The United States Court of Appeals for the Federal Circuit seems to have dealt a big blow to any hopes the Patent Office and the Department of Justice had about possibly convincing the court to overrule the decision of Judge Cacheris with respect to the permanent injunction of the proposed claims and continuations rules. 

In Cooper v. Dudas, the Federal Circuit was asked to decide whether the the Patent Office had the authority to interpret the term “orginal application,” a term used in a section of the American Inventors Protection Act.  The particular section of the law in question was one that authorized for the first time the ability to file an inter partes reexamination of an issued patent.  Previously, if you wanted the Patent Office to reconsider a particular issued patent you would request a reexamination and then not have the ability to participate in the reconsideration.  With the advent of inter partes reexamination now you can both ask for the reexamination and participate in the proceeding as the Patent Office reviews the issued patent. 

The law in question says that inter partes reexamination can only be filed with respect to “original applications” filed on or after November 29, 1999, the date the AIPA became law.  Cooper didn’t like the way the Patent Office defined “original application” so he sued.  The Federal Circuit ruled that the Patent Office does have the authority to interpret statutes, which is the obvious right decision.  The PTO is charged with implementing the law, so it is well established that they, along with other agencies charged with implementing laws, have the authority to interpret the statute. 

What makes this decision important, however, is that the Federal Circuit clearly stated what authority the Patent Office has, and as written it is clear that the Patent Office does not have the authority to implement substantive changes to the law surrounding how many continuation applications can be filed and how many total claims can be obtained on a single invention.  On this issue the Federal Circuit said:

We have also previously held that 35 U.S.C. § 2(b)(2) does not authorize the Patent Office to issue “substantive” rules. See Merck & Co. v. Kessler, 80 F.3d 1543, 1549-50 (Fed. Cir. 1996). “A rule is ‘substantive’ when it ‘effects a change in existing law or policy’ which ‘affect[s] individual rights and obligations.’” Animal Legal Def. Fund, 932 F.2d at 927 (quoting Cubanski v. Heckler, 781 F.2d 1421, 1426 (9th Cir.1986), vacated as moot sub nom., Bowen v. Kizer, 485 U.S. 386 (1988)). “In contrast, a rule which merely clarifies or explains existing law or regulations is ‘interpretative.’” Id. In this case, the Patent Office’s interpretation of “original application” does not effect any change in existing law or policy; rather, it is a prospective clarification of ambiguous statutory language regarding a matter of procedure. It is therefore “interpretive”—rather than “substantive”—under the definitions put forward in Animal Legal Defense Fund. We conclude that the Patent Office had the authority under 35 U.S.C. § 2 to interpret section 4608, because that interpretation both governs the conduct of proceedings in the Patent Office, not matters of substantive patent law, and is a prospective clarification of ambiguous statutory language.

The Federal Circuit is known to signal how they are leaning on important issues months before they actually have to reach a decision, and this case seems to make it clear which way the court is leaning.  There is absolutely no chance that the Federal Circuit will overrule the permanent injunction stopping the implementation of the claims and continuations rules. 

In fact, the Federal Circuit is not likely to even hear oral arguments in the GSK matter until late Fall 2008, which is after the next election.  Even if the Federal Circuit does hear the case late Fall 2008, no decision will be forthcoming until late Winter 2009 at the earliest, which means that by the time the Federal Circuit can agree with Judge Cacheris there will be a new President, a new Director of the Patent Office and a new Attorney General.  So why continue with a losing appeal? 

The PTO appeal should be withdrawn.  It will not be up to the PTO though, because it was the DOJ that decided to move forward with the appeal, so someone needs to talk some sense into the DOJ and get them to abandon this foolish appeal.  The claims and continuations rules are dead on arrival, and they are not going to be resuscitated.  We need to move forward and try and figure out how to fix the dysfunctional patent system that we have, and burdening the next Director of the PTO, whoever that will be, with an embarassing loss will serve no benefit and could be quite harmful to further, hopefully sensible PTO rulemaking efforts.