INTERNATICNAL FEDERATION OF INDUSTRIAL PROPERTY ATTORNEYS, U.S. United states section. Federation Internationale des Conseils en Propriete Industrielle President: Maxim H. Waldbaum Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, New York 10004 Telephone (212) 859-8381 Facsimile (212) 859-8584 Past President: Bill Schuurman Assistant Commissioner of Patents Arnold White & Durkee Box DAC Washington, D.C. 20231 2300 One American Center 600 Congress Avenue Austin, Texas 78701 Telephone (512) 320-7200 Facsimile (512) 474-7577 Socretaryfrreasurer: Tipton D. Jennings Finnegan, Henderson, Farabow, Garrett & Dunner 1300 I Street, N.W. Washington, D.C. 20005 Telephone (202) 408-4000 Facsimile (202) 408-4400 Council Members: Raymond C. Stewart Birch, Stewart, Kolasch & Birch Post Office Box 747 Falls Church, Virginia 22040 Telephone (703) 205-8000 Facsimile (703) 205-8050 John P. Sutton Heller, Ehrman, & McAuliffe 333 Bush Street San Francisco, California 94110 Telephone (415) 433-4150 Facsimile (415) 433-8716 Charles B. Elderkin 1211 East Morehead Street P.O. Drawer 34009 Charlotte, North Carolina 28234 Telephone (704) 331-6000 Facsimile (704) 334-2014 COMMENTS BY THE UNITED STATES SECTION OF FEDERATION INTERNATIONALE DES CONSEILS EN PROPRIETE INDUSTRIELLE (FICPI) ON PROPOSED REEXAMINATION RULES UNITED STATES PATENT AND TRADEMARK OFFICE INTRODUCTION FICPI was created on September 1, 1906, as an association of industrial property attorneys in private practice. The members of the Federation deal with all matters in the field of industrial property both in the countries in which they practice and in other countries through associates. Its aims include the enhancement of international cooperation within the profession of industrial property attorneys in private practice, the maintenance of the dignity and standards of the Profession on an international scale, and the expression of opinion with regard to newly proposed international and national legislation and regulations insofar as they are of general concern to the profession. FICPI supports the PTO in its effort to revise the reexamination process to serve better its intended purpose of providing an objective, quick, and relatively inexpensive proceeding to test the patentability of claims in an issued patent. The expansion of reexamination proceedings to include consideration of Section 112 issues, except best mode, and the opportunity for continued Participation by a third-party requester are significant improvements to the current system. The PTO generally has done a good job iq developing the proposed regulations providing detailed guidance on the conduct of reexamination proceedings under the new law when it is enacted. Before providing comments on specific provisions in the proposed regulations, we have some concerns about how the PTO intends to manage the new reexamination proceedings, particularly those initiated by a third-party requester. Our concerns arise from the recognition that, in general, an inter partes proceeding is more complicated to manage than an ex parts proceeding. In addition, the inter partes reexamination proceeding is likely to present a record to the examiner that will require a higher degree of technical and legal competence in making a determination of patentability than is normally required in an ex parts proceeding. For example, the examiner in an inter partes proceeding will be required to weigh and assess the credibility of often conflicting arguments, theories of operation, and evidence when making a determination of patentability. Accordingly, it is essential that the people assigned to these new reexamination proceedings, and particularly those where a third-party requester is involved, have qualifications that will inspire confidence in the ability of the PTO to handle these proceedings. We are aware of statistics which appear to support the view that there is no inherent bias in the conduct of a reexamination proceeding when the proceeding is assigned to the same examiner who issued the patent. However, there are many who perceive a bias in favor of the patent owner when the reexamination proceeding is assigned to the same examiner. We respectfully request that the Commissioner consider adopting a policy that a reexamination proceeding be assigned to the best qualified examiner available, given the technical, legal, and procedural complexities that are likely to arise in the reexamination proceeding. We also respectfully request that the Commissioner consider the formation of a separate unit of examiners to handle the new reexamination proceedings, or at least those which involve a third-party requester. The examiners in this separate unit would have the same type of qualifications possessed by the staffs at the Board of Patent Appeals and Interferences, the Office of Quality Review, or the Special Program Law Office. If sufficient numbers of examiners with these qualifications could not be assigned to such a unit, we would encourage -he Commissioner to consider hiring, on a permanent or contract basis, recently retired examiners and private practitioners with the appropriate qualifications, to staff a unit dedicated to inter partes reexamination. The special attention that should be given to reexamination proceedings is clearly warranted. Patents that are subject to reexamination are often of significant commercial importance. Because a dispute has arisen or is likely to arise over whether patent rights were appropriately granted, it is appropriate that the PTO make a@special effort to conduct these proceedings in the manner that is, and perceived to be, objective and reliable. SPECIFIC COMMENTS Turning now to the proposed regulations published at 60 Fed. Reg. 41035 (August 11, 1995), specific comments are directed to the identified sections of the proposed regulations in the numbered paragraphs below. (1) S. 1.20(c): The proposed fees of $4,500 for a patent owner and $11,00) for a third-party requester are too high for many potential users of the system. While it is recognized that these fees are intended to cover the estimated costs of conducting these reexamination proceedings, the Commissioner appears to have authority under 35 U.S.C. S 41(d) to use fees collected from other processes, services, and materials offered by the PTO to subsidize the cost off reexamination proceedings. We would urge the Commissioner to adopt this approach to reduce the amount of the proposed fees because of the importance of reexamination proceedings, and to encourage their use as an alternative to litigation in contrast to doing nothing to contest patent validity. There is a well-established public policy of not deterring good faith challenges to patents. If an appeal or participation by a third party in the appeal process will add significantly to the cost of a reexamination proceeding, perhaps consideration should be given to providing for a special, increased third-party-requester appeal fee that could be paid in the event of an appeal. Adoption of a special appeal fee could be used to reduce the amount of the reexamination fee and thereby encourage more third parties to use reexamination. Since the reexamination fees are not subject to a small entity discount, the increased fees proposed in this rule making may serve to discourage participation by the very population of individuals and entities that will be seeking a low-cost alternative to litigation. Alternatively, consideration should be given to requesting that Congress authorize having the small entity discount apply to the reexamination fee. (2) S. 1.915(b)(7): This section should be amended to specifically refer to reexaminations under S 1.931. As presently drafted, this certification would include a reexamination proceeding ordered under the old regulations, and particularly S 1.525. Our suggested amendment is consistent with other parts of the proposed regulations (S 1.907(a) and S 1.989(b)) which would not preclude a patent owner or third-party requester from requesting reexamination of a patent that was the subject of a pending reexamination proceeding initiated under the old regulations. Since one of the purposes of the new reexamination legislation is to permit participation by a third-party requester, no useful or public purpose would be served by precluding a third-party requester from filing a request for reexamination under the new regulations where there was a pending reexamination initiated under the old regulation. (3) S. 1.949: We would urge that the Commissioner consider adopting a@more flexible policy on closing prosecution in a reexamination proceeding than is currently applied by the PTO in its final action practice. Specifically, this proposed section indicates "hat prosecution will not normally close if there is a new ground of rejection which was not necessitated by an amendment to the claims by the patent owner. We are particularly concerned about a situation where new prior art is relied on even if it was necessitated by an amendment to the claims. The proposed practice may serve a useful purpose in the normal examination of patent applications, where an applicant always has the opportunity to file a continuing application to make any further amendments to the claims that may be desirable to address the new ground of -ejection. However, in a reexamination proceeding, where the patent owner is precluded from having any right to amend the claims to address the new ground of rejection or to file another request for reexamination, the patent owner may be trapped with no effective way to address new prior art that has been introduced for the first time in the action that simultaneously closes prosecution. This could be fundamentally unfair to the patent owner. Where new prior art is asserted by the examiner, the patent owner should have the opportunity to amend the claims. (4) S. 1.959(a)(2): The introduction of a right to appeal by a third-party requester who is dissatisfied with an examiner's favorable Consideration of a claim is an important and beneficial aspect of the new reexamination proceedings. However, the apparent unqualified opportunity to file an appeal at this advanced stage in the proceedings raises a concern that the appeal procedure could be used to compromise the patent owner's ability to address the reasons and evidence that the third party might use in its appeal, and to add (perhaps intentionally) considerable length to a proceeding that is to be conducted with special dispatch. The likelihood exists that the first time the patent owner will be made aware of the grounds of rejection to be relied upon by the third-party requester will be upon receiving the third party's appeal brief. The provisions in 1.967(b) relating to the respondent brief apparently do not contemplate any opportunity for the patent owner to offer an amendment or material appropriate to the new ground as is permitted when an examiner makes a new ground of rejection in the examiner's answer. See proposed S. 1.971(b). This is not only unfair to the patent owner, but also has the potential for adding significant complexity and length to the reexamination proceeding. Consideration must be given to setting appropriate limits on the grounds that the third-party requester can rely upon in its appeal. Consideration should also be given to requiring the third- party requester who files a notice of appeal under proposed S 1.959(a)@(2) to identify in this notice the grounds of rejection that it will rely upon in its appeal. (5) 5 1.979(b): This proposed section provides an opportunity for each party to file a single request for reconsideration of the decision of the Board of Patent Appeals and interferences. However, there is no apparent opportunity for the other party to provide comments da that request. The lack of this opportunity is not consistent with the general approach in the new reexamination process of providing an opportunity for both parties to provide comments before any action is taken by the PTO. Accordingly, we would urge that once a request for reconsideration has been filed by either or both parties, that the other party have a one-month period to offer comments to the Board before a decision on the request for reconsideration is made. (6) S. 1.985: This section is currently drafted in a form which would permit any person to advise the PTO about a concurrent proceeding involving the same patent in reexamination. Consideration should be given to requiring the patent owner to advise the PTO, and therefore any third-party requester, of any other concurrent proceeding involving the same patent in reexamination. Similar mandatory requirements are contained in 37 C.F.R. 5 1.660 relating to the conduct of an interference proceeding involving an application or patent. (7) S. 1.991: As presently drafted, this section indicates that a merged reissue/reexamination proceeding will be conducted according ,to provisions applicable to the reissue application except that the participation by a third-party requester shall be limited to issues within the scope of reexamination. Since a third party has a right to inspect a reissue application and file a protest involving any issue considered in a reissue application, consideration should be given to permitting participation by a third-party requester in the full scope of issues addressed under the reissue' statute. The right of appeal and participation in the appeal process by the third-party requester should be limited to the scope permitted under the reexamination statute. Further, it is not clear from the provisions of this proposed section how and when the third party will be notified of its right to appeal within the scope of the reexamination proceeding. In other words, if the examination process is conducted as if the proceeding were a reissue application, there would typically be no separate notice of closing prosecution and right to appeal. Accordingly, when would a third-party requester exercise the right to appeal in order to preserve its right to participate which appears to be guaranteed under proposed S 1.995? CONCLUSION It is recognized that the PTO has offered the proposed regulations in contemplation that legislation will be enacted that requires implementation effective January 1, 1996. It is respectfully requested that in the event that reexamination legislation is not passed in this Congress, additional opportunity to comment on the proposals made in the August 11, 1995 Federal Register be made available to the interested public before final regulations are adopted. If time permits, it may even be useful for the PTO to consider the comments that are being submitted in response to the August 11, 1995 proposal, and issue a revised proposal for comments. Respectfully submitted, Tipton D. Jennings Secretary Treasurer FICPI, U.S.