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A USPTO Examination Policy Change You May Have Missed

Julie Burke

Julie Burke

David Gass

David Gass

Cover Image for A USPTO Examination Policy Change You May Have Missed

This article was originally published by Law360

With little fanfare, the latest Manual of Patent Examining Procedure revision in June inserted a subtle, but potentially significant, change to the first-action final rejection practice that may make the patent examination process more costly for patent applicants, and more profitable for the U.S. Patent and Trademark Office.

What Is the MPEP?

U.S. patents are granted only after the USPTO determines that a patent application satisfies all patentability requirements of federal patent laws and complies with regulations promulgated by the USPTO.

USPTO staff maintain also a Manual of Patent Examining Procedure, currently spanning thousands of pages, offering interpretation of the statute and regulations and instructions to examiners. The MPEP guides examiner behavior and, therefore, impacts the patent examination process. USPTO regulations are promulgated pursuant to the Administrative Procedure Act, which requires a process that includes publication of proposed rules and a public comment period.

Although the USPTO publishes the MPEP its changes to the MPEP do not necessarily involve public comment.

Patent Examination and the Difference Between Nonfinal and Final Rejections

Every patent applicant pays a search and examination fee to the USPTO,[1] and a patent examiner evaluates patentability. USPTO policy encourages examiners to prepare a thorough first examination report on the merits, or office action, identifying all perceived deficiencies,[2] to which the applicant has a legal right to respond.[3]

The USPTO classifies office actions as nonfinal or final. During nonfinal prosecution, examiners and applicants are interacting on a level playing field.

When responding to a nonfinal office action, a patent applicant has a right[4] to present amendments to the application or claims; legal and scientific arguments; and evidence in support of patentability, including documentary evidence and affidavits from experts. The examiner is required to address the merits of the applicant's response and reconsider the application. In the event that the applicant's reply does not place the application in condition for allowance, the examiner will issue a second office action. The second office action generally closes prosecution and is made final.[5]

Once final rejection closes prosecution, applicants and examiners are no longer practicing on a level playing field. Patent examiners have great discretion under USPTO rules to refuse to consider/enter most amendments and virtually complete discretion to refuse to consider further evidence or arguments, with only cursory review.[6]

A final rejection does not foreclose a patent applicant from pursuing a patent. The patent applicant can file a request for continued examination, or RCE, to remove the aforementioned constraints of a final rejection.[7] An RCE again permits the applicant to file amendments, arguments, and evidence, and demand reconsideration. An RCE also requires payment of a fee that is about double or triple the original examination fee![8]

An applicant also can simply refile the patent application to start the process again, a process that may cost less (in USPTO fees) than a second RCE, but comes with a steep trade-off: significant delay. Pendency from filing an RCE to next office action is averaging 2.2 months, while pendency from filing a new application, including a continuing application, to first office action is averaging 15.9 months.[9]

Although it is fairly well settled that a new patent application is entitled to a first office action on the merits that is nonfinal, the USPTO believes that it has discretion in determining whether or not a first office action following an RCE, or in a continuation application, is designated final.

A Change to Examination Practice Without Formal Notice and Comment

The latest MPEP revision in June[10] inserted a subtle, but potentially significant, change to the first-action final rejection practice. Of the 100-plus changes made to Chapter 700,[11] one broadens the first-action final rejection trigger, permitting a first-action final rejection when claims are "patentably indistinct" from previously presented claims. This change to MPEP Section 706.07(b) applies to both RCEs and continuation applications.

Because the USPTO discontinued the practice of providing revisions marks,[12] MPEP changes can be easily overlooked. The following markup shows how relevant portions of Section 706.07(b) were changed:

The claims of a new application may be finally rejected in the first Office action in those situations where (A) the new application is a continuing application of, or a substitute for, an earlier application, and (B) all claims of the new application (1) are drawn to the same invention claimed either identical to or patentably indistinct from the claims in the earlier application (in other words, restriction under 37 CFR 1.145 would not have been proper if the new or amended claims had been entered in the earlier application), and (2) would have been properly finally rejected on the grounds and art of record in the next Office action if they had been entered in the earlier application.

The claims of an application for which a request for continued examination (RCE) has been filed may be finally rejected in the action immediately subsequent to the filing of the RCE (with a submission and fee under 37 CFR 1.114) where all the claims in the application after the entry of the submission under 37 CFR 1.114 and any entered supplemental amendments (A) are drawn to the same invention claimed either identical to or patentably indistinct from the claims in the application prior to the entry of the submission under 37 CFR 1.114, and (B) would have been properly finally rejected on the grounds and art of record in the next Office action if they had been entered in the application prior to the filing of the RCE under 37 CFR 1.114.

By all indications, the USPTO intends these changes to apply retroactively to pending continuations and RCEs that were filed under the USPTO's old policy and awaiting USPTO action, irrespective of the applicant's expectations at the time of filing.

Does the USPTO Intend to Abolish Nonfinal Office Actions During Continuing Examination?

By broadening first-action final rejection's Section 706.07(b) criteria from "same invention" to "patentably indistinct," the USPTO appears to be permitting examiners to make a first action final rejection when there is more than a de minimis amendment to the claims.

In a practice that dates back to 1969, a first-action final rejection would have been found improper in this situation.[13] MPEP 804 defines the phrase "same invention" in the context of statutory double patenting under Title 35 of the U.S. Code, Section 101, which means that identical subject matter is being claimed twice.[14] Under the "same invention" standard, applicants and practitioners have come to expect that most claim amendments filed with an RCE will result in nonfinal office actions (or allowances).

The USPTO's new policy would appear to give examiners' discretion to issue a final rejection whenever the applicant files an RCE or a continuing application[15] with no claim amendments or with amended claims that are patentably indistinct from the claims that were previously examined.

What if the applicant files an RCE with claims to a patentably distinct invention? The USPTO has an established position on that question, grounded in the MPEP and the rules:

Applicants cannot file an RCE to obtain continued examination on the basis of claims that are independent and distinct from the claims previously claimed and examined as a matter of right (i.e., applicant cannot switch inventions). See 37 CFR 1.145. Any newly submitted claims that are directed to an invention that is independent and distinct from the invention previously claimed will be withdrawn from consideration and not entered.[16]

To summarize, established USPTO policy forbids a patent applicant from presenting independent and distinct claims in an RCE, and the new USPTO policy appears to give examiners discretion to issue immediate final rejections when an applicant presents claims that are not independent and distinct from the previously examined claims.

Paying More, Getting Less

Even under the existing practice scheme, RCE practice is stacked against a patent applicant. Although the examiner has become familiar with the application through an initial examination and a reconsideration, and the number of remaining patentability issues typically has been reduced (or at least better defined) by the time an applicant receives a final office action, the applicant pays substantially more to the USPTO for continued examination than is paid for the initial examination.

At the same time, the "count" system that the USPTO uses as a metric for patent examiner productivity awards less credit to examiners during examination following an RCE, and still less credit for second and subsequent RCEs:[17]

Current Fees for Large Entity Counts for a 1st Office action Counts for 1st and final Office actions, or counts for one FAFR
New Application Search fee [18] $660
New Application Examination fee $760
New Application combined search and examination fees $1,420 1.25 1.5
1st RCE fee $1,300 1.00 1.25
2nd and subsequent RCE fee $1,900 0.75 1.00

In simple terms, the USPTO has a long-standing policy that incentivizes patent examiners to spend significantly less time during continued examination, even though the USPTO charges patent applicants more for the privilege of receiving continued examination.

The new first-action final rejection policy threatens to exacerbate this trend of paying more, but getting less. With a new application, the patent applicant is guaranteed a nonfinal first office action; a right to file amendments, arguments and evidence; and a right to full reconsideration as outlined above.

A patent applicant also could typically expect a nonfinal office action following an RCE (or in a continuation application) under the "same invention" criteria of previous versions of the MPEP, as long as the applicant filed a meaningful claim amendment. Under the revised MPEP, the situations in which patent applicants will receive a nonfinal rejection following an RCE may be greatly reduced.[19]

The count system rewards examiners the same, whether they prepare a first office action, reconsider the substance of applicant's reply and then prepare a second, final office action or whether they skip the first nonfinal office action altogether and go straight for a first-action final rejection.

No Advance Notice of the June Policy Change for MPEP 706.07(b)?

Normally, USPTO personnel are alerted of upcoming policy changes, including advance notice of changes to the MPEP, by way of memoranda to the examining corps. These memoranda are posted on the USPTO website[20] and available to patent practitioners, covering topics such as the "Reminder Concerning Terminal Disclaimers" on Oct. 19, 2017, and the "Advance Notice of Change to MPEP 2131.03" on Jan. 28, 2016.

The authors are unable to find any memorandum to the examining corps which announces the change to first-action final rejection policy introduced in MPEP 706.07(b).

The USPTO also announces upcoming policy changes via the Federal Register notice. The authors found only one Federal Register notice[21] pertaining to the June MPEP revision, which was dated after the MPEP release and which did not specifically identify a change to MPEP 706.07(b) nor provide any rationale to account for the change in policy. Anecdotally, patent practitioners were caught unaware by the June revisions to Section 706.07(b).

Had the USPTO wished to implement a change to first-action final rejection by formal rulemaking, it would have announced the change, which would have been the subject of a period of public comment. Indeed, in January 2006, the USPTO generated a set of rules[22] that, if implemented, would have limited the number of continuation applications and RCEs that a patent applicant could file to pursue examination of patentably indistinct claims.

Similarities between motivation and potential effect of the 2006 proposed rules and the June 2020 revision to first-action final rejection practice can be inferred.

The 2006 proposed rules were promulgated in an attempt to address office resources being "absorbed by the examination of a second or subsequent continued examination filing [being] diverted away from the examination of new applications, thus increasing the backlog of unexamined applications."[23] In the 2006 proposed rules, the USPTO attributed applicants with filing 52,870 RCEs as compared to 289,000 new applications (18.29%). While no rationale has been provided for the June 2020 revision to first-action final rejection practice, it appears that the USPTO is once again trying to reduce examiner time spent on about 105,000 RCEs[24] filed in the last year as compared to 570,329 new applications[25] (18.4%).

The 2006 proposed rules generated considerable public comment — much of it negative — and resulted in lawsuits alleging that the rules overstepped the USPTO's rulemaking authority and violated the law. After years of litigation during which implementation of the rules was enjoined, the USPTO voluntarily withdrew this controversial, unpopular rules package in late 2009.

It remains to be seen how the USPTO will implement the June first-action final rejection policy change and how patent applicants will respond.


Julie Burke, Ph.d., is the founder of IP Quality Pro LLC. She is a former USPTO Technology Center 1600 quality assurance specialist.

David Gass is a partner at Marshall Gerstein & Borun LLP.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] At the time of writing, the search and examination fees are $660 and $760, respectively, with discounts available for applicants that qualify as a small entity. These will increase to $700 and $800, respectively, in October 2020.

[2] See 37 CFR 1.104.

[3] See 35 USC § 132.

[4] See 37 CFR 1.112.

[5] See 37 CFR 1.113.

[6] See 37 CFR 1.116; MPEP 714.13(II)-(III).

[7] An applicant also can appeal to the Patent Trial and Appeals Board, a process beyond the scope of this article.

[8] The undiscounted fee for a first RCE is $1300 and each subsequent RCE is $1900. These increase to $1360 and $2000, respectively, in October 2020.

[9] USPTO Data Visualization Center accessed August 7, 2020, at https://www.uspto.gov/dashboard/patents/pendency.html.

[10] Manual of Patent Examining Procedure, E9R10.2019. Fed. Reg. Vol. 85, No. 133 page 41,571.

[11] Executive Summary and Change Summary for the E9R10.2019 available at https://www.uspto.gov/web/offices/pac/mpep/mpep-0005-change-summary.html.

[12] Instruction Regarding the Ninth Edition dated March 2014 available at https://www.uspto.gov/web/offices/pac/mpep/old/e9r0/mpep-0005-change-summary.pdf.

[13] The long-standing practice permitting FAFR when claims of the new application are "drawn to the same invention claimed in the earlier application" was introduced in the 1969 First Action Final Rejection Notice. See 861 Official Gazette Patent Office 1011 (April 22, 1969) (1969 First Action Final Notice).

[14] See MPEP 804, discussing In re Vogel, 422 F.2d 438 (CCPA 1970).

[15] The new FAFR Policy and its effects on Continuation Practice will be covered in a subsequent article.

[16] See MPEP 706.07(h), subsection VI.(B) and MPEP 819. "The general policy of the Office is that applicants are not permitted to shift to claim another invention after an election is made and an Office action on the merits is made on the elected invention. The applicant cannot, as a matter of right, file a request for continued examination (RCE) on claims that are independent and distinct from the claims previously claimed and examined (i.e., applicant cannot switch inventions by way of an RCE as a matter of right). See MPEP § 706.07(h), subsection VI.(B)."

[17] Counts in the following table are based upon publicly available information. The USPTO's updates to the Examiner's Performance and Appraisal Plan announced October 2019 do not appear to have been made publicly available as of this time. https://www.uspto.gov/patent/laws-and-regulations/examination-policy/updates-patent-examination-time-applicationrouting.

[18] The search fee is only charged for a new application. In continuing applications, including RCEs, the Examiner reviews and relies upon prior search notes and brings the search up to date, tasks less time consuming and burdensome that formulation and conducting the original search. See MPEP 904. Whether an RCE requires an examiner to update his/her initial search is a case-specific matter.

[19] The changes to MPEP 706.07(b) did not eliminate Applicant's entitlement to a non-final Office action in one circumstance, a topic to be covered in a second article: "It would not be proper to make final a first Office action in a continuing or substitute application or an RCE where that application contains material which was presented in the earlier application after final rejection or closing of prosecution but was denied entry because (A) new issues were raised that required further consideration and/or search, or (B) the issue of new matter was raised."

[20] https://www.uspto.gov/patent/laws-and-regulations/examination-policy/memorandaexamining-corps.

[21] Manual of Patent Examining Procedure, E9R10.2019. Fed. Reg. Vol. 85, No. 133 page 41,571.

[22] Changes to practice for continuing applications requests for continued examination and applications containing patentably indistinct claims. Fed Reg Vol 71, No. 1 Jan. 3, 2006. Pages 48-61.

[23] 2006 Fed. Reg. page 51, first column.

[24] Statistics obtained from the USPTO dashboard, accessed July 24, 2020 https://www.uspto.gov/corda/dashboards/patents/main.dashxml?CTNAVID=1004 accessed July 24, 2020.

[25] USPTO Data Visualization Center accessed at https://www.uspto.gov/dashboard/patents/production-unexamined-filing.html.

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