USPTO Alexandria Headquarters

Are you General Counsel, Patent/IP Counsel, or an executive of a company that owns valuable proprietary technology? If your company or your client files patent applications, you’re probably encountering rejections. You may be wondering how to deal with the cases at hand and how to improve your strategy, procedures and execution for preparation and prosecution of patent applications.

Here are five things you should know about dealing with rejections and when and how to appeal to the Patent Trial and Appeal Board (PTAB), based on my 25 years of experience in dealing with such situations, plus new insights and tips from the excellent, detailed, informative Webinar on Ex Parte Appeals recently presented by three Patent Judges from the PTAB.

I. You’re not alone

Has your U.S. patent application been rejected? Rejected again? More particularly, has the examiner to whom your utility patent application is assigned issued a final rejection? If so, you’re in good company.

In the U.S. Patent and Trademark Office (USPTO), it is routine for the 8,500 examiners to reject all claims in a first office action (to which you may respond) and then to reject the claims again. Usually, on the second office action, the examiner will check the box for “final.” This can be frustrating, not to mention costly, for applicants.

Why do examiners reject claims so often and so repeatedly? To be fair, some claims fail to distinctly point out that which the applicant considers to be the invention, as required by 35 USC 112. Claims may fail to distinguish over the prior art, as required by 35 USC 102, 103. If claims deal with software or business methods, they are subject to rejection as “abstract ideas” under 35 USC 101. See my colleague Ray Ricordati’s blog on Obtaining Allowance of Software Patents Under Alice and Guidelines.

Applications based on foreign filings may not have been written with U.S. examination in mind, and, unless claims are amended before examination, an office action can be essentially wasted on formalities.

Another typical reason for an examiner to reject claims in a first office action is because it is easy and safe to do so. If the examiner allows overbroad claims, he or she might be criticized by a superior or the media. Put yourself in the examiner’s shoes. How would you like to be accused of allowing the stupid patent of the month? On the other hand, there is no penalty or downside for an examiner to reject claims. No supervisor will complain. There is no right of appeal from a first office action rejection, so the applicant cannot effectively complain to anyone, except to his or her patent attorney, who must deal with the rejection if the applicant wishes to proceed.

II. Prepare applications with prosecution and other challenges in mind

The most important work in any patent matter is figuring out what the invention is. This is best done before the patent application is filed, and it is far harder than one might think. What is needed is a detailed analysis of the new, improved technology and the distinctions over the art. This process ideally includes commissioning and considering the results of a thorough yet targeted novelty or patentability search.

Figuring out the invention should permit drafting of distinct claims and a good, thorough, detailed written description and drawings. See 35 USC 112. The skillful drafter sees and takes precautions against the shoals ahead: Prosecution, enforcement, and post-grant review, typically inter partes review (IPR). Generally, it is prohibited to add disclosure to a specification after filing. Any such addition normally requires a new filing, which might build on the original application via a continuation-in-part, but even that option can be barred by intervening public disclosure or sales activity, see 35 USC 102, 103.

In other words, drafting of a patent application should be conducted not just to support the claims as filed and to distinguish over known prior art references, but also, insofar as feasible, to support claim amendments that will distinguish even over references not yet discovered, even while aiming for reasonable breadth commensurate with the scope of the invention.

One can compare the preparation of a patent application to the construction of a house. A new house will be inspected promptly, and most defects will be identified quickly and repaired promptly. Not so with a patent application. Substantive examination usually will not even begin until about 18 months after filing. During prosecution, alleged “defects” in patent applications can be difficult to cure, and it can be even harder to safeguard against future post-grant challenges in the Patent Office and the Courts, such as often are mounted in response to enforcement of patents in infringement litigation.

For a more valuable patent property that will survive the rigors of examination and other challenges, see my 7 tips for General Counsel, e.g., invest twice as much as the lowest fee estimate in the preparation of your patent application before filing. The initial investment will pay off in longer effective term, greater value, and lower total cost. Keep in mind that the purpose of a patent is to protect the claimed invention from being copied by others who might undercut your prices and margins. Such exclusivity can be worth millions, which can be jeopardized by scrimping on the front end.

You say you have a limited budget? Of course! That means that your investments should be smart, not mindless. One should consider overall cost/benefit, not just low price for initial preparation and filing, which often results in work being pushed to novices, and which may lead in turn to increased overall cost, lengthy delays, duplication of effort, and lower ultimate value.

III. Dealing with rejections

The best time to plant a tree was 20 years ago; the next best time is now. When faced with an office action, applicants often wish they could turn back the clock and add details to their application. But as stated above, that usually is not permitted. Once prosecution is in progress, your main route to issuance is to work with the examiner collaboratively to reach agreement on claims commensurate with the scope of the invention. Technical objections should be resolved. Submission of evidence, as in the form of a Rule 132 declaration showing unexpected results, commercial success, or the like, with “nexus” to the claimed invention, is timely after a first office action. Interviews, often by telephone, can be very helpful. After final, your options are more limited, and it may become necessary to file a Request for Continued Examination (RCE) if you want to continue negotiation with the examiner.

As with preparation of applications, in prosecution, you generally get what you pay for. In the short term, a cursory response may be sufficient to keep a case alive. An even greater danger is a verbose response, which may create prosecution history estoppel unforeseen by the less seasoned practitioner. In contrast, a greater investment of time, effort and skill might lead to earlier allowance, fewer rejections, broader claims, greater value, and lower overall cost. It takes skill, experience and judgment to prosecute applications successfully.

IV. When you get a final rejection, you have options

What are your options when you get a final rejection of your patent claims?  Here are four basic choices:

  1. You can give up;
  2. You can negotiate after final on limited grounds;
  3. You can file an RCE; or
  4. You can file an appeal.

One can see from the discussion above that rejections are commonplace, thus, one should expect rejection from the outset. Sometimes an examiner will find and cite prior art that at first blush looks very close indeed. But one should be prepared to respond, if appropriate, rather than just giving up and abandoning the application. When an invention has real merit, e.g., novelty, and it is described in sufficient detail in the application, it is usually possible to distinguish over prior art references.

As also stated above, it is usually desirable to work with the examiner so long as progress is being made, that is, to advance the prosecution with a view toward obtaining allowance. In a relatively small number of cases, agreement cannot be reached, and it then becomes necessary to consider filing an appeal.

V. Winning Ex Parte Appeals in the USPTO

The largest part of the docket of the Patent Trial and Appeal Board (PTAB) is ex parte appeals, i.e., appeals from final rejections of patent claims. As you may know, “ex parte” is Latin for “by the party,” meaning that there are no other parties involved besides the applicant. For example, your competitor will not be a party in your ex parte appeal. Speaking of invisibility, an examiner can be strangely phantom-like during an appeal.

Know your audience and decision-makers: The PTAB deals not just with ex parte appeals, but also with post-grant review, most often inter partes review (IPR), of patents under the America Invents Act (AIA). AIA cases are fewer in number but usually more time-consuming than ex parte appeals.

There are about 24,000 pending ex parte patent appeals, which are taking up about half of the time of the 230 Patent Judges. There are about 800 new ex parte appeals filed every month. The PTAB is slowly whittling down the backlog.

It takes an average of 30 months from start to finish to get a decision in an ex parte appeal.

Statistically, overall, your odds of winning at least something on appeal are about 50/50. That said, the PTAB deals with the merits of your application. It isn’t a coin flip.

For best results, make sure you have a good, well-positioned case before filing an appeal. Are you sure that you have a novel and non-obvious invention as claimed? Are the claims in good form, with all amendments actually “entered”? Have you done everything that reasonably can be done to make a good record for appeal, including submitting any evidence, such as a Rule 132 declaration?

There are strict steps and time periods in an ex parte appeal to the PTAB. A notice must be filed timely. Fees must be paid. If oral hearing is desired, it must be requested timely.

Most importantly, the applicant must prepare and file a brief that tells the story of the invention and explains why the claims should be allowed over the prior art. Illustrations can be helpful.

Be aware that the examiner has options. For example, after seeing the applicant’s brief and before responding, the examiner may decide to “reopen prosecution” and scuttle the appeal at least for a time.

The facts will not speak for themselves on appeal. Effective advocacy will be required. See my paper, The Abraham Lincoln School of Patent Litigation: Plain English, Simple Exhibits & Uncommon Humor.

Briefs are the primary tools for winning on appeal. See PTAB tips for effective briefs.

If the examiner contests the appeal, he or she must file a responsive brief.

The applicant may file a reply brief, generally limited to responding to arguments stated in the examiner’s brief.

Oral argument, while optional, is usually a smart choice for the applicant, though it is no cure for poor briefs.

At oral hearing, the applicant may help the PTAB Judges understand the nature of the invention, the meanings of the claim terms, and the distinctions between the claimed invention and the prior art.  The Judges will have the chance to ask questions, have those questions answered, and assure themselves that you are entitled to a patent.

In the U.S. legal system, including the patent system, persistence is often required and usually rewarded in meritorious cases. If the PTAB decides against your patent claims, a further appeal can be taken to the Federal Circuit.

Conclusion

If your invention has the value of a new BMW—or a key exclusive product line—take care of it. Don’t treat it badly or abandon it.

Protect your worthy invention by investing in a good, thorough patent application. File as soon as the invention is ready for patent.

After filing, prosecute diligently, and appeal if necessary, to obtain the grant of a valuable U.S. patent.