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PTO Proposes Supplemental Examination Rules – Extremely Expensive and Incredibly Complex

On January 25, 2012, the USPTO published proposed rules to implement the supplemental examination provisions of the America Invents Act (“AIA”). This procedure is intended to be utilized by patent owners to “clean up” patents of iffy validity before, say, asserting them in litigation or selling them. 77 Fed. Reg. 3666. This provision has been widely characterized as a way to purge inequitable conduct – or even an innocent failure to bring forth relevant information – that may have occurred during prosecution, by setting the record straight ex parte. If the petition for supplemental examination is accepted by the PTO as raising a substantial new question of patentability, the PTO will go on to order ex parte reexamination, which may, or may not result in the cancellation of claims. Alternatively, the PTO can refuse to order reexamination on the basis of the submitted information, and a certificate to that effect is attached to the patent. This sounds pretty straightforward but, or course, it is anything but.

To begin with, the fee for simply processing and treating a request for supplemental examination (“SA”) will be $5180. At the same time, the owner must pay a fee of $16,120 for an ex parte reexamination proceeding that may not occur. If reexamination is not ordered, the owner gets this fee refunded. There is no comment regarding any reduction for small or micro entities that I could find in my first read-through.

We practitioners are well-aware that the U.S. patent system requires us to be “our own worst enemies” during prosecution, but the disclosure requirements in the proposed rules make the initial rules for filing an appeal brief look as simple as a “Pet the Bunny” children’s book. The patent owner can submit ten items of information, that are not limited to printed publications, but must be describable in words (e.g., you would have to provide a transcript and storyboard for a video tape). If you are unfortunate enough to have more than ten items of info to be considered, you can file a second request (and a second fee).

I hate to just quote from proposed rules, but here is the PTO’s summary of the information that should be included in each request, about each “item of information” (“IOI”):

“Section 1.610(b)(4) is also proposed to require a statement that: (1) identifies each IOI that was not [earlier] considered, and explains why consideration of the IOI is being requested; (2) identifies each IOI that was not adequately considered [earlier] and explains why reconsideration of the IOI is being requested, and (3) identifies each IOI that was incorrect in the prior examination of the patent and explains how it is being corrected.”[emphasis added]

Interestingly, while the owner/requestor cannot offer any amendments to the claims, or even have an interview, at this point the owner/requestor can, for example, send in a corrected Rule 132 declaration and explain “how the previously submitted erroneous data is being corrected.” [Ed.’s note: How about explaining why it was submitted in the first place?] This summary is followed by about three columns of explanation about how the IOIs should be presented. The request must include “an identification of each aspect of the patent to be examined,…an identification of each issue of patentability raised by each IOI” – which may each raise more than one such issue – “a separate detailed explanation for each identified issue of patentability…the explanation must discuss how each IOI raises each issue identified for examination…Where an identified issue involves [101 or 112], the explanation must discuss the support in the specification for each limitation of each claim identified for examination with respect to this issue.” For 102 or 103 IOIs, “the explanation must discuss how each limitation of each claim identified for examination with respect to this issue is met, or is not met, by each IOI…Preferably the explanation employs a claim chart” [Ed.’s note: No kidding there!]. Of course, a copy of the patent and of each IOI must be provided, although IOIs of over 50 pages can be summarized.

Oh, I almost forgot, the requestor cannot amend claims or interview the Examiner, the request MAY include an explanation of why each IOI does or does not raise a substantial new question of patentability. Remember, the owner doesn’t really want to go into ex parte reexamination, at least it sure would not be my first choice. I want the PTO to say, in effect, “No harm. No foul.”

While commentators have spent a lot of time trying to explain how this procedure will purge inequitable conduct, there is very little about this issue in the body of the proposed rules. The rules do not even IOI materiality until page 3673, where they state that “information material to patentability will be defined by s. 1.56(b) for the purposes of a supplemental examination proceeding and any resulting ex parte reexamination proceeding.” But proposed Rule 1.56(b) says that the Therasense standards are to be followed in determining if an omitted document (IOI) is “material” – and such a document cannot be found material unless it would block issuance of a claim even given all the rebuttal information that the applicant can muster. But how do we know what that is, prior to entering reexamination? While the request may include an “explanation of why each IOI does or does not raise a substantial new question of patentability,”  the proposed rules are silent as to what content such explanations may contain. Review of the request for supplemental examination by the PTO is intended to fast and as ex parte as possible. That intent is simply incompatible with the requestor’s attempt to establish lack of materiality of the contents of an IOI.

If, during the review of the request or ex parte reexamination, the PTO becomes aware of “a material fraud on the Office involving the patent…the supplemental examination proceeding or any ex parte reexamination proceeding … will continue. [Ed.’s note: “and we will keep the fees”]The matter will be referred to the U.S. Attorney General in accordance with …257(e).” See page 3672. “The Office regards the term “material fraud” in …271(e) to be narrower in scope than inequitable conduct as defined by the [Fed. Cir. in Therasense].  See page 3667.

Although that phrase is supposed to give requestors some comfort, I simply don’t know what it means. I think it is intended to mean that the fraud would be that which falls within the exceptionally bad behavior described in the Therasense opinion as an exception to the more mundane inequitable conduct based on an intentional failure to submit known material information. But that super-bad behavior is still inequitable conduct, and 1.56(a) says that no patent will be granted if such fraud is found to have been practiced on the Office. So the idea that these proceedings will somehow keep chugging along to an inevitable bad outcome really makes no sense.

Nearly finally, at page 3675, the PTO attempts to estimate the number of requests for supplemental examination it will receive. The Office has devised an estimate that corresponds exactly to  the number of patent cases filed each year that have alleged inequitable conduct (about 1400 a year). This assumes that every potential plaintiff will do a searching analyses of their allegedly infringed patents prior to filing suit and will choose to undergo supplemental examination if it finds any weak points, rather than take its chances in court.

The Office comes to this conclusion even after recognizing both that the Fed. Cir. seldom upholds IC findings that that it is even less likely to do so post-Therasense. Why try to purge inequitable conduct when the odds of being found “guilty” are vanishingly small? Even successfully completing this process does not guarantee that the patentee has found and fixed every “flaw” in prosecution that might lead to an IC charge. On the other hand, if patentee finds egregious fraud, patentee is (hopefully) simply not going to file suit, as opposed to requesting supplemental examination, and letting the PTO comb through the record for a reason to send the miscreant straight to the A.G.’s office. Factoring in the high costs, and the lack of opportunities for the requestor to participate post-request, this procedure may be about as under-utilized as inter partes reexamination.


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