[Federal Register Volume 73, Number 47 (Monday, March 10, 2008)]
[Proposed Rules]
[Pages 12679-12684]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-4744]


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DEPARTMENT OF COMMERCE

 Patent and Trademark Office

37 CFR Part 1

[Docket No. PTO-P-2006-0004]
RIN 0651-AC00


Examination of Patent Applications That Include Claims Containing 
Alternative Language

AGENCY: United States Patent and Trademark Office, Commerce.

ACTION: Proposed rule; request for comment on initial regulatory 
flexibility analysis.

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[[Page 12680]]

SUMMARY: The United States Patent and Trademark Office (Office) 
published a notice proposing to revise the rules of practice pertaining 
to any claim using alternative language to claim two or more 
independent and distinct inventions (Alternative Claims Notice of 
Proposed Rule Making). The Office has prepared an initial regulatory 
flexibility analysis (IRFA) on this proposed change to the rules of 
practice. This notice publishes the IRFA and requests public comment on 
the IRFA. This notice also invites public comment on the Alternative 
Claims Notice of Proposed Rule Making.

DATES: Written comments on the IRFA or Alternative Claims Notice of 
Proposed Rule Making must be received on or before April 9, 2008. No 
public hearing will be held.

ADDRESSES: Comments should be sent by electronic mail message over the 
Internet. Comments on the IRFA should be addressed to [email protected], and comments on the proposed rule changes in 
the Alternative Claims Notice of Proposed Rule Making should be 
addressed to [email protected]. Comments may also be submitted 
by mail addressed to: Mail Stop Comments--Patents, Commissioner for 
Patents, P.O. Box 1450, Alexandria, VA 22313-1450, or by facsimile to 
(571) 273-7754, marked to the attention of Kathleen Kahler Fonda, Legal 
Advisor, Office of Patent Legal Administration. Although comments may 
be submitted by mail or facsimile, the Office prefers to receive 
comments via the Internet.
    Comments may also be sent by electronic mail message over the 
Internet via the Federal eRulemaking Portal. See the Federal 
eRulemaking Portal Web site (http://www.regulations.gov) for additional 
instructions on providing comments via the Federal eRulemaking Portal.
    The comments will be available for public inspection at the Office 
of the Commissioner for Patents, located in Madison East, Tenth Floor, 
600 Dulany Street, Alexandria, Virginia, and will be available on the 
Office's Internet Web site at (http://www.uspto.gov). Because comments 
will be made available for public inspection, information that the 
submitter does not desire to make public, such as an address or phone 
number, should not be included in the comments.

FOR FURTHER INFORMATION CONTACT: Kathleen Kahler Fonda, Legal Advisor, 
Office of the Deputy Commissioner for Patent Examination Policy, by 
telephone at (571) 272-7754; by mail addressed to: Box Comments 
Patents, Commissioner for Patents, P.O. Box 1450, Alexandria, VA 22313-
1450; or by facsimile to (571) 273-7754, marked to the attention of 
Kathleen Kahler Fonda.

SUPPLEMENTARY INFORMATION: The Office published the Alternative Claims 
Notice of Proposed Rule Making in the Federal Register in August of 
2007. See Examination of Patent Applications That Include Claims 
Containing Alternative Language, 72 FR 44992 (Aug. 10, 2007), 
republished at 1322 Off. Gaz. Pat. Office 22 (Sept. 4, 2007). This 
notice supplements the Alternative Claims Notice of Proposed Rule 
Making. The Alternative Claims Notice of Proposed Rule Making indicated 
that the changes being proposed involve rules of agency practice and 
procedure for which prior notice and an opportunity for public comment 
are not required pursuant to 5 U.S.C. 553 (or any other law), and thus 
neither a regulatory flexibility analysis nor a certification under the 
Regulatory Flexibility Act (5 U.S.C. 601 et seq.) is required under 5 
U.S.C. 603. See Examination of Patent Applications That Include Claims 
Containing Alternative Language, 72 FR at 44999.
    The Office received several comments concerning the impact of the 
proposed rules on small businesses and independent inventors. The 
Office continues to believe that a regulatory flexibility analysis is 
not required for the Alternative Claims Notice of Proposed Rule Making. 
The Office, however, has decided to subject the proposed rules to a 
regulatory flexibility analysis to provide a further opportunity for 
comment on the small business impact of the proposed rules. 
Specifically, the Office has commissioned a detailed analysis of the 
impact of the proposed rules on small entities, and has prepared an 
IRFA. This notice publishes and requests public comment on the IRFA.
    The Alternative Claims Notice of Proposed Rule Making indicated 
that comments on the proposed changes to the rules of practice were to 
have been submitted by October 9, 2007. This notice also provides 
another opportunity to submit comments on the changes to the rules of 
practice proposed in the Alternative Claims Notice of Proposed Rule 
Making.
    1. Description of the reasons that action by the agency is being 
considered: The Office is proposing to revise the rules of practice 
pertaining to any claim using alternative language because patent 
applicants sometimes use Markush or other alternative formats to claim 
two or more independent and distinct inventions and/or to recite 
hundreds, if not thousands, of alternative embodiments in one claim. 
Such claims are confusing, difficult to understand, and frequently 
border on being unmanageable. Proper search of such complex claims, 
particularly those using Markush language, often consume a 
disproportionate amount of Office resources as compared to other types 
of claims. The prosecution of these complex claims likewise often 
requires separate examination and patentability determinations for each 
of the alternatives within the claim, e.g., if the alternatives raise 
separate prior art, enablement, or utility issues. Furthermore, the 
variety and frequency of alternatives recited in claims filed in 
applications pending before the Office, driven in part by trends in 
emerging technologies, have exacerbated problems with pendency. See 
Examination of Patent Applications That Include Claims Containing 
Alternative Language, 72 FR at 44992-97.
    2. Succinct statement of the objectives of, and legal basis for, 
the proposed rules: The objective of the proposed changes is to improve 
practices pertaining to claims that recite alternatives in a manner 
that will enhance the Office's ability to grant quality patents that 
effectively promote innovation in a timely manner. See Examination of 
Patent Applications That Include Claims Containing Alternative 
Language, 72 FR at 44992. The authority for the proposed changes is 35 
U.S.C. 2(b)(2)(A) and (C) (authorizes the establishment of regulations 
to govern the conduct of proceedings in the Office and facilitate and 
expedite the processing of patent applications), 112 (requires 
applicants to submit one or more claims particularly pointing out and 
distinctly claiming the subject matter which the applicant regards as 
his invention), 121 (authorizes the Office to restrict an application 
to a single invention when two or more independent and distinct 
inventions are claimed), and 131 (authorizes the Office to cause an 
examination to be made of an application). See In re Harnisch, 631 F.2d 
716, 722 n.6, 206 USPQ 300, 306 n.6 (CCPA 1980) (inviting the Office to 
exercise its rule making powers to forestall procedural problems 
arising from Markush claims).
    3. Description and estimate of the number of affected small 
entities: The Small Business Administration (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

[[Page 12681]]

regulations generally define small businesses as those with fewer than 
a 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. The Office, however, has 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 (Nov. 20, 2006).\1\
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    \1\ This alternate small business size standard is the 
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 the 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.
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    Unlike the SBA small business size standards set forth in 13 CFR 
121.201, this size standard 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.
    The proposed rule will apply to any such small entity who files a 
patent application and chooses to use alternative language in claiming 
his or her invention. To estimate the number of applications containing 
alternative language that are submitted by small entities, Office staff 
analyzed applications filed in fiscal year 2005 (FY05) (the most recent 
year for which complete eighteen-month publication data are available). 
Using the preceding definition of small entity, the Office screened 
these published applications for commonly used alternative language 
(e.g., ``contains one selected from the group consisting of'') and 
identified 20,824 small entity applications as containing alternative 
language and, therefore, as potentially affected by the proposed rule. 
The Office estimates that this represents approximately 31 percent of 
total applications containing alternative language.
    As anticipated, a larger proportion of applications containing 
alternative language is concentrated in the biotechnology/chemical arts 
(an estimated 9,186 of the 21,187 small entity applications in the 
biotechnology/chemical arts or 43.4 percent). The remaining 
applications with alternative language are distributed throughout the 
electrical and mechanical arts (an estimated 11,638 of the 73,831 small 
entity applications in the electrical/mechanical arts or 15.8 percent). 
These results are summarized in Table 1.

                                   Table 1.--Small Entity Applications (FY05)
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                                                                                     Number of
                                                                                   small entity
                                                                     Number of     applications
                           Type of art                             small entity     containing        Percent
                                                                   applications     alternative
                                                                                     language
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Biotechnology/Chemical Applications.............................          21,187           9,186            43.4
Electrical/Mechanical Applications..............................          73,831          11,638            15.8
                                                                 -----------------------------------------------
    Total Applications..........................................          95,018          20,824            21.9
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    4. Description of the projected reporting, recordkeeping and other 
compliance requirements of the proposed rules, 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: The proposed rule could potentially impact applicants 
in two ways. First, it would require that a claim must be limited to a 
single invention. Consequently, if a submitted application contains a 
single claim that defines multiple independent and distinct inventions, 
then the examiner may apply a restriction requirement. See Examination 
of Patent Applications That Include Claims Containing Alternative 
Language, 72 FR at 44995. In this case of an intra-claim restriction, 
applicants who wish to pursue patent protection for the full scope 
covered by their initial application would have to file a divisional 
application for each additional invention defined in that original 
claim. For example, if a single claim contains three independent and 
distinct inventions and the Office requires restriction, the applicant 
could file two divisional applications to prosecute the full scope of 
the original claims. Alternatively, the applicant could elect not to 
file any divisional applications, in which case he or she would be 
limited to the one invention elected in the initial application.
    To estimate the costs of one divisional application, the Office is 
using unit cost data from the American Intellectual Property Law 
Association (AIPLA) Report of the Economic Survey \2\ and the Office 
fee schedule for fiscal year 2007. Based on these data, the Office 
estimates that the cost of filing one divisional application is $10,258 
(expressed in present value terms using a 7 percent discount rate). The 
cost faced by applicants could be greater than this amount if the 
applicant files more than one divisional.
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    \2\ AIPLA Report of the Economic Survey 2007. Table Q33g, Third 
Quartile, ``Patent application amendment/argument, relatively 
complex, biotechnology/chemical (Preparation and Filing).'' Page I-
74; Table Q33l, Third Quartile, ``Issuing an allowed application 
(all post-allowance activity).'' Page I-81; Table Q33n, Third 
Quartile, ``Pay a Maintenance Fee.'' Page I-76.
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    Second, the proposed rule allows examiners to require applicants to 
simplify the presentation of claims with alternative language so that:

[[Page 12682]]

    (1) The number and presentation of alternatives in a single claim 
are not difficult to construe.
    (2) No alternative is itself defined as a set of further 
alternatives within the claim.
    (3) No alternative is encompassed by any other alternative within a 
list of alternatives unless there is no other practical way to define 
the invention.
    (4) All alternatives are substitutable for each other.
    See Examination of Patent Applications That Include Claims 
Containing Alternative Language, 72 FR at 44996.
    Consequently, if an examiner determines that a claim does not 
comply with one or more of the format requirements listed above, the 
applicant can be required to correct the claim. The applicant would 
provide this correction to the claim by submitting an amendment to the 
application.
    To estimate the cost of amending an application in order to correct 
the format of the claim(s), the Office is using unit cost data on 
amendments from the AIPLA Report of the Economic Survey.\3\ Based on 
the AIPLA data, the Office estimates that the cost of filing one 
amendment to correct the format of the claim(s) is $4,029 (expressed in 
present value terms using a 7 percent discount rate). The cost faced by 
applicants could be less than or greater than this amount, depending on 
how difficult it is to correct the format of the claim(s).
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    \3\ AIPLA Report of the Economic Survey 2007. Table Q33g, Third 
Quartile, ``Patent application amendment/argument, relatively 
complex, biotechnology/chemical (Preparation and Filing).'' Page I-
74.
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    Any particular application containing alternative language could be 
impacted by either, both, or neither of these two effects, and would 
fall into one of the following four categories:
    (1) Applications with alternative language that do not claim 
multiple inventions in a single claim and have claim(s) in a proper 
format.
    (2) Applications with alternative language that claim multiple 
inventions in a single claim and have claim(s) in a proper format.
    (3) Applications with alternative language that do not claim 
multiple inventions in a single claim but have claim(s) in an improper 
format.
    (4) Applications with alternative language that claim multiple 
inventions in a single claim and have claim(s) in an improper format.
    Applications within the first of these categories have 
``acceptable'' alternative language, and small entities submitting such 
applications would not incur any incremental costs of note. The 
remaining three categories, however, contain applications that 
generally would lead to incremental costs. Applications in category 4, 
which require both a divisional application and an amendment, incur the 
greatest cost ($14,287). Table 2 summarizes the compliance activities 
and corresponding cost estimates.

                  Table 2.--Incremental Cost Estimates
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                                                           Cost (present
                   Compliance activity                        value)
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Category 1 applications containing acceptable                       n.a.
 alternative language...................................
Category 2 applications needing one divisional                   $10,258
 application............................................
Category 3 applications needing one amendment to correct           4,029
 the format of the claim(s).............................
Category 4 applications needing one divisional                    14,287
 application and one amendment to correct the format of
 the claim(s)...........................................
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    To estimate the number of small entity applications in each 
category, the Office examined a sample of 102 FY05 small entity 
applications with alternative language from the biotechnology/chemical 
arts and 57 FY05 small entity applications with alternative language 
from the electrical/mechanical arts. For these applications, the Office 
identified and categorized the impact of the proposed rule. The Office 
then scaled these findings to the overall number of small entity 
applications.
    Using this methodology, the Office estimates that 82 percent of 
affected small entity applications in the biotechnology/chemical arts 
and 98 percent of affected small entity applications in the electrical/
mechanical arts would fall into category 1 and would not incur any 
notable incremental costs associated with the rule. The remaining 18 
percent of affected small entity applications in the biotechnology/
chemical arts and 2 percent of affected small entity applications in 
the electrical/mechanical arts would incur costs to comply with the 
proposed rule requirements. In total, the analysis shows that an 
estimated 1,825 small entity applications would incur compliance costs 
under the proposed rule. Table 3 summarizes these results.

           Table 3.--Small Entity Applications Containing Alternative Language by Cost Impact Category
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                                                   Biotechnology/          Electrical/              Total
                                                      chemical             mechanical      ---------------------
                                                  applications FY05     applications FY05
                                               --------------------------------------------   Number    Percent
                                                  Number    Percent     Number    Percent
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Category 1: Small entity applications with          7,565         82     11,434         98     18,999         91
 acceptable alternative language..............
Category 2: Small entity applications with            991         11        204          2      1,195          6
 alternative language that claim multiple
 inventions in a single claim.................
Category 3: Small entity applications with            270          3          0          0        270          1
 alternative language that have claim(s) in an
 improper format..............................
Category 4: Small entity applications with            360          4          0          0        360          2
 alternative language that claim multiple
 inventions in a single claim and have
 claim(s) in an improper format...............
Total Small Entity Applications with                9,186        100     11,638        100     20,824        100
 Alternative Language (Categories 1-4)........

[[Page 12683]]

 
Total Small Entity Applications with a Cost         1,621         18        204          2      1,825          9
 Impact (Categories 2-4)......................
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    In the Office's analysis of these applications, the number of 
claims in an improper format ranged from one to four claims per 
application. Some applications had only dependent claims that were in 
an improper format, while others had only independent claims that were 
in an improper format. One application had independent and dependent 
claims in an improper format. Although the incremental cost faced by 
applicants could vary depending on the complexity and number of claims 
needing correction, the Office's use of AIPLA's 75th percentile unit 
cost estimate for an amendment already accounts for some variation in 
costs (i.e., the 75th percentile may be a high estimate for most 
applications) and would seem to be a conservative figure.
    In the Office's analysis of the sampled applications containing two 
or more independent and distinct inventions that are claimed in the 
alternative in a single claim, the median number of divisional 
applications required to maintain the scope of the application was 5, 
although some applications would have required more than 100 divisional 
applications to maintain scope.
    The wide variation in the estimated number of divisional 
applications is informative when considering the cost impact of the 
proposed rule for small entity applicants. However, the Office believes 
that an applicant would need to file at most approximately seven 
divisional applications following an examiner's restriction 
requirement, even if more were needed to seek patent protection for the 
full scope of the originally claimed inventions.\4\ Therefore, while 
the cost impact of intra-claim restrictions could be as low as zero for 
applicants that elect not to maintain scope, it could range as high as 
the cost of seven divisional applications (present value of 
approximately $42,000). However, the Office believes these applications 
are relatively few in number and the impact for most applicants will be 
far less.
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    \4\ Applicants may file divisional applications sequentially to 
keep a case pending for the lifetime of a patent (twenty years) to 
take advantage of the time to determine whether any of their 
inventions turn out to have market value. The least-cost method of 
achieving this result would involve an applicant pursuing one 
divisional application at a time over a twenty-year period. Assuming 
the prosecution of each divisional application lasts three years, an 
applicant would be able to minimize the total cost by filing 
approximately seven divisional applications during this period.
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    5. Description of any significant alternatives to the proposed 
rules which accomplish the stated objectives of applicable statutes and 
which minimize any significant economic impact of the proposed rules on 
small entities: The Office has considered a number of alternatives; 
however, none of these alternatives would accomplish the stated 
objectives of applicable statutes with a lesser economic impact on 
small entities.
    (1) Hiring more examiners: This alternative would increase the 
number of examiners available to review patent applications in general, 
thereby improving pendency. It would not lead to impacts on small 
entities. However, this alternative also would not make it any easier 
to review applications containing problematic alternative language. The 
Office is currently hiring as many examiners as resources permit. The 
Office's ability to hire qualified new examiners is affected by many 
components, such as budget, the economy, the availability of scientists 
and engineers, and the ability to absorb and train new employees. Thus, 
the Office already is employing this ``alternative'' to the extent that 
its resources permit, but relying upon this alternative ``alternative'' 
alone without taking additional steps would frustrate the Office's 
ability to grant quality patents in a timely manner that effectively 
promote innovation.
    (2) Charging additional fees for applications containing claims 
using alternative language: This option could reduce the number of 
affected small entities by creating a financial disincentive to 
submitting applications containing claims using alternative language. 
However, the Office's past efforts to seek patent fee adjustments does 
not lead to an expectation that the Office would be successful in 
obtaining a patent fee adjustment that would in fact recover the 
Office's actual cost of examining applications containing claims using 
alternative language. In addition, any patent fee adjustment for 
applications containing claims using alternative language that was 
sufficient to recover the Office's actual cost of examining 
applications would likely have a greater economic impact on a larger 
number of small entities than the proposed rule changes. Finally, for 
applicants that chose to submit alternative language despite the 
requirement to pay additional fees, this alternative would not improve 
the patent prosecution process or result in higher quality patents.
    (3) Limiting the number of species that may be presented in an 
application: The rules of practice currently provide that if an 
``application contains claims directed to more than a reasonable number 
of species, the examiner may require restriction of the claims to not 
more than a reasonable number of species before taking further action 
in the application.'' See 37 CFR 1.146. A rule that set out a per se 
limit on the number of species that may be claimed in an application 
would not accomplish the objective of the proposed rules of treating 
applications with two or more independent and distinct inventions 
presented in a single claim. Furthermore, the potential change in the 
scope of protection available via a single patent application likely 
would have a greater economic impact on larger number of small entities 
than the proposed rule changes.
    (4) Exempting small entities (or take no action): While exempting 
small entities from coverage of the proposed rules or any part thereof 
(or taking no action) would avoid any incremental economic impact on 
small entities, such exemption (or lack of action) would frustrate the 
Office's ability to grant quality patents in a timely manner that 
effectively promote innovation. It also would result in small entity 
applications (or, in the case of no action, all applications) with two 
or more independent and distinct inventions presented in single claim 
that either: (1) Consume a disproportionate share of Office examination 
resources per application and thus not effectively promoting innovation 
in a timely manner; or (2) receive a less thorough examination, which 
would decrease, rather than enhance, the Office's ability to grant 
quality patents. Finally, given

[[Page 12684]]

the Office's estimate (as previously noted) that close to one third of 
all patent applications containing alternative language are submitted 
by small entities, this alternative would greatly diminish the rule 
making's ability to improve the patent prosecution process and result 
in higher quality patents.
    6. Identification, to the extent practicable, of all relevant 
Federal rules which may duplicate, overlap or conflict with the 
proposed rules: The Office is the sole U.S. government agency 
responsible for administering the provisions of title 35, United States 
Code, pertaining to examination and granting patents. Therefore, no 
other federal, state, or local entity shares jurisdiction over the 
examination and granting patents.
    Other countries, however, 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 rules.
    7. Request for data and information in support of the Final 
Regulatory Flexibility Analysis: The Office welcomes comments 
addressing the economic impact on small entities of any or all 
provisions of the proposed rule. In particular, however, the Office is 
soliciting information on the following:
    1. Alternative approaches that would reduce the burden of the rule 
for small entities while meeting the Office's objectives.
    2. The costs of modifying an application that already is under 
review as needed to comply with the rule:
    a. The cost of filing one or more divisional applications.
    b. The cost of correcting a claim that is in an improper format, 
and factors that might cause this cost to vary.
    3. The number of patent applications submitted by unique small 
entities per year (or per decade).
    4. Factors that influence an applicant's decision to file 
divisional applications.
    5. Issues that might affect the combined impact of alternative 
language that requires intra-claim restriction and is of an improper 
format.
    6. The extent to which applicants will adjust to the new rules over 
time, such that future initial patent applications containing 
alternative language will comply with the proposed rule (i.e., the 
applications will not need to incur the cost of amendments or 
divisional applications due to alternative language that is of an 
improper format or requires intra-claim restriction).
    7. The benefits of the rule making.
    8. Other information related to this Initial Regulatory Flexibility 
Analysis, including any assumptions or findings stated above.

     Dated: March 5, 2008.
John Doll,
Commissioner for Patents.
 [FR Doc. E8-4744 Filed 3-7-08; 8:45 am]
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