Old Rule Interferences After The Promulgation Of The New Rules

1986 – Article
Journal of the Patent and Trademark Office Society, volume 68 (1986), pages 335-42


by Charles L. Gholz

I. Interferences Pending on the Effective Date of the New Rules

The new rules came into effect on February 11, 1985. On that date, there were approximately 335 interferences pending.[1] The Patent Law Amendments Act of 1984, Pub. L. 98-622, the passage of which was a condition precedent to the promulgation of some of the new rules, did not "grandfather" pending interferences.[2] Moreover, the new rules themselves contain no grandfather clause. However, the "Supplementary Information" published with the new rules states that:

In view of the discretion given the Board under 35 U.S.C. 135(a), as amended by Pub. L. 98-622 ("The Board . . . may determine question of patentability. . . . "), these new rules will apply to all interferences declared on or after February 11, 1985, except in special circumstances . . . [discussed in the next section of this paper].[3]

Or, to put it the other way, the "Supplementary Information" indicated that the new rules would not be applied to the 335 interferences pending on the effective date of the new rules.

Despite the PTO's commendable effort to provide brightline guidance concerning which rules apply to which interferences, a number of perplexing questions remain.

In the first place, it is questionable whether the language in 35 USC 135(a) quoted by the PTO[4] was intended to or can be reasonably construed to justify the PTO's decision not to apply the new rules to interferences pending on the effective date of the new rules.[5] The author is aware of nothing in the legislative history of Pub. L. 98-622 that suggests that Congress gave any consideration to the question of whether amended 35 USC 135(a) should apply to interferences pending on the effective date of the amendment (much less to the question of whether amended 35 USC 135(a) should apply to interferences pending on the subsequent date on which the implementary regulations went into effect).[6] Moreover, the fact that two other titles in Pub. L. 98-622 have sections postponing the effective date of portions of the act and exempting certain patents and patent applications from the effect of other portions of the act,[7] whereas Section 207 of Title II simply provides that the amendments made by that title were to take effect on February 8, 1985, certainly suggests that Congress did not intend to make the kind of distinctions made by the PTO, but, instead, intended the amendment to 35 USC 135(a) to be applicable to interferences pending on February 8, 1985.

On the other hand, Congress has a preference for prospective legislation when retroactive application of new law would disturb rights and expectations created under pre-existing law.[8] Thus, it can be argued that, although there is no evidence that Congress thought about this problem, if it had done so, it probably would have made the same policy judgment that the PTO did.

In the second place, even if, pursuant to its authority under 35 USC 6 and the Administrative Procedure Act, the PTO could have promulgated a rule (i.e., a section of Title 37 of the code of Federal Regulations) making the distinction embodied in the previously quoted passage from the "Supplementary Information,"[9] it is highly unlikely that the mere statement of this rule in the "Supplementary Information" published without prior notice of the proposed rule would be given the same effect by a court.[10] While a statement of this sort in the MPEP has been used to estop the PTO from taking a contrary position in an ex parte situation,[11] the courts traditionally accord markedly less respect to such "informal" administrative rules than they do to the formal rules contained in the Code of Federal Regulations.[12]

In the third place, despite the statement in the "Supplementary Information" to the effect that the PTO would not apply the new rules to interferences pending prior to February 11, 1985, the board in fact has occasionally done so —albeit in an erratic and unpredictable fashion. For instance, in Lutzker v. Plet, 227 USPQ 1055 (PTOBPAI 1985), a panel of the board[13] ruled (1) that 37 CFR 1.68 as amended effective February 11, 1985, does apply to interferences pending on that date,[14] but (2) that 37 CFR 1.671(b), which was added as part of the new rules, does not apply to interferences pending on February 11, 1985.[15] The seeming inconsistency between the two holdings was neither explained nor acknowledged.[16]

Clearly the inconsistent application of the informal rule contained in the "Supplementary Information" also argues against giving that rule binding effect.[17] If the PTO follows that rule only when it suits it to do so, why should that rule be binding on the parties?

II. Interferences Declared after February 11, 1985, but Declared under the Old Rules

The "Supplementary Information" published with the new rules also states that the old rules will be applied to interferences declared after February 11, 1985, in "special circumstances."[18] As examples of such "special circumstances," the "Supplementary Information" lists the following three situations, which could be generically described as "follow-on" and "spin-off" interferences:

(1) Interferences which are declared as a result of a motion made in another interference which was pending before the Board[19] before February 11, 1985 (e.g., an interference declared as a result of a motion under 37 CFR 1.231 to declare an additional interference); (2) an interference related to another interference declared prior to February 11, 1985 (e.g., an interference involving a method of using a compound where an interference involving the same parties and the compound was declared prior to February 11, 1985); and (3) an interference reinstituted after having been dissolved under the old rules (37 CFR 1.201-1.288) (e.g., an interference reinstituted after having been dissolved as a result of a motion under 37 CFR 1.231 to dissolve on the grounds of unpatentability where the applicant has obtained allowance of the claims held unpatentable in the decision on motions).[20]

The intent of this provision in the "Supplementary Information" was presumably to avoid inconsistent results in two or more interferences that, while independent proceedings, are closely enough related so that a result obtainable under the new rules but not under the old rules might rob the victor in the old rule interference of some or all of the practical effect of its victory in the old rule interference. Apparently such a result was regarded as unseemly by the Office, notwithstanding the fact that the two interferences, by definition, are directed to patentably distinct subject matter.

This provision raises all the same questions of enforceability as does the provision that the new rules will not be applied to interferences pending on February 11, 1985. Once again, there is no basis for it in the statute or the Code of Federal Regulations. Additionally, there is markedly less reason to hypothesize that Congress would have reached this result if it had thought about the problem, particularly considering that it takes considerable sophistication in patent law to understand that the decisions in two independent proceedings concerning patentably distinct subject matter can be "inconsistent" in the sense giving rise to Congress's traditional reluctance to disturb rights or expectations created under pre-existing law.

Moreover, the PTO clearly is not construing this provision as existing for the benefit of the parties. For instance, in one follow-on interference handled by the author,[21] the senior party filed a motion under 37 CFR 1.243 to redesignate the interference as a new rule interference.[22] The junior party "join[ed] in . . . [that] motion for the same reasons advanced by . . . [the senior party]." Nevertheless, an examiner-in-chief denied the motion on the ground that, since the interference had been declared under the old rules and the motion period in old rule interferences is no longer than the motion period in new rule interferences, the junior party's attorneys had "detrimentally relied upon the . . . expiration date set for 37 CFR 1.231 motions in scheduling their docket for the coming months."(!)

III. Current Status of Old Rule Interferences

In the period between the effective date of the new rules and December 31, 1985, approximately 145 interferences were declared under the new rules and about five or six interferences were declared under the old rules. During the same period, 162 old rule interferences were terminated, leaving 184 old rule interferences pending on December 31, 1985.[23] Thus, while the problems addressed in this paper are transitional, the transitional period may last for several years. Accordingly, there is a fair probability that, before the transitional period is over, some party will find it to its advantage to challenge the PTO's policy of applying the old rules to interferences pending on February 11, 1985, and to some, but not all, interferences declared after that date.

First published in the Journal of the Patent and Trademark Office Society, volume 68 (1986), pages 335-42.

*.Copyright 1986 by Charles L. Gholtz; Oblon, Fisher, Spivak, McClelland & Maier, P.C. This is a slightly revised version of a paper presented on March 27, 1986, at a conference in Arlington, Virginia, entitled "Practice Under the New Interference Rules" and sponsored by the Patent, Trademark and Copyright Division of the District of Columbia Bar; the Patent, Copyright and Trademark Section of the Virginia Bar; and the American Intellectual Property Law Association.


[1].All the numbers for pending interferences, declarations, and the like herein were supplied by Ian Calvert, Esq., Vice-Chairman of the Board of Patent Appeals and Interferences. Mr. Calvert's assistance is gratefully acknowledged. However, the views expressed herein are the author's own and are not necessarily shared by Mr. Calvert.

[2].Pub. L. 98-622 is divided info four "titles." Title 1 amends 35 USC 103 (to overrule In re Bass), 35 USC 116 (to liberalize the law governing the naming of multiple inventors in a single application), 36 USC 120 (to liberalize the requirements for claiming priority from an earlier filed U.S. application), and 35 USC 271 (to overrule Deepsouth Packing Co. v. Laitram Corp.) and adds 35 USC 135(d) (authorizing arbitration of interferences) and 35 USC 157 (creating statutory invention registrations). Title II merges the Board of Patent Appeals and the Board of Patent Interferences and amends 35 USC 135(a) to authorize the merged board to determine question of patentability. Title III establishes the National Commission on Innovation and Productivity. Title IV makes a number of changes in PCT processing procedures. Title I and Title IV both have elaborate "effective date" provisions that make different sections of those titles effective on different dates. However, Title II (which is the title of interest here) contains no such provision. Section 207 of Title II simply provided that the amendments made by Title II were to take effect three months after the date of the enactment of the act — i.e., on February 8, 1985.

[3].49 Fed Reg. 48416 (Dec. 12, 1984).

[4].The PTO's reference to 35 USC 135(a) may have been intended to indicate that the rule in question (i.e., the rule indicating which complete set of rules is to be applied to which interferences) is an "interpretive rule" rather than a "substantive rule." See generally Schwartz, Administrative Law (2d ed. 1984) §4.6, "Types of Rules." If this rule is held to be an interpretive rule, rather than a substantive rule, it would not be subject to some of the attacks discussed below:

Under the federal APA, both substantive and interpretive rules must be published; but the rulemaking procedures prescribed by the APA do not apply to interpretive rules.

Page 158; footnotes omitted. On the other hand, that classification of the rule would also lower the deference that a court might pay to the rule:

substantive rules receive statutory force upon going into effect, while interpretive rules do not; the statutes themselves, and not the interpretive regulations, remain in theory the sole criterion of what the law authorizes and compels or what it forbids. Whatever practical or psychological impact they may have, their legal effect is only that of opinion of the agency. Interpretive rules are thus accorded less deference than substantive rules.

Page 159; footnotes omitted. However, regardless of whether the PTO intended that this rule be treated as an interpretive rule, it is the author's opinion that it is in fact a substantive rule:

A substantive rule or "legislative-type rule" is one "affecting individual rights and obligations"; it is the administrative equivalent of a statute, compelling compliance with its terms on the part of those within the agency ambit. Substantive rules are issued pursuant to statutory authority and implement the statute; they create law just as the statute itself does, by changing existing rights and obligations. An interpretive rule is a clarification of existing laws or regulations, rather than a substantive modification of them. Interpretive rules are statements as to what the agency thinks a statute or regulation means; they are statements issued to advise the public of the agency's construction of the law it administers.

Page 158-59; footnotes omitted. Since each set of rules (i.e., the old rules and the new rules) contains many rules that are unquestionably substantive rules, it is the author's view that the rule governing which set of rules is to be applied to a given interference is itself a substantive rule.

[5].The principal reason for the use of the permissive "may" in the amendment to 35 USC 135(a) was apparently to permit the board to dispose of interferences solely on the issue of priority in cases where both priority and patentability is placed in issue and judgment can be rendered based solely on the issue of priority. See Paper No. 54 in Interference No. 101,374.

[6].Cf. Union Mfg. Co. v. USITC, 781 F.2d 186, 228 USPQ 272 (Fed. Cir. 1985), which also involved Congressional silence concerning the effective date of an act of Congress. In that case, the act supplied the term for appeal from decisions of the ITC (the pre-existing statute having set no such term). However, the act did not specify how cases decided by the ITC before the effective date of the act but appealed to the Federal Circuit after the effective date of the act should be handled. The court stated that:

We interpret the silence of Congress as intending that a just transition shall ensue. In implementation of the tradition of enabling judicial review when feasible, we held that Union's procedure was not unreasonable under the circumstances, and that its appeal is not barred by the statute.

781 F.2d at 190, 228 USPQ at 275.

[7].See footnote 2, supra.

[8].See Patlex Corp. v. Mossinghoff, 758 F.2d 594, 600-03, 225 USPQ 243, 248-50 (Fed. Cir. 1985), on petition for rehearing, 771 F.2d 480, 226 USPQ 985 (Fed. Cir. 1985).

[9].According to Patlex Corp v. Mossinghoff, 758 F.2d 594, 225 USPQ 293 (Fed. Cir. 1985), on petition for rehearing, 771 F.2d 480, 226 USPQ 985 (Fed. Cir. 1985):

The PTO operates in accordance with detailed rules and regulations, including those set out in the Manual of Patent Examining Procedures (MPEP) which is made available to the public and which has been held to describe procedures on which the public can rely. In re Kaghan, 387 F.2d 398, 401, 156 USPQ 130, 132 (CCPA 1967). Our standard for review is whether the rule or procedure is within the agency's statutory authority and is reasonably related to the purposes of the enabling legislation, Mourning v. Family Publications Service, Inc., 411 U.S. 356, 369 (1973), and does no violence to due process. Mathews v. Eldridge, 424 U.S. 319 (1976).

758 F.2d at 606, 225 USPQ at 252. It is interesting to note that this passage draws no distinction between the formal rules contained in the Code of Federal Regulations and the informal rules contained in the MPEP.

[10].See Schwartz, op. cit. supra n.4 at §4.10, "Administrative Procedure Act," which reads in relevant part as follows:

Unless one of the specified exceptions is applicable, the agency must comply with the APA requirements before engaging in rulemaking in order that its rules have the force of law. Regulations subject to the APA cannot be accorded the force of law if they are not promulgated pursuant to the APA requirements; and the courts are charged with ensuring that agencies comply with those requirements. There is no warrant for an agency to replace the APA scheme with a rulemaking procedure of its own invention. This means, as a minimum, that the required notice must be published in the Federal Register as a mandatory first step.

* * *

The APA requires the notice of proposed rulemaking to include: (1) a statement of the time, place, and nature of the rulemaking proceeding; (2) reference to the authority under which the rule is proposed; and (3) either the terms or substance of the proposed rule or a description of the subjects and issues involved. The notice need not contain the text of proposed rules or every precise proposal that the agency may adopt; it is enough that the substance of the rules be published or even that the agency provides only a description of the subjects and issues involved. Nor is the rule adopted invalid because it differs from that in the notice of proposed rulemaking, provided that the notice adequately apprised interested parties of the issues involved.
But the notice must be specific and may not leave out an essential element of the issues involved in the proposed rules.

Page 172-73; footnotes omitted. The PTO clearly did not comply with the APA requirements before promulgating the rule in question here.

[11].In re Kaghan, 387 F.2d 398, 400-01, 156 USPQ 130, 131-32 (CCPA 1967); In re Hitchings, 342 F.2d 80, 82-85, 144 USPQ 637, 640-41 (CCPA 1965); and In re Fried, 312 F.2d 930, 933-34, 136 USPQ 429, 432-33 (CCPA 1963).

[12].See e.g., Patlex Corp. v. Mossinghoff, 758 F.2d 594, 605-07, 225 USPQ 243, 251-53 (Fed. Cir. 1985), on petition for rehearing, 771 F.2d 480, 486, 226 USPQ 985, 989 (Fed. Cir. 1985) ("These administrative procedures [referring to rules set forth in the MPEP] are not contained in either the statute or the official regulations and [in contrast to the "official regulations" contained in the Code of Federal Regulations] apparently received no public hearing prior to adoption.") But see Schwartz, op. cit. supra n. 4 at §4.8, "Procedure."

[13].Opinion by Examiner-in-Chief Forrer for himself and Examiners-in-Chief Boler and Smith.

[14].Specifically, the holding was that, pursuant to a stipulation under 37 CFR 1.272 the testimony of a witness could be submitted in the form of a declaration rather than in the form of an affidavit — only the latter having been permitted under the old rules.

[15].Specifically, the holding was that 37 CFR 1.671(b), which provides that the Federal Rules of Evidence apply to interference proceedings, is not applicable to interferences pending on February 11, 1985, and that, accordingly, the party Plet was not entitled to an order to sequester the party Lutzker's witnesses under FRE 615.

[16].The author has also observed that the board as applied 37 CFR 1.610 (assignment of each interference to an examiner-in-chief) and 37 CFR 1.613 (requiring each party to appoint a lead attorney) to some interferences pending on February 11, 1985, but not to others.

[17].See Schwartz, op. cit. supra n.4 at §4.7, "Legal Effect":

Agency violation of its own procedures is considered arbitrary action that "cannot be reconciled with the fundamental principle that ours is a government of laws." It violates every sense of decency for the agency to abrogate a procedure just for the purpose of accomplishing the ends of a particular case. "What a farce the attempt to secure rights in any judicial tribunal must become, if its rules and practice are ignored or applied at the arbitrary will of the judge. . .!"

Page 164; footnotes omitted.

[18].49 Fed Reg. 48416 (Dec. 12, 1984).

[19].Query whether the phrase "pending before the Board" was intended to or could be construed to distinguish an interference actually pending before the board on February 11, 1984, from an interference pending before the Federal Circuit on appeal or before a district court in a 35 USC 146 proceeding on that date. No reason is seen why one rule should apply to the former and a different rule to the latter.

[20].49 Fed. Reg. 48416 (Dec. 12, 1984).

[21].The interference in question arguably fell into the second category listed in the "Supplementary Information." A first interference had involved four parties, whom I will term A, B, C, and D. That interference had resulted in an award of priority to the party A prior to February 11, 1985. While the party A's application was still pending, a patent issued to the party B. The party A promptly copied claims from the party B's patent, and a new interference was declared between the party A and the party B after February 11, 1985. Pursuant to the "Supplementary Information," the interference was declared under the old rules. For a similar situation in the strictly old rule context, see Woods v. Tsuchiya, 754 F.2d 1571, 225 USPQ 11 (Fed. Cir. 1985).

[22].The purpose of the motion was to allow the issue of the validity of the claims in the party B's patent to be raised. The party B had filed a motion to dissolve the interference on the ground that the party A's claims corresponding to the counts were unpatentable over the prior art, but the party B was both a patentee and the junior party, and old rule 37 CFR 1.231(a)(1) provides that "a motion to dissolve an interference in which a patentee is a party will not be considered if it would necessarily result in the conclusion that the claims of the patent which correspond to the counts are unpatentable to the patentee on a ground which is not ancillary to priority."

[23].The numbers provided by Mr. Calvert do not quite add up because two of the figures are estimates. It may be that more than the estimated five or six old rule interferences have been declared since February 11, 1985. The author's firm is handling four such interferences, which suggests that there may be more than five or six of them altogether.