'This might happen where the applicant discovers a product that might be covered by the claims but wants to be sure and so files additional claims in a continuation to specifically cover that product. '
A continuation is a later application filed during the pendency of an earlier application and which has the same specification (disclosure) as the prior application. Usually this is done to change (improve) the claims. The continuation does not necessarily mean the original application is dead, although most often the applicant, having improved the claims, no longer needs the prior application and abandons it. Normally that abandonment is expressly done in a transmittal letter accompanying the continuation when filed. If the continuation adds new subject matter to the specification, it is called a "continuation in part" since only part is the same specification. If the continuation has claims to a different invention, it is called a "divisional" rather than a continuation, since a divisional carves out or divides out a different invention found in the same specification. Just like any other application, either the first application (called the "parent" case) or the continuation, or both, may be searched, examined, rejected, or allowed by the Patent Office if the basic, search and examination fees were paid, and either the parent case, the continuation case, or both, may be abandoned or issue as a patent. So it's possible that both the original application and the continuation would result in (separate) patents being issued.
Think of the original application as a lit candle that stays lit as long as the application is pending. So long as the candle is lit, it can be used to light other candles. Those other candles are the continuation, divisional or continuation-in-part applications. Once the two applications are being processed, they are each judged on their merits. US patent law allows applicants to file as many continuations as they like and in whatever series. The only restriction is that you need a lit candle (pending application) to light another candle. And each candle can be considered to have been lit on the date the first candle was lit.
(2) Does a significant change in the continuation application mean that the original application(s) was/were flawed and/or incomplete? How does this affect the new patent application credibility?
No, it doesn't mean the original was necessarily flawed or incomplete. Rather, there are many varied strategies used by patent applicants when building a patent family. Most often continuations result from improvements to the invention or a desire to add claims after examination has been concluded. This might happen where the applicant discovers a product that might be covered by the claims but wants to be sure and so files additional claims in a continuation to specifically cover that product. That product might be the applicant's product or might be a competitive product that the applicant wants to stop as an infringement. As noted in (1) above, the continuation may be what is called a divisional to cover a separate invention disclosed in the parent case. There is some times strategic sense to including multiple inventions in a single case and then filing divisional cases. In the lit candle example, this might be where the first candle was described as red, white or blue and the examiner says those are 3 separate inventions, so the applicant "elects" to prosecute the red candle in the first case and files 2 divisional applications, one to a white candle and one to a blue candle. Three candle patents might result from this.
(3) Assuming the continuation application builds upon the prior application (ergo, requiring prior art pertaining to original claims to predate the previous filing date), how does prior art on ADDED or CHANGED items affect the application, i.e. does prior art for new/changed claims also need to predate the ORIGINAL filing date?
As to all matter disclosed in the parent case, a continuation gets the priority date of the parent application from which it is derived. An applicant can have a continuation of a continuation of a continuation in part of a ..., going on for years) and each will get an "effective filing date" of the first filed application in the chain. Just for one example, US Patent 6,442,336 says:
"This application is a continuation of application Ser. No. 08/110,861, filed Aug. 24, 1993, now U.S. Pat. No. 5,446,599 which is a division of application Ser. No. 07/818,168, filed Jan. 8, 1992, now U.S. Pat. No. 5,260,837, which is a division of application Ser. No. 07/325,768, filed Mar. 20, 1989, abandoned, which is a continuation-in-part of application Ser. No. 06/877,319, filed Jun. 23, 1986, now U.S. Pat. No. 4,819,101, which is a continuation of application Ser. No. 06/516,532, filed Jul. 25, 1983, now U.S. Pat. No. 4,604,668, which is a continuation of application Ser. No. 06/209,057, filed Nov. 21, 1980, abandoned."
