Overlooked Changes To Patent Cooperation Treaty Practice - Law360

by Bradley Arant Boult Cummings LLP
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The recent Actelion Pharmaceuticals Ltd. case brought to light a little-known quirk in how national stage patent applications affect the length of one’s patent term. That case involved a drug company losing five days of patent term due to an error in the national stage coversheet; unlike most errors during patent prosecution, this one could not be corrected. While five days of patent term is a small fraction of the entire term, sales of some blockbuster drugs are over $1 million per day. Actelion attempted to rely on the 2013 passage of the “Technical Corrections" section of the America Invents Act[1] to save its patent term, but to no avail.

More broadly, the Actelion case highlights the potential that an alternative filing procedure, often known as a “bypass” patent application, could have both resolved Actelion’s problem and potentially provided many other benefits. As a result of changes to the patent code from the America Invents Act, the Patent Law Treaties Implementation Act of 2012 (PLTIA) and the AIA's "Technical Corrections," the “bypass” application presents many potential advantages. Choosing between a national stage and a bypass is a key strategic decision during the prosecution of a U.S. patent.

The Patent Cooperation Treaty and the “Bypass” Application

The Patent Cooperation Treaty allows a patent applicant in any signatory country (such as the United States) to reserve its patent rights in all of the other 151 signatory countries by filing a single “international patent application.” Prior to the PCT, a U.S. inventor wishing to preserve patent rights in foreign countries was required to file a patent application in each foreign country within 12 months of filing a U.S. patent application. Under the PCT, once a single international application has been filed within 12 months, patent rights are preserved in all of the signatory countries for up to 30 months from the priority date. To pursue patent protection in individual national jurisdictions, the applicant must file local “national stage” applications in each country within the 30-month period. The PCT allows patent applicants to delay the significant expense of filing and prosecuting patent applications in national patent offices for an additional 18 months. This gives the applicant time to analyze the value of the invention in order to weigh the costs and benefits of filing patent applications.

International patent applications are often subject to distinct treatment by national patent laws because the treaty — not national law — defines their conditions and requirements. In the United States, one of the quirks resulting from the PCT is the ability to file two different types of applications relating to the international patent application.

One option is the standard national phase application. The national stage application is essentially the international application being treated as having entered into the United States, subject to any prosecution history of the international application (such as the international search and opinion).

The other option is the “bypass” application. A “bypass” application is filed as a “continuation” application under the “normal” (non-PCT) procedure under 35 U.S.C. § 111(a) that cites the international application for priority. This procedure treats the international stage application as simply another domestically filed U.S. application.

Bypass practice has generally been considered a secondary alternative to the PCT’s national stage route. Conventional wisdom has been that a national stage requires less paperwork, can cost less, and is less likely to provoke a restriction requirement than a bypass application. For these reasons, most attorneys have recommended proceeding with national stage applications, rather than bypass applications.

However, many subtle (and probably unintentional) changes in the law have erased most of the advantages the national stage once provided over a bypass. Consequently, the relative merits of the bypass have increased with little public attention.

The Current Benefits of Filing a Bypass Application

The National Stage RCE Trap

Under the AIA, the inventors’ oaths or declarations are no longer due upon filing, or within six months thereafter if not filed on the filing date. Instead, the declaration is not due in either a bypass or national stage until the payment of the issue fee.

However, the U.S. Patent and Trademark Office failed to change the requirements to file a request for continued examination in 37 C.F.R. § 114(e). Rule 114(e) prohibits an RCE from being filed in a national stage unless all requirements of 35 USC 371(c) have been fulfilled, including the requirement to file the oath/declaration. There is no such requirement to file an RCE in a bypass.

As a result, if an applicant needs an RCE in a national stage, but has not filed the declaration, the application may become abandoned as a result. Filing a bypass will avoid this complication, which may be especially desirable if filing of the oath/declaration will be delayed.

Track 1 Examination: Only for Bypass Applications

Obtaining “special status” permits prioritized examination. Prior to the AIA, special conditions had to be met to obtain special status (e.g., inventor over 65 years of age, positive international search work-product, etc.), so not all applications were eligible. Now, by paying a fee and limiting the number of claims, any applicant filing a domestic application under Section 111(a) can seek prioritized examination (Track 1). Because national stage applications are not filed under the authority of Section 111(a), Track 1 is not available for them. However, bypass applications can seek Track 1 examination.

A Bypass No Longer Requires a Copy of the Application

Originally, one of the greatest benefits of the PCT and the national stage application was that they did not require the applicant to provide another copy of the specification, claims, and drawings. Instead, the International Bureau of the World Intellectual Property Organization sends a copy to every national patent office for member nations. This reduced paperwork and provided one fewer opportunity for filing errors (such as lost pages).

However, the PLTIA has all but erased this advantage. The PLTIA allows an applicant for a U.S. patent to satisfy the requirement to file a specification and drawings by incorporation of an earlier patent application by reference. The earlier application can be an international application. Thus, a bypass can be filed without a copy of the specification and drawings simply by making such a reference in the application (there is a checkbox on the application data sheet for this). A copy will need to be filed eventually, once the USPTO sends a notice to file missing parts, but it is no longer necessary to be filed as of the filing date.

Disclaimer of Statements During International Stage

When trying to enforce a U.S. patent, any previous statements and amendments made on the record by the applicant can be used to narrow the scope of the claims during claim construction, to reduce or eliminate equivalents, and as fodder for allegations of inequitable conduct. Sometimes relevant statements are made during the processing of international applications, for example if Chapter II demand is made, if amendments are made under either of Rules 19 and 34, or if informal comments are made. A bypass, like any continuation application, can include a disclaimer of statements and amendments made during the prosecution of earlier applications (i.e., the international application), which is known as a Hakim disclaimer. A national stage cannot effectively include such disclaimers, because the national stage is considered the same application as the international application. If there is significant prosecution history during the international stage, it could be advantageous to file a bypass with a Hakim disclaimer.

A Bypass Can Contain New Matter

Because a bypass is really a continuation of the international application, it may be filed as any type continuation application, including as a “continuation-in-part.” Like any CIP, it may contain new matter compared to the parent, which in this case is the international application. Only claims that are fully supported by the international application in the manner required under 35 U.S.C. § 112 (enabled and with adequate written description) will be granted the effective filing date of the international application. In contrast, the national stage must be identical to the international application, and so cannot contain any new matter. Many commentators question the value of a CIP over a new application without a priority claim, but when a CIP of an international application is deemed necessary it is only available through bypass practice.

Fees Can Be Delayed for a Bypass

All patent applications require certain fee payments, and U.S. law has attempted to harmonize the fees due for a bypass and a national stage. However, a national stage that is filed without payment of the basic fee will not be accorded a filing date, which can result in abandonment. In contrast, a bypass will be accorded a filing date even if filed without any fees; the fees can be paid late. This reduces the impact of an unintentionally unpaid fee, and provides the opportunity to avoid the fees entirely if the applicant decides to abandon the application soon after filing.

When Would a National Stage Application be Preferred?

National Stage Can Salvage a Missed Filing Deadline

What happens if the 30-month deadline passes, but the applicant unintentionally neglected to file a U.S. application? In that case, it is too late to file a bypass. A bypass can only be filed while the international application is “pending,” and an international application is considered abandoned after the 30-month deadline. There is no mechanism under U.S. law for filing a bypass (or any other continuation of divisional application) after the parent application is abandoned.

However, the PTLIA created a mechanism for entering the national stage late, so long as the 30-month deadline was unintentionally missed. If the deadline has passed unintentionally, a national stage is the only option. This is the only recent change in the law that favors the filing of a national stage.

The Double-Edged Sword of Delayed Examination

While a bypass application permits prompt examination with few complications before the 30-month date, there is no option for delaying prosecution. To obtain examination before the 30-month date in a national stage application, the applicant must make an express request by checking the box (as Actelion belatedly learned, to its disadvantage). On the other hand, delay could be desirable to postpone costs associated with patent prosecution. In such cases, a national phase application may be preferable. While the bypass application eliminates the risk of accidentally delayed prosecution, there is no additional opportunity for delay once it is filed.

Fees May be Lower in a National Stage Application

In addition to the potential for delaying costs associated with active prosecution, the national stage application also offers an opportunity for lower fees. National stage fees are reduced if the USPTO was the international search authority, and they are actually eliminated if the USPTO as international search authority issues an opinion that all of the claims are novel, inventive, and industrially applicable.

Restriction Practice: Unity of Invention Versus Independent and Distinct

The requirements for an examiner to make a restriction requirement in a national stage are different than those in a bypass.

In a bypass, as in any other application filed under Section 111(a), under Section 121 restriction is proper if at least two claims are either independent or distinct from one another. To rebut a finding that two claims are independent or distinct, the applicant must establish that one of the claims is obvious over the other. This can be a very damaging admission. Furthermore, the legal definition of “distinct” in this context is notoriously vague. As a result, applicants frequently decline to rebut a restriction requirement.

In contrast, in a national stage restriction is proper if two claims lack “unity of invention.” Claims lack unity of invention if all of their common subject matter lacks novelty.[2] To rebut a finding of lack of unity the applicant must establish that the common subject matter is novel. This does not require an admission against interest. Furthermore, the unity of invention standard is much clearer than the independent/distinct standard and puts the burden on an examiner to identify art that renders the common subject matter of the two claims anticipated.

Conclusion

In the hoopla around the multiple statutory changes to the U.S. patent law this decade, some intricate details of the interface between U.S. law and the Patent Cooperation Treaty have escaped attention. Some developments, such as the RCE trap, were probably oversights. Others, such as limiting prioritized examination to bypass applications, seem to have been intentional, but it is not clear what policy goal they serve. Ironically, while one of the goals of patent reform was to harmonize U.S. law with international standards, these changes have exacerbated the asymmetries between bypasses and national stages. As a result, bypass applications may soon become more preferred over the national stage, as they offer many more advantages than were available before enactment of the AIA, "Technical Corrections," and the PLTIA. Applicants and attorneys should be aware of these changed incentives and choose a filing strategy accordingly.

[1] Pub. L. No. 112-274, 126 Stat. 2456 (2013).

[2] 37 C.F.R. § 1.475

Republished with permission. This article first appeared in Law360 on May 14, 2018.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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