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Rawlins: Patent uncertainty continues.
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Late last month, PTO was gearing up to implement new rules governing patent applications. In proposing the changes, which were set to go into effect November 1, the office claimed that existing patent rules prohibit its personnel from effectively managing the volume of patent applications filed each year.
The proposed rule changes, which would have increased the burden on patent applicants, were the subject of much controversy among medtech manufacturers and patent lawyers. Among other significant changes to patent practice, the new rules would have imposed significant limitations on the number of applications and claims that could be filed for an invention. The rules also would have imposed other requirements that would have increased the difficulty and costs of obtaining patents in the field of medical devices, as well as in other fields.
In an effort to block the new rules from going into effect, pharmaceutical titan GlaxoSmithKline (GSK; Greenford, Middlesex, UK) filed suit in district court. Recognizing that the rules would go into effect before the court could hold a trial to determine their propriety, GSK asked that the court enjoin PTO from implementing the new rules. In doing so, GSK argued that PTO had exceeded its procedural rulemaking authority by promulgating substantive rules, that the rules were contrary to prior court decisions, and that the new rules are impermissibly retroactive and unconstitutionally vague. GSK also argued that, if the rules were permitted to go into effect, the company would be irreparably harmed.
On October 31—only one day before the new rules were set to go into effect—the judge, after hearing arguments from GSK and PTO, ruled from the bench that PTO cannot implement its rules until they have been given further consideration.
Although the court’s injunction puts the new rules on hold, they are not dead yet. The judge could lift the injunction at any time—even before a final decision—and permit the rules to go into effect. However, such a situation is only like to occur if, upon more detailed scrutiny of the case, he disagrees with some of the conclusions he made when deciding to issue the injunction. Alternatively, the judge may decide, after a full and complete hearing, that the rules are appropriate and can be implemented—essentially a reversal of his injunction.
However, many in the patent community hope that the judge will stand by his initial decision and render a final decision blocking the new rules. And seeing as how courts rarely enjoin the implementation of rules issued by a federal agency, the preliminary injunction very well may foreshadow a final ruling against PTO. If this occurs, PTO would have to choose between appealing the decision and going back to the drawing board.
The time frame for a resolution to the GSK case remains uncertain, as the court has not yet set a schedule for a final decision on the merits of the case. A resolution might be reached as early as January 2008—but the case could also drag on much longer. Even after the district court issues its final decision, the losing party may appeal. Such an appeal would likely go to the Court of Appeals for the Federal Circuit, which is the appellate court that handles patent issues. If the loser at the appellate level appeals to the Supreme Court and the Supreme Court accepts the case—a rare occurrence, but a distinct possibility in a matter of this magnitude—a final decision could still be years away.
Even if PTO ultimately loses the GSK case, some industry observers fear that the proposed patent rules will be seen again in a repackaged form. However, it’s unlikely that PTO will push for the proposed limits on applications and claims in the form of revised rules. After all, GSK argued and the court’s injunction suggested that PTO may have exceeded its procedural rulemaking authority because the new rules are considered substantive. Under current practices, PTO may issue procedural rules, but not substantive rules—a power reserved to Congress. If GSK ultimately prevails on that argument, PTO will not be able to reissue substantive rule changes, even in another package.
Although Congress might decide to propose limits on patent applications and claims in future legislation, congressional lawmaking often takes much longer than PTO action. Legislation pending on Capitol Hill could give PTO the authority to promulgate substantive rules—but it is unclear whether that legislation will survive.
In the meantime, the injunction in the GSK case puts medtech manufacturers and their patent teams back into the same wait-and-see state that they were in during the many months that it took PTO to hammer out its now-enjoined rules. In light of the current uncertainty in the U.S. patent landscape, companies need to continue to track patent developments both at PTO and in Congress.
For now, medtech manufacturers can discontinue their full-scale preparations for the implementation of the new rules. However, they should ensure that they will be able to efficiently comply with the new rules if they are implemented under a tight schedule—though such a scenario seems unlikely. Although it would be prudent for medtech manufacturers to keep the potential new rules in mind when preparing new patent applications, they should not unduly limit or restrict their rights.
Andrew Rawlins is a partner with Foley & Lardner LLP (Washington, DC).
© 2007 Canon Communications LLC
