Competing patent reform bills were passed by the Senate and House of Representatives earlier this year. Yesterday, the Senate took the unusual step of bypassing reconciliation and instead adopted the House bill without changes, paving the way for President Obama's anticipated signature on the "Leahy-Smith America Invents Act" ("AIA"). The Act provides the most comprehensive set of patent reforms since 1952. A number of the major provisions are summarized below:
Post Grant Review
Among the biggest changes is the new provision for an
administrative process to challenge newly issued patents without
having to resort to litigation in a federal district court.
Moreover, unlike federal district court litigation (where the
patent is "presumed" valid) and invalidity must be
established by "clear and convincing" evidence, a
challenger need only prove invalidity before the new Patent Trial
and Appeal Board by a preponderance of the evidence.
Post grant review must be sought within nine months after the grant or re-issue of a patent. This provision of the act will take effect one year after enactment and apply to all patents issued before, on or after that date. Thus patents that issue before the one year anniversary may still be subject to post grant review provided that they have not been issued for more than nine months as of the effective date.
Unlike the current re-examination process, some discovery may also be permitted. Additionally, an oral hearing can be requested. The scope of discovery will be defined by rules yet to be promulgated by the USPTO. Nonetheless, the ability to conduct discovery and present oral arguments should go a long way towards leveling the playing field between the challenger and the patentee.
In addition to the new Post Grant Review, the traditional routes for reexamining patents will remain available to challengers. However, inter-partes re-examination will be renamed inter-partes review. The AIA also tweaks the standard for initiating review. The new threshold question will be: does the request show that there is a "reasonable likelihood that the requester would prevail" with respect to at least one claim. Inter-partes review will only be available after the nine month period for instituting post grant review proceedings expires.
Forgiveness by Supplemental Examination
Patent owners will be able to request supplemental examination
"to consider, reconsider, or correct information believed to
be relevant to the patent." One purpose of this provision
appears to cleanse patents that might otherwise be unenforceable
due to alleged "inequitable conduct" during prosecution.
The bills provide that, subject to certain exceptions, "a
patent shall not be held unenforceable under section 282 on the
basis of conduct relating to information that had not been
considered, was inadequately considered or was incorrect in a prior
examination of the patent if the information was considered,
reconsidered or corrected during a supplemental examination of the
patent."
First to File
In a roundabout way, the patent reform act provides that a patent
will be issued to the first inventor to file a patent
application. Both the House and Senate bills redefine prior art to
include any earlier filed patent application by another, thereby
ensuring that the second to file will be unable to get a patent.
But both bills also provide for "derivation proceedings"
before a Patent Trial and Appeal Board (which will replace current
Interference proceedings) to determine whether a prior applicant
had derived the subject matter in question from a later patent
applicant. The effective date for the "first to file"
provisions will be 18 months after enactment.
The act also provides greater rights to prior users of an invention, who chose not to seek patent protection. Currently, US patent laws provide a "first inventor" defense to an action for infringement – but only for business method patents. The AIA appears to create a more general prior user right for those who used the "subject matter" on which they are being sued for infringement commercially more than one year prior to the effective filing date of the application giving rise to the patent.
Fee Setting Authority
Currently, the USPTO submits a budget each year to Congress and
proposes fees that will cover the cost of running the patent and
trademark operations. Congress routinely approves the fees but only
gives the USPTO part of the revenue. The rest of the money gets
spirited away and spent by Congress for sundry projects. The Senate
bill would have allowed the USPTO to set fees and retain all of its
fee revenue. However, the final resolution (based on the House bill
approach) will allow fees to be set aside in a special fund that
can be accessed by the USPTO based on congressional approval.
Prior Art Citation
The AIA expands the rights of third parties to submit prior art.
Such submissions have to be considered by the examiner so long as
they are submitted before allowance and no more than six months
after publication.
After issuance, the Act also permits submissions of written statements made by the patent owner in federal court or USPTO proceedings as to the position taken by the patent owner as to the meaning of one or more claims. Such statements can be used for claim interpretation in re-examination, inter-partes review or post grant review proceedings.
Best Mode Requirement
In a nod towards international harmonization, the AIA disables the
unique requirement of the US patent laws that applicants must
disclose the "best mode" of practicing their inventions.
The Act removes failure to disclose the best mode from the list of
invalidity defenses to an infringement action by providing that
this is "not a basis on which any claim of a patent may be
canceled or held invalid or otherwise unenforceable."
Direct Filing by an Assignee Rather Than the
Inventor
The AIA provides for filing in the name of an assignee or one to
whom the inventor is under an obligation to assign the invention. A
person who otherwise shows "sufficient proprietary interest in
the matter" may make an application "on behalf of and as
agent for the inventor," and the patent will issue to the real
party in interest. The AIA thus paves the way for corporations to
file directly and dispenses with the notion that patent
applications must be filed by individuals – and only
after filing can they be assigned to a corporate employer.
Virtual Marking and an End to Marking Trolls
The AIA permits "constructive notice" (for seeking
damages) to be met by notifying consumers that the product is
patented and directing the public to an internet site that provides
a current list of patents covering the product. The Act also puts
an end to so-called "false marking" actions by
enterprising plaintiffs ("marking trolls") who have
sought damages (as private attorneys general) for incorrect
identification of patents covering products. Henceforth, only the
US Government will be able to sue for false marking and collect
statutory penalties. Entities that have suffered "competitive
injury" will also be able to sue for actual economic damages
but marking trolls will be out of luck.
Satellite Offices
"Subject to available resources" the USPTO is directed to
open two more satellite offices (in addition to one in Detroit
currently being planned) within three years of enactment. Several
criteria for selecting the locations of these satellite offices are
set out, including geographic diversity, origin of patent filers
and the availability of technically trained personnel for hiring as
examiners.
The Cutting Room Floor
A number of patent reforms that had been proposed in the prior
unsuccessful House and/or Senate bills were scraped to make the
package of patent reforms less controversial. These include prior
attempts to legislate changes in the way damages are awarded in
infringement action, e.g., calculation of compensatory damages, new
definitions for willful infringement and calculation of enhanced
damages upon a finding of willful infringement. Changes in the law
on inequitable conduct were also abandoned (apart from new
supplemental examination process discussed above). A requirement
for 18 month publication of all applications was also nixed as were
rules relating to venue and provisions for interlocutory appeals
after a district court had completed claim construction but prior
to final disposition of a case.
This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.