USPTO Wins Big in Litigation Over Rules to Limit Continuation Patent Applications in the USA – – Implications for Dealmakers

The Court of Appeals for the Federal Circuit (CAFC) recently handed the US Patent and Trademark Office (USPTO) some key victories (and possible road map for even more wins) in its dispute with pharmaceutical company GlaxoSmithKline (GSK) over the Office’s proposed limitations on, among other things, (1) using continuation patent applications and (2) filing patent applications with large claim sets (without incurring “do-it-yourself” patent examination consequences).  In doing so, the CAFC reversed a lower court that held USPTO did not have the authority to make such rules.

Background on the case and USPTO’s proposed rules:
1.  http://www.patentbaristas.com/archives/2009/03/20/court-splits-the-baby-on-patent-office-continuation-rules-expect-more-tension/
2.  http://www.patentdocs.org/2009/03/tafas-v-doll-fed-cir-2009-1.html
3.  http://www.patentdocs.org/2009/03/anyone-remember-what-these-new-rules-are-all-about.html
4.  http://www.patentlyo.com/patent/2009/03/tafas-v-doll-some-rules-valid-others-invalid.html

For years, US pharma and biotech patent prosecutors (attorneys that get patents from USPTO) have relied on continuation practice.  There are a number of reasons why this is the case including (1) the little time USPTO allows examiners to examine patent applications and the complexity of such applications in this space and (2) the lack of a practical way to delay patent prosecution (e.g., given the high risks and long time horizons in drug development). 

The limits on continuation practice, if put in place, will mean that either potential rights will be lost or patent prosecution will have to get much better (read more expensive).  USPTO says applicants can get more continuations, but don’t count on it!  The implications are similar (but less drastic) for the proposed limitations on the number of claims that can be included in a US patent application (requires better legal services to make it work = more money).  With the way the law of inequitable conduct is going in the United States, “DIY patent examination” is almost certainly out of the question in the minds of most practicing biotech and pharma patent attorneys, so expect claim sets to get narrower.

Adding insult to injury, a discussion on the limits of “division application” practice (essentially identical to continuations in the US for all practical purposes) is now also under way in Europe (see below).  Europe also has raised fees on claims to levels that practically require applicants to limit their claims to 15 (with 1 independent claim).

http://www.epo.org/topics/news/2009/20090403.html

The impact of limiting continuation patent application practice in biotech and pharmaceuticals in these key markets cannot be overemphasized.  Bottom line – – it will be much more difficult and much more expensive to obtain patent claims of interest for pharma and biotech. 

With possible limits on continuations in the US soon to be a potential reality, IP dealmakers, more than ever, may significantly benefit from having a strategy for handling who controls patent prosecution (considerations include – who will be able to pursue continuations, in what circumstances, etc.).  The problem is even greater in a field-restricted license/collaboration setting where interests are not aligned. 

While a final resolution of the US case and the similar proposal for Europe are likely still some ways away, it is likely that collaboration agreements entered today could be impacted by further developments in these governmental processes.  As such, dealmakers are advised to consider at least to have a bookmark in agreements for re-negotiation if/when the law changes in the US or EU, if not outright control over the patent portfolio of interest (with due consideration for how that impacts royalties, etc.). 

Watch out and stay tuned!

Tags: Patent prosecution