1300 I STREET, N. w. WASHINGTON, DC FACSIMILE 202" 408" 4400 WAITER'S DIRECT, DIAL. NUMBER: (202)

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1 ,~ FNNEGAN, HENDERSON, FARABOW, GARRETT 0 DUNNER, L. L. p, 300 STREET, N. w. WASHNGTON, DC , "'. L ~ t FACSMLE 202" 408" 4400 ATLANTA f:>alo AL.TO 650" Dear Colleague, WATER'S DRECT, DAL. NUMBER: (202) December 23, 999 J f TOKYO " 6943 (BRUSSELS 0-22" 646" 0353 f, / Late last month, Congress passed and the Presdent sgned the Amercan nventors Protecton Act of 999. The Act contans some rather sgnfcant reforms to our patent law, so Charle Van Hom, Mke McGurk, and Rebecca McNell ofour frm dssected the statute and wrote an overvew analyzng ts varous features. We thought you mght apprecate havng the artcle, and we enclose a copy for your revew. Please feel free to copy t and dstrbute t to others n your offce, We would also lke to take ths opportunty to wsh you and your famly a peaceful and. prosperous new year. t Cordally, The Attorneys at Fnnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., f [ j f

2 ;::; r ltl ~ FNNEGAN HENDERSON FARABOW GARRETT& DUNNER LLP Report: Amercan nventors Protecton Act of 999 WASHNGTOL. D.C. PA~OALTO A'rLANTA TOKYO BRrSSELS By Charles E. Van Horn, Mchael R. McGurk, and Rebecca McNell ntroducton r On November 29, 999, Presdent Clnton sgned nto law the "ntellectual Property and Communcatons Omnbus Reform Act of 999." Offcally cted as Pub. L. NO.06-3, the new law contans, amo~g otherprovsons, Ttle V, the "Amercan nventors Protecton Act of 999." Many ntellectual property (P) practtoners and P organzatons consder passage a major vctory for proponents of patent reform decause Congress has consdered and rejected varous patent reform blls snce 996. Lke most new laws, some of the new patent law s good, some bad, and some smply does not make a lot of sense. t s clear, however, that the new patent laws wll have a sgnfcant mpact for most P practtoners and ther clents. Ths artcle descrbes the salent features of the new law as ve>aed and revewed by the authors. Every P patent practtoner should therefore carefully revew the newrlaw for themselves, and not rely solely on the authors' vews and opnons expressed below. The Amercan nventors Protecton Act of 999 wll be enacted n stages, dependng on the specfc provlson, and addresses a varety of topcs. The new law ncludes seven major subsectons, namely the "nventors' RghtACtof 999" (protecton aganst nventon promoton servces); the "Patent and Trademark Fee Farness Act of 999"; the "Frst nventor Defense Act of 999" (affrmatve defense to nfrng~ment); the "Patent Term Guarantees Act of 999"; the "Domestc Publcaton of Foregn Fled Patent Applcatons Act of 999" (eghteen-month publcaton); the "Optonal nter Partes Reexamnaton Procedure Act qf 999"; the "Patent and Trademark Offce. Effcency Act" (PTO reorganzaton); and several mportant, mscellaneous provsons relatng to provsonal applcatons, pror nventon, and pror art.' Th~ major provslons of the new law are dscussed below n the order they appear n the new legslaton. j. nventors' Rghts The nventors' Rghts Act of 999 becomes effectve wthn sxty days of enactment. Ths porton of the..new law provdes a polcng mechansm for regulatng the sometmesunscrupulous nventon promoton servces ndustry. Ths secton s sure to spawn a new breed of ltgaton concernng nventon promoters and the servces they offer. Dependng on the' complexty of the technology and ssues nvolved, such ltgaton could well requre the assstance of a patent attorney famlar wth the nuances of patent law and all t encompasses. Such ltgaton wll lkely brng nto queston whether someone s an nventon promoter or whether a company provdes nventon promoton servces. j An "nventon promoter" s defned to nclude any entty that performs nventon promoton servces and holds tself out through advertsng n any mass meda as provdng such servlces. The term does not nclude govemment agences, nonproft organzatons, enttes evaluatng ssued " utlly patepts. or prevously fled nonproyslonal patent applcatons, enttes partcpatng n the sale of stock or busness assets, or partes that,' '. drectly engage n the retal sales of products, r The new law tres to fll the vod n requlatons governng such busnesses, regulatons that were vrtually nonexstent. Now all nventon prpmoters, t \

3 :' "~ t must enter nto a wrtten contract wth an nventor. n addton, before contractng, an nventon promoter must provde to the nventor wrtten nformaton aboutthe company, ncludng the total number of evaluatons the promoter has provded n the past fve years, broken down by postve and negatve evaluatons. The wrtng must provde nformaton on the number of nventors who contracted wth the nventon promoter or hs company, the number who receved profts from ther nventons n excess of the fees pad, and the number who entered nto lcense agreements as a result of the servces. The new law also requres that the wrtng lst the names of each nventon promoton organzaton the offcers and drectors have been afflated wth n the last ten years. f the nventor s njured by any materally false or fraudulent statement or representaton, by any omsson of materal fact, or by falure of the nventon promoter to comply wth the new law, the law provdes for a cvl acton aganst the nventon promoter or hs company. An nventor may seek actual damages or statutory damages of no more than $5000. Treble damages are avalable for ntentonal or wllful behavor by the nventon promoter or hs company. Fnally, the U.S. Patent & Trademark Offce s requred by the new law to keep records on nventon promoters and ther companes and make all complants fled aganst them avalable to the publc after provdng the promoter or the company wth a reasonable opportunty to reply to negatve comments. The PTO may also obtan copes of complants about an nventon promoter or the company from any other govemment agency and provde those records to the publc. Although any meanngful statstcs on dsreputable nventon promoters are nonexstent, the publc and prvate nterest groups representng small enttes and nventors wth lmted resources no doubt beleved that these groups were beng unfarly targeted by nventon promoters. The new law clearly provdes some measure of protecton for the unwary.. Patent and Trademark Fee Farness The Patent and Trademark Fee Farness Act of 999, as t pertans to patent fees, becomes effectve thrty days after enactment. The new ~ law lowers flng. fees for orgnal patent applcatons, ressue.applcatons, fees. for enterng the U.S. natonal stage n an nternatonal applcaton, and the frst patent mantenance fee. The reductons range from about 9-%. The ~. J u

4 certan s that the courts wll ultmately have to tell us what the statute means. Addtonal, lmted protectons are avalable for nonproft research laboratores and enttes, such as unverstes, research centers, and hosptals. Fnally, the affrmatve defense also protects one who purchases a useful end product from the entty assertng the defense, just as f the sale to a thrd party would exhaust the patentee's rghts f the patentee had sold the tem, The frst nventor defense has severalmportant lmtatons. Frst, and perhaps most sgnfcantly, ths defense apples only to asserted method clams and specfcally methods of dong or conductng busness. Thus, the frst nventor defense wll not help a thrd party defend aganst a charge of nfrngement for usng a secret commercal chemcal or mechancal process-that does not otherwse qualfy as a "method" under the new statute-that the thrd party had used long before the patent owner ever fled ts patent applcaton. n effect,congress apparently ntended to favor some, class of persons whle denyng others na smlar poston.' Ths defense does not protect an accused nfrnger f the nfrnger derved the nventon from the patentee or persons n prvty wth the patentee. Further, the defense s lmted to the specfc subject matter of the patent that qualfes under ths chapter (only the method prevously practced by the accused nfrnger); t does not provde an automatc lcense to practce the subject matter of all clams of the patent. Although the defense s not a general lcense to practce all the clams of the patent-only those clams aganst whch a person can assert the defense-t does extend to varatons n the quantty or volume of use and to mprovements that do not nfrnge addtonal clams. The defense does not protect an accused nfrnger who must rely on commercal use that occurred before an abandonment of the nventon. n addton to the above lmtatons, the frst nventor defense s a personal one and generally may not be conveyed. But f the defense s acqured n good fath as part of the assgnment or transfer of an entre enterprse. or lne of busness,then t may be asserted only for uses of the method at stes where that.methodwas n.use before the effectve flng date of the patent orthe transfer of the busness, whchever s later. n other words, the orgnal owner of the rght to assert the defense, f successful, may contnue to add stes to ts busness and expand ndefntely, but a later assgnee of the busness ~annot expand the number of stes once an 9rgnal patent applcaton has been fled. But row s "ste" gong to be defned? The courts wll lkely have to answer ths queston as well The accused nfrnger must establsh t~e frst nventor defense by clear and con~ncng evdence. f the accused nfrnger unsuccessfully assertsths defense andthe court determnes that the accused nfrnger has faled to demonstrate a "reasonable bass" for assertng the deferse, the court must fnd the case exceptonal for pt(rposes of awardng attorney fees. Fnally, the c(efense does not affect the valdty of the patent uader 35 U.S.C. 02 or 03. V. Patent-Term Guarantee : That porton of the Patent Term Guarantee Act of 999 relatng to extenson of patent terms takes effect sx months after enactment and apples to any patent ssued on an applcaton (except desgn applcatons) fled on or after that date. That porton of the Act relatng to cohnnued examnaton practcetakes effect sx months after enactment and apples to all nonproysonal applcatons (except desgn applcatons) and nternatonal applcatons complyng Wth 35 U.S.C. 37 and fled on or after June The new patent-term guarantees have r~sed, to say the least, a few eyebrows. t s ~ntrely possble under the provsons dscussed n detal below that a patent wll be enforceable( for far more than twenty years from ts flng date, the term provded by present law. For efample, those applcatons that do not result n ~ patent wthn three years from flng generally wll enttle ~ha~ha~;:e~fo~~~~: of~~~~~~~~~ Pt~:n~~~rml:: requres the PTa to keep track of many delays at. sgnfcant ponts n the examnaton process and to nform the applcant of the extensonof term upon ssuance of the notce of allowance. n ths task, the legslaton requres the PTa td do the mpossble-predct a delay n grantng ~ patent before t occurs. t s a legtmate concern of many that the PTa wll not be able to e~ectvely admnster these addtonal dutes, resulthg n the burden fallng squarely on the shoulde,s of the publc to calculate the correct pate~t term." ndeed, n.many cases, the publc wllnbjonger ' be able to rely on the nformaton on the "ace of a patent to determne ts term but wll have to estmate the term based on nformaton ~hat can be gleaned only from a consderatol of the - 3-

5 patent fle hstory and the delays n the examnaton process. Even then, the term may be uncertan untl a court fnally resolves whether the patentee has made reasonable efforts to conclude prosecuton. Under the old law, the twenty-years-from-flng patent term could be extended for up to fve years for delays caused by PTO procedures, ncludng delay from an nterference, secrecy order, and successful appellate revew of patentablty. The new law substantally expands these opportuntes for term extensons by removng the fve-year lmt and creatng a new category of PTO delays that may gve rse to a term extenson. n the frst secton of ths Act, the law adds an extenson of patent term for certan delayed PTO responses. For example, the new law guarantees that the PTO wll make a rejecton, objecton, or requrement under 32 (rejecton of applcatons), or ssue a wrtten notce of allowance under 5 (patent ssuance), wthn fourteen months of the flng date of the applcaton. t also states that the PTO must respond wthn fourmonths to a reply under 32 or to an appeal under 34 (Board of Patent Appeals and nterferences) (the Board). Smlarly, the PTO has only four months to act on an applcaton wth allowable clams after a 34 or 35 (nterference) decson by the Board, or a federal court decson under 4, 45, or 46 (Court of Appeals for the Federal Crcut (CAFC) and dstrct court). Lastly, ths Act provdes for ssuance of a patent wthn fourmonths after the payment of the ssue fee. Each of these guarantees potentally ncreases the patent term by one day for each day of delay. n the second secton, the Act prescrbes a general lmt for patent prosecuton of three years from the actual flng date untl ssuance, except for contnued examnatons under 32(b) (contnued examnaton), tme consumed by an nterference, tme consumed by an order under 8 (secrecy of nventons), or bysuccessful appellate revew by the Board or by a federal court, and any delay n processng the applcaton requested by the applcant. For example, ths may cover stuatons where the applcaton mysterously dsappears or s lost for several weeks, months, or, worst of all, years One day of patent term s added for each day after the-end of. the.three-year perod. untl the.patent ssues. n the thrd secton of the Act, the new law requres that the term of a patent ssued on an applcaton n nterference, under a secrecy order,. ~ or subject to appellate revew where a reversal of an adverse determnaton of patentablty (s made must be extended one day for each [cay of pendency of the proceedng, order, or re~ew. But the new law lmts any overap n ext~nsons to the actual number of days that patent lssuance s delayed. Further, no patent ha,vng a dsclamed term may be extended beyond the specfed term. Fnally, an award of an extenson must be reduced by the number of days the applcant faled to engage n "reasonable'efforts" to concude prosecuton, whch falure s presumed to nclude the cumulatve total of any perods of tme n excess of three mqnths to respond to PTO actons. Applcants wll be notfed by the PTO n th~ notce of allowance of the approprate patent-term extensons (wth the obvous excepton bf delay after payment olthe ssue fee), and wll have one opportunty to request reconslderator of an unsatsfactory determnaton. Applcants dssatsfed wth the PTO's decson may seek. remedy by cvl acton n the Dstrct Cou~ for the Dstrct of Columba wthn 80 days after the grant of the patent. t s possble under the new statute, however, to appeal before the patent s granted and even though the PTO may grant the patent notwthstandng the appeal. A thrd party dssatsfed wth the term extenson gveh by the PTO may not challenge the decson untl after the patent s granted. V. Domestc Publcaton of Patent Applcatons Publshed Abroad. The Domestc Publcaton of Foregn Fle~ Patent Applcatons Act of 999 becomes effectve one year from enactment and apples to all applcatons fled under 35 U.S.C. (utlty applcatons) on or after such date. n ;lddton, certan rghts and effects of pror art apply to any applcaton that s pendng one ye~r from enactment and whch s vountarly publl;hed. r Before enactment, U.S. patent applcatlons were not publshed untl they ssued as patents. n contrast, most foregn applcatons are p~blshed 'eghteen months after the earlest flng/date for whch beneft s sought. The new law:requres publcaton of all U.S. utlty applcatons' that are alsoforegnfled (orgnally or subsequently) and are publshed -abroad...publcatonv{lu occur eghteen months from the earlest flng/date for whch beneft s sought. Utlty applcatons not fled abroad wll not be publshed f ~ tmely request s made, nor wll desgn or provlslonal -4-

6 applcatons. Applcatons that are no longer pendng or subject to a secrecy order also are not subject to publcaton. Further, the publc s enttled to nformaton concernng a publshed applcaton only as determned by the Drector of the PTa. The Drector wll have to decde such ssues as whether the applcaton as fled or as amended wll be avalable, whether the whole content of the applcaton fle wll be avalable, whether amendments subsequent to the date of publcaton wll be avalable, and n what form and how to make the nformaton avalable. To avod publcaton, an applcant must certfy n wrtng upon flng ts U.S. applcaton that t has not and does not ntend to fle an applcaton n another country, or under a multlateral nternatonal agreement, where publcaton would occur at eghteen months. f an applcant makes a request not to publsh, and then later fles n another country, or under a multlateral nternatonal agreement, the applcant must notfy the PTa not later than forty-fve days after the flng ofthe applcaton. Falure to tmely notfy wll result n the abandonmentof the U.S. applcaton, unless the applcant can show that the delay was unntentonal. After notfcaton of the applcant's decson to publsh, the PTa wll publsh the applcaton n the Unted States. Publcaton costs are to be covered by a separate publcaton fee to be collected after the clams are allowed. n some stuatons, however, portons of the U.S. applcaton may not be publshed. f an applcant's foregn applcaton contans less dsclosure than the correspondng U.S. applcaton (for example, the U.S. case contans new matter), the applcant can submt a redacted applcaton for publcaton n the Unted States. The PTa must publsh only the redacted applcaton unless t does not receve t wthn sxteen months of the earlest flng date. For example, an nventor who makes an mprovement upon hs or her nventon between the flng of a frst applcaton abroad and the later counterpart U.S. applcaton, and ncludes the mprovement n the later U.S. applcaton, may redact the "mprovement" porton before publcaton. Applcants who fle redacted versons n the Unted States, however, must be careful to ensure that the U.S. specfcaton s enablng for the publshed U.S. clams or rsk losng the' provsonal rghts descrbed below. Provsonal benefts are provded for those applcants who choose to publsh ther U.S. applcatons. The benefts-a patentee may -5-, obtan a reasonable royalty-e-accrueforth~perod of tme after publcaton to the tme the patent s granted and are assessed aganst a thr(l party who makes, uses, sells, or mports the ntenton (or products made by a covered process) n the Unted States. Arguably, provsonal rghts~ccrue by vrtue of acts of drect nfrngement only. The alleged nfrnger must have actual notc~ of the publshed applcaton and, for an nter~atonal applcaton desgnatng the Unted States, translaton of the applcaton f t s publs~ed n a non-englsh language. The provsonal :enefts do not vest untl a patent s granted. However, and ths s a bg "however," therght to clam a reasonable royalty requres that the granted patent clam an nventon that s substantally dentcal to that clamed n the publshed applcaton. What s "substantally dentcal"? And how wll t be defned? One possble ndcator s n the context of ntetvenng rghts when a ressue patent s gra~ted or reexamnaton certfcate ssued, wheren the relevant analyss looks at the substantalldentty of clams rather than dentcal clams n the orgnal patent as compared to the res~ued reexamned patent. There s no clear quldance n the new statute, whch lkely means t wll be an ssue for the courts to wrestle wth.. To collect the reasonable royalty, the patentee must brng an acton no later than sx ye~rs after the patent ssues. Fnally, fthe patentee relles on an ntematonal applcaton desgnatng the Unted States, the rght to collect a royalty (the accrual perod) begns when the PTa receves a,copy of the nternatonal publcaton or, f n a non.(englsh language, the date on whch an Englsh translaton s receved. The new law may affect the tme for clamng beneft to an earler-fled nonprovlslonal or provsonal applcaton or an applcatsln fled abroad. Snce publcaton s measured from the earlest flng date, the PTa needs to kdow the earlest date clamed by an applcant to properly schedule publcaton. The PTa wll determne an approprate tme for clamng prorty, an~ falure to do so wthn the allowed tme may tesult n Waver of the prorty date, unless the ddlay was unntentonal. l' Publcaton of applcatons wll alsd -:affect nterference practce. Accordng to.the new law, _. an nterferng clam for the same or.substantally the same subject matter as a clam n a p6blshed applcaton may be made only fthe clams made (e.g., coped) pror to one year-after theldate on t.l _ a or

7 ---~~~ whch the applcaton s publshed. Assumngthat the ssued and publshed clams are for the same or substantallythe same nventon,falure to copy a clam may bar another applcantfrom provokng an nterference wth the ssued patent. f, on the other hand, the granted clams are drawn to a substantally dfferent nventon, the one-year bar date should not start to run untl the patentssues. See 35 U.S.C. 35(b)(). One queston that comes to mnd for the nterfer.ence practtoner s whether ths substantal dentty requrement of the new law wll be ted to the requrement that nventons be for the "same patentable nventon" before an nterference wll be declared. See 37 C.F.R..60 (n). The new law would also add publshed applcatons to the body of pror art avalable aganst later-fled nventons under 35 U.S.C. 02(e) as of the flng date of the publshed applcaton. An nternatonal applcaton desgnatngthe Unted States may qualfy as pror art under 02(e) as of the nternatonal flng date, but only f the nternatonal applcaton was publshed n Englsh. Fnally, publcaton n the Untes-States, unlke publcaton n some foregn countres, wll not trgger opportuntes for protest or pressuance opposton, unless an applcant consents n wrtng. Opposton, however, s lkely to come n the form of an applcaton clamng the same nventon. Despte some of the early concerns about early publcaton, the new law appears to deal evenhandedlywth these concerns. For example, although small nventors are economcally dsadvantaged by the absence of provsonal rghts, ther concerns that early publcatonswould put them at a dsadvantage aganst large multnatonal corporatons are assuaged by the new law-they are able to opt out of publcaton by not flng abroad ether drectly or by an nternatonalapplcaton. Becausemost domestc and nternatonal corporatons that fle applcatons (representng the 'vast majorty of new flngs).fle nternatonally, ther non-u.s. applcatons are' publshed anyway. Thus, early publcaton s not an ssue for most of them, but nowapplcatons fled n the U.S.wll be publshed n the Englsh language. Moreover, early publcaton under the new "law provdes some,. sgnfcant provsonal benefts to the patentee.' -6- V. Optonal nter Partes.Reexamlaton Procedure The Optonal nter Partes Reexa~naton Procedure Act of 999 becomes efectve mmedately and apples to any U.S. patent that ssues from an orgnal applcaton fled on brafter such date. Certan fees dctated by the new law makng the unntentonal-delay standard applcable to reexamnaton proceedn~s take effect one year after enactment. proba~~ no porton of the patent refor~ bll s more dsappontng than ths one. Congr~ss had a unque opportunty to gve thrd partes wth lmtedresources (and even those wth substantal resources for that matter) a more cost- a~d tmeeffectve means to challenge the valdlty, of a patent. nstead, the new, optonal nterl partes reexamnaton law does nothng more tnan pay lp servce to the noton that thrd partes should have a full, far, and unrestrcted rght to partcpate n a reexamnaton proceedng of another's patent. t s hghly unlkely that anyone wll want to use the current nter partes proceedng because t denes, among other thngs, the thrd party a rght. to appeal an adverse decson beyond theboard. Moreover, t s questonable whether a thfd party has a rght to partcpate n an appeal by the patent owner beyond the Board. The n w law also estops the thrd party from pursung a cvl acton or another reexamnaton on the same pror art/ssues rased, or whch could havy,'been rased, before the PTO on the frst try. fnally, there are no provsons n the new law for tpethrd partyto partcpate n any personal ntervews wth the examner that the patent owner m~y seek durng reexamnaton, ntervews that can result n f allowance wthout a thorough dscusson on the record of what was sad or done by the patent owner durng the ntervew. Nolwthsandng these fatal shortcomngs, a bref outlne of the new reexamnaton law appears below. The new law does not get rd of the ex~tng, ex parte reexamnaton system; t [merely supplements t wth an optonal nter partes reexamnaton proceedng avalable ~o thrd partes who wsh to partcpate ln the reexamnaton. Under the old law, a thrd-party requester can only request reexarnlnatton of the patent but can not partcpata-wth bn~ lmted excepton-n the reexamnaton process tself. Addtonally,. copes of offce actons and responses are sent to the thrd party but that party has no rghts to respond. These prdcedural mpedments, however, can be overcomejoy flng

8 multple, sequental requests for reexamnaton. The new law attempts to address these major defcences of exstng reexamnaton practce by provdng a thrd party wth an opportunty to submt one wrtten response to each response fled by the patentee. The thrd party's comments are due wthn thrty days of servce of the patentee's response and can address the offce acton and any response by.the patentee. But no opportunty s expressly provded for the thrd party to attend or partcpate n any personal or telephonc ntervews scheduled by the patentee or patent examner. More surpnsmg s the new law's lack of a provson for permttng the thrd party to appeal an adverse decson of the Board to a dstrct court and/or the CAFC. Further, although the thrd party may partcpate n an appeal by the patentee to the Board, there s no rght gven to the thrd party to partcpate n an appeal by the patentee to the CAFC. (Note: The new law lmts the patent owner's appeal optons to an appeal to the CAFC, whether an ex parte or nter partes reexamnaton.) n addton to the severe lmts mposed upon a thrd-party reexamnaton requester's ablty to appeal, the new law creates substantal estoppels based on nter partes reexamnaton. Congressdoes not specfywhat consttutes newly dscovered pror art that was unavalable-an nterestng queston because "pror art" s somethngthat s, by defnton, publcly avalable. Does the thrd-party requester have to] make reasonable efforts to uncover pror art or''smpy allege that t dd not personally know. of ts exstence? Or does ths refer to 35U.S.C., 02(e)-type pror art that s not avalable untl t s publshed or patented, but then s effedtve as of an earler date? Once agan, the new law provdes no clear gudance. n vew of the above lmted opportuntes for appeal and partcpaton, and sgnfcant estoppel effects created by the new law, t s easylto see why most people-at least those wellnformed-are not lkely to opt for nterpartes reexamnaton. The new law adds saltto the wound by requrng the real party n nterest to be dentfed" V. Patent and Trademark Offce The Patent and Trademark EffcencyAct Wll take effect four months after enactment. Under ths Act, the PTOs defned as an agency w(hn the Department of Commerce and under the"polcy drecton" of the Secretary of commerce. Sgnfcantly, the Act gves the PTO authorty to "retan and use all of ts revenues and recepts." t wll be nterestng to see f Congress and the Admnstraton, as n years past, use any elfthese revenues and recepts for purposes other than Once a reexamnaton s declared (regardless of whether the thrd party partcpates or a fnal decson s rendered), the thrd party s estopped from assertng at a later tme n any cvl acton the PTO operaton. nvaldty of any clam fnally determned to be vald and patentable on any ground the thrd party The Act provdes for the appontment of ar] Under rased or could have rased durng the Secretary of Commerce for ntellectual ~roperty reexamnaton proceedngs. Smlarly, once a and Drector of the PTO (Drector), apponted by. fnal decson has been entered aganst a party n the Presdent and confrmed by the Se~ate, to a cvl acton that t has not proved the nvaldty of provde polcy drecton and management any patent clam or n reexamnaton has not supervson for the PTO. n addtonl to the proved that any orgnal or proposed clam s not Drector, a Deputy Drector, and a Comrnlssoner patentable, then that party (and ts prves) are of Patents and a Commssoner of Trademarks prohbted from rasng any ssues n a wll be apponted by the Secretary of Corr{merce. subsequent reexamnaton that that party or ts The Commssoners wll have flve-year terms and prves rased or could'have rased n such cvl serve as the chef operatng offcers for the acton or pror reexamnaton. Fnally" any party operatons ofthe PTO, responsble for all ~spects who requests an nter partes reexamnaton s of the actvtes of the PTO affectng the estopped from challengng n a later cvl acton admnstraton of patent and tra~emark any fact determned durng the process, except operatons. Fnally, the new law establshes for a fact later proven to be erroneous based on Publc Advsory Commttees for pate~ts and nformaton unavalable at the tme of -the'.~,... Trademarks, each wth nne members apponted' reexamnaton decson. Only newly dscovered by the Secretary of Commerce for three-year pror art, whch was unavalable to the thrd party perods, to revew..and report on the polces, and PTO durng the pror ltgaton or goals, performance, budget, and user fee's of the reexamnaton, can be assertedaganst the patent PTO. Each commttee s requred to hav~25% of n a later ltgaton or reexamnaton. ts members from small-entty organzatons and - 7 -

9 .", must nclude ndvduals wth substantal background and achevement n fnance, management, labor relatons, scence, technology, and offce automaton. Each commttee wll also have a nonvotng representatve from the unons recognzed by the PTO. V. Mscellaneous Patent Provsons Although lumped nto the back of the new legslaton as "Mscellaneous Patent Provsons," these provsons provde some rather nterestng changes and therefore should be carefully revewed as well. A. Provsonal Applcatons To address largely academc concerns that "provsonal" applcatons were not really applcatons at all, the new law now drects that these applcatons can be treated as "nonprovsonal" applcatons. The new law also elmnates the requrement for copendency between the provsonal and nonprovsonal applcatons n order to obtan' the beneft of the flng date of the provsonal applcaton. For example, the new law allows for the flng of a nonprovsonal applcaton on the next busness day after any weekend or federal holday wthn the Dstrct of Columba, f the twelve-month annversary of the flng of the provsonal applcaton falls on that day,.e., a day that the PTO s closed. Ths latter change conforms the rulesgovemng provsonalapplcatonswth other rules governng the tmely flng of papers at the PTO, thus removng the confusng copendency requrements. The elmnaton of the copendency requrement creates several unque opportuntes for patent applcaton flng strateges for the savvy applcant. Ths amendment to the law s effectve upon enactment and apples to any provsonal applcaton fled on or after June 8, 995, except for patents nvolved n ltgaton commenced before enactment U.S.C. 9 to expressly nclude WTO member countres as those enttled to 9 beneft. C. Certan Lmtatons on Damag~s for Patent nfrngement Not Applcable The lmtaton on remedes and darhages prescrbed by 35 U.S.C. 287(c)() (for s~rgcal procedures), dd not apply to patents ~sued before enactment of ths secton. f See 287(0)(4). The new law amended ths prdvson to exclude patents ssued "based qn an applcaton the earlest effectve flng d~te of whch s pror to September 30, 996." n ~ffect, the change expands the excluson tocover patents that were ssued on applcatonf fled before September 30, 996. The amendment thus changes the focus from the ssue dat~ (old) to the flng date (new). D. Electronc Flng The new law modfes the exstng requrements that papers fled n the PTO be prnled or typewrtten. The new law allows the PTO to requre that certan papers be fled pn an electronc medum or mantaned n electronc form. But the new law does not defne these terms. E. Study and Report on Bologcal Deposts n SupportofBotechnology prtents The new law requres the Comptroller Ge~eral to conduct a study on the potental rsks of (export and transfer to thrd partes of bologcal deposts made n support of botechnology p~tents, ncludng those posed by the eghteen-month publcaton provsons. The drafters pf the legslatonand Congressappearconcemeqlabout access to bologcal deposts and drect th~ PTO to consder recommendatons from ths study n draftng regulatons affectng such deposlfs, F. Pror nventon. Secton 02(g) of ttle 35 s amended to ~clude "durng the course of an nterference ". another nventor nvolved theren establshes, ~o the B. nternatonal Applcatons extent permtted n secton 04, that befo~e such. person's nventon thereof the nventoh was Among other thngs, ths amendment grants.~ made by such other nventor and not aban~dhed, applcatons for plant breeder's rghts fled n a... 'suppressed, or'concealed." Ths chahge s World,Trade Organzaton (WTO). member nterestng for nterference practtoners b~cause country (or n a foregn UPOV Contractng Party) the remanng, orgnal portonof 02(g) was not the same effectfor purposes oflhe rghtto prorty as applcatons for patents. The new law amends amended to permt defendants to rely orl 04 -

10 ~_.._~, w.. t c- \~ acts (.e., foregn acts of nventon) to establsh an affrmatve 02(g) defense to a charge ofpatent nfrngement. Only 04 foregn acts establshed durng the course of an nterference proceedng before the Board or n court can be used under 02(g) to show pror nventon. n addton, the amendment also provdes that f ths pror nventon of another outsde the U.S. s to be effectve to defeat patentablty, t must not have been abandoned, suppressed, or concealed. G. Pror Art Excluson for Commonly Assgned Patents Secton 03(c) of ttle 35 s amended to nclude pror art under 02(e) as pror art that wll not preclude patentablty so long as t was commonly owned wth the clamed subject matter at the tme the nventon was made. Ths amendment apples to any applcaton for patent fled on or after enactment. All patent practtoners should consder the possblty, when faced wth an obvousness rejecton nvolvng only 02(e) pror art, of reflng the applcaton to remove the 02-type document as pror art when the pror art and applcaton were commonly owned at the tme the clamed subject matter was nvented. X. Concluson Whether the reforms ntroduced by the Amercan nventors Protecton Act of 999 are ultmately good, bad, or both, remans to be seen. Ths artcle, we hope, serves as an ntroductory road map for P practtoners and ther clents to navgate the new laws. Endnotes:. Pub. L. No also addresses topcs that are not, strctly speakng, patent related, and therefore wll not be addressed n ths artcle, ncludng satellte home vewer mprovement, rural local televson sgnals, trademark cyberbracy preventon, superfund recyclng equty, andjother mscellaneous nonpatent provsons. j 2. t s not entrely clear why Congress lmted ths defenseto pror commercal methods ofdong or conductng busness. The most lkely reason s the Federal Crcut's decson n State Street Bank & Trust Co. v. Sgnature Fnancal Groupllnc., 49 F.3d 368,47 U.S.P.Q.2d 596, cert. dmed, 999 U.S. LEXS 493, where t held that prevously unpatentable methods of dohg or conductng busness were patentable. t may have been unfar to all those who practced such busness methods and never appled for a patent-and could not by law apply for a ~atent,. even after the law changed-to be subject to a patent nfrngement acton by a later-n-tme nventor who sought and obtaned patent protecton. t remans to be seen how the courts wll ultmately defne ths mperfect attempt to balance the nterests of trade secret and patent - owneff. 3. The Comptroller General s requ~ed to conduct a study of applcants who fle onlypn the Unted States; determne how many do"j'estconly flers request not to be publshed an~ how many later rescnd ther requests; correl3te the relatonshp between the status of an entty flng. an applcaton and publcaton; and examne abandonment/ssuance ratos and applcatlon pendency before abandonment or ssuarlce for publshed versus unpublshed appllcattons, 4. Congress has also requested a report from the PTO wthn fve years to evaluate whether nter partes reexamnaton s nequtable tojanyof the partes n nterest, and to provde recommendatons. There s no need to wat fve years: such a report could be fled n vewof the above comments. We provde ths report for nformatonal purposes only. t should not be construed as, or treated as a sutsttute for, legal advce. We gathered the nformaton n ths report from varous sources over whch Fn~egan, Henderson, Farabow, Garrett & Dunner, L.L.P. has no control. The accuracy of the nformaton depends upon the accuracy ofthosesources. Before relyng or actng on any nformaton contaned n ths report, you should, seek the advce of counsel.. '. Washngton, D.C. 300 Street, NW, Washngton, D.C.' ph: fax: Palo Alto. 700 HansenWay,.RaloAlto, CA ph: dax: Atlanta. 303 Peachtree Street, NE, Atlanta, GA ph: fax: Tokyo. -5, Torenomon 5-Chome, Mnato-ku, Tokyo ph: fax: Brussels. Avenue Louse 326, Box 37,050 Brussels, Belgum. ph: fax: f _