STRATEGIC CONSIDERATIONS IN COORDINATING ACCELERATION OF INTERNATIONAL PATENT PROSECUTION Kathryn H. Wade, Ph.D. 1, Hazim Ansari 2, and John K. McDonald, Ph.D 1. 1 Kilpatrick Stockton LLP, 1100 Peachtree Street, Suite 2800, Atlanta, GA 30309 2 Hennigan, Bennett and Dorman, 865 S. Figueroa St., Suite 2900, Los Angeles, CA 90017 The BIO International Convention Never before has deciding to invest in joining a global event with 60 countries, 300 public officials, 20,000 life science thought leaders and dealmakers been so important. With 14,000 partnering meetings in four days and 2,200 companies within the BIO Exhibition, the BIO International Convention, May 18 21, 2009 in Atlanta, GA provides you efficiency and effectiveness - all together. http://convention.bio.org Disclaimer: No part of this article may be used, in whole or in part, without the author s prior written permission. The opinions expressed by article authors in the attached materials do not necessarily reflect the Biotechnology Industry Organization s position on any of the issues contained herein.
Page 2 of 10 STRATEGIC CONSIDERATIONS IN COORDINATING ACCELERATION OF INTERNATIONAL PATENT PROSECUTION By Kathryn H. Wade, Ph.D., Hazim Ansari, and John K. McDonald, Ph.D. Forming a global patent strategy requires careful consideration of several new developments for accelerating U.S. & foreign patent prosecution. In particular, this article will provide a brief introduction to: the Patent Prosecution Highway programs currently in place; new approaches for accelerating U.S. patent applications which are different from the old petitions to make special; and accelerated examination in Europe. 1 These three topics will be addressed in the context of the impact of the different options on forming a global patent strategy. Patent Prosecution Highway (PPH) The Patent Prosecution Highway (PPH) is a fairly new program that has major implications for accelerating patent grants and for coordinating global patent strategy. The goal for implementing this program was to improve efficiency at the National Patent Offices. It is well known that the Patent Offices are overburdened with extremely high numbers of applications. For example, the U.S. Patent and Trademark Office is experiencing not only a high turn-over rate of patent examiners, but also an increase in the number of filed applications. The European Patent Office has experienced a dramatic increase in filed applications during the last few years, and examiners are struggling with their caseloads. Therefore, the delays in prosecution are steadily increasing. By using searches that have been conducted by the other Patent Offices and by taking advantage of the initial examining process of the other Patent Offices, the goal of the PPH is to make the overall process in each of the Patent Offices more efficient. The essence of the PPH program is that when an Office of First Filing (OFF) rules that at least one claim in an application is patentable, the patent applicant can then ask the office of a second filed patent application to fast track the examination of the corresponding claims in that second application. One consideration to keep in mind is that not all countries currently participate in the Patent Prosecution Highway; however, several of the arguably most important filing jurisdictions do participate. The first program was initiated between the U.S. and Japan on an experimental basis in July 2006 and was fully implemented as of January 2008. A PPH program between the U.S. and Korea also was fully implemented as of January 2009. Canada, 1 There are several other programs involving the cooperation of different national/regional patent offices (e.g., the tri-way pilot program between Europe, Japan, and the U.S.; the work sharing program proposed in October 2008 by Korea, Europe, Japan, China, and the U.S.). However, this article will not address these programs. The tri-way program was implemented at the end of July 2008, and therefore, meaningful data regarding how this program is going to affect the prosecution of a particular application does not yet exist. The work sharing program has not yet been implemented. Leaders from the five participating Patent Offices met in late October 2008, assigned two specific projects to each of the participating Patent Offices, and agreed that each Patent Office would provide to the other participating Offices no later than April 2009 a proposal for how to implement the projects. Information regarding both of these programs may be found on the U.S. Patent and Trademark Office website.
Page 3 of 10 Australia, the United Kingdom (U.K.), Europe, Denmark, and Singapore all currently have PPH trial programs in place with the U.S. These programs demonstrate an effort toward achieving more of a global patent harmonization, particularly as our global economy is in decline. To date, these programs appear to be quite successful. For example, we have used the PPH in Japan and Korea (based on allowed claims in a U.S. application) and have obtained prompt examination. Both Patent Offices issued a first office action within eight to twelve weeks of our request. This program can shave years from application pendency in Japan, where it is not uncommon to receive a first Office Action more than three years after filing the application. We recently entered the PPH in Japan in early May and received a notice of allowance in November, a remarkable savings of time and money. In another example, our colleagues in the United Kingdom have indicated that the U.K. Patent Office is moving PPHaccelerated applications very quickly and is anxious to receive more applications through this program. In fact, our colleagues have received allowance of an application within four months after accelerating the case through the PPH in the U.K. PPH programs also exist between certain foreign countries. Australia, Canada, Europe and Singapore each only has a PPH relationship with the U.S. However, Korea, the UK, and Denmark have a PPH relationship with both Japan and the U.S. In addition, Japan has a PPH relationship with Denmark, Germany, Korea, the U.K., and the U.S. This area of coordinating patent examination among several countries is changing rapidly as more countries implement PPH programs, and therefore, in order to maximize the efficiency of acceleration of patent grants in specific jurisdictions, it is important that a patent applicant s counsel is aware of the different relationships of the Patent Offices involved. In addition, it is highly advantageous for the patent applicant s counsel to have close relationships with foreign counsel because examination moves quickly on the PPH. Communication is essential, and rapid responsiveness is critical. Requirements of PPH In order for an application to be eligible for accelerated examination through the PPH, certain requirements must be met. To illustrate these requirements, consider that U.S. and Japanese national phase applications were filed, claiming priority to a PCT application that does not claim any priority. 2 First, one of the applications must have at least one allowable claim. In this example, if the Japanese Patent Office first examines the case and finds that at least one claim is allowable, then the U.S. application may be eligible to use the PPH program to accelerate prosecution in the U.S. Second, examination of the second application in another PPH jurisdiction (i.e., the U.S. application in this example) must not have begun. Third, the applicant must file a request and a petition to enter the PPH. These forms are available on the participating Patent Office web sites. Fourth, the claims in the second 2 There are specific requirements about what types of priority claims are acceptable for applications using the PPH, and the acceptable priority claims are described in detail on the participating countries Patent Office websites. In particular, typically an eligible patent application may claim priority to a national patent application filing in the Office of First Filing (OFF), a PCT application having no priority claim, a PCT application claiming priority to another PCT application which then has no priority claim, or a PCT claiming priority to a national filing in the OFF.
Page 4 of 10 application must be amended to correspond to the subject matter of the allowable claims in the first application. This amendment often will result in a narrowing of the claims, which may not be acceptable in certain circumstances. However, the applicant has the option to file continuation or divisional applications using traditional prosecution pathways to pursue the desired broader claim coverage, while simultaneously prosecuting the application with the more narrow claims using the PPH. In addition, certain claims would not be advisable to pursue on the PPH. For example, method of treatment claims are patentable in the U.S., but are not patentable in certain other countries. There are different approaches to amend method of treatment claims into an acceptable format, such as use type claims (e.g., pharmaceutical compositions for use in certain treatment), however, not all countries allow even the amended claim type. Therefore, one must consider the claims and whether or not they would be most appropriate for acceleration in one jurisdiction over another. 3 The applicant must submit a claims correspondence table that shows the correlation between the allowed claims in the first application and the amended claims in the second application. This table facilitates the examiner s ability to evaluate the similarity and scope of the claims to ensure that the application is eligible for the PPH. We routinely send draft claims to our foreign associates for review and comment before entering the PPH. Again, effective working relationships with foreign patent counsel are essential for smooth traveling on the PPH. Fifth, the applicant must submit a copy of the Office Actions and the prior art references that were disclosed in the first application. Of course, in the U.S., there is a continuing duty to disclose all potentially material prior art documents under Rule 56. Therefore, in this example, the applicant must disclose in an information disclosure statement not only the references identified in the Japanese search and PCT search report, but also any prior art known that is potentially material to patentability of the claimed invention. The advantage of compiling the required information and amending the claims is a significant reduction in the time to obtain issuance of a patent in the U.S. or other PPH country. This reduction in application pendency can decrease the total cost of prosecution by limiting the rounds of Office Actions necessary to reach agreement on allowable claim language. However, applicants must keep in mind that while overall cost may be reduced, applicants will incur costs and fees much earlier than usual. These costs and fees are due to work that must be completed at an early stage, such as amending the claims, preparing a claims correspondence table, interacting with the foreign associate, filing a request for examination earlier, and filing a request to accelerate examination. These items require both legal fees and government filing fees. In addition, it is important to note that the Office of Second Filing (OSF) is not rubber stamping the determination made by the OFF. In fact, the OSF does not necessarily limit their consideration to the art that was supplied during prosecution in the OFF, and may conduct additional searches that might reveal art that was not considered in the OFF. There are also other considerations such as sufficient enablement or literal support which may have different requirements in different countries, and therefore, may affect examination in the OSF. 3 Another example of claims for which the PPH may not be useful are claims related to stem cells, which would be patentable in the U.S., but not in certain other jurisdictions.
Page 5 of 10 To see the advantages of using the PPH, it is helpful to look at a specific example such as shown in Figure 1. This figure illustrates the interplay between the various Patent Offices with respect to the PPH. In this example, PCT national phase applications were filed in Australia, the U.S., Canada, Korea, and Japan, based on a PCT application that does not contain a priority claim. At least one claim was found allowable in Australia and Japan. First, the U.S. application is available for filing a request for entering the PPH, through two different routes. This is because the U.S. case has not been examined and because the U.S. has a PPH relationship with both countries (Australia and Japan) in which claims were allowed. Although the Canadian application also is pending and has not started prosecution, that application is not eligible to use the PPH program because Canada does not have a PPH program established with either Australia or Japan. The Korean application also is pending, but it has already been examined. Therefore, the Korean application also is not eligible to use the PPH. Because Korea does have a PPH relationship with Japan, if prosecution had not yet started, then that Korean application could have used the PPH based on the allowable claims in the Japanese application. Advantages and Necessary Considerations of Using the PPH As discussed above, there are distinct advantages of using the PPH program. Applicants can accelerate the timing to a first action by a Patent Office and can increase the speed to get an issued patent, giving the patentee the early ability to exclude others from making, using, selling, or practicing the claimed invention. This acceleration to patent issuance can eliminate or reduce the competition, which is particularly useful, for example, in circumstances where you know that your competitor has a manufacturing facility in a PPH country. Early patent issuance also increases the licensing value of a particular invention, as allowed claims will drive up the value of the potential royalties and milestones for the license of the technology. In addition, the perceived value of the company can certainly increase after having a series of patents issue fairly quickly, i.e., within a twelve month time period, by using the PPH in several jurisdictions after a first allowance. This result can be a very significant driver for stock value, and it also can attract private investment. The applicant also must choose carefully where PPH acceleration should begin, particularly with respect to choosing the best jurisdiction for the types of claims that the applicant is interested in pursuing. As discussed earlier, the applicant must consider whether claims can be successfully reformatted to suit the laws of each Patent Office. When considering entry into the PPH, applicant s counsel should forward claims that are close to allowance, for example in the U.S., to a colleague in another PPH country/region to review and suggest acceptable claim format for that country/region. Then the applicant can review the proposed claims for use in the PPH in that country/region. This proactive measure can minimize potential inefficiencies in the PPH system because once you trigger the PPH entry, you must have the claims in proper format for allowance pursuant to the laws of that country. By engaging in this proactive discussion, the applicant will consider at an early stage whether it is willing to accept claims of a particular scope, and certain problems also may be identified as a result of trying to re-format the claims. There are also disadvantages of using the PPH program. As discussed above, this process involves significant costs up front, for example, in terms of attorneys fees for getting the
Page 6 of 10 case in proper condition to enter the PPH; governmental fees for requesting examination; and legal fees associated with preparing and submitting information disclosure statements. Another disadvantage is that you typically will be limited in the claim scope, being restricted to the allowable subject matter in the first application. Therefore, if that is not acceptable to an applicant in a particular case, then the PPH would not be the best approach. However, if there is significant competition and the applicant has an allowable claim that is sufficient to cover the competitor s manufacturing, distribution, or importation of a product, then the PPH can be very desirable. Additional strategic considerations in coordinating an applicant s global patent strategy will be discussed following a brief description of accelerated examination programs in the U.S. and Europe. Accelerated Examination in the U.S. Applicants can accelerate examination of a U.S. application by filing a petition to make special under 37 C.F.R. 1.102. This accelerated examination previously was possible only under certain specific circumstances, such as: if the invention was deemed of peculiar importance to some branch of the public service and a Governmental department head requested immediate action; if the accelerated examination was necessary due to the applicant s age (i.e., 65 or older) or health; or if the invention would materially enhance the quality of the environment, contribute to the development or conservation of energy resources, or contribute to countering terrorism. These rules for accelerating examination in the United States recently have changed. Petitions to make special due to the applicant s age or health are still possible, and there is still no fee due and very little extra effort by the applicant necessary to request accelerated examination in those instances. The revised rules now provide a means for an applicant to accelerate prosecution of his application under any circumstances, and not just the previously specified ones; however, the applicants that do not have age or health-related reasons for seeking accelerated examination are required to pay a fee and do some proactive work to assist the Examiner. This new program guarantees a final decision on patentability (i.e., a Final Office Action or a Notice of Allowance) within 12 months of the petition, in exchange for the additional work on the part of the applicant, as discussed below. This new accelerated examination program was created to decrease the pendency of applications to minimize any negative impact of such pendency on commercial viability of the patent. The program forces early interaction with the patent examiner, and it narrows the scope of issues under consideration in the application. In using this system, we have received first actions, in the form of restriction requirements, within six weeks of requesting accelerated examination. This time period is significantly decreased from the typical two to four years seen in certain art units. Applicants that do not have age or health-related reasons for seeking accelerated examination must file a complete petition to make special along with the appropriate fees, the patent application, an information disclosure statement, an examination support document, and a declaration and power of attorney using the e-file system in order to request accelerated examination in the U.S. Applications under accelerated examination must be limited both in the number and in the scope of the claims. The applications may only have twenty claims, with no more than three independent claims. The applicant must conduct and submit the results of a
Page 7 of 10 patentability search at the time of filing. 4 This search must utilize acceptable national and international databases and must cover the subject matter of all of the claims, including dependent claims. An applicant should not conduct a very broad search if it intends to pursue a fairly narrow set of claims. Furthermore, applicants are well advised to consider submitting a fairly narrow set of claims under this program because they are likely to receive a restriction requirement, and that requirement cannot be traversed. The applicants that do not have age or health-related reasons for seeking accelerated examination also must characterize the search results in writing. Applicants should limit the search results to those that are most relevant to the patentability of the claims. Both the search itself and the characterization must be carefully considered to avoid later pitfalls when trying to enforce the resulting patent. The required written characterization in the examination support document must be well reasoned as that characterization may certainly be good ammunition for opposing counsel during litigation if the arguments characterizing and describing the prior art are arguably incorrect. Moreover, if a patentee failed to disclose certain references as not being material, and an opponent charges that the references should have been disclosed, the opponent may assert that the patent was obtained with inequitable conduct and therefore the patent is unenforceable. Accelerated examination has the disadvantage that applicants must pay high fees and do a significant amount of work at the outset in order to use this program. This is due to the cost to conduct a patentability search and attorneys fees to prepare the written characterization of the search results and to prepare information disclosure statements. Furthermore, within twelve months, you will obtain a Final Office Action or a Notice of Allowance, and there will be a great deal of interaction with the patent examiner until that final action. In fact, Examiners may grant interviews before they issue the first office action, and such interviews often immediately help to resolve minor issues through claim amendments during the interview. One option to consider if choosing to seek accelerated examination with a narrow claim set, is to also have a co-pending application with much broader claim scope. Therefore, if prosecution in the accelerated examination case is not taking a good direction, another case will be pending with broader claims. This co-pending application also may be used to file another continuation application and request accelerated examination for claims covering different subject matter than the first accelerated application. Accelerated Examination in Europe The PACE program in the European Patent Office was created to decrease pendency of applications in Europe. It involves a simple process in which applicant s foreign counsel merely submits a one-page form. Use of the PACE program is quite common, and in some instances, an applicant can obtain a first examination within three months of filing the request. One important consideration when using this program is that the applicant must be able to respond quickly. If the applicant does not respond within the defined specific time limits under the PACE procedure, 4 Even though applicants are required to submit a search, this does not does not mean that the patent examiner will not conduct his or her own search as well.
Page 8 of 10 such as four months after the mailing of the office action, the application will lose its special standing and then will go to the bottom of the pile. The accelerated prosecution in the PACE program has several implications. An application may have oral proceedings much earlier in order to resolve certain issues. Such decisions have a great impact on whether or not the applicant will be able to obtain a patent for the claimed subject matter. If a patent does in fact issue from the application, then the applicant may face an opposition within a nine-month period. Therefore, applicants must be aware of these potential developments in order to consider budgetary constraints and strategic considerations before opting to use the PACE program for their applications. Example The potential of using both regular accelerated examination in one country and the PPH in other countries is demonstrated in Figure 2. In this example, several national phase applications were filed claiming priority to a PCT application which claims priority to a U.S. provisional application. The applicant may file a second U.S. application with a narrower claim set, claiming priority to the first U.S. application which would remain pending with a broader claim set. Applicants could then request accelerated examination of the second application. Once that application is found to have allowable claims, then the applicant can accelerate examination of the applications in Australia, Canada, Europe, Japan, and Korea through the PPH program based on the allowed claims in the second U.S. application. Strategic Considerations Applicants need to consider the nature and state of their business in order to determine whether accelerated examination is appropriate for their patent portfolios. Using the PPH and/or accelerated examination in the U.S. or Europe will allow applicants to more quickly reach conclusion of the prosecution of an application. This resolution will allow the applicant to prevent others from manufacturing, selling, practicing, and marketing their goods or services, and to obtain a higher premium for its goods or services in those countries where the applicant is obtaining allowable claims and issued patents at a faster rate. Applicants can reduce competition, enhance licensing value, and increase the value for its shareholders using these programs. However, there are significant upfront costs associated with accelerated examination. Therefore, this option may not be in the best interest of certain applicants businesses. For example, newly public companies may or may not want to spend the extra money to obtain narrow claim coverage. Early stage companies may need more time to generate funds for prosecution and may not be able to handle the significant resulting costs if accelerated examination is successful (e.g., translation fees for the claims upon grant in Europe, validation fees in different countries in Europe). Other business cannot afford to wait. For example, if a company has a blockbuster compound or some kind of software technology that might not have a long life commercially, it may be important to take advantage of these acceleration options.
Page 9 of 10 Another reason not to pursue accelerated examination is if your company needs more time for research and development. For example, if an application includes a very theoretical, conceptual, or poorly enabled specification, then accelerated examination would not be advisable because it will be difficult in many jurisdictions to obtain a patent. Similarly, some jurisdictions may require actual reduction to practice or actual data in animals or humans, for example, in order to make progress with the application. Therefore, if your company is not at that stage, then accelerated examination might not be appropriate. There are other practical considerations that companies need to consider such as the public perception of the potential for broad claim coverage relative to the perception of actual narrow claim coverage. Making such decisions should involve a healthy, ongoing dialogue within the company as well as with the company s intellectual property counsel. For example, start up companies that are in the process of raising funds typically have very broad claims in a patent application, knowing that that they are unlikely to obtain allowance of the broadest claims. This is a tactic that is commonly used in order to attract investment and also, by publication, to delay or prevent others from obtaining patents in the field. In this instance, the company may not be interested in using accelerated examination with a narrower claim scope, unless they have another application pending in which they can still demonstrate the broader claim coverage. Another important factor is how well the company really knows its business and its longterm direction. For example, if the company s resources are very limited, it may be a poor business decision to spend significant money on accelerated examination in certain applications. This is particularly so if the pursued claims would not cover the core products and services, which often change for a company in the early stages. Therefore, if the company spends all its resources in one of its technology areas using accelerated examination and then the company has to shift business direction, there might not be sufficient resources remaining to properly protect the inventions involved in the new business direction. Finally, it is critical that there is a consensus dialogue within the company on the issue of its international plans. Companies considering accelerated examination must consider where its competitors are operating, the markets for its products or services, and where manufacturing might occur. These factors are important topics for discussions that should occur before spending significant money in accelerating examination in foreign countries. It is important to have that dialogue with patent counsel early and then to appropriate the proper resources to implement the international patent strategy. It is also critical that the company s patent counsel has strong relationships with foreign firms, being able to work seamlessly with foreign counsel in terms of communication and responsiveness. In conclusion, patent applicants must consider the nature and state of their business in deciding whether accelerated examination is appropriate for its patent portfolio. In doing so, it is important that applicants have serious discussions regarding the goals and state of their business, both within the company and with outside counsel before choosing to use the PPH or accelerated examination within the U.S. or Europe.
Page 10 of 10 FIGURE 1 PCT Application 1/10/07 Text Colors Pending Issued/Allowed Expired PPH Australia US Canada Korea Japan Issued 2/5/11 Awaiting Exam. Awaiting Exam. Response to Office Action due 9/18/11 Issued 3/10/11 FIGURE 2 US Provisional Application 1/17/06 PCT Application 1/10/07 Text Colors Pending Issued/Allowed Expired PPH Australia 1 st US Canada Europe Japan Korea Regular exam with broader claim scope 2 nd US 7/18/08 Accelerated exam with narrow claim scope Issued 7/1/09