guidance set forth.  Moreover, the USPTO's reasoning regarding these examples is contradictory, muddled, opaque, and ultimately not helpful.  The greatest evidence for this is how different examiners apply the guidance in dramatically different ways.

Again, the fault lies with the Federal Circuit's incoherent parade of patent eligibility horribles masquerading as judicial decisions.  But instead of acknowledging that the emperor is stark raving naked, the USPTO once again tries to pretend otherwise.

It is time to stop.

[1] One of my favorite examples is the examiner I spoke to who insisted that fully-automated navigation of a self-driving vehicle was a method of organizing human activity because the goal of the invention was to deliver people from point A to point B.

[2] Credit for this confusion should be placed at the feet of the Federal Circuit, the decisions of which these examples are based.  

[3] A relevant definition of "analogy" in the American Heritage Dictionary is "[a] form of reasoning based on the assumption that if two things are known to be alike in some respects, then they are probably alike in other respects."  Too many examiners seem to think that, to be analogous, two things must be exactly the same.

[4] The USPTO has released three new sets of example claims to support the guidance.  They were not specifically addressed herein and may be discussed in a subsequent article.  In short, they do not provide enough further insight to render the updated guidance particularly helpful.

USPTO Unveils Examiner Guidance on Searching Drug-related Applications

By Kevin E. Noonan --

Last November, the U.S. Patent and Trademark Office issued Guidance to the Examiner Corps that was disclosed to the public at the March 19, 2024 Biotechnology, Chemical, and Pharmaceutical Partnership Meeting, on resources to be used by examiners to comply with the dictates of Executive Order 14036 from the Biden Administration related to drug patents and the purported abuse thereof that results in inflated drug prices.

To recap, in one of its first acts, the Administration promulgated Executive Order 14036 (July 9, 2021), which contained the assertion that "Americans are paying too much for prescription drugs and healthcare services — far more than the prices paid in other countries" and the allegation that "too often, patent and other laws have been misused to inhibit or delay — for years and even decades — competition from generic drugs and biosimilars, denying Americans access to lower-cost drugs" (this despite 40 years of generic drugs being available under the Hatch-Waxman Act (1984) and biosimilar copies of biologic drugs for over a decade under the BPCIA, enacted as part of "Obamacare" in 2010).  The purported remedy was that "it is the policy of my Administration to enforce the antitrust laws to combat the excessive concentration of industry, the abuses of market power, and the harmful effects of monopoly and monopsony — especially as these issues arise in . . . prescription drug markets" and "to support aggressive legislative reforms that would lower prescription drug prices, including by allowing Medicare to negotiate drug prices, by imposing inflation caps, and through other related reforms."

One aspect of this policy, under Sec. 5(p)(vi), intended "to help ensure that the patent system, while incentivizing innovation, does not also unjustifiably delay generic drug and biosimilar competition beyond that reasonably contemplated by applicable law," was to have, "not later than 45 days after the date of this order, . . . the Commissioner of Food and Drugs write a letter to the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office enumerating and describing any relevant concerns of the FDA."  There followed a series of letters between these officials that were directed to:

• Enhancing collaboration with other agencies on key technology areas, including pharmaceuticals and biologics
• Improving procedures for obtaining a patent to ensure that the USPTO issues robust and reliable patents
• Improving the process for challenging issued patents before the Patent Trial and Appeal Board (America Invents Act proceedings)and improving public participation in the patent system
• Considering new proposals for incentivizing and protecting innovation while minimizing unnecessary delays in getting more affordable drugs to market

These aspirations were further voiced in a joint blog post almost a year later, on July 7, 2022, from Director of the USPTO Kathi Vidal and FDA commissioner Robert M. Califf that, while crediting the pharmaceutical industry for creating, testing, and bringing to market lifesaving drugs, and that 13 of the top 20 "most innovative and inventive pharmaceutical companies" in the U.S., and recognizing the "delicate balance" with generic companies in providing competition and "driving down prices," insisted that "while the issuance of robust and reliable patents to incentivize pharmaceutical innovations is critical, our patent system must not be used to unjustifiably delay generic drugs and biosimilar competition beyond that reasonably contemplated by law."  These efforts were directed to "striking [an] appropriate balance" by "encouraging meaningful innovation in drug development while not unduly delaying competition that provides relief from the high cost of medicines," a truly Goldilocks objective.

These officials further enunciated their goal to "protect against the patenting of incremental, obvious changes to existing drugs that do not qualify for patents" so that "companies will not be able to unjustifiably delay generic competition based on trivial changes to a drug product."  This was to be done, inter alia, by the PTO giving examiners "time and resources" needed to thoroughly review applications for pharmaceutical inventions (raising the questions, of course of whether examiners had not been given the T&R for the job now and whether so doing would come at the expense of proper T&R for all other areas of technology, and not specifying the resources that would be provided).  The FDA information to be made available to examiners under this policy was to be only from unspecified "publicly available sources" (with updated information on these efforts being available on the USPTO-FDA Collaboration Initiatives webpage).

The latest Guidance is specific to Technology Center 1600 for drugs, formulations, and methods of treatment/use, and concerns methods for searching NIH and FDA databases identifying which databases should be searched.  The Guidance also directs the Examiners to the searching requirements in M.P.E.P. § 904 (§ 904.02) as well as the importance of compliance for examiner review in performance and quality appraisals (i.e., involving their bonuses, raises, and opportunities for advancement).  The Guidance identifies the following "search resources," their properties and characteristics and what information can be gleaned from them:

• FDALabel: this database contains drug labeling information for 140,000 human drugs (including biologics and over-the-counter drugs) and a small number of animal drugs, disclosing prescribing information, patient labeling, and carton/container labeling for the drugs and biologics, as well as label documents for homeopathic remedies, medical devices, dietary supplements, cosmetics, and medical foods.  The Guidance directs that this database can be used to find information on indications, dosage and administration, contraindications (including warnings, adverse reactions, drug interactions, or information about use in particular populations of patients).  The Guidance also includes information on how to use the database and search capabilities, down to level of the interface and ways to use it including navigating the search results obtained (e.g., identifying the approval date for establishing prior art status).

• DailyMed & DailyMedArchive (NIH):  provides labels for FDA-approved products including prescription drug and biological products for human use; nonprescription (e.g., over-the-counter) drug and biological products for human use; certain medical devices for human use; medical gases for human and animal use; and prescription and nonprescription drugs for animal use.  These are labels submitted by drugmakers to FDA (not limited to labels for approved drugs) and the Guidance notes that there are almost 146,000 entries in the database.  The Guidance sets forth detailed search protocols and further cautions Examiners that prior art-relevant info might be in archives and not on the main page.

• Drugs@FDA:  this database contains more information that the DailyMed database according to the Guidance, including regulatory history, FDA reviews, and previously approved labeling.  Information regarding drug approval dates can be parsed by month, and the database includes most approved drug products since 1939, with more robust information on drugs approved since 1998, and is updated daily.  Further this database includes information about approval year and any revisions as well as therapeutic equivalents thereof.

The Guidance includes comparisons between what is available in these databases to further aid Examiners in searches:

The Guidance also recommends using Google to search FDA.gov domain(s), as a way to use the power of the Google search engine to search specific sites that can be used to "group drugs with like regulatory pathways or omit outliers."  The Guidance provides a tabular synopsis of how a combination of these resources can be used to identify specific information related to prior art searching for patents related to drug products:

The Guidance concludes with the Office's intention to "provide additional examiner training and guidance this year to biotech and pharmaceutical patent examiners on examination of declaratory evidence of unexpected results."

At the same time the Office announced that, as part of or ancillary to the duty of candor under 37 C.F.R. § 1.56 there would be applied a "duty of reasonable inquiry . . . to perform an inquiry that is reasonable under the circumstances, including reviewing documents to identify information that is material to the patentability of a claimed invention," falling within scope of 37 C.F.R. § 11.18(b) (part of the ethical duties regarding standards for submitting papers to the Office as part of patent prosecution.  The scope of parties having this duty imposed was the same as Rule 56 as well as individuals involved in re-examination and PGR/IPR proceedings, and included a duty to disclose Para IV positions from generic competitors in pending proceedings before PTO and PTAB.  Further, this policy expressly prohibited "ethical walls" that would prevent patent practitioners from being aware of inconsistencies in representations taken before the Office and the FDA or other agencies.  The impetus for the new duty came, at least in part, in response to a letter from Sens. Leahy (D-VT) and Tillis (R-NC) that USPTO should "take steps to reduce patent applicants' making inappropriate conflicting statements in submissions to the [USPTO] and other federal agencies," specifically in cases where "inconsistent statements submitted to the Food and Drug Administration (FDA) to secure approval of a product—asserting that the product is the same as a prior product that is already on the market— can then be directly contradicted by statements made to the [USPTO] to secure a patent on the product."  The scope of enforcement of this duty has not been further defined.

The USPTO's Proposed Terminal Disclaimer Rule: A Litigator's Perspective

By Joshua Rich --

As discussed at length in a previous post on this blog (see "USPTO Proposed Rule Change to Terminal Disclaimer Practice"), the U.S. Patent and Trademark Office has proposed amending the form of terminal disclaimer to be used by patent applicants.  Specifically, it proposes requiring terminal disclaimers filed to obviate nonstatutory (or obviousness-type) double patenting to include an agreement that the patent will be enforceable only if no claim of any patent to which it is tied by terminal disclaimers has been found by a final decision of a court or the USPTO to be invalid or unenforceable.  There is a real problem that the USPTO is trying to solve, but it is not directly linked to nonstatutory double patenting.  Given that incomplete overlap between the problem and the proposed solution, it seems pretty clear that the proposed amended form of terminal disclaimer is the wrong tool for the job.

Generally speaking, double patenting is a problem that arises when an applicant seeks more than one patent from a given chain.  It comes in two types:  statutory and nonstatutory.  Statutory double patenting arises when the applicant seeks more than one patent that claims the same invention; it is the equivalent of an anticipation rejection that is based on the applicant's own claims in another patent in the same chain.  It is termed statutory because it is based on the Patent Act's indication that "[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title."[1]  Unlike the interpretation of some patent claims, courts have found that "a" there really means only one.  There is no solution to statutory double patenting, other than amending the claims of the rejected application.  Nonstatutory double patenting is the equivalent of obviousness for a single applicant.  It is a judicially-created doctrine that prevents an applicant from obtaining two patents that claim different, but too closely related inventions.  There is a solution to nonstatutory double patenting -- terminal disclaimers.

Terminal disclaimers align the terms of two or more related patents in order to solve two distinct problems.  The first problem is unfair extension of the exclusivity period beyond what could be obtained if the claims issued in a single patent.  Given the possibility of delayed issuance due to USPTO delay (a greater problem with pre-AIA patents, but still an issue) or other term adjustment, the two or more patents could have different terms that would add up to more than twenty years.  The terminal disclaimer solves that problem by shortening the term of a second patent to match the expiration of an earlier-issued patent.  The second problem is that the sale of one or more of the patents could lead to competitors being liable to two different patent owners for basically the same invention.  The purchaser could not have directly obtained the patent it seeks to assert because the claims would have been rejected as obvious over the unsold patent (or vice versa); it is just due to the quirk of the applicant being the same entity that allowed them to issue.  So a terminal disclaimer prevents alienation of the two patents from one another, to avoid the unfair possibility of "double jeopardy."

More recently, a different type of patent gamesmanship has developed:  parties obtaining a raft of closely-related patents to cover every aspect of a product or process.  Whether in the form of a "patent thicket" protecting the owner's product or a patent assertion entity's patent horde, the broad portfolio allows the patent owner to pick and choose which of the patents to assert against numerous defendants.  The extent of the portfolio allows the owner to keep some patents in reserve, asserting only a portion of the portfolio against each defendant (sometimes the same patents, sometimes a different group).  By doing so, the patent owner can bludgeon potential licensees into a favorable settlement on the entire portfolio or run the risk of serial litigation.[2]  In the end, most defendants end up taking the easier route of settling, even if they believe the assertion of each patent in the portfolio would be tenuous, at best.

It is this more recent problem that the new terminal disclaimer rule seeks to avoid.  As the USPTO phrased it, "This action is being taken to prevent multiple patents directed to obvious variants of an invention from potentially deterring competition and to promote innovation and competition by allowing a competitor to avoid enforcement of patents tied by one or more terminal disclaimers to another patent having a claim finally held unpatentable or invalid over prior art."[3]  It is true that the ability of patent owners to evergreen their patent litigation strategy by picking and choosing which patents to assert tamps down innovation.  But the proposed solution has lots of problems of its own.

First, it is more likely than not that demanding a patent owner yield other patents and claims upon the invalidation of one claim is not a proper exercise of agency discretion in rulemaking.  The Patent Act is very clear in establishing that every claim of every patent is independently presumed valid.[4]  The proposed new terminal disclaimer turns that presumption on its head if even a single claim has been found invalid, either through post-grant proceedings or litigation.  While the USPTO has said it has taken (and is taking) the presumption of validity into consideration in the rulemaking process, it is hard to reconcile the rule with the statute.  And it is especially questionable in an era when the Supreme Court is looking for a reason to overrule Chevron deference to agency interpretation of statutes.[5]  So this whole process may end up a frolic and detour, with compelled conditions of terminal disclaimers that cannot be enforced.

Second, the remedy of inability to assert patents later may come too much later to have real teeth.  The rule would prohibit assertion of other patents only after another claim has been finally adjudicated invalid or unenforceable.[6]  That means not only that the USPTO proceedings or district court litigation must be completed, but also that the appeal must be resolved.  But most litigation never goes to trial, let alone through appeal.  Instead, most parties settle, especially the parties threatened by patent assertion entities, who may be offered a far less costly deal if they settle before litigation begins.  So it may be many years from the first assertion of a patent in a terminal disclaimer family before any assertion of other patents is estopped.  That is especially true because patent owners' behavior may be altered by the incentives dictated by the terminal disclaimer, including potentially settling with a payment to the defendant to remove an invalidation from the books.

Third, there may be very substantial unintended consequences from the proposed changes in prosecution, post-grant proceedings, and litigation.  In prosecution, there will be more incentive for parties anticipating litigation of the family to avoid terminal disclaimers.  They may seek to fight against nonstatutory double patenting rejections much harder (including through appeal) to avoid the potential prejudice of a terminal disclaimer.  That shifts a burden from litigating parties to patent examiners.  In post-grant proceedings, there will be an incentive for accused parties to find the broadest claim of the weakest patent in the family to challenge, even if the patent has not be asserted against them (or anyone).  The accused parties can then fight the battle on a different front of their choosing as a proxy for litigation.  This would turn the process on its head, shifting power from patent owners to accused parties, without much benefit for innovation.  Finally, in litigation, the behavior of patent owners is more likely to be bimodal -- either they will want to settle early more often (and avoid potential invalidation of any patents) or they will fight tooth and nail to make sure the asserted claims are not invalidated.  In short, the proposed rule may cause changes in behavior, but they may not be the changes the USPTO is searching for.

[1] 35 U.S.C. § 101 (emphasis added).

[2] The proposed terminal disclaimer would give accused parties a stronger position than they could get even if they had won in litigation against the first invalid patent.  The Federal Circuit has held that a terminal disclaimer alone is not sufficient evidence to support the application of collateral estoppel in litigation of a second patent after the first has been found invalid.  XY, LLC v. Trans Ova Genetics LC, 968 F.3d 1323, 1334 (Fed. Cir. 2020).

[3] 89 Fed. Reg. 40439 (Mar. 10, 2024).

[4] 35 U.S.C. § 282.

[5] Chevron deference, named after the Supreme Court's Chevron v. Natural Resources Defense Council decision, involves courts deferring to administrative agencies' reasonable interpretation of statutes within their area of expertise.  The Supreme Court has been asked to overrule Chevron deference in this term's Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce cases.  Regulations that appear to be based on unreasonable statutory interpretations will provide more fuel to the fire burning down deference to the USPTO and other administrative agencies.

[6] The proposed rule also suggests that a statutory disclaimer would give rise to the prohibition on assertion of other patents, but a party knowing that to be the case would be unlikely to disclaim the claims -- it makes more sense to fight on, instead of giving up the portfolio of related patents all at once.

USPTO Proposed Rule Change to Terminal Disclaimer Practice

By Andrew Velzen --

On May 10, 2024, the U.S. Patent and Trademark Office announced a proposed rule change to terminal disclaimer practice.[1]  Unfortunately, the proposed change appears to further weaken issued patents in which terminal disclaimers have been filed and make obtaining robust patent protection more difficult and uncertain in the future.

Present Nonstatutory Double Patenting / Terminal Disclaimer Practice

One type of rejection a patent examiner can issue during pendency of a patent application is a nonstatutory double patenting rejection (sometimes called an "obviousness-type double patent rejection" or a "judicially created double patenting rejection").[2]  These rejections are "based on a judicially created doctrine grounded in public policy and which is primarily intended to prevent prolongation of the patent term by prohibiting claims in a second patent not patentably distinct from claims in a first patent" and traditionally arise when a subsequent asset (e.g., a patent application) has claims that are, in the patent examiner's eyes, obvious over a prior asset (e.g., a prior patent).[3]  Further, nonstatutory double patenting can be used after the fact (e.g., in litigation) as a grounds on which to invalidate a patent.

One way of overcoming nonstatutory double patenting rejections is by filing a terminal disclaimer.[4]  The terminal disclaimer must include "a provision that any patent granted on that application . . . shall be enforceable only for . . . such period that said patent is commonly owned with the application or patent which formed the basis for the judicially created double patenting."[5]  In other words, both the application in which the terminal disclaimer is being filed and the reference patent must permanently remain commonly owned.  If they do not, any patent that issues from the application will essentially be rendered worthless.  This is typically referred to as the "common ownership requirement" for terminal disclaimers.[6]

Proposed Change

In the proposed rule change to 37 C.F.R. § 1.321, the USPTO is considering adding another requirement for a terminal disclaimer to be used to overcome nonstatutory double patenting rejections (in addition to the common ownership requirement).  Namely, under the proposed rule, the terminal disclaimer would also need to "include an agreement . . . that the patent in which the terminal disclaimer is filed, or any patent granted on an application in which a terminal disclaimer is filed, will be enforceable only if the patent is not tied and has never been tied directly or indirectly to a patent by one or more terminal disclaimers filed to obviate nonstatutory double patenting rejections in which:  any claim has been finally held unpatentable or invalid as anticipated or obvious by a Federal court in a civil action or by the USPTO . . . or a statutory disclaimer of a claim is filed after any challenge based on anticipation or obviousness to that claim has been made."[7]  According to the USPTO, the proposed rule is being made to "promote innovation and competition by allowing a competitor to avoid enforcement of patents tied by one or more terminal disclaimers to another patent having a claim . . . held unpatentable."[8]

Essentially, what this means is that, if a patentee has multiple patents tied together by terminal disclaimers, a competitor would only need to successfully invalidate one claim in one of those patents based on prior art in order to render all of the patents invalid.  To highlight what a dramatic shift this represents, let's take an example.  Assume the following (which represents a relatively common occurrence in a traditional patent family involving multiple assets):

1.  Patentee owns Patent X, Patent Y, and Patent Z;
2.  During prosecution of Application Y (now Patent Y), the examiner gave a nonstatutory double patenting rejection over Patent X, so the patentee filed a terminal disclaimer in Application Y (now Patent Y) over Patent X; and
3.  Likewise, during prosecution of Application Z (now Patent Z), the examiner gave a nonstatutory double patenting rejection over Patent Y, so the patentee filed a terminal disclaimer in Application Z (now Patent Z) over Patent Y.

Under the current regime, a challenger would need to separately successfully challenge each of Patent X, Patent Y, and Patent Z (e.g., in district court or in an inter partes review or post-grant review before the Patent Trial and Appeal Board (PTAB)) in order to render each of Patent X, Patent Y, and Patent Z invalid.  Under the proposed rule change, though, the challenger would only need to successfully demonstrate that just one claim of Patent X is invalid over the prior art in order to automatically render all claims of Patent Y and Patent Z unenforceable.[9]  This is true even if the invalidated claim in Patent X is broader in all aspects than every claim in Patents Y and Z.

Commentary

This proposed change would substantially weaken a patent in which a terminal disclaimer is filed, since the patent's enforceability would be predicated entirely on the enforceability over the prior art of a separate patent over which the terminal disclaimer is filed.  Such a fundamental change to the patent system would be problematic.

i)  No Quid Pro Quo

First, this change lacks sufficient quid pro quo to be justified.  One impetus provided from the USPTO for this proposed change is that, presently, "multiple patents tied by terminal disclaimers that are directed to obvious variants of an invention could deter competition due to prohibitive cost of challenging each patent separately in litigation or administrative proceedings."[10]  While it is certainly true that, under the current terminal disclaimer regime, patents tied together by terminal disclaimers need to be challenged separately to render each of them invalid, it is also true that they need to be asserted separately.  In other words, demonstrating that a defendant has infringed one patent does not automatically lead to a finding of infringement over a related patent simply because there is a terminal disclaimer in place between the two patents.  Instead, the elements of the claims in each respective patent much be proved up separately against the putative infringer.  Under this proposed change, the paradigm would shift to being imbalanced.  While the burden would still be on the patentee to prove infringement in each and every patent separately, a purported infringer may only need to invalidate a single patent to automatically render an entire swath of patents unenforceable.

Likewise, an issued patent only confers protection against infringement of what is claimed, but notably does not confer protection against infringement of all obvious variations of the claims.[11]  Instead, to obtain protection of an obvious variation, a patentee must pay to file, prosecute, and have issued another patent with a different set of claims (not to mention paying maintenance fees on the subsequent patent).  Why, then, should an opponent be able to invalidate a patent without also having to address each patent on its own terms (rather than simply challenging the weakest link in the chain)?  As pointed out by some commentary previously provided to the USPTO, this raises some real concerns regarding the patentee's due process rights.[12]

ii)  The Issues are Compounded by Recent Changes in Jurisprudence and Other Proposed Changes by the USPTO

Obviously, this proposed change does not occur in a vacuum, but is accompanied by everything else swirling around in the world of patent law.  Two other recent issues are also worth noting here.  First is the recent Federal Circuit decision in In re Cellect and second is the recent fee changes proposed by the USPTO.

This blog has recently provided some insight on (and discussed the issues with) the In re Cellect decision.[13]  I also recently wrote a piece about practice steps that patentees / applicants can take to protect themselves against the fallout of the decision.[14]  To briefly summarize the primary result of that case, post In re Cellect, patentees can be put in the situation where patents with the same effective filing date can be used as prior art against one another for nonstatutory double patenting purposes based on the amount of patent term adjustment (PTA) awarded.  To be as safe as possible, and as I proposed in my post referenced above, patentees may want to consider filing proactive and/or bespoke terminal disclaimers.  This already seemed unduly onerous on the patentee (especially given that later-issued patent may result in invalidation of a prior-issued patent based solely on PTA, meaning that the patentee may need to retroactively file a terminal disclaimer in the prior-issued patent).

However, this situation gets even worse when compounded with this proposed rule change from the USPTO.  Now, assuming two patents are even arguably obvious variations over one another, the patentee will be given a "Sophie's choice."  On one hand, the patentee can choose to file a terminal disclaimer of the patent with additional PTA over the patent with less PTA, which will protect them against the In re Cellect issue but will expose them to the vulnerabilities resulting from this proposed new terminal disclaimer rule (should the patent with less PTA be deemed invalid).  On the other hand, the patentee can refrain from filing a terminal disclaimer in the patent with additional PTA so as not to risk the vagaries of this new terminal disclaimer rule, but the patentee then will then risk invalidation based on PTA differences under In re Cellect should the patent with additional PTA be determined to be an obvious variant of the patent with less PTA.  This is effectively a lose-lose decision.

Additionally, the USPTO recently proposed a set of fee changes.[15]  There are many changes proposed by the PTO therein, but I merely wish to highlight the proposed changes to the terminal disclaimer fee structure.  The fees for filing a terminal disclaimer are proposedly increasing by anywhere from 18% (if an applicant files a terminal disclaimer prior to a first action on the merits) to 724% (if an applicant files a terminal disclaimer in an issued patent).  This quite clearly indicates the USPTO's desire to encourage applicants / patentees to file terminal disclaimers proactively and early in prosecution.  It presents an interesting dichotomy that the USPTO is simultaneously encourage applicants to file terminal disclaimers early and often (with the proposed fee changes) while also severely increasing the risk associated with filing terminal disclaimers (with this proposed change). Further, even if an applicant ultimately does decide to file a terminal disclaimer, the applicant is clearly paying more (in terms of raw fees) and getting less (in terms of the value of the terminally disclaimed patent in light of the new risks invited by this rule change).

iii)  Practical Implications

Lastly, I'd like to highlight some practical implications that are created as a result of this new rule change.  As a result of the risks posed by terminally disclaimed patents under the new rule, applicants are likely to seek other ways of addressing nonstatutory double patenting rejections (rather than filing terminal disclaimers almost as a matter of course for expediency, as many applicants do currently).  The USPTO even provides some ways applicants might do so.[16]  The suggestions provided by the USPTO range from self-evident ("cancel[] or amend[] any conflicting claims in the application or in the other application containing the conflicting claims that formed the basis of the nonstatutory double patenting") to unhelpfully thermonuclear ("fil[e] a reissue application of the patent whose claims formed the basis of the nonstatutory double patenting in order to add canceled conflicting claims from the application into the reissue application, provided that the added claims do not introduce new matter into the reissue application").

I think that the most realistic course of action an applicant will take will be to either amend their claims in a fashion that gets around the nonstatutory double patenting rejections or argue the nonstatutory double patenting rejection on the merits.  The former option is, at the very least, undesirable.  The latter option, on the other hand, puts applicant in the unenviable position of being forced to characterize their own reference on the record.  Ideally, under the new rule, examiners would put more effort into determining whether or not a nonstatutory double patenting rejection should apply (so that applicants aren't unnecessarily forced to make such a touch decision).  However, I have not seen any evidence from the USPTO indicating that they will adjust how they instruct examiners to identify and issue nonstatutory double patenting rejections as a result of this proposed change.

Conclusion

This proposed rule change strikes me as counterproductive to the exact purposes the USPTO is purporting to advance with it (namely, to "promote innovation").  The Federal Circuit, itself, has said that a terminal disclaimer does not give rise to the presumption that two patents are patentably indistinct.[17]  Given all this, it seems like an incredibly bold and unnecessary step for the USPTO to promulgate this rule change.  Between the issues inherent with this proposed rule change and the result in In re Cellect, it may be time for Congress (rather than the judicial branch and the executive branch) to weigh-in substantively on nonstatutory double patenting rejections and terminal disclaimer practice.

Comments on this proposed rule change are being accepted by the USPTO until July 9, 2024.[18]  It will certainly be interesting to see how the public responds and what the USPTO does about it.

[1] Full text of the proposed rule change can be found at https://www.federalregister.gov/public-inspection/2024-10166/terminal-disclaimer-practice-to-obviate-nonstatutory-double-patenting.

[2] See the following for a full discussion of nonstatutory double patenting rejections -- https://www.uspto.gov/web/offices/pac/mpep/s804.html.

[3] M.P.E.P. § 804

[4] 37 C.F.R. § 1.321

[5] 37 C.F.R. § 1.321(c)(3)

[6] The "common ownership requirement" is obviously in addition to the inherent effect of a terminal disclaimer that limits any term of the disclaimed patent that would extend beyond the term of the patent over which it is disclaimed.

[7] https://www.federalregister.gov/documents/2024/05/10/2024-10166/terminal-disclaimer-practice-to-obviate-nonstatutory-double-patenting.  In addition to the substantive changes, it might be of interest to some that the USPTO is also proposing changing the C.F.R.'s wording from the phrase "judicially created double patenting" to "nonstatutory double patenting."  This change, at least, is a positive in my view, as it brings the terminology of the C.F.R. into better conformance with the terminology of the M.P.E.P.

[8] https://www.federalregister.gov/documents/2024/05/10/2024-10166/terminal-disclaimer-practice-to-obviate-nonstatutory-double-patenting

[9] This example of cascading unenforceability is similar to Example 2 discussed in the proposed rule change.  It illustrates so-called "direct tying" under the proposed rule change between Patent X and Patent Y and "indirect tying" under the proposed rule change between Patent X and Patent Z.  Note, however, that the rendering of unenforceability remains unidirectional, even under the proposed new rule.  In other words, under this hypothetical, it wouldn't be sufficient to demonstrate that Patent Z is invalid in order to render Patent X or Patent Y unenforceable.  See, e.g., https://www.federalregister.gov/documents/2024/05/10/2024-10166/terminal-disclaimer-practice-to-obviate-nonstatutory-double-patenting ("As is the case under current practice, a terminal disclaimer under the proposed rule would be unidirectional, encumbering only the patent with the terminal disclaimer and not the conflicting patent.")

[10] https://www.federalregister.gov/documents/2024/05/10/2024-10166/terminal-disclaimer-practice-to-obviate-nonstatutory-double-patenting

[11] A patentee does ostensibly get protection of a slightly broader range of things than is literally described in the claims under the Doctrine of Equivalents.  See, e.g., Warner-Jenkinson Co. v. Hilton Davis Chemical Co. (1997).  However, the coverage under Doctrine of Equivalents is certainly not so broad as to cover all obvious variants (and, instead, only covers "insubstantial" differences relative to the claimed invention).

[12] See Request for Comments on USPTO Initiatives To Ensure the Robustness and Reliability of Patent Rights, 87 FR 60130 (October 4, 2022); https://www.federalregister.gov/documents/2024/05/10/2024-10166/terminal-disclaimer-practice-to-obviate-nonstatutory-double-patenting.

[13] https://www.patentdocs.org/2023/10/overcoming-the-consequences-of-in-re-cellect.html

[14] https://www.mbhb.com/intelligence/snippets/living-with-cellect-three-best-practices/

[15] https://www.federalregister.gov/documents/2024/04/03/2024-06250/setting-and-adjusting-patent-fees-during-fiscal-year-2025

[16] https://www.federalregister.gov/documents/2024/05/10/2024-10166/terminal-disclaimer-practice-to-obviate-nonstatutory-double-patenting

[17] SimpleAir, Inc. v. Google LLC (Fed. Cir. 2018).

[18] Comments may be submitted at https://www.regulations.gov/.

The USPTO's Guidance on Use of AI-based Tools in Practice

By Joshua Rich and Michael Borella --

Since President Biden issued his Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence, the U.S. Patent and Trademark Office has been investigating the potential pitfalls of practitioners' use of AI in patent and trademark practice.  On April 11, the Office issued its "Guidance on Use of Artificial Intelligence-Based Tools in Practice Before the United States Patent and Trademark Office."[1]  And while the Guidance does not include or propose any new rules, it provides useful reminders of how to ensure compliance with the rules (along with a dash of advocacy for the USPTO's positions on prosecution strategy).

The starting point for the USPTO's analysis of the effects of AI is the potential efficiencies and cost savings that use of AI-based tools can provide.  After all, the USPTO is already using such tools itself:

For example, patent examiners are performing AI-enabled prior art searches using features like More Like This Document (MLTD) and Similarity Search in the Office's Patents End-to-End (PE2E) Search tool.

The Office recognizes that practitioners are already (and increasingly) using tools to locate prior art, review patent applications, and monitor examiner behavior.  But along with the benefits of using AI-tools come risks:  hallucination, disclosure of confidential client information, and violation of export control laws and rules.  The Guidance attempts to show practitioners how they should -- and (in some cases) must -- mitigate those risks based on the existing rules and regulations.

The USPTO's guidelines rely on six different sets of rules and policies as sources for the obligations for practitioners.

• The duty of candor: "Each individual associated with the filing and prosecution of a patent application has a duty of candor and good faith in dealing with the Office, which includes a duty to disclose to the Office all information known to that individual to be material to patentability as defined in this section."[2]

• The signature requirement for nearly all submissions to the USPTO, which carries with it the implied certification that the person signing or submitting the paper was the one actually signing it and vouching under penalty of perjury that ""[a]ll statements made therein of the party's own knowledge are true, all statements made therein on information and belief are believed to be true"[3] and an obligation to make a reasonable inquiry to ensure the accuracy of those statements.[4]

• The obligation of confidentiality: "A practitioner shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation, the disclosure is permitted by paragraph (b) of this section, or the disclosure is required by paragraph (c) of this section."[5]

• The foreign filing license requirement and regulations governing export of technology, including ITAR (International Traffic in Arms Regulations), EAR (Export Administration Regulations), and AFAEAR (Assistance to Foreign Atomic Energy Activities Regulations).  Notably, the USPTO has previously said that "[a] foreign filing license from the USPTO does not authorize the exporting of subject matter abroad for the preparation of patent applications to be filed in the United States."[6]  Further, ITAR, EAR, and AFAEAR prohibit not only exporting certain technical data in the traditional sense -- that is, sending the information overseas -- they also prohibit allowing nationals of certain foreign countries to have access to that information, even within the United States.

• Policies regarding access to the USPTO's electronic systems, including Patent Center, P-TACTS, ESTTA, and USPTO.gov. Among other things, only individuals may have USPTO.gov accounts and must not share the account with others (including AI-based tools).

• Professional responsibility duties to clients, including the duty of competence (which includes a duty to be competent with technology used to handle client matters before the USPTO)[7] and the duty to "reasonably consult with the client about the means by which the client's objectives are to be accomplished" and "explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation."[8]

Those rules and regulations apply to the use of AI in at least four different contexts of USPTO patent and trademark practice.[9]  Those contexts can involve different AI tools and considerations, but there in one unifying theme:  use of an AI tool does not relieve a practitioner of compliance with existing duties.  Indeed, the USPTO does not expect any more out of practitioners who use AI tools than it does from practitioners who use assistance of junior attorneys or paralegals -- the practitioner is responsible for reviewing work product and ensuring that it is technically and legally correct.  Notably, however, the USPTO seeks to put a thumb on the scales balancing certain duties owed by practitioners.

First, AI tools are increasingly being used in the drafting of prosecution (and PTAB-related) documents.  Even word processing software such as Microsoft Word are beginning to incorporate AI tools.  But specialized AI tools are also being rolled out that can assist in patent and claim drafting, responding to office actions, and preparing forms (such as IDSs).  While such tools are growing more and more robust and useful, they still have deficiencies that must be double-checked.  Double-checking is not only good practice, the Guidelines make it clear that it is a requirement of both the duty of candor and the signature requirement.  "Therefore, if an AI tool is used in drafting or editing a document, the party must still review its contents and ensure the paper is in accordance with the certifications being made."  A practitioner should also reasonably consult with the client to ensure that the client agrees to the means for accomplishing its goals.

Given the requirement for an attorney or agent to double-check the entirety of a submission, the Guidance does not suggest a general obligation to disclose the use of AI tools in preparing papers.  There are potential exceptions, however.  For example, practitioners often include language to broaden the disclosure of an invention using alternative embodiments and potential substitutions known in the art.  While there may be a question whether this makes the patent attorney a joint inventor, the issue is more concerning if an AI tool has come up with the alternatives.  Not only may it throw inventorship in question (and require disclosure of the AI drafting tool), it may exceed the true scope of the invention.

The Office also counsels that "Practitioners are also under a duty to refrain from filing or prosecuting patent claims that are known to be unpatentable.  Therefore, in situations where an AI tool is used to draft patent claims, the practitioner is under a duty to modify those claims as needed to present them in patentable form before submitting them to the USPTO."  The first sentence is uncontroversial:  it is improper to seek claims that you know -- not suspect, know -- to which the client is not entitled.  But the second sentence is much more opaque.  Whether an AI tool is used or not, if "patentable form" is intended to mean something more than the opposite of "known to be unpatentable" is seems to be placing a higher obligation on the review of AI-drafted claims than that imposed on the review of human-drafted claims.  That would appear to be more an Office request than an obligation.

Similarly, the Guidance points out that the obligation to review an IDS requires more than checking to see that it is in proper format.  Rather, it requires "reviewing each piece of prior art listed in the form."  But the Guidance then asserts that the review requires a practitioner to cull not only those references that are irrelevant but also those that include "marginally pertinent cumulative information."  Of course, the duty of disclosure requires the citation of material prior art and what may be "marginally pertinent" in the eyes of one may be "material" to another.  Practitioners and Examiners often disagree vehemently over the relevance of cited art.  By emphasizing the obligation to eliminate irrelevant art and extending it to "marginally pertinent" art, the Guidance seem to be trying to tip the scales away from citing all potentially relevant art.  That is, the Office seems to be trying to use the vehicle of the Guidance ease the Examiner's burden of reviewing submitted art at the cost of greater risk of violation of the duty of disclosure.  Whether an AI tool is used or not should not affect that calculus.

The issue is that, on one hand, the USPTO has set forth the duty of candor in Rule 56 and elsewhere.  But, on the other hand, the Guidance implicitly incentivizes practitioners to NOT strictly follow Rule 56.  The notion of what a "reasonable Examiner" might consider to be relevant art varies dramatically between Examiners and art units.  Further, there is no practically useful test for what constitutes cumulative art.  Given this, the burden of determining whether to disclose art that falls into either of these gray areas should not fall on practitioners.  Instead, practitioners should be encouraged to err on the side of disclosure when in doubt.

With regard to trademark filings, many of the concerns related to document preparation are the same.  The Guidance brings up one additional example of the perils of AI hallucination, specifically, submission of an AI-generated specimen of use.  Again, the AI tool must be double-checked to make sure it has provided accurate information.

Second, AI tools may be useful in the mechanical process of filing documents with the USPTO.  But the rules seem to throw a wrench into that prospect, at least as far as they currently are written.  Almost all submissions require a person's signature; the Guidance unequivocally states, "It would not be acceptable for the correspondence to have the signature of an AI tool or other non-natural person."  Thus, even if a person has prepared a document, it would be a violation of rules to have an AI tool affix a signature and submit the document.  That is especially true because a non-natural person cannot have a USPTO.gov account.  Thus, for now, AI tools cannot be used to file USPTO documents.

Third, AI tools could be used to access USPTO systems, for example, to scrape filings to include in a large language model.  Again, however, an AI tool cannot have a USPTO.gov account and certain actions violate the terms of service of USPTO websites.  As the Guidance warns, "Users should also be extremely careful when attempting to data mine information from USPTO databases.  Using computer tools, including AI systems, in a manner that generates unusually high numbers of database accesses violates the Terms of Use for USPTO websites, and users using tools in this way will be denied access to USPTO servers without notice and could be subject to applicable state criminal and civil laws."  As the Guidance points out, however, the USPTO does offer bulk access to its data for purposes of mass downloading, and those interfaces should be used instead.

Fourth, the Guidance raises the concern of potential unintended disclosure of client confidential information when using an AI tool.  As the Guidance cautions:

This can happen, for example, when aspects of an invention are input into AI systems to perform prior art searches or generate drafts of specification, claims, or responses to Office actions.  AI systems may retain the information that is entered by users.  This information can be used in a variety of ways by the owner of the AI system including using the data to further train its AI models or providing the data to third parties in breach of practitioners' confidentiality obligations to their clients under, inter alia, 37 CFR 11.106.  If confidential information is used to train AI, that confidential information or some parts of it may filter into outputs from the AI system provided to others.

This is an especially acute concern because current large language models are "black boxes" with terms of service that may change without much notice.  But the use of a tool with terms of service that prohibit use of inputs to teach the model may not be sufficient if the owner of the tool is not especially trustworthy.  The Guidance suggests that "practitioners must be especially vigilant to ensure that confidentiality of client data is maintained" when client data is used with an AI tool (but also when client data is stored on third-party storage).  The concern may extend to knowing where the model's servers are based, since disclosure to the model may violate the foreign filing license rules or export control regulations.  In short, the Guidance suggests extreme caution in maintaining the confidentiality of client data.

All in all, the Guidance is intended to reinforce that the use of AI tools does not relieve practitioners of their obligations to comply with existing rules and regulations, even if it may simplify or quicken prosecution tasks.  There are clear risks and pitfalls, and the Guidance helps highlight them without placing additional obligations on practitioners.

[1] 89 Fed. Reg. 25,609 (Apr. 11, 2024).
[2] 37 C.F.R. § 1.56.  There are analogous duties of candor and good faith in 37 C.F.R. § 1.555(a) and 37 C.F.R. § 42.11.
[3] 37 C.F.R. § 11.18(b)(1).
[4] 37 C.F.R. § 11.18(b)(2).
[5] 37 C.F.R. § 11.106(a).
[6] Scope of Foreign Filing Licenses, 73 Fed. Reg. 42,781 (July 23, 2008).
[7] 37 C.F.R. § 11.101.
[8] 37 C.F.R. § 11.104.
[9] In the Guidance, the Office included a fifth context, "Fraud and Intentional Misconduct."  But the Guidance does nothing more than reiterate the previously-stated concerns with the submission (or omission) of materials in violation of the duty of candor and use of AI tools to violate the terms of service of USPTO websites.

USPTO Updates Service Methods for Notices of Appeal and Related Documents

By Joshua Rich --

In a Federal Register notice dated March 29, 2024, the U.S. Patent and Trademark Office is updating the required method for serving it with a notice of appeal to the U.S. Court of Appeals for the Federal Circuit, a notice of election to proceed by civil action in district court, or a request for extension of time to file a notice of appeal or commence a civil action.  Previously, all such notices or requests had to be served by mail.  Under the new rule, the notices and requests are to be served by email (with Priority Mail as a failsafe if email is not feasible.

The new rule requires a party to serve an email address in the Office of the General Counsel to be posted on the USPTO website.  If that cannot be done, the party can serve the Office of the Solicitor.

While this seems like a small change (and it is), it has some clear benefits for practitioners.  First, it modernizes practice to bring it more in line with the more streamlined process used in litigation.  That is, litigators are accustomed to serving opposing parties by email rather than snail mail.  Second, the USPTO will accord the service copy with a time-stamped receipt date which serves as proof of receipt of service of the notice.  This prevents any potential concern that the service copy "got lost in the mail."  But potentially most importantly, this procedure is just easier -- no printing copies, trips to the Post Office, or other hassle.

USPTO Publishes Updated Guidance for Making Proper Obviousness Determinations

By Michael Borella --

On February 27, 2024, the U.S. Patent and Trademark Office published its Updated Guidance for Making a Proper Determination of Obviousness ("Guidance") in the Federal Register.  The stated goal of the Guidance is:

To provide a review of the flexible approach to determining obviousness that is required by KSR Int'l Co. v. Teleflex Inc. (KSR).  The focus of this document is on post-KSR precedential cases of the United States Court of Appeals for the Federal Circuit (Federal Circuit), to provide further clarification for decision-makers on how the Supreme Court's directives should be applied.

At first blush, the Guidance appears to be merely restating the law and one might be inclined to think that it is much ado about nothing.  However, the Guidance is notable for what it does not cover and may actually lead to its intended audience (mainly examiners and PTAB judges) being more likely to find claims obvious and raising the bar on applicant rebuttals of obviousness contentions.

Put another way, the Guidance sets forth a number of legal principles that could result in examiners believing that they should issue more obviousness rejections.  But it does not acknowledge or even mention that examiners commonly and frequently misapply the law and facts when doing so.  Thus, the Guidance is -- at best -- one-sided in this regard and may result in more time and expense for applicants.

The Guidance states that it "is based on the Office's current understanding of the law and is believed to comport with the binding precedent of the Supreme Court and the Federal Circuit . . . [and] is meant to be consistent with the Office's present examination policy."  It is expected that the Guidance will be incorporated into an updated version of the Manual of Patent Examining Procedure (M.P.E.P.).

One tangential point that the Guidance notes is that the America Invents Act (AIA) changed "the time focus of the obviousness inquiry from 'at the time the invention was made' to 'before the effective filing date of the claimed invention.'"  The Guidance instructs USPTO personnel to "interpret references to 'at the time of invention' in KSR . . . as if they referred to the statutory time focus under the AIA."  Presumably, USPTO personnel should do the same with any use of the term "at the time of the invention" in other cases and in Applicants' comments for purposes of consistency, though such a directive is not made.  Nonetheless, this seems to be a minor clarification that is unlikely to lead to a substantive change in examination.

The Guidance goes on to reiterate that KSR affirmed that the factors set forth in Graham v. John Deere Co. still control the obviousness inquiry.  These factors require that "differences between the prior art and the claims at issue are to be ascertained; and the level of ordinary skill in the pertinent art resolved."  Here, the USPTO missed an opportunity to advise examiners to explicitly state their interpretation of the differences (which sometimes is missing in obviousness rejections) and their understanding of the level of ordinary skill in the art (which is almost never mentioned in obviousness rejections).

More substantively, the main theme of the Guidance is that KSR set forth a flexible rather than robotic obviousness test.  The Guidance states that this flexibility has two aspects, "first with regard to the proper understanding of the scope of the prior art, and second with regard to appropriate reasons to modify the prior art."

On these points, the Guidance asserts that "a proper understanding of the prior art extends to all that the art reasonably suggests, and is not limited to its articulated teachings regarding how to solve the particular technological problem with which the art was primarily concerned."  This requires understanding the prior art "in a flexible manner that credits the common sense and common knowledge of a [person having ordinary skill in the art (PHOSITA)]."

According to the Guidance this means that "[a]n argument that the prior art lacks a specific teaching will not be sufficient to overcome an obviousness rejection when the allegedly missing teaching would have been understood by a PHOSITA—by way of common sense, common knowledge generally, or common knowledge in the relevant art."  The Guidance goes on to give examples from the case law that reject a rigid approach to obviousness and properly combine prior art elements without an express teaching to do so.

The problem here is that the Guidance is silent as to how an examiner is supposed to determine the understanding of a PHOSITA or even the proper level of ordinary skill in the art.  As noted above, such determinations are rarely made explicit in office actions.  And, even when they are explicit, the rationale provided by examiners is often conclusory with little or no supportive reasoning.

The Guidance goes on to note that "the flexible approach to obviousness encompasses not only how to understand the scope of prior art, but also how to provide a reasoned explanation to support a conclusion that claims would have been obvious."  Thus, there are "numerous possible sources that may, either implicitly or explicitly, provide reasons to combine or modify, the prior art to determine that a claimed invention would have been obvious."  As a notable example, a so-called "universal" type of improvement to improve system performance may exist "even absent any hint of suggestion in the references themselves."

The concern with this language is that examiners will use it to justify poorly-reasoned, hand-waving contentions involving uses, modifications, and combinations of prior art.  These concerns are somewhat addressed by the Guidance reiterating that "a proper obviousness rejection still requires the decision-maker to provide adequate analysis based on evidentiary support."  In other words, "Office personnel are required to provide a clear articulation of their reasoning, grounded in relevant facts, when making a determination that a claim would have been obvious."  Having said that, it is rare for said personnel to admit that their articulations have not been clear and the guidance provides little criteria for determining whether an obviousness rejection meets this requirement.

Along similar lines, the Guidance states that "[i]f objective indicia of nonobviousness are properly before the examiner, such as by way of incorporation into the written description as filed or submission of an evidentiary declaration after the filing date, the examiner must consider those indicia, even before the issuance of a first Office action."  While a well-drafted patent application may point out differences between the claimed invention and the prior art known to the applicant, it is not clear in examination procedures whether and to what extent such statements have been considered by examiners.  There currently is no requirement for examiners to make such considerations on the record.

Other issues addressed by the Guidance include the use of common sense by a PHOSITA and how to evaluate the weight of expert opinions.

Notably missing from the Guidance is any example of what a sufficient obviousness rejection would look like in practice.  It would have been helpful for the USPTO to provide examples of properly-reasoned as well as improperly-reasoned obviousness rejections.  As it stands, such details are not present, which may incentivize examiners to continue taking short cuts.

At the very least, the Guidance should have called out a few of the most common and problematic types of examiner errors.  These include <ctrl>-F rejections (the examiner finds the words of the claims in prior art references and does not consider that the words may have multiple meanings or are used in a different context), overreliance on broadest reasonable interpretation (the examiner ignores how a claim term is used in the claim and/or defined in the specification), low-effort rejections of dependent claims (the examiner uses the same references to reject all dependent claims even if those references do not teach the specific elements of those claims), the Where's Waldo rejection (the examiner essentially cites an entire reference -- perhaps dozens of pages long -- and merely tells the applicant that the claim element in question is "in there somewhere"), the "expert" examiner (the examiner claims, without any evidentiary support, that the claim element would be well-known to a PHOSITA because the examiner considers themself an expert in the field), and the ghost claim element (an element that is explicitly recited in a claim that the examiner completely and utterly fails to address).  These are just a few examples.

The point is that the USPTO needs to crack down on examiners taking liberty with lazy examination practices.  Along with the Guidance's discussion of the flexibility the obviousness analysis should be a further and more detailed discussion of how to apply it properly.

Another aspect missing from the Guidance is an acknowledgement that there is a line of Federal Circuit cases that put a fence around overly broad motivations to combine prior art references.  Notably, in Belden Inc. v. Berk-Tek LLC, the Court wrote that "obviousness concerns whether a skilled artisan not only could have made but would have been motivated to make the combinations or modifications of prior art to arrive at the claimed invention" (emphasis added).  Similar language can be found in Personal Web Techs., LLC v. Apple, Inc. and In re NuVasive, Inc. in other words, it is not enough for an examiner to contend that references X and Y could be theoretically combined in some fashion.  Instead, the prima facie burden on the examiner is to establish that a PHOSITA would have been motivated to combine references X and Y in a manner that results what is being claimed by the applicant.

In short, nobody is perfect.  Examiners are human.  Most are not attorneys.  They will make mistakes when applying the law of obviousness.  The USPTO, however, seems content to stick its head in the sand regarding some of the more common and egregious examiner errors that can be found in obviousness rejections without even looking that hard.

If nothing else, the USPTO should be looking closely at examiners who have very high or very low allowance rates in comparison to their art unit or technical center peers as ones that potentially are misapplying the law of obviousness.  The USPTO should also be looking at examiners who are frequently reversed during any stage of the appeals process (e.g., on a pre-appeal brief or PTAB decision) as also potentially misapplying this law.  These individuals should be targeted for additional training on how and how not to employ the obviousness inquiry.

USPTO Issues Guidance about Inventorship of AI-assisted Inventions

By Aaron Gin and Michael Borella --

On February 12, 2024, the U.S. Patent and Trademark Office released detailed guidance regarding inventorship of inventions created with the assistance of artificial intelligence (AI).  The guidance, signed by Kathi Vidal, Under Secretary of Commerce for Intellectual Property and Director of the USPTO, is scheduled to be published in the Federal Register on February 13, 2024.  The guidance focuses on how inventorship should be determined in U.S. patents and patent applications when AI, including generative AI, plays a role in the conception and/or reduction to practice of a given invention.

The 27-page document demonstrates the Patent Office's effort to navigate the challenges AI poses to traditional notions of inventorship and creativity, and comes in response to AI-specific requests for public comment, public listening sessions, and President Joe Biden's "Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence."

At the heart of the USPTO's guidance is the principle that AI systems, even when they have a role in facilitating or contributing to the creation of inventions, cannot themselves be named as inventors on patent applications.  Instead, only natural persons—humans—are capable of inventing under U.S. law, consistent with Thaler v. Vidal, 43 F.4th 1207 (Fed. Cir. 2022).  Thaler makes clear that "the AI system's contribution is not inventorship, even if the AI system's contributions were instrumental in the creation of the invention."  Id.

Accordingly, the guidance firmly states that inventors as well as joint inventors named on U.S. patents and patent applications must be natural persons.  Specifically, the guidance provides that "based on the holding in Thaler that an 'individual' must mean a natural person, it is clear that a 'joint inventor' or 'coinventor' must also be a natural person."  Furthermore, patent applications that name a machine (e.g., an AI) on an Application Data Sheet, an inventor's oath or declaration, or a substitute statement as either an inventor or a joint inventor will be considered to have improper inventorship.

Interestingly, the guidance acknowledges that AI systems could perform acts that, if performed by a human, could constitute inventorship under existing U.S. patent law.  Furthermore, in the scenario where an AI could otherwise be considered an inventor, the inability to list the AI as an inventor or joint inventor does not inherently render the invention unpatentable.

Detailed principles and examples are provided to assist in determining when a human's contribution to an AI-assisted invention is significant enough to warrant inventorship.  Namely, the guidance reiterates the factors of Pannu v. Iolab Corp., 155 F.3d 1344 (Fed. Cir. 1998), which include that each inventor must:

(1) contribute in some significant manner to the conception of the invention;

(2) make a contribution to the claimed invention that is not insignificant in quality, when that contribution is measured against the dimension of the full invention; and

(3) do more than merely explain to the real inventors well-known concepts and/or the current state of the art.

The guidance also delves into the public policy of the U.S. patent system.  Specifically, it outlines the importance of a human contribution in the innovation process, because "the patent system is designed to encourage human ingenuity," citing the IP Clause of the Constitution and the legislative history of the 1952 Patent Act ("Inventions eligible for patenting 'include anything under the sun made by man.'") Graham v. John Deere Co., 383 U.S. 1, 9 (1966).

The USPTO highlights some "guiding principles" in determining AI-assisted inventorship, which include:

(1) A natural person's use of an AI system in creating an AI-assisted invention does not negate the person's contributions as an inventor.  Rather, the natural person can be listed as the inventor or joint inventor if the natural person contributes significantly to the AI-assisted invention;

(2) Merely recognizing a problem or having a general goal or research plan to pursue does not rise to the level of conception.  A natural person who only presents a problem to an AI system may not be a proper inventor or joint inventor of an invention identified from the output of the AI system.  However, a significant contribution could be shown by the way the person constructs the prompt in view of a specific problem to elicit a particular solution from the AI system;

(3) Reducing an invention to practice alone is not a significant contribution that rises to the level of inventorship.  Therefore, a natural person who merely recognizes and appreciates the output of an AI system as an invention, particularly when the properties and utility of the output are apparent to those of ordinary skill, is not necessarily an inventor.  However, a person who takes the output of an AI system and makes a significant contribution to the output to create an invention may be a proper inventor.  Alternatively, in certain situations, a person who conducts a successful experiment using the AI system's output could demonstrate that the person provided a significant contribution to the invention even if that person is unable to establish conception until the invention has been reduced to practice;

(4) A natural person who develops an essential building block from which the claimed invention is derived may be considered to have provided a significant contribution to the conception of the claimed invention even though the person was not present for or a participant in each activity that led to the conception of the claimed invention.  In some situations, the natural person(s) who designs, builds, or trains an AI system in view of a specific problem to elicit a particular solution could be an inventor, where the designing, building, or training of the AI system is a significant contribution to the invention created with the AI system; and

(5) Maintaining "intellectual domination" over an AI system does not, on its own, make a person an inventor of any inventions created through the use of the AI system.  Therefore, a person simply owning or overseeing an AI system that is used in the creation of an invention, without providing a significant contribution to the conception of the invention, does not make that person an inventor.

The guidance applies to utility patents, plant patents, design patents, and corresponding applications.

The guidance also states that the duty of disclosure and the duty of reasonable inquiry both apply to the question of proper inventorship.  This will incentivize inventors and their representatives to be forthcoming about the contributions that humans and/or AI systems may have had with respect to the conception of inventions.  Moreover, the guidance notes that examiners and other USPTO employees may make requests for information regarding inventorship when such an individual "has a reasonable basis to conclude that one or more named inventors may not have contributed significantly to the claimed subject matter."

Nonetheless, further rounds of USPTO guidance may be released "as appropriate."  These may discuss the impact of AI on other aspects of patent practice, including subject matter eligibility, obviousness, and enablement.

By emphasizing human contribution and providing specific principles and examples, the guidance gives the clearest picture yet available from the USPTO regarding its policies and practices at the intersection between AI and inventorship.

For additional information, please see:

• Unpublished Version of USPTO Inventorship Guidance
• Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence

USPTO Further Transitions to DOCX Format

By Donald Zuhn --

In an email News Brief distributed today, the U.S. Patent and Trademark Office reminded stakeholders that starting at 12:01 am (ET) on January 17, the filing of new, non-provisional utility patent applications with specification, claims, and abstract in a non-DOCX filing format will incur a surcharge of up to $400.  The Office noted that an Applicant will still have the option of providing a backup (or auxiliary) PDF version of a newly filed application with the DOCX version, and that there would be no fee associated with providing the backup PDF.

The Office indicated that the transition to the DOCX format is intended "to modernize [the Office's] patent application systems to improve user experience, provide applicants a more streamlined process, harmonize across country borders, and strengthen [the Office's] ability to examine applications quickly and effectively."  The Office stated that it had "worked carefully with stakeholders to shape both the transition to DOCX as well as the timing," and that the Office's systems will "provide[] pre-prosecution checks that improve the robustness and reliability of patents."

Further information regarding the DOCX format can be found on the Office's DOCX webpage, and a video explaining "How to file your patent application documents in DOCX" can be found here.  Questions regarding DOCX filing can be directed to the Patent Electronic Business Center at [email protected] or 866-217-9197.

USPTO Provides Guidance on Standards for Enablement Requirement

By Kevin E. Noonan --

On January 10^th, the U.S. Patent and Trademark Office published a Notice in the Federal Register (89 Fed. Reg. 1563) regarding proposed Guidance on how the Office will apply the enablement requirement under 35 U.S.C. § 112(a) in light of the Supreme Court's decision last year in Amgen v. Sanofi.  In a nutshell, the Office announced that it will do so by continuing to use the rubrics established by the Federal Circuit in In re Wands.

The Notice sets forth the Office's understanding of the Supreme Court's decision and its substantial adherence to existing law, particularly Wands.  But the Office is also cognizant (as the past 15-20 years has illustrated) that Supreme Court precedent is certainly (if not the only) the most relevant source of interpretation on how the patent statute should be understood and applied.  The Notice cites O'Reilly v. Morse, 56 U.S. 62 (1854); The Incandescent Lamp Patent, 159 U.S. 465 (1895); and Holland Furniture Co. v. Perkins Glue Co., 277 U.S. 245 (1928), in this regard.  The Office also recognizes more recent Federal Circuit precedent, including McRO, Inc. v. Bandai Namco Games Am. Inc., 959 F.3d 1091 (Fed. Cir. 2020); Wyeth & Cordis Corp. v. Abbott Laboratories, 720 F.3d 1380 (Fed. Cir. 2013); Enzo Life Sciences, Inc. v. Roche Molecular Systems, Inc., 928 F.3d 1340 (Fed. Cir. 2019); and Idenix Pharmaceuticals LLC v. Gilead Sciences Inc., 941 F.3d 1149 (Fed. Cir. 2019), and the Supreme Court's holding in Amgen, based on Wood v. Underhill, 46 U.S. 1 (1846), and Minerals Separation, Ltd. v. Hyde, 242 U.S. 261 (1916), that a "specification is not necessarily inadequate just because it leaves the skilled artisan to perform some measure of adaptation or testing."

This is where the Wands factors come into play, in providing the framework for determining the "reasonableness of experimentation."  The Notice acknowledges that the Court did not expressly address or rely on the Wands factors but finds support for their continued analytical vitality in the Court's emphasis that "the specification may call for a reasonable amount of experimentation to make and use the full scope of the claimed invention," the Wands factors being probative thereof.  The Notice cites post-Amgen decisions, specifically Baxalta Inc. v. Genentech Inc., 2023 U.S. App. LEXIS 24863 (Fed. Cir. 2023); Medytox, Inc. v. Galderma S.A., 71 F.4th 990 (Fed. Cir. 2023); and In re Starrett, 2023 WL 3881360 (Fed. Cir. 2023) (non-precedential), for reference to or reliance upon Wands.  Returning to the Federal Circuit's decision in Amgen (affirmed by the Supreme Court), the Notice cites the determination in that decision that "the scope of the claims was far broader in functional diversity than the disclosed examples, that the invention was in an unpredictable field of science with respect to satisfying the full scope of the functional limitations, and that there was not adequate guidance in the specification," all of which considerations track with the Wands factors.  Similar assessments are provided for the Baxalta (district court litigation), Medytox (PTAB decision in a PGR proceeding, and Starrett (PTAB decision in an ex parte appeal) Federal Circuit decisions.

The Notice and proposed Guidance falls within the statutory interpretive protocol wherein the Supreme Court provides broad interpretation of the limits the statute imposes on what is patentable, the Federal Circuit applies those standards to individual cases cabined by their particular facts, and the Office, as an administrative agency, applies both layers of precedential interpretation in examining patent applications for compliance with the statutory standards as enacted by Congress and interpreted by the courts.  The Notice particularly specifies that it will apply the Wands factors "to ascertain whether the experimentation required to enable the full scope of the claimed invention is reasonable" "regardless of technology" under M.P.E.P § 2164.04.

The Notice contains contact information for Office personnel from whom additional information can be obtained: Mary C. Till, Senior Legal Advisor, Office of Patent Legal Administration, at [email protected] or 571–272–7755; or Andrea S. Grossman, Legal Advisor, Office of Patent Legal Administration, at [email protected] or 571–270–3314.

USPTO Kicks Off Semiconductor Technology Pilot Program to Expedite Semiconductor Manufacturing Applications

By Aaron Gin --

Today, the U.S. Patent and Trademark Office announced a new, no-cost, pilot program that accelerates the examination process for U.S. patent applications related to semiconductor manufacturing.  Starting tomorrow Friday, December 1, 2023, applicants can file a petition to participate in the pilot program.  Petitions that correspond to qualifying non-provisional utility patent applications, directed to "certain processes and apparatuses for manufacturing semiconductor devices," will be advanced out of turn for examination (accorded special status) until a first action.

• Qualifying applications must be "non-continuing original utility non-provisional applications" that may optionally claim priority to a prior provisional application or one or more foreign priority applications.

• At least one claim of the qualifying application must cover a process or an apparatus for manufacturing a semiconductor device and correspond to one or more of the technical concepts within H10 (Semiconductor Devices; Electric Solid-State Devices Not Otherwise Provided For) or H01L (Semiconductor Devices Not Covered by Class H10) in the Cooperative Patent Classification (CPC) system.

• Applicants must file the petition to make special with the application or entry into the national stage under 35 U.S.C. § 371 or within 30 days of the filing date or entry date of the application.

• The fee for the petition to make special under 37 C.F.R. § 1.102(d) has been waived for this program.

In a related news release, the Secretary of Commerce Gina Raimondo stated that "[t]his new USPTO program will ensure we are prioritizing critical intellectual property protections to incentivize investments in domestic semiconductor manufacturing."  The Director of the USPTO, Kathi Vidal said of the new pilot program: "Fast tracking examination of patent applications related to semiconductor device manufacturing speeds bringing key innovations to market and strengthens our nation's supply chain."

The pilot program aims to support the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act of 2022, which allocates investments designed to increase semiconductor manufacturing capacity and improve the resilience of the semiconductor supply chain.  The Semiconductor Technology Pilot Program supports the CHIPS Act by "encouraging research, development, and innovation in the semiconductor manufacturing space and providing equitable intellectual property protection to incentivize investments in the semiconductor manufacturing area."  The USPTO stated that the new pilot program can help achieve the goals of the CHIPS Act by expediting and encouraging innovations relating to semiconductor devices and their manufacture.

The petition (Form PTO/SB/467) will be available starting December 1, 2023.  The pilot program will be available until December 2, 2024 or until the USPTO accepts 1,000 grantable petitions, whichever is reached first.

For additional information, please see:

• USPTO Semiconductor Technology Pilot Program
• Pre-publication of the Federal Register 2023-26340