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Patent Reform 4/6/2009 2:31:59 PM EST Axford on Tafas v. Doll, 2009 U.S. App. LEXIS 5806 (March 20, 2009) Partner, Gordon and Rees
In Tafas v. Doll, 2009 U.S. App. LEXIS 5806 (Fed. Cir. Mar. 20, 2009), the Federal Circuit issued its opinion in a landmark case that put the U.S. Patent and Trademark Office (USPTO) on one side and some very large patentees on the other. This decision is a huge victory for the USPTO in its efforts to reform patent practice and streamline prosecution. However, its ultimate impact on patentees may lead to negative consequences and may even threaten to undermine innovation in general. In this Commentary, Laurie Axford discusses Tafas, which involved proposed new rules relating to the permissible number of continuing applications and the maximum number of claims allowed to be filed without supporting patentability in advance. At issue was whether or not the promulgation of these new rules constituted permissible procedural changes to USPTO practice or impermissible substantive changes to the law. Ms. Axford writes:
In the District Court, Plaintiffs argued that implementation of the new rules constituted a substantive change to the Patent Laws, and thus the USPTO lacked the authority to make these changes. The USPTO argued that they were entitled to implement the new rules because they were procedural, an argument that ultimately failed in the District Court.
In the present opinion authored by Judge Prost, the rulemaking authority of the USPTO was reviewed in light of Chevron, U.S.A., Inc. v. NRDC, Inc., 467 U.S. 837 (U.S. 1984). The so-called Chevron deference is accorded to an agency to determine the scope of its own authority, if as a threshold matter the agency can demonstrate a congressional delegation of administrative authority. The USPTO argued first that the District Court should have deferred to the USPTO’s interpretation of the scope of its rulemaking authority and granted it Chevron deference, and second that even under the District Court’s interpretation of a narrower rulemaking authority, the rules were still proper because they were merely procedural.
Thus, the underlying issue in analyzing the propriety of the USPTO’s rulemaking authority was whether or not the New Rules were substantive or procedural. The District Court took the approach that any rule that affects individual rights and obligations is substantive, citing Jem Broadcasting Co. v. FCC, 22 F.3d 320, 325 (D.C. Cir. 1994). Therein, the D.C. Circuit Court held that there is a distinction between agency actions that alter the rights of parties (i.e. substantive) and those that do not alter the rights of parties, but only alter the manner in which the parties assert their rights (i.e. procedural.)
(citations omitted)
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