Changes To Implement Derivation Proceedings, 56067-56092 [2012-22204]

Agencies

• DEPARTMENT OF COMMERCE
• Patent and Trademark Office

[Federal Register Volume 77, Number 176 (Tuesday, September 11, 2012)]
[Rules and Regulations]
[Pages 56067-56092]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-22204]



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Vol. 77

Tuesday,

No. 176

September 11, 2012

Part V





Department of Commerce





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Patent and Trademark Office





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37 CFR Part 42





Changes to Implement Derivation Proceedings; Final Rule

Federal Register / Vol. 77 , No. 176 / Tuesday, September 11, 2012 / 
Rules and Regulations

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DEPARTMENT OF COMMERCE

Patent and Trademark Office

37 CFR Part 42

[Docket No. PTO-P-2011-0086]
RIN 0651-AC74


Changes To Implement Derivation Proceedings

AGENCY: United States Patent and Trademark Office, Commerce.

ACTION: Final rule.

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SUMMARY: The United States Patent and Trademark Office (Office or 
USPTO) is revising the rules of practice to implement the provisions of 
the Leahy-Smith America Invents Act (AIA) that create a new derivation 
proceeding to be conducted before the Patent Trial and Appeal Board 
(Board). These provisions of the AIA will take effect on March 16, 
2013, eighteen months after the date of enactment, and apply to 
applications for patent, and any patent issuing thereon, that are 
subject to first-inventor-to-file provisions of the AIA.

DATES: Effective Date: The changes in this final rule take effect on 
March 16, 2013.

FOR FURTHER INFORMATION CONTACT: Michael P. Tierney, Lead 
Administrative Patent Judge; Sally G. Lane, Administrative Patent 
Judge; Sally C. Medley, Administrative Patent Judge; Richard Torczon, 
Administrative Patent Judge; and Joni Y. Chang, Administrative Patent 
Judge, Board of Patent Appeals and Interferences, (will be renamed as 
Patent Trial and Appeal Board on September 16, 2012), by telephone at 
(571) 272-9797.

SUPPLEMENTARY INFORMATION: 
    Executive Summary: Purpose: On September 16, 2011, the AIA was 
enacted into law (Pub. L. 112-29, 125 Stat. 284 (2011)). The purpose of 
the AIA and these regulations is to establish a more efficient and 
streamlined patent system. The preamble of this notice sets forth in 
detail the procedures by which the Board will conduct new 
administrative proceedings called derivation proceedings. Derivation 
proceedings were created to ensure that the first person to file the 
application is actually a true inventor. This new proceeding will 
ensure that a person will not be able to obtain a patent for an 
invention that he did not actually invent. If a dispute arises as to 
which of two applicants is a true inventor (as opposed to who invented 
it first), it will be resolved through a derivation proceeding 
conducted by the Board. This final rule provides a set of rules 
relating to Board trial practice for derivation proceedings.
    Summary of Major Provisions: Consistent with section 3 of the AIA, 
this final rule sets forth: (1) The requirements for a petition to 
institute a derivation proceeding; (2) the standards for showing of 
sufficient grounds to institute a derivation proceeding; (3) the 
standards for instituting a derivation proceeding; (4) the standards 
and procedures for conducting a derivation proceeding; and (5) the 
procedures for arbitration and settlement (subpart E of 37 CFR part 
42).
    Costs and Benefits: This rulemaking is not economically 
significant, but is significant, under Executive Order 12866 (Sept. 30, 
1993), as amended by Executive Order 13258 (Feb. 26, 2002) and 
Executive Order 13422 (Jan. 18, 2007).
    Background: To implement the changes set forth in sections 3, 6, 7, 
and 18 of the AIA that are related to administrative trials and 
judicial review of Board decisions, the Office published the following 
notices of proposed rulemaking: (1) Rules of Practice for Trials before 
the Patent Trial and Appeal Board and Judicial Review of Patent Trial 
and Appeal Board Decisions, 77 FR 6879 (Feb. 9, 2012), to provide a 
consolidated set of rules relating to Board trial practice for inter 
partes review, post-grant review, derivation proceedings, and the 
transitional program for covered business method patents, and judicial 
review of Board decisions by adding new parts 42 and 90 including a new 
subpart A to title 37 of the Code of Federal Regulations (RIN 0651-
AC70); (2) Changes to Implement Inter Partes Review Proceedings, 77 FR 
7041 (Feb. 10, 2012), to provide rules specific to inter partes review 
by adding a new subpart B to 37 CFR part 42 (RIN 0651-AC71); (3) 
Changes to Implement Post-Grant Review Proceedings, 77 FR 7060 (Feb. 
10, 2012), to provide rules specific to post-grant review by adding a 
new subpart C to 37 CFR part 42 (RIN 0651-AC72); (4) Changes to 
Implement Transitional Program for Covered Business Method Patents, 77 
FR 7080 (Feb. 10, 2012), to provide rules specific to the transitional 
program for covered business method patents by adding a new subpart D 
to 37 CFR part 42 (RIN 0651-AC73); (5) Transitional Program for Covered 
Business Method Patents--Definition of Technological Invention, 77 FR 
7095 (Feb. 10, 2012), to add a new rule that sets forth the definition 
of technological invention for determining whether a patent is for a 
technological invention solely for purposes of the transitional program 
for covered business method patents (RIN 0651-AC75); and (6) Changes to 
Implement Derivation Proceedings, 77 FR 7028 (Feb. 10, 2012), to 
provide rules specific to derivation proceedings by adding a new 
subpart E to 37 CFR part 42 (RIN 0651-AC74).
    Additionally, the Office published a Patent Trial Practice Guide 
for the proposed rules in the Federal Register to provide the public an 
opportunity to comment. Practice Guide for Proposed Trial Rules, 77 FR 
6868 (Feb. 9, 2012) (Request for Comments) (``Practice Guide'' or 
``Office Patent Trial Practice Guide''). The Office also hosted a 
series of public educational roadshows, across the country, regarding 
the proposed rules for the implementation of AIA.
    In response to the notices of proposed rulemaking and the Office 
Patent Trial Practice Guide notice, the Office received 251 submissions 
offering written comments from intellectual property organizations, 
businesses, law firms, patent practitioners, and individuals. The 
comments provided support for, opposition to, and diverse 
recommendations on the proposed rules. The Office appreciates the 
thoughtful comments, and has considered and analyzed the comments 
thoroughly. The Office's responses to the comments are provided in the 
Response to Comments section, infra, in the 83 separate responses based 
on the topics concerning derivation raised in the 251 comments 
received.
    In light of the comments, the Office has made appropriate 
modifications to the proposed rules to provide clarity and to take into 
account the interests of the public, patent owners, patent challengers, 
and other interested parties, with the statutory requirements and 
considerations, such as the effect of the regulations on the economy, 
the integrity of the patent system, the efficient administration of the 
Office, and the ability of the Office to complete the proceedings 
timely. The Office has decided to proceed with several separate final 
rules to implement the changes set forth in sections 3, 6, 7, and 18 of 
the AIA that are related to administrative trials and judicial review 
of Board decisions. This final rule adopts the proposed changes, with 
modifications, set forth in the Changes to Implement Derivation 
Proceedings (77 FR 7028).

Differences Between the Final Rule and the Proposed Rule

    The major differences between the rules as adopted in this final 
rule and the proposed rules are as follows:
    The final rule clarifies that the phrase ``same or substantially 
the same

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invention'' means patentably indistinct (Sec.  42.401). The final rule 
also clarifies that the phrase ``the first publication'' means either a 
patent or an application publication under 35 U.S.C. 122(b), including 
a publication of an international application designating the United 
States as provided by 35 U.S.C. 374.
    To follow closely the statutory language in 35 U.S.C. 135(a), as 
amended, the final rule clarifies that a petition for a derivation 
proceeding must be filed within the one-year period beginning on the 
date of the first publication of a claim to an invention that is the 
same or substantially the same as the earlier application's claim to 
the allegedly derived invention (Sec.  42.403).
    As to the content of the petition, the final rule clarifies the 
petition must show that the petitioner has at least one claim that is 
the same or substantially the same as the invention disclosed to the 
respondent (Sec.  42.405(a)(2)(ii)). The final rule also clarifies that 
the petition must demonstrate that the inventor from whom the claimed 
invention was allegedly derived did not authorize the filing of the 
earlier application claiming the derived invention (Sec.  
42.405(b)(2)). Further, the final rule clarifies that the petition must 
show why the respondent's claimed invention is the same or 
substantially the same as the invention disclosed to the respondent 
(Sec.  42.405(b)(3)(i)).
    As to mode of service, the final rule eliminates the requirement 
that the petitioner must contact the Board to discuss alternate modes 
of service when the petitioner cannot effect service of the petition 
and supporting evidence (Sec.  42.406(b)). Instead, the final rule 
clarifies that: (1) Upon agreement of the parties, service may be made 
electronically; (2) personal service is not required; and (3) service 
may be by EXPRESS MAIL[supreg] or by means at least as fast and 
reliable as EXPRESS MAIL[supreg] (Sec.  42.406(b)).

Discussion of Relevant Provisions of the AIA

    Section 3(i) of the AIA amends 35 U.S.C. 135 to provide for 
derivation proceedings and to eliminate the interference practice as to 
applications and patents having an effective filing date on or after 
March 16, 2013 (with a few exceptions). Derivation proceedings will be 
conducted in a manner similar to inter partes reviews and post-grant 
reviews. Unlike patent interferences, derivations will be conducted in 
a single phase without the use of a ``count.'' An inventor seeking a 
derivation proceeding must file an application. 35 U.S.C. 135(a). An 
inventor, however, may copy an alleged deriver's application, make any 
necessary changes to reflect accurately what the inventor invented, and 
provoke a derivation proceeding by filing a petition and fee timely.
    In particular, 35 U.S.C. 135(a), as amended, provides that an 
applicant for patent may file a petition to institute a derivation 
proceeding in the Office. As amended, 35 U.S.C. 135(a) provides that 
the petition must state with particularity the basis for finding that a 
named inventor in the earlier application derived the claimed invention 
from an inventor named in the petitioner's application and, without 
authorization, filed the earlier application. The petition must be 
filed within one year of the first publication by the earlier applicant 
of a claim to the same or substantially the same invention, made under 
oath, and be supported by substantial evidence. As amended, 35 U.S.C. 
135(a) further provides that if the Director determines that the 
petition demonstrates that the standards for instituting a derivation 
proceeding are met, the Director may institute a derivation proceeding 
and that the determination of whether to institute a derivation 
proceeding is final and nonappealable. A derivation is unlikely to be 
instituted, even where the Director thinks the standard for instituting 
a derivation proceeding is met, if the petitioner's claim is not 
otherwise in condition for allowance. Cf. Brenner v. Manson, 383 U.S. 
519, 528 n.12 (1966); accord Ewing v. Fowler Car Co., 244 U.S. 1, 7 
(1917).
    As amended, 35 U.S.C. 135(b) provides that, once a derivation 
proceeding is instituted, the Board will determine whether a named 
inventor in the earlier application derived the claimed invention from 
a named inventor in the petitioner's application and, without 
authorization, filed the earlier application. As amended, 35 U.S.C. 
135(b) also provides that the Board may correct the naming of the 
inventor of any application or patent at issue in appropriate 
circumstances, and that the Director will prescribe regulations for the 
conduct of derivation proceedings, including requiring parties to 
provide sufficient evidence to prove and rebut a claim of derivation.
    As amended, 35 U.S.C. 135(c) provides that the Board may defer 
action on a petition for derivation proceeding for up to three months 
after a patent is issued from the earlier application that includes a 
claim that is the subject of the petition. That section further 
provides that the Board also may defer action on a petition for a 
derivation proceeding or stay the proceeding after it has been 
instituted until the termination of a proceeding under chapter 30, 31, 
or 32 involving the patent of the earlier applicant.
    As amended, 35 U.S.C. 135(d) provides that a decision that is 
adverse to claims in an application constitutes the final refusal of 
the claims by the Office, while a decision adverse to claims in a 
patent constitutes cancellation of the claims, if no appeal or other 
review of the decision has been taken or had. As amended, 35 U.S.C. 
135(d) provides that a notice of such claim cancellation must be 
endorsed on the patent.
    Section 3(i) of the AIA further adds two new provisions, 35 U.S.C. 
135(e) and (f). New paragraph (e) of 35 U.S.C. 135 provides that the 
parties to a derivation proceeding may terminate the proceeding by 
filing a written statement reflecting the agreement of the parties as 
to the correct inventors of the claimed invention in dispute. Moreover, 
35 U.S.C. 135(e) provides that the Board must take action consistent 
with the agreement, unless the Board finds the agreement to be 
inconsistent with the evidence of record. Further, 35 U.S.C. 135(e) 
provides that the written settlement or understanding of the parties 
must be filed with the Director and, at the request of a party, will be 
treated as business confidential information, will be kept separate 
from the file of the involved patents or applications, and will be made 
available only to Government agencies on written request, or to any 
person on a showing of good cause.
    New paragraph (f) of 35 U.S.C. 135 allows the parties to a 
derivation proceeding to determine the contest, or any aspect thereof, 
by arbitration within a time specified by the Director, and provides 
that the arbitration is governed by the provisions of title 9, to the 
extent that title is not inconsistent with 35 U.S.C. 135. Further, 35 
U.S.C. 135(f) provides that the parties must give notice of any 
arbitration award to the Director, that the award is not enforceable 
until such notice is given, and that the award, as between the parties 
to the arbitration, is dispositive of the issues to which it relates 
but does not preclude the Director from determining the patentability 
of the claimed inventions involved in the proceeding. The Director 
delegates the authority to the Board to resolve patentability issues 
that arise during derivation proceedings when there is good cause to do 
so.

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Discussion of Specific Rules

    This final rule provides new rules to implement the provisions of 
the AIA for instituting and conducting derivation proceedings before 
the Board. As amended, 35 U.S.C. 135(b) provides that the Director will 
prescribe regulations setting forth standards for the conduct of 
derivation proceedings. This final rule adds a new subpart E to 37 CFR 
part 42 to provide rules specific to derivation proceedings.
    Additionally, the Office in a separate final rule has added part 
42, including subpart A (RIN 0651-AC70), that includes a consolidated 
set of rules relating to Board trial practice. More specifically, 
subpart A of part 42 sets forth the policies, practices, and 
definitions common to all trial proceedings before the Board. The rules 
adopted in this final rule and discussion below reference the rules in 
subpart A of part 42. Furthermore, the Office in other separate final 
rules adds a new subpart B to 37 CFR part 42 to provide rules specific 
to inter partes review, a new subpart C to 37 CFR part 42 to provide 
rules specific to post-grant review, and a new subpart D to 37 CFR part 
42 to provide rules specific to transitional program covered business 
method patents (RIN 0651-AC71 and RIN 0651-AC75).
    Title 37 of the Code of Federal Regulations, Chapter I, Part 42, 
Subpart E, entitled ``Derivation'' is added as follows:
    Section 42.400: Section 42.400 sets forth policy considerations for 
derivation proceedings.
    Section 42.400(a) provides that a derivation proceeding is a trial 
and subject to the rules set forth in subpart A.
    Section 42.400(b) delegates to the Board the Director's authority 
to resolve patentability issues when there is good cause to do so. See 
the last sentence of 35 U.S.C. 135(f), as amended. For example, an 
issue of claim indefiniteness (35 U.S.C. 112) might need to be resolved 
before derivation can be substantively addressed on the merits. 
Resolution of such issues promotes procedural efficiency, and may even 
encourage party settlement, by providing clear guidance on the scope of 
the contested issues.
    Section 42.401: Section 42.401 sets forth definitions specific to 
derivation proceedings, in addition to definitions set forth in Sec.  
42.2 of this part.
    Definitions:
    Agreement or understanding under 35 U.S.C. 135(e): The definition 
reflects the terminology used in 35 U.S.C. 135(e) to describe a 
settlement between parties to a derivation proceeding.
    Applicant: The definition makes it clear that reissue applicants 
are considered applicants, and not patentees, for purposes of a 
derivation proceeding.
    Application: The definition makes it clear that a reissue 
application is an application, not a patent, for purposes of a 
derivation proceeding. Specifically, the definition includes both an 
application for an original patent and an application for a reissued 
patent.
    The first publication: The definition makes it clear that the 
phrase means either a patent or an application publication under 35 
U.S.C. 122(b), including a publication of an international application 
designating the United States as provided by 35 U.S.C. 374.
    Petitioner: The definition of petitioner incorporates the statutory 
requirement (35 U.S.C. 135(a), as amended) that the petitioner be an 
applicant.
    Respondent: The definition of respondent identifies the respondent 
as the party other than the petitioner.
    Same or substantially the same invention: The definition makes it 
clear that the phrase means patentably indistinct.
    Section 42.402: Section 42.402 provides who may file a petition for 
a derivation proceeding.
    Section 42.403: Section 42.403 provides that a petition for a 
derivation proceeding must be filed within the one-year period 
beginning on the date of the first publication of a claim to an 
invention that is the same or substantially the same as the 
respondent's earlier application's claim to the invention. Such 
publication may be the publication by the USPTO of an application for 
patent or by the World Intellectual Property Organization (WIPO) of an 
international application designating the United States. As amended, 35 
U.S.C. 135(a) provides that a petition for instituting a derivation 
proceeding may only be filed within the one-year period of the first 
publication to a claim to an invention that is the same or 
substantially the same as the earlier application's claim to the 
invention. The rule is consistent with 35 U.S.C. 135(a), as amended, 
because the earlier application's first publication of the allegedly 
derived invention triggers the one-year bar date. While the statute's 
use of the phrase ``a claim'' is ambiguous inasmuch as it could include 
the petitioner's claim as a trigger, such a broad construction could 
violate due process. For example, the petitioner could be barred by 
publication of its own claim before it had any knowledge of the 
respondent's application. Such problems may be avoided if the trigger 
for the deadline is publication of the respondent's claim.
    Section 42.404: Section 42.404 provides that a fee must accompany 
the petition for a derivation proceeding and that no filing date will 
be accorded until payment is complete.
    Section 42.405: Section 42.405 identifies the content of a petition 
to institute a derivation proceeding. The rule is consistent with 35 
U.S.C. 135(b), as amended, which authorizes the Director to prescribe 
regulations setting forth standards for the conduct of derivation 
proceedings, including requiring parties to provide sufficient evidence 
to prove and rebut a claim of derivation.
    Section 42.405(a) requires a petition to demonstrate that the 
petitioner has standing. To establish standing, a petitioner, at a 
minimum, must timely file a petition that shows that at least one claim 
of the petitioner's application is the same or substantially the same 
as the respondent's claimed invention and as the invention disclosed to 
the respondent by the inventor in the petitioner's application. This 
requirement ensures that a party has standing to file the petition and 
helps prevent spuriously instituted derivation proceedings. This rule 
also ensures that the petitioner has taken steps to obtain patent 
protection for the same or substantially same invention, thus promoting 
the useful arts by participating in the patent system. Facially 
improper standing would be a basis for denying the petition without 
proceeding to the merits of the decision.
    Section 42.405(b) requires that the petition identify the precise 
relief requested. The petition must provide sufficient information to 
identify the application or patent subject to a derivation proceeding. 
The petition must also demonstrate that the claimed invention in the 
subject application or patent was derived from an inventor named in the 
petitioner's application and that the inventor named in the 
petitioner's application did not authorize the filing of the earliest 
application claiming the derived invention. The petitioner must further 
show why the claim is the same or substantially the same as the 
invention disclosed to the respondent. For each of the respondent's 
targeted claims, the petitioner must likewise identify how the claim to 
the allegedly derived invention is to be construed. Where the claim to 
be construed contains a means-plus-function or step-plus-function 
limitation as permitted under 35 U.S.C. 112(f), the construction of the 
claim must identify the specific portions of the specification that 
describe the

[[Page 56071]]

structure, material, or acts corresponding to each claimed function. 
The rule provides an efficient means for identifying the legal and 
factual basis supporting a prima facie case of relief and provides the 
opponent with a minimum level of notice as to the basis for the 
allegations of derivation.
    Section 42.405(c) provides that a derivation showing is not 
sufficient unless it is supported by substantial evidence and at least 
one affidavit addressing communication and lack of authorization, 
consistent with 35 U.S.C. 135(a), as amended. The showing of 
communication must be corroborated.
    Section 42.406: Section 42.406 provides requirements for the 
service of a petition in addition to the requirements set forth in 
Sec.  42.6(e).
    Section 42.406(a) requires that the petitioner serve the respondent 
at the correspondence address of record. A petitioner may also attempt 
service at any other address known to the petitioner as likely to 
effect service. Once a patent has issued, communications between the 
Office and the patent owner often suffer. Ray v. Lehman, 55 F.3d 606 
(Fed. Cir. 1995) (patentee's failure to maintain correspondence address 
contributed to failure to pay maintenance fee and therefore expiration 
of the patent). While the rule requires service at the correspondence 
address of record, in many cases, the petitioner will already be in 
communication with the owner of the earlier application at a better 
service address than the official correspondence address.
    Section 42.407: Section 42.407(a) provides requirements for a 
complete petition. As amended, 35 U.S.C. 135(b) provides that the 
Director establish regulations concerning the standards for the conduct 
of derivation proceedings. Further, 35 U.S.C. 135(a), as amended, 
provides that a derivation proceeding may be instituted where the 
Director determines that a petition demonstrates that the standards for 
instituting a derivation proceeding are met. Consistent with the 
statute, the rule requires that a complete petition be filed along with 
the fee and that it be served at the correspondence address of record 
for the earlier application.
    Section 42.407(b) provides petitioners a one-month time frame to 
correct defective petitions to institute a derivation proceeding, 
unless the statutory deadline in which to file a petition for 
derivation has expired. In determining whether to grant a filing date, 
the Board will review the petitions for procedural compliance. Where a 
procedural defect is noted, e.g., failure to state the claims being 
challenged, the Board will notify the petitioner that the petition was 
incomplete and identify any non-compliance issues.
    Section 42.408: Section 42.408 provides that an administrative 
patent judge institutes and may reinstitute a derivation proceeding on 
behalf of the Director.
    Section 42.409: Section 42.409 makes it clear that an agreement or 
understanding filed under 35 U.S.C. 135(e) would be a settlement 
agreement for purposes of Sec.  42.74.
    Section 42.410: Section 42.410 provides for arbitration of 
derivation proceedings. Section 42.410(a) provides that parties to a 
derivation proceeding may determine such contest, or any aspect 
thereof, by arbitration, except that nothing shall preclude the Office 
from determining the patentability of the claimed inventions involved 
in the proceeding. The rule is consistent with 35 U.S.C. 135(f) because 
it permits arbitration, but does not displace the Office from 
determining issues of patentability during the course of the 
proceeding. Section 42.410(b) provides that the Board will not set a 
time for, or otherwise modify the proceeding for, an arbitration unless 
the listed procedural requirements are met.
    Section 42.411: Section 42.411 provides that an administrative 
patent judge may decline to institute or continue a derivation 
proceeding between an application and a patent or another application 
that are commonly owned. Common ownership in a derivation proceeding is 
a concern because it can lead to manipulation of the process, such as 
requesting the Board to resolve an inventorship dispute within the same 
company. The rule is stated permissively because not all cases of 
overlapping ownership would be cause for concern. The cases of 
principal concern involve a real party-in-interest with the ability to 
control the conduct of more than one party.
    Section 42.412: Section 42.412 provides for public availability of 
Board records.

Response to Comments

    The Office received 251 written submissions of comments from 
intellectual property organizations, businesses, law firms, patent 
practitioners, and individuals. The comments provided support for, 
opposition to, and diverse recommendations on the proposed rules. The 
Office appreciates the thoughtful comments, and has considered and 
analyzed the comments thoroughly. The Office's responses to the 
comments that are directed to the consolidated set of rules relating to 
Board trial practice and judicial review of Board decisions are 
provided in a separate final rule (RIN 0651-AC70). In addition, the 
Office's responses to comments that are directed to inter partes review 
proceedings (77 FR 7041), post-grant review proceedings (77 FR 7060), 
and transitional post-grant review proceedings for covered business 
method patents (77 FR 7080) are provided in another separate final rule 
(RIN 0651-AC71), and the Office's responses to the comments that are 
directed to the definitions of the terms ``covered business method 
patent'' and ``technological invention'' are provided in a third 
separate final rule (RIN 0651-AC75).
    The Office's responses to comments that are directed to derivation 
proceedings (77 FR 7028) are provided as follows:

Procedure; pendency (Sec.  42.400)

    Comment 1: One comment suggested that the use of the word 
``proceeding'' in the proposed derivation rules is in conflict with how 
``proceeding'' is defined in proposed Sec.  42.2. As such, the 
suggestion is for Sec.  42.400(b) to reference the ``trial'' and not 
the ``proceeding'' or to separately define the term ``derivation 
proceeding'' to exclude any preliminary proceeding.
    Response: Section 42.2 defines ``proceeding'' as a trial or a 
preliminary proceeding. The term ``derivation proceeding'' includes a 
preliminary proceeding or a trial, and thus it is consistent with Sec.  
42.2. Redefining the term ``derivation proceeding'' to exclude a 
preliminary proceeding would result in an inconsistency with Sec.  
42.2. There may be, based on the specific facts of a given case, a need 
to resolve a patentability issue prior to determining whether to 
institute a derivation proceeding. Thus, to facilitate flexibility, the 
Office adopts proposed Sec.  42.400(b) without any modifications.

Definitions (Sec.  42.401)

    Comment 2: One comment suggested that the Office define 
``substantially the same'' to mean ``not patentably distinct'' or 
``mere obvious variants.'' Still another comment suggested that a claim 
is the ``same or substantially the same'' invention if: (i) the claim 
recites an invention that would be anticipated by or obvious over the 
allegedly derived invention; and (ii) the allegedly derived invention 
would be anticipated by or obvious over the invention defined by that 
claim. Lastly, one comment suggested providing more guidance as to 
whether ``substantially the same'' will be evaluated based on the 
``two-way

[[Page 56072]]

obviousness'' test or some other standard.
    Response: Section 42.401, as adopted in this final rule, provides 
that the ``same or substantially the same means patentably 
indistinct.'' The final rule makes clear that in determining whether a 
petitioner has at least one claim that is the same or substantially the 
same as a respondent's claimed invention (Sec.  42.405), the petitioner 
must show that the respondent's claim is anticipated by or obvious over 
the petitioner's claim.
    Comment 3: One comment suggested that the definition of 
``respondent'' should clarify that the term means ``the assignee of 
record or any subsequent legal or equitable owner of the earlier-filed 
application in a proceeding under 35 U.S.C. 135.'' The comment proposed 
that such a definition would also clarify that the deadline for filing 
a petition to institute a derivation proceeding is one year from the 
earliest publication of the respondent's claim.
    Response: Section 42.401 defines ``respondent'' to mean a party 
other than the petitioner. Section 42.2 defines a ``party,'' such as in 
a derivation proceeding, as any applicant or assignee of the involved 
application. Moreover, Sec.  42.8 requires a party involved in a 
proceeding to identify the real party-in-interest for the party. 
Lastly, the deadline for filing a petition to institute a derivation 
proceeding is one year from the first publication of the respondent's 
claim. Accordingly, the suggestion of setting forth a definition of the 
term ``respondent'' expressly in the rule is not adopted.
    Comment 4: One comment noted that proposed Sec.  42.405(c) requires 
a derivation showing to be supported by ``at least one affidavit 
addressing communication of the derived invention.'' The comment 
suggested that the term ``communication of the derived invention'' 
should be added to the definitions as ``knowledge of the claimed 
invention, or at least so much of the claimed invention as would have 
made it obvious to one of ordinary skill in the art, obtained directly 
or indirectly from a named inventor, and prior to the filing date, of 
the earlier-filed patent.''
    Response: Section 42.405(b)(3)(i) requires a petitioner to show, 
for each of the respondent's claims, why the claimed invention is the 
same or substantially the same as (i.e., patentably indistinct from) 
the invention disclosed to the respondent. This requirement means that 
the respondent's claimed invention need not be identical to the 
invention disclosed to the respondent. Moreover, Sec.  42.405(b)(2) 
provides that the invention disclosed to the respondent must be 
disclosed prior to the filing of the ``earlier application.'' The 
Office agrees that the communication of the invention need not be 
direct.
    Comment 5: One comment suggested that the rule should provide a 
definition for the phrase ``the first publication of a claim'' to 
clarify that merely presenting a new claim in an application after it 
has been published under 35 U.S.C. 122(b) does not constitute the first 
publication of that new claim. In particular, the comment suggested a 
definition that specifies that a claim presented in an application or 
issued in a patent which defines an invention that is patentably 
distinct from a claim that was earlier published in the corresponding 
application or patent is the date of the first publication of that 
patentably distinct claim.
    Response: The Office agrees that the first publication of a claim 
is the publication date of the application published under 35 U.S.C. 
122(b) that includes that claim, or the issue date of the patent that 
includes that claim. Section 42.401, as adopted in this final rule, 
provides that ``the first publication'' means either a patent or an 
application publication under 35 U.S.C. 122(b), including a publication 
of an international application designating the United States as 
provided by 35 U.S.C. 374. In the situation where an application is 
published under 35 U.S.C. 122(b) with an originally filed claim and 
subsequently issued as a patent with a new claim that is patentably 
distinct from the originally filed claim, the first publication of the 
new patentably distinct claim is the issue date of the patent. Notably, 
the first publication of the new patentably distinct claim is not the 
publication date of the originally filed claim and it is not the date 
that the new patentably distinct claim is presented in the published 
application. The Office believes that the examples in the preamble 
provide sufficient clarity, and additional guidance will be provided to 
the public as decisions are rendered.
    Comment 6: One comment suggested that the definitions should be 
revised to make clear that a petitioner can seek a derivation 
proceeding against either a pending application or an issued patent.
    Response: Section 42.405(b)(1) provides that a petitioner may 
request to institute a derivation proceeding against an application or 
a patent.
    Comment 7: One comment suggested adding to the end of the 
definition for application ``where the application contains or 
contained at any time a claim that has an effective filing date on or 
after March 16, 2013, or contains a specific reference under 35 U.S.C. 
120, 121, or 365(c) to any patent or application that contains or 
contained such a claim at any time.''
    Response: The suggested language appears to come from section 3(n) 
of the AIA and would be required by law already.

Who may file a petition for a derivation proceeding (Sec.  42.402)

    Comment 8: One comment suggested that a petition should be granted 
even when the true inventor has not filed a patent application because 
the true inventor may misunderstand that his or her invention is a mere 
modification of the prior art. The comment further suggested that the 
MPEP should mention that the petition for the derivation proceeding 
should be granted by filing the latter patent application at the time 
of filing the petition for the derivation proceeding, even when the 
true inventor has not filed his or her patent application.
    Response: The true inventor must be named in the petitioner's 
application. Section 3(i) of the AIA amends 35 U.S.C. 135 to provide 
for derivation proceedings. The statute, among other things, specifies 
that the petition shall set forth with particularity the basis for 
finding that an inventor named in an earlier application derived the 
claimed invention from an inventor named in the petitioner's 
application. See 35 U.S.C. 135(a), as amended. Therefore, the Office 
will not grant a petition when the true inventor is not named in the 
petitioner's application.

Time for Filing (Sec.  42.403)

    Comment 9: One comment suggested that the rule on timing for filing 
should track the literal language of the statute because the proposed 
rule defines a different period than does the statute (one that does 
not include the date of first publication).
    Response: This comment has been adopted. Section 42.403, as adopted 
in this final rule, includes that a petition for a derivation 
proceeding ``must be filed within the one-year period beginning on the 
date of the first publication.''
    Comment 10: Several comments suggested changes to the rules to 
define or specify what constitutes a ``first publication.'' For 
example, one comment suggested that public availability of a claim 
through the Office's PAIR system does not constitute first publication. 
Still, several comments suggested that ``first publication'' refers not 
only to U.S. application publication, but also PCT international 
application publication in English designating the United States, and 
where an application

[[Page 56073]]

has not published, the date of the first publication is the date of the 
issuance of the patent. Yet another comment suggested incorporating the 
preamble language from the proposed rules regarding ``first 
publication'' into the rule. Lastly, one comment suggested that the 
Office consider a petition process that would allow an applicant to 
petition for waiver of the rule in the interests of justice in certain 
exceptional circumstances, i.e., when a deriver's claims are filed in a 
non-English language country and a subsequently filed PCT application 
has no translation.
    Response: This comment has been adopted in part. Section 42.401, as 
adopted in this final rule, provides that ``the first publication'' 
means either a patent or an application publication under 35 U.S.C. 
122(b), including a publication of an international application 
designating the United States as provided by 35 U.S.C. 374. Therefore, 
the first publication of a claim may be the publication by the USPTO of 
an application for patent, a U.S. patent, or a WIPO publication of an 
international application designating the United States. The public 
availability of a claim through the Office's PAIR system (e.g., a new 
claim filed in a published application) does not constitute the first 
publication of a claim, as such publication is not an application 
publication under 35 U.S.C. 122(b). As to the comments regarding WIPO 
publication of an international application, 35 U.S.C. 374, as amended, 
deems a WIPO publication of an international application designating 
the United States as a publication under 35 U.S.C. 122(b) without any 
English language requirement. Therefore, the first publication of a 
claim may be a WIPO publication of an international application 
designating the United States that is published in a non-English 
language.
    Comment 11: Several comments suggested that the rule make clear 
that the one-year period is calculated from publication of the 
respondent's claims, and not publication of the petitioner's claims. 
One comment suggested that the statute is ambiguous in defining the 
event that will trigger the one-year statutory bar for filing. Still 
another comment suggested that the proposed rule in combination with 
the supplementary information indicates that the window-opening date is 
the date of first publication by the deriver, but that that is contrary 
to the statutory language. Lastly, one comment suggested that the rule 
does not make clear which publication (the earlier or later-filed 
claim) is meant to trigger the one-year bar date.
    Response: The rule is consistent with the language of 35 U.S.C. 
135(a), as amended. The preamble of this final rule clarifies that the 
one-year period is calculated from publication of the respondent's 
claim. The statute's use of the phrase ``a claim'' is ambiguous. The 
Office recognizes that if the phrase is interpreted to include the 
petitioner's claim as a trigger, such a broad construction could 
violate due process. For example, the petitioner could be barred by 
publication of its own claim before it had any knowledge of the 
respondent's application. The Office believes that the Congress did not 
intend to prevent a true inventor from seeking a derivation proceeding 
in such situation. To resolve the ambiguity in the statute, the Office 
interprets the statute to mean that the trigger for the deadline is 
publication of the respondent's claim. This interpretation is 
reasonable, as the identified problems may be avoided if the trigger 
for the deadline is publication of the respondent's claim. Accordingly, 
the Office's interpretation is consistent with the statute and ensures 
that the first person to file the application is actually a true 
inventor.
    Comment 12: One comment asked whether the time bar for filing a 
derivation includes the one-year anniversary date of the date of 
publication.
    Response: The time period for filing a derivation petition includes 
the one-year anniversary date of the date of publication. For example, 
if the publication occurs on January 7, 2014, then the petition must be 
filed before January 8, 2015. If the one-year period expires on a 
Saturday, Sunday, or Federal holiday within the District of Columbia, 
the petition may be filed on the next succeeding business day. 35 
U.S.C. 21(b). For example, if the publication occurs on July 3, 2014, 
then the petition must be filed before July 7, 2015 (July 3, 2015, 
being a Federal holiday; July 4, 2015, being a Saturday; and July 5, 
2015, being a Sunday).
    Comment 13: One comment suggested that the rules should make it 
clear whether potentially derived claims that are first presented and 
published in a continuing application will be deemed to relate back to 
an initial parent application that was published more than a year 
before the publication of the case in which the potentially derived 
claims are presented and published.
    Response: Consistent with 35 U.S.C. 135(a), the one-year time 
period begins on the first publication date of a claim to an invention 
that is the same or substantially the same as the earlier application's 
claim to the invention, rather than the publication of a parent 
application (unless the publication of the parent application contains 
such a claim).
    Comment 14: One comment requested clarification on how the Office 
intends to treat derivation petitions filed when a petitioner's claim 
is not otherwise in condition for allowance.
    Response: A derivation petition filed in an application that is not 
otherwise in condition for allowance may be accorded a filing date 
under Sec.  42.407 and considered timely filed if the petition complies 
with the statutory and rule requirements. Generally, once the petition 
has been accorded a filing date, the Office will hold the petition 
until the petitioner's claim is otherwise in condition for allowance.
    Comment 15: One comment requested clarification on what proceedings 
are available when one application or patent has a post-AIA effective 
filing date and another party's application or patent has a pre-AIA 
effective filing date. The comment further requested that the proposed 
rules be amended by: (i) confirming that the earlier party could seek 
declaration of an interference, and the latter party could petition for 
derivation proceedings to be instituted; and (ii) indicating what 
action the Office would take when both types of proceedings are 
requested. The comment also recommended that when both types of 
proceedings are properly requested, the Office initiate the 
interference proceeding and handle the derivation issues as part of the 
interference.
    Response: The Office appreciates the suggestion that in such 
situations the Office initiate the interference proceeding and handle 
the derivation issues as part of the interference. The Office will 
consider requests for interference proceedings and/or petitions to 
institute a derivation proceeding in light of the statutory provisions 
and the facts of the particular case. For instance, if both subject 
applications have issued as patents and neither is pending before the 
Office, the Office will not declare an interference, nor institute a 
derivation proceeding, between two patents. See 35 U.S.C. 291. In the 
situation where the application that has a post-AIA effective filing 
date is pending before the Office, the applicant of such application 
may file a petition for a derivation proceeding under 35 U.S.C. 135(a), 
as amended, if appropriate. See Sec.  3(n)(1) of the AIA.
    Comment 16: One comment explained that section 3(n) of the AIA is 
confusing with regard to the ``effective date'' stating ``patent or 
application'' when referring to the effective date in general,

[[Page 56074]]

and ``claim'' when referring to interfering patents. The comment 
further explained that continuation-in-part patent applications or 
patents may contain claims that fall on either side of the March 16, 
2013 date, and then all claims would not be subject to the provisions 
of AIA. The comment seeks clarification from the Office.
    Response: Under section 3(n)(1) of the AIA, the first-inventor-to-
file provisions of the AIA apply to any application that previously 
contained, or currently contains, a claim that has an effective filing 
date on or after March 16, 2013. Therefore, the first-inventor-to-file 
provisions apply to all of the claims in a continuation-in-part 
application that satisfies that standard. Additional information is 
provided in a separate rulemaking and guidance notice concerning the 
first-inventor-to-file provisions. See e.g., Changes to Implement the 
First Inventor to File Provisions of the Leahy-Smith America Invents 
Act (Notice of proposed rulemaking) (RIN 0651-AC77). Additional 
guidance will also be provided to the public as decisions are rendered 
and as they become available.

Content of Petition (Sec.  42.405)

    Comment 17: Several comments expressed concern over the language of 
proposed Sec.  42.405(a)(2)(ii). One comment suggested deleting 
proposed Sec.  42.405(a)(2)(ii) requiring the ``not patentably 
distinct'' showing, because the statutory term ``substantially the 
same'' encompasses the ``not patentably distinct'' term and paragraphs 
(a)(2)(i) and (a)(2)(ii) of proposed Sec.  42.405 are therefore 
redundant. The comment further suggested deletion of proposed Sec.  
42.405(b)(3)(i) for the same reason. Another comment requested 
clarification as to whether a patent would be allowed if based on a 
novel and nonobvious improvement to what was disclosed.
    Response: In light of these comments, the Office has modified the 
proposed rules. Section 42.405, as adopted in this final rule, uses the 
standard of ``same or substantially the same,'' and Sec.  42.401, as 
adopted in this final rule, defines ``same or substantially the same'' 
to mean patentably indistinct. In particular, Sec.  42.405(a)(2)(ii), 
as adopted in this final rule, requires the petitioner to show that it 
has a claim that is the same or substantially the same as the invention 
that was actually disclosed to the respondent. Section 42.405(b)(3)(i), 
as adopted in this final rule, requires a showing that each of the 
respondent's claims to the derived invention is the same or 
substantially the same as the invention that was disclosed to the 
respondent. Where a respondent's claim is directed to subject matter 
that is not the same or substantially the same as what was disclosed, 
there would be insufficient basis upon which to institute a proceeding.
    Comment 18: A comment suggested that proposed Sec.  42.405(b) 
should be revised to require prima facie evidence in the form of sworn 
testimony or other documentary evidence to demonstrate that: (i) Each 
allegedly derived claimed invention was derived from an inventor named 
in the petitioner's application; and (ii) the inventor or inventors 
from whom the allegedly derived claimed invention was derived did not 
authorize the filing of the earliest-filed application claiming such 
invention.
    Response: The final rule clarifies that a showing must be made that 
the filing of the earliest filed application claiming the allegedly 
derived invention was not authorized by the petitioner. See Sec.  
42.405(b). Documentary evidence alone is not sufficient. As provided in 
Sec.  42.205(c), at least one affidavit that addresses the 
communication of the allegedly derived invention and lack of 
authorization for the respondent to file the earliest-filed application 
must accompany the petition. Documentary evidence may be sufficient as 
corroborative evidence depending on the facts of the proceeding.
    Comment 19: One comment suggested that the rules should require 
that the petition disclose the entirety of the petitioner's case and 
effectively serve as the petitioner's main ``trial brief.''
    Response: Petitioners are encouraged to set forth their entire case 
and supporting evidence in their petitions, lest the petitioner risk a 
determination by the Board not to institute the derivation proceeding. 
See Sec. Sec.  42.405 and 42.108(b). For instance, under Sec.  
42.405(c), a derivation showing is not sufficient unless it is 
supported by substantial evidence, including at least one affidavit 
addressing communication of the allegedly derived invention and lack of 
authorization that, if unrebutted, would support a determination of 
derivation. The showing of communication must be corroborated. 
Requiring such a showing prior to any institution of a proceeding is 
consistent with the Office's goal of avoiding institution of 
proceedings that lack merit and additional costs on both a respondent 
and a petitioner unnecessarily.
    Comment 20: Several comments suggested that proposed Sec.  42.405 
requires too much detailed information and should only require 
identification of the basis of the contention and the evidence to 
support the contention. One comment suggested that the validity of a 
claim of derivation may be resolved in the derivation proceeding itself 
and need not be conclusively determined on the face of the petition. 
Another comment stated that the requirements for a sufficient showing 
to institute a proceeding seem onerous and that the more onerous burden 
should lie in proving derivation.
    Response: The Office agrees that the ultimate question of whether 
an invention was derived from the petitioner is decided only after a 
derivation proceeding is instituted and completed. Further, the Office 
has taken into account the statutory requirements and the burden on the 
parties. As amended, 35 U.S.C. 135(a) requires that the petition be 
supported by substantial evidence and that the petition and evidence 
demonstrate that the standards for instituting a derivation proceeding 
are met. The rule is consistent with the statute and the Office's goal 
of avoiding institution of costly proceedings that lack merit.
    Comment 21: Several comments suggested deleting the final sentence 
of proposed Sec.  42.405(c), because corroboration should only be 
required after initiation of a derivation proceeding and an opportunity 
for discovery. One comment suggested expanded discovery for 
derivations, since the alleged deriver is likely to have information 
unavailable to the petitioner.
    Response: The nature of derivation proceedings requires the Board 
to make credibility determinations based on the evidence presented. 
Requiring corroboration at the outset provides a greater likelihood 
that credible testimony is presented by the petitioner and is 
consistent with the Office's goal of avoiding institution of costly 
proceedings that lack merit. This is true even where testimony from 
someone other than the inventor is presented to support the allegation 
of derivation. Discovery prior to institution is not provided by the 
rules as it is the alleged inventor who conceived and communicated the 
conception of the invention to the alleged deriver and is in the best 
position to offer testimony or other evidence regarding the conception 
and communication. Further, it is well settled that an inventor's 
testimony must be corroborated.
    Comment 22: Several comments suggested that requiring the 
petitioner to offer a proposed claim interpretation is burdensome as 
the petitioner already has reason to provide claim interpretation where 
necessary to set forth a sufficient showing, especially as to claim 
terms at issue.

[[Page 56075]]

    Response: The Office believes that the petitioner's claim 
construction requirement is not unduly burdensome and that it will 
improve the efficiency of the proceeding. In particular, the 
petitioner's claim construction will help to provide sufficient notice 
to the respondent regarding what the petitioner believes to have been 
derived, and will assist the Board in analyzing whether a prima facie 
showing of derivation has been made. During a proceeding, a claim of an 
application or unexpired patent will be given its broadest reasonable 
construction in light of the specification of the patent in which it 
appears. This means that the words of the claim will be given their 
plain meaning unless the plain meaning is inconsistent with the 
specification. In re Zletz, 893 F.2d 319, 321 (Fed. Cir. 1989). In the 
absence of a special definition in the specification, a claim term is 
presumed to take on its ordinary and customary meaning, a meaning that 
the term would have to a person of ordinary skill in the art. In re Am. 
Acad. of Sci. Tech Ctr., 367 F.3d 1359, 1364 (Fed. Cir. 2004). 
Therefore, petitioners are not required to define every claim term, but 
rather merely provide a statement that the claim terms are presumed to 
take on their ordinary and customary meaning, and point out any claim 
term that has a special meaning and the definition in the 
specification.
    Comment 23: One comment suggested that Sec.  42.405 should indicate 
that its requirements are in addition to those of proposed Sec. Sec.  
42.8 and 42.22 if that is the Office's intent.
    Response: The Office notes that proposed Sec.  42.405(b) expressly 
provides that ``[i]n addition to the requirements of Sec. Sec.  42.8 
and 42.22, the petition must: * * *'' Therefore, the Office assumes 
that the comment supports the proposed provision and adopts the 
language without any modification. As such, Sec.  42.405, as adopted in 
this final rule, expressly provides that the petitioner also must 
comply with Sec. Sec.  42.8 and 42.22. Sec.  42.405(b).
    Comment 24: One comment suggested that, because derivation requires 
a showing of earlier conception by the party alleging derivation, the 
rule should require the petition include at least one affidavit 
addressing conception, and corroboration of the conception.
    Response: Derivation requires both earlier conception by the party 
alleging derivation as well as communication of the conception. Thus, 
by requiring demonstration of derivation, the rule necessarily requires 
a showing of earlier conception as well as corroboration of that 
earlier conception. Sec.  42.405(c).
    Comment 25: Several comments expressed concern about the lack of a 
``count'' that defines the derived subject matter or a separate phase 
that allows for a time to define what is included as derived subject 
matter and time for dealing with other issues such as inventorship 
disputes where possible joint inventorship is an issue.
    Response: Derivation proceedings are distinct from interferences 
such that a ``count'' may lead to confusion. In a derivation 
proceeding, a petitioner must make a showing as to each of the 
respondent's claims that it believes is derived subject matter. Sec.  
42.405(b)(3)(i). Specifically, the petitioner must demonstrate that the 
respondent acquired knowledge of the claimed invention from the 
petitioner. Hence, the ``acquired knowledge,'' which the petitioner 
must define as part of its proof, determines the scope of subject 
matter that would have been anticipated or obvious from the acquired 
knowledge. Other issues, such as inventorship issues, can be raised by 
authorized motion. Sec.  42.20. The Board will set a schedule for the 
filing of any authorized motions. Sec.  42.25.
    Comment 26: Several comments asked for clarification as to a 
respondent's burden. One comment suggested that the Office should study 
the possibility of imposing a certain degree of burden of proof on the 
respondent as well as on the petitioner and should provide examples of 
what type of evidence is admissible. Another comment asked for examples 
of what would be sufficient rebuttal evidence under Sec.  42.405(c).
    Response: Under the AIA, the first party to file an application to 
an invention that is otherwise patentable is entitled to the patent. 35 
U.S.C. 102. A petitioner seeking to change the status quo by 
petitioning for a derivation proceeding appropriately is charged with 
the burden of proof. 35 U.S.C. 135(a), as amended. The showing must be 
sufficient such that the petitioner would prevail if a respondent did 
not provide any rebuttal of the showing. A respondent may submit 
rebuttal evidence in an opposition under Sec.  42.23. Sufficiency of 
rebuttal evidence will be considered and given appropriate weight on a 
case-by-case basis after institution of a proceeding.
    Comment 27: Several comments suggested that the phrase ``invention 
disclosed to the respondent'' is undefined. One comment also suggested 
that standing should be based on the ``claimed invention'' rather than 
a vague concept of the invention.
    Response: In view of the comments, Sec.  42.405(b)(2), as adopted 
in this final rule, provides ``a claimed invention'' rather than ``an 
invention.'' The AIA requires that the Board in a derivation proceeding 
determine whether an inventor named in the earlier application derived 
the claimed invention from an inventor named in the petitioner's 
application. 35 U.S.C. 135(a). The AIA also requires that a petitioner 
provide substantial evidence supporting its allegations of derivation. 
In instituting a derivation proceeding, the Board is to determine 
whether a petition meets standards for institution. Id. Consistent with 
the statute, the rules provide that substantial evidence of derivation 
include a showing that the invention in question was disclosed to the 
earlier filer, i.e., the respondent. See Sec.  42.405. For instance, 
Sec.  42.405(a)(2) requires that the petition must show that the 
petitioner's claim is the same or substantially the same as the 
invention disclosed to the respondent, and that the petitioner's claim 
is the same or substantially the same as the respondent's claimed 
invention.
    Comment 28: Several comments expressed concern about the 
corroboration requirement. One comment suggested that the corroboration 
requirement for the showing of communication is an outdated requirement 
in a digital age where verification of the authenticity of an 
electronic communication can be proven by other means than submission 
of a statement of a purportedly corroborating witness. Another comment 
asked for examples of sufficient corroboration.
    Response: The rule does not limit the form that corroboration must 
take. In the instance where an inventor has testified that a 
communication has occurred, it may be appropriate to corroborate the 
testimony with proof of an electronic communication. The Board expects 
to consider each situation on a case-by-case basis and to use a ``rule 
of reason'' in determining whether corroboration is sufficient. For 
example, communications with the respondent or with the Office, both of 
which are independent determination of authenticity.
    Comment 29: One comment asked for clarification of whether one 
affidavit addressing communication will be enough to be considered 
``substantial evidence'' of derivation, or whether something additional 
will be required, whether corroboration of communication also must be 
shown via an affidavit, and whether evidence of a written communication 
is required.
    Response: Under Sec.  42.405(c), a derivation showing is not 
sufficient unless it is supported by substantial evidence, including at 
least one affidavit

[[Page 56076]]

addressing communication of the derived invention and lack of 
authorization that, if unrebutted, would support a determination of 
derivation. Whether a petition makes a sufficient showing of derivation 
will be decided on a case-by-case basis. The submission of one 
affidavit addressing the communication and the lack of authorization is 
a minimum requirement but is not a guarantee that a proceeding will be 
instituted. The Board will look at the substance and credibility of all 
of the evidence submitted in determining whether to institute a 
proceeding. The rules do not require that corroboration be in the form 
of an affidavit or written communication. The Board expects to apply a 
``rule of reason'' when accessing sufficiency of corroboration.
    Comment 30: Several comments suggested that a petitioner should not 
be required to have patentable subject matter in order for a proceeding 
to be instituted. One noted that various circumstances could make a 
claim unpatentable to the petitioner, yet patentable to others, such as 
intervening prior art. Thus, this requirement is contrary to the basic 
reason for derivations. One comment suggested that proposed Sec.  
42.408 should be revised to provide that the Office may act on a 
petition if either party has an allowable claim to the subject matter 
at issue or at either or both parties' request, and that a petitioner 
should be required to update the status of the claims after notice that 
the Office intends to consider the petition.
    Response: Prior to instituting a proceeding that is both costly and 
time-consuming to the parties and the Office, a determination will be 
made to ensure that each party is claiming subject matter that is 
actually patentable but for the potential derivation issue. While 
ordinarily a derivation will not be instituted when none of 
petitioner's claims are in condition for allowance, the rule does not 
preclude institution in such a situation, and each situation will be 
evaluated on its particular facts. See 35 U.S.C. 135(a), as amended.
    Comment 31: One comment suggested that proposed Sec.  42.405(a)(2) 
should be deleted, since requiring a showing that petitioner has at 
least one claim that is the same or substantially the same as 
respondent's invention is contrary to the AIA and 35 U.S.C. 135, as 
amended. Specifically, neither the AIA nor 35 U.S.C. 135 impose any 
limitations as to the claims in the petitioner's application. In 
contrast, 35 U.S.C. 291(a) states that ``[t]he owner of a patent may 
have relief by civil action against the owner of another patent that 
claims the same invention.'' More specifically, the comment recommended 
that the Office should not impose a requirement for claiming the same 
invention in the situation in which Congress expressly did not do so.
    Response: As amended, 35 U.S.C. 135(b) requires the Director to 
prescribe regulations setting forth standards for the conduct of 
derivation proceedings, including requiring parties to provide 
sufficient evidence to prove and rebut a claim of derivation. Further, 
35 U.S.C. 135(a), as amended, provides that a petition to institute a 
derivation proceeding may be filed only within the one-year period 
beginning on the date of the first publication of a claim to an 
invention that is the same or substantially the same as the allegedly 
derived invention. Section 42.405(a)(2) applies the same standard as 
set forth in 35 U.S.C. 135(a): ``the same or substantially the same.'' 
A petitioner is not required to claim the same invention, since it may 
have a claim that is substantially the same as the respondent's claimed 
invention. As discussed in the preamble, Sec.  42.405(a)(2) also 
ensures that the petitioner has taken steps to obtain patent protection 
for the same or substantially same invention, thus promoting the useful 
arts. Therefore, Sec.  42.405(a)(2) is consistent with 35 U.S.C. 135, 
as amended.
    Comment 32: One comment suggested that the Office should not 
require the petitioner to have at least one claim that is the same or 
substantially the same as the respondent's claimed invention because 
this requirement may unfairly deny a petitioner the remedy of 
cancellation or refusal of a respondent's claim.
    Response: As amended, 35 U.S.C. 135(a) requires that a party must 
be an applicant for a patent as a prerequisite for filing a petition 
for a derivation proceeding. Under Sec.  42.405(a)(2), a petitioner 
must show that it has a claim that is both: (1) the same or 
substantially the same as the respondent's claim; and (2) the same or 
substantially the same as the invention that was actually disclosed to 
the respondent. This rule is therefore consistent with the statutory 
requirement that a petitioner be an applicant for patent.
    Comment 33: One comment stated that the proposed rules fail to 
address various complexities, such as whether the petitioner is 
required to amend its claims to match the respondent's claims in order 
to continue the proceeding in the situation where a respondent amends 
its claim to avoid derivation issues.
    Response: Whenever the Board determines that a petition 
demonstrates that the standards for institution of a derivation 
proceeding (e.g., the requirements set forth in Sec.  42.405) are met, 
the Board may institute a derivation proceeding. Each situation will be 
evaluated on its particular facts. The requirements of Sec. Sec.  
42.405(a) and (b) must be met even where a respondent is an applicant 
and is in a position to amend the claims.
    Comment 34: One comment requested clarification as to whether a 
lack of authorization must also be corroborated.
    Response: Section 42.405(c) requires an affidavit addressing the 
lack of authorization. While the rule does not specifically require 
corroboration of the testimony regarding a lack of authorization, 
testimony is more credible when it is corroborated. Moreover, inventor 
testimony must be corroborated by independent evidence. The Board plans 
to use a ``rule of reason'' standard for evaluating whether 
corroboration of such testimony is sufficient.

Service of Petition (Sec.  42.406)

    Comment 35: One comment suggested that the rule should allow for 
deferred service of supporting evidence due to trade secret material 
that may be included.
    Response: The rules provide for the protection of confidential 
information such as trade secrets. In particular, Sec.  42.55 allows a 
petitioner filing confidential information with a petition to file a 
concurrent motion to seal with a proposed protective order as to the 
confidential information. The petitioner may serve the confidential 
information under seal. The patent owner may only access the sealed 
confidential information prior to the institution of the trial by 
agreeing to the terms of the proposed protective order or obtaining 
relief from the Board. In addition, after denial of a petition to 
institute a trial or after final judgment in a trial, a party may file 
a motion to expunge confidential information from the record. Sec.  
42.56.
    Comment 36: One comment requested clarification regarding the 
circumstances under which a petitioner will be deemed to have not been 
able to have effected actual service and suggests service through 
Express Mail or by means at least as fast and reliable, or by party 
agreement through facsimile or electronically. The comment also 
suggested that proposed Sec.  42.406 be rewritten as follows: ``(a) The 
petition and supporting evidence must be served at the correspondence 
address of record for the earlier application or subject

[[Page 56077]]

patent. The petitioner may additionally serve the petition and 
supporting evidence on the respondent at any other address known to the 
petitioner as likely to effect service. Service must be made in 
accordance with Sec.  42.6(e)(4) in a manner that provides for 
confirmation of delivery. (b) If the petitioner cannot confirm delivery 
at the correspondence address of record for the subject application or 
patent, the petitioner must immediately contact the Board to discuss 
alternate modes of service.'' (Emphasis deleted.)
    Response: The comment has been adopted. Section 42.406, as adopted 
in this final rule, expressly provides that, upon agreement of the 
parties, service may be made electronically, and service may be made by 
EXPRESS MAIL[supreg] or by means at least as fast and reliable as 
EXPRESS MAIL[supreg]. Further, Sec.  42.406, as adopted in this final 
rule, does not include the requirement for contacting the Board when 
the petitioner cannot effect service.

Filing Date (Sec.  42.407)

    Comment 37: Several comments suggested that a petitioner be allowed 
time to cure an incomplete petition. One comment suggested allowing the 
petitioner one month to complete an incomplete request if the petition 
was filed at least two months before the statutory deadline. Another 
comment suggested that the period for correction be changed to the 
later of one month from the notice of incomplete request or the 
expiration of the statutory deadline. Another comment further suggested 
that the proposed rule should be modified to provide that if a petition 
affords notice sufficient to identify the application with which a 
derivation proceeding is sought and sufficient to identify the 
petitioner's application, the petition be accorded a filing date which 
can be preserved by completing the remaining requirements within one 
month after notice of the defects and upon payment of a surcharge. One 
comment suggested a petitioner be given two months from the notice of 
an incomplete request to cure, even if the statutory deadline would not 
be met. One comment suggested that the language of proposed Sec.  
42.407 should be clarified to provide that a filing date will be 
accorded a petition for a derivation proceeding provided that all the 
elements of Sec.  42.407 (and Sec.  42.405) are present in the 
petition.
    Response: The Office may not waive the one-year filing requirement 
for a derivation petition that is set in 35 U.S.C. 135(a), as amended. 
The Board generally will accord a filing date and accept minor 
deficiencies that do not impact the Board's ability to determine 
whether to institute a derivation proceeding or the respondent's 
ability to file an opposition. It is important to note that petitioners 
should make every effort to complete their petitions accurately. While 
the Board may accept minor omissions or mistakes, certain omissions or 
mistakes may nonetheless impact the Board's determination under Sec.  
42.405(c).
    Comment 38: One comment suggested that the rule refers to an 
incomplete ``request'' in some places but refers to an incomplete 
``petition'' in other places and that the word ``petition'' should be 
used throughout.
    Response: This comment has been adopted. Specifically, Sec.  
42.407(b), as adopted in this final rule, uses the term incomplete 
petition rather than incomplete request.
    Comment 39: One comment asked for clarification as to whether the 
Office will mail a Notice indicating that a petition meets the 
statutory requirements and how long it would take for such a notice to 
be mailed.
    Response: The Board plans to process the petitions and accord the 
filing date as soon as practical. A notice will be provided to the 
petitioner as quickly as resources allow, indicating whether a filing 
date has been accorded.

Institution of Derivation Proceeding (Sec.  42.408)

    Comment 40: One comment suggested that the rule include a provision 
for routine discovery to include cross-examination of inventors, since 
the inventors' oaths or declarations can be considered to be affidavit 
testimony.
    Response: The Board does not anticipate allowing for the deposition 
of inventors as routine discovery unless an affidavit of an inventor is 
relied upon by a party. Sec.  42.51(b)(1). When a party wishes to 
obtain the testimony of an inventor and the parties cannot agree 
amongst themselves to such discovery, the party requesting such 
discovery may seek the relief by authorized motion. Sec. Sec.  42.20(a) 
and 42.51(b)(2).
    Comment 41: One comment suggested that the rules should include an 
option that permits a petitioner to withdraw the petition or to 
withdraw from the derivation proceeding.
    Response: A party may file a request for adverse judgment under 
Sec.  42.73(b). It is expected that a request to terminate made by both 
parties would be granted, unless the request is contrary to the 
evidence of record. 35 U.S.C. 135(e). Under Sec.  42.72, the Board may 
terminate a trial without rendering judgment where appropriate.
    Comment 42: One comment asked whether there is a requirement that 
``the suggestion could not have been made in the original petition,'' 
and if not, whether the Office foresees any ``legitimate'' excuses for 
a petitioner who is aware of patent or application to fail to include 
it in an original petition.
    Response: Under Sec.  42.408(b), a petitioner may suggest the 
addition of a patent or application to the derivation proceeding, but 
must explain why the suggestion could not have been made in the 
original petition.

Settlement Agreement (Sec.  42.409)

    Comment 43: One comment stated that Sec.  42.74(c), which applies 
to Sec.  42.409, appears to give undue access to a settlement party's 
business confidential information. The comment further noted that the 
rule does not appear to provide an opportunity to notify the parties to 
the settlement agreement of the request to make available or 
contemplate a public redacted version of the settlement, and it does 
not address what is required of ``a showing of good cause.''
    Response: As amended, 35 U.S.C. 135(e) requires a settlement 
agreement or understanding be treated as business confidential 
information and be kept separate from the file of the involved patents 
or applications. Section 42.74 is consistent with the statutory 
requirements. Whether good cause has been shown will depend upon the 
particular facts of the request. However, based on the experience of 
the Board, it is not expected that such requests will be frequent and 
that the grant of any such request would be a rare occurrence.

Public Availability of Board Records (Sec.  42.412)

    Comment 44: One comment suggested merging Sec.  42.412 with Sec.  
42.14, because it is unclear whether Sec.  42.412 is intended to apply 
to derivation proceedings alone or to Board decisions and records in 
general.
    Response: Both Sec. Sec.  42.14 and 42.412 apply to derivation 
proceedings. Section 42.412 is specific to derivation proceedings and 
addresses situations particular to having an application involved in 
the proceeding. For example, the rule specifies that the record of a 
Board proceeding is available to the public, unless a patent 
application not otherwise available to the public is involved.
    Comment 45: One comment stated that Sec.  42.412(b)(1) does not 
give any consideration to the possibility that a motion or portions of 
the record may contain business confidential

[[Page 56078]]

information, and suggested the Office should consider adding a 
provision like Sec.  42.74(c) (``Request to keep separate'') and, in 
addition, or alternatively, provide the disclosing party an opportunity 
to redact business confidential information prior to disclosure.
    Response: The rules provide for the protection of confidential 
information such as trade secrets. In particular, Sec.  42.55 allows a 
petitioner filing confidential information with a petition to file, 
concurrent with the filing of the petition, a motion to seal with a 
proposed protective order as to the confidential information. The 
petitioner may serve the confidential information under seal. In 
addition, after denial of a petition to institute a trial or after 
final judgment in a trial, a party may file a motion to expunge 
confidential information from the record. Sec.  42.56.
    Comment 46: One comment asked if the Office will provide public 
notice of a finding of derivation in the involved patent/patent 
application and in other patents/applications that are either (i) 
related by priority, or (ii) directed to the derived subject matter.
    Response: A final decision will be entered in the file of any 
application or patent involved in the proceeding. Where the decision is 
adverse to any claims in an application, the Office will finally refuse 
those claims. Where the decision is adverse to the claims of a patent, 
the effected claims will be cancelled and notice of said cancellation 
shall be endorsed on copies of the patent distributed after such 
cancellation. 35 U.S.C. 135(d).

Correction of Inventorship

    Comment 47: Several comments suggested that the rules should 
specify the relief that may be requested and granted in an instituted 
derivation proceeding. In particular, one of the comments recommended 
the following to be included in the rules: (1) Correcting the 
inventorship of the earlier-filed application by adding the name of an 
inventor of the later-filed application; (2) correcting the 
inventorship of the earlier-filed application by removing or changing a 
named inventor; and (3) permitting the petitioner to claim the benefit 
under 35 U.S.C. 120 to the earlier-filed application.
    Response: The comments have been adopted to the extent that 
Sec. Sec.  1.48 and 1.324 have been revised to provide for correction 
of inventorship in a contested case before the Board. In particular, 
Sec.  1.48(i) provides that, in a contested case, a request for 
correction of inventorship in an application must be in the form of a 
motion under Sec.  42.22, and the motion must also comply with the 
requirements of Sec.  1.48(a). Similarly, Sec.  1.324(d) provides that, 
in a contested case, a request for correction of inventorship in a 
patent must be in the form of a motion under Sec.  42.22, and the 
motion must also comply with the requirements of Sec.  1.324. As to 
claiming the benefit of an earlier-filed application, a party may file 
a motion to amend under Sec.  42.22, but such a motion must also comply 
with the requirements of Sec.  1.78.
    Comment 48: One comment sought clarification on the procedure for 
correcting inventorship in a derivation proceeding, and on the 
circumstances where the Board will exercise its authority to correct 
the naming of the inventor in the application or patent at issue.
    Response: The procedure for an applicant or patent owner to file a 
request for correction of inventorship is set forth in Sec. Sec.  
1.48(i), 1.324(d), and 42.22. Under 35 U.S.C. 135(b), as amended, the 
Board will determine in an instituted derivation proceeding whether an 
inventor named in the earlier application derived the claimed invention 
from an inventor named in the petitioner's application. When making 
this determination, if the Board finds the inventorship to be incorrect 
in an involved application or patent, the Board may correct the 
inventorship in such an application or patent depending on the facts of 
the particular case, such as whether there is an agreement of the 
parties as to the correct inventors of the claimed invention in 
dispute.
    Comment 49: One comment suggested that the Office should accept the 
parties' determinations on the inventorship of the involved 
applications as conclusive unless it has reasons to believe that the 
parties' determinations are incorrect.
    Response: The Office may accept the parties' determinations 
depending on the particular facts of each case, such as whether the 
records in the proceeding are consistent with the parties' 
determinations. See also 35 U.S.C. 135(e).
    Comment 50: One comment suggested that, in the situation where the 
parties agree among themselves as to the inventorship of the involved 
claims, they must inform the Office of the correct inventorship of each 
surviving involved claim, not simply the correct inventorship of each 
surviving involved application or patent. The comment further suggested 
that if the Board determines the inventorship of the involved claims, 
its decision will recite the correct inventorship of each surviving 
involved claim, not simply the correct inventorship of each surviving 
involved application or patent.
    Response: The Board may require such information or provide such 
information in its decision depending on the particular facts of each 
case, such as whether the agreement or determination is consistent with 
the evidence on record.
    Comment 51: One comment suggested that, if the parties agree among 
themselves as to the inventorship of the involved claims, they should 
not be required to submit evidence supporting their determinations.
    Response: The Board may require evidence of the correct 
inventorship of the involved claims depending on the particular facts 
of the case, such as whether the agreement is inconsistent with the 
evidence or record.
    Comment 52: One comment suggested that the Office should provide 
that each party to a derivation proceeding may amend the inventorship 
named in its involved application or patent.
    Response: The Office agrees that a party in a derivation proceeding 
may file a motion to correct the inventorship of its involved 
application or patent. Sec. Sec.  1.48, 1.324, and 42.22. Any request 
to correct the inventorship of an application or patent accompanying 
such a motion must also comply with the appropriate requirements in 
part 1 of the CFR (e.g., Sec.  1.48).

Deferring Action on a Derivation Petition

    Comment 53: One comment requested clarification on the statement in 
the preamble that a derivation is unlikely to be instituted if the 
petitioner's claim is not otherwise in condition for allowance, and 
suggested that the Office should allow an applicant to file a petition 
for derivation before the statutory deadline and then hold such a 
petition in abeyance until the petitioner's claim is otherwise in 
condition for allowance.
    Response: At the time of filing a petition, the petitioner's 
application is not required to be otherwise in condition for allowance. 
The statement in the preamble is directed to when the Office will 
institute a derivation proceeding, as opposed to when an applicant is 
required to file the petition. The statement is consistent with 35 
U.S.C. 135(a), as amended, that provides that whenever the Office 
determines that a petition demonstrates that the standards for 
instituting a derivation proceeding are met, the Office may institute a 
derivation proceeding. Thus, an applicant may file a derivation 
petition that complies with the statutory

[[Page 56079]]

and rule requirements in an application that is not otherwise in 
condition for allowance.
    Comment 54: One comment recommended that, in normal situations, the 
Office should not defer action on petitions for derivation. The comment 
also suggested that the rules should set forth expressly the rare 
circumstances where the Board would defer action on a petition for 
derivation.
    Response: As provided by 35 U.S.C. 135(c), as amended, the Board 
may defer action on a petition for derivation up to three months after 
a patent has been issued with a claim that is directed to the subject 
matter in dispute. Other circumstances may similarly warrant deferring 
action on the petition; the Board will consider the particular facts of 
each case in determining whether to defer action on a petition for 
derivation. The Office does not believe it is necessary to set forth 
expressly in the rules all of the circumstances where the Board will 
defer action on a petition for derivation to limit the Board's 
discretion and flexibility as provided in 35 U.S.C. 135(c), as amended. 
As discussed previously, a derivation is unlikely to be instituted if 
the petitioner's claim is not otherwise in condition for allowance.

Other Suggestions

    Comment 55: One comment suggested that the Board has authority to 
enter a ``split decision.'' The comment provided the following example: 
the Board may determine that the inventors named in the first involved 
application are correct as to one or more claims in the first 
application and the inventors named in the second involved application 
are correct as to one or more claims in the second application.
    Response: The Office agrees that the Board has the authority under 
the AIA to enter a split decision in appropriate situations. As 
amended, 35 U.S.C. 135(b) provides that the Board shall determine, in 
an instituted derivation proceeding, whether an inventor named in the 
earlier application derived the claimed invention from an inventor 
named in the petitioner's application and, without authorization, filed 
the earlier application claiming that invention. Further, the statute 
provides that in appropriate circumstances, the Board may correct the 
naming of the inventor in any application or patent at issue. Thus, the 
statutory provisions do not preclude the Board from rendering a 
decision that determines the correct inventorship as to the claims in 
an involved application or patent.
    Comment 56: One comment noted that if a party to a derivation 
proceeding wishes to establish unpatentability of its opponent's claims 
based on a ground other than derivation, it must file a petition to 
institute a review as authorized by the AIA.
    Response: The Office agrees that if a party wishes to challenge a 
patent claim on a ground other than derivation, the party may file a 
petition to institute an inter partes review, post-grant review, or 
covered business method patent review, where appropriate.
    Comment 57: One comment suggested that the rules should facilitate 
having the same Board panel handle various proceedings that involve the 
same matter.
    Response: The AIA and rules provide that the Board may consolidate 
multiple proceedings involving the same patent before the Office. See, 
e.g., 35 U.S.C. 315(d), as amended, and Sec.  42.122. Therefore, the 
Board may take into account whether there are multiple proceedings 
involving the same patent or matter.
    Comment 58: One comment suggested that the Office should consider 
italicizing or capitalizing defined terms in the rules to alert 
practitioners that the terms have been separately defined.
    Response: The defined terms are italicized in Sec. Sec.  42.2 and 
42.401, and the terms are used in other rules consistent with the 
definitions. Therefore, the Office has not adopted the suggestion to 
italicize or capitalize defined terms throughout the rules.
    Comment 59: One comment suggested that the issue of whether the 
petitioner's claim is entitled to the benefit of the filing date of any 
priority application should be decided in the derivation proceeding.
    Response: In general, the Board will resolve any issue related to a 
priority claim during a derivation proceeding if it is necessary for 
the Board to determine whether an inventor named in the earlier 
application derived the claimed invention from an inventor named in the 
petitioner's application and, without authorization, filed the earlier 
application claiming that invention. The examining corps, however, is 
not precluded from determining issues related to a priority claim when 
the application is under its jurisdiction before a derivation 
proceeding has been instituted involving the application, or after the 
derivation proceeding has been terminated.
    Comment 60: One comment recommended that the rules should set forth 
the standard that ``the subject matter defined by the target claim 
would have been either anticipated by or obvious over the subject 
matter defined by the targeting claim.'' Another comment requested 
clarification on whether the Office intends to use what is known as an 
``obviousness-type'' standard for conducting the derivation proceeding.
    Response: The Office agrees with the comments that the rule should 
set forth the standard for instituting a derivation proceeding. Section 
42.401, as adopted in this final rule, defines ``same or substantially 
the same invention'' as patentably indistinct. In addition, the rule 
provides that the petition must, for each of the respondent's claims to 
the derived invention, show why the claimed invention is the same or 
substantially the same as the invention disclosed to the respondent. 
Sec.  42.405(b).
    Comment 61: One comment suggested the rules should provide that any 
involved application containing claims with inventorship that was 
determined to be correct should be returned to the examining corps for 
further appropriate action.
    Response: The procedure for returning an application to the 
examining corps after the termination of a derivation proceeding will 
be similar to the existing process for ex parte appeals and contested 
cases.
    Comment 62: One comment recommended that a patent owner who wishes 
to request a derivation proceeding must file a reissue application 
within the time period allowed by statute.
    Response: Consistent with 35 U.S.C. 135(a), as amended, Sec.  
42.403 provides that an applicant for patent may file a petition to 
institute a derivation proceeding in the Office. Further, as provided 
in Sec.  42.401, the definition of ``applicant'' includes a reissue 
applicant. A patent owner, thus, may file a petition to institute a 
derivation proceeding in an application for reissue of its patent. 
Alternatively, a patent owner may also seek relief in other method, 
such as filing a civil action under 35 U.S.C. 291 or a petition for a 
derivation proceeding in a continuing application claiming the benefit 
of the filing date of the application that resulted in the patent.
    Comment 63: One comment suggested that the Office should consider 
the following hypothetical situation: (1) True inventor A invents, and 
then discloses to B; (2) B (e.g., a magazine reporter) publishes a 
description of A's invention, but does not file a patent application; 
(3) C reads B's publication, and files a patent application; (4) A then 
files a patent application, after C's filing date, but less than one 
year after A's disclosure to B. The comment further suggested that A 
should be permitted to

[[Page 56080]]

compel discovery from nonparty B and party C to establish the flow of 
information from A to B to C, thereby to show derivation.
    Response: Based on the fact pattern in the comment, the publication 
by B of A's invention is prior art to Application C. Therefore, the 
claims in Application C would be subject to a rejection based on B's 
publication as anticipated or obvious. Since Application C is not 
allowable over the publication by B, discovery of B to establish the 
flow of information would not appear to be necessary.
    Comment 64: One comment requested clarification on the situation 
where a deriver files an application subsequent to the true inventor. 
In particular, the comment asked whether the Office would reject the 
deriver's claim based on the true inventor's earlier-filed application.
    Response: For the situation described in the comment, the 
publication of the true inventor's application will be prior art 
against the deriver's application. If the true inventor's application 
is not published, the Office may allow the true inventor's earlier-
filed application in the appropriate situation, and then reject the 
claims of the deriver based on the patent of the true inventor's 
earlier-filed application.
    Comment 65: One comment requested clarification on whether an 
applicant may overcome a rejection based on an earlier-filed 
application by filing an affidavit showing derivation without filing a 
petition to institute a derivation proceeding.
    Response: Where a patent or patent application publication merely 
discloses, rather than claims, the subject matter used in making a 
rejection, it is appropriate to file an affidavit consistent with 35 
U.S.C. 102(b), as amended by the AIA. See proposed Sec.  1.130, Changes 
to Implement the First Inventor to File Provisions of the Leahy-Smith 
America Invents Act (Notice of proposed rulemaking) (RIN 0651-AC77).
    Comment 66: One comment requested clarification on how the Office 
intends to treat information regarding derivation in the light of the 
fact that 35 U.S.C. 102, as amended by the AIA, does not include the 
provision set forth in 35 U.S.C. 102(f), in effect before the enactment 
of the AIA.
    Response: The Office will apply the relevant statutory provisions 
(e.g., 35 U.S.C. 101) and case law to determine whether the evidence 
regarding derivation is sufficient to demonstrate that the named 
inventor is not the true inventor, and make a rejection if appropriate.

Rulemaking Considerations

    The rulemaking considerations for the series of final rules for 
implementing the administrative patent trials as required by the AIA 
have been considered together and are based upon the same assumptions, 
except where differences between the regulations and proceedings that 
they implement require additional or different information. Notably, 
this final rule is directed to specific procedures for derivation 
proceedings.

A. Administrative Procedure Act (APA)

    This final rule revises the rules of practice concerning the 
procedure for requesting a derivation, and the trial process after 
institution of such a proceeding. The changes being adopted in this 
notice do not change the substantive criteria of patentability. These 
changes involve rules of agency practice, standards, and procedure and/
or interpretive rules. See Bachow Commc'ns Inc. v. F.C.C., 237 F.3d 
683, 690 (D.C. Cir. 2001) (rules governing an application process are 
procedural under the Administrative Procedure Act); Inova Alexandria 
Hosp. v. Shalala, 244 F.3d 342, 350 (4th Cir. 2001) (rules for handling 
appeals were procedural where they did not change the substantive 
standard for reviewing claims); Nat'l Org. of Veterans' Advocates v. 
Sec'y of Veterans Affairs, 260 F.3d 1365, 1375 (Fed. Cir. 2001) (rule 
that clarifies interpretation of a statute is interpretive); JEM Broad. 
Co., Inc. v. F.C.C., 22 F.3d 320, 328 (D.C. Cir. 1994) (The rules are 
not legislative because they do not ``foreclose effective opportunity 
to make one's case on the merits''). Section 3(i) of the AIA requires 
the Director to prescribe regulations for implementing the new 
proceeding.
    Accordingly, prior notice and opportunity for public comment are 
not required pursuant to 5 U.S.C. 553(b) or (c) (or any other law). See 
Cooper Techs. Co. v. Dudas, 536 F.3d 1330, 1336-37 (Fed. Cir. 2008) 
(stating that 5 U.S.C. 553, and thus 35 U.S.C. 2(b)(2)(B), does not 
require notice and comment rulemaking for ``interpretative rules, 
general statements of policy, or rules of agency organization, 
procedure, or practice'') (quoting 5 U.S.C. 553(b)(A)). The Office, 
however, published these proposed changes for comment as it sought the 
benefit of the public's views on the Office's proposed implementation 
of these provisions of the AIA. See Changes to Implement Derivation 
Proceedings, 77 FR 7028 (Feb. 10, 2012) (notice of proposed 
rulemaking).
    The Office received one written submission of comments from the 
public regarding the Administrative Procedure Act. Each component of 
that comment directed to the APA is addressed below.
    Comment 67: One comment suggested that almost all of the proposed 
regulations were legislative and not interpretive rules. That leads the 
USPTO to omit required steps in the rulemaking process.
    Response: At the outset, it should be noted that the Office did not 
omit any steps in the rulemaking process. Even though not legally 
required, the Office published notices of proposed rulemaking in the 
Federal Register, solicited public comment, and fully considered and 
responded to comments received. Although the Office sought the benefit 
of public comment, these rules are procedural and/or interpretive. 
Stevens v. Tamai, 366 F3d. 1325, 1333-34 (Fed. Cir. 2004) (upholding 
the Office's rules governing the procedure in patent interferences). 
The final written decisions on patentability which conclude the 
proceedings will not be impacted by the regulations, adopted in this 
final rule, as the decisions will be based on statutory patentability 
requirements, e.g., 35 U.S.C. 101 and 102.
    Comment 68: One comment suggested that, even if the rules are 
merely procedural, reliance on Cooper Technologies. Co. v. Dudas was 
not appropriate and therefore notice and comment was required.
    Response: These rules are consistent with the AIA requirements to 
prescribe regulations to set forth standards and procedures. The rules 
are procedural and/or interpretive. Stevens v. Tamai, 366 F.3d at 1333-
34 (upholding the Office's rules governing the procedure in patent 
interferences). The Office nevertheless published notices of proposed 
rulemaking in the Federal Register, solicited public comment, and fully 
considered and responded to comments received. In the notices of 
proposed rulemaking and this final rule, the Office cites Cooper 
Technologies. Co v. Dudas, 536 F.3d 1330, 1336-37 (Fed. Cir. 2008), for 
the proposition that 5 U.S.C. 553, and thus 35 U.S.C. 2(b)(2)(B), does 
not require notice and comment rulemaking for ``interpretive rules, 
general statement of policy, or rules of agency organization, procedure 
or practice.'' The Office's reliance on Cooper Technologies is 
appropriate and remains an accurate statement of administrative law. In 
any event, the Office sought the benefit of public comment on the 
proposed rules and has

[[Page 56081]]

fully considered and responded to the comments received.

B. Final Regulatory Flexibility Act Analysis

    The Office estimates that 50 petitions for seeking institution of a 
derivation (derivation petitions) will be filed in fiscal year 2013. In 
fiscal year 2014, it is estimated that 50 derivation petitions will be 
filed. In fiscal year 2015, it is estimated that 50 derivation 
petitions will be filed.
    The Office expects the number of newly declared interferences to 
decrease as some parties file inter partes review petitions rather than 
file reissue applications of their own earlier filed patents. Parties 
filing such reissue applications may seek a review of another party's 
issued patent in an interference proceeding. The Office estimates that 
no more than 50 derivation petitions will be filed annually during FY 
2013-2015.
    The Office has reviewed the percentage of applications and patents 
for which an interference was declared in fiscal year 2010. 
Applications and patents known to be owned by a small entity represent 
19.62% of applications and patents for which interference was declared 
in FY 2010. Based on the assumption that the same percentage of 
applications and patents owned by small entities will be involved in a 
derivation proceeding, 20 small entity-owned applications or patents 
(50 multiplied by 0.1962, and then multiplied by two (one for the 
petitioner plus one for the alleged deriver since either the petitioner 
and alleged deriver may be owned by a small entity)) would be affected 
by derivation proceedings annually during fiscal years 2013-2015.
1. Description of the Reasons That Action by the Office Is Being 
Considered
    The Office is revising the rules of practice to implement 
derivation provisions of the AIA, which take effect March 16, 2013. 
Pub. L. 112-29, Sec.  3(n), 125 Stat. 284, 293 (2011). The AIA requires 
the Office to issue regulations to implement the new derivation 
proceedings.
2. Statement of the Objectives of, and Legal Basis for, the Final Rules
    The final rule is part of a series of rules that implement the new 
administrative trials authorized by the AIA. Specifically, this final 
rule adopts regulations setting forth standards and procedures for 
conducting derivation proceedings, including requiring parties to 
provide sufficient evidence to prove and rebut a claim of derivation.
3. Statement of Significant Issues Raised by the Public Comments in 
Response to the IRFA and the Office's Response to Such Issues
    The Office published an IRFA analysis to consider the economic 
impact of the proposed rules on small entities. See Changes to 
Implement Derivation Proceedings, 77 FR 7028, 7032-36 (Feb. 10, 2012). 
The Office received one written submission of comments from the public 
concerning the Regulatory Flexibility Act. Each component of that 
submission directed to the Regulatory Flexibility Act is addressed 
below.
    Comment 69: One comment argued that non-office costs and burden 
should include the burden on small entity patent owners, petitioners, 
and licensees, as well as settlement burdens, disruption of businesses, 
or effects on investment, business formation, or employment. The 
comment further argued that prophylactic application steps (e.g., 
filing of reissue applications) were not considered and that the 
offsets for inter partes reexamination's elimination were not 
appropriate.
    Response: As explained in the notice of proposed rulemaking, the 
Office notes that inter partes reexamination is the appropriate 
baseline for estimating economic impacts, because the use or outcome of 
the prior reexamination process and the new review trial are largely 
the same. See OMB Circular A4, (e)(3). The Office estimated that the 
same number of patents would be subject to inter partes review as would 
have been subject to inter partes reexamination. The comment did not 
argue that this estimate was unreasonable and did not provide an 
alternative estimate. Considering the similarities in the grounds of 
review and the number of patents subject to the proceedings, the Office 
anticipates that the existing inter partes reexamination process, if 
not eliminated for new filings, would have had similar impacts on the 
economy as the new review proceedings, and therefore the impacts noted 
in the comment would simply replace existing analogous impacts and 
effects in inter partes reexamination. The comment argues that no 
offset for the replaced process should be considered, although OMB 
guidance provides otherwise. See OMB Circular A4. Additionally, 
although the comment argues that the new proceedings may result in 
patent owners taking additional prophylactic measures that would have 
their own burdens for small businesses, any patent owner motivated by 
the regulations adopted in this final rule to take prophylactic 
application steps would similarly have been motivated to take those 
steps under the former inter partes reexamination regime. Thus, the 
burdens on small entity patent owners, petitioners, and licensees, as 
well as settlement burdens, disruption of businesses, or effects on 
investment, business formation, or employment that are caused by the 
final rules would have been similarly caused by the former inter partes 
reexamination proceedings as the same effects and impacts are caused by 
the two types of proceedings.
    Additionally, the Office's estimates of the burden on small 
entities are likely overstated. As noted in the notice of proposed 
rulemaking, the Office anticipates that the current significant overlap 
between district court litigation and inter partes reexamination may be 
reduced by improvement in the coordination between the two processes. 
See Rules of Practice for Trials Before the Patent Trial and Appeal 
Board and Judicial Review of Patent Trial and Appeal Board Decisions, 
77 FR at 6903. Similarly, it is anticipated that the public burden will 
be reduced because the longer duration of the inter partes 
reexamination process will be reduced owing to the anticipated shorter 
duration of the new procedure. Id.
    Comment 70: One comment indicated that the underlying data for the 
98.7 hours of judge time for an inter partes review proceeding was not 
provided.
    Response: Based on the Office's experience involving similar 
proceedings, the Office estimates that, on average, an inter partes 
review proceeding will require 35 hours of judge time to make a 
decision on institution, 20 hours of judge time to prepare for and 
conduct hearings, 60 hours of judge time to prepare and issue a final 
decision, and 15 hours of judge time to prepare and issue miscellaneous 
interlocutory decisions. It is also estimated that 2.5% of proceedings 
will settle before a decision of whether to institute is made, and 
another 2.5% of proceedings will terminate by patent owners filing a 
default judgment motion after institution. The Office estimates that 
10% of proceedings will not be instituted and another 20% of 
proceedings will settle after institution. In settled cases it is 
estimated that 50% of the anticipated motions will not be filed. It 
should be appreciated that cases that terminate prior to the need to 
render a decision on institution, that do request an oral hearing, or 
do not require a final decision because of an earlier termination, 
result in an average judge time per proceeding which is less than the 
time needed to perform all possible steps in a proceeding.

[[Page 56082]]

4. Description and Estimate of the Number of Affected Small Entities
    A. Size Standard and Description of Entities Affected. The Small 
Business Administration's (SBA) small business size standards 
applicable to most analyses conducted to comply with the Regulatory 
Flexibility Act are set forth in 13 CFR 121.201. These regulations 
generally define small businesses as those with fewer than a specified 
maximum number of employees or less than a specified level of annual 
receipts for the entity's industrial sector or North American Industry 
Classification System (NAICS) code. As provided by the Regulatory 
Flexibility Act, and after consultation with the Small Business 
Administration, the Office formally adopted an alternate size standard 
as the size standard for the purpose of conducting an analysis or 
making a certification under the Regulatory Flexibility Act for patent-
related regulations. See Business Size Standard for Purposes of United 
States Patent and Trademark Office Regulatory Flexibility Analysis for 
Patent-Related Regulations, 71 FR 67109, 67112 (Nov 20, 2006), 1313 
Off. Gaz. Pat. Office 60, 63 (Dec. 12, 2006). This alternate small 
business size standard is SBA's previously established size standard 
that identifies the criteria entities must meet to be entitled to pay 
reduced patent fees. See 13 CFR 121.802. If patent applicants identify 
themselves on a patent application as qualifying for reduced patent 
fees, the Office captures this data in the Patent Application Location 
and Monitoring (PALM) database system, which tracks information on each 
patent application submitted to the Office.
    Unlike the SBA small business size standards set forth in 13 CFR 
121.201, the size standard for USPTO is not industry-specific. 
Specifically, the Office's definition of small business concern for 
Regulatory Flexibility Act purposes is a business or other concern 
that: (1) meets the SBA's definition of a ``business concern or 
concern'' set forth in 13 CFR 121.105; and (2) meets the size standards 
set forth in 13 CFR 121.802 for the purpose of paying reduced patent 
fees, namely, an entity: (a) whose number of employees, including 
affiliates, does not exceed 500 persons; and (b) which has not 
assigned, granted, conveyed, or licensed (and is under no obligation to 
do so) any rights in the invention to any person who made it and could 
not be classified as an independent inventor, or to any concern which 
would not qualify as a non-profit organization or a small business 
concern under this definition. See Business Size Standard for Purposes 
of United States Patent and Trademark Office Regulatory Flexibility 
Analysis for Patent-Related Regulations, 71 FR at 67112 (Nov 20, 2006), 
1313 Off. Gaz. Pat. Office at 63 (Dec. 12, 2006).
    B. Overview of Estimates of Number of Entities Affected. The rules 
will apply to any small entity that either files a petition for 
derivation proceeding, or owns a patent application or patent subject 
to such review. As discussed above (and incorporated here), the Office 
anticipates that 50 petitions for derivation proceedings will be filed 
in fiscal year 2013. In fiscal year 2014, it is estimated that 50 
petitions for derivation proceedings will be filed. In fiscal year 
2015, it is estimated that 50 petitions for derivation proceedings will 
be filed.
    The Office has reviewed the percentage of applications and patents 
for which an interference was declared in fiscal year 2010. 
Applications and patents known to be owned by a small entity represent 
19.62% of applications and patents for which interference was declared 
in FY 2010. Based on the assumption that the same percentage of 
applications and patents owned by small entities will be involved in a 
derivation proceeding, 20 small entity-owned applications or patents 
would be affected by a derivation proceeding annually during fiscal 
years 2013-2015.
    The USPTO estimates that 2.5% of patent applicants or patent owners 
will file a request for adverse judgment prior to a decision to 
institute and that another 2.5% will file a request for adverse 
judgment or fail to participate after institution. Specifically, an 
estimated two patent applicants or patent owners will annually file a 
request for adverse judgment or fail to participate after institution 
in derivation. Based on the percentage of small entity-owned patent 
applications or patents that were the subject of an interference 
declared in FY 2010 (19.62%), it is estimated that one small entity 
will file such a request or fail to participate after institution in 
derivation proceedings annually.
    The Office predicts that it will institute ten derivation 
proceedings annually based on petitions seeking derivation filed in 
fiscal years 2013-2015. This estimate is based on the low number of 
interference proceedings declared, as well as the limited number of 
eligible applications.
    During fiscal year 2011, the Office issued 21 decisions following a 
request for reconsideration of a decision on appeal in inter partes 
reexamination. The average time from original decision to decision on 
reconsideration was 4.4 months. Thus, the decisions on reconsideration 
were based on original decisions issued from July 2010 until June 2011. 
During this time period, the Office mailed 63 decisions on appeals in 
inter partes reexamination. See BPAI Statistics--Receipts and 
Dispositions by Technology Center, available at https://www.uspto.gov/ip/boards/bpai/stats/receipts/index.jsp (monthly data). Based on the 
assumption that the same rate of reconsideration (21 divided by 63 or 
33.333%) will occur, the Office estimates that 13 requests for 
reconsideration (40 decisions not to institute times 33.333%) will be 
filed. Based on the percentage of small entity-owned patent 
applications or patents that were the subject of an interference 
declared in fiscal year 2010 (19.62%), it is estimated that five small 
entities (13 multiplied by 19.62% multiplied by two (for both parties)) 
will file a request for a reconsideration of a decision dismissing the 
petition for derivation annually during FY 2013-2015. Further, the 
Office estimates that it will issue six final written decisions for 
derivation proceedings. Applying the same 33.333% rate, the Office 
estimates two requests for reconsideration (six multiplied by 33.333%) 
will be filed annually based on the final written decisions. Therefore, 
the Office estimates an annual total of 15 (13 plus 2) requests for 
reconsideration.
    The Office reviewed motions, oppositions, and replies in a number 
of contested trial proceedings before the trial section of the Board. 
The review included determining whether the motion, opposition, and 
reply were directed to patentability grounds and non-priority non-
patentability grounds. This series of final rules adopts changes to 
permit parties to agree to certain changes from the default process 
between themselves without filing a motion with the Board. Based on the 
changes in the final rules, the estimate of the number of motions has 
been revised downward so that it is now anticipated that derivation 
proceedings will have an average of 20 motions, oppositions, and 
replies per trial after institution. Settlement is estimated to occur 
in 20% of instituted trials at various points of the trial. In trials 
that are settled, it is estimated that only 50% of the noted motions, 
oppositions, and replies would be filed. The Office envisions that most 
motions will be decided during an initial conference call or shortly 
thereafter.
    After a trial has been instituted but prior to a final written 
decision, parties to a review or derivation proceeding may request an 
oral hearing. It is anticipated that five requests for oral hearings 
will be filed annually during

[[Page 56083]]

FY 2013-2015 based on the number of requests for oral hearings in inter 
partes reexamination and the stated desirability for oral hearings 
during the legislative process. Based on the percentage of small 
entity-owned patent applications or patents that were the subject of an 
interference declared in FY 2010 (19.62%), it is estimated that two 
small entities (five multiplied by 19.62% multiplied by two) will file 
a request for oral hearing in derivation proceedings annually during 
fiscal years 2013-2015.
    Parties to a derivation proceeding may file requests to treat a 
settlement as business confidential, and requests for adverse judgment. 
A written request to make a settlement agreement available may also be 
filed. Parties to derivation proceedings may also file arbitration 
agreements and awards. Given the short time period set for conducting 
trials, it is anticipated that the alternative dispute resolution 
options will be infrequently used. The Office estimates that two 
requests to treat a settlement as business confidential; two requests 
for adverse judgment, default adverse judgment, or settlement notices; 
and two arbitration agreements and awards, will be filed annually based 
on petitions filed during fiscal years 2013-2015. The Office also 
estimates that two requests to make a settlement available will be 
filed annually in petitions filed during fiscal years 2013-2015. Based 
on the percentage of small entity-owned patent applications or patents 
that were the subject of an interference declared in fiscal year 2010 
(19.62%), it is estimated that one small entity (two multiplied by 
19.62% multiplied by two) will file a request to treat a settlement as 
business confidential, one small entity will file a request for adverse 
judgment, default adverse judgment notice, or settlement notice, and 
one small entity will file an arbitration agreement and award in the 
derivations instituted annually based on petitions filed during fiscal 
years 2013-2015.
    Parties to a derivation proceeding may seek judicial review of the 
final decision of the Board. Historically, 33% of examiners' decisions 
in inter partes reexamination proceedings have been appealed to the 
Board. Based on this rate, it is estimated that four notices of appeal 
(six multiplied by 33% multiplied by two) will be filed annually based 
on petitions in the new derivation proceedings filed during fiscal 
years 2013-2015. Furthermore, based on the percentage of small entity-
owned patent applications or patents that were the subject of an 
interference declared in fiscal year 2010 (19.62%), it is estimated 
that annually one small entity (four notices of appeal multiplied by 
19.62%) will seek judicial review of final decisions of the Board in 
the derivation proceedings instituted during fiscal years 2013-2015.
5. Description of the Reporting, Recordkeeping, and Other Compliance 
Requirements of the Final Rule, Including an Estimate of the Classes of 
Small Entities Which Will Be Subject to the Requirement and the Type of 
Professional Skills Necessary for Preparation of the Report or Record
    Based on the trends of declared contested cases in fiscal year 
2011, it is anticipated that petitions for derivation will be filed 
across all technologies with approximately 16% in electrical 
technologies, approximately 17% in mechanical technologies, and the 
remaining 67% in chemical technologies and design. A derivation 
petition is likely to be filed by an entity practicing in the same or 
similar field as the patent. Therefore, it is anticipated that 16% of 
the petitions for review will be filed in the electronic field, 17% in 
the mechanical field, and 67% in the chemical or design fields.
    Preparation of the petition would require analyzing the patent 
claims, locating evidence supporting arguments of communication, and 
preparing the petition seeking review of the patent. The procedures for 
petitions to institute a derivation proceeding include those set forth 
in Sec. Sec.  42.5, 42.6, 42.8, 42.11, 42.13, 42.20, 42.21, 42.22, 
42.24(a)(4), 42.63, 42.65, and 42.402 through 42.406.
    The skills necessary to prepare a petition seeking a derivation 
proceeding and to participate in a trial before the Patent Trial and 
Appeal Board would be similar to those needed to prepare a request for 
inter partes reexamination, and to represent a party in an inter partes 
reexamination before the Patent Trial and Appeal Board. The level of 
skill is typically possessed by a registered patent practitioner having 
devoted professional time to the particular practice area, typically 
under the supervision of a practitioner skilled in the particular 
practice area. Where authorized by the Board, a non-registered 
practitioner may be admitted pro hac vice, on a case-by-case basis 
based on the facts and circumstances of the trial and party, as well as 
the skill of the practitioner.
    The cost of preparing a petition for inter partes review is 
anticipated to be the same as the cost for preparing a request for 
inter partes reexamination. The American Intellectual Property Law 
Association's AIPLA Report of the Economic Survey 2011 reported that 
the average cost of preparing a request for inter partes reexamination 
was $46,000. Based on the work required to file and prepare such 
request, the Office considers the reported cost as a reasonable 
estimate. Accordingly, the Office estimates that the cost of preparing 
a petition for inter partes review will be $46,000.
    The cost of preparing a petition for post-grant or covered business 
method patent review is estimated to be 33.333% higher than the cost of 
preparing a petition for inter partes review, because the petition for 
post-grant or covered business method patent review may seek to 
institute a proceeding on additional grounds such as subject matter 
eligibility. Therefore, the Office estimates that the cost of preparing 
a petition for post-grant or covered business method patent review will 
be $61,333. It is expected that petitions for derivation would have the 
same complexity and cost as a petition for post-grant review because 
derivation proceedings raise issues of conception and communication, 
which have similar complexity to the issues that can be raised in a 
post-grant review, i.e., public use, sale and written description. 
Thus, the Office estimates that the cost of preparing a petition for 
derivation will also be $61,333.
    If the Office decides not to institute a trial, the petitioner may 
file a request for reconsideration of the Office's decision. It is 
anticipated that a request for reconsideration will require 80 hours of 
professional time to prepare and file at a cost of $29,680.
    Following institution of a trial, the parties may be authorized to 
file various motions, e.g., motions to amend and motions for additional 
discovery. Where a motion is authorized, an opposition may be 
authorized, and where an opposition is authorized, a reply may be 
authorized. The procedures for filing a motion include those set forth 
in Sec. Sec.  42.6, 42.8, 42.11, 42.13, 42.21, 42.22, 42.24(a)(5), 
42.51, 42.52, 42.53, 42.54, 42.63, 42.64, 42.65, 42.121, 42.221, 
42.123, and 42.223. The procedures for filing an opposition include 
those set forth in Sec. Sec.  42.6, 42.8, 42.11, 42.13, 42.21, 42.23, 
42.24(b), 42.51, 42.52, 42.53, 42.54, 42.63, 42.64, 42.65, 42.107, 
42.120, 42.207, and 42.220. The procedures for filing a reply include 
those set forth in Sec. Sec.  42.6, 42.8, 42.11, 42.13, 42.21, 42.23, 
42.24(c), 42.51, 42.52, 42.53, 42.54, 42.63, and 42.65. As discussed 
previously, the Office estimates that the average derivation proceeding 
will have 20 motions, oppositions, and replies after institution. The 
Office envisions that most motions will be decided in a conference call 
or shortly thereafter.

[[Page 56084]]

    After a trial has been instituted, but prior to a final written 
decision, the parties to a derivation proceeding may request an oral 
hearing. The procedure for filing requests for oral argument is set 
forth in Sec.  42.70. The AIPLA Report of the Economic Survey 2011 
reported that the third quartile cost of an ex parte appeal with an 
oral argument is $12,000, while the third quartile cost of an ex parte 
appeal without an oral argument is $6,000, and the mean billing rate 
for professional time of $371 per hour for attorneys in private firms 
(see page 8). In view of the reported costs, which the Office finds 
reasonable, and the increased complexity of an oral hearing with 
multiple parties, it is estimated that the cost per party for oral 
hearings is $6,800, or 18.3 hours of professional time ($6,800 divided 
by $371), or $800 more than the reported third quartile cost for an ex 
parte oral hearing.
    Parties to a review or derivation proceeding may file requests to 
treat a settlement as business confidential, requests for adverse 
judgment, and arbitration agreements and awards. A written request to 
make a settlement agreement available may also be filed. The procedures 
to file requests that a settlement be treated as business confidential 
are set forth in Sec. Sec.  42.74(c) and 42.409. The procedures to file 
requests for adverse judgment are set forth in Sec.  42.73(b). The 
procedures to file arbitration agreements and awards are set forth 
Sec.  42.410. The procedures to file requests to make a settlement 
agreement available are set forth in Sec.  42.74(c)(2). It is 
anticipated that requests to treat a settlement as business 
confidential will require two hours of professional time, or $742. It 
is anticipated that requests for adverse judgment will require one hour 
of professional time, or $371. It is anticipated that arbitration 
agreements and awards will require four hours of professional time, or 
$1,484. It is anticipated that a settlement agreement will require 100 
hours of professional time, or $37,100 if the parties are not also in 
litigation over the patent and one hour, or $371 if the parties are in 
litigation. It is estimated that one of the two settlement agreements 
will be between parties that are not otherwise in litigation over the 
alleged derived subject matter, and the other settlement agreement will 
be between parties that are in litigation over alleged derived subject 
matter. It is anticipated that requests to make a settlement agreement 
available will require one hour of professional time, or $371. The 
requests to make a settlement agreement available will also require 
payment of a fee of $400 specified in Sec.  42.15(d). The fee is the 
same as that currently set forth in Sec.  41.20(a) for petitions to the 
Chief Administrative Patent Judge.
6. Description of Any Significant Alternatives to the Final Rules Which 
Accomplish the Stated Objectives of Applicable Statutes and Which 
Minimize Any Significant Economic Impact of the Rules on Small Entities
    Size of petitions and motions: The Office considered whether to 
apply a page limit in the administrative trials and what an appropriate 
page limit would be. The Office does not currently have a page limit on 
inter partes reexamination requests. The inter partes reexamination 
requests from October 1, 2010, to June 30, 2011, averaged 246 pages. 
Based on the experience of processing inter partes reexamination 
requests, the Office finds that the very large size of the requests has 
created a burden on the Office that hinders the efficiency and 
timeliness of processing the requests, and creates a burden on patent 
owners. The quarterly reported average processing time from the filing 
of a request to the publication of a reexamination certificate ranged 
from 28.9 months to 41.7 months in fiscal year 2009, from 29.5 months 
to 37.6 months in fiscal year 2010, and from 31.9 to 38.0 months in 
fiscal year 2011. See Reexaminations--FY 2011, available at https://www.uspto.gov/patents/Reexamination_operational_statistic_through_FY2011Q4.pdf.
    By contrast, the Office has a page limit on the motions filed in 
contested cases, except where parties are specifically authorized to 
exceed the limitation. The typical contested case proceeding is subject 
to a standing order that sets a 50-page limit for motions and 
oppositions on priority, a 15-page limit for miscellaneous motions 
(Sec.  41.121(a)(3)) and oppositions (Sec.  41.122), and a 25-page 
limit for other motions (Sec.  41.121(a)(2)) and oppositions to other 
motions. In typical proceedings, replies are subject to a 15-page limit 
if directed to priority, 5-page limit for miscellaneous issues, and 10-
page limit for other motions. The average contested case was terminated 
in 10.1 months in fiscal year 2009, 12 months in fiscal year 2010, and 
9 months in fiscal year 2011. The percentage of contested cases 
terminated within 2 years was 93.7% in fiscal year 2009, 88.0% in 
fiscal year 2010, and 94.0% in fiscal year 2011. See BPAI Statistics--
Performance Measures, available at https://www.uspto.gov/ip/boards/bpai/stats/perform/index.jsp.
    Comparing the average time period for terminating a contested case, 
during fiscal years 2009 through 2011, 10.0 to 12.0 months, with the 
average time period, for completing an inter partes reexamination 
during that same time period, 28.9 to 41.7 months, indicates that the 
average contested case takes from 24% (10.0/41.7) to 42% (12.0/28.9) of 
the time of the average inter partes reexamination. While several 
factors contribute to the reduction in time, limiting the size of the 
requests and motions is considered a significant factor. Section 42.24 
would provide page limits for petitions, motions, oppositions, and 
replies. 35 U.S.C. 316(b), as amended, and 35 U.S.C. 326(b) provide 
considerations that are to be taken into account when prescribing 
regulations including the integrity of the patent system, the efficient 
administration of the Office, and the ability to complete the trials 
timely. The page limits set forth in these rules are consistent with 
these considerations.
    Federal courts routinely use page limits in managing motions 
practice as ``[e]ffective writing is concise writing.'' Spaziano v. 
Singletary, 36 F.3d 1028, 1031 n.2 (11th Cir. 1994). Many district 
courts restrict the number of pages that may be filed in a motion 
including, for example, the District of Delaware, the District of New 
Jersey, the Eastern District of Texas, the Northern, Central, and 
Southern Districts of California, and the Eastern District of Virginia.
    Federal courts have found that page limits ease the burden on both 
the parties and the courts, and patent cases are no exception. Eolas 
Techs., Inc. v. Adobe Sys., Inc., No. 6:09-CV-446, at 1 (E.D. Tex. 
Sept. 2, 2010) (``The Local Rules' page limits ease the burden of 
motion practice on both the Court and the parties.''); Blackboard, Inc. 
v. Desire2Learn, Inc., 521 F. Supp. 2d 575, 576 (E.D. Tex. 2007) (The 
parties ``seem to share the misconception, popular in some circles, 
that motion practice exists to require Federal judges to shovel through 
steaming mounds of pleonastic arguments in a Herculean effort to 
uncover a hidden gem of logic that will ineluctably compel a favorable 
ruling. Nothing could be further from the truth.''); Broadwater v. 
Heidtman Steel Prods., Inc., 182 F. Supp. 2d 705, 710 (S.D. Ill. 2002) 
(``Counsel are strongly advised, in the future, to not ask this Court 
for leave to file any memoranda (supporting or opposing dispositive 
motions) longer than 15 pages. The Court has handled complicated patent 
cases and employment discrimination cases in which the parties were 
able to limit their briefs supporting and opposing summary judgment to 
10 or 15 pages.'' (Emphasis omitted)).

[[Page 56085]]

    The Board's contested cases experience with page limits in motions 
practice is consistent with that of the Federal courts. The Board's use 
of page limits has shown it to be beneficial without being unduly 
restrictive for the parties. Page limits have encouraged the parties to 
focus on dispositive issues, and reduce costs for the parties and the 
Board.
    The Board's contested cases experience with page limits is informed 
by its use of different approaches over the years. In the early 1990s, 
page limits were not routinely used for motions, and the practice 
suffered from lengthy and unacceptable delays. To reduce the burden on 
the parties and on the Board and thereby reduce the time to decision, 
the Board instituted page limits in the late 1990s for every motion. 
Page limit practice was found to be effective in reducing the burdens 
on the parties and improving decision times at the Board. In 2006, the 
Board revised the page limit practice and allowed unlimited findings of 
fact and generally limited the number of pages containing argument. Due 
to abuses of the system, the Board recently reverted back to page 
limits for the entire motion (both argument and findings of fact).
    The Board's current page limits are consistent with the 25-page 
limits in the Northern, Central, and Southern Districts of California, 
and the Middle District of Florida, and exceed the limits in the 
District of Delaware (20), the Northern District of Illinois (15), the 
District of Massachusetts (20), the Eastern District of Michigan (20), 
the Southern District of Florida (20), and the Southern District of 
Illinois (20).
    In a typical proceeding before the Board, a party may be authorized 
to file a single motion for unpatentability based on prior art, a 
single motion for unpatentability based upon failure to comply with 35 
U.S.C. 112, lack of written description, and/or enablement, and 
potentially another motion for lack of compliance with 35 U.S.C. 101, 
although a 35 U.S.C. 101 motion may be required to be combined with the 
35 U.S.C. 112 motion. Each of these motions is currently limited to 25 
pages in length, unless good cause is shown that the page limits are 
unduly restrictive for a particular motion.
    A petition requesting the institution of a trial proceeding would 
be similar to motions currently filed with the Board. Specifically, 
petitions to institute a trial seek a final written decision that the 
challenged claims are unpatentable, where derivation is a form of 
unpatentability. Accordingly, a petition to institute a trial based on 
prior art would, under current practice, be limited to 25 pages, and by 
consequence, a petition raising unpatentability based on prior art and 
unpatentability under 35 U.S.C. 101 and/or 112 would be limited to 50 
pages.
    Petitions to institute derivation proceedings raise a subset of 
issues that are currently raised in contested cases in a motion for 
judgment on priority of invention. Currently, motions for judgment on 
priority of invention, including issues such as conception, 
corroboration, and diligence, are generally limited to 60 pages. Thus, 
the 60-page limit is considered sufficient in all but exceptional 
cases.
    The final rule provides that petitions to institute a trial must 
comply with the stated page limits but may be accompanied by a motion 
that seeks to waive the page limits. The petitioner must show in the 
motion how a waiver of the page limits is in the interests of justice. 
A copy of the desired non-page limited petition must accompany the 
motion. Generally, the Board will decide the motion prior to deciding 
whether to institute the trial.
    Current Board practice provides a limit of 25 pages for other 
motions and 15 pages for miscellaneous motions. The Board's experience 
is that such page limits are sufficient for the parties filing them and 
do not unduly burden the opposing party or the Board. Petitions to 
institute a trial would generally replace the current practice of 
filing motions for unpatentability, as most motions for relief are 
expected to be similar to the current contested cases miscellaneous 
motion practice. Accordingly, the 15-page limit is considered 
sufficient for most motions but may be adjusted where the limit is 
determined to be unduly restrictive for the relief requested.
    Section 42.24(b) provides page limits for oppositions filed in 
response to motions. Current practice for other contested cases 
provides an equal number of pages for an opposition as its 
corresponding motion. This is generally consistent with motions 
practice in Federal courts. The rule is consistent with the practice 
for other contested cases.
    Section 42.24(c) provides page limits for replies. Current practice 
for other contested cases provide a 15-page limit for priority motion 
replies, a 5-page limit for miscellaneous (procedural) motion replies, 
and a 10-page limit for all other motions. The rule is consistent with 
current contested case practice for procedural motions. The rule 
provides a 15-page limit for reply to petitions requesting a trial, 
which the Office believes is sufficient based on current practice. 
Current contested case practice has shown that such page limits do not 
unduly restrict the parties and, in fact, have provided sufficient 
flexibility to parties to not only reply to the motion but also help to 
focus on the issues. Thus, it is anticipated that default page limits 
would minimize the economic impact on small entities by focusing on the 
issues in the trials.
    Discovery: The Office considered a procedure for discovery similar 
to the one available during district court litigation. Discovery of 
that scope has been criticized sharply, particularly when attorneys use 
discovery tools as tactical weapons, which hinder the ``just, speedy, 
and inexpensive determination of every action and proceedings.'' See 
introduction to An E-Discovery Model Order, available at https://www.cafc.uscourts.gov/images/stories/announcements/Ediscovery_Model_Order.pdf. Accordingly, this alternative would have been inconsistent 
with objectives of the AIA that the Director, in prescribing rules for 
the inter partes review, post-grant review, and covered business method 
patent review, consider the effect of the rules on the economy, the 
integrity of the patent system, the efficient administration of the 
Office, and the ability of the Office to complete the instituted 
proceedings timely.
    Additional discovery increases trial costs and increases the 
expenditures of time by the parties and the Board. The Board's 
experience in contested cases, however, is that such showings are often 
lacking and authorization for additional discovery is expected to be 
limited. While an interests-of-justice standard will be employed in 
granting additional discovery in inter partes reviews and derivation 
proceedings, the post-grant and covered business method patent reviews 
will employ a good cause standard in granting additional discovery. 
Parties may, however, agree to additional discovery amongst themselves.
    To promote effective discovery, the rule requires a showing that 
additional requested discovery would be productive in inter partes 
reviews and derivation proceedings. An interests-of-justice standard 
for additional discovery applies to inter partes reviews and derivation 
proceedings. This standard is consistent with the considerations 
identified in 35 U.S.C. 316(b) and 135(b), as amended, including the 
efficient administration of the Board and the Board's ability to 
complete trials timely. Further, the interests-of-justice standard is 
consistent with 35 U.S.C. 316(a)(5), as amended, which states that 
discovery other than depositions of

[[Page 56086]]

witnesses submitting affidavits and declarations be what is otherwise 
necessary in the interests-of-justice.
    Good cause and interests-of-justice are closely related standards, 
but the interests-of-justice standard is slightly higher than good 
cause. While a good cause standard requires a party to show a specific 
factual reason to justify the needed discovery, under the interests-of-
justice standard, the Board would look at all relevant factors. 
Specifically, to show good cause, a party would be required to make a 
particular and specific demonstration of fact. Under the interests-of-
justice standard, the moving party would also be required to show that 
it was fully diligent in seeking discovery and that there is no undue 
prejudice to the non-moving party. The interests-of-justice standard 
covers considerable ground, and in using such a standard, the Board 
expects to consider whether the additional discovery is necessary in 
light of the totality of the relevant circumstances.
    The Office sets forth a default scheduling order to provide limited 
discovery as a matter of right and provide parties with the ability to 
seek additional discovery on a case-by-case basis. In weighing the need 
for additional discovery, should a request be made, the Board would 
consider the economic impact on the opposing party. This will tend to 
limit additional discovery where a party is a small entity.
    Pro Hac Vice: The Office considered whether to allow counsel to 
appear pro hac vice. In certain instances, highly skilled, but non-
registered, attorneys have appeared satisfactorily before the Board in 
contested cases. The Board may recognize counsel pro hac vice during a 
proceeding upon a showing of good cause. The Board may impose 
conditions in recognizing counsel pro hac vice, including a requirement 
that counsel acknowledge that counsel is bound by the Office's Code of 
Professional Responsibility. Proceedings before the Office can be 
technically complex. The grant of a motion to appear pro hac vice is a 
discretionary action taking into account the specifics of the 
proceedings. Similarly, the revocation of pro hac vice is a 
discretionary action taking into account various factors, including 
incompetence, unwillingness to abide by the Office's Code of 
Professional Responsibility, prior findings of misconduct before the 
Office in other proceedings, and incivility.
    The Board's past practice has required the filing of a motion by a 
registered patent practitioner seeking pro hac vice representation 
based upon a showing of: (1) How qualified the unregistered 
practitioner is to represent the party in the proceeding when measured 
against a registered practitioner, and (2) whether the party has a 
genuine need to have the particular unregistered practitioner represent 
it during the proceeding. This practice has proven effective in the 
limited number of contested cases where such requests have been 
granted. The rule allows for this practice in the new proceedings 
authorized by the AIA.
    The rules provide a limited delegation to the Board under 35 U.S.C. 
2(b)(2) and 32 to regulate the conduct of counsel in Board proceedings. 
The rules delegate to the Board the authority to conduct counsel 
disqualification proceedings while the Board has jurisdiction over a 
proceeding. The rules also delegate to the Chief Administrative Patent 
Judge the authority to make final a decision to disqualify counsel in a 
proceeding before the Board for the purposes of judicial review. This 
delegation would not derogate from the Director the prerogative to make 
such decisions, nor would it prevent the Chief Administrative Patent 
Judge from further delegating authority to an administrative patent 
judge.
    The Office considered broadly permitting practitioners not 
registered to practice by the Office to represent parties in trial as 
well as categorically prohibiting such practice. A prohibition on the 
practice would be inconsistent with the Board's experience, and more 
importantly, might result in increased costs to parties, particularly 
where a small entity has selected its district court litigation team 
and subsequently a patent review is filed after litigation efforts have 
commenced. Alternatively, broadly making the practice available would 
create burdens on the Office in administering the trials and in 
completing the trial within the established timeframe, particularly if 
the selected practitioner does not have the requisite skill. In 
weighing the desirability of admitting a practitioner pro hac vice, the 
economic impact on the party in interest will be considered, which will 
tend to increase the likelihood that a small entity could be 
represented by a non-registered practitioner. Accordingly, the 
alternatives to eliminate pro hac vice practice or to permit it more 
broadly would have been inconsistent with the efficient administration 
of the Office and the integrity of the patent system.
    Default Electronic Filing: The Office considered a paper filing 
system and a mandatory electronic filing system (without any 
exceptions) as alternatives to the requirement that all papers are to 
be electronically filed, unless otherwise authorized.
    Based on the Office's experience, a paper-based filing system 
increases delay in processing papers, delay in public availability, and 
the chance that a paper may be misplaced or made available to an 
improper party if confidential. Accordingly, the alternative of a 
paper-based filing system would have been inconsistent with objectives 
of the AIA that the Director, in prescribing rules for inter partes 
review, post-grant review, and covered business method patent review, 
consider the effect of the rules on the economy, the integrity of the 
patent system, the efficient administration of the Office, and the 
ability of the Office to complete the instituted proceedings timely.
    An electronic filing system (without any exceptions) that is 
rigidly applied would result in unnecessary cost and burdens, 
particularly where a party lacks the ability to file electronically. By 
contrast, with the option, as adopted, it is expected that the entity 
size and sophistication will be considered in determining whether 
alternative filing methods would be authorized.
7. Identification, to the Extent Practicable, of All Relevant Federal 
Rules Which May Duplicate, Overlap, or Conflict With the Final Rules
    The following rules also provide processes involving patent 
applications and patents:
    37 CFR 1.99 provides for the submission of information after 
publication of a patent application during examination by third 
parties.
    37 CFR 1.171-1.179 provide for applications to reissue a patent to 
correct errors, including where a claim in a patent is overly broad.
    37 CFR 1.291 provides for the protest against the issuance of a 
patent during examination.
    37 CFR 1.321 provides for the disclaimer of a claim by a patentee.
    37 CFR 1.501 and 1.502 provide for ex parte reexamination of 
patents. Under these rules, a person may submit to the Office prior art 
consisting of patents or printed publications that are pertinent to the 
patentability of any claim of a patent, and request reexamination of 
any claim in the patent on the basis of the cited prior art patents or 
printed publications. Consistent with 35 U.S.C. 302-307, ex parte 
reexamination rules provide a different threshold for institution, 
require the proceeding to be conducted by an examiner with a right of 
appeal to the Patent Trial and Appeal

[[Page 56087]]

Board, and allow for limited participation by third parties.
    37 CFR 1.902-1.997 provide for inter partes reexamination of 
patents. Similar to ex parte reexamination, inter partes reexamination 
provides a procedure in which a third party may request reexamination 
of any claim in a patent on the basis of the cited prior art patents 
and printed publication. The inter partes reexamination practice will 
be eliminated, except for requests filed before the effective date, 
September 16, 2012. See section 6(c)(3)(C) of the AIA.
    Other countries have their own patent laws, and an entity desiring 
a patent in a particular country must make an application for patent in 
that country, in accordance with the applicable law. Although the 
potential for overlap exists internationally, this cannot be avoided 
except by treaty (such as the Paris Convention for the Protection of 
Industrial Property, or the Patent Cooperation Treaty (PCT)). 
Nevertheless, the Office believes that there are no other duplicative 
or overlapping foreign rules.

C. Executive Order 12866 (Regulatory Planning and Review)

    This rulemaking has been determined to be significant for purposes 
of Executive Order 12866 (Sept. 30, 1993), as amended by Executive 
Order 13258 (Feb. 26, 2002) and Executive Order 13422 (Jan. 18, 2007).
    The Office estimates that the aggregate burden of the rules for 
implementing the new derivation procedure is approximately $2.1 million 
annually for fiscal years 2013-2015. The USPTO considered several 
factors in making this estimate.
    Based on the petition and other filing requirements for instituting 
a derivation proceeding, the USPTO initially estimated the burden of 
the rules on the public to be $11,622,674.90 annually in fiscal years 
2013-2015, which represents the sum of the estimated total annual 
(hour) respondent cost burden ($11,601,874.90) plus the estimated total 
annual non-hour respondent cost burden ($20,800.00) provided in Item 
(O)(II) of the Rulemaking Considerations section of the following final 
rule: Rules of Practice for Trials before the Patent Trial and Appeal 
Board and Judicial Review of Patent Trial and Appeal Board Decisions 
(RIN 0651-AC70). However, since the AIA also eliminates interference 
practice as to applications and patents that have an effective filing 
date on or after March 16, 2013 (with a few exceptions), the burden of 
the rules should be offset by the eliminations of those proceedings and 
their associated burdens.
    The public burden due to a reduction in the number of interferences 
declared, from 64 to 51, is estimated at $9,484,400 annually based on 
the assumption that the current percentage of interferences decided in 
the preliminary phase (80%) will continue on the lower number of 
proceedings instituted and based on cost to the public. To calculate 
this public burden due to a reduction in the number of interferences 
declared ($9,484,400), the Office used the following information. The 
average public burden for a two-party interference decided in the 
preliminary phase reported in the AIPLA Report of the Economic Survey 
2011 is $644,000 (if decided in the preliminary phase) and $1,262,000 
(if decided after the preliminary phase). It is estimated that had the 
AIA not been enacted, 52 interferences would have been decided in the 
preliminary phase, and 12 would have been decided after the preliminary 
phase, equating to a public burden of $48,632,000 ((52 multiplied by 
$644,000 equals $33,488,000), plus (12 multiplied by $1,262,000 equals 
$15,144,000) for a total of $48,632,000). It is estimated that 51 
interferences will be instituted in fiscal years 2013-2015, at an 
average public burden of $767,600 (80% of $644,000 plus 20% of 
$1,262,000) per interference, or a total of $39,147,600 (51 multiplied 
by $767,600). Accordingly, it is estimated that burden to the public 
due to the reduction of interferences would be the total public burden 
for interferences of $48,632,000 minus total public burden for 
estimated interferences for fiscal years 2013-2015 of $39,147,600, or 
$9,484,400.
    Therefore, the estimated aggregate burden of the rules for 
implementing the new derivation proceedings is $2,138,274.90 
($11,622,674.90 minus $9,484,400) in fiscal years 2013-2015.
    The Office received one written submission of comments from the 
public regarding Executive Order 12866. Each component of that comment 
directed to Executive Order 12866 is addressed below.
    Comment 71: One comment suggested that the proposed rules would 
have been classified more appropriately as significant under section 
3(f)(4) of Executive Order 12866 because the proposed rules raise novel 
legal or policy issues arising out of legal mandates.
    Response: As stated in the notice of proposed rulemaking and in 
this final rule, the Office of Management and Budget designated the 
proposed rules as significant under Executive Order 12866, but not 
economically significant. The comment does not present what aspect(s) 
of the rule is believed to present novel legal or policy issues.
    Comment 72: One comment suggested that the costs, including any 
prophylactic application steps resulting from the new proceedings, were 
not calculated appropriately when the Office offsets the new burdens 
with those removed by elimination of the ability to file new inter 
partes reexamination under Executive Order 12866. The comment suggested 
that when appropriately calculated, the cost would exceed the $100 
million threshold for declaring the proposed rules significant under 
section 3(f)(1).
    Response: As stated in the notice of proposed rulemaking and in 
this final rule, the Office of Management and Budget designated the 
proposed rules as significant, but not economically significant, under 
Executive Order 12866, The baseline costs that the Office used to 
determine the increased burden of the proposed rules properly included 
the burden on the public to comply with inter partes reexamination 
because those burdens existed before the statutory change, and that 
process was eliminated and replaced by the process adopted by the AIA 
as implemented in this final rule. See OMB Circular A4, section (e)(3). 
See also response to Comment 69.
    Comment 73: One comment argued the $80,000,000 burden estimate is 
so close to the $100,000,000 threshold, that the Office should assume 
that it is likely that the proposed rules would have a $100,000,000 
impact, particularly in view of the difficulties in estimating burden. 
One comment suggested that the Office should have conducted a 
Regulatory Impact Analysis.
    Response: While the comment was submitted in response to the notice 
of proposed rulemaking for derivation proceedings, it is directed to 
the aggregate burden for all administrative trials. As stated in the 
notice of proposed rulemaking and in this final rule, the Office of 
Management and Budget designated the proposed rules as significant, but 
not economically significant under Executive Order 12866. The comment 
did not indicate what aspect of the estimate was likely to be wrong. 
Additionally, $80,000,000 is twenty percent below the $100,000,000 
threshold, and the Office's estimate did not take into account the 
reduction in burden due to decreased litigation. Thus, the Office's 
estimate is likely an overstatement of the estimated basis.

[[Page 56088]]

D. Executive Order 13563 (Improving Regulation and Regulatory Review)

    The Office has complied with Executive Order 13563. Specifically, 
the Office has, to the extent feasible and applicable: (1) Made a 
reasoned determination that the benefits justify the costs of the rule; 
(2) tailored the rule to impose the least burden on society consistent 
with obtaining the regulatory objectives; (3) selected a regulatory 
approach that maximizes net benefits; (4) specified performance 
objectives; (5) identified and assessed available alternatives; (6) 
involved the public in an open exchange of information and perspectives 
among experts in relevant disciplines, affected stakeholders in the 
private sector, and the public as a whole, and provided on-line access 
to the rulemaking docket; (7) attempted to promote coordination, 
simplification, and harmonization across government agencies and 
identified goals designed to promote innovation; (8) considered 
approaches that reduce burdens and maintain flexibility and freedom of 
choice for the public; and (9) ensured the objectivity of scientific 
and technological information and processes.

E. Executive Order 13132 (Federalism)

    This rulemaking does not contain policies with federalism 
implications sufficient to warrant preparation of a Federalism 
Assessment under Executive Order 13132 (Aug. 4, 1999).

F. Executive Order 13175 (Tribal Consultation)

    This rulemaking will not: (1) Have substantial direct effects on 
one or more Indian tribes; (2) impose substantial direct compliance 
costs on Indian tribal governments; or (3) preempt tribal law. 
Therefore, a tribal summary impact statement is not required under 
Executive Order 13175 (Nov. 6, 2000).

G. Executive Order 13211 (Energy Effects)

    This rulemaking is not a significant energy action under Executive 
Order 13211 because this rulemaking is not likely to have a significant 
adverse effect on the supply, distribution, or use of energy. 
Therefore, a Statement of Energy Effects is not required under 
Executive Order 13211 (May 18, 2001).

H. Executive Order 12988 (Civil Justice Reform)

    This rulemaking meets applicable standards to minimize litigation, 
eliminate ambiguity, and reduce burden as set forth in sections 3(a) 
and 3(b)(2) of Executive Order 12988 (Feb. 5, 1996). This rulemaking 
carries out a statute designed to lessen litigation. See H.R. Rep. No. 
112-98, at 45-48.

I. Executive Order 13045 (Protection of Children)

    This rulemaking does not concern an environmental risk to health or 
safety that may disproportionately affect children under Executive 
Order 13045 (Apr. 21, 1997).

J. Executive Order 12630 (Taking of Private Property)

    This rulemaking will not effect a taking of private property or 
otherwise have taking implications under Executive Order 12630 (Mar. 
15, 1988).

K. Congressional Review Act

    Under the Congressional Review Act provisions of the Small Business 
Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801-808), prior 
to issuing any final rule, the United States Patent and Trademark 
Office will submit a report containing the final rule and other 
required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the Government 
Accountability Office. The changes in this notice are not expected to 
result in an annual effect on the economy of 100 million dollars or 
more, a major increase in costs or prices, or significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or the ability of United States-based enterprises to 
compete with foreign-based enterprises in domestic and export markets. 
Therefore, this notice is not expected to result in a ``major rule'' as 
defined in 5 U.S.C. 804(2).

L. Unfunded Mandates Reform Act of 1995

    The changes set forth in this notice do not involve a Federal 
intergovernmental mandate that will result in the expenditure by State, 
local, and tribal governments, in the aggregate, of 100 million dollars 
(as adjusted) or more in any one year, or a Federal private sector 
mandate that will result in the expenditure by the private sector of 
100 million dollars (as adjusted) or more in any one year, and will not 
significantly or uniquely affect small governments. Therefore, no 
actions are necessary under the provisions of the Unfunded Mandates 
Reform Act of 1995. See 2 U.S.C. 1501-1571.

M. National Environmental Policy Act

    This rulemaking will not have any effect on the quality of the 
environment and is thus categorically excluded from review under the 
National Environmental Policy Act of 1969. See 42 U.S.C. 4321-4370h.

N. National Technology Transfer and Advancement Act

    The requirements of section 12(d) of the National Technology 
Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) are not 
applicable because this rulemaking does not contain provisions which 
involve the use of technical standards.

O. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3549) requires 
that the USPTO consider the impact of paperwork and other information 
collection burdens imposed on the public. This rulemaking involves 
information collection requirements which are subject to review by OMB 
under the Paperwork Reduction Act. The collection of information 
involved in this final rule has been submitted to OMB under OMB control 
number 0651-0069 when the notice of proposed rulemaking was published. 
The Office published the title, description, and respondent description 
of the information collection, with an estimate of the annual reporting 
burdens, in the following notices of proposed rulemaking, Changes to 
Implement Derivation Proceedings, 77 FR 7028 (Feb. 10, 2012) (RIN 0651-
AC74), and Rules of Practice for Trials before the Patent Trial and 
Appeal Board and Judicial Review of Patent Trial and Appeal Board 
Decisions, 77 FR 6879 (Feb. 9, 2012) (RIN 0651-AC70).
    The Office received two comments and made minor revisions to the 
requirements in the rule, as well as the burden estimates, as outlined 
below. Accordingly, the Office resubmitted the proposed revision to the 
information collection requirements under 0651-0069, and OMB approved 
on July 16, 2012. The information collection requirements under 0651-
0069 are available at OMB's Information Collection Web site 
(www.reginfo.gov/public/do/PRAMain).
    Notwithstanding any other provision of law, no person is required 
to respond to nor shall a person be subject to a penalty for failure to 
comply with a collection of information subject to the requirements of 
the Paperwork Reduction Act unless that collection of information 
displays a currently valid OMB control number.
    The Office received two written submissions of comments regarding 
the Paperwork Reduction Act. Each component of those comments directed 
to the Paperwork Reduction Act is addressed below.

[[Page 56089]]

    Comment 74: One comment suggested that inter partes reexamination 
is a very poor proxy for these proceedings because there have been very 
few completed proceedings relative to all filing of inter partes 
reexaminations from 2001 to 2011, and the comment claims that the 
completed proceedings are only the least complex of proceedings which 
the comment alleges result in a sampling bias.
    Response: While only 305 inter partes reexamination proceedings 
have resulted in a certificate, the comment is not correct that only 
the least complex of proceedings have been completed. The number of 
filings of inter partes reexamination has increased considerably in the 
last three full years. See Rules of Practice for Trials before the 
Patent Trial and Appeal Board and Judicial Review of Patent Trial and 
Appeal Board Decisions, 77 FR at 6893. For example, in the last three 
years 824 were filed, or 64.5% of the 1,278 requests filed from 2001 to 
2011. Considering that the average time from filing to certificate for 
the 305 certificates was 36.2 months and the median pendency was 32.9 
months, it would have been more appropriate for the comment to consider 
the 305 certificates that have issued compared with the filings from 
2001 to 2008. During that time period there were 467 requests filed: 14 
requests were subsequently denied a filing date, 53 requests were 
denied on the merits, 246 had concluded with a certificate by September 
30, 2011, and 154 were still pending on September 30, 2011. Of the 154 
that were still pending, only one was before the examiner after a non-
final rejection, only three had an action closing prosecution as the 
last action, and only three had a right of appeal notice as the last 
action. Most of the 154 proceedings were subject to appeal proceedings 
or were in the publication process. Accordingly, inter partes 
reexamination is an appropriate proxy.
    Comment 75: One comment suggested that for matters not concurrently 
in litigation, the Office's two-hour estimate for public burden of 
settlement under the Paperwork Reduction Act was unreasonably low by a 
factor of 30-100, and must include the costs to arrive at the 
settlement in addition to the cost of submitting the agreement to the 
Office. The comment asserted that this burden is fully cognizable under 
the Paperwork Reduction Act.
    Response: This comment was adopted in part. For inter partes and 
post-grant review proceedings where the parties are not also in 
district court litigation regarding the patent, the burden estimate has 
been increased to 100 hours per settlement, as suggested as the highest 
estimate in the comment. Based partially on historical data for inter 
partes reexamination, it is estimated that 30% of reviewed patents will 
not be subject to concurrent litigation.
    By statute, any petitioner seeking review of a covered business 
method must also be in litigation regarding the patent or have been 
charged with infringement. The comment only argued that for parties not 
in litigation, the cost of settlement was too low.
    Therefore, this portion of the comment is not pertinent to this 
rulemaking and is not adopted.
    Any petitioner seeking review of a covered business method under 
the transitional program, however, is also in concurrent litigation. 
Thus, the estimated burden for settlement in those proceedings has not 
been revised in view of the comment.
    Comment 76: Two comments requested that the Office set forth the 
basis for the number of petitions for review.
    Response: As discussed above in item B, the Office considered the 
actual number of inter partes reexamination requests filed during FY 
2001-2011 and the anticipated number of requests in FY 2012, the number 
of such requests of patents classified in Class 705, the number of 
interferences, and the differences between reexamination and the new 
review. The Office estimated the number of reviews based on the 
historical data on the number of filings in the most analogous 
proceedings. See Transitional Program for Covered Business Method 
Patents--Definition of Technological Invention, 77 FR at 7097.
    Comment 77: One comment suggested that a projection for at least 
three years of growth in future filings is necessary because the 
Paperwork Reduction Act clearance is for three years. The comment also 
seeks disclosure of USPTO's estimation models.
    Response: The suggestion has been adopted. The Office estimates 
moderate aggregate growth for petitions seeking inter partes review and 
post-grant review, as set forth in item B above. Further, the Office 
estimates no growth for petitions seeking review under the transitional 
program for covered business method patents during the three-year 
period. Calculations for these numbers are provided in the supporting 
statement for this collection. In 2013, the number of eligible patents 
will include patents which are currently in litigation. In subsequent 
years, the number of eligible patents is expected to be reduced, 
because some proceedings will have been settled, while others will have 
been stayed pending a review. At the same time, as experience in the 
procedure becomes more widespread, the public would more likely seek a 
review. Because these two factors offset each other, the Office 
anticipates zero growth for petitions for the covered business method 
patent review.
    Comment 78: Two comments noted that the distribution of claims for 
the review was not disclosed during the comment period. The comment 
asserts that failure to disclose underlying data in the notice of 
proposed rulemaking violates the Paperwork Reduction Act (and other 
requirements).
    Response: The distribution of claims for which review will be 
requested was estimated based on the number of claims for which inter 
partes reexamination was requested in the first 60 requests filed 
during the second quarter of FY 2011, as that data was the most timely 
when the proposed rule notices were drafted. That data was publicly 
available when the notice of proposed rulemaking was published and 
remains available today. See https://portal.uspto.gov/external/portal/pair. A summary of that publicly available data is as follows: 40 of 
the 60 proceedings requested review of 20 or fewer claims; eight of the 
60 requested review of between 21 and 30 claims; three of the 60 
requested review of between 31 and 40 claims; six of the 60 requested 
review of between 41 and 50 claims; one of the 60 requested review of 
between 51 and 60 claims; one of the 60 requested review of between 61 
and 70 claims; and one of the 60 requested review of between 91 and 100 
claims. A second group of 20 proceedings filed after September 15, 
2011, were reviewed to determine if the change to the statutory 
threshold resulted in a clear change in the number of claims for which 
review was requested. A summary of that data is as follows: 13 of 20 
requested review of 20 or fewer claims; three of 20 requested review of 
between 21 and 30 claims; three of 20 requested review of between 31 
and 40 claims; and one of 20 requested review of 53 claims.
    Comment 79: One comment suggested that the estimate of the number 
of post-grant review proceedings should be doubled based on the 
analysis of the University of Houston of patent cases from 2005-2009. 
According to the comment, this analysis shows that for every 15 
decisions involving printed prior art grounds, there were 13 decisions 
involving public use, ``on sale,'' or 35 U.S.C. 112.
    Response: The suggestion is not adopted. While the Office agrees 
that many decisions involved public use, ``on sale,'' or 35 U.S.C. 112, 
the

[[Page 56090]]

comment and the analysis by the University of Houston did not consider 
which decisions did not include a prior art grounds, but did include a 
public use, ``on sale,'' or 35 U.S.C. 112 ground. Only the subset of 
decisions including the newly available grounds could be used 
appropriately in estimating an increased rate of post-grant review 
filings relative to inter partes review. The comment also did not 
address how the limited filing window relative to the filing of 
district court litigation for post-grant review would be addressed 
appropriately if the University of Houston study served as a basis for 
the estimates.
    Comment 80: One comment suggested that the hourly rate for 
practitioners should be raised from $340 (the median hourly rate from 
the AIPLA economical survey referenced in the notice of proposed 
rulemaking) to $500. The comment asserts that using the median hourly 
rate from the AIPLA Economic Survey of $340 is analytically wrong and 
that, at a minimum, the higher mean rate of $371 from that survey 
should be used.
    Response: The suggestion is adopted in part. The Office has adopted 
a mean hourly rate of $371 from the AIPLA Economic Survey, rather than 
the median hourly rate of $340 from that survey. The suggestion of a 
$500 hourly rate cannot be adopted because the comment did not provide 
any data to support the validity of the hourly rate suggested and the 
Office believes, based on its experience, that $371 is a better 
estimate of the average hourly rate.
    Comment 81: The comments suggested that reliance on the AIPLA 
economic survey was inappropriate as the survey is flawed. The comment 
asserts that the survey is unreliable for estimating paperwork burden 
under the Information Quality Act.
    Response: In providing estimates of burden hours, the USPTO 
sometimes referenced the AIPLA economic survey report, as a benchmark 
for the estimates. While the costs reported in the survey were 
considered, the Office, in estimating the cost of the collection, also 
considered the work required to prepare and file the submissions.
    Under the USPTO's Information Quality Guidelines (IQG), the AIPLA 
economic survey report is not a ``dissemination'' of information. The 
Guidelines state that ``dissemination'' means an ``agency initiated or 
sponsored distribution of information to the public.'' USPTO's IQG, 
Section IV, A, 1. Subsection (a) further defines ``agency initiated 
distribution of information to the public'' to mean ``information that 
the agency distributes or releases which reflects, represents, or forms 
any part of the support of the policies of the agency.'' Id. at Section 
IV, A, 1, a. The USPTO did not distribute or release the AIPLA economic 
survey report.
    Likewise, the AIPLA economic survey report does not qualify as an 
``agency sponsored distribution of information'' under Subsection (b) 
of the Guidelines, which ``refers to situations where the agency has 
directed a third party to distribute or release information, or where 
the agency has the authority to review and approve the information 
before release.'' Id. at Section IV, A, 1, b. The USPTO did not 
commission the report, had no input into the structure of the report 
and does not rely exclusively upon the results of the report to arrive 
at estimates. No correction of the documents is required because the 
Office utilized the AIPLA economic survey report in formulating some 
burden estimations. No correction is required under the Information 
Quality Act.
    Comment 82: One comment suggested that the regulations imposed a 
substantial paperwork burden without a valid OMB Control Number.
    Response: OMB has approved OMB Control number 0651-0069 for this 
rulemaking.
    Comment 83: One comment suggested that the USPTO's estimates 
systematically ignore burdens and costs associated with the attorney's 
client company.
    Response: See response to Comment 69.

List of Subjects in 37 CFR Part 42

    Administrative practice and procedure, Inventions and patents, 
Lawyers.

Amendments to the Regulatory Text

    For the reasons stated in the preamble, the Under Secretary of 
Commerce for Intellectual Property and Director of the United States 
Patent and Trademark Office amends 37 CFR part 42 as follows:

PART 42--TRIAL PRACTICE BEFORE THE PATENT TRIAL AND APPEAL BOARD

0
1. The authority citation for 37 CFR Part 42 is revised to read as 
follows:

    Authority:  35 U.S.C. 2(b)(2), 6, 21, 23, 41, 135, 311-319, 321-
329 and Leahy-Smith America Invents Act, Pub. L. 112-29, sections 
3(i), 6, and 18, 125 Stat. 284, 289-90, 299-313, and 329-331 (2011).


0
2. A new subpart E is added to read as follows:
Subpart E--Derivation

General

Sec.
42.400 Procedure; pendency
42.401 Definitions.
42.402 Who may file a petition for a derivation proceeding.
42.403 Time for filing.
42.404 Derivation fee.
42.405 Content of petition.
42.406 Service of petition.
42.407 Filing date.

Instituting Derivation Proceeding

42.408 Institution of derivation proceeding.

After Institution of Derivation Proceeding

42.409 Settlement agreements.
42.410 Arbitration.
42.411 Common interests in the invention.
42.412 Public availability of Board records.

Subpart E--Derivation

General


Sec.  42.400  Procedure; pendency

    (a) A derivation proceeding is a trial subject to the procedures 
set forth in subpart A of this part.
    (b) The Board may for good cause authorize or direct the parties to 
address patentability issues that arise in the course of the derivation 
proceeding.


Sec.  42.401  Definitions.

    In addition to the definitions in Sec.  42.2, the following 
definitions apply to proceedings under this subpart:
    Agreement or understanding under 35 U.S.C. 135(e) means settlement 
for the purposes of Sec.  42.74.
    Applicant includes a reissue applicant.
    Application includes both an application for an original patent and 
an application for a reissued patent.
    First publication means either a patent or an application 
publication under 35 U.S.C. 122(b), including a publication of an 
international application designating the United States as provided by 
35 U.S.C. 374.
    Petitioner means a patent applicant who petitions for a 
determination that another party named in an earlier-filed patent 
application allegedly derived a claimed invention from an inventor 
named in the petitioner's application and filed the earlier application 
without authorization.
    Respondent means a party other than the petitioner.
    Same or substantially the same means patentably indistinct.


Sec.  42.402  Who may file a petition for a derivation proceeding.

    An applicant for patent may file a petition to institute a 
derivation proceeding in the Office.

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Sec.  42.403  Time for filing.

    A petition for a derivation proceeding must be filed within the 
one-year period beginning on the date of the first publication of a 
claim to an invention that is the same or substantially the same as the 
earlier application's claim to the allegedly derived invention.


Sec.  42.404  Derivation fee.

    (a) A derivation fee set forth in Sec.  42.15(c) must accompany the 
petition.
    (b) No filing date will be accorded to the petition until payment 
is complete.


Sec.  42.405  Content of petition.

    (a) Grounds for standing. The petition must:
    (1) Demonstrate compliance with Sec. Sec.  42.402 and 42.403; and
    (2) Show that the petitioner has at least one claim that is:
    (i) The same or substantially the same as the respondent's claimed 
invention; and
    (ii) The same or substantially the same as the invention disclosed 
to the respondent.
    (b) In addition to the requirements of Sec. Sec.  42.8 and 42.22, 
the petition must:
    (1) Provide sufficient information to identify the application or 
patent for which the petitioner seeks a derivation proceeding;
    (2) Demonstrate that a claimed invention was derived from an 
inventor named in the petitioner's application, and that the inventor 
from whom the invention was derived did not authorize the filing of the 
earliest application claiming such invention; and
    (3) For each of the respondent's claims to the derived invention,
    (i) Show why the claimed invention is the same or substantially the 
same as the invention disclosed to the respondent, and
    (ii) Identify how the claim is to be construed. Where the claim to 
be construed contains a means-plus-function or step-plus-function 
limitation as permitted under 35 U.S.C. 112(f), the construction of the 
claim must identify the specific portions of the specification that 
describe the structure, material, or acts corresponding to each claimed 
function.
    (c) Sufficiency of showing. A derivation showing is not sufficient 
unless it is supported by substantial evidence, including at least one 
affidavit addressing communication of the derived invention and lack of 
authorization that, if unrebutted, would support a determination of 
derivation. The showing of communication must be corroborated.


Sec.  42.406  Service of petition.

    In addition to the requirements of Sec.  42.6, the petitioner must 
serve the petition and exhibits relied upon in the petition as follows:
    (a) The petition and supporting evidence must be served on the 
respondent at the correspondence address of record for the earlier 
application or subject patent. The petitioner may additionally serve 
the petition and supporting evidence on the respondent at any other 
address known to the petitioner as likely to effect service.
    (b) Upon agreement of the parties, service may be made 
electronically. Service may be by EXPRESS MAIL[supreg] or by means at 
least as fast and reliable as EXPRESS MAIL[supreg]. Personal service is 
not required.


Sec.  42.407  Filing date.

    (a) Complete petition. A petition to institute a derivation 
proceeding will not be accorded a filing date until the petition 
satisfies all of the following requirements:
    (1) Complies with Sec. Sec.  42.404 and 42.405, and
    (2) Service of the petition on the correspondence address of record 
as provided in Sec.  42.406.
    (b) Incomplete petition. Where the petitioner files an incomplete 
petition, no filing date will be accorded, and the Office will dismiss 
the petition if the deficiency in the petition is not corrected within 
the earlier of either one month from notice of the incomplete petition, 
or the expiration of the statutory deadline in which to file a petition 
for derivation.

Instituting Derivation Proceeding


Sec.  42.408  Institution of derivation proceeding.

    (a) An administrative patent judge institutes, and may as necessary 
reinstitute, the derivation proceeding on behalf of the Director.
    (b) Additional derivation proceeding. The petitioner may suggest 
the addition of a patent or application to the derivation proceeding. 
The suggestion should make the showings required under Sec.  42.405 and 
explain why the suggestion could not have been made in the original 
petition.

After Institution of Derivation Proceeding


Sec.  42.409  Settlement agreements.

    An agreement or understanding under 35 U.S.C. 135(e) is a 
settlement for the purposes of Sec.  42.74.


Sec.  42.410  Arbitration.

    (a) Parties may resort to binding arbitration to determine any 
issue. The Office is not a party to the arbitration. The Board is not 
bound by, and may independently determine, any question of 
patentability.
    (b) The Board will not set a time for, or otherwise modify the 
proceeding for, an arbitration unless:
    (1) It is to be conducted according to Title 9 of the United States 
Code;
    (2) The parties notify the Board in writing of their intention to 
arbitrate;
    (3) The agreement to arbitrate:
    (i) Is in writing;
    (ii) Specifies the issues to be arbitrated;
    (iii) Names the arbitrator, or provides a date not more than 30 
days after the execution of the agreement for the selection of the 
arbitrator;
    (iv) Provides that the arbitrator's award shall be binding on the 
parties and that judgment thereon can be entered by the Board;
    (v) Provides that a copy of the agreement is filed within 20 days 
after its execution; and
    (vi) Provides that the arbitration is completed within the time the 
Board sets.
    (c) The parties are solely responsible for the selection of the 
arbitrator and the conduct of the arbitration.
    (d) The Board may determine issues the arbitration does not 
resolve.
    (e) The Board will not consider the arbitration award unless it:
    (1) Is binding on the parties;
    (2) Is in writing;
    (3) States in a clear and definite manner each issue arbitrated and 
the disposition of each issue; and
    (4) Is filed within 20 days of the date of the award.
    (f) Once the award is filed, the parties to the award may not take 
actions inconsistent with the award. If the award is dispositive of the 
contested subject matter for a party, the Board may enter judgment as 
to that party.


Sec.  42.411  Common interests in the invention.

    The Board may decline to institute, or if already instituted the 
Board may issue judgment in, a derivation proceeding between an 
application and a patent or another application that are commonly 
owned.


Sec.  42.412  Public availability of Board records.

    (a) Publication. (1) Generally. Any Board decision is available for 
public inspection without a party's permission if rendered in a file 
open to the public pursuant to Sec.  1.11 of this chapter or in

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an application that has been published in accordance with Sec. Sec.  
1.211 to 1.221 of this chapter. The Office may independently publish 
any Board decision that is available for public inspection.
    (2) Determination of special circumstances. Any Board decision not 
publishable under paragraph (a)(1) of this section may be published or 
made available for public inspection if the Director believes that 
special circumstances warrant publication and a party does not petition 
within two months after being notified of the intention to make the 
decision public, objecting in writing on the ground that the decision 
discloses the objecting party's trade secret or other confidential 
information and stating with specificity that such information is not 
otherwise publicly available.
    (b) Record of proceeding. (1) The record of a Board proceeding is 
available to the public, unless a patent application not otherwise 
available to the public is involved.
    (2) Notwithstanding paragraph (b)(1) of this section, after a final 
Board decision in or judgment in a Board proceeding, the record of the 
Board proceeding will be made available to the public if any involved 
file is or becomes open to the public under Sec.  1.11 of this chapter 
or an involved application is or becomes published under Sec. Sec.  
1.211 to 1.221 of this chapter.

    Dated: September 4, 2012.
David J. Kappos,
Under Secretary of Commerce for Intellectual Property and Director of 
the United States Patent and Trademark Office.
[FR Doc. 2012-22204 Filed 9-10-12; 8:45 am]
BILLING CODE 3510-16-P