Comments on USPTO’s proposed rules on attributable ownership

The comment period closed April 24 and of course nearly all commenters filed their comments on the last possible day.  USPTO has posted the comments.

From a review of the comments it is easy to see who was behind the proposed rules in the first place — a very small number of very large corporations.  Nearly all of the few favorable comments came from large corporations.

As in any rulemaking, the parties that would benefit from a proposed rule knew perfectly well who they were and had no difficulty filing supportive comments.  In contrast the parties who would be harmed by the proposed rules were dispersed and most of them probably did not even know that they ought to be filing comments against the proposed rules.  So one might expect to see the majority of comments being favorable.  Interestingly, however, the vast majority of comments (including my comments) were negative toward USPTO’s proposed rules.

A chief concern is that the reporting burden, were the proposed rules to take effect, would fall disproportionately on small startups and privately held companies.  See for example the comments of the  Medical Device Manufacturers Association and the Pharmaceutical Research and Manufacturers of America.

A related concern is that the Notice of Proposed Rulemaking understated the cost of the reporting burden.  Estimates of the magnitude of the understatement ranged from a factor of ten to a factor of a thousand or more.

Among the commenters were several associations of patent practitioners.  Their comments are of interest because these are people who represent small to medium sized businesses including small startups and privately held companies, many of which probably had no idea that they ought to be commenting against the burdens that would fall upon them were the proposed rules to be put into effect.  These comments from practitioner’s associations thus represent a “multiplier effect”, in the sense that each association spoke for hundreds or thousands of practitioners, many of whom spoke for multiple clients that would be affected by the proposed rules.  Each such comment (most of which were negative on most points being discussed) should arguably be given greater weight in the rulemaking process than a comment from a single entity.

2 Replies to “Comments on USPTO’s proposed rules on attributable ownership”

  1. The proposed rules remind me of the ill-fated continuation practice rules which were abandoned due to court challenges and general lack of public support. Like in this case, those rules were also accompanied by a low-ball representation of the overall cost to patent applicants. That is a violation of the legal requirement to provide a proper economic impact assessment which, if undertaken, would easily reach the figures you’ve mentioned.

    The legal issues the rules would raise are indeed as complex as those you used for illustration in your comments to the PTO, not to mention conflicts with data protection laws and legitimate contractual obligations around the globe.

    Then there’s the question of legitimacy under US patent law, the Administrative Procedure Act and the separation of powers under the US Constitution. The USPTO has the duty to grant and maintain patents when the requirements of US patent law are met. Deeming patent applications abandoned for failure to comply with a nonstatutory requirement not reasonably related to the grant of a patent appears to be arbitrary and capricious. Attempting to specify the requirements for a proper transfer of rights under a patent encroaches on a domain reserved to state law due to setting up a mandatory registration system outside the control of state law.

    Under the current system, failure to update the assignment records at the USPTO can result in failure to receive notification that an action has been taken against the patent with the concommitent risk of a default ruling. Patent owners and exclusive licensees therefore have a built-in incentive to keep the assignment records up-to-date once the patent is granted. There is therefore no need to impose a non-statutory post-grant requirement, which would probably be struck down as ultra vires anyway.

  2. An even bigger problem with these proposed “attributable ownership” rules is that the USPTO has absolutely no lawful authority to issue/enact them, including based on the assignment statute 35 USC 261. I predict we’re going to another fight like we have with the Tafas/GSK suit filed over the claim-continuation rules.

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