In a 2-1 decision Friday the U.S. Court of Appeals for the Federal Circuit pretty much sided with the Patent and Trademark Office and overturned a summary judgment that the agency overstepped its authority when it presumed to change its rules a couple of years ago.

The new rules are said to threaten innovation.

In fact, the court's dissenting opinion agreed that they "drastically change the existing law and alter an inventor's rights and obligations under the Patent Act," which is why the case has been so closely watched and generated so many friend-of-the-court briefs.

Even the decision waving the rules through on the basis that they were procedural and not substantive changes had to admit that "the USPTO may in some cases attempt to apply the rules in a way that makes compliance impossible and substantively deprives applicants of their rights. In such cases, judicial review will be available."

The PTO claims they'll help reduce its backlog of patent applications and the Linux folk at PubPat and its friends such as the Software Freedom Law Center claim they will curtail some patent abuse and junk patents, which is why they filed an amicus brief backing the PTO.

The new rules, which continue to be on hold, limit the number of claims that can be made in an application to five independent claims or 25 claims in total and limit the number of continuing applications to three. An applicant is also supposed to provide all prior art and show why his widgetry trumps what went before.

However, the appeals court unanimously shot down the PTO's attempt to limit continuation requests to two and said that was contrary to the Patent Act.

The case will now go back to the district court in Virginia that gave GlaxoSmithKline its summary judgment and that court could still find the new rules are "impermissibly vague or retroactive," "arbitrary and capricious," or at variance with the Patent Act in ways not addressed by the appeals court.

The plaintiffs could also seek en banc review by the appeals court.

Critics are concerned that the PTO may now take in into its head to make still more rules.