Due a major computer glitch, from August 15 through the 23rd inclusive, users of the USPTO’s PAIR system for monitoring patent applications, as well as its electronic filing system (EFS), were unable to access data on applications or to electronically file documents, including new applications.
There’s much that could be and has been written about this system outage, but I want to focus here one specific issue. In order to encourage applicants to file their applications electronically rather than in paper, significant discounts are given for new applications that are filed electronically. No EFS means no electronic filing, only paper filing, and hence no discounts.
Any five-year-old can tell you something’s not fair about the USPTO allowing its system to crash, and then charging applicants more as a result of having made it impossible to file electronically. And this wasn’t lost on USPTO Director Andre Iancu, who announced this week via a Federal Register notice that applicants who had been forced to file in paper and met certain criteria would be able to receive refunds of the difference between the discounted and full fee rates, or to pay at the discounted rate if they haven’t yet paid.
My reaction to this was, it’s reassuring to see the Director do the right thing. I’m not sure all of his predecessors would have done the same under similar circumstances.
I was therefore somewhat, but not wholly, surprised to hear some lawyers respond by questioning this announcement on the grounds that the Director doesn’t have the statutory power to do this, implying that they might be putting their clients’ future patents at risk if they ask for and receive the fee refund or now pay at the discounted rate, because this could become an issue during litigation.
35 U.S.C. 21(a) reads,
(a) The Director may by rule prescribe that any paper or fee required to be filed in the Patent and Trademark Office will be considered filed in the Office on the date on which it was deposited with the United States Postal Service or would have been deposited with the United States Postal Service but for postal service interruptions or emergencies designated by the Director.
The Doubting Thomases apparently read that last clause as, “but for postal service (a) interruptions or (b) emergencies, which postal service interruptions or emergencies are designated by the Director”. In other words, according to some, the Director only has the power to designate postal service emergencies but not other kinds of emergencies.
However, it seems to me that that phrase could be read as “but for (a) postal service interruptions or (b) emergencies designated by the Director”, where “designated by the director” applies at least to “emergencies”, and possibly also to postal service interruptions. In which case the Director was within his authority to issue this week’s FR notice, since he is now designating the system outage as an emergency (which for people filing things at the USPTO it was).
But let’s assume for the sake of argument that the first reading proffered above is the correct one. I still don’t think that precludes the Director from doing what he did. The FR notice says that the USPTO will treat certain applications as having been filed electronically. How is it not within the Director’s purview to decide to regard a certain class of applications as having been filed electronically, especially when the applicants sought to file electronically and it was the USPTO itself that prevented them from doing so?
For at least three reasons, I find it difficult to see how, years from now in litigation, any judge will buy into the argument that a patent is invalid because it was filed in paper during a prolonged computer system outage at the USPTO, and the USPTO allowed the applicant to later pay at the discounted rate or refunded the difference back to the applicant.
First, this is the sort of thing that the Federal Circuit has tried to keep its hands off. See e.g. Aristocrat Technologies v International Game Technology, 543 F. 3d 657 (Fed. Cir. 2008), in which the CAFC refused to second-guess the PTO’s decision about revival of an unintentionally abandoned patent application.
Second, there will no doubt be widespread reliance on this FR announcement; I doubt the CAFC will want to retroactively invalidate hundreds of patents on the grounds that the USPTO collected too little in fee money at the time the applications were filed. (Recall that on the question of whether or not a continuation could be filed on the day the parent patent issues, a practice allowed by the USPTO for many, many years, the CAFC refused to retroactively invalidate the thousands of patents that would have been affected.)
And third, only a complete jerk would say that the USPTO’s attempt to correct its failure to keep its systems online – by treating certain applications as having been filed electronically even though they weren’t – deserves reprobation rather than approval, in the form of invalidation of patents in which reduced fees were effectively paid.