On August 21, 2007, the United States Patent & Trademark Office (USPTO) announced new rules related to the examination of claims, the disclosure of documents and the filing of continuation applications for all United States patent applications. The rules, related to claims and continuations, represent the first two of three rule-change packages that the USPTO has in its queue. The third rule package relates to the Information Disclosure Statement (IDS) procedure, which is an essential procedure to protect your issued patents against invalidity challenges by infringers and third parties.

These new rules are poised to change how pending and future patent applications are handled from initial drafting to prosecution and finally to due diligence analyses, infringement and invalidity-related litigation. The rules packages, as a whole, are radical reinterpretations of the USPTO's duties and authorities.

Although the Eastern District of Virginia temporarily enjoined the USPTO from enacting these rules last week (Tafas/GSK v. Dudas), it is likely that these new rules will be repackaged at some point in 2008-09. Congress may step in and clarify the USPTO's ability to make rules, as part of the Patent Reform Bill.

Who Is Affected?

While these rules were initially designed to prevent companies from filing large patent applications with hundreds of claims, several continuations and volumes of cited references, they affect every currently pending U.S. and PCT (Patent Cooperation Treaty) patent application and those yet to be filed. In fact, there are very few pending applications that are not covered under the proposed rules. Individuals who have pending patent applications, along with companies that maintain and acquire active patent portfolios should be familiar with the new rules and their implementation status. Pharmaceutical and biotechnology-based applications are especially susceptible to the proposed rules, as these applications are usually large, contain more than 20 claims and are ripe for continuation filings.

What Are These New Rules?

In the past, a patent application could be filed with 20 claims, prosecuted, allowed, and 20 new claims filed before the first patent was issued, in order to efficiently extend patent coverage. Patent owners were able to follow this procedure, as long as new patentable subject matter could be mined from the parent application. This allowed new claims—voluntary divisional applications—directed to potential infringers or commercial formulations to be drafted years after the parent application was originally filed. Applicants could also file a Continuation-in-Part Application (CIP), which adds new matter (new data, formulations, etc.) to a previously filed application.

Under the new rules, a patent owner may only file two continuation applications, which includes voluntary divisional applications and CIPs, off of a parent application. Any additional continuation applications must be accompanied by a petition stating why the application could not have been filed earlier. Patent owners are not limited, however, to the number of involuntary divisional applications that are filed as a result of a restriction requirement by the USPTO.

In addition, if more than five independent claims or 25 total claims are filed in an application, the applicant must file an Examination Support Document (ESD) or delete claims. These documents are not easy or inexpensive to prepare, and they will provide a great deal of information to potential infringers and patent litigators.

The USPTO would also require patents and patent applications that share a related technology, along with a common owner or inventor to be disclosed to the patent office during examination.

Finally, the IDS system mandates that inventors and assignees provide copies of relevant patent and non-patent literature related to the application under question to the USPTO. Withholding these references can result in invalidation of the issued patent. Under the proposed rules, if the applicant wants to submit more than 20 references or large references, the USPTO will require an ESD-type of statement accompany the submission, which may be devastating for a small company or a technology that is prone to infringement.

What Do Patent Applicants Need to Do?

Pending Patent Applications

Patent owners and applicants should review all pending U.S. and PCT patent applications by the end of year, document related applications and file all related patent and non-patent literature related to the patent application. In addition, if continuation applications are desirable or necessary, it is advisable to get those filed as soon as possible.

New Patent Applications

Patent applicants should determine whether the new technology is the foundation of a larger platform for the company or a "one-hit wonder." If the former, then filing more claims initially may be a good strategy, since USPTO-restricted claims can be prosecuted later as "involuntary" divisional applications and not as continuation applications. If the application is designed to protect an invention that is not related to other company technologies (the one-hit wonder), then the patent budget may be better spent by filing less than 25 total claims in the original parent.

In either case, a long-term and comprehensive strategic view of the patent portfolio should be the ideal goal for every patent applicant.

Issued Patent Applications

The new rules will require that related patents be disclosed to the patent office for pending applications. Therefore, if there are issued patents related to current applications by technology and owner/inventor, those patents should be disclosed to the USPTO. Nondisclosure of those patents may result in invalidity of the later-allowed patent applications.

What Do Others Need to Do?

Due Diligence

Companies that are considering merging with or acquiring another company and/or purchasing or licensing patents and patent applications from another entity should review the patent portfolio with experienced patent counsel in order to determine what effect these new requirements have on the value and enforceability of the portfolio.

Litigation

Individuals and companies who are threatened with suit or sued over patent infringement issues should ask counsel to review the USPTO file histories of the subject patent(s). In the past, patent prosecutors would strive to keep as much information as possible out of the file history for a patent. Under the new rules, brevity may no longer be an option. Therefore, litigators will have more information to review as to what the inventors believe is patentable and why.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.