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Federal Circuit makes a decision on Tafas v. Doll

3/20/2009

On Friday, March 20, 2009, a three-judge panel of the Court of Appeals for the Federal Circuit decided Tafas et al. v. Doll, the legal challenge to the USPTO Final Rules that were published on August 21, 2007. The opinion for the court was filed by Judge Prost, and Judge Bryson concurred, while Judge Rader dissented.
 
The Federal Circuit has clarified that:
(a) The rules are authorized procedural rules, and thus the USPTO is afforded deference, and
(b) The continuation rules are inconsistent with the patent statute.
 
However, the final status of the rules is not yet fixed in view of further reconsideration by the District Court and, possibly, additional challenges by the Appellees. No changes in applicant prosecution practice are recommended based on this Federal Circuit decision.  The Federal Circuit did not vacate the Preliminary Injunction issued by the District Court, which prevents the USPTO from enacting these rules. Thus, the USPTO cannot make new rules related to the litigated rules at this point.
 
Specifically, the Federal Circuit reversed the District Court, holding that all of the final rules are procedural rules within the scope of the USPTO's rulemaking authority, and not substantive.  These include the final rules directed to limiting the number of continuation applications, Rule 78; Requests for Continued Examination (RCE), Rule 114; and claims, unless an Examination Support Document (ESD) is submitted, Rules 75 and 265.  Thus, the USPTO is entitled to more deference when making rules than given by the District.
 
However, the Federal Circuit held that the limitation on the number of continuation applications (Rule 78) is invalid as inconsistent with 35 USC §120 of the Patent Act, while the other final rules are not inconsistent with the Patent Act.  
  
Looking forward, either party can challenge the decision of the Federal Circuit by (a) request rehearing by an en banc (enlarged) panel of the entire Federal Circuit, within 45 days of the decision (CAFC Rule 40(a)(1)), i.e., by May 4, 2009, or (b) filing a writ of certiorari with the Supreme Court requesting review, i.e., by June 19, 2009.
If the parties do nothing, after the time period for appeal has ended, the case will be remanded to the District Court for further determination.  Alternatively, it is possible that either of the parties may drop their case. For example, the USPTO may choose to abandon the effort to implement the rules.
 
Since the District Court decided the original case based on a substantive interpretation of the rules, and did not consider the other legal bases for challenge of the rules, the District Court must now reconsider its earlier position based on a procedural interpretation of the rules. More specifically, the District Court must determine if the rules on RCEs and ESDs are legal or "arbitrary and capricious".  The District Court may also consider other previously unconsidered arguments raised by the parties regarding the legality of the rules.