Court rejects Patent Office's new rules

By Diane Bartz

WASHINGTON (Reuters) - A U.S. court has thrown out new U.S. Patent and Trademark Office rules which were designed to limit the size of patent applications and reduce a growing backlog of patent requests.

The ruling issued on Tuesday was a victory for Europe's biggest drugmaker, GlaxoSmithKline Plc, which had challenged the rules, and other companies which have large patent portfolios.

Because the new rules were to be retroactive, companies like Glaxo feared they would have to refile applications that exceeded the new limits, at a time when the patent office takes 32 months on average to either approve or reject a patent.

The patent office had argued the limits were needed to reduce a large and growing backlog of applications, which sometimes consist of two dozen boxes of documents.

"The court finds that the final rules are substantive in nature and exceed the scope of the USPTO's rulemaking authority," wrote Judge James Cacheris, of the U.S. District Court for the Eastern District of Virginia, in a 26-page order.

Cacheris issued a temporary injunction against the rules on October 31, a day before they were to have gone into effect.

"We are pleased that the court has considered our arguments and decided that the PTO lacks the necessary authority to implement the proposed rule changes," Glaxo said in a statement on Tuesday. "This is a judgment in support of innovation across all industries."

The patent office had no immediate response to the ruling.

Glaxo was supported in the lawsuit by the American Intellectual Property Law Association, Pharmaceutical Research and Manufacturers of America and the Biotechnology Industry Organization.

Under the new rules, the number of claims in each patent application would have been limited to 25. A patent claim is a statement which describes an element of a patent.

The rules would have also limited follow-up filings, known as continuations, to three. Applicants could have asked for more, but would have had to show cause.

Currently, there are no limits on claims or continuations.

The decision comes amid general discontent among many U.S. companies with the U.S. Patent and Trademark Office as the backlog of applications has risen steadily in the past four years. In the communications sector it takes an average of 43.1 months for a patent application to be approved or rejected, according to patent office figures.

Congress is considering overhauling the patent process, but its focus is not on the patent office backlog but on reducing the number of patent infringement lawsuits.

A bill passed the U.S. House of Representatives in September but has stalled in the Senate because of opposition from drug firms like Eli Lilly & Co, seed and herbicide company Monsanto Co and smaller tech companies.