(123) Department of Commerce
Patent and Trademark Office
37 CFR Part 1
[Docket No. 50103-7058]
Arbitration of Patent Interference Cases
Agency: Patent and Trademark Office, Commerce.
Action: Final rule.
Summary: The Patent and Trademark Office is amending its rules to
implement the arbitration provisions of section 105 of the Patent Law
Amendments Act of 1984, Pub. L. 98-622.
Effective Date: May 27, 1987.
For Further Information Contact: Ian A. Calvert or Michael Sofocleous by
telephone at (703) 557-4000 or by mail marked to the attention of either
and addressed to Box Interference, Commissioner of Patents and
Trademarks, Washington, D.C. 20231.
Supplementary Information: Section 105 of the Patent Law Amendments Act
of 1984, enacted Nov. 8, 1984, provides for the arbitration of patent
interference cases. Section 105, codified as 35 U.S.C. 135(d), provides:
Parties to a patent interference, within such time as may be specified
by the Commissioner by regulation, may determine such contest or any
aspect thereof by arbitration. Such arbitration shall be governed by the
provisions of title 9 to the extent such title is not inconsistent with
this section. The parties shall give notice of any arbitration award to
the Commissioner, and such award shall, as between the parties to the
arbitration, be dispositive of the issues to which it relates. The
arbitration award shall be unenforceable until such notice is given.
Nothing in this subsection shall preclude the Commissioner from
determining patentability of the invention involved in the interference.
The Patent and Trademark Office (PTO) conducts interference
proceedings to determine any question of patentability and priority of
invention between two or more parties claiming the same patentable
invention. An interference may be declared between two or more pending
applications naming different inventors when, in the opinion of an
examiner, the applications contain claims for the same patentable
invention. An interference may be declared between one or more pending
applications and one or more unexpired patents naming different
inventors when, in the opinion of an examiner, any application and any
unexpired patent contain claims for the same patentable invention.
Patent interference cases can be quite expensive. Arbitration may prove
useful to minimize expenses in interference cases. The arbitration rule
applies to all pending interferences.
The PTO published an advance notice of rulemaking in the Federal
Register of Jan. 16, 1985 (50 FR 2294-2296). The notice was also
published in the Official Gazette on Feb. 12, 1985 (1051 O.G. 9-10). The
notice also appeared in the Bureau of National Affairs' Patent,
Trademark and Copyright Journal, Vol. 29, p. 310 (Jan. 24, 1985),
hereinafter "BNA." Five written comments were received in response to
the advance notice.
A notice of proposed rulemaking was published in the Federal Register
on Sept. 15, 1986 (51 FR 32756-32762), in the Official Gazette on Oct.
21, 1986 (1071 O.G. 25-31), and in BNA's Patent, Trademark and Copyright
Journal, Vol. 32, pp. 552-558 (Sept. 18, 1986). In response to the
notice, three comments, two in writing and one by telephone, were
received. These comments are discussed herein.
All written comments are available for public inspection in Rm.
10C01, Crystal Gateway 2, 1225 Jefferson Davis Hwy., Arlington, Va.
Discussion of the Rule
Under 1.690 the arbitrator can determine issues of patentability as
between the parties but a determination by him or her that the subject
matter is patentable would not be binding upon the PTO. If the
arbitrator's award holds that a party's claims corresponding to the
count are unpatentable over prior art or under 35 U.S.C. 112, that
determination would be binding on that party vis-a-vis the party's
opponent and would result in a judgment adverse to that party. The
judgment, however, would not discharge the duty that each party has
under 37 CFR 1.56 to bring to the attention of the examiner in charge of
its respective application any prior art and/or reason relied upon by
the arbitrator in the determination of unpatentability.
It is the longstanding practice of the PTO to favor the settlement of
interferences and the PTO looks with favor on all proper efforts in that
direction as being conducive to the termination of the proceeding. See 4
Revise and Caesar, Interference Law and Practice, section 861, p. 2956
(Michie Co. 1948) and the Commissioner's Notice of Nov. 9, 1976, titled,
"Extensions of Time and Filing of Papers in Interferences," 953 Official
Gazette 2 (Dec. 7, 1976). In this regard, the notice states that:
* * * stipulation or motions for extensions of time under 37 CFR 1.245
will not henceforth be approved or granted, respectively, unless
accompanied by a detailed showing of facts sufficient to establish that
the action for which the extension is sought could not have been or
cannot be taken or completed during the time previously set therefor,
and that the entire extension appears necessary for the taking or
completion of that action. Since the Office favors the amicable
settlement of interferences, the foregoing requirement will be liberally
applied in the case of a first request for extension of time for the
purpose of negotiating settlement.
Consequently, the examiner-in-chief may give favorable consideration to
a motion for an extension of time for purposes of settlement; however, a
further motion for an extension for that purpose would not be granted
unless it is accompanied by a schedule of specific dates showing that
the parties will make a good faith effort to promptly terminate the
proceeding. If preliminary motions under 37 CFR 1.633 have not been
filed, the examiner-in-chief would not normally extend the time for
their filing merely for purposes of settlement. In these circumstances,
the examiner-in-chief would require that the preliminary motions be
filed or that their filing be waived.
If the proceeding is in the testimony stage, the examiner-in-chief
could grant the parties' motion to extend all the unexpired testimony
times to close concurrently on the date the record is due provided they
file a stipulation that any evidence to be submitted will be in one of
the forms specified in 37 CFR 1.672(e) and (f), i.e., affidavit
testimony or a stipulation either as to what a particular witness would
testify to if called or the facts in the case of any party.
Analogously, the aforesaid practice would apply to arbitration.
Section 1.690 requires that parties who intend to arbitrate an
interference notify the examiner-in-chief in writing of their intention
to arbitrate and file a copy of the arbitration agreement within 20 days
of its execution. Pursuant to 35 U.S.C. 135(c) an agreement to arbitrate
is considered to be one "made in connection with and in contemplation of
the termination of the interference". The agreement must be in writing a
copy filed in the PTO within 20 days after its execution. The
notification of intention to arbitrate must be made in a separate paper.
Merely incorporating the notification in the agreement is not sufficient
to comply with 1.690(a). The parties also will be required to adhere
to a time schedule approved by the examiner-in-chief such that the
interference proceeding can be expeditiously resolved so as to prevent
the unnecessary postponement of the beginning of the running of the term
of any patent resulting from an application involved in the
interference. Pritchard v. Loughlin, 361 F.2d 483, 149 USPQ 841 (CCPA
1966).
If the parties desire to arbitrate an interference prior to the close
of the motion period, the examiner-in-chief will not normally grant an
extension of time for the purpose. The parties will be required to file
their preliminary motions under 37 CFR 1.633. After the motions are
filed, the examiner-in-chief could grant an extension only upon
compliance with 37 CFR 1.645 which requires a showing of "good cause."
Such a "good cause" showing would normally include a schedule, agreed to
by the parties, setting forth, inter alia, the dates for (1) executing
the arbitration agreement, (2) determining priority and (3) terminating
the interference.
Section 1.690(a) requires that an arbitration agreement include the
following:
(1) The name of the arbitrator or a date certain (not more than 30 days
after the execution of the agreement) for his or her selection.
(2) The issues to be decided by the arbitrator.
(3) A provisions that the arbitrator's award is binding on the
parties and that the Board can enter a judgment based thereon.
Section 1.690(c) requires that a copy of the arbitration award be filed
within 20 days from the date of the award or by a date set by the
examiner-in-chief.
If the proceeding is in the testimony stage and the parties desire to
arbitrate, the examiner-in-chief could grant a reasonable extension for
that purpose. A motion for a further extension for that purpose would
not be granted unless it were accompanied by a schedule, agreed to by
the parties, setting forth, inter alia, the dates for (1) executing the
arbitration agreement, (2) determining priority, and (3) terminating the
interference. If the parties are to submit the required schedule, a
motion for a further extension could be granted. If the parties file a
copy of the arbitration agreement and they agree that any evidence
submitted in the proceeding will be in one of the forms specified by 37
CFR 1.672(e) or (f), the examiner-in-chief could give favorable
consideration to the parties' motion that all the unexpired times be
extended to close concurrently on the date the record is due. By that
date, the parties would be required to file the arbitrator's award and
their records, if necessary for the resolution of any issue not decided
by the arbitrator. If the award is not dispositive of all the issues in
the interference, the examiner-in-chief would set brief times so that
parties could explain their evidence relating to any issues which the
arbitrator did not, or was unable to decide. For example, the award
might be dispositive of the issue of priority between the parties and
leave for the Board's determination the question of substituting a new
count raised in a preliminary motion under 37 CFR 1.633.
The arbitration award, filed by the parties, would be in the nature
of a final decision and should include the following:
(1) The style (e.g., Jones v. Smith), the number of the interference
and the names of the real parties in interest.
(2) The subject matter in issue, i.e., the counts and a table of
counts, if necessary, indicating the relationship of the parties' claims
corresponding to each count and those claims not corresponding thereto.
(3) The issues for decision before the arbitrator.
(4) The arbitrator's decision. The decision may also include a
statement of the grounds and reasoning in support thereof.
(5) A summary, if appropriate, indicating, inter alia, that judgment
should be awarded to one of the parties.
Any party to the arbitration can attack the award only in the manner
provided by 9 U.S.C. 10 and 11.
9 U.S.C. 10 reads as follows:
In either of the following cases the United States court in and for the
district wherein the award was made may make an order vacating the award
upon the application of any party to the arbitration--
(a) Where the award was procured by corruption, fraud, or undue means.
(b) Where there was evident partiality or corruption in the
arbitrators, or either of them.
(c) Where the arbitrators were guilty of misconduct in refusing to
postpone the hearing, upon sufficient cause shown, or in refusing to
hear evidence pertinent and material to the controversy; or of any other
misbehavior by which the rights of any part have been prejudiced.
(d) Where the arbitrators exceeded their powers, or so imperfectly
execute them that a mutual, final, and definite award upon the subject
matter submitted was not made.
(e) Where an award is vacated and the time within which the agreement
required the award to be made has not expired the court may, in its
discretion, direct a rehearing by the arbitrators.
9 U.S.C. 11 reads as follows:
In either of the following cases, the United States court in and for the
district wherein the award was made may make an order modifying or
correcting the award upon the application of any party to the
arbitration--
(a) Where there was an evident material miscalculation of figures or
an evident material mistake in the description of any person, thing, or
property referred to in the award.
(b) Where the arbitrators have awarded upon a matter not submitted to
them, unless it is a matter not affecting the merits of the decision
upon the matter submitted.
(c) Where the award is imperfect in matter of form not affecting the
merits of the controversy.
The order may modify and correct the award, so as to effect the
intent thereof and promote justice between the parties.
See, for example, Fairchild and Co., Inc. v. Richmond, F. and P. R.
Co., 516 F.Supp. 1305 (D.D.C. 1981). If such an attack were to be made by
one of the parties while the interference is pending before the Board,
the Board would not stay the interference. Rather, the Board would issue
its judgment in accordance with the award. So long as the award is in
compliance with 1.690, it would carry the presumption that the
arbitrator acted correctly in making his decision and accordingly, the
party designated by the award as the prevailing party would be entitled
prima facie to a judgment in its favor. If the dissatisfied party brings
an action in an appropriate United States district court and if the
court vacates, modifies or corrects the award, the Board would take
action consistent with the court's findings. No action would lie in the
PTO to vacate or correct an arbitration award, unless all parties agreed
in writing.
The following examples illustrate the practice of the PTO concerning
arbitration.
Example 1
Arbitration Practice-Preliminary Stage
An interference is declared on or after Feb. 11, 1985. The
examiner-in-chief sets a time in accordance with 37 CFR 1.611 for filing
preliminary motions under 37 CFR 1.633 and preliminary statements. The
parties decide to arbitrate the interference in accordance with 1.690
and file a motion for an extension of time so that they can "freely"
arbitrate the interference, but do not file a waiver of their right to
file motions.
The examiner-in-chief would deny the motion because the parties'
intention to arbitrate, in and of itself, does not constitute a showing
of "good cause" within the meaning of 37 CFR 1.645(a). Even if the
parties file an agreement to arbitrate, the PTO would not grant any
extension of time to permit the parties to "freely" arbitrate an
interference prior to the expiration of the time for filing preliminary
motions.
Example 2
Arbitration Practice-Testimony Stage
An interference is declared on or after Feb. 11, 1985. The
examiner-in-chief sets a time in accordance with 37 CFR 1.611 for filing
preliminary motions under 37 CFR 1.633. The parties file preliminary
motions; the examiner-in-chief renders a decision thereon and sets the
testimony times. The parties file a notice of intent to arbitrate the
interference under 1.690(a) and a motion for a one month extension of
the testimony times. The examiner-in-chief could grant the motion, but
would indicate that if the parties file another motion for an extension
for that purpose, the motion must be accompanied by a schedule, agreed
to by the parties, setting forth the dates for (1) executing the
arbitration agreement, (2) determining priority and (3) terminating the
interference.
The parties file a motion for an additional one month extension of time
to permit the parties to arbitrate the interference. Accompanying the
motion is a proposed schedule of times and a copy of the arbitration
agreement which provides, inter alia, (i) the name of the arbitrator or
a date certain for his selection, (ii) that the arbitrator's award will
be binding on the parties, (iii) the issues to be decided by the
arbitrator and (iv) that the award will be filed by the date the record
is due. The parties also indicate that the evidence to be filed in the
proceeding will be in one of the forms specified by 37 CFR 1.672(e) or
(f). The examiner-in-chief could grant the motion and indicate that he
will give favorable consideration to a motion to extend all the
unexpired times to close concurrently on the date the record is due
should the parties request such.
On the date for filing the record, the parties file the arbitrator's
award and their evidentiary records, if necessary. The award states (i)
the style and number of the interference and the real parties in
interest, (ii) the subject matter in issue and the parties' claims which
correspond thereto and which do not correspond thereto, (iii) the issues
for decision before the arbitrator, (iv) the arbitrator's decision
(which may include a statement of the grounds and reasoning in support
thereof) and (v) that judgment should be awarded to one of the parties.
The examiner-in-chief examines the award to ensure that it complies with
1.690 and is dispositive of the issues in the interference which can
be decided by the arbitrator. If the award is otherwise acceptable, the
Board would issue a judgment based on the award. If the award is not
dispositive of all the issues in the interference, the examiner-in-chief
would determine how the interference will proceed.
Example 3
Arbitration Practice-Award Decides Interference-in-Fact Issue and Junior
Party Takes No Testimony
An interference is declared on or after Feb. 11, 1985. The
examiner-in-chief sets a time in accordance with 37 CFR 1.611 for filing
preliminary motions under 37 CFR 1.633 and preliminary statements. The
junior party files a motion for judgment under 37 CFR 1.633(b) on the
ground that there is no interference-in-fact between his claims
corresponding to the count and his opponent's claims corresponding
thereto. The examiner-in-chief denies the motion, examines the
preliminary statements and sets the testimony times.
During the testimony period, the parties decide to arbitrate the
interference, notify the examiner-in-chief of their intent to arbitrate
and file an arbitration agreement which is approved by the
examiner-in-chief. On the date for filing the record, the junior party
files the award together with a motion requesting that the interference
be terminated in view of the award. He does not file a record. In his
award the arbitrator holds that no interference-in-fact exists between
the parties' claims corresponding to the count.
The motion would be denied because the award decides a matter of
patentability which would not result in a judgment adverse to one of the
parties. Consequently, the junior party would be placed under an order
to show cause why judgment under 37 CFR 1.652 should not be entered
against him for his failure to file an evidentiary record by the time
set therefore. In response to the order, the junior party requests final
hearing to review the examiner-in-chief's denial of the motion for
judgment and a testimony period to show no interference-in-fact. The
examiner-in-chief would grant the junior party's request to the extent
that final hearing is set and would deny the request for testimony
because the junior party already had the opportunity to take testimony
on the matter.
Example 4
Arbitration Practice--Cannot Decide Patentability
An interference is declared on or after Feb. 11, 1985. The
examiner-in-chief sets a time in accordance with 37 CFR 1.611 for filing
preliminary motions under 37 CFR 1.633 and preliminary statements. The
junior party files a motion for judgment under 37 CFR 1.633(a) on the
ground that the claims corresponding to the count are unpatentable over
prior art. In his decision on motions, the examiner-in-chief grants the
motion and places both parties under an order pursuant to 37 CFR
1.640(d)(1) to show cause why judgment should not be entered against
them as to the count. In response to the order, the senior party files a
paper in accordance with 37 CFR 1.640(e) purportedly showing good cause
why judgment should not be entered in accordance with the order and a
motion requesting permission to arbitrate the patentability issue. The
examiner-in-chief would deny the motion. The arbitrator is without
authority to establish vis-a-vis the public that the subject matter of
the court is patentable. Thus, the arbitration will serve no useful
purpose. The Board would consider the senior party's paper and enter an
appropriate order.
Example 5
Arbitration Practice--Award After Decision on Motions
An interference is declared on or after Feb. 11, 1985. The
examiner-in-chief sets a time in accordance with 37 CFR 1.611 for filing
preliminary motions under 37 CFR 1.633 and preliminary statements. The
junior party files a motion for judgment under 37 CFR 1.633(a) on the
ground that the claims corresponding to counts 1 and 2 are unpatentable
over prior art. In his decision on motions, the examiner-in-chief grants
the motion with respect to count 1, denies the motion with respect to
count 2 and places both parties under an order pursuant to 37 CFR
1.640(d)(1) to show cause why judgment should not be entered against
them as to count 1. The senior party files a paper in accordance with 37
CFR 1.640(e); the junior party, a response thereto. The Board considers
the paper and the response thereto and based on the record enters
judgment adverse to both parties as to count 1. Thereafter, the
examiner-in-chief examines the preliminary statements and sets dates for
taking testimony and filing the record.
During the testimony period, the parties decide to arbitrate the
interference, notify the examiner-in-chief of their intent to arbitrate
and file an arbitration agreement which is approved by the
examiner-in-chief. In his award, the arbitrator decides that judgment
should be awarded to the junior party. On the date for filing the
record, both parties file the award together with a motion requesting
that the interference be terminated in view of the award. No record is
filed.
The motion would be granted and accordingly it would be held that the
senior party is not entitled to a patent containing his claims
corresponding to count 2.
Example 6
Arbitration Practice--Award Decides Patentability
An interference is declared on or after Feb. 11, 1985. The
examiner-in-chief sets a time in accordance with 37 CFR 1.611 for filing
preliminary motions under 37 CFR 1.633 and preliminary statements. No
motions for judgment under 37 CFR 1.633 are filed and after the
examination of the preliminary statements, the examiner-in-chief sets
the testimony times.
During the testimony period, the parties decide to arbitrate the
interference, notify the examiner-in-chief of their intent to arbitrate
and file an arbitration agreement which is approved by the
examiner-in-chief. In his award, the arbitrator finds (1) that the
evidence is insufficient to establish a prior public use bar under 35
U.S.C. 102(b) against the junior party, (2) that the claims of the
junior party corresponding to the count are patentable under 35 U.S.C.
103 over the prior art cited by the senior party to the junior party,
and (3) that judgment on priority should be awarded to junior party. On
the date for filing together with a motion requesting that the
interference be terminated in view of the award.
The motion would be granted and accordingly it would be held that the
senior party is not entitled to a patent containing his claims
corresponding to the count. After the termination of the proceeding,
each party has the duty under 37 CFR 1.56 to bring before the primary
examiner the evidence concerning the purported public use bar and the
prior art cited by the senior party and/or considered by the arbitrator.
Example 7
Arbitration Practice--Award Grants Priority to Junior Party Contingent
Upon Granting of Preliminary Motion Under 1.633(C)
An interference is declared on or after Feb. 11, 1985. The
examiner-in-chief sets a time in accordance with 37 CFR 1.611 for filing
preliminary motions under 37 CFR 1.633 and preliminary statements. The
junior party files a motion under 37 CFR 1.633(c)(1) to substitute
another count. The examiner-in-chief denies the motion, examines the
preliminary statements and sets the testimony times.
During the testimony period, the parties decide to arbitrate the
interference, notify the examiner-in-chief of their intention to
arbitrate and enter into an arbitration agreement which is approved by
the examiner-in-chief. The agreement provides that any evidence to be
submitted by the parties will be in the form of a stipulation under 37
CFR 1.672(e) and (f). The parties file a motion requesting that all the
unexpired testimony times be extended to close concurrently on the date
the record is due. The motion would be granted.
On the date for filing the record, the junior party files his record
and the award. The award states, inter alia, that if the Board at final
hearing should grant the junior party's motion under 37 CFR 1.633(c)(1)
to substitute a new count, judgment should be awarded to the junior
party based on the evidence. Otherwise, the award states that judgment
should be awarded to the senior party.
The examiner-in-chief sets the brief times and after the filing
thereof the interference would be set for final hearing so that the
Board can review the examinter-in-chief's denial of the junior party's
motion under 37 CFR 1.633(c) and issue an appropriate judgment based on
the award.
Example 8
Arbitration Practice--Award Attacked
An interference is declared on or after Feb. 11, 1985. The
examiner-in-chief sets a time in accordance with 37 CFR 1.611 for filing
preliminary motions under 37 CFR 1.633 and preliminary statements. No
preliminary motions are filed. The examiner-in-chief examines the
preliminary statements and sets the testimony times.
During the testimony period, the parties decide to arbitrate the
interference, notify the examiner-in-chief of their intention to
arbitrate and file an arbitration agreement which is approved by the
examiner-in-chief.
On the date for filing the record, both parties file their records.
The junior party files the award which states that judgment should be
awarded to him and a motion for judgment based on that award. The senior
party files an opposition to the motion for judgment on the grounds (i)
that the award contains errors of law, (ii) that the award was procured
by "corruption, fraud or undue means" in violation of 9 U.S.C. 10(a),
and (iii) that the arbitrator exhibited "evident partiality" in
violation of 9 U.S.C. 10(b) and was "guilty of misconduct * * * in
refusing to hear evidence pertinent and material" to the interference,
citing 9 U.S.C. 10(c).
The Board would grant the judgment based on the award, holding that
the senior party is not entitled to a patent containing his claims
corresponding to the count. So long as the award is in compliance with
the provisions of 1.690, it would carry a presumption that the
arbitrator acted properly in all respects. Consequently, before the PTO
the award is binding upon the parties and the junior party is prima
facie entitled to a judgment in its favor. Thus, no action lies in the
PTO as regards the matter raised by the senior party. The senior party's
action lies in an appropriate United States district court and the PTO
would take any action consistent with the court's decision.
Example 9
Arbitration Practice--Award Cannot Modify Board's Final Decision
An interference is declared on or after Feb. 11, 1985. The
examiner-in-chief sets a time in accordance with 37 CFR 1.611 for filing
preliminary motions under 37 CFR 1.633 and preliminary statements. No
motions are filed. The examiner-in-chief examines the preliminary
statements and sets the testimony times.
During the testimony period, the parties decide to arbitrate the
interference and enter into an arbitration agreement. Neither party
notifies the examiner-in-chief of their intent to arbitrate nor do they
file a copy of the agreement in the interference. Both parties timely
file their records and briefs. Both waive oral argument. The Board
enters a final decision after consideration of the evidence in favor of
the senior party.
The junior party requests reconsideration of the Board's final
decision, submits a copy of the arbitration award and moves that the
Board set aside its final decision and enter judgment in his favor based
on the award. In support of its request, the junior party cites 9 U.S.C.
9, which provides that "any party to the arbitration may apply to the
court so specified for an order confirming the award" and 35 U.S.C.
135(d) which provides that title 9 applies to interference arbitrations.
The Board would deny the motion to set aside. The parties did not
comply with 1.690(a), i.e., notify the examiner-in-chief in writing
of their intention to arbitrate and file a copy of the arbitration
agreement within twenty (20) days of its execution. The denial of the
motion is an appropriate sanction under 37 CFR 1.616. Such action by the
Board is considered consistent with long-standing interference practice.
Cf. Humphrey v. Fickert, 1904 Dec. Comm'r. Pat. 447 (Comm'r. 1904)
wherein the Board, after it had considered the evidence, refused to set
aside its award of priority to Fickert and act upon the Fickert's
concession of priority in favor of Humphrey, the losing party.
Example 10
Arbitration Award Filed With Record--No Notice to Examiner-In-Chief
An interference is declared on or after Feb. 11, 1985. The
examiner-in-chief sets a time in accordance with 37 CFR 1.611 for filing
preliminary motions under 37 CFR 1.633 and preliminary statements. No
motions are filed. The examiner-in-chief examines the preliminary
statements and sets the testimony times.
During the testimony period, the parties decide to arbitrate the
interference and enter into an arbitration agreement. Neither party
notifies the examiner-in-chief of the agreement. The junior party timely
files its record together with a copy of the arbitration award and a
motion for judgment based on the award.
The motion would be denied. Under the provisions of 37 CFR 1.616, the
examiner-in-chief would place both parties under an order to show cause
why judgment should not be rendered against them for their failure to
comply with 1.690(a), i.e., failing to notify him of their intent to
arbitrate and file a copy of the arbitration agreement.
Discussion of Comments
One commentor suggested that the expression "An interference or any
aspect thereof shall be arbitrated" in part (b) of proposed 1.690
might be construed as going beyond the terms of the statute by
authorizing an examiner-in-chief to require the parties to arbitrate an
interference, and proposed that the quoted language be changed to "An
arbitration proceeding under this section shall be conducted." To
eliminate any possible misconstruction of the rule, this proposal has
been adopted.
A second commentor suggested, by telephone, that a provision be added
to proposed 1.690 requiring that the arbitrator be familiar with
United States interference practice, and that United States law be
applied by the arbitrator in making the determination. He expressed the
fear that a foreign arbitrator might reach a result contrary to
established domestic law.
This suggestion has not been adopted. It is incumbent upon the
parties to select the arbitrator, and to satisfy themselves as to his or
her qualifications. Presumably if the arbitrator's decision is contrary
to established law, any resulting patent would be subject to attack on
that ground by a third party in subsequent litigation.
Another commentor stated that, with the arbitration rule, the PTO was
"attempting to apply a band-aid to a system which cannot be cured by
application of a band-aid," and that the first-to-file system should be
adopted in place of the first-to-invent system. This suggestion is
obviously far beyond the scope of the rule change under consideration.
The first-to-invent system is mandated by statute and could not be
replaced merely by a change in the rules. The purpose of 1.690 is to
establish a specific procedure governing the optional arbitration of
interferences provided by section 105 of Pub. L. 98-622.
Other Considerations
This rule does not have a significant impact on the quality of the human
environment or the conservation of natural resources.
The rule is in conformity with the requirements of the Regulatory
Flexibility Act (Pub. L. 96-354), Executive Order 12291, and the
Paperwork Reduction Act of 1980, 44 U.S.C. 3501 et seq.
The General Counsel of the Department of Commerce certified to the
Small Business Administration that the rule will not have a significant
adverse economic impact on a substantial number of small entities
(Regulatory Flexibility Act. Pub. L. 96-354) because arbitration
intended to minimize expenses in interference cases.
The Patent and Trademark Office has determined that this rule is not
a major rule under Executive Order 12291. The annual effects on the
economy will be less than $100 million. There will be no major increase
in costs or prices for consumers, individual industries, federal, state
or local government agencies, or geographic regions. There will be no
significant adverse effects on competition, employment, investment,
productivity, innovation, or on the ability of United States-based
enterprises to compete with foreign-based enterprises in domestic or
export markets.
The rule will not impose a burden under the Paperwork Reduction Act
of 1980, 44 U.S.C. 3501 et seq., since no record keeping or reporting
requirements within the coverage of the Act are placed upon the public.
List of Subjects in 37 CFR Part 1
Administrative practice and procedure, Authority delegations, Conflicts
of interest, Courts, Inventions and patents, Lawyers.
For the reasons set out in the preamble and under the authority given
to the Commissioner of Patents and Trademarks by 35 U.S.C. 6 and 135,
Part 1 of Title 37 CFR is amended as follows:
PART 1-RULES OF PRACTICE IN PATENT CASES
1. The authority citation for 37 CFR Part 1 would continue to read as
follows:
Authority: 35 U.S.C. 6 unless otherwise noted.
2. New 1.690 is added to Subpart E to read as follows:
1.690 Arbitration of Interferences.
(a) Parties to a patent interference may determine the interference or
any aspect thereof by arbitration. Such arbitration shall be governed by
the provisions of Title 9, United States Code. The parties must notify
the Board in writing of their intention to arbitrate. An agreement to
arbitrate must be in writing, specify the issues to be arbitrated, the
name of the arbitrator or a date not more than thrity (30) days after
the execution of the agreement for the selection of the arbitrator, and
provide that the arbitrator's award shall be binding on the parties and
that judgment thereon can be entered by the Board. A copy of the
agreement must be filed within twenty (20) days after its execution. The
parties shall be solely responsible for the selection of the arbitrator
and the rules for conducting proceedings before the arbitrator. Issues
not disposed of by arbitration will be resolved in accordance with the
procedures established in 37 CFR, Subpart E of Part 1, as determined by
the examiner-in-chief.
(b) An arbitration proceeding under this section shall be conducted
within such time as may be authorized on a case-by-case basis by an
examiner-in-chief.
(c) An arbitration award will be given no consideration unless it is
binding on the parties, is in writing and states in a clear and definite
manner (1) the issue or issues arbitrated and (2) the disposition of
each issue. The award may also include a statement of the grounds and
reasoning in support thereof. Unless otherwise ordered by an
examiner-in-chief, the parties shall give notice to the Board of an
arbitration award by filing within twenty (20) days from the date of the
award a copy of the award signed by the arbitrator or arbitrators. When
an award is timely filed, the award shall, as to the parties to the
arbitration, be dispositive of the issue or issues to which it relates.
(d) An arbitration award shall not preclude the Office from
determining patentability of any invention involved in the interference.
Mar. 16, 1987 DONALD J. QUIGG
Assistant Secretary and
Commissioner of Patents
and Trademarks
[FR Doc. 87-9373 Filed 4-24-87; 8:45 am]
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