USPTO Power Outage Concerns Could Have Some Teeth

This article first appeared in the January 25, 2016 edition of IP Law360

A January 4, 2016 article in IP Law360 raised several issues regarding the USPTO’s handling of the December 2015 power outage, including the USPTO’s statutory authority to declare the power outage days as federal holidays and vulnerabilities of patents having bar dates on a power outage day but filed on the next succeeding business day. Patentees can breathe a sigh of relief in at least one respect – future attacks on “power outage patents,” i.e., patents based on applications with a bar date on a USPTO power outage day, but filed on the first business day after the USPTO electronic filing system came back online, are highly unlikely. In the 2008 Aristocrat decision, the Federal Circuit reiterated that “[p]rocedural lapses during examination, should they occur, do not provide grounds of invalidity.”[1] Still, clarification of the USPTO’s statutory basis to declare the power outage patents as timely filed is needed to protect against several potential pitfalls.

Lack of Statutory Basis

The USPTO’s reliance on 35 § U.S.C. 21 as the sole statutory basis for declaring the power outage patents timely is problematic for several reasons.[2] 35 U.S.C. § 21(a) allows the USPTO to consider late filings timely under “postal service interruptions or emergencies designated by the Director,” but that subsection as a whole seems limited to United States Postal Service interruptions or postal mail emergencies.

In contrast, 35 U.S.C. § 21(b), which is where the USPTO purportedly derives authority to declare the power outage days as federal holidays, does not delegate the Director with any authority to declare a “Federal holiday within the District of Columbia.” Because 35 U.S.C. § 21(a) explicitly states that the “Director” can designate a postal service interruption or emergency but the text of 35 U.S.C. § 21(b) makes no mention of the Director designating a federal holiday, an interpretation that the Director may declare a “Federal holiday within the District of Columbia” under 35 U.S.C. § 21(b) would be an odd result.

To be sure, the USPTO cited federal regulations in support of its authority to declare a federal holiday under 35 U.S.C. § 21(b). The relevant regulation is 37 C.F.R § 1.9(h), which defines the term “Federal holiday within the District of Columbia” in 35 U.S.C. § 21(b) as “any day, except Saturdays and Sundays, when the Patent and Trademark Office is officially closed for business for the entire day.” Although this regulation and M.P.E.P. § 510(I) broadens the definition of federal holiday to include “[w]hen the entire USPTO is officially closed for business for an entire day, for reasons due to adverse weather or other causes,” the statutory language of 35 U.S.C. § 21(b) itself does not seem to allow for such a broad interpretation.

Procedural Defects Do Not Provide Grounds for Invalidity

Regardless of whether the USPTO has authority to declare the power outage patents timely, the Federal Circuit’s 2008 Aristocrat decision is clear that procedural flaws with examination are not a basis for patent invalidity (unless the Supreme Court or Federal Circuit judges think differently in the future). 35 U.S.C. § 282(b) provides several defenses in a patent suit, including any ground specified in part II of title 35 as a condition for patentability and any other fact or act made a defense by title 35.

However, the Federal has confirmed in Aristocrat that these conditions, facts, and acts are narrow and that procedural irregularities, such as improper revival, may not be asserted as a defense in a patent suit absent proof of inequitable conduct.[3] The Federal Circuit explained there is “good reason” for this result:

Once a patent has issued, the procedural minutiae of prosecution have little relevance to the metes and bounds of the patentee’s right to exclude. If any prosecution irregularity or procedural lapse, however minor, became grist for a later assertion of invalidity, accused infringers would inundate the courts with arguments relating to every minor transgression they could comb from the file wrapper. This deluge would only detract focus from the important legal issues to be resolved – primarily, infringement and invalidity.[4]

Clarifying USPTO Authority to Declare Power Outage Patents Timely

Although procedural flaws with examination do not currently provide a basis for patent invalidity, clarification of the USPTO’s statutory basis for declaring power outage patents as timely would be helpful to future owners of power outage patents. For example, clarification may lessen the likelihood of patent challengers seeking to have the Federal Circuit or Supreme Court overturn the Aristocrat decision.

Clarification of the USPTO’s statutory basis to declare power outage patents timely is also needed to protect against the potential of patent applicants continuing to largely paper file to avoid a potential of loss of rights when the USPTO makes similar declarations during future outages. Clarification would give stakeholders confidence in the USPTO’s authority, and therefore save patent applicants paper filing fees and conserve USPTO resources in processing the paper filings inundating the USPTO mail room.

Legislative Fix May Be Needed

To the extent the USPTO is unable to find an adequate statutory basis in 35 U.S.C. § 21, Congress should enact a legislative fix. The first fix is to modernize 35 U.S.C. § 21(a) to reflect the modern day practice of electronic filing. For example, 35 U.S.C. § 21(a) could be amended to refer to electrical or computer equipment emergencies designated by the Director. The second fix is to codify a retroactive grace period that declares the power outage patents as timely filed.

Conclusion

 Although speculation that power outage patents may be subject to future attacks due to procedural defects appears to be overblown, the USPTO’s declaration of a federal holiday as the mechanism to deal with this issue raises genuine causes for concern. The USPTO should clarify the basis for its statutory authority to declare the power outage patents timely. If there is any ambiguity, the USPTO should recognize a retroactive legislative fix may be needed and 35 U.S.C. § 21(a) should be amended to reflect the modern day practice of electronic filing.


[1] Aristocrat Techs. Austl. Pty Ltd. v. Int’l Game Tech., 543 F.3d 657, 663 (Fed. Cir. 2008) (citing Magnivision, Inc. v. Bonneau Co., 115 F.3d 956, 960 (Fed. Cir. 1997) (“Procedural lapses during examination, should they occur, do not provide grounds of invalidity”).

[2] See http://www.uspto.gov/learning-and-resources/operating-status#electronicsystemsDec2015 (stating “In light of this emergency situation, the USPTO will consider each day from Tuesday, December 22, 2015, through Thursday, December 24, 2015, to be a ‘Federal holiday within the District of Columbia’ under 35 U.S.C. § 21 and 37 C.F.R. §§ 1.6, 1.7, 1.9, 2.2(d), 2.195, and 2.196. Any action or fee due on these days will be considered as timely for the purposes of, e.g., 15 U.S.C. §§ 1051(b), 1058, 1059, 1062(b), 1063, 1064, and 1126(d), or 35 U.S.C. §§ 119, 120, 133, and 151, if the action is taken, or the fee paid, on the next succeeding business day on which the USPTO is open (37 C.F.R. §§ 1.7(a) and 2.196)”).

[3] Aristocrat Techs., 543 F.3d at 663.

[4] Id.