On August 21, 2007, the United States Patent and Trademark Office (USPTO) issued a final rules package limiting the ability to file continuing applications as well as the number of claims. While the effective date of the new rules is not until November 1, 2007, many aspects will impact applications that are already pending.

The new rules are extensive and complex. The USPTO held a Web seminar on August 23, 2007 to explain and answer questions regarding their implementation, but still left many questions unanswered. Also, a lawsuit has already been filed seeking an injunction and declaratory relief preventing the USPTO from implementing the rules.

This letter is intended to highlight some of the key changes to the rules, as well as identify steps that you may wish to take before November 1st.

Limit of Two Continuations and One RCE
For applications filed on or after November 1st, the final rules will permit only two continuations (including continuations-in-part) and one request for continued examination (RCE) as a matter of right ("2+1 Limit"). Applications filed before November 1st will count against the 2+1 Limit for any continuation filed after November 1st.

The filing of numerous continuations before November 1st appears to have been anticipated by the USPTO. The new rules limit the ability to prosecute claims that are "patentably indistinct" from the claims that are pending in other applications that are co-owned or share a common inventor. For example, if you file a continuation before November 1st, such claims must be patentably distinct from the claims in the parent application in order to be prosecuted in the continuation, unless the parent application is being abandoned.

An option that may be considered prior to November 1st is the filing of an RCE. The new rules limit the number of RCEs that can be filed after November 1st to just a single RCE within a patent family. For example, if an RCE has already been filed in the application, or in any application in the family (i.e., the parent application or any continuation application that claims priority from the parent application), you are not permitted to file a further RCE after November 1st as a matter of right. In this situation, you should consider filing an RCE prior to November 1st in order to preserve this examination option.

One-Time Exception to File Additional Continuation
The new rules permit one continuation in addition to the 2+1 Limit for applications filed before August 21, 2007, and where there is no other application filed on or after that date claiming priority from the same.

Continuations and RCEs in Excess of 2+1 Limit
Once the 2+1 Limit is reached, further continuations and RCEs are permitted only upon petition and must be accompanied by a showing why the desired amendment, argument or evidence sought to be presented “could not have been submitted during the prosecution of the prior-filed application.” The little guidance the USPTO has provided suggests that this will be a difficult burden to satisfy.

Divisional Applications
The new rules do not limit the number of divisional applications that may be filed, provided the Examiner has made a Restriction Requirement of record and the divisional applications present claims in a manner consistent with the Restriction Requirement. For example, if a five-way Restriction Requirement has been entered, the applicant may elect a single invention for examination in the application, and file four divisional applications directed to the non-elected groups. Such divisionals may be prosecuted serially or in parallel with one another. (We note that, the USPTO did not adopt its prior suggestion that all divisionals must be filed during the pendency of the application in which the Restriction Requirement was entered). Each divisional application family is then subject to its own 2+1 Limit.

Going forward, restriction practice may very well prove an important mechanism for preserving the ability to prosecute the full scope of the disclosed inventions, particularly in the context of the biotechnology and pharmaceutical fields that rely heavily on what are known as “Markush” claims. In this regard, the USPTO has also recently published proposed rules that would allow a patent Examiner to enter a Restriction Requirement against a single claim, as opposed to an election of species and provisional restriction as currently practiced. (See “Examination of Applications that Include Claims Containing Alternative Language”, Fed. Reg., vol. 72, No. 154, 44992-45001, August 10, 2007.)

Anticipating the importance of divisionals, the new rules allow an applicant to propose a Restriction Requirement to the Examiner. However, it will be important that the Examiner makes the Restriction Requirement of record in order to properly file a divisional application. For example, if the Examiner does not enter a Restriction Requirement (or later withdraws the same), then the corresponding application will be treated as a continuation application.

Limit of 5 Independent and 25 Total Claims (“5/25 Limit”)
Any application filed on or after November 1st, or any pending application in which a first action on the merits (FAOM) has not been mailed by November 1st, is limited to 5 independent claims and 25 claims total, unless an onerous Examination Support Document (ESD) is filed before the FAOM. If an ESD is not timely filed, the application will have to be amended to comply with the 5/25 Limit.

We note that any pending application in which an FAOM has already been received, or in which an FAOM is mailed before November 1st, is exempt from the 5/25 Limit. Thus, for these applications, an ESD is not needed if the pending claims exceed the 5/25 Limit. A Restriction Requirement alone, however, is not considered an FAOM. There are many instances when a Restriction Requirement is made in conjunction with an action on the merits that would qualify as an FAOM.

A notice will be mailed requiring the cancellation of excess claims or the submission of an ESD in any application in which the 5/25 Limit has been exceeded. Applicants will be given two months to respond. The response is not extendible for applications filed after November 1st and is extendable by up to 4 additional months for applications filed before November 1st.

As noted above, an applicant may exceed the 5/25 Limit along with a suggested Restriction Requirement. If the suggested Restriction Requirement is accepted by the Examiner, the applicant may withdraw the non-elected claims, and such withdrawn claims would not count toward the 5/25 Limit. However, if the Examiner does not accept the suggested Restriction Requirement, any excess claims must then be canceled or an ESD submitted.

Patentably Indistinct Claims
The USPTO anticipated the filing of separate applications that do not claim priority from each other in an attempt to circumvent the new rules. For example, instead of filing a single application with 100 claims, an applicant could file four separate applications each with only 25 claims.

To prevent this, the new rules require applicants to identify any applications that (1) have filing dates or claim benefit to filing dates that are the same date or within 2 months of each other taking into account the actual filing date, any foreign priority date, and any filing date of a prior-filed provisional or nonprovisional application for which a benefit is claimed; (2) name at least one common inventor; and (3) are owned or subject to an obligation of assignment to the same person or entity. For applications filed on or after November 1st, this information must be submitted (by way of a currently unavailable USPTO Form) within the later of four months from the actual filing date of the application, or 2 months from the mailing date of the initial filing receipt. For applications filed before November 1st, this information must be submitted by the later of the above dates or February 1, 2008.

Furthermore, the new rules create a rebuttable presumption that an application contains at least one claim that is not patentably distinct from a claim in another pending application, or an issued patent, when the other application or patent has (1) the same priority or filing date, (2) at least one common inventor, and (3) substantial overlapping disclosure (i.e., if the other application or patent has support for at least one claim in the application). This presumption can be rebutted by filing a Terminal Disclaimer, or by explaining why the claims are patentably distinct.

Actions to Consider Going Forward
(1) Take advantage of provisional applications to the fullest extent. If you have a pending nonprovisional and want to file a continuation or CIP, consider converting the existing nonprovisional into a provisional application (as long as you are within 12 months from the priority filing date), and filing the further application as the first nonprovisional application.

(2) If you have already filed an RCE in a patent family, consider filing a further RCE (if appropriate – for example, if a final rejection has been received) prior to November 1st. Otherwise, you will lose your ability to file an RCE as a matter of right.

(3) Take steps to identify related applications that must be identified by February 1, 2008, and, if necessary, submit an appropriate response to the rebuttable presumption. Note applications that are being prosecuted by different firms or where there is a joint development agreement.

(4) Present claims directed to any unclaimed subject matter in existing applications to provoke a Restriction Requirement to the extent possible, or present such claims when filing the two allowed continuations or one allowed RCE.

(5) Consider examiner interviews after all first Office Actions, and appeal unfavorable Office Actions rather than relying on RCE or continuation practice. Submit evidence of secondary factors in the initial response to Office Actions. Begin testing or developing data useful in showing unexpected results before receiving the first Office Action.

For additional information on this issue or other intellectual property issues, please contact us at info@SeedIP.com or call 206.622.4900.

This material is for general information purposes only and should not be regarded as legal advice. Providing this information does not create an attorney-client relationship. You should contact your attorney for legal advice regarding your individual circumstances.