USPTO Proposes to Require Disclosure of Patent Ownership, Exclusive Licenses

18 December 2012 PharmaPatents Blog

Last year, on November 23, 2011, the USPTO announced that it was considering collecting information on patent ownership and requiring disclosure of patent ownership information throughout the patent application process. Although written comments were due by January 23, 2011, the USPTO has not issued any response to public comments. Instead, in a Federal Register Notice issued November 26, 2012, the USPTO announced that it is considering promulgating regulations that would require the disclosure of “real party in interest” (RPI) information throughout the patent application process and after grant. The USPTO is holding a “roundtable” to discuss this proposal on Friday, January 11, 2013, at its Alexandria, Virginia campus. Requests to participate in the roundtable must be submitted by Friday, December 21, 2012. Written comments on the proposal are due by  Friday, January 25, 2013.

The 2011 Proposal 

As set forth in the 2011 Federal Register Notice, the USPTO was considering requiring applicants to provide ownership information at the following stages of prosecution:

  1. At the time of application filing.
  2. After filing, in time for inclusion on the patent application publication.
  3. After filing, when any new ownership rights cause the application or patent to gain or lose entitlement to small entity status.

The USPTO also was considering amending 37 CFR § 3.81 to require that the application issue in the name of the assignee or assignees as of the date of payment of the issue fee. (Currently, this is an option but not a requirement.)

The proposal was based on the following possible public benefits of the publication of more complete and current patent ownership information:

  • The public would have a more comprehensive understanding of what patent rights being issued by the United States are being held and maintained by various entities.
  • The financial markets would have more complete information about the valuable assets being generated and held by companies.
  • Patenting inventors and manufacturers would better understand the competitive environment in which they are operating, allowing them to better allocate their own research and development resources, and more efficiently obtain licenses and accurately value patent portfolios and patent estates that they may seek to acquire.

The 2012 Proposal 

The 2012 proposal appears to build on the 2011 proposal, but was issued as an independent notice. Indeed, only one sentence in the 2012 Federal Register Notice mentions the 2011 proposal:

The USPTO published a Request for Comments on November 23, 2011, regarding whether regulations should be promulgated for the collection of assignment and real-party-in-interest information for both applications and patents. See Request for Comments on Eliciting More Complete Patent Assignment Information, 76 FR 72372 (Nov. 23, 2011). Responses to this request for comments were more favorable towards the proposal than unfavorable. See http://www.uspto.gov/patents/law/comments/patent–assignment–information.jsp.

The 2012 proposal goes further than the 2011 proposal with regard to the type of “ownership” information that would have to be disclosed. Now, the USPTO is considering requiring disclosure of the “real party in interest” in a patent application or patent, and has offered two possible definitions of ”real party in interest” for public consideration and comment.

The 2012 proposal cites many of the same possible benefits of the proposed disclosure requirement, but also offers additional justifications.

  • The USPTO may need “accurate and up-to-date ownership information” to examine patent applications under certain provisions of the America Invents Act (AIA), such as the AIA version of 35 USC § 102(b)(2)(C). (Under the AIA version of 35 USC § 102(b)(2)(C), certain earlier filed, unpublished patent applications can be disqualified as prior art by establishing common ownership by the time of the effective filing date of the later filed patent application. You can read more about this new prior art exception here.) The Notice states that changes in the law may make “the current method of handling the possibility of [disqualifying prior art by establishing] common ownership–the examiner presenting an initial rejection, and the applicant rebutting the rejection with proof of ownership…–inefficient in a manner that would undermine the principles of compact prosecution. (Which is less efficient, requiring applicants to disclose information in every application even though it will be relevant in only a fraction of applications, or requiring applicants to provide the information when it actually is relevant?)
  • The USPTO needs real-party-in-interest information to “ensure that a ‘power of attorney’ is current in each case.” (Patent practitioners can prosecute applications without a formal power of attorney in place, although a power of attorney is required to support an express abandonment or Terminal Disclaimer.)
  • The USPTO needs real-party-in-interest information in order to avoid potential conflicts of interest for judges and examiners alike. (The Appeal Brief rules already require disclosure of the real-party-in-interest. This proposal seems to imply that examiners may recuse themselves if a conflict-of-interest is apparent.)
  • The USPTO and the public need “timely ownership information” for the new third party proceedings that can be lodged against granted patents.
  • The USPTO and the public need information about ownership as of the effective filing date in order to identify patent applications that qualify as prior art under 35 USC § 102(b)(2)(C).

The Proposed “Broad” Definition of RPI

Under the USPTO’s “broad” definition, the RPI would be “those entities having the legal right to enforce the patent, i.e., those parties that would be necessary and sufficient to bring a legal infringement action.” The Federal Register notice cites the 1991 Federal Circuit decision in Vaupel Textilmaschinen KG v. Meccanica Euro Italia SPA, 944 F.2d 870, 875-76 (Fed. Cir. 1991) and 35 USC § 154(a)(1) in this context. In general, under this definition RPI would include the legal title holder(s) and “exclusive licensees in certain cases.”

The Proposed “Limited” Definition of RPI

Under the USPTO’s “limited” definition, the RPI would be the legal title holder(s) and its/their “ultimate parent entity(ies).”‘ The Federal Register Notice cites 16 CFR § 801.1(a)(3) for its definition of  ”ultimate parent entity” as “an entity which is not controlled by any other entity.” According to the Federal Register Notice, exclusive licensee information likely would not need to be disclosed under this definition. The Federal Register Notice states that the USPTO is open to other definitions of  ”ultimate parent entity” and also invites comments on “whether the direct adoption of a well-established definition would itself be beneficial.” (… why bother, since Rule 56 has us acclimated to operating under a requirement to disclose information without a “well-established definition” of what is required to be disclosed!?)  

The Proposed Disclosure Requirements

The USPTO proposes to collect (e.g., require disclosure of) RPI information at the following times:

  • when a patent application is filed (i.e., in the first Application Data Sheet (ADS)).
  • while an application is pending, updating the information within “a reasonable period of time,” such as within 3 months of any change in RPI. The Federal Register Notice suggests that the updating information would be submitted in a “change form.” (If the information first was provided in an ADS, why not update the information via an ADS? Do we really need more new forms?) The Federal Register Notice refers to a possible requirement to submit “fees or [an] explanation why such change had not been reported earlier” if a change is not timely disclosed.
  • prior to 18-month publication, verifying or updating RPI information. The Federal Register Notice indicates that this will require a new form.
  • with the issue fee payment, verifying or updating RPI information. The Federal Register Notice indicates that this could be accomplished with a certification or change form submitted with the issue fee payment.
  • with each maintenance fee payment , verifying or updating RPI information. The Federal Register Notice indicates that this could be accomplished with a certification or change form submitted with the maintenance fee payment.
  • if the patent is involved in any post-grant proceeding, verifying or updating RPI information.

Good Intentions Could Go Awry

I understand why ownership information could be useful to the USPTO and the public, but I have several concerns about the practical implications of this proposal.

  • By requiring ownership information beyond the “legal title holder(s),” the proposal opens the door to confusion, uncertainty, and high costs of compliance due to the additional legal research and factual inquiries that could be required to determine the requisite information.
  • By keying the “broad” definition of RPI to the parties who are “necessary and sufficient” to bring a patent infringement lawsuit, the proposal would require patent practitioners to develop an expertise in patent litigation procedures. On the other hand, I note that the USPTO did not cite Rule 17 of the Federal Rules of Civil Procedure, which requires an action to be prosecuted in the name of the real-party-in-interest, and provides definitions of the same. Is the USPTO deliberately choosing not to invoke Rule 17 and the surrounding body of case law?
  • By including the “ultimate parent entity” in the “limited” definition of RPI, the proposal would require patent practitioners to develop an understanding of corporations law and corporate structures. (Without reading 16 CFR § 801.1(a)(3), I never would have thought to name any person who controls a corporation as the “ultimate parent entity.” Is that what the USPTO intends?)
  • By requiring ownership information to be updated throughout prosecution, and by requiring the submission of periodic “certifications” even if the information has not changed, the proposal would increase the costs of patent prosecution without  substantial justification.  Even if the information has not changed, the patent practitioner may need to verify the information with the client, and even in-house patent practitioners may need to conduct internal investigations to ascertain the status of any license negotiations or corporate restructuring. Moreover, even a simple “change form” or “certification” would have to be carefully prepared and submitted. Of course, any “fees” required to support a “late” submission would increase patent prosecution costs as well.
  • The Federal Register Notice refers to Rule 56–would failure to disclose, promptly disclose, or correctly disclose  RPI information be grounds for unenforceability based on inequitable conduct? Could it amount to fraud on the USPTO? Could it form the basis of a disciplinary action against the practitioner?
  • The Federal Register Notice refers to 37 CFR § 1.137 in its discussion of “excusing late updates in appropriate circumstances.” That rule relates to the revival of lapsed patents or patent applications where the delay was unavoidable (a very high standard) or unintentional (a relatively low standard). If the choice is between these two options, I hope the USPTO adopts an “unintentional” standard!
  • The Federal Register Notice considers only the possible positive outcomes of a requirement to disclose RPI information, but a recent article by Dr. Nahoko Oho in the Journal of the Patent and Trademark Office Society (94 JPTOS 228 (2012)) outlines potential drawbacks if the proposal is not implemented carefully, in a manner that does not burden the transfer of patent rights.
  • I also still have many of the same concerns I raised regarding the 2011 proposal, which I outlined in this article.

Having Your Say 

As noted above, the USPTO is holding a “roundtable” to discuss this proposal on Friday, January 11, 2013, at its Alexandria, Virginia campus.

Requests to participate in the roundtable must be submitted by Friday, December 21, 2012, and should be made by electronic mail to saurabh.vishnubhakat@uspto.gov.

Written comments on the proposal are due by  Friday, January 25, 2013, and may be submitted

by electronic mail to saurabh.vishnubhakat@uspto.gov or SMEpatenting@uspto.gov

by postal mail to

Saurabh Vishnubhakat, Expert Advisor, Office of Chief Economist
United States Patent and Trademark Office
Mail Stop External Affairs
P.O. Box 1450, Alexandria, VA 22313-1450.

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