IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA (Alexandria Division)
TRIANTAFYLLOS TAFAS, Plaintiff, - against JON. W. DUDAS, et al., et al., Defendants. 1:07cv846 JCC/TRJ Judge Cacheris
SMITHKLINE BEECHAM CORPORATION, et al., Plaintiff, - against JON. W. DUDAS, et al., et al., Defendants. BRIEF OF AMICUS CURIAE CFPH, LLC IN SUPPORT OF PLAINTIFFS' SUMMARY JUDGMENT MOTIONS Richard S. Meyer (VSB #66236) Jonathan D. Link (VSB #42951) TOWNSEND AND TOWSEND AND CREW LLP 1301 K Street, N.W., Ninth Floor East Tower Washington, DC 20005 Telephone: (202) 481-9900 Facsimile: (202) 481-3972 e-mail: rmeyer@townsend.com 1:07cv1008 (JCC/TRJ) Judge Cacheris
Of Counsel Dean Alderucci, Esq. CFPH, LLC 110 East 59th Street New York, NY 10022 Telephone: (212) 829-7009 Facsimile: (212) 308-7505 e-mail: dalderucci@cantor.com December 20, 2007
TABLE OF CONTENTS Page I. INTRODUCTION.....1 A. STATEMENT OF FACTS...2 1. 2. 3. II. The Presumption of Patentable Indistinctness..3 Requirements to Prove Patentability..6 Limits on Continuation Applications and RCEs..8
ARGUMENT....10 A. The Final Rules Illegally Impose Substantive, Not Procedural, Requirements....10 1. 2. 3. B. The Presumption of Patentable Indistinctness is Substantive....11 The Requirements to Prove Patentability Are Substantive.16 The Limits on Continuation Applications Are Substantive..17
The Final Rules Illegally Shift Burdens of Proof...18
TABLE OF AUTHORITIES Page Cases Air Transport Assn. of Am. v. Dept. of Transportation, 900 F.2d 369 (D.C. Cir. 1990).... 13, 15 Alabama Power Co. v. Costle, 636 F.2d 323 (D.C. Cir. 1979)... 20 Alcaraz v. Block, 746 F.2d 593 (D.C. Cir. 1984)... 11 American Airlines, Inc. v. CAB, 359 F.2d 624 (D.C. Cir. 1966) (en banc).... 22 American Dredging Co. v. Miller, 510 U.S. 443 (1994).... 14 American Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350 (Fed. Cir. 1984).. 8 American Hospital Assn. v. Bowen, 834 F.2d 1037 (D.C. Cir. 1987).... passim American Mining Congress v. Mine Safety & Health Admin., 995 F.2d 1106 (D.C. Cir. 1993)... 13, 15 Animal Legal Defense Fund v. Quigg, 932 F.2d 920 (Fed. Cir. 1991)... 11, 12, 13, 14 Bachow Communs., Inc. v. Federal Communications Commn., 237 F.3d 683 (D.C. Cir. 2001)... 13, 14 Batterton v. Marshall, 648 F.2d 694 (D.C. Cir. 1980)... 12, 13, 15 Community Nutrition Inst. v. Young, 818 F.2d 943 (D.C. Cir. 1987).... 8 Dickinson v. Zurko, 527 U.S. 150 (1999).... 11 Director, Office of Workers Compensation Programs v. Greenwich Collieries, 512 U.S. 267, 271 (1994)... 14, 19, 22 Graham v. John Deere Co., 383 U.S. 1 (1966).... 4

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TABLE OF AUTHORITIES (cont) Page Heckler v. Campbell, 461 U.S. 458, 46 (1983)... 22 Hoechst Aktiengesellschaft v. Quigg, 917 F.2d 522 (Fed. Cir. 1990)... 12 Hyatt v. Dudas, 492 F.3d 1365 (Fed. Cir. 2007)... 8 In re Alton, 76 F.3d 1168 (Fed. Cir. 1996)... 5, 8 In re Berg, 140 F.3d 1428 (Fed. Cir. 1998)... 3, 4 In re Bogese, 303 F.3d 1362 n.6 (Fed. Cir. 2002)... 10, 18 In re Braithwaite, 379 F.2d 594 (C.C.P.A. 1967)... 18 In re Epstein, 32 F.3d 1559 (Fed. Cir. 1994).... 4 In re Glaug, 283 F.3d 1335 (Fed. Cir. 2002)... 5 In re Griswold, 365 F.2d 834 n.5 (C.C.P.A. 1966).... 18 In re Henrickson, 399 F.2d 253 (C.C.P.A. 1968)... 20 In re Hogan, 559 F.2d 595 (C.C.P.A. 1977)... 20 In re Lee, 277 F.3d 1338 (Fed. Cir. 2002)... 23 In re Longi, 759 F.2d 887 (Fed. Cir. 1985).... 4 In re Oetiker, 977 F.2d 1443 (Fed. Cir. 1992)... 5 In re Piasecki, 745 F.2d 1468 (Fed. Cir. 1984)... 5

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TABLE OF AUTHORITIES (cont) Page In re Rinehart, 531 F.2d 1048 (C.C.P.A. 1976)... 5 In re Robeson, 331 F.2d 610 (C.C.P.A. 1964).... 3 In re Rouffet, 149 F.3d 1350 (Fed. Cir. 1998)... 4 In re Siu, 222 F.2d 267 (C.C.P.A. 1953).... 3 In re Van Ornem, 686 F.2d 937 (C.C. P.A. 1982)... 17, 18 In re Warner, 379 F.2d 1011 (C.C.P.A. 1967).... 4, 5 In re Zickendraht, 319 F.2d 225 (C.C.P.A. 1963)... 18 Inova Alexandria Hospital v. Shalala, 244 F.3d 342 (4th Cir. 2001).... 14 Jerris Ceramic Arts, Inc. v. Consumer Product Safety Commission, 874 F.2d 205 (4th Cir. 1989)... 11, 20 KSR International Co. v. Teleflex, Inc., 127 S.Ct. 1727 (2007)..... 4 Lefevre v. Secretary, Dept. of Vet. Aff., 66 F.3d 1191 (Fed. Cir. 1995)... passim J.E.M. Broad Co. v. Federal Communications Comm'n, 22 F.3d 320 (D.C. Cir. 1994).... 14 Mazzari v. Rogan, 323 F.3d 1000 (Fed. Cir. 2003)... 11 McLouth Steel Corp. v. Thomas, 838 F.2d 1317 (D.C. Cir. 1988).... 8, 21 Merck & Co. v. Kessler, 80 F.3d 1543 (Fed. Cir. 1996)... 12 Motor Vehicle Mfrs. Ass'n v. StateFarm Mut. Auto. Ins. Co., 463 U.S. 29 (1983).... 23

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TABLE OF AUTHORITIES (cont) Page Pacific Gas & Electric Co. v. Federal Power Commn., 506 F.2d 33 n.14 (D.C. Cir. 1974)... 11, 12, 13, 15 Paralyzed Vets. of Am. v. Secretary of Veterans Affairs 308 F.3d 1262, 1266 (Fed. Cir. 2002).... 11, 14 Paralyzed Vets. of Am. v. West, 138 F.3d 1434 (Fed. Cir. 1998)... 11, 14 RSM Inc. v. Buckles, 254 F.3d 61 (4th Cir. 2001)... 12 Star Fruits S.N.C. v. United States, 393 F.3d 1277 (Fed. Cir. 2005).. 19 Stevens v. Tama, 366 F.3d 1325 (Fed. Cir. 2004)... 16, 17 Texaco, Inc. v. Federal Power Commn., 412 F.2d 740 (3d Cir. 1969).... 15
Statutes 35 U.S.C. 101.... U.S.C. 102.... 3, U.S.C. 103.... U.S.C. 120..... U.S.C. 131..... U.S.C. 132..... U.S.C. 2.... 10, 11, U.S.C. 363..... U.S.C. 371..... U.S.C. 372.... 13, U.S.C. 6.... U.S.C. 135..... 3
TABLE OF AUTHORITIES (cont) Page 37 CFR 1.105.... 15, CFR 1.109 (2006).... CFR 1.183..... CFR 1.56.... CFR 1.633..... CFR 1.647..... CFR 10.18.... CFR 1.637.... CFR 1.321 (2006)..... U.S.C. 553.... 9, 11, U.S.C. 556.... U.S.C. 706.... 18 Other Authorities Manual of Patent Examining Procedure 804 (8th ed. 5th rev. 2006).. 3 Rules 71 Fed. Reg. 48 (Jan. 3, 2006)... 5, 7, Fed. Reg. 46,715 (Aug. 21, 2007)... passim New Rule 1.105.... 7 New Rule 1.265... 6, 15, 16, 17 New Rules 1.183..... 8, 9 New Rules 1.114..... 8 New Rules 1.78..... passim

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TABLE OF AUTHORITIES (cont) Page Treatises 2-5 Chisum on Patents 5.06.... 5 3A-9 Donald S. Chisum, Chisum on Patents 9.03 (Lexis-Nexis 2007).... 3 6-19 Chisum on Patents 19.03.... 7

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INTRODUCTION CFPH, LLC (Cantor Fitzgerald Patent Holdings, CFPH) submits this brief
amicus curiae to assist the Court in evaluating motions for summary judgment to determine whether the U.S. Patent and Trademark Office (PTO) exceeded its legal authority in promulgating the rules at issue.1 The Final Rules substantively change the manner in which the PTO would evaluate patentability, in ways that would dramatically limit and delay the ability of CFPH, Cantor Fitzgerald, L.P. and their affiliates (collectively Cantor) to obtain patents, limit the duration of the many patents that Cantor would nevertheless obtain, and increase the costs of obtaining those patents. These changes are illegal, as the PTO has not been delegated

See id.at 12-30. See Comments of Dean Alderucci (Cantor Comments), Attachment A to Alderucci Decl. 6 New Rules 1.78(f)(2)(i)&(ii). See 37 CFR 1.321(c) (2006). All citations are to Title 37 of the CFR. The Final Rules appear at 72 Fed. Reg. 46,836-40. 7 New Rules 1.75(b)(1) and 1.265(a)(1),(4)&(5). 8 New Rules 1.78(d)(1)(i)-(v)&(vi) and 1.114(f)&(g).
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The Presumption of Patentable Indistinctness
A patent claim may be patentably indistinct from claims in another application or issued patent if it describes the same invention9 or if it describes a sufficiently similar invention that would not be patentable in light of the other claims.10 The judicial doctrine of nonstatutory double patenting was developed to prevent patent holders from effectively extending the duration of the first patent to obvious variants of the invention, and to protect competitors against harassing duplicative litigation by assuring common ownership of patentably indistinct claims.11 Nonstatutory double-patenting rejections must be made by the PTO whenever it determines that the claims are not patentably distinct from claims in a commonly owned application.12 Under the prior rules, nonstatutory double patenting rejections could not be made without an adjudication by the PTO that the claims in different applications were obvious (or otherwise unpatentable) in light of each other, which requires comparison of the actual claims.13 The PTO bore the burden of establishing a prima-facie case of unpatentablity.14 Unless a prima facie case
This is referred to as statutory double patenting, and is prohibited under 35 U.S.C. 101 (which permits inventors to obtain a patent for an invention). 10 This is referred to as nonstatutory double patenting, and is typically found where the later claim would be obvious under 35 U.S.C. 103 in light of the earlier claims; hence it is often referred to as obviousness-type double patenting. See, e.g., In re Vogel, 422 F.2d 438, 441-42 (C.C.P.A. 1970). 11 See, e.g., In re Berg, 140 F.3d 1428, 1431-35 (Fed. Cir. 1998); In re Vogel, 422 F.2d at 442; In re Robeson, 331 F.2d 610, 615 (C.C.P.A. 1964); In re Siu, 222 F.2d 267, 269-70 (C.C.P.A. 1953). See generally 3A-9 Donald S. Chisum, Chisum on Patents 9.03[2][b]&[3] (Lexis-Nexis 2007) (Chisum on Patents) (discussing obviousness tests for patentable distinctness); id. 9.04[2] (discussing harassment concerns underlying double patenting rejections and how they may be obviated by common ownership terminal disclaimers). 12 See 37 CFR 1.109(a) (2006). Examiners are instructed to make these rejections provisional to permit applicants to file a terminal disclaimer. See Manual of Patent Examining Procedure (MPEP) 804, at 800-17 (8th ed. 5th rev. 2006). Absent common ownership, the PTO may declare an interference (a priority contest) under 35 U.S.C. 135. 13 See, e.g., Chisum on Patents 9.03[1][a]. 14 See, e.g., In re Longi, 759 F.2d 887, 895-96 (Fed. Cir. 1985). See also MPEP, 804, at 80019 & 800-21 (examiners are instructed to determine obviousness-type double patenting using analysis that parallels the approach to obviousness rejections under 35 U.S.C. 103(a)); In re Berg, 140 F.3d at 1431-35 (describing two tests for making obviousness-type double patenting

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had been established, applicants were entitled by the Patent Act to have their claims issue,15 without the need to limit duration or to restrict alienation through terminal disclaimers. Under new Rule 1.78(f)(2)(i), the PTO has done away with any requirement for the PTO to determine that the claims are patentably indistinct. The new Rule simply adopts a legal presumption that entirely prejudges the issue, for applications having substantially overlapping disclosures, without ever comparing the language of the actual claims or evaluating them for obviousness or other unpatentability.16 Given the presumption, the PTO no longer must establish a prima-facie case. The new Rule thus shifts to the applicant the burden of proving the negative that all of the claims in the applications are patentably distinct.17 Rule 1.78(f)(2)(i) does not specify how such a rebuttal is to be achieved if the disclosures substantially overlap. The Final Rules do not specify the facts on which the presumption is purportedly based,18 and thus the only conclusive means of rebutting the new presumption would be to supply evidence and argument to favorably resolve any and all possible evidentiary
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rejections). Obviousness is decided under the complex and fact-sensitive analysis of Graham v. John Deere Co., 383 U.S. 1 (1966), as further elaborated in KSR International Co. v. Teleflex, Inc., 127 S.Ct. 1727 (2007), but is a question of law, see Graham, 383 U.S. at 18. 15 See, e.g., In re Warner, 379 F.2d 1011, 1016 (C.C.P.A. 1967) (the precise language of 35 U.S.C. 102 that (a) person shall be entitled to a patent unless, concerning novelty and unobviousness, clearly places a burden of proof on the Patent Office); In re Rouffet, 149 F.3d 1350, 1355 (Fed. Cir. 1998) (In the absence of a proper prima facie case of obviousness, an applicant is entitled to a patent); In re Epstein, 32 F.3d 1559, 1570 (Fed. Cir. 1994) (Plager, J., concurring) (unlike the normal rule that an applicant seeking government-issued property bears the burden of establishing entitlement to that grant, for patents the rule is that the burden of persuasion is on the PTO to show why the applicant is not entitled to a patent). 16 See 72 Fed. Reg. at 46,783 (acknowledging comment that overlapping disclosures should not create a prima facie case of double patenting, which requires comparison of claims). 17 See, e.g., 72 Fed. Reg. at 46,785 (requiring for rebuttal that applicants point[] to unique claim element(s) that patentably distinguish[] them from the claims that gave rise to the 1.78(f)(2) presumption); id. (seeking to deny that the applicant prove a negative, because the applicant may identify the claim elements that patentably distinguish the claims). 18 There is no evidentiary basis in the record of the Final Rules to support a factual presumption leading from the fact of substantially overlapping disclosures to the legal conclusion of double patenting. As Cantor noted in its comments on the proposed rule, the PTO did not perform any analysis of the existence of double patenting in multiple applications, raising additional legal

disputes (and logical inferences arising therefrom) that might support the PTOs burdens of production and persuasion on nonstatutory double patenting for all of the claims on all possible grounds of unpatentability. In contrast, when an applicant seeks to rebut a PTO rejection establishing a prima-facie case of obviousness, it only needs to supply sufficient evidence to challenge the specific prima-facie case made by the PTO, and then the PTO must reevaluate the entire record while continuing to bear the burden of persuasion (under the preponderance of evidence standard) in regard to potentially conflicting facts and their inferences.19 The PTO has effectively admitted that the Final Rules shift its burdens of proof, confirming this result in efforts to deny it.20 The Final Rules are expressly based on the view that applicants are required to assist the PTO.21 Under the Final Rules, Cantor would now be found by the PTO to have patentably indistinct claims, even if rebuttal is attempted, and Cantor
concerns. See Cantor Comments. The Final Rules provide no adequate response. See, e.g., In re Glaug, 283 F.3d 1335, 1338 (Fed. Cir. 2002); In re Oetiker, 977 F.2d 1443, 1445 (Fed. Cir. 1992); In re Piasecki, 745 F.2d 1468, 1471-74 (Fed. Cir. 1984); Warner, 379 F.2d at 1017. See also In re Alton, 76 F.3d 1168, 1174-76 (Fed. Cir. 1996) (the PTO must provide adequate grounds for rejecting an applicants rebuttal); In re Rinehart, 531 F.2d 1048, 1052 (C.C.P.A. 1976) (a prima facie case is a legal conclusion, not a fact, and when a primafacie case is rebutted with new evidence the decision-maker must start over). See generally 25 Chisum on Patents 5.06 (discussing the PTOs burden of a prima-facie case of obviousness). 20 See, e.g., 72 Fed. Reg. at 46,783 (incoherently stating that the rebuttable presumption does not equate to a prima facie case of patentably indistinct claims[, because a]n applicant may rebut the presumption); 72 Fed. Reg. at 46,815 (arguing that the rebuttable presumption of new Rule 1.78(f)(2)(i) is merely a procedural tool and is not a merits determination of patentability, even though the PTO may rely on the rule to require a rebuttal or a terminal disclaimer). Nor do the Final Rules adequately explain how the presumption of patentable indistinctness is not akin to a presumption of obviousness, how the ultimate determination of double patenting rests or remain[s] with the Office if it can rely solely on the new presumption, or how the rebuttable presumption is not a merits determination of patentability in the absence of a successful rebuttal. Id. at 46,780, 46,782, 46,783. 21 See, e.g., 72 Fed. Reg. at 46,736 (applicants are responsible for assisting the Office in resolving potential double patenting situations, rather than taking no action until faced with a double patenting rejection); id.at 46,772 (same). Cf. Changes to Practice for Continuing Applications, Request for Continued Examination Practice, and Applications Containing Patentably Indistinct Claims, 71 Fed. Reg. 48, 55 (Jan. 3, 2006) (applicants responsibilities relate to filing terminal disclaimers once double patenting has been shown by the presumption).

was purportedly lacking.34 (The PTO also is seeking to impose burdens of explanation regarding a prima-facie case through new final rules regarding Information Disclosure Statements.35) As a result of these changes, Cantor will lose or forego patent rights and encounter significant delays and additional costs in prosecution, adversely affecting its investments and finances.36 3. Limits on Continuation Applications and RCEs
New Rules 1.78(d)(1)(i)-(v) and 1.114(f) limit the number of continuations and RCEs to two and one, respectively. New Rules 1.78(d)(1)(vi) and 1.114(g) limit the grounds for a petition to exceed these new limits to a showing that the [new claim or] amendment, argument, or evidence sought to entered could not have been submitted [earlier]. At no point do the Final Rules clearly state any grounds on which petitions to exceed the limits on continuation applications would be granted, although the Final Rules repeatedly acknowledge that such grounds exist.37 Rather, the Final Rules clearly prohibit granting petitions for any action that could have been taken in an earlier application.38 The Final Rules also suggest that such delays violate registered practitioners duties under Rule 10.18(b)(2)(i),39 even though that section is limited to filing papers in bad faith with an intent to delay prosecution or increase costs, and does
See, e.g., Hyatt v. Dudas, 492 F.3d 1365, 1369-71 (Fed. Cir. 2007); Alton, 76 F.3d at 117. Cf. 72 Fed. Reg. at 46,806 (acknowledging the examiners responsibility to determine the lack of written description support and stating that the new rule would make it easier for examiners to do so). The Final Rules adopt new Rule 1.105(a)(1)(ix), which also eliminates the requirement for examiners to make a prima-facie case before requesting such written description identification. 35 See 71 Fed. Reg. 38,821 (July 10, 2006) (proposing new Rules 1.98(a)(3)(iv)). Cantor submitted comments opposing the PTOs proposed IDS rules. 36 See Alderucci Decl. 18-27, 30. 37 See, e.g., id. at 46,754; id. at 46,755; id. at 46,762; id. at 46,670; id. at 46,774. Cf. id. at 46,775-76, 46,777 (discussing test data grounds, for which a petition is likely to be successful). 38 See, e.g., 72 Fed. Reg. at 46,756. However, the PTO has also noted that 37 CFR 1.183 authorizes petitions to be granted notwithstanding this new categorical standard, in an extraordinary situation where justice requires. 72 Fed. Reg. at 46,769. 39 See, e.g., id. at 46,768.
not relate in any way to whether a newly filed paper could have been filed earlier.40 The PTO has effectively admitted that the new limits on continuation applications and RCEs, and the grounds for granting petitions to exceed them, establish new substantive criteria that are not required by the Patent Act. 41 The PTO selected the petition standard not on the merits of the need for applicant relief or by balancing applicant and PTO interests, but because that standard is more readily determined than alternatives presented in the comments.42 The Final Rules also admit that the new limits on continuation applications and RCEs and the petition standard are not interpretations of the judicially developed doctrine of prosecution laches.43 As a result of these changes, Cantor will lose or forego patent rights and encounter significant delays and additional costs in prosecution, adversely affecting its investments and finances.44

The PTOs position is illogical, as 37 CFR 10.18(b)(2)(i) (2006) prohibits the earlier filing of papers solely for delay, so the new filing would build off of earlier valid amendments, arguments, and evidence. That section also is a disciplinary rule, not a rule of examination procedure. 41 See, e.g., 72 Fed. Reg. at 46,767-68 (the PTO considers the standard to be an appropriate balance of the interests of applicants and the need for a better focused and effective examination process to reduce the large and growing backlog of unexamined applications); id. at 46,757 (the new rules including the petition and showing are a reasonable balance between appropriate uses of continued examination filings and avoiding unnecessary prolongation of proceedings). The new Rules cannot be required by the statute, as the PTO also stated that it may grant relief [from the petition showing] pursuant to 1.183. 72 Fed. Reg. at 46,777. 37 CFR 1.183 (2006) recites that the PTO cannot waive rules if a requirement of the statute. 42 See id. at 46,768-69. 43 See 72 Fed. Reg. at 46,813 (relying for the new limits and petition standard on an asserted inherent authority to set reasonable deadlines, purportedly recognized in In re Bogese, 303 F.3d 1362, 1368 n.6 (Fed. Cir. 2002)); id. (acknowledging that the Final Rules did not seek to codify the holding in Bogese or the doctrine of prosecution laches). See also 71 Fed. Reg. at 50 (noting that the proposed rules did not seek to codify Bogese and noting the discretion in show[ing] to the satisfaction of the Director that the amendment, argument, or evidence could not have been submitted earlier) (emphasis added). 44 See Alderucci Decl. 23-27, 29-30. Cantor will also waste money and increase PTO examination burdens by filing claims that otherwise might not have been needed. See id. 27.
ARGUMENT A. The Final Rules Illegally Impose Substantive, Not Procedural, Requirements
Substantive, or legislative, rules are distinguished under the Administrative Procedure Act (APA) from interpretive rules, procedural rules, and general statements of policy. See 5 U.S.C. 553(b).45 [A] rule is substantive when it effects a change in existing law or policy which affects individual rights and obligations46 A substantive rule encodes a substantive value judgment or puts a stamp of approval or disapproval on a given type of behavior.47 In contrast, interpretive rules merely clarify or explain existing law or regulations.48 Procedural rules merely ensure that agencies retain latitude in organizing their internal operations and do not themselves alter the rights or interest of parties, although [they] may alter the manner in which parties present themselves or their viewpoints to the agency.49 General statements of policy, unlike substantive rules, do not establish a binding norm, [and are] not determinative of the issues or rights to which [they] are addressed.50 An

Thus, the PTOs rulemaking power under 35 U.S.C.
2(b)(2)(A) simply does not supply the authority to adopt the substantive rules at issue here. 1. The Presumption of Patentable Indistinctness is Substantive
There is no doubt that the presumption of patentable distinctness is an illegal substantive rule,55 notwithstanding the PTOs assertions to the contrary and evasions regarding the
applied in that particular instance.) (emphasis added). American Hospital Assn., 834 F.2d at 1045; Batterton, 648 F.2d at 701 (legislative or substantive rules can be issued only if Congress has delegated to the agency the power to promulgate binding regulations in the relevant area). 52 See, e.g., Merck & Co. v. Kessler, 80 F.3d 1543, 1549-1550 (Fed. Cir. 1996) (the broadest of the PTOs rulemaking powers authorizes the Commissioner to promulgate regulations directed only to the conduct of proceedings in the [PTO]; it does NOT grant the Commissioner the authority to issue substantive rules) (quoting 35 U.S.C. 6(a), currently codified at 35 U.S.C. 2(b)(2), and citing, inter alia, Animal Legal Defense Fund v. Quigg, 932 F.2d 920, 930 (Fed. Cir.1991), and Hoechst Aktiengesellschaft v. Quigg, 917 F.2d 522, 526 (Fed. Cir. 1990)). 53 Air Transport Assn. of Am. v. Dept. of Transportation, 900 F.2d 369, 376, 378 (D.C. Cir. 1990) (quoting American Hospital Assn., 834 F.2d at 1041, 1047), vacated as moot, 933 F.2d 1043 (D.C. Cir. 1991); Batterton, 648 F.2d at 702 (non-binding agency actions regulating practice or procedure express internal house-keeping measures organizing agency activities but do not foreclose alternative courses of action or conclusively [e]ffect rights of private parties). 54 Animal Legal Defense Fund, 932 F.2d at 930-31. Cf. American Hospital Assn., 834 F.2d at 1044-45 (interpretive and procedural rulemaking exceptions to the APA are to be construed narrowly) 55 The presumption of patentable indistinctness of new Rule 1.78(f)(2)(ii) is not a general
51 Continued on the next page

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presumptions consequences.56 As the Supreme Court held in Director, Office of Workers Compensation Programs v. Greenwich Collieries, 512 U.S. 267 at 271, the assignment of the burden of proof is a rule of substantive law.57 Similarly, as the Federal Circuit held in

Paralyzed Vets. of Am. v. Secretary of Veterans Affairs, creating (or refusing to create) factual presumptions on which agency adjudication decisions depend is substantive rulemaking.58
statement of policy. It is codified in the CFR and purports to have the force of law. See, e.g., Pacific Gas & Electric Co., 506 F.2d at 42 (substantive rule was avowedly adopted in the exercise of rulemaking power); American Mining Congress v. Mine Safety & Health Admin., 995 F.2d 1106, 1109 (D.C. Cir. 1993) (an agency seems likely to have intended a rule to be legislative if it has the rule published in the Code of Federal Regulations). 56 See, e.g., 72 Fed. Reg. at 46,830 (these rule changes involve interpretive rules, or rules of agency organization, practice, and procedure) (citing Bachow Communs., Inc. v. Federal Communications Commn., 237 F.3d 683, 690 (D.C. Cir. 2001)). Cf. id. at 46,808 (the patentably indistinct claims provisions do not affect applicants patent rights because once [i.e., only if] the required explanation of patentable []distinctness has been provided [by the applicant], the claimed invention is examined on the merits and patentability is determined by the Office) (emphasis added); Although Bachow does state that rules at issue, governing the timing of filing of applications and permitting or suspending of amendments, were rules of agency organization, procedure, or practice under 5 U.S.C. 553(b)(A), Bachow was premised on the lack of any right to file for telecommunications licenses for particular frequencies, which had previously been held to be within the Commissions substantive lawmaking power to suspend without notice and comment. See 237 F.3d at 690 (citing, inter alia, J.E.M. Broad Co. v. Federal Communications Comm'n, 22 F.3d 320, 326-28 (D.C. Cir. 1994)). See also Inova Alexandria Hospital v. Shalala, 244 F.3d 342, 347, 349-50 (4th Cir. 2001) (finding rule to be procedural that authorized dismissals of appeal when filing dates are missed). In contrast, by statute patent applicants are entitled to have their applications examined and amendments and arguments reexamined under 35 U.S.C. 131, 132(a), with the PTO required to meet its burden of proof. See supra at 4 & n.15. In any event, nothing in Bachow or in any of the cases it cites have any relevance to changes to the substantive grounds on which applications are to be evaluated for validity, such as the presumption of patentable indistinctness adopted by Rule 1.78(f)(2)(ii). U.S. 267, 271 (1994) (citing American Dredging Co. v. Miller, 510 U.S. 443, 454 (1994)). 58 See Paralyzed Vets. of Am. v. Secretary of Veterans Affairs, 308 F.3d 1262, 1266 (Fed. Cir. 2002) (noting that the new presumption of service-related causation of disease at issue in LeFevre was a reviewable substantive rule, and not a general statement of policy, because it prescribed the basis on which the Department would adjudicate every claim and reflected a process that was legislative in nature) (quoting LeFevre, 66 F.3d at 1197); American Hospital Assn., 834 F.2d at 1051 (if the agency had inserted a presumption of invalidity when reviewing certain operations, its measures would surely [be substantive and thus] require notice and comment). Cf. Animal Legal Defense Fund, 932 F.2d at 928-30 (finding change in policy regarding patentability not to be a substantive rule only because it was a valid interpretation of intervening judicial and adjudicatory decisions and did not purport to bind examiners to follow the notice); Pacific Gas & Electric Co., 506 F.2d at 43-44 (interpreting agency Order to not shift

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35 U.S.C. 2(b)(2)(A) permits the PTO to establish the new substantive presumption of patentable indistinctness contrary to the statute. The question answers itself No. The PTOs housekeeping authority simply cannot be extended to justify new rules encoding substantive policy judgments (particularly that revise statutory defaults) and imposing new obligations on applicants.63 This is precisely the kind of substantive rulemaking authority that the PTO lacks. The dicta of Stevens v. Tamai64 regarding the PTOs authority to establish burdens of proof is readily distinguished, particularly as the rule at issue was authorized as an interpretation of a substantive statutory provision.65 In Stevens, the rules at issue provided that the party in an interference seeking to establish relief requested by a motion bears the burden of proof, and that when a party seeks to establish invention priority by relying on a foreign-language application it must file a translation and an affidavit certifying to its accuracy.66 The movant failed to do so, but argued it should have been entitled to priority anyway because its application was examined without a verified translation (as was authorized by other statutory provisions, with which the rules were supposedly in conflict).67 The Federal Circuit rejected this argument, given the separate statutory authority for the PTO to require a verified translation.68 It was in this context that the Federal Circuit stated that the rules were a permissible exercise of the PTOs authority to allocate the burdens associated with [expeditiously resolving interferences] in a reasonable
Similarly, 35 U.S.C. 2(b)(2)(C) cannot justify the new Rule, as that section addresses only rules to facilitate and expedite the processing of patent applications, particularly [electronic applications] subject to the confidential status of applications. F.3d 1325 (Fed. Cir. 2004). 65 See 35 U.S.C. 372(b)(3). Cf. PTO PI Brief at 21, 23 (relying on Stevens, 366 F.3d at 1333, as providing authority for the Final Rules). 66 See Stevens, 366 F.3d at 1328 (citing 37 CFR 1.633(f), 1.637(a)&(f), and 1.647 (2003)). 67 See id. at 1331-32 (citing 35 U.S.C. 363 and 371(c)(2)). 68 Id. at 1333 (noting that 35 U.S.C. 372(b)(3) permits the Director to require a verification of the translation.).

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manner not inconsistent with the statutory scheme.69 But imposing verification obligations pursuant to a substantive grant of regulatory authority is not an exercise of procedural rulemaking power to establish burdens of proof. Further, requiring a certified translation is wholly dissimilar to imposing substantive value judgments of double patenting for all relevant applications through a presumption of patentable indistinctness. And unlike in Stevens, the Patent Act itself allocates to the PTO the burden of proving patentable distinctness,70 and thus new Rule 1.78(f)(2)(ii) conflicts with the statute rather than being authorized by it. The dicta in In re Van Ornem71 also are distinguishable, as Van Ornem actually addressed a rule interpreting and codifying existing case law. The PTO had met its burden to make a valid obviousness-type double patenting rejection, but determined under the applicable terminal disclaimer rule that the requisite disclaimer to assure common ownership could not be supplied (because the earlier patent had been assigned to another party by the applicants owner).72 The Court upheld the rejection and the PTOs terminal disclaimer regulation requiring common ownership.73 In doing so, the Court noted that the relevant regulatory language was precisely the language of a terminal disclaimer that had been approved in an earlier case.74 The Court also noted that the rule had been adopted immediately after that case, and recited the long history of case law underlying the requirement for common ownership.75 As with Stevens, having found that the rule was authorized under existing substantive law, the Court rejected the argument that the PTOs housekeeping rulemaking authority did not authorize the rule.76 In contrast, new Rule

Id. at 1333 (emphasis added). See supra at 4 & n.15. F.2d 937 (C.C. P.A. 1982). Cf. PTO PI Brief at 22-23 (relying on Van Ornem). 72 See id. at 945. 73 See id. at 942-46. 74 In re Griswold, 365 F.2d 834, 840 n.5 (C.C.P.A. 1966). 75 See id. at 945; supra at 3 & n.11. 76 See id. at 946-48 (citing, inter alia, In re Zickendraht, 319 F.2d 225 (C.C.P.A. 1963), and In re

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1.78(f)(2)(ii) expressly alters requirements for the PTO to establish double patenting rejections in the first instance, and in doing so conflicts not only with the existing statutory requirements but also with established case law placing those burdens on the PTO.77 2. The Requirements to Prove Patentability Are Substantive
There is no doubt that the claim limits in new rule 1.75(b)(1), triggering the requirements to search for prior art, to prove patentability, and to explain written description support of new Rule 1.265(a)(1), (4) and (5), are illegal substantive rules. New Rule 1.75(b)(1) encodes the substantive value judgment that more than the specified number of claims imposes purportedly excessive burdens supposedly authorizing the PTO to shift to applicants its examination obligations.78 Nothing like this requirement previously existed in the PTOs rules or the case law, including 37 CFR 1.105,79 and thus new Rule 1.75(b)(1) is not an interpretive rule. Nor is new Rule 1.75(b)(1) a housekeeping measure, as it triggers requirements that dramatically affect applicants substantive rights, imposing duties enforced by the threat of abandonment.80 Similarly, new Rules 1.265(a)(1),(4)&(5) clearly change existing law and policy, and are
Braithwaite, 379 F.2d 594 (C.C.P.A. 1967)), and noting that Braithwaites holding clearly contemplate[d] common ownership). In contrast, the dissent in Van Ornem believed that the rule was contrary to 35 U.S.C. 261 and not supported by the judicially developed case law, and thus that it exceeded the PTOs procedural rulemaking authority. See id. at 949-51. 77 It should go without saying that the PTOs reliance on Bogese, PTO PI Brief at 21, also misplaced. Bogese addressed a PTO adjudicatory decision to refuse to process claims that, following notice, were not being diligently prosecuted. The Court suggested that the PTOs authority to sanction undue delay was at least as extensive as existing case law governing unenforceability of patents for prosecution delays. See 303 F.3d at 1367-68. 78 See American Hospital Assn., 834 F.2d at 1047; supra at 4 n.15. 79 Star Fruits S.N.C. v. United States, 393 F.3d 1277 (Fed. Cir. 2005), provides no authority for compelling applicants to do the PTOs prior art searching or to develop arguments to rebut a prima-facie case that has not been made by the examiner. See 72 Fed. Reg. at 1279-80, 1283-85 (failure to respond to a non-arbitrary request under 37 CFR 1.105 for information in the applicants possession regarding sales conduct, which might have demonstrated a statutory bar under 35 U.S.C. 102(b), provided the PTO with authority to treat an application as abandoned). 80 See, e.g., Lefevre, 66 F.3d at 1197; American Hospital Assn., 834 F.2d at 1047.

See 5 U.S.C. 706(2)(A)&(E); Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (requiring a rational connection between the facts found and the choices made); In re Lee, 277 F.3d 1338, 1342 (Fed. Cir. 2002) (judicial review is premised on an agencys ability to make required findings and to show the evidence on which they are based); supra at 4 & n.18 (discussing the lack of evidence in the record). In regard to Rule 1.78(f)(2)(ii), the Final Rules note that the presumption of patentable indistinctness applies only to applications that most likely contain patentably indistinct claims. 72 Fed. Reg. at 46,784 (emphasis added). But the Final Rules provide no evidence for either meaning of the emphasized words that applications subject to the new rule are the most likely kinds of applications to contain indistinct claims or that such applications are highly likely to do so.

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CERTIFICATE OF SERVICE I hereby certify that on this 20th day of December 2007, I electronically filed in Case Nos. 1:07cv1008 and 1:07cv846 (JCC/TRJ) the foregoing "BRIEF OF AMICUS CURIAE CANTOR FITZGERALD PATENT HOLDINGS IN SUPPORT OF PLAINTIFFS' SUMMARY JUDGMENT MOTION" and "DECLARATION OF DEAN ADLERUCCI IN SUPPORT OF BRIEF OF AMICUS CURIAE CFPH, LLC" using the CM/ECF system and that service was thereby accomplished on: Elizabeth M. Locke, Esq. KIRKLAND & ELLIS LLP 655 15th Street, NW - Suite 1200 Washington, DC 20005 e-mail: elocke@kirkland.com and Craig C. Reilly, Esq. RICHARD MCGETTIGAN REILLY & WEST PC 1725 Duke Street, Suite 600 Alexandria, VA 22314 e-mail: craig.reilly@rmrwlaw.com Counsel for Plaintiffs in Civil Action No. 1:07cv1008 (JCC/TRJ) Joseph Dale Wilson, III, Esq. KELLEY DRYE & WARREN LLP Washington Harbour 3050 K Street, NW, Suite 400 Washington, DC 20007 e-mail: jwilson@kelleydrye.com Counsel for Plaintiff in Civil Action No. 1:A07cv846 (JCC/TRJ) Lauren A. Wetzler, Esq. United States Attorney's Office 2100 Jamison Ave. Alexandria, VA 22314 e-mail: lauren.wetzler@usdoj.gov Counsel for Defendants in Civil Action Nos. 1:07cv1008 (JCC/TRJ) and 1:07cv846 (JCC/TRJ)

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Thomas J. O'Brien Morgan, Lewis & Bockius 1111 Pennsylvania Ave., NW Washington, DC 20004 e-mail: to'obrien@morganlewis.com Counsel for Amicus American Intellectual Property Lawyers Association Dawn-Marie Bey Kilpatrick Stockton, LLP 700 13th Street, NW Suite 800 Washington, DC 20005 e-mail: dbey@kslaw.com Counsel for Amicus Hexas, LLC, The Roskamp Institute, Tikvah Therapeutics, Inc. James Murphy Dowd Wilmer Cutler Pickering Hale & Dorr LLP 1455 Pennsylvania Ave., NW Washington, DC 20004 e-mail: james.dowd@wilmerhale.com Counsel for Amicus Pharmaceutical Research and Manufacturers of America Randall Karl Miller Arnold & Porter LLP 1600 Tysons Blvd., Suite 900 McLean, VA 22102 e-mail: randall_miller@aporter.com Counsel for Amici BIO and Monsanto Company Charles Gorenstein Michael K. Mutter Birch, Stewart, Kolasch & Birch, LLP 8110 Gatehouse Rd, Suite 100 East Falls Church, Virginia 22042 e-mail: cg@bskb.com Counsel for Amicus Intellectual Property Institute of the William Mitchell College of Law

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Rebecca M. Carr Pillsbury Winthrop Shaw Pittman, LLP 2300 N Street, N.W. Washington, DC 20037 e-mail: rebecca.carr@pillsburylaw.com Counsel for Amicus Elan Pharmaceuticals, Inc.
/s/ Jonathan D. Link (VSB #42951) TOWNSEND AND TOWNSEND AND CREW LLP 1301 K Street, N.W., Ninth Floor, East Tower Washington, DC 20005 Telephone: (202) 481-9900 Fax: (202) 481-3972 e-mail: jlink@townsend.com

DATED: December 20, 2007

61239798 v1

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