From: srctran@world.std.com (Gregory Aharonian) Subject: Patent Office Reform Panel Final Report PART2a Message-ID: Organization: The World Public Access UNIX, Brookline, MA Date: Thu, 4 Feb 1993 14:31:55 GMT Lines: 1814 Last year, the Patent Office sponsored a committee to review current patent practices in the United States. Last fall they issued their final report, which contains many interesting suggestions, including first to file, software patents, excessive secrecy orders, international harmonization, challenging patents, reexamination, excessive legal costs and other issues. In particular, I know that a few Congressmen are introducing legislation this spring to switch the U.S. from first-to-invent to first-to-file. Also, it seems that the Patent Office library does not have any IEEE or ACM publications, as incredible as that might seem (nor have they deemed to buy a copy of my directory of much of the government's software, a great prior art source). What follows is the text to their final report, split into five files. A paper version of this text can be obtained from the Patent Office. I would like to thank Noah Friedman, Toni Emerson, Keith Berrier, Glenn Tenney, Rahul Dhesi and Jude Wilkinson for all contributing ten dollars to help me defray the cost of acquiring a $1.50 diskette from the Patent Office with these files. Gregory Aharonian Source Translation & Optimization ============================================================================== VI. GROUNDS FOR HOLDING PATENTS UNENFORCEABLE A. Introduction and Overview In the United States, a defendant to an infringement action can raise an equitable defense of unenforceability in response to a charge of patent infringement if misconduct on the part of the patentee can be established. This defense is often justified through reference to the "unclean hands" doctrine. In other words, a court sitting in equity should prevent a "bad actor" from gaining the benefit of its "bad conduct". If the defense is sustained, all claims in the patent will be held unenforceable, irrespective of the substantive merit of these claims (e.g., whether or not the patent itself is valid). The types of activities which justify this judicially imposed equitable penalty include inequitable conduct and patent misuse. Judicial interpretation of inequitable conduct focuses upon the two elements of intent and materiality to judge whether an inventor's, assignee's, or attorney's conduct before the USPTO warrants holding the patent unenforceable. As the Federal Circuit has stated, [i]nequitable conduct resides in failure to disclose material information, or submission of false material infor)mation, with an intent to deceive, and those two elements, materiality and intent, must be proven by clear and convincing evidence [83]. As contrasted with earlier positions, courts have found that information withheld by an applicant is material if a "reasonable examiner" would have considered it important during the determination of patentability of the invention. At one extreme, this standard could include prior art known to the applicant that would not in fact preclude grant of the patent. As to intent, the courts have emphasized that a specific intent to mislead is required, rather than gross negligence standing alone. Patent misuse focuses on actions taken by the patentee following the grant of patent rights. Generally, use of patent rights in an attempt to expand the enforceable scope of protection defined by the patent may serve as a basis for a finding of patent misuse. Examples of patent misuse include situations such as a patentee demanding that royalty payments extend beyond the term of the patent, or requiring the license or purchase of unwanted products as a condition to the license of a patented invention. Actions such as these are used as a basis for finding antitrust violations. The conditional sale example mentioned above, for instance, has been classified as a per se illegal "tying arrangement". Legislative reform of the antitrust provisions has been debated for several years, with the object being a clarification of the significance of possession of patent rights as a measure of market power. Finally, patent misuse, unlike inequitable conduct, is purgeable through appropriate actions of the patentee. The Commission, as well as a substantial number of the public respondents, supports the defense of unenforceability where a patentee engaged in inappropriate conduct during the procurement of the patent. Although the defense has the potential to increase both the cost and complexity of patent litigation, many respondents believe that the cost is justified to discourage inappropriate conduct, and to ensure open and fair dealing during the ex parte prosecution of patent applications before the Patent and Trademark Office. The Commission also recognizes the necessity of some mechanism to induce patent applicants to provide the Patent and Trademark Office with clearly relevant prior art known to the applicant during examination of the patent application. Finally, although the penalty of unenforceability is considered by some to be harsh, many believe it to be the most appropriate, and most direct manner of sanctioning a party which engages in improper conduct. Although there is support for the continued availability of the defense of unenforceability, this support is conditioned upon a clarification of the appropriate standard of conduct necessary to justify application of the defense. Both the Commission and some sectors of the patent user community agree that, as interpreted by the Federal Circuit, the current standards for interpreting inequitable conduct are inappropriate in assessing the nature of conduct which will result in the sanction of unenforceability. Specifically, the Commission believes that the "reasonable examiner" standard for assessing the materiality of information withheld during prosecution, as interpreted in recent holdings, does not accurately reflect the appropriate level of materiality of information which can be used to support the sanction of unenforceability. Some members of the patent user community advocate adoption of an objective "but for" standard for assessing the significance of information known to the applicant but intentionally withheld during prosecution. This standard would not provide a defendant with access to the equitable defense of unenforceability unless the intentionally withheld information would in fact have rendered the claimed invention unpatentable if it had been presented[84]. In the Commission, and in the public comments, many have argued that this is the only appropriate standard for assessing the significance of information which is withheld during prosecution of a patent application. Recently, the Patent and Trademark Office has sought to respond to the concern over the question of the appropriate standard for measuring inequitable conduct by changing the rules which govern the disclosure obligations of patent applicants. The USPTO has thus amended 37 CFR 1.56 to replace the former "reasonable examiner" standard for measuring the materiality of information withheld with a more easily quantifiable standard [85]. The new standard holds that information is material if it creates a prima facie case of unpatentability of any claim, either by itself or in combination with other information. The prima facie standard is satisfied if the information compels a conclusion that a pending claim is unpatentable, using a preponderance of the evidence standard, as applied to the broadest reasonable interpretation of the claims in question, and before any rebuttal evidence is considered. This new standard thus seeks to base the question of materiality on familiar evidentiary and claim construction standards. Importantly, the new rule also clarifies that disclosure requirements are satisfied if the material information reaches the examiner through any means, which relieves the patent applicant of supplying additional information which is only cumulative to the information before the examiner, and construes disclosure requirements in the context of pending claims only. B. Summary of Public Comment The public response received on patent unenforceability defense generally agreed that the defense was appropriate for a clear case of patentee misconduct. Many referred to the desirability of using the defense to reduce the possibility of invalid patents issuing due to a failure of the USPTO to discover the most relevant prior art. Others stressed its necessity to prevent fraud on the USPTO, by providing an incentive for patent applicants and their representatives to deal fairly with the USPTO, and to force parties to take their duty of disclosure seriously. Irrespective of their beliefs regarding the application of the defense, many comments recognized the need for some means for encouraging voluntary citation of prior art by the patent applicant. Despite the general belief expressed in the comments that the defense is necessary, many expressed their opinion that problems exist in the application of the inequitable conduct doctrine. The most commonly cited drawbacks focused upon the application of the inequitable conduct doctrine. Some comments suggested that the availability of the defense unnecessarily adds to the complexity and cost of patent litigation. Others urged that the present remedy of unenforceability is too harsh, especially since there are no provisions which allow "purging" of the conduct as there is for patent misuse. Much concern was expressed that the inequitable conduct defense is often abused by parties, and does not accurately reflect truly fraudulent activity. The comments suggested that these problems cause the unenforceability defense to undermine the purpose of the patent system, decrease the prestige of patents, and sometimes unfairly punish inventors for the actions of their representatives. Many comments urged replacement of the inequitable conduct doctrine with a more objective standard for assessing materiality of information withheld, specifically, an objective "but for" standard. Such a standard would only find conduct to be actionable if, "but for" the conduct, the USPTO would not have issued the patents. Comments often pointed out that the "but for" standard is fairer to the patentee and his representatives, because it only punishes conduct which omits clearly pertinent art citations. Some parties suggested a new Federal Rule of Civil Procedure which would permit the award of costs and attorneys fees for charges of inequitable conduct that are not borne out at trial. Others urged that the "fraud on the Office" defense should be construed according to true fraud standards (e.g., plead with particularity). The responses arguing against the continued applicability of the unenforcability defense included numerous suggestions regarding alternative sanctions. These included: - discipline the lawyer who partakes in conduct which would amount to inequitable conduct, but do not hold the patent to be unenforceable; - restrain the party found to be guilty of inequitable conduct from enforcing the patent against the accused infringer, but do not hold the patent to be unenforceable against all later parties; - restrict the scope of the unenforceability sanction to be commensurate with the nature of the conduct; specifically, allow the patentee to enforce claims which would be patentable irrespective of the withheld prior art, but not those which would be unpatentable over such art -- such a standard would properly distinguish the degree of culpability of the patentee and also would diminish the tendency of those charged with infringement to relentlessly pursue evidence to support an inequitable conduct claim; - require forfeiture of damages awarded to the patentee, with the amount to be transferred to the Patent and Trademark Office, and include a preclusion against awarding plaintiff fees or costs; and - provide an opportunity for a special reexamination proceeding to enable a party to purge misconduct in the form of withheld prior art. These suggestions for reform show that the unenforceability defense retains its desirability as a means of preventing improper conduct on the part of the patent owner, particularly during the patent prosecution. C. Recommendations and Discussion Recommendation VI-A Clarify the nature of conduct by a patent rights holder that justifies the use by a defendant to a patent infringement action of the equitable defense of unenforceability consistent with the following guidelines: (i) continue to hold unenforceable patents in which the applicant, its attorney or its representative during the prosecution of the application for that patent before the Patent and Trademark Office failed to meet the appropriate requirements for disclosure of information within their knowledge having to do with the allowability of presented claims; (ii) implement a more objective standard for materiality of information than one based upon the perspective of a "reasonable examiner", and (iii) create a presumption that the standard of disclosure is satisfied if required information is before the examiner in a timely manner, regardless of how that information came to the attention of the examiner. The debate over the appropriate materiality standard has divided the patent community. Within the Commission, there are factions which favor and oppose the objective "but for" standard for materiality, as well as the new "prima facie" standard of the recently amended Rule 56. Despite the difference in opinion as to the precise standard for materiality, the Commission recognizes the desirability of addressing the broader goal of implementing a materiality standard which is more objective than the "reasonable examiner" standard. The Commission also recognizes the need to ensure that changes in standards used during prosecution of patent applications before the Patent and Trademark Office remain consistent with the interpretation of those standards in the Federal courts, particularly by the Court of Appeals for the Federal Circuit. Thus, the Commission focused its recommendations on the broader goals of ensuring a more objective standard for interpreting the materiality of withheld information. The Commission's recommendation accounts for the need to provide an unenforceability defense where a party has withheld information, while at the same time not penalizing parties for not providing cumulative information. The first element of this recommendation is based upon the Commission's belief that the unenforceability defense is a necessary one and should be available to parties charged with infringement in appropriate circumstances. Some mechanism to ensure fair dealing between the patentee, the public and the Federal Government has been part of the patent system for over 200 years [86]. In its modern form, the unenforceability defense provides a necessary incentive for patent applicants to engage in fair and open dealing with the Patent and Trademark Office during the ex parte prosecution of patent applicants, by imposing the penalty of forfeiture of patent rights for failure to so deal. The defense is also considered to be an essential safeguard against truly fraudulent conduct before the Patent and Trademark Office. Finally, the defense provides a means for encouraging complete disclosure of information relevant to a particular patent application. This strengthens the presumption of validity of issued patents. Thus, from a policy perspective, the defense of unenforceability based upon inequitable conduct is desirable and should be retained. The second component of the recommendation embodies the belief of the Commission that a more objective standard for measuring the materiality of information is necessary to justify the unenforceability sanction. A significant amount of anecdotal evidence from the public comments suggests that claims of inequitable conduct based upon questionable grounds are becoming more prevalent. Indeed, without the imposition of a strong burden of proof, one would expect that claims of inequitable conduct, which can negate infringement of all claims of a patent, would be routinely made as part of the defensive strategy of the accused infringer. Grounding the inequitable conduct defense on a more objective basis will deter these frivolous or questionable claims of inequitable conduct. It will also clarify the standards for conduct for patent applicants and their representatives. This will enable these parties to guide their future conduct during prosecution of patent applications. In this regard, the new formulation of Rule 56 will provide some measure of improvement, as it provides a more easily quantifiable standard to be used by the patent applicant in assessing whether information is material. Finally, the Commission recognizes that information not supplied by a patent applicant, but nevertheless fully considered by the patent examiner prior to the grant of the patent, should not serve as the basis for upholding a claim of inequitable conduct. This may occur where information withheld by the patent applicant is merely cumulative to that already considered, or where information is withheld by the applicant but is independently discovered and considered by the patent examiner. Under old Rule 56, in both of these situations the failure of applicant to provide the information can render the patent unenforceable, even though the information was fully considered by the patent examiner. To effectuate this element of the proposal, the Commission believes that the courts should not hold the patent unenforceable where the information withheld was actually considered by the patent examiner. The inequitable conduct defense would remain available to alleged infringers where the examiner did not consider the withheld information. Thus, the inequitable conduct defense would still deter frivolous or poorly supported claims of inequitable conduct early in the proceeding. This, in turn, can be expected to reduce discovery burdens and unnecessary litigation expense. The Commission's proposal here is presently incorporated into amended Rule 56. Recommendation VI-B Changes to the standards for judging inequitable conduct before the United States Patent and Trademark Office should not prejudice the rights of patent rights holders, so that in any action to enforce a patent which was granted prior to the effective date of such changes, the patent rights holder should be given the choice of being judged by either the standard used before, or the standard employed after the amendment. The Commission is concerned that unwarranted and undesirable effects of the recent change in the standard of materiality will adversely affect parties which prosecuted patent applications under one standard for duty of disclosure, and subsequently face a different standard during litigation. Accordingly, the Commission recommends that parties enforcing patent rights should be given the choice of defining the standard under which their conduct before the USPTO will be measured. Certain baseline considerations must be articulated. First, parties who receive a patent grant after the effective date of the new rules shall be governed by the new standard. Second, litigation which was already in progress at the time of the enactment of the new rules should continue to be governed by the "reasonable examiner" standard. Finally, for all other instances, namely patent grant prior to the date of enactment and no pending litigation, the patentee should be given the choice of defining the standard of materiality, in the form of a non-reversible election prior to commencement of discovery. This flexibility will ensure that patent rights are not adversely affected simply because of a rule change in the USPTO. Recommendation VI-C Enact legislation which establishes that possession of intellectual property rights should not give rise to a per se presumption of market power, in the context of an antitrust proceeding. The Commission is concerned about the effect of several decisions which permit a presumption that possession of intellectual property rights confers market power upon the holder of those rights [87]. This presumption shifts the burden of proof to the antitrust defendant, and has the effect of encouraging litigation related to and counterclaims during enforcement of intellectual property rights. The Commission believes this presumption and its effects are both inappropriate and undesirable. This presumption ignores the distinction between possession of intellectual property rights and the economic element of market power. For example, a patented article may have numerous economic substitutes which preclude the patent holder from asserting market power. Possession of patent rights in such a situation does not establish that the patent owner has obtained market power. Many commentators share the Commission's view that permitting parties to rely upon a per se presumption of market power presents a serious threat to the effective incentive that the patent law is intended to provide to inventors [88]. Finally, the Commission believes that this perception of intellectual property rights plainly ignores the pro*competitive function of patents in stimulating further innovation and competition. Accordingly, the Commission advocates a legislative remedy which would prevent courts from presuming the existence of market power from the possession of intellectual property rights. Specifically, the Commission advocates revival of recent legislative efforts which would provide this remedy [89]. VII. REEXAMINATION A. Introduction and Overview The genesis of the present reexamination system is the 1966 recommendation of the President's Commission on the Patent System. That recommendation sought an ex parte administrative procedure as a faster and less costly alternative to a validity challenge in court. While largely successful in providing patent owners an efficient means for confirming the patentability of issued patents and thereby reducing the likelihood of a validity challenge, the substantially ex-parte character of the present system may discourage its use by many third parties as an alternative to validity challenges in court. Under the present system, a third party seeking reexamination has an initial opportunity in his request to present arguments for unpatentability of issued claims in view of newly-discovered documentary prior art. If he is unsuccessful in convincing the examiner that "a substantial new question of patentability" exists, the third party's sole remedy is a petition for de novo review by the Group Director. A USPTO decision refusing reexamination is final and not appealable. If the examiner orders reexamination, the third party may have a second and final opportunity to present arguments of unpatentability, but only if a statement is filed by the patent owner responding to the decision ordering reexamination. Thereafter, reexamination is completely ex parte; the third party having no opportunity to address issues raised during the reexamination. While the patent owner may appeal any adverse decision, the third party cannot appeal a decision to grant a reexamination certificate. A third party may be granted an opportunity to intervene in a patent owner's appeal to the Federal Circuit or in a de novo review in the district court, although he is not able to participate in an appeal to the USPTO Board of Patent Appeals and Interferences. Since 1981, over half of all reexamination requests have been filed by third parties [90]. Notwithstanding such third party participation, because reexamination is essentially ex parte, reexamination is limited to consideration of patentability issues solely arising from documentary prior art [91]. Since the USPTO's reexamination decision is likely to be given great weight by a court in considering validity of the reexamined patent, a third party's burden of proving invalidity will be more difficult to sustain. The third party's validity challenge in court may also be weakened if the USPTO refuses a third party's request for reexamination. Thus, many third parties do not perceive the reexamination system as a fair alternative to challenging validity in court [92] and are less likely to request reexamination as an alternative to litigation because of the perceived unfairness of the system. If the reexamination system discourages its use by third parties as an alternative to litigation, the system is failing one of its primary purposes -- to provide an expert forum as a faster, less expensive alternative to litigation of patent validity. Initially, the Commission's views differed on the preferable scope of third party participation in reexamination. There was strong support for a full inter partes proceeding, with certain restrictions designed to avoid abuse and to limit the scope of evidence upon which a third party can rely. For example, those supporting full inter partes reexamination would limit USPTO consideration to documentary prior art and would preclude discovery or reliance on testimonial evidence such as depositions taken in related judicial proceedings. Other Commission members were concerned that a full inter partes proceeding, even with certain restrictions, would lead to abuses of the process much as occurred in the reissue protests under the Dann amendments. As presently constituted, the USPTO is not an appropriate forum for an inter partes adversarial proceeding addressing all potential issues of validity. Even if the USPTO were to develop the capability to handle full adversarial proceedings, such a procedure would not be an alternative to litigation but rather litigation in an administrative forum. Providing for third party participation at every stage of reexamination would unduly complicate the proceeding, adding undue cost to the parties and the USPTO and requiring excessive time before a decision could be reached. Broadening the scope of reexamination to consider all issues material to validity and infringement would impose on the USPTO examiners evidentiary burdens beyond their primary expertise. Any modification of the present reexamination system must be a compromise. Consistent with its intended purpose of providing a desirable alternative to validity litigation, the reexamination system should be modified to provide third parties with a greater opportunity to participate. Any modifications, however, must not result in harassment of patent owners, or unreasonably increase the cost or duration of the proceedings, or impose unreasonable burdens on the USPTO. The Commission believes that its recommendations satisfy all these criteria. B. Summary of Public Comments Many of the public comments on the reexamination system focused on expanding the scope of third party participation in reexamination proceedings. These comments included creating a tribunal within the USPTO for full examination of all validity and infringement issues, establishing a post-grant opposition procedure similar to those in European systems for consideration of all validity issues, and permitting third party participation at all stages of reexamination, including interviews with the examiner. Other public comments, however, supported the reexamination system as it presently operates. Several of the public comments summarily proposed that reexamination be permitted for all issues affecting validity, thus implicitly proposing that Section 112, among other issues, be the basis for and within the scope of reexamination. The majority of comments which specifically addressed section 112 and the scope of reexamination either did not address Section 112 as a basis for ordering reexamination or specifically excluded it as a basis for reexamination without explanation. The public comments addressing application of a uniform claim construction standard in USPTO reexamination and the courts were generally split, with some in favor of a uniform standard and some opposed. Several public comments suggested assigning reexamination cases to special reexamination examiners, to a panel of examiners, or to an examiner who did not issue the patent. Others suggested that reexamination should be permitted only for a limited period after issuance of the patent. It was also suggested that third parties be forced to use reexamination, or be prevented from relying upon any prior art not considered by the USPTO in the original examination or during reexamination or reissue proceedings. This, however, was perceived by many commentators as depriving such third parties of meaningful access to the courts. C. Recommendations and Discussion Recommendation VII-A The basis for and scope of reexamination should include compliance with all aspects of 35 U.S.C. @@112 except for best mode. Since one purpose of reexamination is to correct an administrative error of the USPTO [93], it is appropriate for the USPTO to examine patent claims for compliance with section 112. The recommendation provides that failure to comply with section 112 by itself may be a basis for ordering reexamination and that the scope of reexamination (of original as well as new and amended claims) should include section 112 issues, except for best mode issues [94]. To the extent section 112 issues are amenable to documentary presentation and are of the type ordinarily considered by examiners (i.e., written description, enablement, claim definiteness), it should be a basis for ordering reexamination. A "substantial new issue of patentability" should be found where the requester establishes in the request a prima facie violation of section 112 which was not considered previously on the record. While this may present certain evidentiary issues where affidavits are involved, this is no more than examiners face in examination of original applications. Limiting the basis for reexamination to documentary prior art precludes administrative determination of substantial issues of patentability well within the ambit of the USPTO's expertise and, indeed, well within what the USPTO should have considered in the initial examination. Entirely separate from permitting section 112 to form the basis for reexamination, once reexamination is ordered, section 112 should be within the scope of examination, even of the original claims. Since new and amended claims submitted during reexamination are examined for compliance with section 112 [95], there is no reason not to reexamine the original claims for such compliance. Examining all claims for section 112 compliance would not significantly increase the examiner's burden and would avoid the difficult task of examining amended claim language for section 112 compliance without examining the unamended portion of the claim. Since best mode issues generally involve disputed factual evidence not normally considered by examiners, exclusion of this issue from the basis for and the scope of reexamination keeps the examination within the primary expertise of the USPTO. Other issues traditionally outside the normal practice of examiners because of the evidentiary issues, i.e., public use or on sale bars, inequitable conduct, etc., should not be a basis for or within the scope of reexamination. Although litigation validity decisions are rarely predicated solely on section 112 issues, permitting such issues to be the basis for and within the scope of reexamination will provide a more complete alternative to litigation. Recommendation VII-B The order for reexamination and the first Office action should be consolidated and any third party requester should be permitted, within strict time deadlines, to submit written comments on the patent owner's response to the first office action. The third party's comments should be limited to issues covered by the examiner's office action and the patent owner's response. Under current practice, a third party requester may only comment on the patent owner's statement in response to the decision ordering reexamination. In order to deprive the third party of this opportunity, many patent owners do not file a statement, waiting instead for the first Office action. This recommendation, therefore, ensures the third party requester an opportunity to comment while shortening the duration of many reexamination proceedings. The recommendation also will shorten the necessary time to conduct a reexamination requested by the patent owner. Since the examiner's first Office action may introduce prior art and patentability issues not addressed in the third party's request, the third party's comments after the first office action may aid in focusing the issues early in the reexamination proceedings. Also, it may avoid the need to reopen reexamination after the close of prosecution as a result of the third party's comments at that stage. The recommendation is not intended to change the standard used in determining whether to order reexamination. The examiner would first consider whether a request raises a substantial new question of patentability. If the request does not meet the standard, the examiner would issue a notice to that effect. If, however, reexamination is deemed appropriate, the examiner would then consider whether a prima facie case of unpatentability exists. The first communication from the examiner in this instance would issue as an Office action addressing the question of whether there is a substantial new question of patentability, and then any applicable grounds for rejection. In this and other recommendations regarding reexamination, the third party requesters must have access to all communications between the patent owner and the USPTO. Accordingly, the patent owner should be required to serve copies of such communications on the third party requester. Recommendation VII-C A third party requester should have the right to participate in any examiner interview initiated by the patent owner or by the examiner. Such an interview should be conducted under controlled conditions before the examiner and a senior USPTO representative. The third party should not be permitted to initiate interviews. While not unanimous, several Commission members urged either that third parties be given the right to participate in examiner interviews or that interviews in reexaminations be banned altogether. Their position is that interviews present an opportunity for mischief since the record rarely reflects all that transpired. In their view, where a reexamination is requested by a third party, neither party should have the opportunity for ex-parte contact with the examiner. This could be achieved either by banning interviews or permitting inter partes interviews. In lieu of banning interviews, which would deprive the USPTO of a proven and effective means of communication, inter partes interviews have been recommended. The recommendation is limited to interviews initiated by the patent owner or the examiner. There was opposition to the recommendation by those Commission members who feel the changes to the reexamination system should preserve as much as possible its present ex parte nature while providing third parties with greater opportunity to participate. The reexamination process is intended to make use of the normal examination procedures, including interviews. It presumes that examiners will comply with the examination requirements, including that of a detailed interview summary. Giving third parties the opportunity to participate in interviews will come close to transforming the reexamination process into a full adversarial process with the attendant delays and costs and may burden the USPTO with adversarial hearings before examiners untrained to deal with such proceedings. As an alternative to inter partes interviews, a transcript of ex parte interviews could be provided to third party requesters. This was deemed less acceptable by those promoting inter partes interviews. Moreover, there was no agreement as to who should bear the cost involved. Recommendation VII-D A third party requester should have the right to submit written comments at the close of prosecution of a patent under reexamination. Such comments, which should be limited to issues raised during ex parte reexamination, should be considered by the examiner before any appeal by the patent owner of an adverse decision and before issuance of a Notice of Intent to Issue a Reexamination Certificate. If the third party's comments cause the examiner to change his decision, the examiner should be permitted to reopen prosecution to the extent of issuing a supplemental final action to which the patent owner should be entitled a single response under 37 C.F.R. 1.116. If, in the single response, the patent owner makes any claim amendment, the third party should be permitted to submit comments limited to the claim amendments. Thereafter no further comments should be received from either the patent owner or a third party. The third party comments should be a part of the record considered on any appeal by the patent owner or the third party. Allowing the third party requester to comment on the outcome of prosecution in which he could not participate will enhance reexamination as an alternative to litigation without unduly complicating the process or burdening the USPTO. To minimize the burden on the reexamination process, the third party will only be able to submit comments after the close of prosecution and to only those issues raised during ex parte prosecution. The content of any comments may be a composite of previously offered comments and any additional comments, provided the composite remains restricted to the issues raised during the reexamination prosecution. While in a few cases the third party's comments may result in a supplemental final Office action, the additional admin)istrative burden and concomitant delay in the process should be acceptable if it reduces litigation on the validity of the patent by encouraging greater third party use of the reexamination system. This recommendation presents a concept which may require new rules to ensure procedural control over the process. Once the concept is accepted, it is within the ambit of the USPTO to implement it procedurally. Recommendation VII-E A third party who requested and participated in a reexamination should be permitted to appeal any adverse decision of the Examiner to the Board of Patent Appeals and Interferences and to the Federal Circuit. The third party and the patent owner should be permitted to participate in any appeal by the other. The third party's appeal to the Board and the Federal Circuit should be limited, respectively, to issues raised in the third party's comments after close of prosecution and to issues dealt with by the Board. A third party's right to appeal should be conditioned upon filing of a written waiver by the third party of any right to assert, in any forum, the invalidity of any claim determined to be patentable on appeal on any ground which the third party raised or could have raised during the reexamination. The Commission is unanimous that, at a minimum, third party participation in patent owner appeals of reexamination decisions would be necessary to make reexamination a meaningful alternative to validity litigation. Given the increased burden of subsequently proving invalidity of a reexamined claim, many third parties would be reluctant to use reexamination without an opportunity to at least participate in judicial review of the USPTO's decision. Although third party participation in patent owner appeals will increase the burden on the USPTO and delay the reexamination process, any such increased burden and delay would likely be minimal and an appropriate trade-off for increased third party use of the reexamination system. The Commission, by a slim majority, also recommends that a third party who participates in a reexamination should be given the opportunity to appeal any decision adverse to the third party, but the Commission believes that right should be conditioned upon the third party's waiver of any right subsequently to litigate the same issues. Several members opposed such a condition, arguing that, contrary to the purpose of the recommendation, the waiver requirement would discourage third party use of reexamination as an alternative to litigation. Those favoring the condition believe that, without the proposed waiver, there would be no finality to reexamination proceedings, thus permitting a third party to burden a patent owner and the courts with subsequent litigation over the same issues. Several members believe that the third party should not be specifically given the right to participate in appeals beyond the Board. They note that under existing precedent a third party would likely be permitted to participate as an intervener in appeals from decisions of the Board to the Court of Appeals for the Federal Circuit and in de novo review actions under 35 U.S.C. 145. The Commission believes that third party appeals from decisions of the Board should be limited to the Court of Appeals for the Federal Circuit, and should not include de novo review actions under 35 U.S.C. 145. Section 145 review would merely add an additional layer of review to the process and is considered undesirable. Since under current law the patent owner is permitted the section 145 option, consideration should be given to eliminating the option as to the patent owner as well. If it is not eliminated, it would be necessary to take steps to preclude the possibility of court review of the USPTO decision in different courts, in those situations where both the patent owner and the third party are dissatisfied with the USPTO decision. Recommendation VII-F A reexamination should not be initiated or continued on any patent claim held valid in an entered judgment, or its equivalent, of a district court in an action in which the requesting party or its privies raised or could have raised the same issues. By this recommendation, a third party (and its privies) would be precluded from pursuing reexamination of any claim in which the validity was determined adversely to the third party by a court in a judgment or dismissal with prejudice. This avoids the potential for inconsistent treatment by the USPTO after completion of a judicial determination of validity of the patent. The prohibition would be effective unless the judgment were reversed or unless the right to reexamination was specifically preserved in a consent judgment or dismissal. The prohibition would not apply to reexamination on issues of patentability which the requesting party did not raise and could not have raised in court. Under this standard, a party would not be able to request a reexamination based upon any prior art actually known to the litigators in the prior court proceeding, but would be able to do so if the request was based upon prior art discovered after termination of that earlier proceeding. D. Other Considerations 1. Use of Different Standards of Claim Construction in the USPTO and in the Courts Under prevailing Federal Circuit law, the USPTO in a reexamination proceeding construes the claims as broadly as is reasonably possible while according the reexamined patent no presumption of validity. On the other hand, that same patent being litigated in a district court would normally not have its claims construed as broadly as reasonably possible but in a manner to save their validity based on a presumption of validity. These different approaches to claim evaluation provide an opportunity for considerable mischief. A claim saved from invalidity by a district court through a narrow reading which avoids the prior art may nevertheless be held to be infringed, either literally or through the doctrine of equivalents, without raising any issues of intervening rights. That same claim presented to the USPTO in a reexamination proceeding, however, may be required to be amended to avoid the prior art, creating the possibility of intervening rights. Where the patent owner himself/ herself elects to have his patent reexamined, there is no reason for concern, since the patent owner controls the process and accordingly can elect the procedure which best suits his/her needs. The patent owner, however, suffers a disadvantage where a third party forces a reexamination, due to the potential for intervening rights as aforenoted. While this problem is in need of rectification, the potential solutions to the problem each have their own set of attendant problems. For example, requiring reexamination examiners to construe claims narrowly to sustain validity while granting the claims a presumption of validity would require the examiners to apply standards outside the ambit of their normal experience and might well serve to discourage third party participation in reexamination proceedings. Alternatively, requiring courts to construe claims as broadly as the USPTO does in ordinary prosecution would place patent owners at a severe disadvantage since the claims could not be amended in court, and requiring the patent owner to go back to the USPTO for reexamination or reissue would subject him to the intervening rights problem noted above. One possible solution that should be explored is an appropriate amendment to 35 U.S.C. 307(b). This amendment would require equitable treatment of any claim by a third party of intervening rights arising from a reexamination requested by that third party and preclude application of the first sentence of the second paragraph of 35 U.S.C. 252 in that situation. Given the foregoing, and since the public comments addressing application of a uniform standard in the USPTO and the courts were generally split, no specific recommendation is made on this issue, though it is worthy of further consideration. 2. Reexamination by Different Examiners Several public comments sought to direct assignment of reexamination to special reexamination examiners, to a panel of examiners, or to an examiner who did not issue the patent. These suggestions apparently were based on perceptions that regular examiners were insufficiently skilled to handle reexaminations or that the original examiner would be biased in favor of his original examination and allowance. There is no evidence of the former, particularly since the scope of reexamination is limited to areas within the skill of ordinary examiners. The USPTO's experience belies the latter since original and different examiners have nearly identical records in treatment of claims on reexamination [96]. The impact on the USPTO's costs and efficiency in handling reexaminations if special or different examiners were required is much greater than the limited benefit, if any, of such procedures. 3. Limited Time for Filing Reexamination Requests Another public suggestion concerned permitting reexamination only for a limited period after issuance of the patent. One suggestion recommended that the limited period not exceed nine months after issuance. While this could limit reexamination requests, many patents do not achieve a value worthy of validity litigation until many years after issuance [97]. If reexamination were limited to relatively new patents, the process would not act as an alternative to validity litigation for those patents which mature in value later