By Kevin E. Noonan —

On October 9th,
SmithKline Beecham Corp., SmithKline Beecham PLC, and Glaxo Group Ltd. (d/b/a/ collectively as GlaxoSmithKline) filed a verified complaint in the U.S. District Court for the Eastern District of Virginia against John Dudas and the U.S. Patent and Trademark Office, asking for preliminary and permanent injunctions staying implementation of the PTO’s new continuation and claims rules entitled "Changes to Practice for Continued Examination Filings, Patent Applications Containing Patentably-indistinct Claims and Examination of Claims in Patent Applications; Final Rule" (New Rules).  The Complaint also asks the Court for a permanent injunction enjoining Defendants from issuing new regulations relating to the number of continuations, request for continuing examination (RCEs), or claims permitted in an application, to vacate the New Rules and declare them arbitrary, capricious, an abuse of agency discretion, contrary to law, constitutional right, power privilege or immunity, and in excess of the Office’s statutory authority.  Writs of mandamus necessary to effectuate the Court’s decision are also requested.

The Complaint asserts eight Counts supporting its prayer for relief:

1.  That the New Rules are ultra vires because the PTO lacks the statutory authority to issue substantive rules relating to continuations, RCEs, and claims;
2.  That the PTO "especially" lacks the authority to limit the number of continuation applications an applicant can file;
3.  That the New Rules are beyond the PTO’s power because they are to be applied retroactively and change the legal consequences and prosecution strategies of already-filed applications;
4.  That the PTO lacks the authority to limit the number of claims an applicant can file in an application;
5.  That the New Rules limiting the number of continuing applications than can be filed are contrary to the Patent Act;
6.  That the PTO violated the provisions of the Administrative Procedures Act by violating the notice and comment provisions regarding the revised limitations on the number of claims filed in an application;
7.  That the New Rules are vague and fail to provide sufficient notice for GSK to comply with them;
8.  That the New Rules are an unconstitutional taking of GSK’s patent and patent application property rights.

GSK addresses in its complaint some of the concerns that have been raised in discussions of legal action against the Office, including standing, ripeness, and irrevocable harm.  Regarding the standing issue, the Complaint asserts than GSK has identified more than 100 applications that have two or more continuations, and another 30 that have two or more continuations or continuation-in-part applications as well as at least 1 RCE, establishing that GSK is at risk for judicially-recognized injury.  As for whether the issue is ripe, the Complaint cites the two-part ripeness test of Abbott Labs., Inc. v. Gardner, 387 U.S. 136 (1967).  According to GSK, the issue is fit for judicial review and would pose a hardship on regulated parties.  The fitness prong is established as presenting the question of whether the New Rules exceed the PTO’s statutory authority.  The Complaint alleges that the regulated parties would suffer the hardship of complying with the New Rules, requiring GSK "either to expend non-recoverable resources in complying with the potentially invalid regulation or to risk subjection to costly enforcement processes," citing Seegers v. Gonzales, 396 F.3d 1248, 1253 (D.C. Cir. 2005).  In this regard, GSK benefited from the
assertions in the PTO’s answer to the complaint in Tafas v. Dudas (see "Rules Challenger Amends Complaint and Withdraws PI Motion"), the only other effort to forestall implementation of the New Rules; the Complaint uses the Abbott standard to refute the Office’s position on ripeness.  As it does at several points in the Complaint, included in the hardship is the loss of life-saving drugs that GSK will not be able to pursue in the absence of robust patent protection.

The Complaint cites the provisions of H.R. 1908, the patent "reform" act, that would amend Title 35 to add § 2(c)(6) to grant the PTO "the authority to promulgate regulations to insure the quality and timeliness of applications and their examination, including specifying circumstances under which an application for patent may claim the [priority] benefit under sections 120, 121 and 365(c) of the filing date of prior filed applications for patent" (see "Patent ‘Reform’ Bill Passes House of Representatives").  GSK further cites the provisions of the legislation requiring a 60-day review period during which Congress can pass a joint resolution of disapproval which would prevent the regulation from becoming effective, and the fact that the Senate bill (S. 1145) does not contain provisions granting such rulemaking authority to the PTO.  The Complaint contends that if the PTO had the authority it asserts in promulgating the New Rules this legislation would be unnecessary and redundant, and that the disapproval provisions indicate that Congress has not, and is not contemplating granting unlimited authority to the PTO to change provisions of substantive law.  The PTO’s actions in promulgating the New Rules is characterized in the complaint as an attempt to bypass the political process and overstepping the authority granted to it by Congress.

Interestingly, the Complaint alleges that the examination support document provisions of 37 C.F.R. § 1.265 are impermissibly vague and fail to put GSK on notice of how to comply with the regulation, because the rule does not define the metes and bounds of the extent of the search required, whether electronic or manual searches are required, whether these searches be limited to domestic databases or ones in other countries, and what libraries must be searched for non-patent art.  This objection is important not only as it applies to the New Rules that the Office has promulgated, but in view of the provisions of the House bill that grant the Director the authority to require searching and other prior art information in all applications.

The Complaint also identifies as a "regulatory ‘trap’" the provisions of the New Rules that purport to provide additional continuation applications and claims upon the filing of a petition and a showing.  This portion of the Complaint is important because it addresses the counter-allegations of the Office that it has not abridged any substantive rights.  The Complaint alleges that the petition and showing provision set forth in the New Rules is an illusion, since the requirement that the amendment, evidence, or argument "could not have been" earlier presented is interpreted by the Office to require that the earlier submission was "physically impossible," a standard impossible to meet.  The Complaint also alleges that the mere submission of such a petition would put a practitioner at risk under the Office’s ethical proscriptions against filing false statements.

The Complaint provides extensive supporting information for the Court, including the economic costs of drug discovery investment and how that investment is put in jeopardy by the New Rules, the reduction in drug discovery and development that the New Rules will induce, and the harm brought upon the public as a consequence.  (Indeed, the Complaint identifies protecting the public health as "[t]he highest public interest.")  Included in the Complaint is a review of Congressional and Court sanction of unlimited continuing application practice, and prior court rejection of the PTO’s assertion of the power to restrict an applicant from filing an unlimited number of continuing applications under the patent statute.  The lack of Congressional intent that the Office have the authority they assert under the New Rules is evidenced by the failure to pass legislation in 2005 granting that authority to the PTO.

There are two additional aspects of the complaint.  First, the complaint was filed as a Verified Complaint, that is, it was sworn to under penalty of perjury by Sherry M. Knowles Senior Vice President and Global Head of Corporate Intellectual Property of GSK.  Second, the complaint was sent to John Dudas (at left) over a cover letter inviting the Office to discuss the merits and (presumably) delay implementation of the New Rules until these discussions could take place.

After a protracted (and perhaps stunned) silence following publication of the New Rules (see "Breaking A Very Long Silence"), those parties whose interests are most threatened by the New Rules are beginning to act.  In addition to this Complaint, reliable sources have informed Patent Docs that efforts are continuing before the Office of Management and Budget (OMB), particularly in view of the contradiction between the Office’s representation that the New Rules would not have "significant economic impact" and the evidence, provided by the Intellectual Property Owners (IPO) and others (see "Is the Patent Office Starting to Blink?") that compliance with even the reporting provisions of the New Rules will be accompanied by significant costs (perhaps even as "clarified" by the PTO yesterday; see "USPTO Issues Notice to ‘Clarify’ Certain Provisions of the New Rules").  In view of the evident disdain the Patent Office has shown toward patent owners and the patent bar throughout the rulemaking process, experience suggests that additional efforts by even more important actors should be brought to bear if there is any hope that the New Rules will not be implemented.

For additional information regarding specific provisions of the New Rules, please see:

• "USPTO Issues Notice to ‘Clarify’ Certain Provisions of the New Rules," October 10, 2007
• "An Analysis of the New Rules: 37 C.F.R. § 1.78(a)(2): Divisional Dilemma?" October 9, 2007
• "An
  Analysis of the New Rules: 37 C.F.R. § 1.142(c): Increasing the Chances
  of Submitting a Successful Suggested Restriction Requirement (SRR)," October 4, 2007
• "An Analysis of the New Rules: 37 C.F.R. § 1.145: "Provoking a Restriction Requirement," October 3, 2007
• "An Analysis of the New Rules: 37 C.F.R. § 1.78(d)(1)(i) & (vi): PCT Practice," September 23, 2007
• "An Analysis of the New Rules: USPTO Releases ESD Guidelines," September 17, 2007
• "An Analysis of the New Rules: 37 C.F.R. § 1.265: Examination Support Document," September 13, 2007
• "An Analysis of the New Rules: Revisions to First Action and Second Action Final Practice," September 11, 2007
• "An Analysis of the New Rules: 37 C.F.R. §§ 1.78(d)(1) and 1.114: Streamlined Examination," September 10, 2007
• "An Analysis of the New Rules: 37 C.F.R. § 1.117: Refund Due to Cancellation of Claims," September 10, 2007
• "An Analysis of the New Rules: 37 C.F.R. § 1.142: Suggested Restriction Requirements," September 6, 2007
• "An Analysis of the New Rules: 37 C.F.R. § 1.114: RCE Practice," September 5, 2007
• "An Analysis of the New Rules: 37 C.F.R. § 1.75(b): 5/25 Limit on Claims," September 4, 2007
• "An Analysis of the New Rules: 37 C.F.R. § 1.78(d)(1): Claims for Benefit of Prior-Filed Applications," September 3, 2007
• "An Analysis of the New Rules: 37 C.F.R. § 1.78(f): Commonly Owned Applications and Patents," August 27, 2007

For additional information on this and other related topics, please see:

• "Changes to New Rules to Be Published in Early November," October 11, 2007
• "‘Impact’ of New Continuation and Claims Rules," October 8, 2007
• "Is the Patent Office Starting to Blink," October 5, 2007
• "Breaking A Very Long Silence," October 1, 2007
• "It Ain’t Necessarily So," September 28, 2007
• "Commissioner Doll Addresses ACI Biotech Patents Conference," September 26, 2007
• "Rules Challenger Amends Complaint and Withdraws PI Motion," September 11, 2007
• "Inventor Sues PTO to Prevent New Continuation Rules from Taking Effect," August 30, 2007
• "Patent Office Provides Recorded Web-Based Discussion of New Rules," August 30, 2007
• "New PTO Continuation Rules: Unfair to Biotech?" August 29, 2007
• "Proposed Agenda for September 12, 2007 Biotechnology/ Chemical/Pharmaceutical Art Group Meeting," August 24, 2007
• "The ‘Word’ on the New Continuation Rules (from the USPTO Webcast) – Part II," August 24, 2007
• "The ‘Word’ on the New Continuation Rules (from the USPTO Webcast) – Part I," August 23, 2007
• "New Continuation and Claims Rules Published," August 22, 2007
• "More on M.P.E.P. § 710.06," August 20, 2007
• "Patent Office to Hold Webcast on New Claim and Continuation Rules on August 23, 2007," August 20, 2007
• "Patent Office Announces that New Continuation and Claims Rules Will Be Published . . . Tomorrow," August 20, 2007
• "Procuring Patent Protection from the Present USPTO," August 15, 2007
• "New Continuation and Claims Rules to Be Published in Late Summer," July 25, 2007
• "They Just Don’t Get It – ‘Patent Reform’ at the USPTO," April 11, 2007
• "Patent Applicants Beware: The Rules Are Changing (Again)" Part 1 and Part 2, November 6, 2006