The saga took a turn in July of this year when the post-Dudas Office attempted to clarify the status of the rule for 2009, indicating that no due date had been announced and that “[n]o decision has been made to collect the fee in FY2009.”

So the rule is officially in limbo, and practitioners don’t know if or when the fee will become due. More importantly, the position of the new Kappos administration on the annual fee and other aspects of the rule remains less than clear.

Now it looks like the Office still considers the rule alive and kicking. On Friday, the Office published a Federal Register Notice [.pdf] that references the “Annual Practitioner Registration Fee” and various other fees related to the rule (voluntary inactive status, USPTO CLE fees, etc.). The Notice is labelled a “continuing information collection” that relates to various aspects of practitioner registration. There is no mention of a due date, and the fee is mentioned alongside several other fees and forms relating to practitioner registration.

The Notice is certainly not a direct indication that the Kappos administration supports the requirement for an annual registration fee. The inclusion of the fee in this “continuing information collection” does, though, seem to indicate that the Office intends to require payment of the fee at some point in the future, perhaps in fiscal year 2010.

The Office is soliciting comments on its “continuing information collection” and will presumably accept comments that address the substance of the proposed annual fee. You can send your input by email to Susan.Fawcett@uspto.gov. Comments must be submitted on or before February 9, 2010.

I have previously offered my support for imposition of the annual fee, with a few important concerns.

As I’ve re-read the case several times, Judge Bryson’s concurring opinion continues to draw my attention. His open wondering about the ability of the Office to limit serially-filed continuations is very interesting…especially when considered in light of the Office’s recent efforts to explore the possibility of implementing a deferred examination system.

Could a deferred examination system that allows an applicant to file, in parallel, several continuations while the original application remains pending provide a compromise to the competing concerns over late-filed continuations and an applicant’s ability to claim that which he disclosed?

All eyes are on Congress this week as many believe both chambers will see introductions of new vintages of the now perennial patent reform bill. Bicameral introduction, with bipartisan original sponsors in each chamber, is expected and would be a new twist. Such an approach might be a sign that, somehow, this round is different. But don’t forget that, despite significant hearing activity and coverage in the media, patent reform legislation has seen very little movement in previous sessions. Only time will tell if the 111th is any different.

The coming excitement doesn’t end there, though. Remember that the Court of Appeals for the Federal Circuit is sitting on the Tafas v. Dudas case, and a decision could come anytime over the next several weeks. Depending on the outcome, the opinion could represent a posthumous victory for the Dudas administration or a final reminder of its failed attempts at aggressive administrative reform.

And don’t forget that we’re still waiting for President Obama to appoint a new Under Secretary of Commerce/Director of the Patent and Trademark Office. The confirmation hearings for the person tapped for this exciting and challenging post will, no doubt, receive a great deal of attention as many stakeholders wait to see if the Office will continue the policy initiatives of the Dudas era or if new leadership will bring new approaches to familiar problems.

Clear your schedules – there’s plenty of patent law excitement on the way.

For the first post of the New Year, I thought I’d break tradition a bit. Instead of looking forward and listing all the things I’m hoping for in 2009, I’ve decided to look backward and commemorate an anniversary.

Three years ago this week (January 3rd), the Patent and Trademark Office published the controversial continuation and claim limit rules (read the original Promote the Progress post here).

Three years! Can you believe it?

Since that date, the patent community has lived under an inescapable cloud of doubt as to whether the right to claim a properly disclosed invention would be severely limited by agency rule-making. While we’ll soon have an answer from the Court of Appeals for the Federal Circuit regarding the legality of the continuation rules, the “final” answer on the issue of limiting the right to claim an invention – independent from these rules - might not be known for some time. The philosophy and clout of the next Director, the political climate that develops under the new Administration, and the willingness of the 111th Congress to consider the issue under the patent reform banner will certainly influence the issue.

But this is an anniversary, so let’s reflect a bit. Even though these three-year old rules have yet to become law, their enormous impact on the patent community is undeniable. Most owners of large portfolios of applications made an effort to review their applications to determine if any continuation filings should be made ahead of the original Halloween deadline. These efforts required a significant investment of time and money that, if the rules die in the end, might have been completely unnecessary.

And the Office, no doubt, has spent a small fortune defending the rules.

More importantly, though, the impact of the proposed rules goes way beyond time and money. Over these past three years, I’ve had the opportunity to talk to practitioners and other patent stakeholders around the country and from all sections of the community (private practice, in-house, small company, large company). One thing is clear – the rules have contributed significantly to the deterioration of the sense of partnership between stakeholders and the Office that seemed to exist just a few short years ago.

Happy Anniversary!

The Bolten memo is apparently set to be ignored, though.  According to this New York Times article, no less that twenty ‘highly contentious’ rules are set to be finalized after the soft November 1 deadline and before inauguration day.

Will we see any new regulations in the patent arena?  Not likely.  Although the ‘highly contentious’ draft IDS and Markush claim regulations remain in limbo, the Dudas-directed PTO has previously indicated that it does not intend to finalize these rules. Also, we’ve passed the 60 day deadline that accommodates the typical lag time for new rules to become effective before inauguration and provides opportunity for a new President to modify or delay last ditch regulations.

Certainly anything is possible, though.  Remember that the Office recently resurrected the Practitioner Maintenance Fee regulation after it sat dormant for five years.

Cross your fingers.

Comment 2: A large number of comments, citing past history, raised concern that annual practitioner maintenance fee payments would be diverted, and therefore opposed the annual practitioner maintenance fee on the basis that the fees would not be used to operate the roster maintenance process, including the disciplinary system.

Response: The USPTO has operated with full access to fee collections for the past four years. Annual practitioner maintenance fees collected under section 11.8(d) will be used to support maintenance of the roster of registered attorneys and agents, including the disciplinary system.

That’s reassuring, considering the extent to which PTO funds have been diverted to other causes in the past ($422.5 million diverted since 1992).  But is it a promise the Office can rightfully make?

Clearly it isn’t.  Sure the Office currently has full access to the fees it collects.  But, that could be a temporary situation.  Congress has never provided a permanent end to fee diversion (the current fix is the latest temporary fix), and something tells me Congress will be looking for new sources of cash in the coming months.

And the Office knows this.  Indeed, it wasn’t that long ago that the Department of Justice, with Associate Counsel from the Patent and Trademark Office sitting alongside, argued in Figuerora v. United States that Congress could divert all patent fees to other, non-patent purposes if it chose to do so.  Judge Newman’s direct question on this point during oral argument, and government counsel’s response, is illustrative:

Judge Newman – “Is the government’s position that…Congress could appropriate the entire [patent fee] income…and allow the backlog to continue to increase in the patent office if, in fact, [that's] what Congress decided to do?”

Government counsel: “Yes, your Honor. It’s our position that Congress’ legislation is not limited by the preamble’s promotion language on which the Appellant relies.”

The promise that Practitioner Maintenance Fee monies will be used to support OED activities is, simply put, one that the Office cannot make.  It might be true next year, and the year after, but fee diversion will always remain a possibility until Congress implements a permanent fix.

The Patent Office is, in essence, running parts of a professional bar association for its members.  It administers the system for entering the association, maintains the membership rolls, and oversees the disciplinary system.  Each of these is a vital component of a self-regulating professional association; the absence (or malfunction) of any one of which would endanger the legitimacy of the association.

Oddly, though, patent practitioners have never had to pay the costs of running these functions.  Since taking and passing the patent bar and being admitted to practice, I haven’t paid a single nickel to any association that oversees enrollment and discipline (though I’ve paid many nickels to AIPLA and other groups).  Nor has any other patent practitioner who has remained in good standing (unless they wanted a certificate of good standing, perhaps with the ’suitable for framing’ $10 upcharge).  In essence, we’ve enjoyed several benefits of having a professional association without having to pay for any of them.

What’s worse – we’ve actually managed to pass the costs associated with running our “association” onto fee-paying customers of the Office.  Certainly someone has been footing the bills for all these years.  We all know the Office is able to float its own boat, so it seems fair to assume that the Office of Enrollment and Discipline has been operating on patent fees paid by applicants.  Indeed, the final rule notes that, through the new fee, “USPTO will recover the costs associated with these activities from the practitioners instead of the public in general.”

I’d much rather see an independent federal patent bar association oversee these functions (and these fees), but such a beast is not likely to be born anytime soon and we, as professionals, cannot shirk our obligation to pay for these functions while we wait for one to arise.  So, in the meantime, I support the Office in its decision to take this bold step.

But, with that said, I have a a few concerns about this new direction.

First, the Office needs to provide complete and accurate accountings for income raised by the fee and expenses paid with the collected monies.  Unfortunately, the Office cannot, without an asterisk, promise practitioners that the fees we pay will always be used only for OED purposes.  It is possible that, in the future, these fees would be used for other Office expenses unrelated to maintaining the membership, or even other non-Office and/or non-patent purposes.  On this point, it is disturbing that the Office summarily dismissed the fee diversion comments received in connection with the “practitioner maintenance fee” draft rule in “don’t worry about it” fashion, especially when juxtaposed with the government’s argument in Figuerora v. United States (the patent fee diversion challenge).  The oral argument from Figuerora is enlightening:

Judge Newman – “Is the government’s position that…Congress could appropriate the entire [patent fee] income…and allow the backlog to continue to increase in the patent office if, in fact, [that's] what Congress decided to do?”

Government counsel: “Yes, your Honor. It’s our position that Congress’ legislation is not limited by the preamble’s promotion language on which the Appellant relies.”

Second, the Office needs to provide legitimate avenues through which practitioners can provide meaningful input on the enrollment and discipline systems.  Policies, procedures and personnel should all be subject to some degree of input from practitioners.  The patent statute gives the Office significant discretion in connection with the establishment and operation of these systems (see 35 U.S.C. s. 2(b)(d), the same section cited by the Office for the authority to impose the practitioner fee).  Now that a fee is being exacted, the Director should make it a priority to exercise that discretion in a manner that opens these systems to the bar.

Lastly, the Office should work with Congress to reduce patent fees paid by applicants by the amount of money that will be collected through the new practitioner maintenance fee.  The amount is minimal, I know, but it’s the principle that matters.  The final rule indicates that patent applicants have been paying for the enrollment and discipline systems for all these years.  If the new fee is designed to pay for these services going forward, the assessment on applicants should be removed.

You can view and/or download a .pdf of the rule here.

The rule will become effective on December 17, 2008.  The Office will provide “adequate notice” to practitioners in advance of the due date.  The fee for maintaining active status is, currently, $118.  The fee for voluntary, inactive status (for “practitioners who have retired or are unable to continue their practice, but still desire to maintain a recognized professional association with the USPTO”) is, currently, $25.

I’ll write more about the rule once I have time to ponder it a bit more, but my initial thought is this: it’s about time.

Lest anyone think the monies collected by the new Rule will be applied to the issue/maintenance fee shortfall, the Office ensures the bar that they will be used “to enable the Office to maintain a roster of registered practitioners and, consequently, better protect the public from unqualified practitioners.”

I do have two questions following my brief review of the rule

• could the Office have picked a worse name for this new fee?  ”The Practitioner Maintenenace Fee?”  Seriously.  How about “Annual dues?”
• Why did it take five years to take this rule from draft (published on December 12, 2003) to final (published today)?

Hat tip to the Filewrapper blog.

Consider these events:

1.  The Patent and Trademark Office introduced the controversial continuation and claim limit rules during the first week of the year way back in 2006.  Happy New Year!

2.  When making the rules final, the Office decided to draw the line in the sand on November 1, 2007, placing the deadline for filing rules-inspired continuation applications on Halloween.  Happy Halloween!

3.  On that same day, the United States District Court for the Eastern District of Virginia issued a preliminary injunction, temporarily preventing the Office from implementing the rules.  Happy  Halloween, part two!

4.  On April 1, 2008, District Court Judge Cacheris permanently enjoined Director Jon Dudas and the Patent and Trademark Office from implementing the controversial continuation and claim limit rules.  Nope, this was no April Fool’s joke.

5.  The Court of Appeals for the Federal Circuit has scheduled oral argument in the appeal of the new rules injunction for December 5, 2008, which, of course, is the annual Day of the Ninja.

All kidding aside, the timing of the oral argument is a bit strange, too.  Consider this – we have a lame duck administration with lame duck policies, and a President-elect with a yet-to-be announced Director of the Patent and Trademark Office and yet-to-be announced administrative policies.  Will the new PTO administration support the rules?  Will they pursue them with the same fervor as Director Dudas? Or, will the new PTO administration choose to abandon the rules, perhaps in an effort to mend fences in the partnership that used to exist between the Office and its stakeholders?

The court has a calendar to manage, of course, and the hearing date is probably the result of standard scheduling procedures.  But, arguing this case in December is probably the strangest event on the new rules timeline.  What if the PTO wins on appeal but the new administration doesn’t support the rules?  What if they lose but the new team has somewhat less passion for the rules than the Dudas adminstration does?  Do they appeal again, as the current administration has promised?

In the end, with either a win or a loss, it’s possible the rules might just disappear depending on the policies of the new administration, meaning our resource-strapped Patent and Trademark Office might have just wasted untold amounts of time and money.

With a hearing in December, the court will likely hand the new administration a ruling as the ink is drying on the new business cards.  I’m betting on February 14th, Valentine’s Day.

The two controversial rules packages have remained in limbo for years, leaving many to wonder whether they would be the subject of a final push for finalization in the waning days of the Jon Dudas-directed administration. The AIPLA report seemingly kills this possibility.

At the time of writing this post, the USPTO “Proposed Rule Changes” page does not mention this announcement.

The fate of these proposed rule changes, like that of many other reform efforts of the Office, now lies in the hands of the to-be-named new Director.