February, 2010 Patent Reform Legislative Update 1

Transcription

1 February, 2010 Patent Reform Legislative Update 1 The Patent Law Reform Act of 2011, based on the Managers Amendment version of S. 515 in the 11 th Congress, was introduced as S. 23 on January 25, 2011 and referred to the Senate Judiciary Committee. On February 3, 2011, that committee adopted amendments proposed by the managers, Senators Leahy, Grassley and Hatch, and by Senators Feinstein and Kyl. The 105 page bill, as amended, was unanimously adopted by a 15-0 vote of the committee and reported to the Senate. 2 Here is a condensed summary of features in S. 23: Substantive Patent Law S. 23 retains the earlier proposals to shift from a first to invent system to the first inventor to file system. (Sec 2). 3 The effective date has been extended from the previously proposed 1 year to 18 months from enactment. (Sec. 2(o)). 4 The PTO and 1 This summary is intended only to apprise the IP community of recent legislative developments relating to patent reform, and is not intended to advocate any particular positions. It is for educational purposes only, and is not to be relied on as legal advice th Cong., S. 23, reported with amendments February 3, 2011, last viewed February 7, 2011 at 112s23rs.pdf 3 4 Id. at 2-7 (page numbers provided for convenience of reference to this version). Id. at

2 Small Business Administration would be required to study and report to Congress within 1 year of enactment regarding the effects of eliminating the use of dates of invention in determining whether an applicant is entitled to a patent. (Sec. 2(m)). 5 The current grace period for all applicants would be replaced by a personal grace period system. The applicant s own disclosures and information derived therefrom, within 1 year before filing a U.S. application, would not be prior art. (Sec. 2). 6 Patent interferences would be abolished, but derivation proceedings would be available before the renamed Patent Trial and Appeal Board. (Sec. 2(h) & (i), & 6 ). 7 As in the earlier proposals, the prior art effect of prior knowledge or use evidence would no longer be limited to evidence of such knowledge or use in this country. (Sec. 2 ). 8 The provisions concerning common ownership under joint research agreements were supplemented in the Leahy-Grassley-Hatch amendment on Feb. 3, 2011, to clarify the intent. (Sec. 2(d) & (e)). 9 As in the Senate s April, 2009 version, the existing best mode requirement would continue for patent applications; however, failure to disclose the best mode could not be used to invalidate a patent. (Sec. 15). 10 The provisions in 35 U.S.C. 104 and 157, limiting rights in connection with certain inventions made abroad and providing for statutory invention certificates, respectively, would be repealed. (Sec. 2(d) & (e)) Id. at Id. at 4-5. Id. at 5, Id. at 3-4. Id. at 7. Id. at Id. at

3 Although proposals for broadened prior user rights were dropped from the proposals a few years ago, S. 23 would require the PTO Director to study the operation of prior user rights in selected countries and report to the Judiciary Committees within 1 year from enactment. (Sec. 2(n)) U.S.C. 273, which now provides a prior user defense limited to methods of conducting or doing business, would be amended to more fully define the personal nature of that defense. (Sec. 4(b)). 13 Under a new tax strategy limitation in S. 23, any strategy for reducing, avoiding, or deferring tax liability would be deemed insufficient to differentiate a claimed invention from the prior art. (Sec. 14). 14 PTO Practice Assignee filing of applications would be permitted; however, an inventor s oath or declaration would be required before patent grant. (Sec. 3). 15 Third party submissions of prior art during patent prosecution would be encouraged. (Sec. 7). 16 The PTO would be granted fee setting authority subject to review by the Public Advisory Committees, reporting to Congress and a waiting period in which Congress might act. (Sec. 9). 17 The 50% reduction in major fees for small entities would continue and a new category of microentities would be entitled to a 75% fee reduction. (Sec. 9(a)(2) & 12) Id. at Id. at Id. at 94. Id. at Id. at Id. at Id. at 79-80,

4 Consideration of proposals to limit or prohibit fee diversion (widely supported in both Judiciary Committees and by industry) has been postponed until debate on the Senate floor. The PTO s request for an immediate, 15% temporary fee surcharge has yet to be addressed by the 112 th Congress. A statute of limitations would limit the period in which disciplinary actions could be taken for misconduct before the Office to the earlier of 10 years from the misconduct or 1 year from discovery. The PTO would be required to report biennially to Congress about the effects of this limitation. (Sec. 2(l)). 19 Post-grant PTO Proceedings As in prior proposals, some of the procedures for PTO review of patents after grant would be revised by S. 23. (Sec. 5). 20 Ex-Parte reexamination by Examiners (presumably in the Central Reexamination Unit) would continue to be available upon request by a patent owner or third party, on a showing of a substantial new question of patentability, as presently required. S. 23 includes the supplemental examination proposal, a form of reexamination originally introduced in the March 2010 Senate Managers Amendment. (Sec. 10). 21 It would permit patent owners to purge inequitable conduct allegations relating the original patent prosecution by making post-grant disclosure to the PTO. Although several members of Congress would like to do more to limit allegations of inequitable conduct and patent unenforceability litigation, no proposal other than Supplemental Examination (discussed above) has achieved broad support Id. at Id. at Id. at 4

5 Inter-partes reexamination would be abolished, effective 18 months from enactment, and replaced by two new inter-partes procedures before administrative law judges of the renamed Patent Trial and Appeal Board, post-grant review and inter partes review. Post-grant review would only be available within 9 months following grant of an original or reissue patent and, pursuant to Leahy-Grassley-Hatch amendment, not more than 6 months after the petitioner is served with a complaint alleging infringement of the patent. The threshold for initiating Post-Grant Review would be a nonappealable determination by the PTO Director 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 that the petition raises a novel or unsettled legal question that is important to other patents or patent applications. (Sec. 5(d)-(f)). 22 Post-grant review may be conducted on any ground of invalidity that could be raised under paragraph (2) or (3) of 35 U.S.C. 282(b), which includes all of the prior art and Section 112 defenses. A petition for inter partes review could be filed only after the later of either 9 months after the grant of a patent issuance of a reissue of a patent; or termination of a post grant review. This type of review would be permitted only on a ground that could be raised under Section 102 or 103, and only on the basis of prior art consisting of patents or printed publications. (Proposals for including consideration of prior use and sale evidence were removed in an earlier version of the bills.) The threshold requirement would be a nonappealable determination by the PTO Director that there is a reasonable likelihood that the petitioner would prevail with respect to at least one challenged claim. (Sec. 5(a)-(c)) Id. at Id. at

6 Final written decisions in both post-grant reviews and inter partes reviews would create an estoppel against raising a claim on the same ground of invalidity in a district court or ITC proceeding. In addition, the estoppel arising out of an inter partes review would bar court or ITC litigation of claims on any ground that could have been reasonably raised in the inter partes review. 24 Patent Litigation S. 23 continues the April 2009 proposal that would add to 35 U.S.C. 284 a procedure for determining damages, making the district judge a gatekeeper who would instruct the jury regarding the methodologies and factors to be considered in determining the damages. The proposal also includes the March 2010 Senate Managers Amendment proposal that would require courts to grant a request for sequencing of trials, absent good cause to reject the request, so that the trier of fact decides questions of the patent s infringement and validity before the issues of damages and willful infringement are tried to the court or the jury. (Sec. 4(a)). 25 The proposal for codifying the standard for finding willful infringement, introduced in the March, 2010 Senate Managers Amendment, was deleted by the Feinstein-Kyl amendment on Feb. 3, (Sec. 4(a)). 26 S. 23 retains a related proposal, which would preclude use of evidence that an alleged infringer failed to obtain the advice of counsel or did not present advice of counsel to the court or jury may not be used to prove that the accused infringer willfully infringed the patent or intended to induce infringement. (Sec. 4(d)). 27 This provision would be effective in actions filed on or after enactment date Id. at 43, 57. Id. at Id. at Id. at 38. 6

7 Earlier versions of the Patent Law Reform Act, proposed to limit venue in patent infringement litigation; but more recent versions took the indirect approach that is continued in S. 23. (Sec. 8). 28 The basic venue law would be unchanged, but transfer to a more convenient venue would be eased. In contrast to the general transfer law, 28 U.S.C. 1404(a), which permits; the proposed law would require that a court shall transfer any civil action relating to patents upon a showing that the transferee venue is clearly more convenient. The false marking law in 35 U.S.C. 292 would be modified (1) to permit only the United States to sue for the current $500 penalty and (2) to permit private parties to sue for false marking only if they have suffered a competitive injury as a result of a violation of that section, in which case they may recover damages adequate to compensate for the injury. These amendments would apply to all cases pending on or after the date of the enactment. (Sec. 2(k)). 29 In a new provision, S. 23 would permit virtual marking of patent numbers, by marking with an Internet address that associates the patented article with the patent number. (Sec. 4(c)). 30 Courts of Appeal Two proposals concerning appellate jurisdiction were added to S. 23 by the Feb. 3, 2011 Leahy-Grassley-Hatch amendment, in a new section headed Clarification of jurisdiction. (Sec. 17). 31 Judging from the introductory remarks of Judiciary Committee Chair Leahy, they were added at the suggestion of the House Judiciary Committee and House IP subcommittee leadership. One would extend Federal Circuit jurisdiction to Id. at Id. at Id. at Id. at

8 appeals in cases having a counterclaims under the patent or plant variety protection law, overruling Holmes Group v. Vornado Air Circ. Sys., 535 U.S. 826 (2002). The other would clarify the exclusivity of federal jurisdiction under the patent, plant variety protection and copyright laws, and provide for removal of civil actions asserting a claim for relief under any of those laws from state to federal courts. S. 23 retains the proposal to repeal the current requirement in 28 U.S.C. 44(c) that Federal Circuit judges reside within 50 miles of Washington, DC. The Feb. 3, 2011 Leahy-Grassley-Hatch amendment, however, eliminated the previously proposed requirement that the government to provide chambers and support outside the District of Columbia for Federal Circuit judges. (Sec. 11). 32 John Pegram is a Senior Principal in the New York office of Fish & Richardson P.C., and can be reached at and pegram@fr.com. Steven C. Carlson is a Principal in the Silicon Valley office of Fish & Richardson P.C. He can be reached at and steven.carlson@fr.com. Michael M. Rosen is a Principal in the San Diego office of Fish & Richardson P.C. He can be reached at and Michael.Rosen@fr.com. 32 Id. at 91. 8