Goldilocks Prosecution

The rules of claim drafting are numerous and arcane.  Even after years of prosecution experience, however, it seems there are more to discover.

While the wording of claims is obviously important, recently, several office actions revealed the criticality of the spacing of claims.  You don’t want the spacing to be too much:

nor can it be too little.

the spacing needs to be just right.

A §145 Action May Not Be As Appealing as a Trip to the Federal Circuit

In Nantkwest, Inc. v. Matal, [2016-1794] (June 23, 2017), the Federal Circuit reversed the denial of attorneys fees to the USPTO in successfully defending civil action under 35 USC §145 brought by a patent applicant.  The statute provides that the applicant must pay “[a]ll of the expenses of the proceeding . . . regardless of the outcome.” The district court held that “expenses” did not include attorneys fees.

The Federal Circuit found that the ordinary meaning of “expenses” as defined in dictionaries and the Supreme Court’s interpretation of this term lend significant weight to the conclusion that when Congress used the phrase “all expenses,” it meant to include attorneys’ fees.  Accordingly, the Federal Circuit held “[a]ll expenses of the proceedings”
under § 145 includes the pro-rata share of the attorneys’ fees the USPTO incurred to defend applicant’s appeal.

The Federal Circuit remanded the case for the district court to enter an additional award of $78,592.50 in favor of the Director.

Although it may seem unfair that an applicant losing an appeal has to pay the Office’s cost in successfully defending the appeal of a rejection, as the Federal Circuit pointed out, this is how Congress chose to allocate the cost of an appeal to the district court.  What is unfair, however, is that this is how Congress chose to allocate the cost of an applicant’s successful appeal of an improper rejection as well.  Thus, an applicant faced with an improper rejection who brings an action under §145 and wins, is still on the hook for the Patent Office’s attorneys fees.  This unfair result alone might suggest that Congress did not intent to include attorneys’ fees in “expenses,” otherwise Congress is putting a high price on justice.

So why would an applicant chose to take a PTAB decision to district court, rather than appeal to the Federal Circuit?  The principal reason is that the PTAB may have pointed out an evidentiary defect in the applicant’s case.  If the applicant appeals to the Federal Circuit the record is fixed, and if the PTAB was correct about the defect, the Federal Circuit will simply affirm the PTAB.  However, in an action under §145 the applicant can introduce additional evidence, for example a declaration by the inventor, or by an expert, or perhaps even evidence of objective indicia of non-obviousness.  This could allow the applicant to obtain a patent, when an appeal would otherwise be futile.  Depending upon the importance of the invention, this might well be worth an additional $78,000 or so.

However is a §145 action the only way to obtain this result?  Perhaps not.  One might assume that if you do not appeal the PTAB decision that it becomes final and res judicata will prevent the application from ever getting the claims that the were the subject of the appeal. This would be a good reason to pursue the §145 action.  However, the underlying assumption may be wrong.  In In re Donohue, 226 USPQ 619 (Fed. Cir. 1985), the Federal Circuit held that the Patent Office should not apply res judicata where the applicant made a different record, for example by supplying a new affidavit or declaration:

Appellant has made a record different from that in Donohue I by submitting the Fields affidavit. This new record presents a new issue of patentability with respect to whether the previously sustained anticipation rejection can still be maintained. In view of this new issue, the PTO properly declined to make a formal res judicata rejection . . .

226 USPQ 621.  As long as Donohue remains good law, a patent applicant can file an RCE or even a continuation, supplement its records, and continue to prosecute claims whose rejection was affirmed by the PTAB (and not have to spend $80,000 on the the USPTO’s expenses in a §145 action.

It is still unfair that a successful applicant in a §145 action has to pay for the unsuccessful efforts of the USPTO in defending an improper rejection, but at least the applicant has an alternative route to continue to pursue the claims after an unsuccessful appeal to the PTAB.