Beware new Rule 704

The USPTO frequently tweaks the rules that govern patent practice. Some of these tweaks are user-friendly and helpful; some are not. The latest tweak is most certainly not. If you’re a patent owner, particularly in the pharmaceutical space or other area where patent term is critical, please be aware of (and beware of) the recent rule change.

The upshot of this post is that clients should understand that attorneys may be less willing to make Rule 704 certifications than before, for the reasons that follow.

It’s long been my view that the USPTO should pass easy-to-follow, bright-line rules that are clear and unambiguous and that help attorneys and applicants comply with the law. There should be no rules or procedures that generate and amplify the risk of interacting with the Office. Most certainly, there should be no circumstances where an attorney places himself or herself at personal risk because of the rules.

The most recent USPTO rulemaking goes the other way. The USPTO has just passed a change to Rule 704 that is fraught with peril—not just risk to the applicant, but personal jeopardy for any attorney who uses this rule.

Rule 704 relates to patent term adjustments. The America Invents Act and certain subsequent legislation generally specifies that the term of a U.S. patent will be extended past the 20-year date if there’s been prosecution delay, unless the applicant “failed to engage in reasonable efforts to conclude prosecution.” What that means is up to the USPTO, and the USPTO has spelled out what it thinks this means in Rule 704.

One ground of “applicant failure to engage in reasonable efforts” is submission of an IDS after examination has started. At first blush this seems to make sense; the Examiner might have to re-do some of the work already completed if a new reference is cited late in the game.

But what if an applicant just learned of a reference? In theory, in that case an attorney can avoid loss of patent term by making one of two certifications (these are unique to Rule 704 and are not the same as those in Rule 98):

[E]ach item of information contained in the information disclosure statement:

(i) Was first cited in any communication from a patent office in a counterpart foreign or international application or from the Office, and this communication was not received by any individual designated in § 1.56(c) more than thirty days prior to the filing of the information disclosure statement; or

(ii) Is a communication that was issued by a patent office in a counterpart foreign or international application or by the Office, and this communication was not received by any individual designated in § 1.56(c) more than thirty days prior to the filing of the information disclosure statement.

Under the new rule, ?the applicant has to use a special USPTO form to make this certification, and the applicant isn’t allowed to alter the pre-printed form. See

https://www.federalregister.gov/documents/2023/06/15/2023-12712/standardization-of-the-patent-term-adjustment-statement-regarding-information-disclosure-statements

So, what’s the problem? The problem is that there are dozens of situations that the rules don’t clearly address, and the recent rule change takes away the opportunity to explain the situation.

An attorney who makes a Rule 704 certification when it is not appropriate to do so risks an inequitable conduct charge for the patent owner and its attendant consequences for the attorney (loss of employment and livelihood; ethical investigation and sanctions; malpractice claim).

Under Therasense v. Becton, Dickinson and Co., 649 F.3d 1276 (Fed. Cir. 2011), a materially false statement to the Office can constitute inequitable conduct. So, even if the Rule 704 certification results in one single day of retained patent term adjustment, any statement under Rule 704 that avoids loss of patent term adjustment would seem “material” and could lead to an inequitable conduct charge if falsely made.

It’s easy to find difficulties in interpreting the rule. For example:

·????????Jill is a senior partner and Jack is her associate. They work together on a patent application. Jack then leaves and takes a job at another firm. It’s now three years later. Jill receives a foreign search report citing a new reference that neither she nor her client have seen before. But what about Jack? Is Jack still an “individual designated in § 1.56(c)”? He was an author of the application, which brings him under Rule 56(c). Nothing in Rule 56(c) speaks to this status as somehow expiring just because Jack has changed jobs.

·????????So, does Jill need to check with Jack at the other firm to see if Jack has seen the reference previously? Jack is probably busy and unwilling to help Jill’s client.

·????????Whoever wrote the rule probably didn’t mean to require inquiry from long-departed prior law firm associates, but it really isn’t all that easy to get there from the text of the rule.

·????????What if Jack, the former associate, had seen the reference a year ago in connection with some unrelated matter for a different client at his new firm? Why would that be a “fail[ure] to engage in reasonable efforts to conclude prosecution” on Jill’s part?

·????????What does “first cited in any communication from a patent office in a counterpart foreign or international application” mean? What if Jill had seen the reference five years earlier when prosecuting some unrelated application for a different client?

·????????Notably, M.P.E.P. 2732 speaks to prior awareness of a reference: “[I]nformation first cited by any foreign patent office more than thirty days before the filing of the information disclosure statement in a communication from that foreign patent office is not entitled to the safe harbor provision….” “This is because the applicant was aware of the information more than thirty days before the filing of the information disclosure statement, yet did not submit that information.”

·????????So, was Jill “aware” of the information because it arose in some other context years earlier? Is she charged forever with being “aware” of all references she’s ever seen? If so, how could an attorney be expected to keep track of every reference encountered in a long career? If not, what records does Jill have to examine, and how far back in time must she go, before Jill can make this certification?

·????????What about the inventors? Does Jill need to check with every inventor, and what if some inventors have quit and gone to a competitor? Jill might not be allowed to contact them directly, and if she does, it’s unlikely they’ll be helpful.

·????????What if it turns out that an inventor saw the reference in some other context sixteen years ago (maybe it was cited in some prior patent naming that inventor)? Trust me: Opposing counsel in litigation will ferret out that fact.

·????????What’s a “counterpart” application? Can two U.S. applications be "counterparts"? Do the applications have to be in the same patent family/priority chain? If not, then does the attorney have to check all patents ever prosecuted? Can a parent and child be "counterparts"?

·????????What is the nature of a Rule 704 certification? Is it a certification upon reasonable inquiry, or is it in the nature of a warranty/absolute representation?

·????????Put another way, what happens if an attorney makes the certification after reasonable inquiry but the inquiry is factually wrong? Maybe the client had seen the reference at a seminar years before but had forgotten. (A well-funded defense firm might find out about this, though.) Is the certification nonetheless proper, and does the patentee get to keep the additional patent term that would otherwise have been lost? Put another way, does the term of the patent depend on how good the client’s memory is?

·????????How can an attorney certify to what his or her client knows? Let’s say attorney Francis represents inventor Oscar. Francis sees a recent foreign search report citing the Roosevelt reference. She asks Oscar whether Oscar had ever seen the Roosevelt reference previously. Oscar replies in the negative, but he is mistaken (perhaps he has forgotten that he saw the Roosevelt reference in some other counterpart search report). Francis makes a Rule 704(d)(1)(i) certification when citing the Roosevelt reference.

·????????Has Francis committed an ethical violation, or inequitable conduct, or other sanctionable conduct? Francis has certified that Oscar had not seen the reference previously, not that she thought that was the case. She properly had asked Oscar, but got the wrong answer. Still, and it’s Francis who made the certification. Her certification resulted in an arguably undue extension of the patent term.

·????????Could Francis be accused of a criminal act? Patent term extension is generally of most interest to pharmaceutical companies, and patents prevent generic drug manufacturers from selling cheaper competitive drugs. The prosecutor could accuse Francis of conspiring with a greedy giant large corporation to prevent competition for some lifesaving drug. Would you like to be Francis facing a jury in that criminal case?

·????????What if the attorney had known about a different version of the same patent reference previously? Let’s say attorney Emma is aware of, but has not cited, the prior art U.S. Pierce patent. A Canadian examiner issues an office action citing the Canadian equivalent of the Pierce patent. May Emma file an IDS to cite the Canadian Pierce patent, with a Rule 704(d)(1)(i) certification?

·????????If Emma can make a Rule 704 certification, then this means that the term of the U.S. patent that Emma is prosecuting will depend on the quirk of which version of an identical prior art disclosure a foreign examiner chooses to cite. If Emma can’t make the certification for the Canadian version of the Pierce patent, then exactly why not? Emma didn’t know about the Canadian version previously, and it was “first cited” within the last 30 days, so the rule would seem to allow Emma to make this certification.

·????????Under the new rule, Emma can’t alter the language on the new PTO-mandated form to make the facts clear or to make a conditional request.

·????????Attorney Paul is prosecuting a patent application filed seventeen months ago. Paul sees that a competitor’s application, filed eighteen months ago, has just published today. Paul wants to disclose the competitor’s application because the application has an earlier filing date than the application Paul is prosecuting. But Paul can’t make the Rule 704(d)(1)(i) certification, because Paul learned of the competitor application independently and it was not “cited” in a counterpart application. Why is Paul’s client penalized with loss of patent term, when there was no way for Paul to have learned of the competitor’s unpublished application before today?

In a written comment, I asked the USPTO these questions, and many others, when the rule change was posted for comment. The USPTO declined to answer any of these questions or to provide any clarity on the operation of the rule. That’s so, even though, “a patent by its very nature is affected with a public interest.” 37 C.F.R. 1.56. Both private patent owners and the public at large have a significant interest in ensuring that the term of a patent is determined correctly. It is also strongly in the public interest that any factual representation that an applicant might make to the Office is correct.

Apparently, it’s for the courts to resolve questions like the above. And how do you think such questions will arise? In malpractice and inequitable conduct cases, of course. Instead of giving us a simple answer to some of these questions (can Emma cite the Canadian version of the patent and make a Rule 704 certification, or not?) the USPTO leaves practitioners and clients to guess.

If Emma decides she can’t make the certification but could have done so properly, Emma’s client might not be happy. Many clients won’t care, of course

On the other hand, let’s say Emma decides that the certification is proper. Whether or not she’s correct, Emma is likely to be charged with inequitable conduct for making this certification if the patent is litigated. That’s the way of the world, like it or not. Maybe Emma and her client will win, but it still will cost several hundred thousand dollars and years of uncertainty to litigate this.

The USPTO could have simply told us the answer, but it chose not to. The USPTO could have left in place a conditional certification with the opportunity to explain the circumstances, but the new rule removes that option. Gee, thanks!

Obviously, I’m not a fan of this rule change. It’s not clear why the USPTO now mandates the use of inflexible language to make a certification, especially where the circumstances surrounding the certification are ambiguous or subject to interpretation. But that’s how it works now. There will remain cases where such certification is warranted, of course, and conversely there will be cases where an attorney will decline to make a Rule 704 certification if there is ambiguity.

If you’re a client and have a question under Rule 704, please be sure to discuss the situation carefully with your attorney. There are times when the attorney may be wary of making a Rule 704 certification under the new rules. In such case, please understand that the attorney is looking out for your / your company’s interests as much as his or her own.

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