File your comments by April 24 on proposed patent applicant filing burdens

The USPTO has published proposed rules which would impose upon all patent applicants and upon all patent owners a new burden — an obligation to carry out recurring investigations as to “attributable owners” of patent applications and patents, and to report the list of “attributable owners” to the USPTO.  The proposed rules would subject each patent owner to the grave risk, at litigation time, that a court might deem the underlying patent application to have gone abandoned during its pendency before the USPTO due to a real or imagined error in the reported list of “attributable owners”.  The investigation and reporting burden would, for many corporations, add thousands or tens of thousands of dollars to the cost of prosecuting a US patent application.

Comments are due by April 24.  Any corporation that owns US patents should read the proposed rules and, I suggest, should file comments by the due date.  Likewise any patent practitioner that represents corporations before the USPTO should read the proposed rules and, I suggest, should file comments by the due date.  I have filed comments with the USPTO.

What’s the big problem with these rules proposed by the USPTO?  

As I explain in some detail in the comments that I filed with the USPTO, there are two chief problems with these proposed rules.

A first problem is that under the proposed rules, any patent applicant would be required to carry out an investigation enumerating the owners of a patent application, the “enforcement entities” with power to enforce the patent, the “divesting entities” with respect to the patent, and the “ultimate parent entities” of each of these entities.  The results of the investigation, called an “attributable owners” list, would have to be filed with the USPTO at the time of filing of the patent application.  At a minimum the “attributable owners” list would be required to provide a list of all shareholders of a corporate patent owner.

The investigation would have to be redone no less often than once every three months during the pendency of the patent application, and in the event that the investigation revealed any change in the “attributable owners” list, then a new list would have to be filed with the USPTO.  Thus for example any change in the shareholder list for a corporation would trigger the need for another filing with the USPTO.

The investigation and reporting to the USPTO of the new “attributable owners” list would have to be redone upon payment of the Issue fee, and again upon payment of the 3½-year, 7½-year, and 11½-year maintenance fees.

Under the proposed rules, any mistake in an “attributable owners” list or any failure to report any change in the “attributable owners” list within three months of the change would cause the patent application to go abandoned at the time of the mistake or failure-to-report.  Neither the patent owner nor the USPTO would, in any likelihood, be aware that the patent application had supposedly gone abandoned.  So prosecution would continue, with office actions being mailed and responded to, continuations and divisionals being filed (and lacking copendency with the parent), and issue fees paid.  The first time that the real or imagined lapse in the reporting of “attributable owners” to the USPTO would be explored would be at litigation time.

It would not be so bad if “attributable owner” were defined as “owner”.  But the proposed rules require the patent applicant to seek out the source of the Nile and all of its tributaries.  If one of the shareholders of the corporation owning a patent were itself, say, a venture capital firm, then the “attributable owners” list filed with the USPTO would have to disclose in turn the shareholders of the venture capital firm.  The “attributable owners” inquiry would be an iterative process, leading eventually to a list of natural persons who between them owned all of the intervening owners such as mutual funds and venture capital firms.

As mentioned earlier, comments are due by April 24, 2014.  You can see the comments that people have already filed with the USPTO about this.  And you can see the comments that I have filed.

It looks to me as though these proposed rules, if enacted, would be a disaster for patent applicants, in the near term because of the substantial costs for the recurring “attributable owners” investigations and reports, and in the longer term because of the grave risk of loss of a patent due to real or imagined errors in the “attributable owners” reports.

It looks to me as though the harm caused by these proposed rules, if enacted, would fall particularly hard on startup companies.  A would-be investor that was a privately held company or partnership might choose not to invest at all in a startup if the price to be paid for such investment were the forced public revelation of the details of its ownership.


5 Replies to “File your comments by April 24 on proposed patent applicant filing burdens”

  1. Thank you for submitting such thoughtful and solid comments to the USPTO. Your letter highlights how ridiculous the proposed rules really are, which I think are even more burdensome and pointless than the defunct claims and continuations rules. The USPTO didn’t even bother to give fair consideration to the comments to those rules (they were predisposed to enact the rule package regardless of what the community said), let’s hope the USPTO has changed this time around.

  2. Carl – Thanks. The location to view comments from the public is:
    The USPTO’s estimate of the cost to the public of implementing the proposed rules are based upon inaccurate data and flawed assumptions. The USPTO’s estimate of the cost to the public are far too low. The USPTO’s cost estimate has a substantial influence on their decision whether to implement the proposed rules. I filed comments on the proposed rules early on. I explain in my comments why the USPTO’s cost estimate is unrealistically low and provide an alternative estimate of the cost based upon verifiable evidence and reasonable assumptions. Anyone interested in submitting comments should read my comments to provide a basis for contesting the USPTO’s cost estimates for implementing the proposed rules. Rick Neifeld

  3. Rick, I read your comments as well, excellent job. I represent many startups and small companies, many involving a complex network of investors and separate corporate entities which are frequently restructured. This rule package would be a nightmare for me. Aside from filing my own comments with the USPTO, let me know if there is anything else we can do to help get this tabled.

    I also wonder if, like with the claims and continuations rules, there is someone waiting in the wings to file a lawsuit against the USPTO if it is enacted.

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