Update on Implementation of American Invents Act Effective As of September 16, 2012

By Dennis Clarke and James McEwen

On September 16, 2011, the “Leahy-Smith America Invents Act” (AIA) was signed into law. The AIA makes the most substantial changes in U.S. patent law in decades and sets various dates on which these changes are to take effect.

The most profound of those changes is the switch to a first-inventor-to-file system, in place of the current first-to-invent practice in the U.S. This change takes effect only for applications originally filed on or after March 16, 2013. However, on September 16. 2012, other major changes will take effect, including the possibility of requesting inter partes review and other post-grant trial procedures before the newly renamed “Patent Trial and Appeal BoarcL” This paper will predominantly relate to the new requirements relating to declarations and assignments and other miscellaneous provisions that have an effective date of September 16, 2012. The new trial proceedings are discussed briefly hereinbelow.

Continue reading

USPTO Issues Proposed Rules for Implementing the America Invents Act

Charles Pierce and James G. McEwen

On July 25, 2012, the United States Patent and Trademark Office (USPTO) announced proposed rules as a result of changes in the America Invents Act (AIA) converting the U.S. patent system from a first to invent to a first to file system.  These changes will take place on March 16, 2013.

The proposed rules are intended to promote consistency caused by the changes in the AIA for pending applications, and to implement the AIA for future applications.  Comments on the proposed rules are open until October 5, 2012.  Below is a summary of significant elements of the proposed rules.

The proposed rules will treat commonly owned or joint research agreement patents and patent application publications as having the same inventive entity for the purposes of 35 U.S.C. §§ 102 and 103 as required under 35 U.S.C. § 102(c) of the AIA.  35 U.S.C. §102(c) of the AIA essentially broadens the current 35 U.S.C. §§ 103(c) by making these provisions usable for novelty.  The broadened use of this exclusion should be beneficial to holders of large families of patents.

Since new 35 U.S.C. §102(b) provides exceptions to 35 U.S.C. §102(a) based upon prior disclosure by the inventor, the rule changes also allow the submission of affidavits or declarations to show that a disclosure upon which a claim rejection is based was made by an inventor, joint inventor, or someone who obtained the disclosed subject matter from the inventor or a joint inventor.  These provisions will also allow the submission of affidavits to show that there was a prior public disclosure by an inventor, joint inventor, or someone who obtained the disclosed subject matter from the inventor or a joint inventor.  This will be codified in 37 CFR §§ 1.104, 1.130, and 1.131.

Another change being implemented relates to using the effective dates of foreign priority applications against third party patents.  In order to ensure that the foreign priority documents are received in time for publication and use, the USPTO is now requiring that the certified copy be received within the deadline now only required for submitting the priority claim: the later of four months from the filing date or sixteen months from the foreign priority date.  The claim must also be included in an Application Data Sheet.  While these changes are likely not an issue where the applicant is able to retrieve priority documents using the priority document exchange (PDX) system, this timing will be an issue for all other applications.  Therefore, applicants need to ensure that the certified copies are provided as soon as possible in the prosecution process or be required to file a Petition for late acceptance.

The last major change in this round of AIA rulemaking is relate to the transitional period between first to invent and first to file, and probably will have the greatest short term impact on patent practitioners.  In order to ensure that the USPTO can properly evaluate which set of rules to apply when faced with priority claims for applications filed prior to March 16, 2013, the USPTO is requiring the applicants identify which rules will apply.

Specifically, where the application is filed after March 16, 2013, but claims the benefit of a foreign, provisional, or nonprovisional application having an effective filing date prior to March 16, 2013, the applicant will need to provide a statement whether the claims in the application are entitled to the earlier effective filing date.  Also, if the nonprovisional application that claims such benefit does not contain a claim to a claimed invention that has an effective filing date on or after March 16, 2013, but discloses subject matter not also disclosed in the prior application, the applicant must provide a statement to that effect.  For example, under proposed 37 C.F.R. 1.55, where the application claims priority to a foreign application filed prior to March 16, 2013, the applicant will need to specify if there is new matter in the application, and whether the claims are supported by the foreign priority date.  Examples of such statements include “upon reasonable belief, this application contains subject matter not disclosed in the foreign application” or “upon reasonable belief, this application contains at least one claim that has an effective filing date subject matter on or after March 16, 2013”.

These statements will have to be filed within the later of four months from the actual filing date of the later application, four months from the date of entry into the national stage in an international application, or sixteen months from the filing date of the prior filed application, or the date that a first claim to a claimed invention that has an effective filing date on or after March 16, 2013 is presented in the application.  Failure to make such a statement after these deadlines will require a Petition, and any changes will result in the Examiner issuing a Request for Information under 37 CFR 1.105 to require the applicant to prove by line and element number where support is found.  For continuations, divisionals, and continuation in part applications, this requirement will be codified in 37 CFR § 1.78.

As these rules are still only being proposed, applicants and the legal community are reviewing the proposed changes and preparing comments.  While many of the changes seem consistent with the requirements of the AIA, the transitional requirement for identifying whether disclosures and claims can have an effective filing date in a prior application are likely the most controversial and the most likely to cause significant problems for applicants having families of patents.  Therefore, as a short term solution, in order to avoid these potential issues should the USPTO not retract this provision, applicants should ensure that they file applications prior to March 16, 2013 if any priority claim is going to be made to an application filed prior to March 16, 2013.

Review of the Effects of the Leahy-Smith America Invents Act on Third Party Participation Applicants

James G. McEwen*

Introduction

In the article included in the Stein McEwen Newsletter entitled Overview of the Leahy-Smith America Invents Act: What Is The Practical Effect of First-to-File for Patent Applicants (October 2011), the novelty portions of the American Invents Act were explored.  However, as the America Invents Act was the result of pressures from diverse industries and groups, not all changes revolved directly around first to file issues.  Specifically, in view of the high costs of litigation, there was pressure from electronics companies to reduce the uncertainties of litigation by clarifying the law in regards to willful infringement and inequitable conduct, eliminating “secret” prior art, and retaining the prior user defense.[1] Additional issues included ensuring patent quality and reducing pendency by increasing third party participation in the issuance of patents, and increasing funding for the United States Patent and Trademark Office so that more examiners could be hired to deal with the increased number of patent applications being filed. Continue reading

Overview of the Leahy-Smith America Invents Act: What Is The Practical Effect of First-to-File for Patent Applicants

James G. McEwen*

Introduction

The American Invents Act is a result of pressures from diverse industries and groups.  From international companies and academics, there has been a desire to have the U.S. conform to international standards, and specifically, to switch from its first-to-invent system to a first-to-file system.[1]  Furthermore, in view of the high costs of litigation, there was pressure from electronics companies to reduce the uncertainties of litigation by clarifying the law in regards to willful infringement and inequitable conduct, eliminating “secret” prior art, and retaining the prior user defense.[2]  There were conflicting pressures from the electronics and pharmaceutical industries in relation to making changes to various types of damages deemed excessive, such as treble damages for willful infringement, as well as mechanisms for making equitable factors play a greater role in determining whether to enjoin infringement.[3]  Additional issues related to perceived abuses of venue, as well as ensuring patent quality and reducing pendency by enhancing the obviousness standard and increasing funding for the United States Patent and Trademark Office so that more examiners could be hired to deal with the increased number of patent applications being filed.

These pressures and issues have been at the forefront of the patent community since the American Inventors Protection Act was enacted on November 29, 1999[4] and amended by the Intellectual Property and High Technology Technical Amendments Act of 2002, and they have pitted different elements of the patent community against each other.[5]  Starting in 2004, two major reports revisited these issues with an expanded emphasis on patent quality and enforceability.  The first report, issued by the Federal Trade Commission, is titled To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy.[6]  The second report, issued by the National Academies Board on Science, Technology, and Economic Policy is titled A Patent System for the 21st Century.[7]  Upon issuance of these reports, the National Academies Board on Science, Technology, and Economic Policy and the American Intellectual Property Law Association (“AIPLA”) further promoted the need for change in a series of Conferences on Patent Reform in 2005.[8]  These conferences and reports focused their discussion on changing the novelty requirement to comport with a first-to-file system, emphasizing the need for reinvigorating the obviousness standard, and reducing litigation risks and costs.[9]

These reports and the growing call for change led to the first serious attempt to make substantial changes to the U.S. patent system in 50 years when, on June 8, 2005, Representative Lamar Smith, Chairman of the House Subcommittee on Courts, the Internet, and Intellectual Property, along with several co-sponsors, introduced H.R. 2795.[10]  Popularly known as the “Patent Reform Act of 2005,” the omnibus bill overhauled multiple aspects of patent practice.[11]  The Patent Reform Act overhauled basic procedures including the filing of patent applications,[12] how patent practitioners are regulated,[13] and even how patents are enforced.[14]  In view of the scope of the Patent Reform Act, a great deal of interest and scrutiny surrounded certain major proposed changes, and especially a proposal to switch to a first-to-file system.  However, other proposals, including changes to the award of damages, pitted independent inventors against large patent owners, and the pharmaceutical industry against the consumer electronics industry.[15]  Due to the scope of this bill, these conflicting constituencies prevented passage of the Patent Reform Act of 2005 and like bills in the following years.

With each year, however, more of the problems in the two reports were addressed by the Courts.  For instance, the Supreme Court clarified the law on obviousness[16] and, perhaps more significantly, made injunctions harder to obtain in IP cases.[17]  Also significant were changes in the law at the Circuit Court level, where courts made venue transfer easier to obtain[18] and reduced damage by clarifying they should be calculated.[19] As the courts resolved these issues, there were fewer problems needing to be solved by legislation, and thus fewer contested issues needing resolution.  The result was a simplified Patent Reform Act in 2011, which issued as the America Invents Act signed by President Obama on September 16, 2011.[20]  Below is an overview of the more notable portions of the America Invents Act, along with a discussion on potential pitfalls of each section. Continue reading

America Invents Act Signed Into Law

President Barack Obama has just signed into law on Friday, September 16, 2011, the America Invents Act.  A number of provisions take effect immediately, while others will become effective over time.  Of more immediate concern, the America Invents Act will increase fees automatically on September 26, 2011.  Specifically, The America Invents Act imposes a 15% surcharge on most fees (see Summary below), which takes effect after 10 days and lasts until the Director of the USPTO sets his own fees.  Thus, consider filing any documents with the USPTO before September 26, 2011 to avoid the 15% surcharge, and preferably by September 23 as September 26 is a Monday.  Such fees include, but not limited to the filing or payment of:

            a.  new utility or provisional or PCT patent applications;

            b.  extensions of time;

            c.  Notices of Appeal and appeals;

            d.  issue fees; and

            e.  maintenance fees.

 

Other provisions that are effective immediately relate to defenses of infringement based on earlier patent; change of default venue; best mode requirement no longer a basis to render claims invalid in court cases; limiting the situations to be able to bring false marking actions; and jurisdiction and procedural changes.

For additional information on the effective dates and the projected increases, please see Effective Dates For Patent Reform (posted September 13, 2011).   For a summary of the America Invents Act, including discussions on the major revisions which become effective either one year or 18 months from such as post-grant review; changes to 35 USC §102 and what constitutes prior art; and changing from a first-to-invent to a first-to-file system, please see Feature Comment: An Overview of the Patent Reform Act of 2011 (Posted July 8, 2011).  Additional details will be posted on the SteinMcEwenBlawg in the future.

Effective Dates For Patent Reform

By Thad Cox and James McEwen

Ever since June 8, 2005, Representative Lamar Smith, then Chairman of the House Subcommittee on Courts, the Internet, and Intellectual Property, along with several co-sponsors, have attempted to change the U.S. patent system.  In 2005, this was through introduction of H.R. 2795.  Popularly known as the “Patent Reform Act of 2005 ,” the Patent Reform Act was an omnibus bill which overhauled multiple aspects of patent practice.  While this act aroused a significant amount of interest, it ultimately failed as lawmakers were unable to reconcile numerous competing interests.  Similar efforts failed in each successive legislative session.

However, with the Patent Reform Act of 2011, (H.R.1249) as introduced by Rep. Smith (R-TX) on March 30, 2011, the first significant change to the United States patent system has arrived.   Since renamed the Leahy-Smith America Invents Act was passed by the U.S. House of Representatives on June 23, 2011, and by the U.S. Senate on September 8, 2011, and is due to be signed by President Obama as soon as the end of this week.  As such, applicants and patent owners need to be aware of when the changes will become effective and when to expect the United States Patent and Trademark Office to begin changing the way it conducts business, including establishing new fee schedules.  What follows below is a summary of which portions of the Leahy-Smith America Invents Act are effective relative to the date of enactment. Continue reading

Feature Comment: An Overview of the Patent Reform Act of 2011

By Grant Gildehaus[1] and James G. McEwen[2]

Ever since June 8, 2005, Representative Lamar Smith, then Chairman of the House Subcommittee on Courts, the Internet, and Intellectual Property, along with several co-sponsors, have attempted to change the U.S. patent system.  In 2005, this was through introduction of H.R. 2795.  Popularly known as the “Patent Reform Act of 2005 ,” the Patent Reform Act was an omnibus bill which overhauled multiple aspects of patent practice.[3]  While this act aroused a significant amount of interest, it ultimately failed as lawmakers were unable to reconcile numerous competing interests.  Similar efforts failed in each successive legislative session.  However, with the Patent Reform Act of 2011, (H.R.1249) as introduced by Rep. Smith (R-TX) on March 30, 2011, there is a very real chance that these changes could be implemented in the near future. .

As such, this article provides an overview of the significant provisions of the Patent Reform Act. Continue reading

Report On the Patent Reform Act of 2009

By Fadi N. Kiblawi[1]

Introduction

Though various forms of patent reform legislation have been unsuccessfully introduced in Congress over the past five years, Democratic and Republican leaders have recently presented a new Patent Reform Act of 2009.  The Senate Bill (S.515) and the House bill (H.R.1260) respectively introduced by Senators Leahy (D-VT) and Hatch (R-UT) and Representatives Conyers (D-MI) and Smith (R-TX), include many of the same provisions as years past (2005 and 2007), including the controversial limitations on damages for infringement.[2]  However, some less divisive provisions are omitted in the 2009 version, including stipulations on inequitable conduct and requirements that all applications be published in 18 months and prior art searches be conducted by Applicants (i.e., Applicant Quality Submissions).  The following is an overview of the more serious changes proposed in the 2009 Act.

First Inventor to File

Section 3 of the House bill and Section 2 of the Senate bill propose a transition from a “first-to-invent” to a “first-to-file” system, whereby invention is as of the date of filing, and not the date of actual invention.  Accordingly, any third-party publication, issued patents, or published applications prior to the date of filing are valid prior art, irrespective of the actual date of invention.  Similarly, any published application or issued patent filed before the date of filing are also valid prior art, irrespective of the actual date of invention.

Damages for Infringement

As related to the 2007 bills, which differed in this respect, the House in 2009 conforms to the Senate’s proposal on damages.  That is, for determining damages, the House (section 5) and Senate (section 4) bills propose an identical standard that is far more limiting than current practice.  Specifically, the courts are to determine whether a claimed invention’s “specific contribution over the prior art is the predominant basis for market demand for an infringing product or process.”  If so, the damages may be maximally based on the entire market value of the infringing product or process.  Furthermore, if the claimed invention has been the subject of a reasonable nonexclusive license, prior to the filing of the case before the court, for the same use as the infringing product or process, damages may be determined based on the terms of the license.  Similarly, if the claimed invention has similar noninfringing substitutes that are subject of nonexclusive licenses for substantially the same use as the infringing product or process, damages may be determined based on the terms of such licenses.  However, if none of the above conditions are met, the court is then to determine a reasonable royalty “applied only to the portion of the economic value of the infringing product or process properly attributable to the claimed invention’s specific contribution over the prior art” (emphasis added).

Post-Grant Review

In regards to reexaminations, the 2009 Act expands the basis of such post-grant proceedings by allowing submissions of not just patents or printed publications, but also evidence of substantial public use or sale in the U.S. more than one year prior to the U.S. patent application date and written statements of the patent owner filed in a Federal Court or the Patent and Trademark Office.  The House bill additionally allows such written statements in proceedings before the International Trade Commission.  Moreover, inter partes reexamination proceedings would be heard by administrative patent judges, as opposed to Examiners.  35 U.S.C. 317(b) would be amended to prohibit such inter partes proceedings once a judgment of a district court has been entered in a civil action.

The 2009 Act would also establish a post-grant opposition procedure, whereby any person may file a petition for cancellation “as unpatentable any claim of a patent on any ground” within 12 months of issuance of the patent.  Of note, the cancellation petition is not limited to prior art submissions, but can be on any ground of invalidity.

Preissuance Submissions

Like the 2007 Act, section 9 of the House bill and section 7 of the Senate bill provide a prescription for third party submissions during prosecution.  Specifically, the third party may submit prior art before the earlier of:

  1. the date a notice of allowance is mailed, or
  2. the later of  either (i) 6 months after the publication date of the application or (ii) the date of the first rejection of any claim by the Examiner.

Any such submissions must include “a concise description of the asserted relevance of each submitted document.”

Venue and Jurisdiction

The new regulations would curtail forum shopping and are more deferential to defendants in litigation.  In particular, venue for civil actions and actions for declaratory judgment would be limited to where the defendant has its principal place of business or is incorporated, or to where the defendant has committed a substantial act of infringement.  In the latter case, the defendant must also control thereat an established physical facility that constitutes a substantial portion of the defendant’s operations.  In very limited circumstances when the primary plaintiff is an institution of higher education, a nonprofit organization, or a micro-entity (such as an individual inventor), venue is proper where the primary plaintiff resides.

Other Provisions

Both bills provide for interlocutory appeals of district court claim construction orders (i.e., Markman Hearing Orders) to the Federal Circuit if the appeals are filed within ten days of entry of the relevant order.  Moreover, the Director would have expanded authority “to set or adjust by rule any fee established or charged by the Office under sections 41 and 376… provided that such fee amounts are set to reasonably compensate the Office for the services performed.”  Section 6 of both bills establishes a new Patent Trial and Appeal Board, replacing the Board of Patent Appeals and Interferences.  Accordingly, interferences are written off, replaced by derivation proceedings conducted by the Patent Trial and Appeal Board (along with appeals, reexamination proceedings, and post-grand opposition proceedings).  Furthermore, the Act allows for statements filed in substitute of an oath or declaration by an Applicant when an inventor is “under an obligation to assign the invention but has refused to make the [required] oath or declaration.”

Conclusion

While the simultaneous introduction of the same version of the Patent Reform Act of 2009 would give the impression that Congress is ready to implement these long standing reforms, the Senate has recently indicated that the Senate version is not ready for a vote.  One of the main contentious points is how to apportion damages under the new law, and whether such is even appropriate.[3]  Until such issues are resolved, it seems unlikely that Patent Reform will be enacted in 2009, and even more unlikely that it will pass in its present form. 


[1] The opinions in this article do not represent the official positions of Stein McEwen, LLP.    

[2] For simplicity, The Senate Bill (S.515) and the House bill (H.R.1260) will collectively be referred to as the “2009 Act”.

[3] Brent Kendall, Senate Panel Tweaks Patent Bill, Delays Significant Changes, Dow Jones Newswires  (March 29, 2009) (available at http://online.wsj.com/article/BT-CO-20090326-710952.html).