New Legal Interpretation Puts Many Patents at Risk

Posted on May 27, 2016 in Articles

This article originally appeared in The Legal Intelligencer on May 25, 2016.

Timing is everything—so the ­saying goes. In the world of patent procurement, bad timing can have horrendous consequences. A district court recently held that a patent application was filed one day later than the statute allowed, and the resulting patent was thus invalid. The ­decision contravenes 150 years of accepted patent practice. If the decision is allowed to stand, more than 12,000 patents may become worthless.

The U.S. District Court for the District of Delaware’s decision—Immersion v. HTC, No. 12-259, slip op. (D. Del. Feb. 11, 2015)—is now on appeal with the U.S. Court of Appeals for the Federal Circuit. At issue is the interpretation of the statute pertaining to continuing applications, a type of patent application that is filed when multiple inventions need protection. Since a U.S. Patent and Trademark Office (PTO) examiner is only required to examine one invention per patent application, multiple inventions require the filing of multiple patent applications, respectively. Thus, after an initial patent application that discloses multiple inventions is filed, subsequent applications—­continuing applications—may be filed that receive the benefit of the filing date of the initial ­patent application. Receiving that benefit is of vital importance to the patent owner. The filing date plays a myriad of functions:

• It must occur within one year of the underlying invention being on sale or in public use—otherwise any patent rights in the United States are abandoned.
• For two people that independently ­invent the same invention, any resulting ­patent will go to the inventor with the ­earlier filing date.
• A PTO examiner evaluating a patent ­application for patentability must limit his or her study of prior art references to published technology that predates the filing date. Also, patent applications filed for the same invention in multiple countries are (in most cases) accorded the filing date of the first country in which the patent applications were filed—as long as the other patent ­application filings take place within one year of the first country filing. Thus, ­applicants file continuing applications because they want the benefit of the filing date of any earlier filed application.

Continuing applications have three ­requirements according to the statute: (1) the information they contain must not be different than the information included in the original application; (2) they must have at least one inventor in common; and (3) the continuing application must be filed “before” the previously filed patent application issues as a U.S. patent or is abandoned. Disagreement over interpretation of the word “before” resulted in the appeal.

Immersion revolves around a continuing application that was filed the same day an earlier patent was issued. That continuing application subsequently issued as a U.S. patent and was asserted by Immersion Corp. against HTC Corp. The district court ­concluded that the continuing application should have been filed at least one day prior to the date that the earlier patent issued (this is how the district court interpreted the word “before” in the requirements). Because the continuing application was filed the same day the earlier patent issued, the court held that the continuing application patent was invalid.

In almost three decades of practicing patent law, I have always understood the “before” requirement to permit a continuing application to be filed on the same day that a patent based on an earlier application issued. The district court’s interpretation is at odds with the understanding that I and my colleagues have with regard to how the statute is to be interpreted for the purpose of determining when a continuing application needs to be filed.

HTC (of course) agreed with the lower court. The statute uses the word “before,” and HTC argued that Immersion’s ­patent filing on the same day the earlier patent issued does not constitute “before.” Immersion and the amici curiae have put forth a number of compelling arguments as to why the district court’s decision was wrong.

In 1863, the U.S. Supreme Court decided Godfrey v. Eames, 68 U.S. (1 Wall.) 317 (1863), and held that a patent applicant could withdraw a first-filed patent application, file a new or second application on the same day the first-filed application was withdrawn, and in doing so the second application would be entitled to the benefits of the filing date of the first-filed application. Godfrey thus made clear that a continuing application (i.e., the second application) could be filed the same day that an earlier application (i.e., the first application) is no longer pending (whether by patent grant or application abandonment). That ­understanding has continued for 150 years, until the district court ruled in Immersion.

In 1952, the ability to file a continuing application was codified as 35 U.S.C. Section 120. The statute appeared at the time with the following language:

“An application for patent for an ­invention … in an application previously filed in the United States by the same inventor shall have the same effect, as to such invention, as though filed on the date of the prior application, if filed before the patenting or abandonment of, or termination of proceedings on the first application … if it contains or is amended to contain a specific ­reference to the earlier filed application.”

While the statute has been revised over the years, the “before” language has ­remained. Nevertheless, the PTO has consistently interpreted Section 120 as being satisfied as long as a later application is filed no later than the date an earlier application issues as a patent or is abandoned.

Patent attorneys have always relied on how the PTO has interpreted this statute, as clarified by Section 211.01(b)(I) of the “Manual of Patent Examining Procedure” (MPEP):

“If the prior application issues as a ­patent, it is sufficient for the later-filed application to be co-pending with it if the later-filed application is filed on the same date, or before the date that the patent issues on the prior application.”

Therefore, the amici argued that the PTO interpretation is entitled to deference due to the PTO’s long-standing expertise with regard to patent procurement.

The amici also argued in their briefs that the PTO interpretation of the statute ­(regarding the timing of a continuing application filing) is entitled to Chevron deference. For example, the U.S. Department of Justice (DOJ) argued as follows:

“Under Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 837, 842-843 (1984), an agency’s reasonable ­interpretation of an ambiguous statute that it is charged with administering, will control at least where the statutory context ­demonstrates that Congress expected the agency to speak with the force of law.”

As the PTO administers the patent ­statutes, and the PTO has consistently maintained that Section 120 permits a continuing application to be filed on the date an earlier application issues as a patent, the DOJ argued that its position is entitled to Chevron deference, and the federal ­circuit should therefore agree with the PTO.

It seems reasonable to assume that almost all continuing applications, filed on the day the previous application became a patent, relied on the definition of “before” ­provided by the “Manual of Patent Examining Procedure.” Therefore, the PTO brief argued that “the agency’s interpretation has given rise to ‘substantial reliance interests,’ Zenith Radio v. United States, 437 U.S. 443, 457-58 (1978), that provide even more justification for deference.” The public, it was argued, has “reliance interests” in how the government interprets a statute, and for this additional reason the Federal Circuit should agree with the PTO’s position.

This case is unusual in that the statute clearly uses the language “before,” yet the PTO has consistently interpreted the statute to mean that a continuing application could be properly filed on the day of patent issue. It is not known why this issue has not come up before, but the owners of at least 12,000 patents are surely hoping that the Federal Circuit will continue to interpret the statute in the same manner as it has always been understood.

– by Lawrence Ashery