U.S. Patent Law Reform The America Invents Act
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1 U.S. Patent Law Reform The America Invents Act August 15, 2011 John B. Pegram Fish & Richardson
2 What s New in 2011? Patent Law Reform is high on Congressional agenda A desire to legislate Bipartisan Patent law reform is linked with job creation Frustration in Congress with industry s lack of willingness to compromise Congress has been listening to the PTO Increased focus on need for adequate PTO funding Many litigation issues have been addressed by the courts 2
3 Major Legislative Actions March 8, 2011 S. 23, renamed the America Invents Act, was adopted by the Senate in a 95-5 vote, following a few minor amendments. June 23, 2011 The House bill (H.R. 1249), based on the Senate version and prepared in cooperation between the House and Senate Judiciary Committee staffs, was approved by a vote. Now it appears likely that the Senate will approve the House version, either as-is or with few changes. 3
4 Topics Seven General Areas: PTO Fees & Funding Substantive Patent Law PTO Practice & Operations Post-Grant PTO Proceedings Litigation Special Interest Legislation Studies 4
5 PTO Fees & Funding The PTO will be granted fee-setting authority Subject to a rule-making and review procedure. As an interim measure: The Act specifies fees, similar to current fees, and The Act will impose a 15% surcharge on most fees, effective 10 days after signature by the President ( enactment ). (Sec. 11(i)). 5
6 PTO Fees & Funding A Prioritized Examination Fee of $4,800 would be established. This fee is in addition to the usual filing, search, examination, processing and publication fees. This fee will enable the PTO to begin its Prioritized Examination track later in
7 PTO Fees & Funding Small & Micro-entities The current 50% reduction in major fees for small entities would continue; A new category of micro entities would be entitled to a 75% fee reduction, Micro entity status will be available to certain applicants primarily employed by, or who assign their application to, an institution of higher education; and Additional fee categories would be subject to these reductions, including the fee for prioritized examination. 7
8 PTO Fees & Funding Fees collected by the PTO shall be solely for the use of the Office and any excess over the amounts authorized ( appropriated ) for expenditure shall be placed in a separate fund and will not be subject to diversion. (Sec. 22). The Senate s PTO revolving fund proposal was not approved by the House; therefore, annual appropriations will be necessary to approve PTO spending. 8
9 Substantive Patent Law The Act includes: The change from a first to invent system to the first inventor to file system. Prior art exceptions for applicants (personal grace period) A broadened scope of patent-defeating prior art Broad Prior User Rights provisions 9
10 The First Inventor to File System Priority would be based on application filing dates. Effective 18 months from enactment Adoption of this First-Inventor-to-File system is not conditioned on adoption by Europe & Japan of a U.S.-style grace period, as proposed in some prior House bills. The Act omits the 102(g) interference and prior art provisions, relating to an invention was previously made in this country by another inventor who had not abandoned, suppressed, or concealed it Patent interferences would be abolished, with transition provisions Derivation proceedings would be available before the renamed Patent Trial and Appeal Board. 10
11 Exceptions for Applicants (Personal Grace Period ) (1) Exceptions from Prior Art: The applicant s own disclosures within 1 year before the effective filing date (first priority date) of a U.S. application, and information derived therefrom. Includes Applicants own publications The grace period right is expanded in cases claiming foreign priorities and provisional applications. 11
12 Exceptions for Applicants (Personal Grace Period ) (2) Is a public use or on sale activity a disclosure for grace period purposes? Some people have said the Act is unclear. A legislative history cure was attempted in a colloquy on the House floor on June 22, 2011 between House Judiciary Chair Lamar Smith and Repr. Bass, who agreed Congress intends that the grace period in the new Section 102(b) cover the same type of actions by an inventor that otherwise might be a bar under the new Section 102(a). 12
13 Prior Art (1) The basic Novelty provisions in Section 102(a)(1) will be: A person shall be entitled to a patent unless--(1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention; The interpretation of or otherwise available to the public is likely to be disputed Proponents say that that legislative history supports an interpretation limiting the preceding phrases, but Others may argue that it is stated in the alternative to the preceding phrases, and that the clear literal meaning precludes resort to legislative history. 13
14 Prior Art (2) The Forgotten Changes would expand the scope of prior art: U.S. patents and published patent applications of other persons effectively filed before the effective filing date of the claimed invention would be included in the prior art. Effectively filed includes foreign priority dates In re Hilmer doctrine would be abolished The priority date will be the effective date for both noveltydefeating and obviousness Many other countries do not use patent publications as of the priority date for inventive step determinations (Continued) 14
15 Prior Art (3) The Forgotten Changes (continued) Prior use and on sale activities: No longer would be limited to in this country ; and On sale would still include offers for commercial sale (literally broader than many other countries prior art laws), and Query whether applicants and third party offers, sales and uses, which do not reveal the claimed invention, will be prior art Likely to depend on interpretation of or otherwise available to the public in 102(a)(1) 15
16 Prior User Rights The prior user defense in 35 U.S.C. 273 would be expanded to cover commercial use of the subject matter of a patent in the United States, without current restriction to business methods. (Sec. 5). Effective for patents issued on or after date of enactment This defense would not be applicable where the subject matter of the patent was developed pursuant to a federal government funding agreement, or by a nonprofit institution of higher education or an affiliated technology transfer organization that did not receive private funding in support of that development. 16
17 PTO Practice & Operations (1) The PTO was not granted substantive rulemaking authority Third Party submissions would be encouraged at any time before issuance, including: Patents and printed publication prior art, and Statements of the patent owner before a federal court or the Office taking a position on the scope of any claim of a particular patent. (See Sec. 6(g) and 8) 17
18 PTO Practice & Operations (2) Assignee filing of applications would be permitted by both bills; however, an inventor s oath or declaration would be required before patent grant. (Sec. 4). 18
19 Post Grant PTO Proceedings Ex Parte Reexamination This procedure continues Inter Partes Reexamination To be replaced by new procedures Supplemental Examination New Post-Grant Review New Inter Partes Review New Key Issue Threshold to start the proceeding 19
20 Ex Parte Reexamination Central Reexamination Unit (CRU) apparently would retain responsibility for Ex Parte Reexamination. The present threshold of a substantial new question of patentability (SNQ) would continue. 20
21 Inter Partes Reexamination Inter-partes reexamination would be abolished, effective 1 year from enactment A transitional provision provides for Inter Partes Reexamination requests filed on or after date of enactment: The threshold would change: From a substantial new question of patentability affecting any claim To a reasonable likelihood that the requester would prevail with respect to at least 1 of the claims challenged in the request. 21
22 Supplemental Examination (1) Inequitable Conduct may be purged & unenforceability avoided by Supplemental Examination: Purpose is to permit the Office to consider, reconsider, or correct information believed by the patentee to be relevant to the patent, Supplemental Examination would consider each Substantial New Question (SNQ) of patentability submitted by the patent holder prior art will not be limited to patents and printed publications Procedure will be like an Ex Parte Reexamination. 22
23 Supplemental Examination (2) (Continued): A patent shall not be held unenforceable on the basis of conduct relating to information that was considered, reconsidered, or corrected during a Supplemental Examination of the patent. Exceptions: An allegation pled with particularity before the request for Supplemental Examination, and A litigation defense in a civil action filed before Supplemental Examination is concluded. The making or absence of a request for Supplemental Examination, shall not be relevant to enforceability. 23
24 Supplemental Examination (3) The PTO Director is to refer cases of material fraud to the Attorney General. 24
25 Patent Trial and Appeal Board (PTAB) The Board of Patent Appeals and Interferences becomes the Patent Trial and Appeal Board (PTAB) Derivation proceedings replace Interferences PTAB takes responsibility for the two new types of inter partes proceedings: Post-Grant Review Inter Partes Review PTAB inter partes procedures are expected to be similar to Interferences 25
26 Post Grant PTO Proceedings Two new procedures before the Board, effective 1 year after enactment: Post-Grant Review Requested within 9 months from grant of a patent or a broadening reissue All grounds of invalidity considered Inter Partes Review Requested after 9 months from grant or reissue of a patent, or after Post-Grant Review Inter partes review will be limited to patents and printed publications. 26
27 Post Grant PTO Proceedings Both Post-Grant Review and Inter Partes Review would ordinarily be completed within 1 year from institution Extension of up to 6 months for good cause These changes are expected to expedite PTO review of issued patents by setting tight time schedules and avoiding the current delays resulting from an appeal to the Board following inter partes reexamination. Query What will this do to pendency of Board cases? 27
28 Post-Grant Review Both bills provide that Post-Grant Review would include all grounds of invalidity. The Post-Grant Review threshold requires that the information presented in the petition, if not rebutted, would demonstrate that it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable, or or that the petition raises a novel or unsettled legal question that is important to other patents or patent applications. 28
29 Inter Partes Review (2) The threshold would be raised slightly to showing a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged. Little change from the current substantial new question of patentability (SNQ) standard is expected, At a House Judiciary Committee hearing, PTO Director Kappos said that recent data on reexaminations conducted under the SNQ standard shows a very high percentage of rejections of at least one claim. 29
30 Other Post Grant Review Provisions The Act has provisions for: Graduated Implementation of Post-Grant and Inter-Partes Reviews Permits the PTO Director to limit the number of reviews in first 4 years. Estoppels based on PTO review decisions that may prevent an issue from being raised in litigation or other PTO proceedings. 30
31 Litigation (1) Venue (Sec. 9). (Effective upon enactment) The venue for litigation against the PTO is changed to E.D. Va. No venue or transfer provisions for infringement litigation are included in the Act. 31
32 Litigation (2) Best mode requirement. (Sec. 15) (Effective upon enactment) Failure to disclose best mode would not be a basis for invalidation of a patent Purpose reduce litigation issues involving intent Best mode requirement would be maintained for applications Examiner has no way to determine compliance. A toothless requirement? 32
33 Litigation (3) Patent Number Marking. (Sec. 16) (Effective upon enactment, including pending cases) Virtual marking will be permitted, by reference to an Internet address; and False marking actions will be limited: Only the U.S. government may sue for a statutory civil penalty, Private parties can sue for compensatory damages on a showing of competitive injury, and Marking a product with matter relating to a patent that covered that product but has expired will not be a violation of this section. 33
34 Litigation (4) Advice of counsel. (Sec. 17) (Effective 1 year from enactment per Sec. 35) Failure to obtain the advice of counsel with respect to any allegedly infringed patent, or failure to present such advice, may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement of the patent. 34
35 Litigation (5) Jurisdiction and procedural matters. (Sec. 19) (Effective in cases filed on or after enactment) State court jurisdiction limited No State court shall have jurisdiction over any claim for relief arising under any Act of Congress relating to patents, plant variety protection, or copyrights. Establishes a procedure for removal to a Federal Court. (Continued) 35
36 Litigation (6) Joinder of accused patent infringers in one action will be proper only if: A right to relief is asserted with respect to the same transaction, occurrence, etc. relating to the same accused product or process, or questions of fact common to all defendants or counterclaim defendants will arise in the action; and Accused infringers may not be joined or have their actions consolidated for trial, based solely on allegations that they each have infringed the patent or patents in suit. 36
37 Special Interest Provisions (1) Certain tax strategies deemed within the prior art. (Sec. 14) (Effective upon enactment) Transitional program for covered business method patents. (Sec. 18) (Effective upon enactment) Priority examination for technologies important to the national economy or national competitiveness. (Sec. 25) 37
38 Special Interest Provisions (2) Pro bono program to assist financially under-resourced independent inventors and small businesses. (Sec. 32) Bar to issuance of a patent with a claim directed to or encompassing a human organism. (Sec. 33) (Effective upon enactment, for pending applications) Calculation of 60-day period for application of patent term extension. (Sec. 37) (Effective upon enactment, including pending cases) 38
39 Studies (1) The Act provides for several studies and reports, by the PTO and in one case the Comptroller General: Effects of eliminating the use of invention dates on the ability of small business concerns to obtain patents and their costs of obtaining patents (Sec. 3(l)) Operation of prior user rights in selected, industrialized countries (Sec. 3(m)) Implementation of the Act. (Sec. 26) (Continued) 39
40 Studies (2) Effective ways to provide independent, confirming genetic diagnostic test activity. (Sec. 27) Establishment of methods for studying the diversity of applicants. (Sec. 29) How can the PTO can best help small businesses with international patent protection? (Sec. 31) The consequences of patent litigation by non-practicing entities and patent assertion entities (Comptroller General - Sec. 34) 40
41 The End Thank you! See the 2011 Patent Law Reform Updates at
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