The Law and Practice Under 35 USC 135(c)

198880 Journal of The Patent and Trademark Office Society 561, 675 (1998)

THE LAW AND PRACTICE UNDER 35 USC 135(c)[1]

By Charles L. Gholz [2]

Table of Contents I.           Introduction II.           The Statutory and Regulatory Scheme -- and a Few Questions III.            A Few Answers -- and a Few Guesses

A. What is "an interference" Within the Meaning of 35 USC 135(c)?

B. Who are the "parties to an interference" Within the Meaning of 35 USC 135(c)?

C. What is an "agreement... made in connection with or in contemplation of the termination of the interference" Within the Meaning of 35 USC 135(c)?

D. What is an "understanding... made in connection with or in contemplation of the termination of the interference" Within the Meaning of 35 USC 135(c)?

E. What is a "collateral agreement[ ]" Between the Parties to an Interference Within the Meaning of 35 USC 135(c)?

F. What Kind of a Reference to a "collateral agreement [ ]" Between the Parties to an Interference is Required to Trigger 35 USC 135(c)?

G. What is "the termination of... [an] interference as between the said parties to an agreement or understanding" Within the Meaning of 35 USC 135(c)?

H. What (If Anything) Must One Do If an Agreement or Understanding a Copy of Which Has Been Filed in the PTO Pursuant to 35 USC 135(c) is Later Modified?

I. Does 35 USC 135(c) Apply to Agreements or Understandings Made Prior to the Declaration of an Interference?

J. What Does It Mean for an Agreement or Understanding

to "be in writing" Within the Meaning of 35 USC 135(c)?

K. What is a "true copy" of an Agreement or Understanding Within the Meaning of 35 USC 135(c)?

L. Who Has Standing to Assert a Violation of 35 USC 135(c)?

M. By What Standard of Proof Must a Party Asserting a Violation of 35 USC 135(c) Prove Its Case?

N. How Does the PTO Implement the Mandate in 35 USC 135(c) that, "If any party filing... [a true copy of an agreement or understanding between the parties to an interference] so requests, the copy shall be kept separate from the file of the interference..."?

O. What "Government agencies" are Entitled to Obtain Access to the Copies of 35 USC 135(c) Agreements "kept separate from the file[s] of the interference[s]" Pursuant to the Written Requests of the Parties That Filed the Copies, and What Government Agencies Do Obtain Access to the Copies of 35 USC 135(c) Agreements "kept separate from the file[s] of the interference[s]" Pursuant to the Written Requests of the Parties That Filed the Copies?

P. How Do the Government Agencies Go About Obtaining Access to the Copies of 35 USC 135(b) Agreements "kept separate from the file[s] of the interference[s]" Pursuant to the Written Requests of the Parties That Filed the Copies?

Q. What Do the Government Agencies Do After Having Obtained Access to the Copies of 35 USC 135(c) Agreements "kept separate from the file[s] of the interference[s]" Pursuant to the Written Requests of the Parties that Filed the Copies?

R. What Reasons Have Been Accepted or Not Accepted as Constituting "good cause" Within the Meaning of 35 USC 135(c) for Someone Other Than a "Government agenc[y]" to Obtain Access to a 35 USC 135(c) Agreement "kept separate from the file of the interference" Pursuant to the Written Request of the Party That Filed the Copy?

S. If a Party to an Interference Failed to Comply with 35 USC 135(c), Does the Entire Patent Become Permanently Unenforceable or Only the Claims That Were Designated as Corresponding to the Count or Counts in the Interference?

T. If a Party to an Interference Failed to Comply with 35 USC 135(c), is a Patent That Matured from a Downstream Application Permanently Unenforceable?

U. If a Party to an Interference Failed to Comply with 35 USC 135(c), Can That Failure be Remedied in Any Way?

V. What Reasons Have Been Accepted or Not Accepted as Constituting "good cause" Within the Meaning of 35 USC 135(c) Justifying the Filing of a Copy of a 35 USC 135(c) Agreement or Understanding "during the six-month period subsequent to the termination of the interference as between the parties to the agreement or understanding"?

W. Is a Notice Concerning 35 USC 135(c) Given in the Declaration of the Interference a "notice... [given] a reasonable time prior to... [the] termination [of the interference]..." Within the Meaning of 35 USC 135(c)?

X. Does a Notice Given to a Patent Agent or Agents of Record Rather Than to an Attorney or Attorneys of Record Comply with the Second Paragraph of 35 USC 135(c)?

Y. Is a Patent Permanently Unenforceable If the Commissioner Fails to Give the Required Notice, But the Patentee and/or the Patentee's Attorney or Agent Knew About 35 USC 135(c) and Nevertheless Failed to Comply with It?

Z. What are the "discretionary action[s] of the Commissioner" Referred to in the Third Paragraph of 35 USC 135(c), and What Standard of Review Will the Court Apply if you Do Seek Review Under Section 10 of the Administrative Procedure Act of a Discretionary Action of the Commissioner Under 35 USC 135(c)?

IV. Conclusion

I. Introduction

35 USC 135(c) was added to 35 USC 135 in 1962 by Public Law 87-831. According to the House Committee Report relating to the enactment of the bill that became 35 USC 135(c):

Interference proceedings may be terminated in a manner hostile to the public interest by using patent interference settlement agreements as a means of restricting competition. To make such a practice more difficult[,] the bill requires the filing of such agreements in the Patent Office.[3]

The legislative history indicates that its sponsors expected what became 35 USC 135(c) to have a major, salutary impact on patent law.[4] Specifically, what became 35 USC 135(c) was apparently expected to aid the Antitrust Division of the Justice Department in ferreting out antisocial activity by the patent interference bar.

In practice, 35 USC 135(c) has had little impact. However, the "harsh"[5] and "penal"[6] results of non-compliance with 35 USC 135(c) require that careful attention be paid to it. Compliance may be pointless, but it can't be overlooked.

II. The Statutory and Regulatory Scheme -- and a Few Questions

In its current incarnation, 35 USC 135(c) reads as follows[7]:

Any agreement or understanding between parties to an interference, including any collateral agreements referred to therein, made in connection with or in contemplation of the termination of the interference, shall be in writing and a true copy thereof filed in the Patent and Trademark Office before the termination of the interference as between the said parties to the agreement or understanding. If any party filing the same so requests, the copy shall be kept separate from the file of the interference, and made available only to Government agencies on written request, or to any person on a showing of good cause. Failure to file the copy of such agreement or understanding shall render permanently unenforceable such agreement or understanding and any patent of such parties involved in the interference or any patent subsequently issued on any application of such parties so involved. The Commissioner may, however, on a showing of good cause for failure to file within the time prescribed, permit the filing of the agreement or understanding during the six-month period subsequent to the termination of the interference as between the parties to the agreement or understanding.

The Commissioner shall give notice to the parties or their attorneys of record, a reasonable time prior to said termination, of the filing requirement of this section. If the Commissioner gives such notice at a later time, irrespective of the right to file such agreement or understanding within the six-month period on a showing of good cause, the parties may file such agreement or understanding within sixty days of the receipt of such notice.

Any discretionary action of the Commissioner under this subsection shall be reviewable under section 10 of the Administrative Procedure Act.

The statutory mandate that, "If any party filing... [a true copy of an agreement or understanding between the parties to an interference] so requests, the copy shall be kept separate from the file of the interference..." is reflected in 37 CFR 1.666, which currently reads as follows:

§ 1.666 Filing of interference settlement agreements.

(a) Any agreement or understanding between [the] parties to an interference, including any collateral agreements referred to therein, made in connection with or in contemplation of the termination of the interference, must be in writing and a true copy thereof must be filed before the termination of the interference (§ 1.661) as between the parties to the agreement or understanding.

(b) If any party filing the agreement or understanding under paragraph (a) of this section so requests, the copy will be kept separate from the file of the interference, and made available only to Government agencies on written request, or to any person upon petition accompanied by the fee set forth in § 1.17(i) and on a showing of good cause.

(c) Failure to file the copy of the agreement or understanding under paragraph (a) of this section will render permanently unenforceable such agreement or understanding and any patent of the parties involved in the interference or any patent subsequently issued on any application of the parties so involved. The Commissioner may, however, upon petition accompanied by the fee set forth in § 1.17(h) and on a showing of good cause for failure to file within the time prescribed, permit the filing of the agreement or understanding during the six month period subsequent to the termination of the interference as between the parties to the agreement or understanding.

Finally, the statute and the rule are further explained in MPEP § 2366, which currently reads as follows:

2366 Interference Settlement Agreement

***

37 CFR 1.666 sets out the procedure for filing settlement agreements in interference cases. The PTO is merely a repository for copies of agreements filed under 35 U.S.C. 135(c) and does not undertake to rule on whether the statute requires that a copy of any particular agreement be filed. Nelson v. Bowler, 212 USPQ 760 (Comm'r Pat. 1981).

A Certificate of Mailing under 37 CFR 1.8 cannot be used for the purpose of filing a settlement agreement, nor can the settlement agreement be transmitted by facsimile, (37 CFR 1.6(d)(3) and 1.8(a)(2)(i)(C)).

The language of 35 USC 135(c) suggests at least the following questions, some of which have been answered by the case law or PTO practice and some of which have not yet been answered by the case law or PTO practice:

What is "an interference" within the meaning of the first sentence of the first paragraph of 35 USC 135(c)?

Who are the "parties to an interference" within the meaning of the first sentence of the first paragraph of 35 USC 135(c)?

What is an "agreement...made in connection with or in contemplation of the termination of the interference" within the meaning of the first sentence of the first paragraph of 35 USC 135(c)?

What is an "understanding...made in connection with or in contemplation of the termination of the interference" within the meaning of the first sentence of the first paragraph of 35 USC 135(c)?

What is a "collateral agreement[ ]" between the parties to an interference within the meaning of the first sentence of the first paragraph of 35 USC 135(c)?

What kind of a reference to a "collateral agreement[ ]" between the parties to an interference is required to trigger 35 USC 135(c)?

What is "the termination of... [an] interference as between the said parties to an agreement or understanding" within the meaning of the first sentence of the first paragraph of 35 USC 135(c)?

What (if anything) must one do if an agreement or understanding a copy of which has been filed in the Patent and Trademark Office pursuant to the first paragraph of 35 USC 135(c) is later modified (a) prior to termination of the interference, (b) within the six-month period subsequent to the termination of the interference as between the parties to the agreement or understanding, or (c) after the six-month period subsequent to the termination of the interference as between the parties to the agreement or understanding?

Does the first paragraph of 35 USC 135(c) apply to an agreement or understanding made prior to the declaration of an interference?

What does it mean for an "agreement or understanding" to "be in writing" within the meaning of first sentence of the first paragraph of 35 USC 135(c)?

What is a "true copy" of an agreement or understanding within the meaning of the first sentence of the first paragraph of 35 USC 135(c)?

Who has standing to assert a violation of 35 USC 135(c)?

By what standard of proof must a party asserting a violation of 35 USC 135(c) prove its case?

How does the PTO implement the statutory mandate in the second sentence of the first paragraph of 35 USC 135(c) that, "If any party filing... [a true copy of an agreement or understanding between the parties to an interference] so requests, the copy shall be kept separate from the file of the interference..."?

What Government agencies are entitled to obtain access to the copies of 35 USC 135(c) agreements "kept separate from the file[s] of the interference[s]" pursuant to the written requests of the parties that filed the copies, and what Government agencies do obtain access to the copies of 35 USC 135(c) agreements "kept separate from the file[s] of the interference[s]" pursuant to the written requests of the parties that filed the copies?

How do the Government agencies go about obtaining access to the copies of 35 USC 135(c) agreements "kept separate from the file[s] of the interference[s]" pursuant to the written requests of the parties that filed the copies?

What do the Government agencies do after having obtained access to the copies of 35 USC 135(c) agreements "kept separate from the file[s] of the interference[s]" pursuant to the written requests of the parties that filed the copies?

What reasons have been accepted or not accepted as constituting "good cause" within the meaning of the second sentence of the first paragraph of 35 USC 135(c) for someone other than a "Government agenc[y]" to obtain access to a copy of a 35 USC 135(c) agreement "kept separate from the file of the interference" pursuant to the written request of the party that filed the copy?

If a party to an interference failed to comply with 35 USC 135(c), does the entire patent become permanently unenforceable or only the claims that were designated as corresponding to the count or counts in the interference?

If a party to an interference failed to comply with 35 USC 135(c), is a patent that matured from a downstream application permanently unenforceable?

If a party to an interference failed to comply with 35 USC 135(c), can that failure be remedied in any way?

What reasons have been accepted or not accepted as constituting "good cause" within the meaning of the fourth sentence of the first paragraph of 35 USC 135(c) justifying the filing of a copy of a 35 USC 135(c) agreement "during the six-month period subsequent to the termination of the interference as between the parties to the agreement or understanding"?

Is a notice of 35 USC 135(c) given in the declaration of the interference a "notice... [given] a reasonable time prior to... [the] termination [of the interference]..." within the meaning of the first sentence of the second paragraph of 35 USC 135(c)?

Does a notice given to a patent agent or agents of record rather than to an attorney or attorneys of record comply with the second paragraph of 35 USC 135(c)?

Is a patent permanently unenforceable if the Commissioner fails to give the required notice, but the patentee and/or the patentee's attorney or agent knew about 35 USC 135(c) and nevertheless failed to comply with it?

What are the "discretionary action[s] of the Commissioner" referred to in the third paragraph of 35 USC 135(c), and what standard of review will the court apply if you do seek review under section 10 of the Administrative Procedure Act of a discretionary action of the Commissioner under 35 USC 135(c)?

III. A Few Answers -- and a Few Guesses

A. What is "an interference" Within the Meaning of 35 USC 135(c)?

The only guidance we have on this question comes from Carella v. Starlight Archery 804 F.2d 135, 231 USPQ 644 (Fed. Cir. 1986)Carella v. Starlight Archery, 804 F.2d 135, 231 USPQ 644 (Fed. Cir. 1986). There a third party had previously sued the patentee (Carella) for a declaratory judgment, apparently that one or more claims in Carella's patent were invalid. The previous action had been settled, and the patentee had "fail[ed] to disclose [that settlement] to the PTO...."[8] The defendant in the action for patent infringement on appeal argued that the patentee's failure to disclose the settlement of the previous litigation to the PTO "should have rendered Carella's patent void ab initio."[9] The court rejected that argument, saying that:

We have considered this argument, but are unpersuaded. The cited cases [i.e., Precision Instrument Mfg. Co. v. Automotive Maintenance Machinery Co. 324 U.S. 806, 65 USPQ 133 (1945)Precision Instrument Mfg. Co. v. Automotive Maintenance Machinery Co., 324 U.S. 806, 818-20, 65 USPQ 133, 138-40 (1945), and Moog, Inc. v. Pegasus Laboratories, Inc. 521 F.2d 501, 187 USPQ 279 (6th Cir. 1975)Moog Inc. v. Pegasus Lab., Inc., 521 F.2d 501, 504, 187 USPQ 279, 281-82 (6th Cir. 1975)] are inapposite because they deal specifically with failure to disclose in the context of an interference proceeding before the PTO, which is not present in this case.[10]

Thus, I think it safe to say that both patent infringement actions and actions for declaratory judgments of non-infringement and/or invalidity are not interferences within the meaning of 35 USC 135(c). However, how about (a) a patent-patent interference under 35 USC 291 and (b) a civil action under 35 USC 146 to review a decision by the board in a proceeding under 35 USC 135(a)? Even more importantly, how about an agreement or understanding between the parties to an incipient interference -- i.e., an interference that has not yet been declared?

As to patent-patent interferences under 35 USC 291, I know of no authority requiring that an agreement or understanding between the parties to a 35 USC 291 action must be filed with the Patent and Trademark Office,[11] and it could be argued that, since, by definition, a United States district court has jurisdiction over any such proceeding, there would be no reason to file a true copy of an agreement or understanding between the parties to such a proceeding with the Patent and Trademark Office. On the other hand, a 35 USC 291 action is clearly "an interference" in a general sense, and it could be argued that the plain language of the statute requires that result whether or not it makes any sense. Moreover, if the point of 35 USC 135(c) is to aid the Antitrust Division of the Justice Department in ferreting out antisocial activity by the patent interference bar, there is no reason to think that we engage in any less such activity in patent-patent interferences under 35 USC 291 than we do in application-application and application-patent interferences under 35 USC 135. On balance, I recommend the filing of a true copy of any such agreement or understanding with the PTO.

As to civil actions under 35 USC 146 to review decisions of the board in proceedings under 35 USC 135(a), again assuming that the point of 35 USC 135(c) is to aid the Antitrust Division of the Justice Department in ferreting out antisocial activity by the patent interference bar, there is obviously no reason to draw a distinction between a 35 USC 135(a) proceeding before the board and a 35 USC 146 proceeding before a district court -- or, for that matter, between a proceeding before the board and an appeal to the Federal Circuit from a decision by either the board in a 35 USC 135(a) proceeding or a district court in a 35 USC 146 proceeding. However, in CTS Corp. v. Piher International Corp. 727 F.2d 1550, 221 USPQ 11 (Fed. Cir. 1984)CTS Corp. v. Piher International Corp., 727 F.2d 1550, 221 USPQ 11 (Fed. Cir. 1984), the court specifically left open the possibility that a 35 USC 146 proceeding is not "an interference" within the meaning of 35 USC 135(c):

We note with interest that appellee contends that an "interference," as stated in section 135, refers only to the proceedings in the PTO and not to the proceedings in the district courts under section 146. Thus, the "interference" in the instant case terminated in 1980 when the PTO granted priority to CTS. We, however, do not and need not reach this issue. Moreover, the record for this issue was not fully developed below.[12]

As to an agreement or understanding settling an incipient interference, see section III.I, infra.

B. Who are the "parties to an interference" Within the Meaning of 35 USC 135(c)?

As stated in section I.C., "The Parties to an Interference" of Gholz, "Interference Practice," Chapter 24 in Patent Practice (6th Ed. Release No. 1):

The nominal parties to interferences in the Patent and Trademark Office are the named inventors, regardless of whether the applications or patents involved have been assigned. That is, the interference will be termed "Jones v. Smith," not "ABC Corp. v. XYZ Inc.," even if Jones and Smith have each left their former employers and have no further interest in the subject matter of the interference.

However, as that treatise notes in the next paragraph:

The polite fiction that the litigation is between the inventors rather than the owners of the applications or patents involved is, however, abandoned when it comes to discovery (e.g., when the question is whether a given document is in the possession, custody, or control of one of the "parties"), when it comes to determining personal jurisdiction or venue for a civil action brought to review the decision of the board under 35 USC § 146, and when two or more cases are owned by the same real party in interest.[13]

While I have found no opinion that expressly deals with the issue, it is my opinion that, if the issue were ever litigated, the court would hold that the "parties to an interference" within the meaning of 35 USC 135(c) are the real parties in interest, not the nominal "parties" as that term is used in the Patent and Trademark Office.

The opinion that comes closest to answering this question is PPG Industries, Inc. v. Bausch & Lomb, Inc.___ F.Supp. ___, 205 USPQ 914 (W.D.N.Y. 1979)PPG Industries, Inc. v. Bausch & Lomb, Inc., ___ F.Supp. ___, 205 USPQ 914 (W.D.N.Y. 1979). There the defendant, Bausch & Lomb, argued that Brockaway's Weber patent[14] was "unenforceable because a license agreement between PPG, Research Corporation[,] and Corning, excuted [sic; executed] September 16, 1969 was not filed with the Patent Office."[15] The opinion says that Bausch & Lomb "contend[ed] that this agreement should have been filed because of the provisions of 35 U.S.C. Section 135(c), which requires parties to an interference to file agreements they make in contemplation of termination of the interference."[16] That sentence implies that the September 16, 1969, license agreement was entered into prior to termination of the interference. However, elsewhere in the opinion the court indicated that the interference was Kistler v. Webber412 F.2d 280, 162 USPQ 214 (CCPA 1969)Kistler v. Weber, 412 F.2d 280, 162 USPQ 214 (CCPA 1969) (Rich, J.). That case was decided by the CCPA on June 26, 1969, which was before the license agreement was executed on September 16, 1969, and certiorari was not sought. Accordingly, the interference had apparently terminated before the license agreement was executed,[17] which makes the court's analysis doubly suspect -- i.e., suspect for a reason other than the goofiness of the court's reasoning, discussed below.

Now, recall that the patentee was Brockaway and that the court said that the license agreement was "between PPG, Research Corporation[,] and Corning...."[18] Elsewhere in the opinion the court said that "Research Corporation, acting as... [Brockaway's] licensing agent in the ophthalmic field, has [apparently as of the 1979 date of the court's opinion] licensed nearly fifty companies to use the Weber invention in strengthening lenses."[19] Thus, Research Corporation's position in the license agreement with PPG and Corning was apparently that of Brockaway's agent, not that of a principal. Nevertheless, the court said that 35 USC 135(c) didn't apply because:

45. Brockaway was, at all relevant times, the owner of the Weber patent and was the controlling party to the interference between the Weber patent and Kistler's application. Brockaway was not a party to the agreement in question. Since the only agreements required to be filed under the penal provisions of the statute are those between parties to an interference, the statute is not applicable. PPG, which was a party to the agreement, was not a party to the interference. The fact that a PPG house counsel, Oscar Spencer, was representing Brockaway in the interference does not make PPG a party. It is clear that Spencer was acting under the direct control of Brockaway, its general counsel, Saperston, and its outside patent counsel, Christel.

46. The statute requires only the filing of agreements made in settlement of interferences or those which totally destroy the incentives of the parties to the interference to litigate in an adverse manner. The license agreement in question here did not terminate or otherwise decide the interference, and Research Corporation, the only party to the license agreement who was also a party to the interference,[[20]] retained the same strong incentives to litigate after the license agreement that it had before that agreement. Research Corporation's financial incentives to win the interference were greater after the license agreement than they had been before it.[21]

Comment: In my opinion, if Research Corporation was acting as Brockaway's "licensing agent" when it entered into the license agreement with PPG and Corning, Brockaway should have been deemed a party to the license agreement for purposes of 35 USC 135(c). However, 35 USC 135(c) apparently still did not apply (a) because the license agreement was entered into after the interference had been terminated[22] and (b) because the party Kistler's assignee (which was apparently the University of Utah, although Judge Rich's opinion does not say so expressly) was not a party to the license agreement. That is, the license agreement was not between the real parties in interest to the interference.

Despite the general goofiness of the opinion, PPG can be cited (gingerly) for the proposition that 35 USC 135(c) does not require the filing of a license agreement entered into during the course of an interference between one real party in interest to the interference and another party that is not involved in the interference.[23]

C. What is an "agreement... made in connection with or in contemplation of the termination of the interference" Within the Meaning of 35 USC 135(c)?

According to CTS Corp. v. Piher International Corp., 727 F.2d 1550, 221 USPQ 11 (Fed. Cir. 1984):

As a means to prevent anti-competitive settlements between parties involved in patent interferences, any settlement agreements between parties must be filed with the PTO.[24]

***

We agree with the district court that, pursuant to section 135(c), there must be a causal relationship between the agreements and the termination of the interference. See United States v. FMC Corp. 514 F.Supp. 1166, 210 USPQ 486 (E.D. Pa. 1981), ___ F.Supp. ___, 215 USPQ 43 (E.D. Pa. 1982), rev'd, 717 F.2d 775, 219 USPQ 761 (3rd Cir. 1983)United States v. FMC Corp., 215 USPQ 43, 51-53 (E.D.Pa. 1982), rev'd on other grounds, 717 F.2d 775, 219 USPQ 761 (3rd Cir. 1983); cf. Moog [, Inc. v. Pegasus Laboratories, Inc., 521 F.2d 501, 187 USPQ 279 (6th Cir. 1975)], 521 F.2d at 506 ("The District Court was right in finding a causal relationship between the withholding [of an agreement] and the termination of the interference.").[25]

That language certainly suggests that 35 USC 135(c) requires the filing only of copies of settlement agreements (i.e., of agreements that are part of the termination of an interference),[26] and indeed CTS was found not to have violated 35 USC 135(c) in this case because the agreement a copy of which it did not file had nothing to do with the termination of the interference.[27] However, there is other precedent that indicates that the obligation is actually much broader.

In Old Dominion Box Co. v. Continental Can Co. 273 F.Supp. 550, 155 USPQ 70 (S.D.N.Y. 1967), aff'd on other grounds, 393 F.2d 321, 157 USPQ 353 (2nd Cir. 1968)Old Dominion Box Co. v. Continental Can Co., 273 F.Supp. 550, 155 USPQ 70 (S.D.N.Y. 1967), aff'd on other grounds, 393 F.2d 321, 157 USPQ 353 (2nd Cir. 1968), the agreement a copy of which the patentee had not filed was "quite lengthy"[28] and "contained numerous provisions covering many matters"[29] -- most of which apparently had nothing to do with the interference. Nevertheless, the agreement was entered into during the pendency of the interference, and one of its provisions "granted Federal [the assignee of the party that lost the interference] an exclusive license to manufacture and sell cartons under the Weiss patent [i.e., one of the patents involved in the subject declaratory judgment action]."[30] According to the court:

The agreement contained no specific provision for the termination of the interference proceedings as to the Weiss patent, yet the licensing of Federal under the Weiss patent, for all practical purposes, made it improbable that the interference proceedings would or could be continued. The parties to the agreement apparently recognized that fact, for on the very day the contract was entered into counsel for Continental wrote counsel for Federal in regard to the matter of terminating the interference proceedings, which was done.

Realistically, it is difficult to envision the agreement of June 18, 1962, other than as an agreement "in connection with or in contemplation of the termination of the interference." It seems clear that at the time the agreement was signed there was in the contemplation of the parties a termination of the interference proceedings. It is the finding of the Court that the agreement of June 18, 1962, did constitute an agreement within the purview of Section 135(c), Title 35 U.S.C.A.[31]

While the broad supposition that the licensing of one interferent by another interferent makes it improbable that the interference proceedings will be continued is utter nonsense,[32] what the Old Dominion court said may have made sense under the facts of that case. Specifically, the court noted that:

On June 18, 1962, on the day the agreement was executed and while the interference proceedings were still pending, counsel for the defendant, Continental Can Company, Inc., wrote counsel for the Federal Paper Board Company, in part, as follows:

"Obviously, the public use referred to in your letter of May 21, 1962 would constitute a bar to the allowance of any valid claims in the Arneson application [i.e., in Federal's case in the interference] which would cover the Weiss carton. However, the disclosures in the [Arneson] application and in patent No. 2,990,997 [i.e., the Weiss patent] are not identical[,] and possibly limited claims could be drawn which would not be generic. Whether any such claims, if obtained, would be of any value is questionable, particularly in view of the fact that the lock per se is broadly old as shown in Trogman patent No. 2,102,497, which we note is cited in 2,990,997.

"If you feel the interests of both parties will best be served by abandoning the Arneson application, we are authorized [sic; we authorize you?] to drop the prosecution of the same ***."[33]

That certainly suggests that the agreement had taken the fight out of the party Arneson! Also, it is no doubt relevant that the party Arneson filed its concession of priority on October 17, 1962, only four months after the agreement was executed.

Morever, while Old Dominion could perhaps be limited to its own peculiar facts, in Forbro Design Corp. v. Ratheon Co. ___ F.Supp. ___, 190 USPQ 70 (D. Mass. 1975), aff'd on other grounds, 532 F.2d 758, 190 USPQ 49 (1st Cir. 1976)Forbro Design Corp. v. Ratheon Co., ___ F.Supp. ___, 190 USPQ 70 (D. Mass. 1975), aff'd on other grounds, 532 F.2d 758, 190 USPQ 49 (1st Cir. 1976), the agreement a copy of which was not filed was a garden variety "non-exclusive, royalty-free cross-license agreement"[34] entered into during the pendency of the interference. Despite the cross license, "Interference proceedings continued[,] and the matter never went to settlement."[35] Nevertheless, the court found that the prevailing party had violated 35 USC 135(c) by not filing a copy of the cross license agreement:

Plaintiff's position that the agreement was not connected with settlement discussions is simply untenable. It is true that the parties agreed to let the Board decide their dispute, but there can be no question but that the cross-license had to have had an effect upon the proceedings. After their agreement was signed, both parties had the right to use the patent in issue royalty-free, regardless of the outcome of the Interference. The Court is particularly struck by the deposition of Hewlett-Packard counsel Chognard [Hewlett-Packard was the assignee of the party that lost the interference] on the question of the Interference decision:

Q. Why did you not appeal from the decision?

A. Mostly pressure of other work. We had a license under the patent, anyway, since we had at that time negotiated a fairly broad cross-licensing agreement with Kepco,[[36]] and there wasn't enough economic interest involved as far as we were concerned to justify further expense.

And later in the same deposition:

Let me clarify one point as far as our mental state at the time was concerned: We had a sporting interest in winning the interference[,] and you can see from the papers that we did quite a bit of digging and trying to get some evidence. But from the business standpoint we really didn't care whether we won it or not.

The point is that there can be no doubt of a connection between the cross-licensing agreement and the resolution of the Interference. Whether the Interference is terminated by a settlement or by the Board is unimportant if the effect of an agreement is to remove the adversary character of the proceedings. The harm to the public from such an agreement is present in either situation.[[37]] The legislative history of § 135(c) reflects this sentiment: "Interference proceedings may be terminated in a manner hostile to the public interest by using patent interference settlement agreements as a means of restricting competition." Senate Report No. 2169, U.S. Code Cong. & Admin. News, 87th Cong., 2nd Sess., p. 3286 (1962). This is not to say that there has been an antitrust violation or that the failure to file was fraudulent. Section 135(c) addresses itself only to filing requirements[,] and it is only this filing requirement which I find plaintiff has violated in the prosecution of the Interference.[38]

Comment: Of course interferents through their counsel enter into myriads of "agreements" during the course of most interferences, and I do not think that an agreement to start a witness's deposition an hour later than originally scheduled needs to be reduced to writing and a copy filed with the PTO.[39] However, if a court can be persuaded that, absent additional facts, a royalty-free cross-license agreement entered into during the course of an interference is "an agreement... [that] remove[s] the adversary character of the proceedings,"[40] it is certainly prudent to reduce to writing and file with the PTO copies of many agreements that fall far short of being "settlement agreements" as that phrase is normally used.

D. What is an "understanding... made in connection with or in contemplation of the termination of the interference" Within the Meaning of 35 USC 135(c)?

The word "understanding" in 35 USC 135(c) was presumably intended to cover agreements by "a wink and a nod," as opposed to formal agreements. That is, if two friendly real parties in interest[41] trust each other enough not to reduce a mutual understanding to a written contract,[42] but each party clearly understands that the other is going to do something "in connection with or in contemplation of the termination of the interference," 35 USC 135(c) is designed to compel the parties to reduce that mutual understanding to writing and to submit it to the PTO for scrutiny by the Antitrust Division.[43]

That is how the court treated the "understanding" language in 35 USC 135(c) in United States v. FMC Corp., ___ F.Supp. ___, 215 USPQ 43 (E.D. Pa. 1982), rev'd, 717 F.2d 775, 219 USPQ 761 (3rd Cir. 1983). There the Antitrust Division (which was the party asserting that 35 USC 135(c) had been violated):

conten[ded]... that defendant [FMC] and Bayer [the assignees of the interferents] reached an unwritten understanding at the August, 1968 meeting that defendant drop pending oppositions to Bayer's patent applications in Australia, Israel, and Japan. The government argue[d] [that] defendant's failure to reduce the understanding to writing and file it with the Patent Office... [was] a violation of 35 U.S.C. §135(c).[44]

The Antitrust Division almost won on this issue. The court said that:

Defendant's decision to drop its pending oppositions to Bayer's patent applications followed the August, 1968 meeting where the five written agreements were negotiated. *** This creates the inference that the parties came to an unwritten understanding concerning those oppositions. This inference is reinforced by statements made after the August, 1968 meeting referring to a "settlement" of defendant's patent dispute with Bayer in countries not covered by the written agreements.[45]

However, the court ultimately ruled that the Antitrust Division had failed to prove the existence of such an unwritten understanding:

Nonetheless, the evidence establishes that no unwritten understanding was reached at the August, 1968 meeting. Although Bayer suggested to defendant that it drop its oppositions to Bayer patent applications[,] there is no contemporaneous evidence that FMC acquiesced in that suggestion at the meeting. By August, 1968 defendant knew that it was almost certain to lose its pending oppositions because of the first-to-file rule. *** Defendant's decision to drop its pending oppositions was made in order to cut its losses. *** Furthermore, one opposition was not dropped. *** That opposition was not dropped because defendant had fully prepared its case[,] and it needed no additional investment of money. *** This is further evidence that defendant terminated its other oppositions because they were not worth pursuing.[46]

However, Moog, Inc. v. Pegasus Laboratories, Inc., 376 F.Supp. 445, 183 USPQ 225 (E.D. Mich. 1974), aff'd, 521 F.2d 501, 187 USPQ 279 (6th Cir. 1975), suggests that the word "understanding" in 35 USC 135(c) means a lot more than a clear, but unexpressed understanding. According to that opinion:

The use by Congress of the word "understanding" conveys as clearly as possible its intent to include any meeting of the minds of whatever proportions. An understanding is not exempted from the requirements of section 135(c) merely because it is tentative or informal or because certain details are to be filled in at a later date.[47]

Of course, a tentative understanding is not an agreement at all, in the normal sense of that word,[48] so this opinion suggests that interferents who have reached a tentative understanding are under a legal compulsion to solidify that tentative understanding, to reduce it to writing, and to submit the understanding to scrutiny by the Antitrust Division.

Fortunately, this aspect of Moog is clearly dictum. The facts were as follows. Moog had been in two interferences with Bell Aerospace Corporation. They had "entered into a written agreement which provided for a settlement procedure requiring the exchange of proofs, to be followed by concessions of priority."[49] In addition, "[t]he parties... granted each other nonexclusive royalty-free cross-licenses under their respective applications [and, presumably, under any patents maturing from those applications!], and each granted the other the right to sublicense third parties."[50] A copy of that agreement was duly filed with the Patent Office in each interference. However, "After proofs had been exchanged and concessions [of priority] filed [but before the interferences were terminated], Moog and Bell entered into a written supplemental agreement dated March 16, 1965, which revoked the previously agreed-upon right of each to sublicense any patent awarded to the other as a result of the interference proceedings."[51] The interferences were then terminated on May 11, 1965. However, a copy of the supplemental agreement was not timely filed,[52] and it was the failure to timely file copies of the supplemental agreement that was at issue in this case.

The supplemental agreement was highly material. Moog and Bell had each filed a concession of priority in one of the two interferences, meaning that each of them wound up with a patent on one of the two inventions at issue. Under the original agreement, each had the right to license its own patent and to sublicense the other's patent. Under the supplemental agreement, neither could license the other's patent, and, since the two patents were blocking patents, third parties who wanted to practice either invention had to obtain licenses from both parties. As the court put it:

the purpose and effect of eliminating the sublicensing provisions in the original settlement agreement was to eliminate the potential for competition in the granting of licenses which would result from each party['s] having the power independently to license third parties under either patent.5 The result was to restore to each patentee the exclusive power to grant further licenses under its own patent.

____________________

5At the time of the original agreement neither Moog nor Bell was assured of winning either interference, and the sublicensing provision eliminated the risk of total loss for both parties. However, once they had determined that each was to prevail on certain claims, and that the resultant patents would be blocking patents, the original risk against which both had sought protection was eliminated, and because the value of each patent would be enhanced if held by only one rather than two potential licensors, the parties followed their economic self-interest and eliminated the original pooling-type arrangement.[53]

In sum, the "meeting of the minds" between Moog and Bell had gone from being an "understanding" to being a written agreement before the interferences were terminated. Hence, by the time that the interferences were terminated, it was neither "tentative" nor "informal." Moreover, the supplemental agreement contained what was clearly a highly material amendment to the original agreement. Under the circumstances, there was no excuse for not filing a copy of the supplemental agreement. Thus, I agree with the court's holding. However, what the court had to say about the meaning of the word "understanding" in 35 USC 135(c) was dictum and should not bind (or even influence) future courts.

E. What is a "collateral agreement[ ]" Between the Parties to an Interference Within the Meaning of 35 USC 135(c)?

Once the real parties in interest sit down together to discuss the settlement of a U.S. patent interference, they frequently decide to "settle" other matters. Those other matters may be very directly related to the interference or very tenuously related to the interference -- if they are related to the interference at all by anything other than the fact that they involve the same parties. In my experience, the most typical example of such a collateral matter that is very directly related to the interference is a settlement of oppositions, potential oppositions, cancellations, and potential cancellations involving counterpart applications and patents in foreign countries. An example of a less directly related collateral matter would be an agreement by one real party in interest to supply another real party in interest with parts or raw materials needed to make the subject matter in dispute. An example of an arguably collateral matter that is very tenuously related to the base interference but which might nevertheless get settled as part of settling the base interference is another potential interference concerning another invention entirely. The possibilities are endless.[54]

The leading opinion on such "collateral agreements" is United States v. FMC Corp., ___ F.Supp. ___, 215 USPQ 43 (E.D.Pa. 1982), rev'd, 717 F.2d 775, 219 USPQ 761 (3rd Cir. 1983). There the parties entered into a plurality of agreements contemporaneously. One of those agreements was clearly covered by 35 USC 135(c), and a copy of it was filed, but copies of the other agreements were not filed. However, the trial court found as a matter of fact that:

Each of the agreements was discussed and its terms negotiated separately and sequentially. There were no trade-offs or bargaining between agreements.[55]

***

37. Although the United States agreement and the Canadian agreement were negotiated at the same meeting, the Canadian agreement was not causally related to the termination of the United States carbofuran patent interference No. 95,192. It was not made in connection with or in contemplation of the termination of the interference.[56]

***

38. Although the United States agreement was negotiated at the same meeting as the Latin American agreement, the Latin American agreement was not causally related to the termination of the United States carbofuran patent interference No. 95,192. It was not made in connection with or in contemplation of the termination of the United States carbofuran patent interference No. 95,192.[57]

***

39. The production and trademark license agreements between FMC and Chemagro were limited to setting forth details for the sale and marketing of carbofuran provided for in the United States agreement. The production and trademark license agreements were not causally related to the termination of the United States carbofuran patent interference No. 95,192. They were not made in connection with or in contemplation of the termination of the interference.[58]

***

48. FMC did not come to an unwritten understanding with Bayer to drop its pending oppositions to Bayer's [foreign] application[s]. *** At best, at the August 1968 meeting, FMC acknowledged to Bayer that[,] under the "first-to-file" rule in Australia, Japan, and Israel, FMC would probably lose its oppositions. *** Although Bayer suggested that FMC drop its oppositions, FMC's decision to drop all but one opposition in Japan was motivated by its perception that to fight Bayer in "first-to-file" countries was a waste of time and money. *** FMC's decision to drop its oppositions was not a cause of or related to the termination of the United States interference nor was it motivated by Bayer's acquiescence in the United States agreement.[59]

The trial court then held that, as a matter of law:

in order for there to be a violation of 35 U.S.C. §135(c), at the very least the unfiled agreements must affect the parties' attitude toward the interference. For example, the unfiled agreements must have the effect of rendering the decision of the patent office meaningless to the parties or affect the parties' motivation to litigate the interference.[60]

It then applied that holding to the facts before it, saying:

I... [find] that there was no causal relationship between...[the unfiled written agreements] and the termination of interference No. 95,192. See Findings of Fact 37-39. That is, the agreements neither caused the termination of the interference nor altered the parties['] attitude[s] toward the interference in any way.

The lack of a causal relationship between the unfiled written agreements and the termination of the United States interference is particularly evident when the Canadian and Latin American agreements are examined. These agreements dispose of rights wholly unrelated to the patent rights addressed in the United States agreement. See Findings of Fact 37-38. They constitute in effect a "bonus" for defendant, who would have settled the United States interference irrespective of whether patent issues in Canadian [sic; Canada] and Latin America were resolved. See Finding of Fact 24. They were negotiated apart from the United States agreement. See Finding of Fact 31. The execution of these agreements did not terminate the United States patent interference nor did they affect the parties['] attitude[s] toward terminating the United States patent interference. Therefore, the Canadian and Latin American agreements were not made "in connection with or in contemplation of" the termination of an interference, and failure to file them is not a violation of 35 U.S.C. §135(c).

Similarly, there is no causal relationship between the unfiled production agreement and the termination of the interference. The production agreement amplifies the terms under which defendant was obligated to supply carbofuran to Chemagro. See Finding of Fact 39. Clearly, defendant's obligation to sell carbofuran to Bayer was the quid pro quo for Bayer's agreement to settle the United States interference. Nonetheless, the obligation to supply Chemagro appears in the filed United States agreement[,] as do all the major terms relating to that obligation. The production agreement only details terms appearing in the filed United States agreement and is therefore tangential to the United States agreement. It did not, in and of itself, cause the termination of the United States interference or affect the parties' attitude[s] toward terminating the United States interference.

Likewise, there is no causal relationship between the unfiled trademark agreement and the termination of the interference. The filed agreement which settled the interference obligates defendant to sell carbofuran to Chemagro in exchange for patent rights to carbofuran. See Finding of Fact 26. The trademark agreement obligates Bayer to use defendant's trademark in the sale of carbofuran. See Finding of Fact 30. While the obligation to use the trademark was arguably part of the bargain defendant and Bayer struck in settling the United States interference, see Finding of Fact 22 (references to trademark in GX 29, 31), it certainly is far removed from the blood and guts of their agreement. The trademark agreement did not cause the termination of the interference or alter the parties' attitude[s] toward the interference.[61]

Comment: The problem with relying on United States v. FMC is that, at least in my experience, contemporaneously negotiated deals do tend to impact on one another. I am certainly in no position to take issue with the district court's findings of fact in that specific case. I will say, however, that I don't believe that it is usually the case that such contemporaneously negotiated deals do not "alter[ ] the parties['] attitude[s] toward the interference in any way."[62] Moreover, even if I believed in a specific case that a contemporaneously negotiated deal had not altered the parties' attitudes toward the interference, I would not be confident of my ability to convince some skeptical judge or jury of that fact at some later day in the face of another attorney's argument that what had really happened is that one interferent had been persuaded to take a dive in the interference in exchange for a sweetheart deal somewhere else in the world. Accordingly, I strongly recommend that copies of all contemporaneously negotiated agreements between the real parties in interest be filed with the PTO.

F. What Kind of a Reference to a "collateral agreement [ ]" Between the Parties to an Interference is Required to Trigger 35 USC 135(c)?

35 USC 135(c) says that one must file copies of "any collateral agreements referred to... [in any agreement or understanding between the parties to an interference made in connection with or in contemplation of the termination of the interference]...." (Emphasis supplied.) Accordingly, the plain meaning of the statute is that you don't have to file a copy of a collateral agreement if that collateral agreement is not referred to in the principal agreement or understanding.

In my opinion, such a "plain meaning" interpretation of the statute would yield a ludicrous result. Suppose (1) that the collateral agreement between the real parties in interest is one that is plainly prohibited by the antitrust laws (e.g., an agreement that both parties will keep their prices above a certain level) and (2) that that agreement was the principal factor motivating the party that lost the interference to file a 37 CFR 1.662(a) request for entry of adverse judgment. Can it really be that one could avoid the filing of a true copy of the collateral agreement simply by not mentioning it in the principal agreement? I think not. Moreover, I note that United States v. FMC Corp., ___ F.Supp. ___, 215 USPQ 43 (E.D. Pa. 1982), rev'd, 717 F.2d 775, 219 USPQ 761 (3rd Cir. 1983), which is the leading opinion on collateral agreements under 35 USC 135(c), did not even mention that the principal agreement did not refer to the alleged collateral agreements, although the opinion strongly suggests that it did not.

I believe that it is extremely unlikely that 35 USC 135(c) will ever be read literally in this respect. Accordingly, I recommend that copies of all agreements that are in fact "collateral" to an agreement covered by 35 USC 135(c) be filed with the PTO.

G. What is "the termination of... [an] interference as between the said parties to an agreement or understanding" Within the Meaning of 35 USC 135(c)?

This is a much more difficult question than it appears at first reading. Moreover, this is a question which has received a remarkable amount of judicial attention.

There are really two questions here. One is, when does an interference terminate? The other is, when does an interference terminate "as between" some but less than all of the parties to an interference? For instance, if two parties to a three-way interference have entered into an agreement which causes one of the parties to cease participating in the interference, but that party continues to be listed as a party in the heading of the interference, has the interference "terminated" as between that party and the party with which it has entered into an agreement?[63]

According to 37 CFR 1.658(a):

After final hearing, the Board shall enter a decision resolving the issues raised at final hearing. *** When the Board enters a decision awarding judgment as to all counts, the decision shall be regarded as a final decision for the purpose of judicial review (35 U.S.C. 141-144, 146) unless a request for reconsideration under paragraph (b) of this section is timely filed.

Thus, one might think that the earliest date that could be regarded as the date of "the termination of the interference" for the purpose of 35 USC 135(c) would be the date on which the board entered a judgment as to all counts.

However, according to Moog, Inc. v. Pegasus Laboratories, Inc., 376 F.Supp. 445, 183 USPQ 225 (E.D. Mich. 1974), aff'd, 521 F.2d 501, 187 USPQ 279 (6th Cir. 1975):

it was the act of filing... concessions [of priority], not the determination of priority [i.e., the entry of the award of priority], which effected the termination [of the interference].[64]

Similarly, according to United States v. FMC Corp., ___ F.Supp. ___, 215 USPQ 43 (E.D. Pa. 1983), rev'd, 717 F.2d 775, 219 USPQ 761 (3rd Cir. 1983):

Although the United States agreement allowed United States carbofuran patent interference No. 95,192 to run its course, for practical purposes, it terminated the interference by giving FMC the exclusive right to make, use and sell carbofuran in the United States.[65]

***

There is no doubt that the United States agreement terminated the interference within the meaning of 35 U.S.C. §135(c). The agreement gave defendant the right to make, use and sell carbofuran for the life of the patent irrespective of who prevailed in the patent interference. The agreement thereby rendered the final decision of the Patent Office in interference No. 95,192 meaningless.[66]

At the other end of the spectrum we have the question of whether an interference is "terminat[ed]" for the purpose of 35 USC 135(c) (a) during the period after entry of judgment by the board and before the period for seeking judicial review of the board's decision has run, (b) during the pendency of a court's review of the decision of the board, and (c) during the period after the entry of judgment by a reviewing court and before the period for seeking further review of that decision has run. Unfortunately, of all of those interesting questions, we have an answer (of sorts!) only to the last.

In CTS Corp. v. Piher International Corp., ___ F.Supp. ___, 219 USPQ 1180 (N.D. Ill. 1983), aff'd, 727 F.2d 1550, 221 USPQ 11 (Fed. Cir. 1984), the agreement a copy of which had not been filed with the PTO was entered into during the period (a) after the decision of the Seventh Circuit on appeal in a 35 USC 146 action and (b) before the time for seeking certiorari to review that decision had expired. The district court said that "termination under this statute [i.e., 35 USC 135(c)] may not mean the same thing as becoming final under some other statute or judicial construction"[67] and that, even giving consideration only to 35 USC 135(c), "this statute cannot be mechanically interpreted or applied,"[68] but could mean different things in different cases. In the case before it, the trial court held that the interference "was terminated on November 4, 1981, when the Court of Appeals decided in favor of CTS,"[69] not (a) on December 02, 1981, when the Court of Appeals denied Piher's request for rehearing, (b) on December 10, 1981, when the Court of Appeals issued its mandate, or (c) on March 02, 1982, when the period for filing a petition for certiorari expired.[70] However, the trial court specifically said that, in another case, at least the first and third of those events might signal the termination of the interference:

I believe that[,] in the context of another case where, for instance, you might have had a two-to-one panel decision by the Court of Appeals, where novel questions might be involved, where there might even be a conflict with a different panel of the circuit, or a conflict with another circuit, that a Judge applying the statute in such a context would have to take into consideration the viability of a petition for rehearing or a petition for certiorari.[71]

On appeal, the Federal Circuit affirmed without specifying when an interference terminates for the purpose of 35 USC 135(c). Instead, the Federal Circuit affirmed on the ground that "the district court committed no clear error in finding that the possibility of filing a writ petition was not discussed at the November 23[, 1981] meeting, and[,] thus, no causal relationship was shown [between the agreement a copy of which was not filed in the PTO and the termination of the interference]."[72]

Finally, in Unisys Corp. v. Commissioner of Patents and Trademarks, ___ F.Supp. ___, 39 USPQ2d 1842 (D.C.D.C. 1993), the court seems to have treated the critical date for purposes of 35 USC 135(c) as either the date that the Federal Circuit issued its mandate in an appeal from the decision of the board in an interference or the date that the PTO received the mandate -- apparently not recognizing that those are different dates:

Furthermore, the Commissioner pointed out that, upon receipt of the mandate from the Federal Circuit, "proceedings in the interference were terminated."[73]

***

When, on July 11, 1991, the Federal Circuit issued an order and mandate dismissing the appeal, the judgment of the Board became final as to both parties.[74]

This unsatisfactory state of affairs has led several of the APJs to include a form paragraph in their declarations of interferences reading as follows:

Termination Date of Interference

For the purpose of filing settlement agreements under § 1.666(a), the undersigned construes § 1.661 to mean that an interference is considered terminated when the time for seeking appellate (35 U.S.C. § 135 [sic; §141]) or other review (35 U.S.C. § 146) has passed, even where termination is the result of voluntary action by one or more of the parties, e.g., a request for entry of adverse judgment pursuant to § 1.662. [Emphasis in the original.]

Comment: I applaud the above quoted form paragraph, and I wish that the PTO would put such a statement either into 37 CFR 1.661 or into 37 CFR 1.666.[75] However, it seems quite unlikely that the PTO will do that.[76] Moreover, 37 CFR 1.661 only deals with the situation where no 35 USC 141 appeal or 35 USC 146 civil action is instituted; it does not even purport to define the termination of an interference when a 35 USC 141 appeal or a 35 USC 146 civil action is instituted. Accordingly, both because of the uncertainty over the point at which an interference is considered to have terminated for the purpose of 35 USC 135(c) and because the obligation to file copies of 35 USC 135(c) agreements has apparently slipped people's minds with appalling frequency, my practical advice is to file a copy of any such agreement immediately after it has been executed, while the agreement is still at the forefront of your mind.[77]

H. What (If Anything) Must One Do If an Agreement or Understanding a Copy of Which Has Been Filed in the PTO Pursuant to 35 USC 135(c) is Later Modified?

The leading opinion on modifications to previously filed 35 USC 135(c) agreements is Moog, Inc. v. Pegasus Laboratories, Inc., 376 F.Supp. 439, 180 USPQ 4 (E.D. Mich. 1973) (on motion for summary judgment), after trial, 376 F.Supp. 445, 185 USPQ 225 (E.D. Mich. 1974), aff'd, 521 F.2d 501, 187 USPQ 279 (6th Cir. 1975). There the court took an extremely relaxed view:

The sanction proscribed for failure to file under Section 135 is harsh -- patent unenforceability. In view of the language of the statute as well as the congressional history, this court does not believe Congress intended unenforceability to result in all cases where parties failed to file supplemental agreements. Two examples come immediately to mind.

First, the statute is silent about supplemental agreements executed after official termination of an interference by the Patent Office. Assuming the six-month grace period is of no assistance, a cursory reading of the statute might lead to the conclusion that[,] since no filing would be accepted by the Patent Office, unenforceability would result. We do not believe Congress intended such a result.

A second example, arguably applicable to the facts at bar, is where a supplemental agreement is merely incidental to the basic termination agreement. Where, for example, the parties execute a supplemental agreement correcting some figures or spellings in the original termination agreement, this court cannot believe Section 135(c) demands a forfeiture of a patent if such an incidental agreement is not timely filed.[78]

However, most of the courts that have dealt with 35 USC 135(c) have taken a far more exigent view of the statute. Moreover, even the Moog court said (somewhat inconsistently) that:

Consistent with the congressional intent to take away from the parties to an interference the option to pick and choose which of their termination agreements have antitrust implications and thus which they need to file, this court believes that all agreements, whether initial or supplemental, with actual or potential antitrust implications, must be filed in accordance with Section 135(c) or suffer the penalty of unenforceability.[79]

Accordingly, I think it imprudent to rely on the supposition that another court would agree with this court's view that 35 USC 135(c) does not "demand[ ] a forfeiture of a patent if... an incidental [supplemental] agreement is not timely filed."[80] My advice is to file a copy of every supplemental agreement -- if permitted by the statute.

That, of course, brings us to the three time periods set out in question (8).

If the supplemental agreement is reached prior to termination of the interference, there is no problem. Simply file a copy of it. The PTO will accept a supplemental agreement the same as the original agreement, and you will have fulfilled your obligation.

If the supplemental agreement is reached after termination of the interference but within the six-month grace period after termination, I don't believe that there is a problem. That is, I disagree with the implication of the statement in the quotation from Moog ante that "the six-month grace period is of no assistance..."[81] in that situation. On the contrary, I believe that the fact that the supplemental agreement did not come into existence until after the interference was terminated is the best possible "showing of good cause" for why a copy of the agreement was not filed prior to termination of the interference. Thus, one should file a copy of the supplemental agreement with a 37 CFR 1.666(c) petition explaining that the copy was not filed prior to termination because the supplemental agreement did not come into existence until after termination.

Finally, if the supplemental agreement is reached more than six months after termination of the interference, the PTO has no authority to accept a copy of it.[82] Under that circumstance, I completely agree with the court that Congress did not intend the patent to be rendered unenforceable by failure to file a copy of the agreement with the PTO! On the other hand, that does seem an odd result, and one that perhaps should be changed by amendment to the statute. That is, if the Justice Department is really going to seek to amend 35 USC 135(c), one thing that it might do is to seek to amend it to require the filing of a copy of any supplemental agreement revising the terms of a 35 USC 135(c) agreement whenever the supplemental agreement is entered into.

I. Does 35 USC 135(c) Apply to Agreements or Understandings Made Prior to the Declaration of an Interference?

There are actually two types of agreements made prior to the declaration of an interference that need to be considered. The first is an agreement that results in the interference's never being declared. The second is an agreement that does not avoid declaration of the interference but which impacts on the way that the parties litigate the interference.

Many interferences are declared as the result of an applicant's filing a 37 CFR 1.607 request for an interference with a patent. Typically a period of many months (and sometimes years) passes between the filing of a 37 CFR 1.607 request and the declaration of the interference. Suppose that the owner of the application contacts the owners of the patent during that period, that the parties enter into negotiations, and that the parties ultimately enter into an agreement pursuant to which the owner of the application withdraws the 37 CFR 1.607 request -- and, perhaps, even abandons its application. Does the patentee have to file a copy of the agreement with the PTO?

I know of no case on point. However, the first sentence of the first paragraph of 35 USC 135(c) refers to an agreement or understanding "between the parties to an interference," and the parties to the negotiations in my "hypothetical" (which, of course, is a common occurrence) are not "parties to an interference" because no interference has been declared at the time of the negotiations. Accordingly, the "plain meaning" interpretation of the statute is that a copy of that agreement need not be filed with the PTO.

Furthermore, former Chief Administrative Patent Judge McKelvey once circulated a proposed rule change to the interference bar that would have provided that, rather than declaring interferences (thereby triggering 35 USC 135(c)), the board would mail the prospective parties a "notice of intent to declare an interference" and give them two months to settle the incipient interference. He said that one of the chief inducements for the prospective parties to settle before the interference was actually declared was that, if they did so, they would not have to file copies of their settlement agreements, thereby subjecting their settlement agreements to scrutiny by the Antitrust Division. Obviously, he reads the statute the same way that I do.

Agreements that are entered into before the declaration of an interference, which do not prevent the declaration of the interference, but which impact on the way that the parties litigate the interference present very different concerns. For instance, many interferences are between companies with long histories of interactions -- often including many previous interferences. Many of those companies have exchanged "block cross-licenses" of one sort or another, including royalty-free block cross-licenses. Such block cross-licenses obviously impact on the parties' desire to litigate with maximum vigor.

In Old Dominion Box Co. v. Continental Can Co., 273 F.Supp. 550, 155 USPQ 70 (S.D.N.Y. 1967), aff'd on other grounds, 393 F.2d 321, 157 USPQ 353 (2nd Cir. 1968), the court said that the patentee should have filed a copy of an agreement entered into during the interference despite the fact that "[t]he agreement contained no specific provision for the termination of the interference proceedings..., [because] the licensing of Federal [i.e., the assignee of the opposing party] under the Weiss patent [i.e., the patent in interference], for all practical purposes, made it improbable that the interference proceedings would or could be continued."[83]

Similarly, in Forbro Design Corp. v. Raytheon Co., ___ F.Supp. ___, 190 USPQ 70 (D. Mass. 1975), aff'd on other grounds, 532 F.2d 758, 190 USPQ 49 (1st Cir. 1976), the court held that the patentee had violated 35 USC 135(c) because a copy of a royalty-free cross-license entered into during the pendency of the interference was not filed. According to the court:

It is true that the parties agreed to let the Board decide their dispute, but there can be no question but that the cross-license had to have had an effect upon the proceedings.[84]

***

The point is that there can be no doubt of a connection between the cross-licensing agreement and the resolution of the Interference. Whether the Interference is terminated by a settlement or by the Board is unimportant if the effect of an agreement is to remove the adversary character of the proceedings. The harm to the public from such an agreement is present in either situation.[85]

Obviously, there are judges loose upon the land who see a strong public interest in ensuring that interferences are litigated with maximum vigor, thereby enriching the interference bar to the maximum extent possible.[86] Moreover, a block royalty-free cross-license entered into before declaration of an interference "harm[s]... the public" just as much (or just as little) as a royalty-free cross-license entered into during the pendency of an interference specifically directed to the cases in interference. Accordingly, I think it prudent (if not absolutely compelled by the language of the statute) to file copies of such "background" agreements.[87]

However, Old Dominion and Forbro Design should be contrasted with Omark Industries, Inc. v. Carlton Co. 458 F.Supp. 449, 201 USPQ 825 (D. Or. 1978), aff'd on other grounds, 652 F.2d 783, 212 USPQ 413 (9th Cir. 1980)Omark Industries, Inc. v. Carlton Co., 458 F.Supp. 449, 201 USPQ 825 (D. Or. 1978), aff'd on other grounds, 652 F.2d 783, 212 USPQ 413 (9th Cir. 1980), and PPG Industries, Inc. v. Bausch & Lomb, Inc., ___ F.Supp. ___, 205 USPQ 914 (W.D.N.Y. 1979).

In Omark the assignees of the parties to an interference had a background agreement, entered into before the interference was declared, that gave one of the assignees (Omark) the right of first refusal to buy the other assignee (Draper). During the interference, Draper gave Omark notice that it "had received a bona fide offer... for its business, including its patents."[88] Omark thereupon elected to buy Draper's assets, including its patents. After having done so, Omark:

notified the Patent Office of this agreement. Plaintiff [i.e., Omark] also stated that it would determine whether the Consoletti patent [i.e., the patent that Omark had bought from Draper] or its patent application [i.e., the Carlton patent application] was entitled to priority and make an election accordingly.[89]

However, while Omark "notified" the Patent Office of the background agreement, it did not file a copy of the background agreement; it only filed a copy of the assignment of the Consoletti patent to it. It then "elected" its own application (i.e., it filed a notice that the Carlton application was entitled to priority over the Consoletti patent). The Consoletti patent was thereupon cancelled pursuant to 35 USC 135(a), and the Carlton application thereafter matured into a patent.

In a subsequent infringement action, the defendant (which happened to be a company founded by Carlton!) argued that Omark's failure to file a copy of the background agreement rendered the Carlton patent permanently unenforceable. However, the court rejected that argument, reasoning as follows:

Section 135(c) was designed to prevent an applicant from obtaining a patent monopoly by a private settlement hostile to the public interest. Moog, Inc. v. Pegasus Laboratories, Inc., 521 F.2d 501, 505, 187 USPQ 279, 282-283 (6th Cir. 1975). Here, plaintiff complied with the statute by filing a copy of the assignment with the Patent Office. In this case, the assignment disclosed everything that was relevant.

There is no merit to defendant's contention that plaintiff, in addition to the assignment, was required to file the agreement to make the assignment.[90]

In PPG, the court held that the patentee was not a party or a successor in interest to a party to the agreement in question.[91] However, the court also said in dictum that:

44. Bausch & Lomb's last contention is that the patent is unenforceable because a license agreement between PPG, Research Corporation[,] and Corning, executed September 16, 1969[,] was not filed with the Patent Office. Defendant contends that this agreement should have been filed because of the provisions of 35 U.S.C. Section 135(c), which requires parties to an interference to file agreements they make in contemplation of termination of the interference. This court rejected Bausch & Lomb's motion for summary judgment on this contention by its decision of November 29, 1976.

45. Brockway was, at all relevant times, the owner of the Weber patent and was the controlling party to the interference between the Weber patent and Kistler's application. Brockway was not a party to the agreement in question. Since the only agreements required to be filed under the penal provisions of the statute are those between parties to an interference, the statute is not applicable. PPG, which was a party to the agreement, was not a party to the interference. The fact that a PPG house counsel, Oscar Spencer, was representing Brockway in the interference does not make PPG a party. It is clear that Spencer was acting under the direct control of Brockway, its general counsel, Saperston, and its outside patent counsel, Christel.

46. The statute requires only the filing of agreements made in settlement of interferences or those which totally destroy the incentives of the parties to the interference to litigate in an adverse manner. The license agreement in question here did not terminate or otherwise decide the interference, and Research Corporation, the only party to the license agreement who was also a party to the interference, retained the same strong incentives to litigate after the license agreement that it had before that agreement. Research Corporation's financial incentives to win the interference were greater after the license agreement than they had been before it.[92]

J. What Does It Mean for an Agreement or Understanding to "be in writing" Within the Meaning of 35 USC 135(c)?

Many "agreements or understandings" these days are purely electronic. Would the board accept a diskette containing a 35 USC 135(c) agreement or would it require the party submitting the copy to download the agreement on to paper and submit that version of the agreement?

Since the board serves purely as a repository and makes no effort whatsoever to monitor the contents or form of 35 USC 135(c) agreements, I suspect that the board would happily accept an agreement on a diskette,[93] and it is hard for me to believe that a court would find that 35 USC 135(c) had been violated simply because a copy of an agreement was submitted in electronic form rather than on paper. On the other hand, I see no reason whatsoever to tempt fate by being the first to submit a 35 USC 135(c) agreement in electronic form! Far better to download a copy of the agreement on to paper even if the original of the agreement is purely electronic.

A more interesting question is whether agreements that are entered into in a foreign language need to be translated and a copy of the translation filed. Neither the statute nor 37 CFR 1.666 says either that the agreement must be in English (which would, of course, be an affront to the many, many customers of the United States Patent and Trademark Office whose native language is not English) or that a translation of an agreement entered into in a language other than English need be filed.[94] Accordingly, I have filed copies of agreements in languages other than English -- and the board has not objected.

Two caveats to the last point do need to be mentioned.

First, it is obviously prudent for a practitioner filing a copy of an agreement in a foreign language to have the agreement translated into English and to carefully review the translation before filing a copy of the foreign language original. Foreign clients can, in all good faith, enter into agreements which the Antitrust Division would find shocking. If, perchance, your client has entered into such an agreement[95] and you catch it before a copy of the agreement is filed, a supplemental agreement taking out the anxiety-inducing provisions can be entered into and copies of the original agreement and the supplemental agreement filed together.

Second, I have no idea how the Antitrust Division treats copies of agreements entered into in languages other than English. On the one hand, the Antitrust Division attorney reviewing the agreements may, upon reaching an agreement in, say, Swahili, simply shrug his or her shoulders, turn the agreement over, and go on to the next one. On the other hand, that attorney may take the filing of the agreement in Swahili as evidence that the parties are trying to hide something, get the agreement translated, and subject it to enhanced scrutiny.

K. What is a "true copy" of an Agreement or Understanding Within the Meaning of 35 USC 135(c)?

This is an easy one. The board accepts unnotarized photocopies of the original agreement. Basically, all that you have to do is to state in the document by which you submit the copy that it is a true copy.

A copy of our form submittal document is reproduced below:

THE PARTY__________'S

37 CFR 1.666(b) REQUEST

Submitted herewith in a sealed envelope is a true copy of an agreement between the parties to this interference made in connection with or in contemplation of the termination of this interference.

Pursuant to 37 CFR 1.666(b), the party requests that this copy be kept separate from the file of the interference and made available only to Government agencies on written request, or to any person upon petition accompanied by the fee set forth in § 1.17(i)(1) and on a showing of good cause.

L. Who Has Standing to Assert a Violation of 35 USC 135(c)?

One thing is for sure: the PTO doesn't. As Judge Calvert wrote in Nelson v. Bowler, 212 USPQ 760 (Comm'r 1981):

the PTO is merely the repository for copies of agreements filed under 35 USC 135(c), and does not undertake to rule on whether the statute requires that a copy of a particular agreement be filed. If a party files a document and states that it is a copy of an agreement submitted in accordance with 35 USC 135(c), the PTO's only concern is whether the copy was filed within the time limit prescribed by the statute.[96]

See generally section III.O., infra.

At the other extreme, it is equally clear that an accused infringer does have the right to assert as an affirmative defense that the or a patent in suit is permanently unenforceable because of a violation of 35 USC 135(c). See Old Dominion Box Co. v. Continental Can Co., 273 F.Supp. 550, 572, 155 USPQ 70, 87 (S.D.N.Y. 1967) ("Any rights the defendant might have under Weiss Patent No. 2,990,997 are unenforceable under Section 135(c), Title 35 U.S.C.A."), aff'd on other grounds, 393 F.2d 321, 157 USPQ 353 (2nd Cir. 1968); and Moog, Inc. v. Pegasus Laboratories, Inc., 376 F.Supp. 445, 450-51, 183 USPQ 225, 229 (E.D. Mich. 1974) ("The supplementary [agreement] between Moog and Bell thus falls within the purview of 35 U.S.C. § 135(c). Because it was not timely filed, the patent obtained by Moog as a result of the termination of the interferences is unenforceable. Unenforceability is an absolute defense to a claim of infringement, and judgment must therefore be rendered for the defendant."), aff'd, 521 F.2d 501, 187 USPQ 279 (6th Cir. 1975).

While I have found no case on point, I am equally convinced that a party to an agreement rendered permanently unenforceable because of failure to comply with 35 USC 135(c) has the right to assert the unenforceability of that agreement. For instance, if the agreement in question were a bulk license of many patents including a patent involved in an interference[97] and if the parties to the interference failed to file a copy of that license, thereby rendering the agreement permanently unenforceable, the licensor could presumably sue the licensee for infringement of the patents not involved in the interference -- despite the fact that it, too, could have filed a copy of that license.[98] If the licensee had built a factory in reliance on the license, the licensor might well be in a position to negotiate a much higher royalty rate than the rate provided in the original license.

The interesting question is whether the Antitrust Division has standing to assert a violation of 35 USC 135(c). In United States v. FMC Corp., 514 F.Supp. 1166, 210 USPQ 486 (E.D. Pa. 1981), ___ F.Supp. ___, 215 USPQ 43 (E.D. Pa. 1982), rev'd, 717 F.2d 775, 219 USPQ 761 (3rd Cir. 1983), a district court held that "the United States may sue to have... a patent declared unenforceable [for failure to comply with 35 USC 135(c)]..."[99] on the theory that, although "[t]he statute is silent as to who may enforce... [35 USC 135(c)]"[100]:

Congress passed §135(c) solely to give law enforcement agencies access to interference settlement agreements. To limit the statute to use as a defense by patent infringers as FMC urges would increase the likelihood that violations [of 35 USC 135(c)? of the antitrust laws?] would go undetected.[101]

However, the Third Circuit reversed that holding in an often-cited opinion dealing with when a court may imply a cause of action in the face of statutory silence.[102]

Regrettably, the Third Circuit's opinion does not altogether end the matter.

In the first place, the Third Circuit ended its opinion by saying that, "If Congress desires that the United States play a role in the enforcement of section 135(c), it may so provide expressly."[103] Judging by recent "luncheon law" speeches (notably including a speech by Assistant Attorney General Klein to the American Intellectual Property Law Association's spring meeting in San Antonio, Texas, on May 02, 1997[104]) the possibility that the Justice Department will ask Congress to amend the statute to let the Antitrust Division loose upon patent malefactors is apparently presently under active consideration.

In the second place, in FMC the Antitrust Division had apparently argued only an implied remedy theory. The Third Circuit specifically noted that:

The government neither alleged nor argued that it sues as parens patriae representative of the class of private persons who may enforce section 135(c). Consequently, we do not deal with such a contention here.[105]

Thus, even absent an amendment to the statute, the Antitrust Division could apparently try again, this time "su[ing] as parens patriae representative of the class of private persons who may enforce section 135(c)."[106] Whether the Justice Department would think that a desirable expenditure of the Antitrust Division's presumably scarce resources is, of course, another matter.

M. By What Standard of Proof Must a Party Asserting a Violation of 35 USC 135(c) Prove Its Case?

In United States v. FMC Corp., ___ F.Supp. ___, 215 USPQ 43 (E.D.Pa. 1982), rev'd, 717 F.2d 775, 219 USPQ 761 (3rd Cir. 1983), the court held that:

It is government's burden to prove causality by a preponderance of the evidence. See Burch v. Reading Co. 240 F.2d 574 (3rd Cir.), cert. denied, 353 U.S. 965 (1957)Burch v. Reading Co., 240 F.2d 574, 578 (3rd Cir.), cert. denied, 353 U.S. 965 (1957). Defendant's argument that the government's standard of proof is clear and convincing evidence is frivolous. Defendant relies on cases in which there is an appeal from the Patent Office's determination that the patentee was the first inventor. In those cases the rationale for a more rigorous burden of proof is the statutory presumption of validity created by the administrative agency's determination of patentability. Sidewinder Marine, Inc. v. Starbuck Kustom Boats and Products, Inc. 597 F.2d 201, 202 USPQ 356 (10th Cir. 1979)Sidewinder Marine, Inc. v. Starbuck Kustom Boats and Products, Inc., 597 F.2d 201, 205, 202 USPQ 356, 360 (10th Cir. 1979); GAF Corp. v. Amchem Products, Inc. 514 F.Supp. 943, 211 USPQ 172 (E.D. Pa. 1981)GAF Corp. v. Amchem Products, Inc., 514 F.Supp. 943, 964, 211 USPQ 172, 190 (E.D. Pa. 1981). No such concerns are present in this case. There is no indication in the legislative history or the statute itself that the standard of proof in 35 U.S.C. §135(c) cases is anything but a preponderance of the evidence.[107]

FMC was, of course, an attempt by the Antitrust Division to have a patent declared unenforceable for failure to comply with 35 USC 135(c).[108] Hence, it is not direct authority for the proposition that the burden of proof on a private party asserting the permanent unenforceability of a patent on the ground of failure to comply with 35 USC 135(c) is only the preponderance of the evidence. The burden of proof on a private party asserting the invalidity of a claim in a patent on the ground of failure to comply with the substantive provisions of Title 35 is clear and convincing evidence.[109] Why should a defendant relying on 35 USC 135(c) have an easier time of it than a defendant relying on 35 USC 102 or 103?

I regard this as an open question. My guess (but it is only a guess) is that the Federal Circuit will disagree with, distinguish, or ignore the holding in FMC.

N. How Does the PTO Implement the Mandate in 35 USC 135(c) that, "If any party filing... [a true copy of an agreement or understanding between the parties to an interference] so requests, the copy shall be kept separate from the file of the interference..."?

As Judge Calvert wrote in Nelson v. Bowler, 212 USPQ 760 (Comm'r 1981), "the PTO is merely the repository for copies of agreements filed under 35 USC 135(c)...."[110] Hence the PTO's statutory obligation is merely archival.[111], [112] How the PTO fulfills its statutory obligation is described as follows in a letter to me from Chief Administrative Patent Judge Stoner dated November 06, 1997:

The term "repository," used in both your letter and the MPEP to describe our storage facility, suggests something more grand than the reality. Each agreement is housed in a file folder, labeled with the interference number. Inside each folder is also placed a copy of the Board's letter acknowledging the request that the agreement be stored apart from the interference file. Pursuant to the Commissioner's Notice,[[113]] it is Board policy to place a copy of the agency request in the file folder as well.

The file folders are housed in numerical order in three gray, four-drawer lateral file cabinets in the clerical area of the Board. Old agreements (prior to the 1980s) have been sent to the warehouse. The lateral file cabinets are relatively modern, having been acquired to replace older, battered file cabinets. The file cabinets are locked[,] and the keys are controlled by the Supervisory Legal Instruments Examiners.

Note (a) that the "agency" to which Judge Stoner refers is the Antitrust Division of the Justice Department and (b) that the board does not send copies of the agency's requests to the parties. Thus, if you are curious as to whether the Antitrust Division has reviewed a copy of a 35 USC 135(c) agreement that you filed, you either have to go the board yourself or ask your Washington area representative to go the board and ask to see the appropriate file folder in the repository.[114]

O. What "Government agencies" are Entitled to Obtain Access to the Copies of 35 USC 135(c) Agreements "kept separate from the file[s] of the interference[s]" Pursuant to the Written Requests of the Parties That Filed the Copies, and What Government Agencies Do Obtain Access to the Copies of 35 USC 135(c) Agreements "kept separate from the file[s] of the interference[s]" Pursuant to the Written Requests of the Parties That Filed the Copies?

Amazingly, the APJs are not given access to the copies of the settlement agreements kept in the board's repository![115] Thus, it is not unusual to receive a telephone call from an APJ after one has filed a copy of a 35 USC 135(c) agreement with a 37 CFR 1.666(b) request asking whether a 37 CFR 1.662(a) request for entry of adverse judgment is about to follow.

The language of 35 USC 135(c) is clearly not limited either to the Justice Department in general or to the Antitrust Division in particular. What it says is "Government agencies." It is not even limited to U.S. Government agencies, and the court in United States v. FMC Corp., 514 F.Supp. 1166, 210 USPQ 486 (E.D. Pa. 1981), ___ F.Supp. ___, 215 USPQ 43 (E.D. Pa. 1982), rev'd, 717 F.2d 775, 219 USPQ 761 (3rd Cir. 1983), stated broadly that "Congress passed § 135(c)... to give law enforcement agencies access to interference settlement agreements."[116] Moreover, the Commissioner's Notice implementing that aspect of 35 USC 135(c)[117] also refers broadly to "Government agencies" -- not to United States Government agencies, Federal Government agencies, the Justice Department, or the Antitrust Division. Thus, at least in theory, a wide variety of government agencies (notably including the Federal Trade Commission) other than the Antitrust Division could obtain access to the copies of 35 USC 135(c) agreements archived by the board. However, Chief Administrative Patent Judge Stoner wrote me in a letter dated December 23, 1997, that he was "not aware of any agency other than Justice [i.e., the Antitrust Division] which has requested access." However, he cautioned that he had "not searched the files to discover contrary information."

P. How Do the Government Agencies Go About Obtaining Access to the Copies of 35 USC 135(b) Agreements "kept separate from the file[s] of the interference[s]" Pursuant to the Written Requests of the Parties That Filed the Copies?

According to a letter to me from Chief Administrative Patent Judge Stoner dated November 06, 1997:

Pursuant to a standing request, letters are sent [by the board] to the Antitrust Division several times a year and identify, by interference number, those interferences in which agreements have been filed and requests for separate keeping acknowledged. The interference numbers are arranged by the month in which the acknowledgment was mailed. Should we fail to timely send a letter to the Antitrust Division, we will be reminded by them of the need to do so.

Note first that Judge Stoner did not say either that the board sends the Antitrust Division copies of the copies of 35 USC 135(c) agreements that it archives or that a representative of the Antitrust Division comes over to the board to read the copies archived there. However, Administrative Patent Judge Calvert told me several years ago that an apparently very junior representative of the Antitrust Division does come over periodically to while away some time reviewing at least selected ones of the file folders[118] of copies of 35 USC 135(c) agreements maintained by the board.[119] Thus, the Federal Circuit's statement in CTS Corp. v. Piher International Corp., 727 F.2d 1550, 221 USPQ 11 (Fed. Cir. 1984), that 35 USC 135(c):

agreements can... be reviewed by the Department of Justice's Antitrust Division by means of a "Civil Investigative Demand." See generally United States v. FMC Corp., 717 F.2d 775, 777-78, 219 USPQ 761, 763-64 (3rd Cir. 1983).[120]

is highly misleading. While that is what happened in FMC Corp., that is not what usually happens!

Note also that the Antitrust Division is only informed of 35 USC 135(c) agreements filed with 37 CFR 1.666(b) requests. Thus, if you are willing to file a copy of a 35 USC 135(c) agreement without a 37 CFR 1.666(b) request (and of course nothing compels you to file a 37 CFR 1.666(b) request when you file a copy of a 35 USC 135(c) agreement), the board will not inform the Antitrust Division that that copy has been filed. The price that you will pay for avoiding the scrutiny of the Antitrust Division in this manner is that the copy will be open to inspection by the public after (a) the interference has terminated without entry of judgment or (b) judgment has been entered as to all parties and all counts. 37 CFR 1.11(e).

The Commissioner's Notice implementing this aspect of 35 USC 135(c) envisions that representatives of various government agencies will read the copies of 35 USC 135(c) agreements archived by the board. That Commissioner's Notice reads in its entirety as follows:

Access to Interference Settlement Agreements

by Government Agencies

Under the provisions of 35 U.S.C. § 135(c), a party to an interference filing a copy of a settlement agreement may request that the copy be kept separate from the file of the interference, and made available only to Government agencies on written request, or to any person on a showing of good cause.

In order to provide the parties with a record of the inspection of such agreements by Government agencies, a representative of an agency will henceforth be required to present a written request, similar to the following, for each interference in which the inspection and/or copying of the agreement(s) is desired:

Date: ________________

To: Clerk, Board of Patent Interferences

Pursuant to the provisions of 35 USC 135(c), please permit the bearer(s) of this letter, to [ ] inspect and/or [ ] copy the settlement agreement(s) filed in Interference No. . The information gained from such inspection and/or copying will be kept in confidence and will not be disclosed to any other person except for official investigative or law enforcement purposes.[[121]]

_______________________________

Name, Title

_______________________________

Agency

The request will be placed in the folder containing the copy of the agreement, where it may be inspected by the parties or their authorized representatives.

This procedure will be applicable only to inspection or copying by the representatives of Government agencies, since no person other than a representative of a Government agency, or of a party, will be granted access to a copy of an interference settlement agreement which is kept separate from the interference file except by way of a petition for access thereto, see M.P.E.P. § 1002.02(k), item 2, and the parties to the interference are normally provided with copies of any such petition.[[122]]

LUTRELLE F. PARKER

Date: June 5, 1978 Acting Commissioner of Patents

and Trademarks

However, although 35 USC 135(c) was enacted in 1962 and the Commissioner's Notice quoted above was published in 1978, the court in United States v. FMC Corp., 514 F.Supp. 1166, 210 USPQ 486 (E.D.Pa. 1982), rev'd, 717 F.2d 775, 219 USPQ 761 (3rd Cir. 1983), noted with apparent amazement that:

Although § 135(c) was designed to provide government access to all interference settlement agreements, the settlement agreements here at issue did not come to light until eleven years later [i.e., after the patent at issue was granted] and then only because of a Justice Department antitrust investigation.[123]

On appeal, the Third Circuit noted the same thing:

Although the settlement agreement between FMC and Bayer relating to the United States had been on file since 1968, no member of the Justice Department or the Patent Office reviewed that agreement until 1978 when FMC disclosed it pursuant to a CID.[124]

Q. What Do the Government Agencies Do After Having Obtained Access to the Copies of 35 USC 135(c) Agreements "kept separate from the file[s] of the interference[s]" Pursuant to the Written Requests of the Parties that Filed the Copies?

That is, of course, the sixty four thousand dollar question. As Chief Administrative Patent Judge Stoner wrote to me in a letter dated November 06, 1997:

What the Antitrust Division does with the information it receives [from the board][125] is a question best asked of them.

Judge Stoner gave me the name and address of the board's current contact in the Antitrust Division,[126] and I wrote her asking her just that. In response, I received a letter, dated December 10, 1997, from Kurt Shaffert, the Antitrust Division's lead counsel in United States v. FMC Corp., 514 F.Supp. 1166, 210 USPQ 486 (E.D. Pa. 1981), ___ F.Supp. ___, 215 USPQ 43 (E.D. Pa. 1982), rev'd, 717 F.2d 775 (3rd Cir. 1983). According to him:

Your first letter asked for an explanation of "what the Antitrust Division does with the information that it receives... under 35 USC 135(c)." The brief answer is that we review it for indications that an interference may have been settled on anticompetitive terms. A hypothetical example of terms that would attract our closer scrutiny would be provisions precluding a party from conducting research to develop competing technologies.[[127]] It is not possible to compile a list of all potentially offensive provisions in settlement agreements, but it is safe to say that agreements whereby the prevailing party simply licenses the other under the patent growing out of the interference do not, in the absence of special factors, attract our interest. Any leads to potentially anticompetitive conduct that we may obtain from these filings are pursued, similarly to leads obtained from any other information source, in civil or criminal investigations to determine whether it is appropriate to bring antitrust enforcement actions in given situations.

Comment: Mr. Shaffert did not cite any case in which the Antitrust Division's review of a copy of a 35 USC 135(c) agreement led to a "civil/or criminal investigation[]," much less to an "antitrust enforcement action[]," and I am aware of no such case. Assuming, therefore, that thirty-six years of zealous review of 35 USC 135(c) agreements by the Antitrust Division has led to little or no action by the Antitrust Division, one can tentatively draw various conclusions. One such conclusion is, of course, that the interference bar seldom engages in antisocial behavior and that the attorneys of the Antitrust Division who review the 35 USC 135(c) filings would better spend their time doing other things.

R. What Reasons Have Been Accepted or Not Accepted as Constituting "good cause" Within the Meaning of 35 USC 135(c) for Someone Other Than a "Government agenc[y]" to Obtain Access to a 35 USC 135(c) Agreement "kept separate from the file of the interference" Pursuant to the Written Request of the Party That Filed the Copy?

Remarkably, there is only one published opinion on a 37 CFR 1.666(b) petition: Trokel v. L'Esperance 44 USPQ2d 1702 (Comm'r 1997)Trokel v. L'Esperance, 44 USPQ2d 1702 (Comm'r 1997). Moreover, even that opinion is marked non-precedential -- which means that Chief Administrative Patent Judge Stoner, who was the author of that opinion,[128] is (and his successors are) not bound to rule the same way again in the future.

Administrative Patent Judge Calvert, who for many years was the Commissioner's delegee to decide petitions under 37 CFR 1.666(b) and its predecessors,[129] told me several years ago that he had never received a petition for access to the PTO's copy of a 35 USC 135(c) agreement.[130] He speculated that that was because most companies who might be interested in a 35 USC 135(c) agreement were involved in litigation with the patentee and that it was easier to obtain a copy of the agreement through discovery in the litigation than to go to the bother and expense of filing a 37 CFR 1.666(b) petition.[131]

That speculation by Judge Calvert brings me to Trokel v. L'Esperance.[132] There a company that was involved in district court litigation with the party Trokel's assignee sought via discovery in that action to obtain a copy of a 35 USC 135(c) agreement a copy of which had been filed with the board during the interference. The assignee resisted production of that copy in the district court action. After that issue had been briefed in the district court, the party that had sought production of the copy in the district court litigation filed a 37 CFR 1.666(b) petition. The assignee of the party Trokel opposed that petition on the ground, inter alia, that the district court was better positioned to decided whether or not the adverse party should be given access to a copy of the 35 USC 135(c) agreement. Chief Administrative Patent Judge Stoner agreed, denying the petition.

Comment: I do not understand why Judge Stoner made his opinion non-precedential. The facts (a) that there was previously no published opinion interpreting 37 CFR 1.666(b) and (b) that the only published opinion now available is marked non-precedential only increase the star chamber aura that surrounds 35 USC 135(c) and 37 CFR 1.666.

S. If a Party to an Interference Failed to Comply with 35 USC 135(c), Does the Entire Patent Become Permanently Unenforceable or Only the Claims That Were Designated as Corresponding to the Count or Counts in the Interference?

In Forbro Design Corp. v. Raytheon Co., ___ F.Supp. ___, 190 USPQ 70 (D.Mass. 1975), aff'd on other grounds, 532 F.2d 758, 190 USPQ 49 (1st Cir. 1976), the patent in suit contained six claims. However, in modern terms, only claim 6 had been designated as corresponding to the count. The court found that the plaintiff patentee had failed to file a copy of an agreement entered into with its opponent in the interference in connection with settlement of the interference. Nevertheless, it found no violation of 35 USC 135(c), reasoning as follows:

Plaintiff asserts that the issue is not relevant to a resolution of this case since the only claim decided in the Interference was claim 6, and this case relates only to claims 1-4.[133]

***

I agree with plaintiff that the Interference was decided only upon claim 6 and [that] thus the issue is not properly under consideration. If anything is to be rendered unenforceable, it should only be that claim.[134]

***

In view of the Court's previously articulated position that this failure to file is only effective as to claim 6, claims 1-4 are not unenforceable under the provisions of §135(c).[135]

In my opinion, what the court said in Forbro is just plain wrong. What the statute says is that "Failure to file the copy of such agreement or understanding shall render permanently unenforceable... any patent of such parties involved in the interference or any patent subsequently issued on any application of such parties so involved." (Emphasis supplied.) It does not say that failure to file the copy of such agreement or understanding shall render permanently unenforceable any claim of such parties involved in the interference.

Moreover, subsequent opinions, while not expressly referring to Forbro, have said the opposite. Specifically, in United States v. FMC Corp., ___ F.Supp. ___, 215 USPQ 43 (E.D.Pa. 1982), rev'd, 717 F.2d 775, 219 USPQ 761 (3rd Cir. 1983), the court said that:

Defendant maintains noncompliance with 35 U.S.C. §135(c) does not render the patent unenforceable, but renders only that portion of the patent involved in the interference unenforceable. Defendant's patent is comprised of the four claims in its patent application. See Finding of Fact 14. Only claims one and three were the subject of the interference with Bayer. See Finding of Fact 9. According to defendant, if I find it did not comply with 35 U.S.C. §135(c), only that portion of its patent corresponding to claims one and three need be invalidated.

There is no support for defendant's argument. The statute clearly says that noncompliance results in the unenforceability of the patent itself. Moreover, there is evidence in the legislative history that defendant's interpretation of the statute's penalty provision was expressly considered and rejected. At the Senate hearings David Ladd, Commissioner of Patents, said specifically that he would not accept a less stringent penalty provision which would invalidate only the claims involved in the interference. Hearings on H.R. 12513 Before the Subcomm. on Patents, Trademarks and Copyrights of the Senate Comm. on the Judiciary, 87th Cong., 2d Sess. at 15 (1962) (hereinafter "Senate Hearings").[136]

Similarly, in Unisys Corp. v. Commissioner of Patents and Trademarks, ___ F.Supp. ___, 39 USPQ2d 1842 (D.C.D.C. 1993), the court said that:

under the clear terms of §135(c), both the settlement agreement and the patent that was at issue in the interference are rendered "permanently unenforceable."[137]

T. If a Party to an Interference Failed to Comply with 35 USC 135(c), is a Patent That Matured from a Downstream Application Permanently Unenforceable?

I know of no case on point. What the statute says is that "Failure to file the copy of such agreement or understanding shall render permanently unenforceable... any patent of such parties involved in the interference or any patent subsequently issued on any application of such parties so involved." (Emphasis supplied.) Hence, the plain meaning of the statute is that any patent that matures from a downstream application is not "render[ed] permanently unenforceable..." by failure to file a copy of a 35 USC 135(c) agreement. Moreover, the statute is clearly penal in nature,[138] so it should be strictly construed.

On the other hand, if all an applicant interferent has to do to avoid the strictures of 35 USC 135(c) is to file a continuation of the application that was involved in the interference, 35 USC 135(c) is a toothless tiger indeed.[139] Moreover, it seems surpassingly unlikely that Congress intended the strictures of 35 USC 135(c) to impact unequally on applicant interferents and patentee interferents.[140]

Comment: If the Antitrust Division really is going to try to get 35 USC 135(c) amended, it would be desirable to amend it to eliminate this presumably unintended potential loophole.

U. If a Party to an Interference Failed to Comply with 35 USC 135(c), Can That Failure be Remedied in Any Way?

The answer to this question is a qualified yes, but the available option is probably illusory in most cases. As the court said in Esso Research and Engineering Co. v. Brenner ___ F.2d ___, 165 USPQ 486 (D.C. Cir. 1970) (per curiam)Esso Research and Engineering Co. v. Brenner, ___F.2d, 165 USPQ 486 (D.C. Cir. 1970) (per curiam):

It was the position of appellee [i.e., the Commissioner of Patents] that he had no authority to accept the agreement after the expiration of the statutory six-months' grace period following the interference termination. Appellant seeks to scale this barrier by asserting that appellee failed to give a timely notice within the meaning of the statute. His argument in essence is that the notice was given too far in advance, and that a "reasonable" timing of the notice would have been at, or shortly before, the termination. But we see nothing in the statute, or in its legislative history, that compels this construction. The notice was given prior to termination in this instance; and its statutory purpose would have been fully achieved except for appellant's neglect. Although the sanction is concededly harsh, especially in a case like this where only human failure -- and not deliberate disregard -- was apparently involved, only Congress can conceivably relieve appellant from the consequences which surely attach under the statute as written.[141]

See also Nelson v. Bowler, 212 USPQ 760 (Comm'r 1980):

Since the agreement copy was filed beyond the six-month period, under the provisions of 35 USC 135(c) the Commissioner has no authority to accept it, regardless of whether or not "good cause" is shown.[142]

and Unisys Corp. v. Commissioner of Patents and Trademarks, ___ F.Supp. ___, 39 USPQ2d 842 (D.C.D.C. 1993):

plaintiff appears to argue that, because it was "caught in a trap set for others," the Court should somehow craft a remedy for plaintiff that would avoid the effects of § 135(c). Absolutely nothing in the statute permits this Court to ignore the law in such a fashion. Nor does the Court condone plaintiff's attempt to avoid the legal consequences of its own oversight....[143]

Thus, practically speaking, the answer to the question is probably no in the overwhelming majority of cases.

V. What Reasons Have Been Accepted or Not Accepted as Constituting "good cause" Within the Meaning of 35 USC 135(c) Justifying the Filing of a Copy of a 35 USC 135(c) Agreement or Understanding "during the six-month period subsequent to the termination of the interference as between the parties to the agreement or understanding"?

Amazingly, I have found no published opinions (precedential or non-precedential) on this point! Thus, on this point I can only offer two guesses.

First, as I previously stated,[144] I believe that a supplemental agreement entered into after an interference has been terminated but before the six-month grace period has expired can be filed during that period on the basis that the fact that the supplemental agreement did not come into existence until after the interference was terminated is "good cause" for not having filed a copy of the supplemental agreement prior to termination of the interference.

Second, I believe that, if a 35 USC 135(c) agreement was entered into prior to termination of an interference but no copy of it was filed prior to termination of the interference due to the responsible attorney's or agent's ignorance of 35 USC 135(c), that ignorance will not be accepted as constituting "good cause" justifying the filing of a copy of the agreement during the six-month grace period. While not quite on point, Unisys Corp. v. Commissioner of Patents and Trademarks, ___ F.Supp.___, 39 USPQ2d 1842 (D.C.D.C. 1993), probably shows how an attempt to justify failure to file a copy of a 35 USC 135(c) agreement on that basis would be received. There, the six-month grace period had already expired before the attempt was made to file a copy of the 35 USC 135(c) agreement. However, what the court had to say about the patentee's attempt to file the copy after expiration of the six-month grace period would apply equally during the six-month grace period:

Plaintiff does not explain the reason for its delay in filing the settlement agreement, other than to state that it was "[d]ue to an inadvertent mistake." Instead, plaintiff appears to argue that, because it was "caught in a trap set for others," the Court should somehow craft a remedy for plaintiff that would avoid the effects of § 135(c). Absolutely nothing in the statute permits this Court to ignore the law in such a fashion. Nor does the Court condone plaintiff's attempt to avoid the legal consequences of its own oversight, especially where plaintiff was provided with ample notice of those consequences.[145]

While the court's reference to the plaintiff-patentee's having been "provided with ample notice of... [the] consequences [of failing to comply with 35 USC 135(c)]" might seem to provide an out in some cases, in point of fact I've never seen a declaration of an interference that didn't contain a form paragraph about 35 USC 135(c), and the courts have accepted such form paragraphs as providing the notice required by the statute.[146]

W. Is a Notice Concerning 35 USC 135(c) Given in the Declaration of the Interference a "notice... [given] a reasonable time prior to... [the] termination [of the interference]..." Within the Meaning of 35 USC 135(c)?

The second paragraph of 35 USC 135(c) reads as follows:

The Commissioner shall give notice to the parties or their attorneys of record, a reasonable time prior to said termination, of the filing requirement of this section. If the Commissioner gives such notice at a later time, irrespective of the right to file such agreement or understanding within the six-month period on the showing of good cause, the parties may file such agreement or understanding within sixty days of the receipt of said notice.

Reading that, one would think that it means that the Commissioner is supposed to give interferents notice of the filing requirement of 35 USC 135(c) a relatively short time before an interference is terminated -- e.g., by incorporating a form paragraph in each decision at final hearing warning the parties that, if they have entered into a 35 USC 135(c) agreement or understanding but have not filed a copy of that agreement or understanding, they must file that copy prior to the 37 CFR 1.661 termination of the interference if no court review of the board's decision is sought or prior to the termination of the court proceedings if court review of the board's decision is sought.[147] However, that is not how the PTO has implemented that statutory mandate. What it does is to incorporate the following form paragraph into the declaration of each interference:

Notice Under 35 U.S.C. § 135(c)

Notice is hereby given of the requirement of 35 U.S.C. § 135(c) for filing in the U.S. Patent and Trademark Office a copy of any agreement "in connection with or in contemplation of the termination of the interference." SeeUnisys Corp. v. Commissioner of Patents and Trademarks, 39 USPQ2d 1842 (D.C.D.C. 1993).

Since interferences that go to final hearing are typically lasting four to six years these days, that means that counsel are supposed to remember that form paragraph for four to six years -- or, more realistically, that counsel are simply supposed to be aware of the filing requirement of 35 USC 135(c). That is, the form paragraph is really a meaningless ritual.

Moreover, perhaps because counsel are "presumed to know the law," the courts have let the PTO get away with its surprising interpretation of "a reasonable time prior to said termination...." The strongest language on point is found in one of the earliest opinions interpreting 35 USC 135(c), Esso Research and Engineering Co. v. Brenner, ___ F.2d ___, 165 USPQ 486 (D.C. Cir. 1970) (per curiam):

It was the position of appellee [i.e., the Commissioner of Patents] that he had no authority to accept the agreement after the expiration of the statutory six-months' grace period following the interference termination. Appellant seeks to scale this barrier by asserting that appellee failed to give a timely notice within the meaning of the statute. His argument in essence is that the notice was given too far in advance, and that a "reasonable" timing of the notice would have been at, or shortly before, the termination. But we see nothing in the statute, or in its legislative history,1 that compels this construction. The notice was given prior to termination in this instance; and its statutory purpose would have been fully achieved except for appellant's neglect. Although the sanction is concededly harsh, especially in a case like this where only human failure -- and not deliberate disregard -- was apparently involved, only Congress can conceivably relieve appellant from the consequences which surely attach under the statute as written.

________________________

1Appellant points to testimony in the Congressional hearings in which the Commissioner of Patents said that notice would be given at the time of the interference termination, and urges that Congress passed the law in reliance upon this representation. But this does not, in context, appear to have been anything like a fixed commitment, and the Commissioner's subsequent letter to the Senate Committee refers to the giving of notice "before" termination.[148]

See also Unisys Corp. v. Commissioner of Patents and Trademarks, ___ F.Supp. ___, 39 USPQ2d 1842 (D.C.D.C. 1993). In that case the plaintiff patentee was seeking an order requiring the PTO to "reopen" a terminated interference so that it could file a copy of a 35 USC 135(c) agreement that it had not filed prior to expiration of the six-month grace period. The parties filed cross-motions for summary judgment, and the court granted the Commissioner's motion and denied the patentee's motion, saying, inter alia, that:

It is undisputed that plaintiff was warned of the requirements of § 135(c) at least three times during the course of the interference proceeding in this case.[149]

***

Nor does the Court condone plaintiff's attempt to avoid the legal consequences of its own oversight, especially where plaintiff was provided with ample notice of those consequences.[150]

The assertion in Unisys that the plaintiff-patentee "was warned of the requirements of § 135(c) at least three times during the course of the interference proceeding in this case" is sufficiently odd[151] that I called counsel for the plaintiff-patentee. He explained that the underlying interference had been between (1) an application and (2) a patent and an application to reissue that patent, both of which were owned by Unisys. Thus, in accordance with standard board practice, a copy of the declaration of the interference (containing the standard form paragraph) was put (1) in the file of the interference, (2) in the file of the application owned by Unisys's opponent, (3) in the file of Unisys's patent, and (4) in the file of Unisys's reissue application. Moreover, and also in accordance with standard board practice, Unisys had been sent copies of the copies filed in the interference file, its patent file, and its reissue application file -- copies which differed only in their headings. Thus, the court's assertion that Unisys had been "warned of the requirements of § 135(c) at least three times during the course of the interference proceeding in this case" was not really fair. What happened is that it was warned once, at the very beginning of the interference, and it got three copies of that warning![152]

X. Does a Notice Given to a Patent Agent or Agents of Record Rather Than to an Attorney or Attorneys of Record Comply with the Second Paragraph of 35 USC 135(c)?

The second paragraph of 35 USC 135(c) says that "The Commissioner shall give notice to the parties or their attorneys of record, a reasonable time prior to said termination, of the filing requirement of the section." (Emphasis supplied.) However, parties can be represented by patent agents of record rather than by attorneys of record. Suppose that the board sends the declaration of the interference with the form paragraph to a party's patent agent or agents of record rather than to its attorney or attorneys of record. Is that notice valid?

As I previously pointed out, the statute is penal[153] and should, therefore, be strictly construed. On the other hand, a ruling that notice to a party's patent agent or agents of record did not comply with 35 USC 135(c) would be a ridiculous result! Patent agents have to pass the same patent bar exam that patent attorneys do, and they, too, are "presumed to know the law" -- or, at least, the law governing practice before the PTO, which definitely includes 35 USC 135(c) and 37 CFR 1.666.

Nevertheless, if the Antitrust Division really is going to try to get 35 USC 135(c) amended, this would be another presumably unintended glitch in 35 USC 135(c) that ought to be addressed.

Y. Is a Patent Permanently Unenforceable If the Commissioner Fails to Give the Required Notice, But the Patentee and/or the Patentee's Attorney or Agent Knew About 35 USC 135(c) and Nevertheless Failed to Comply with It?

I don't think so. Of course, counsel are presumed to know the law, and the PTO is not required to remind us of 35 USC 103 or the filing requirements of 37 CFR 1.602. However, the first sentence of the second paragraph of 35 USC 135(c) specifically says that:

The Commissioner shall give notice to the parties or their attorneys of record, a reasonable time prior to said termination, of the filing requirement of this section. [Emphasis supplied.]

Moreover, the second sentence of the second paragraph of 35 USC 135(c) specifically says that:

If the Commissioner gives such notice at a later time, irrespective of the right to file such agreement or understanding within the six-month period [following termination of the interference] on a showing of good cause, the parties may file such agreement or understanding within sixty days of the receipt of such notice.

Under the circumstances, I think that Congress, for whatever reason, has imposed a special requirement on the PTO in this situation and that, if the PTO muffs it (that is, if an APJ fails to include the form paragraph in a declaration of an interference), the parties are excused from timely compliance with 35 USC 135(c).

On the other hand, if the Antitrust Division is successful in getting 35 USC 135(c) amended, I see no reason why the second paragraph of 35 USC 135(c) should not be deleted.

Z. What are the "discretionary action[s] of the Commissioner" Referred to in the Third Paragraph of 35 USC 135(c), and What Standard of Review Will the Court Apply if you Do Seek Review Under Section 10 of the Administrative Procedure Act of a Discretionary Action of the Commissioner Under 35 USC 135(c)?

The second sentence of the first paragraph of 35 USC 135(c) says that:

If any party filing... [a copy of a 35 USC 135(c) agreement] so requests, the copy shall be kept separate from the file of the interference, and made available only to Government agencies on written request, or to any person on a showing of good cause.

Those obligations are not discretionary; the Commissioner's delegee (i.e., the board) must do that. If it fails to comply with either of those obligations, review could presumably be sought by way of mandamus rather than under the Administrative Procedure Act.

Similarly, the first sentence of the second paragraph of 35 USC 135(c) says that:

The Commissioner shall give notice to the parties or their attorneys of record, a reasonable time prior to... termination [of the interference], of the filing requirement of this section. [Emphasis supplied.]

Again, that's not discretionary; the Commissioner's delegee must do that.

However, the fourth sentence of the first paragraph of 35 USC 135(c) says that:

The Commissioner may, however, on a showing of good cause for failure to file within the time prescribed, permit the filing of the agreement or understanding during the six-month period subsequent to the termination of the interference as between the parties to the agreement or understanding.

That's discretionary. If you think that you have "show[n]... good cause for failure to file within the time prescribed [by the first sentence of the first paragraph of 35 USC 135(c)]...," but the chief administrative patent judge says that you haven't, you can sue the Commissioner (in the district court of your choice; you are not limited to the District Court for the District of Columbia) under section 10 of the Administrative Procedure Act.

Moreover, if you ask the board to "reopen" an interference so that you can "timely" file a copy of a 35 USC 135(c) agreement that you did not in fact timely file, and the board turns you down, you can sue the Commissioner under section 10 of the Administrative Procedure Act. That's exactly what was involved in Unisys Corp. v. Commissioner of Patents and Trademarks, ___ F.Supp. ___, 39 USPQ2d 1842 (D.C.D.C. 1993).

However, if you do sue the Commissioner under section 10 of the Administrative Procedure Act to seek review of a discretionary action by the Commissioner's delegee under 35 USC 135(c), don't expect plenary review. As the court said in Unisys:

The appropriate standard of review of the Commissioner's decision is set out at § 706(2)(A) of the APA, 5 U.S.C. § 706(2)(A). That standard requires the Court to "hold unlawful and set aside agency action, findings, and conclusions found to be arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law." The standard is a narrow one: a court may not "substitute its judgment for that of the agency," Motor Vehicle Mfrs. Ass'n v. State Farm Mutual Auto. Ins. Co. 463 U.S. 29 (1983)Motor Vehicle Mfrs. Ass'n v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29, 43 (1983), but rather must uphold the agency's decision if "the agency's path may reasonably be discerned." Bowman Transp. Sys. v. Arkansas-Best Freight Sys., Inc. 419 U.S. 281 (1974)Bowman Transp. Sys. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 286 (1974).[154]

In addition, you should be aware that, in contrast to an action under 35 USC 146, you do not get to supplement the administrative record. That is, whether or not the Commissioner's delegee abused his or her discretion will be decided on the record you made before the delegee. Hence, it is imperative that that be a complete record. Thus, if the decision of which you wish to complain states or implies that the decision might be different if you had submitted additional evidence in some regard, and if you have that additional evidence (of course, sometimes you will not have any additional evidence to submit), for heaven's sake, submit the additional evidence and a request for reconsideration in the PTO. Don't try to submit that evidence for the first time in the Administrative Procedure Act action.

IV. Conclusion

35 USC 135(c) is a goofy law, and it has provoked an unusual amount of goofy commentary by the courts. However, its terms are mandatory, and it has been enforced with great vigor by the courts. Accordingly, no matter what one may think of its desirability, one must carefully comply with 35 USC 135(c).

Published in 80 Journal of The Patent and Trademark Office Society 561, 675 (1998).


ENDNOTES



[1]This is a revised version of a paper delivered at the 13th Annual Spring CLE Program of the Section of Intellectual Property of the American Bar Association in Washington, D.C., on March 31, 1998.

[2]Partner in and head of the interference section at Oblon, Spivak, McClelland, Maier & Neustadt, P.C. The author's E-mail address is [email protected]

[3]The report appears at United States Code and Congressional and Administrative News, 87th Congress, Second Sessions, pp. 3286-89. See also Moog, Inc. v. Pegasus Laboratories, Inc., 376 F.Supp. 439, 444, 180 USPQ 4, 8 (E.D. Mich. 1973) ("the sum and substance of the legislative hearings as well as the congressional report is that Congress was seeking to check antitrust violations."); Moog, Inc. v. Pegasus Laboratories, Inc., 376 F.Supp. 445, 450, 183 USPQ 225, 229 (E.D. Mich. 1974) ("If the agreement materially affects either the issuance or the utilization of a patent, it is intrinsically a matter of significance under the antitrust laws."), aff'd, 521 F.2d 501, 187 USPQ 279 (6th Cir. 1975); Moog, Inc. v. Pegasus Laboratories, Inc., 521 F.2d 501, 502, 187 USPQ 279, 280 (6th Cir. 1975) ("this statute is designed to restrict monopolistic practices...."); United States v. FMC Corp., ___ F.Supp. ___, 215 USPQ 43, 51 (E.D. Pa. 1982) ("The purpose of the statute is to prevent parties to an interference from terminating it by agreements containing provisions that might offend the antitrust laws. *** 35 U.S.C. § 135(c) requires agreements 'in connection with or in contemplation of' a termination of a patent interference to be filed with the Patent Office so the Department of Justice can evaluate them for antitrust implications."), rev'd, 717 F.2d 775, 219 USPQ 761 (3rd Cir. 1983); Omark Industries, Inc. v. Carlton Co., 458 F.Supp. 449, 452, 201 USPQ 825, 828 (D. Or. 1978) ("Section 135(c) was designed to prevent an applicant from obtaining a patent monopoly by a private settlement hostile to the public interest."), aff'd on other grounds, 652 F.2d 783, 212 USPQ 413 (9th Cir. 1980);
CTS Corp. v. Piher International Corp.

___ F.Supp. ___, 219 USPQ 1180

(N.D. Ill. 1983), aff'd, 727 F.2d 1550,

221 USPQ 11 (Fed. Cir. 1984)CTS Corp. v. Piher International Corp., ___ F.Supp. ___, ___, 219 USPQ 1180, 1184 (N.D. Ill. 1983) ("the purpose of the statute... is to require the filing of agreements which might be anti-competitive in nature...."), aff'd, 727 F.2d 1550, 1555, 221 USPQ 11, 14 (Fed. Cir. 1984) ("As a means to prevent anti-competitive settlements between parties involved in patent interferences, any settlement agreements between parties must be filed with the PTO.").

[4]The legislative history of the statute is reviewed (with varying emphasis) in Old Dominion Box Co. v. Continental Can Co., 273 F.Supp. 550, 561, 155 USPQ 70, 78 (S.D.N.Y. 1967), aff'd on other grounds, 393 F.2d 321, 157 USPQ 353 (2nd Cir. 1968); Esso Research and Engineering Co. v. Brenner, ___ F.2d ___, ___ n.1, 165 USPQ 486, 487 n.1 (D.C. Cir. 1970) (per curiam); Moog, Inc. v. Pegasus Laboratories, Inc., 376 F.Supp. 445, 448-49 n.8, 183 USPQ 225, 228 n.8 (E.D. Mich. 1974), aff'd, 521 F.2d 501, 404-06, 187 USPQ 279, 282-83 (6th Cir. 1975); and United States v. FMC Corp., 514 F.Supp. 1166, 1168-70, 210 USPQ 486, 487-89 (E.D. Pa. 1981), ___ F.Supp. ___, ___, 215 USPQ 43, 50 nn. 3 and 4, rev'd, 717 F.2d 775, 777-79, 219 USPQ 761, 763-65 (3rd Cir. 1983).

[5]Esso Research and Engineering Co. v. Brenner, ___ F.2d ___, ___, 165 USPQ 486, 487 (D.C. Cir. 1970) (per curiam); and Moog, Inc. v. Pegasus Laboratories, Inc., 376 F.Supp. 439, 443, 180 USPQ 4, 7 (E.D. Mich. 1973).

[6]PPG Industries, Inc. v. Bausch & Lomb, Inc., ___ F.Supp. ___, ___, 205 USPQ 914, 919 (W.D.N.Y. 1979).

[7]While 35 USC 135 has been amended twice since 1962, neither amendment made any substantive change to 35 USC 135(c).

[8]804 F.2d at 137, 231 USPQ at 645.

[9]804 F.2d at 140, 231 USPQ at 688. The opinion does not indicate what the defendant thought the PTO would have done if the patentee had attempted to file a copy of the settlement in the declaratory judgment action with the board.

[10]804 F.2d at 140-41, 231 USPQ at 648.

[11]I don't think that the Federal Circuit's off-hand reference to "an interference proceeding before the PTO" in Carella, 804 F.2d at 141, 231 USPQ at 648, decides this question. Precision Instrument and Moog both did in fact involve "an interference proceeding before the PTO," and the court was clearly drawing a distinction between "an interference proceeding" and a declaratory judgment action, not a distinction between "an interference proceeding before the PTO" and an interference proceeding before a district court.

[12]727 F.2d at 1556 n.6, 221 USPQ at 15 n.6.

[13]Cf. also Davis v. Loesch

998 F.2d 963, 27 USPQ2d 1440 (Fed. Cir. 1993)Davis v. Loesch, 998 F.2d 963, 27 USPQ2d 1440 (Fed. Cir. 1993), which recognized "the long-standing practice of the PTO that, in an interference, joint inventors are deemed to constitute a single party." 998 F.2d at 966, 27 USPQ2d at 1443.

[14]PPG, the first named plaintiff, held an exclusive license from Brockaway in a defined field of use.

[15]___ F.Supp. at ___, 205 USPQ at 919.

[16]___ F.Supp. at ___, 205 USPQ at 919.

[17]See section III.G., infra.

[18]___ F. Supp. at ___, 205 USPQ at 919.

[19]___ F. Supp. at ___, 205 USPQ at 916.

[20]Research Corporation was not "a party to the interference" under any construction of that term! The possible parties were the inventor (Weber) and his assignee (Brockaway).

[21]___ F. Supp. at ___, 205 USPQ at 919.

[22]See section III.G., infra.

[23]That, of course, is a totally different question from the question of whether 37 CFR 1.602(b) and (c) require that the existence of such a license agreement be disclosed on the open record. However, 37 CFR 1.602(b) and (c) do not require that a copy of the license agreement be filed with the PTO.

[24]727 F.2d at 1555, 221 USPQ at 14.

[25]727 F.2d at 1556, 221 USPQ at 15.

[26]See also Moog, Inc. v. Pegasus Laboratories, Inc.,

376 F.Supp. 439, 180 USPQ 4

(E.D. Mich. 1973)Moog, Inc. v. Pegasus Laboratories, Inc., 376 F.Supp. 439, 443, 180 USPQ 4, 7-8 (E.D. Mich. 1973) ("The statute requires the filing of '[a]ny agreement or understanding *** made in connection with or in contemplation of the termination of the interference.' This language demands some definite link between the settlement of an interference and the agreement or understanding."), 376 F.Supp. 445, 448, 183 USPQ 225, 227 (E.D. Mich. 1974) ("As noted in the previous opinion, the statutory reference to agreements made 'in connection with or in contemplation of' termination requires a 'definite link between the settlement of an interference and the agreement or understanding'"; footnote omitted.), aff'd, 521 F.2d 501, 187 USPQ 279 (6th Cir. 1975); United States v. FMC Corp., ___ F.Supp. ___, ___ n.10, 215 USPQ 43, 53 n.10 (E.D. Pa. 1982) ("any understanding regarding these oppositions would have been reached after the parties agreed to terminate the United States interference. The understanding [therefore] would not be causally related to the termination of the United States interference, as it must be to fall within the rubric of 35 U.S.C. § 135(c)."), rev'd, 717 F.2d 775, 219 USPQ 761 (3rd Cir. 1983); and CTS Corp. v. Piher International Corp., ___ F.Supp. ___, ___, 219 USPQ 1177, 1178 (N.D. Ill. 1983) ("I am at a loss to understand how the plain language of the statute can be construed to permit, let alone to require, the filing of an agreement entered into after termination of the interference..."; emphasis in the original), aff'd, 727 F.2d 1550, 221 USPQ 11 (Fed. Cir. 1984).

[27]The agreement in question was entered into after the 7th Circuit's decision on appeal in a 35 USC 146 action. While the period for filing a petition for certiorari had not yet expired, and while the agreement did refer to the interference, the district court found as a fact that the evidence did not demonstrate a causal relationship between the agreement (which did specifically settle another proceeding in a different court between the same two real parties in interest) and the termination of the interference. See CTS Corp. v. Piher International Corp., ___ F.Supp. ___, 219 USPQ 1180 (N.D. Ill. 1983), aff'd, 727 F.2d 1550, 221 USPQ 11 (Fed. Cir. 1984).

[28]273 F.Supp. at 561, 155 USPQ at 79.

[29]273 F.Supp. at 562, 155 USPQ at 79.

[30]275 F.Supp. at 562, 155 USPQ at 79.

[31]273 F.Supp. at 562, 155 USPQ at 79.

[32]I have had many interferences in which the parties litigated vigorously despite the existence of a cross license, since each party wanted a patent on the invention in dispute to assert against other companies. Moreover, the Old Dominion court said nothing about the terms of Federal's license. Obviously, an interferent that has an onerous royalty-bearing license from its opponent can have a great incentive to litigate the interference vigorously in order to get out from under the license.

[33]273 F.Supp. at 561-62, 155 USPQ at 79.

[34]___ F.Supp. at ___, 190 USPQ at 77.

[35]___ F.Supp. at ___, 190 USPQ at 77. The court noted and may have given some weight to the facts that "the parties filed written evidence with the Patent Office... [, and] [t]he Board of Interference Examiners ultimately made its decision based upon this documentary evidence." ___ F.Supp. at ___, 190 USPQ at 78. That is, the parties waived cross-examination, which arguably took some of the adversarial character out of the proceeding.

[36]Forbro was the patentee, and Kepco marketed devices under Forbro's patents. Mr. Chognard apparently should have referred to Forbro rather than to Kepco.

[37]Apparently the court regarded an agreement that lessened Raytheon's incentive to litigate with maximum vigor as harming the public!

[38]___ F.Supp. at ___, 190 USPQ at 78; footnote omitted.

[39]Cf. Moog, Inc. v. Pegasus Laboratories, Inc.,

376 F.Supp. 445, 185 USPQ 225 (E.D. Mich. 1974),

aff'd, 521 F.2d 501, 187 USPQ 279

(6th Cir. 1975)Moog, Inc. v. Pegasus Laboratories, Inc., 376 F.Supp. 445, 450 n.9, 183 USPQ 225, 229 n.9 (E.D. Mich. 1974), aff'd, 521 F.2d 501, 187 USPQ 279 (6th Cir. 1975):


if the statute is read as ... applying to incidental or collateral agreements having only a minimal "connection with" the termination of an interference, then the statute's potential reach is enlarged beyond its rationale of deterring and exposing improper agreements. Admittedly the filing requirement is essentially prophylactic rather than remedial, and thus must apply to all agreements which offer the slightest potential for producing illicit consequences. An after-the-fact determination that the agreement was in fact proper is insufficient to excuse noncompliance. Yet it is conceivable that certain agreements literally connected with or made in contemplation of termination would nevertheless be so far removed from even the possibility of impro-priety, that even the broad prophylactic purposes of the statute would not be furthered by its application to them. This exception is obviously of very limited scope and will be properly invoked only in rare circumstances.

[40]___ F.Supp. at ___, 190 USPQ at 78.

[41]The concept of friendly interferents is by no means an oxymoron. Many interferences are between two real parties in interest that have long term commercial relationships that are valuable to both parties and that the parties want to preserve. Such interferences can be litigated with great vigor, but they are usually litigated with extreme civility and great care not to sour the long term relationship between the parties.

[42]In CTS Corp. v. Piher International Corp., ___ F.Supp. ___, 219 USPQ 1180 (N.D. Ill. 1983), aff'd, 727 F.2d 1550, 221 USPQ 11 (Fed. Cir. 1984), the court said that:

defendant's scenario of parties to an interference proceeding being so trustful of each other that they would be willing to wait until after the interference is terminated before setting down in writing the terms of their agreement does not seem realistic to me. [___ F.Supp. at ___, 219 USPQ at 1178; footnote omitted.]

However, I think that the truth of the matter is that, depending on the parties and the nature of the understanding, that scenario could be quite realistic.

[43]According to CTS Corp. v. Piher International Corp., ___ F.Supp. ___, 219 USPQ 1177 (N.D. Ill. 1983), aff'd, 727 F.2d 1550, 221 USPQ 11 (Fed. Cir. 1984):

[35 USC 135(c)] neither requires nor permits the filing of an agreement entered into after termination of the interference.

I conclude that §135(c) requires the filing of agreements which have been reduced to writing prior to the termination of the interference, and no others.4

____________________

4This interpretation does leave open the possibility that parties might intentionally wait until after termination of the interference to reduce their prior agreement to writing. I believe the risk of this is slight, for the reason indicated... [above]. The statute probably covers the bases as well as can be done. But[,] in any event, any loophole in the statute is a problem for Congress. My function is to apply the statute, not to rewrite it. [___ F.Supp. at ___, 219 USPQ at 1179; footnote omitted.]

[44]___ F.Supp. at ___, 215 USPQ at 53.

[45]___ F.Supp. at ___, 215 USPQ at 53.

[46]___ F.Supp. at ___, 215 USPQ at 53; footnote omitted.

[47]376 F.Supp. at 449, 183 USPQ at 228.

[48]According to CTS Corp. v. Piher International Corp., ___ F.Supp. ___, 219 USPQ 1180 (N.D. Ill. 1983), aff'd, 727 F.2d 1550, 221 USPQ 11 (Fed. Cir. 1984):

The statute is not interested in the filing of an agreement that does not represent the final agreement of the parties. The statute, as I read it, is interested in what the parties have actually agreed to. And the fundamental thing in this case is that both sides understood that there would be no agreement until it was signed by both sides and regarded by both sides as a final draft. [___ F.Supp. at ___, 219 USPQ at 1185.]

[49]376 F.Supp. at 447, 183 USPQ at 227.

[50]376 F.Supp. at 447, 183 USPQ at 227.

[51]376 F.Supp. at 447, 183 USPQ at 227.

[52]A copy of the supplemental agreement was filed belatedly in each interference, and, amazingly, the Patent Office accepted them. See Moog, Inc. v. Pegasus Laboratories, Inc., ___ F.Supp. ___,___, 180 USPQ 4, 7 (E.D. Mich. 1973)(denying defendant's motion for summary judgment). However, notwithstanding their acceptance by the Patent Office, the belated filings did not comply with the statute and, hence, were nugatory.

The PTO will no longer accept belatedly filed copies of 35 USC 135(c) agreements. Nelson v. Bowler, 212 USPQ 760, 762 (Comm'r 1981) ("Since the agreement copy was filed beyond the six-month period, under the provisions of 35 USC 135(c) the Commissioner has no authority to accept it, regardless of whether or not 'good cause' is shown.").

[53]376 F.Supp. at 448, 183 USPQ at 227.

[54]Note that the third sentence of the first paragraph of 35 USC 135(c) says that "Failure to file the copy of... [an] agreement or understanding [that the first sentence of the first paragraph of 35 USC 135(c) requires you to file] shall render permanently unenforceable such agreement...." Depending on what is in a collateral agreement, the fact that the collateral agreement is rendered permanently unenforceable may be a more serious penalty than the fact that the involved patent or the patent maturing from the involved application is rendered permanently unenforceable!

[55]___ F.Supp. at ___, 215 USPQ at 47.

[56]___ F.Supp. at ___, 215 USPQ at 48.

[57]___ F.Supp. at ___, 215 USQP at 48.

[58]___ F.Supp. at ___, 215 USPQ at 48.

[59]___ F.Supp. at ___, 215 USPQ at 49.

[60]___ F.Supp. at ___, 215 USPQ at 52.

[61]___ F.Supp. at ___, 215 USPQ at 52-53; footnote omitted.

[62]___ F.Supp. at ___, 215 USPQ at 52.

[63]This situation is not unusual, and the way that the APJs handle it varies. If the party that has ceased to participate in the interference either files an express 37 CFR 1.662(a) request for entry of adverse judgment or fails to do something which should automatically lead to entry of judgment against it (such as a junior party's failure to file a brief at final hearing), some APJs immediately enter judgment against that party, while others do not.

[64]376 F.Supp. at 449, 183 USPQ at 228.

[65]___ F.Supp. at ___, 215 USPQ at 48.

[66]___ F.Supp. at ___, 215 USPQ at 50.

[67]___ F.Supp. at ___, 219 USPQ at 1184.

[68]___ F.Supp. at ___, 219 USPQ at 1184.

[69]___ F.Supp. at ___, 219 USPQ at 1184.

[70]In Nelson v. Bowler, 212 USPQ 760 (Comm'r 1981), which was a decision by the Chairman of the Board of Patent Interferences on a petition to the Commissioner from a decision by the Clerk of the Board of Patent Interferences refusing to accept a copy of a 35 USC 135(c) agreement on the ground that the interference had terminated more than six months before the copy was filed, the petitioner:

Bowler et al. assert[ed] that[,] since their time for petitioning the Supreme Court for review of the CCPA's decision [on appeal from the board] did not expire until February 4, 1981, the statutorily prescribed "six-month period subsequent to the termination of the interference" did not expire until August 4, 1981, and that the copy of the agreement was filed [on August 7, 1981] just a few days after the end of that period. [212 USPQ at 761.]

Unfortunately, this is one of those situations where "a miss is as good as a mile," and Chairman Calvert held that:

In the present case, it is undisputed that the sealed envelope containing the copy of the agreement was filed more than six months after the termination of the interference, even assuming arguendo that (as postulated by Bowler et al.) the interference did not terminate until February 4, 1981. Since the agreement copy was filed beyond the six-month period, under the provisions of 35 USC 135(c) the Commissioner has no authority to accept it, regardless of whether or not "good cause" is shown. [212 USPQ at 762; emphasis supplied.]

Thus, Chairman Calvert did not decide the issue under consideration here. However, Nelson is at least citable for the proposition that he did not dismiss the contention out of hand -- but, rather, treated it as an open issue.

[71]___ F.Supp. at ___, 219 USPQ at 1184.

[72]727 F.2d at 1556, 221 USPQ at 15.

[73]___ F.Supp. at ___, 39 USPQ2d at 1844. This is the critical date for purposes of 35 USC 120. See Dunner et al., Court of Appeals for the Federal Circuit: Practice and Procedure §6.01, "Opinion, Decision, Judgment, and Mandate" at 6-7 ("In an ex parte patent appeal from the PTO, receipt of the mandate in a case where the rejection of all claims was affirmed marks the end of pendency of the application.") and §6.07, "Effect of Federal Circuit Decision in Appeals from the PTO" at 6-89 ("Proceedings on a patent application are 'terminated' within the meaning of 35 USC §120 on the day the PTO receives the Federal Circuit's mandate (not the day the court issues the mandate), although it has been said that proceedings on an application will be retroactively revived thereafter within the meaning of 35 USC §120 if certiorari is granted by the Supreme Court"; emphasis in the original; footnote omitted.).

[74]___ F.Supp. at ___, 39 USPQ at 1845.

[75]The reference in 37 CFR 1.666(a) to 37 CFR 1.661 is a start. However, it is probably too subtle to have any impact on the judiciary.

[76]Chief Administrative Patent Judge Stoner appointed Vice Chief Administrative Patent Judge Schafer as the "point man" to receive proposals for changes in the rules of patent interferences, and I sent Judge Schafer a number of such proposed changes. However, he responded that "[c]urrently, no interference rule change package is under development" and that "[n]one of... [my] proposals raise problems significant enough to warrant committing resources to an ad hoc rule change." Not surprisingly, I vehemently disagree with Judge Schafer's assessment of the significance of the problems addressed by my proposed rule changes!

[77]Some of my clients have resisted filing copies of such agreements immediately on the ground that filing a copy of any such agreement may signal to the APJ that the parties (and, particularly, the party filing the copy of the agreement) are losing interest in the interference. However, note that, as explained in section III.O., infra, the APJs apparently do not have access to the copies of agreements filed pursuant to 35 USC 135(c) if, as is usually the case, the party filing the copy requests that it "be kept separate from the file of the interference, and made available only to Government agencies on written request, or to any person upon petition accompanied by the fee set forth in § 1.17(i) and on a showing of good cause."

[78]376 F.Supp. at 443, 180 USPQ at 7.

[79]376 F.Supp. at 444, 180 USPQ at 8; emphasis supplied. Query: If only agreements with "actual or potential antitrust implications..." need be filed, may an interferent rely upon an opinion of counsel that an agreement in connection with or in contemplation of the termination of an interference does not have even "potential antitrust implications" as an excuse for not filing a copy of the agreement? I think not!

[80]376 F.Supp. at 443, 180 USPQ at 7.

[81]376 F.Supp. at 443, 180 USPQ at 7.

[82]Nelson v. Bowler

212 USPQ 760 (Comm'r 1981)Nelson v. Bowler, 212 USPQ 760 (Comm'r 1981); and Unisys Corp. v. Commissioner of Patents

and Trademarks

___ F.Supp. ___, 39 USPQ2d 1842

(D.C.D.C. 1993)Unisys Corp. v. Commissioner of Patents and Trademarks, ___ F.Supp. ___, 39 USPQ2d 1842 (D.C.D.C. 1993).

[83]273 F.Supp. at 562, 155 USPQ at 79.

[84]___ F.Supp. at ___, 190 USPQ at 78.

[85]___ F.Supp. at ___, 190 USPQ at 78.

[86]See particularly Moog, Inc. v. Pegasus Laboratories, Inc., 521 F.2d 501, 504, 187 USPQ 279, 281 (6th Cir. 1975), in which the court said that "The patent law of the United States is not designed to allow private parties to determine amongst themselves who shall have the right to a legal monopoly." In that case, the parties had actually settled two related interferences, with priority in an interference involving dominant claims going to one party and priority in an interference involving subordinate claims going to the other party. Concerning that result the court said that "Even less is it [i.e., the patent law of the United States] intended to support the negotiated grant of two patents upon one invention where the purpose and effect may be that any potential licensee must pay tribute to two separate patent holders." 521 F.2d at 504, 187 USPQ at 281-82. Of course, the fact that the Patent Office had declared two interferences, not one interference, meant that it had decided that there were two inventions, not one, involved in the two interferences!

[87]Note again that the third sentence of the first paragraph of 35 USC 135(c) says that "Failure to file the copy of... [an] agreement or understanding [that the first sentence of the first paragraph of 35 USC 135(c) requires you to file] shall render permanently unenforceable such agreement...." If a court holds that you should have filed a copy of such a "background" agreement, your failure to file it may render permanently unenforceable licenses under other patents that are far more valuable than the subject matter in dispute in the interference!

[88]458 F.Supp. at 452, 201 USPQ at 828.

[89]458 F.Supp. at 452, 201 USPQ at 828.

[90]458 F.Supp. at 452, 201 USPQ at 828.

[91]PPG is discussed at greater length supra in section III.B.

[92]___ F.Supp. at ___, 205 USPQ at 919; emphasis supplied.

[93]Note, however, that MPEP §2366 says that "Settlement agreements [can not] be transmitted by facsimile...," citing 37 CFR 1.6(d)(3) and 1.8(a)(2)(i)(C). That is odd, given that substantive interference documents (e.g., motions) can be transmitted by facsimile, and given that it would be no harder for the clerical staff of the board to put a faxed paper copy of a 35 USC 135(c) agreement in the file or in the separate repository (depending on whether or not the party submitting the copy did so with a 37 CFR 1.666(b) request) than it would be for the clerical staff of the board to put a mailed or hand delivered paper copy of a 35 USC 135(c) agreement in the file or in the separate repository. However, neither the MPEP nor the cited sections of the rules answers the question of whether the clerical staff of the board would put a mailed or hand delivered diskette copy of a 35 USC 135(c) agreement in the file or the separate repository.

[94]37 CFR 1.647 clearly does not govern this situation. It reads as follows:

§ 1.647 Translation of document in foreign language.

When a party relies on a document or is required to produce a document in a language other than English, a translation of the document into English and an affidavit attesting to the accuracy of the translation shall be filed with the document.

When one files a copy of a 35 USC 135(c) document, one is not relying on it. Additionally, one is not being "required to produce" the document; that language clearly refers to production during discovery.

[95]Of course, ideally the American practitioner is involved in negotiating the agreement. However, the sad truth is that that is not always the case.

[96]212 USPQ at 762.

[97]See section III.C. concerning the need to file a copy of such a bulk license -- even if it was entered into prior to the declaration of the interference.

[98]It is not always the prevailing party that files a copy of a 35 USC 135(c) agreement. For one thing, copies of many 35 USC 135(c) agreements are filed long before there is a prevailing party.

[99]514 F.Supp. at 1167, 210 USPQ at 486.

[100]514 F.Supp. at 1168, 210 USPQ at 487.

[101]514 F.Supp. at 1168, 210 USPQ at 487.

[102]717 F.2d 775, 219 USPQ 761 (3rd Cir. 1983).

[103]717 F.2d at 787, 219 USPQ at 771.

[104]See generally O'Rourke, "The Justice Department's Proposed Monitoring of Patent Licenses," 15 IPL Newsletter No. 4 (1997) at page 8. A copy of the text of Mr. Klein's speech is available from the Antitrust Division's Legal Procedures Unit, 202/514-2481.

[105]717 F.2d at 777 n.5, 219 USPQ at 763 n.5.

[106]717 F.2d at 777 n.5, 219 USPQ at 763 n.5; emphasis supplied.

[107]___ F.Supp. at ___ n.9, 215 USPQ at 52 n.9.

[108]See section III.L., supra.

[109]See Harmon, Patents and the Federal Circuit (3rd ed. 1994) §1.5(a) at n.151.

[110]212 USPQ at 762.

[111]The PTO has voluntarily undertaken other obligations by inter-agency agreement with the Antitrust Division. Those obligations are described infra at section III.P.

[112]It follows from this that the Sixth Circuit's speculation in Moog, Inc. v. Pegasus Laboratories, Inc., 521 F.2d 501, 505, 187 USPQ 279, 282 (6th Cir. 1975), that, if the supplemental agreement in question had been disclosed to the Patent Office, "the nature of the agreement would have been likely to provoke 'adverse' action by the Patent Office..." is dead wrong. Chances are that nobody at the Patent Office would even have read the supplemental agreement!

[113]The Commissioner's Notice of June 05, 1997, appearing at 972 O.G. 2. That notice is discussed and quoted infra in section III.P.

[114]In response to the question "Why don't you send copies of the agency requests to the parties?," Chief Administrative Judge Stoner wrote me in a letter dated December 23, 1997, that:

Obviously, to do so would increase the administrative burden on our clerical staff. Also, you should recall that we are serving the function of a repository. It is not evident to me that parties to terminated interferences are particularly curious whether a government agency has inspected their agreement[,] and the parties may, indeed, expect that the agreement will be inspected, given the language of 35 U.S.C. § 135(c).

However, as indicated infra in section III.P., the Antitrust Division apparently does not review all 35 USC 135(c) filings.

[115]That should be contrasted to the board's treatment of preliminary statements -- which, pursuant to 37 CFR 1.627(a), are "filed in... sealed envelope[s] bearing only the name of the party filing the statement and the style (e.g., Jones v. Smith) and number of the interference." According to 37 CFR 1.627(b), "A preliminary statement may be opened only at the direction of an administrative patent judge." However, the APJ assigned to a patent interference pursuant to 37 CFR 1.610 can open the sealed envelope and read a preliminary statement any time that he or she wants to. See Goutzoulis v. Athale

15 USPQ2d 1461 (Comm'r 1990) Goutzoulis v. Athale, 15 USPQ2d 1461, 1465 (Comm'r 1990) ("the Board should consider the allegations of the preliminary statements [when deciding 37 CFR 1.633(a)/35 USC 102(a) and 102(e) motions] and only enter an order to show cause based on unpatentability under § 102(a) or § 102(e) when there is no alleged 'prior invention'.").

N.B.: Goutzoulis was overruled as to reliance on the preliminary statements in deciding 37 CFR 1.633(a)/35 USC 102(a) and (e) motions in a subsequently published Commissioner's Notice. 1118 O.G. 19, 20 n.1 (August 10, 1990). However, my point that the APJs have access to the preliminary statements remains valid.

[116]514 F.Supp. at 1168, 210 USPQ at 487.

[117]Commissioner's Notice of June 5, 1987, appearing at 972 O.G. 2 and quoted in section III.P., infra.

[118]I wonder how the Antitrust Division selects which agreements to read. Since the letter that the board sends to the Antitrust Division only identifies the interferences by number (despite the fact that the board has presumably been informed pursuant to 37 CFR 1.602 who the real parties in interest are), how can the Antitrust Division, for instance, choose to read all 35 USC 135(c) agreements to which Microsoft Corporation is a party?

[119]This appears to be a change from the Antitrust Division's original practice. In United States v. FMC Corp., 717 F.2d 775, 219 USPQ 761 (3rd Cir. 1983), the Third Circuit noted that:

Although the settlement agreement between FMC and Bayer relating to the United States had been on file since 1968, no member of the Justice Department or the Patent Office reviewed that agreement until 1978 when FMC disclosed it pursuant to a CID. [717 F.2d at 784, 219 USPQ at 768.]

[120]727 F.2d at 1555, 221 USPQ at 14.

[121]Query: What authority does the Commissioner have to impose this obligation on the Government agencies?!

[122]The implication of the word "normally" in this passage is frightening! Apparently the PTO believes that it could grant a 37 CFR 1.666(b) petition without giving the affected parties the opportunity to oppose the petition.

[123]514 F.Supp. at 1170, 210 USPQ at 489.

[124]717 F.2d at 784, 219 USPQ at 768.

[125]See section III.P., supra.

[126]The name and address of that person is:

Mary Jean Moltenbrey, Chief

Antitrust Division

Civil Task Force

325 Seventh Street, NW

Suite 300

Washington, DC 20530

[127]I suspect that the reason that this example came to Mr. Shaffert's mind is that the Antitrust Division is looking for such a license to challenge. Accordingly, whatever you do, don't put a provision like this one in a 35 USC 135(c) agreement -- unless, of course, you enjoy litigating with the Antitrust Division.

[128]The chief administrative patent judge is the Commissioner's delegee to decide 37 CFR 1.666(b) petitions. MPEP § 1002.02(f)4.

[129]Judge Calvert used to be the vice chief administrative patent judge of the present combined board, and before that he was the chairman of the Board of Patent Interferences.

[130]The fact that there have been so few petitions for access to the PTO's copies of 35 USC 135(c) agreements undermines the Third Circuit's assertion in United States v. FMC Corp., 717 F.2d 775, 219 USPQ 761 (3rd Cir. 1983), that:

The government's claim that it is the especial beneficiary of information from section 135(c) ignores part of the statute's effect. Section 135(c) operates as a self-enforcing deterrent as well as a source of information: competitors contemplating the collusive settlement of a patent interference claim must risk the disclosure of the collusive terms of such a settlement or, if they attempt to keep the agreement secret, they risk invalidation of the underlying patent. Moreover, to the extent that the purpose of section 135(c) is to generate investigative information as well as provide a deterrent to the patent owner who has entered into the agreement, the section benefits private antitrust litigants as well as the Department of Justice, undermining the government's claim as an "especial beneficiary." [717 F.2d at 784, 219 USPQ at 768; footnote omitted. Note that, while the USPQ version of this opinion has the paragraphing as shown here, the F.2d version runs this and the previous paragraph together.]

In point of fact, 35 USC 135(c) is of little or no "benefit[] [to] private antitrust litigants...."

[131]The PTO fee for a 37 CFR 1.666(b) petition is set by 37 CFR 1.17(i). It is currently $130.

[132]In the interest of complete candor, I note that I represented the assignee of the party Trokel in opposing the petition.

[133]___ F.Supp. at ___, 190 USPQ at 78.

[134]___ F.Supp. at ___, 190 USPQ at 78.

[135]___ F.Supp. at ___, 190 USPQ at 78.

[136]___ F.Supp. at ___ n.2, 215 USPQ at 49-50 n.2.

[137]___ F.Supp. at ___, 39 USPQ2d at 1846.

[138]See PPG Industries, Inc. v. Bausch & Lomb, Inc., ___F.Supp. ___, ___, 205 USPQ 914, 919 (W.D.N.Y. 1979) ("the only agreements required to be filed under the penal provisions of the statute are those between parties to an interference....").

[139]In effect, 35 USC 135(c) would then impose a fine equal to the sum of (a) the cost of filing a continuation application and (b) the value of the time and term lost by reason of having one's patent issue from the continuation application rather than from the application in interference. However, Congress specifically considered the possibility of imposing a fine under 35 USC 135(c) and specifically rejected that possibility. See the discussion of this bit of legislative history in United States v. FMC Corp., 717 F.2d 775, 777-79, 219 USPQ 761, 763-65 (3rd Cir. 1983).

[140]Under Clark, In re

522 F.2d 623, 187 USPQ 209 (CCPA 1975)In re Clark, 522 F.2d 623, 187 USPQ 209 (CCPA 1975), a patentee interferent presumably could not avoid the impact of 35 USC 135(c) by filing an application to reissue its patent in interference.

[141]___ F.2d at ___, 165 USPQ at 487; footnote omitted; emphasis supplied.

[142]212 USPQ at 762.

[143]___ F.Supp. at ___, 39 USPQ2d at 1846.

[144]Supra section III.H.

[145]___ F.Supp. at ___, 39 USPQ2d at 1846.

[146]See section III.W., infra.

[147]I have suggested to Chief Administrative Patent Judge Stoner that the board do that. To date I have not received a response to my suggestion.

[148]___ F.Supp. at ___, 165 USPQ at 487.

[149]___ F.Supp. at ___, 39 USPQ2d at 1846.

[150]___ F.Supp. at ___, 39 USPQ2d at 1846.

[151]I have never received multiple warnings of the requirements of 35 USC 135(c).

[152]Actually, if it obtained a copy of its opponent's file, it got four copies of that warning!

[153]See PPG Industries, Inc. v. Bausch & Lomb, Inc., ___F.Supp. ___, ___, 205 USPQ 914, 919 (W.D.N.Y. 1979) ("the only agreements required to be filed under the penal provisions of the statute are those between parties to an interference....").

[154]___ F.Supp. at ___, 39 USPQ2d at 1844.