KEY POINTS ABOUT THE NEW PATENT REFORM LAW

PROF. PAUL JANICKEUNIVERSITY OF HOUSTON LAW CENTER

OCTOBER 2011

2011 2

1. WE ARE NOT GOING TO A “FIRST TO FILE” SYSTEM

• THE SENATE FLOOR REMARKS AND THE HOUSE REPORT MAKE CLEAR THAT THE RULE WILL BE:

• IN A CONTEST BETWEEN INDEPENDENT INVENTORS, THE VALID CLAIM WILL GO TO THE FIRST TO PUBLICLY DISCLOSE

2011 3

• FIRST-TO-FILE IS THE DEFAULT RULE

– TWO ENTITIES VYING FOR SAME PATENT COVERAGE WILL LIKELY CONTINUE TO BE A FAIRLY RARE HAPPENING

• CALLING THE STATUTE THIS WAY IS ODD

– RULE: WHERE NO ONE HAS PUBLICLY DISCLOSED AND BOTH HAVE FILED CLAIMING ≈ SAME SUBJECT MATTER, THE FIRST TO FILE WINS

2011 4

EXAMPLE

• JANUARY A INVENTS• FEBRUARY B INVENTS• MARCH B PUBLICLY USES• APRIL A FILES• MAY B FILES

• B WINS, EVEN THOUGH A WAS FIRST TO INVENT AND FIRST TO FILE

• A IS BARRED BY THE PUBLIC USE• B IS SAVED BY HIS “GRACE PERIOD”

2011 5

2. MOST ONE-YEAR CLOCKS FOR TIME BARS WILL BE ABOLISHED

• OFFERS FOR SALE AND PUBLIC USES WILL NOW BE WORLD-WIDE

• AND THEY INSTANTLY BAR ANYONE WHO IS NOT ALREADY ON FILE SOMEWHERE (PRIORITY DATE) OR IN A GRACE PERIOD

2011 6

SO-CALLED GRACE PERIOD ONLY FOR FIRST-INVENTOR-TO-PUBLISH

• WHERE AN INVENTOR’S OWN WORK TRIGGERED THE BAR, DIRECTLY OR THROUGH AN INTERMEDIARY:

– HE GETS A ONE-YEAR PERIOD IN WHICH TO FILE, IF NOTHING ELSE HAPPENS

– A PARIS CONVENTION FILING WILL BE OK TO AVOID THE BAR

>

2011 7

BOTTOM LINE

• THE SYSTEM SHOULD BE NAMED “INSTANT BAR SYSTEM, WITH NARROW GRACE PERIOD” RATHER THAN “FIRST TO . . . ”

• THE ONLY WAY TO PROTECT AGAINST 3RD PARTY PUBLIC DISCLOSURES IS TO FILE OR PUBLICLY DISCLOSE BEFORE THEY HAPPEN

2011 8

DANGER: TARDY APPLICATION DRAFTING

• LAWYERS: MUST TAKE ACCOUNT OF POTENTIAL INSTANT BAR BY 3RD PARTY WHEN COMMISSIONED TO FILE AN APPLICATION

• THE CLIENT CAN BE BARRED IF AN INDEPENDENT PARTY PUBLISHES TOMORROW!

2011 9

• CLIENTS SHOULD BE WARNED

• LAWYERS SHOULD BE AS PROMPT AS FEASIBLE

2011 10

3. “INVENTION DATE” IS HERE TO STAY FOR QUITE SOME TIME

• THE PHASE-IN OF “NEW” PRIOR ART PROVISIONS IS PAINFULLY SLOW

• NEW APPLICATIONS FILED AFTER 3/16/13, WITH NO EARLIER PRIORITY CLAIM, ARE UNDER “NEW” PRIOR ART

• BUT >

2011 11

• ALL NOW-EXISTING PATENTS• ALL APPLICATIONS NOW PENDING– AND PATENTS ISSUING THEREON

• ALL APPLICATIONS FILED UP TO 3/16/13– AND PATENTS ISSUING THEREON

• ALL LATER APPLICATIONS, IF THEY CLAIM EARLIER PRIORITY– AND PATENTS ISSUING THEREON

• ARE UNDER THE OLD NOVELTY LAW! >

2011 12

• RESULT:

–WE SHOULD EXPECT TO SEE LITIGATION DEFENSE OF EARLIER INVENTORSHIP BEING ADJUDICATED UNTIL ABOUT 2025; MAYBE LONGER

–WE SHOULD NOT SAY INTERFERENCES HAVE BEEN ABOLISHED, OR ARE EVEN OBSOLESCENT, UNTIL AT LEAST 2020

>

2011 13

• BEST MODE, HOWEVER, IS RETROACTIVELY PURGED FOR EXISTING PATENTS

• ALL “PROCEEDINGS” COMMENCED AFTER 9/16/11 HAVE NO BEST MODE DEFENSE

2011 14

4. BEST MODE CAN NOW BE CONCEALED?

• EVEN DELIBERATELY

• § 15 OF THE BILL:

– “. . . EXCEPT THAT THE FAILURE TO DISCLOSE THE BEST MODE SHALL NOT BE A BASIS ON WHICH ANY CLAIM OF A PATENT MAY BE . . . HELD INVALID OR OTHERWISE UNENFORCEABLE”

>

2011 15

• NO LOSS OF PRIORITY EITHER

–AMENDED 119, 120 NOW HAVE SPECIFIC EXCEPTION FOR BEST MODE OMISSION

• SEEMS TO BE NO PENALTY FOR HIDING IT

• A BOON TO FOREIGN ORIGINATORS

>

2011 16

• MYSTERY: WHY DID CONGRESS KEEP BEST MODE IN

§ 112?

• DOES IT HAVE SOME LINGERING EFFECT?

• PTO HAS INDICATED AN INTENTION TO CONTINUE TO ENFORCE IT (SOMEHOW)

2011 17

5. DERIVED INFORMATION IS NOT PRIOR ART

• INVENTOR’S STATEMENT NEW 35 U.S.C. §

115(b) MUST ASSERT BELIEF OF ORIGINALITY

• BUT: A LITTLE CHANGE MAY GO A LONG WAY– SLIGHT VARIATION FROM THE DERIVED

INFO WOULD SEEM TO BE OK– DERIVED INFO IS NOT PRIOR ART >

2011 18

• “PRIOR ART” WAS NEVER DEFINED IN THE 1952 ACT

• IT APPEARED ONLY IN § 103

• NOW, IT APPEARS IN THE HEADING OF NEW § 102(a): “NOVELTY; PRIOR ART”

• SO, PARTIAL DERIVATION SHOULD HAVE NO EFFECT ON OBVIOUSNESS

2011 19

• CONGRESSIONAL APPROACH TO DERIVED INFO: – NEW 35 U.S.C. § 291: “DERIVED

PATENTS”– APPLIES ONLY WHERE THE ORIGINATOR

SEEKS A PATENT AT SOME POINT

• IF ORIGINATOR DOESN’T CARE TO FILE, THE MAINLY DERIVED CLAIMS APPEAR TO BE VALID

2011 20

6. PENITENCE“SUPPLEMENTAL EXAMINATION,” § 10 OF H.R. 1249,

NEW 35 U.S.C. § 257(c)

• INEQUITABLE CONDUCT CAN NOW BE CURED BY A POST-GRANT CLEANSING PROCEDURE

• ANY WITHHELD INFORMATION CAN BE BROUGHT FORWARD TO PTO

• IF CLAIMS ARE RE-ALLOWED, THIS INFO IS BLOCKED IN COURT

2011 21

CONDITIONS FOR CLEANSING

• CANNOT COMMENCE OR CONTINUE SUPPLEMENTAL EXAM IF PATENTEE HAS BROUGHT A PENDING INFRINGEMENT ACTION– FILING OF SUIT TERMINATES THE

SUPPLEMENTAL PROCEEDING

• CANNOT COMMENCE SUPPLEMENTAL EXAM IF A D.J. SUIT IS PENDING AND THE CHALLENGER HAS PLEADED INEQ. CONDUCT “WITH PARTICULARITY”

2011 22

7. DECEPTIVE INTENT DISAPPEARS

• “WITHOUT DECEPTIVE INTENTION” HAS BEEN DELETED FROM THE STATUTE (ALL 7 OCCURRENCES)– CHANGE OF INVENTORSHIP (§§ 116, 256)– ERROR IN REISSUE (§ 251)– FILING A DISCLAIMER (§ 253)– SUING ON A PATENT CONTAINING AN

INVALID CLAIM (§ 288)– FOREIGN FILING WITHOUT A LICENSE (§§

184, 185) >

2011 23

WHY?• PROBABLY:

– TOO MANY MENTAL STATES FOR A MODERN COMMERCIAL STATUTE

– NEED TO STREAMLINE PATENT LITIGATION

• COULD ALSO BE: HARMONIZATION ATTEMPT

2011 24

8. PUBLIC SUBMISSION OF PRIOR ART AND OTHER INFO

• WE HAVE LONG HAD 35 USC § 301: – ANY PERSON, AT ANY TIME, CAN SEND

IN PRIOR PATENTS OR PUBLICATIONS FOR CONSIDERATION RE. SOMEONE ELSE’S ISSUED PATENT

– IF EXPLANATION IS GIVEN, WILL BE PLACED IN THE FILE

• AMENDED § 301 ADDS A WRINKLE THAT COULD BE IMPORTANT >

2011 25

• A PERSON CAN NOW SUBMIT CLAIM-SCOPE POSITION STATEMENTS PREVIOUSLY MADE BY PATENTEE– THESE CAN BE USED FOR PURPOSES OF

CONSTRUING A CLAIM IN• AN INTER PARTES REVIEW [LATE TYPE]• A POST-GRANT REVIEW [EARLY TYPE]• A REEXAM

• CAVEAT PATENTEE: BROAD CLAIM- SCOPE ASSERTIONS CAN BITE!

2011 26

AND WILL NOW BE ALLOWED TO ATTACK PENDING

APPLICATIONS AS WELLH.R. 1249 §8, ADDING 35 U.S.C. §122(e)

• SUBMISSIONS OF PRIOR PATENTS AND PUBLICATIONS

• SOME TIME CONSTRAINTS:1. BEFORE NOTICE OF ALLOWANCE2. OTHER LIMITS BASED ON APPL. PUBLICATION

DATE OR CLAIM REJECTION >

2011 27

• THE STATUTE SAYS THESE SUBMISSIONS ARE “FOR CONSIDERATION AND INCLUSION IN THE OFFICIAL RECORD”

• EXPLANATIONS ARE REQUIRED

• THEORETICALLY, THESE ARE NOT OPPOSITION PROCEEDINGS– PRE-GRANT OPPOSITIONS ARE STILL

PROHIBITED BY 35 U.S.C. §122(c)

2011 28

9. NEW DANGER: UNSUPPORTED CLAIMS

• NEW § 102 (STRICT) vs. OLD § 102 (EASIER)

• IN A CHAIN OF APPLICATIONS THAT STRADDLES 3/16/13, INSERTION OF ANY CLAIM THAT IS NOT ENTITLED TO PRIORITY:–MAY BE UNPATENTABLE UNDER § 112,

OF COURSE– ALSO PUTS ALL CLAIMS UNDER THE

NEW, MORE STRINGENT LAW

2011 29

10. SUBMARINE PRIOR ART

• WE WORRIED ABOUT SUBMARINE PATENTS– STILL A PROBLEM, ALTHOUGH LESS

WITH 20-YEAR EXPIRATION

2011 30

• NOW WE HAVE SECRET RETROACTIVE PRIOR ART, EXTENDED:– PUBLISHED APPLICATION OR PATENT OF

ANOTHER IS RETROACTIVE PRIOR ART– AND IT IS EFFECTIVE NOW GOING TO BE

AS OF ITS FOREIGN PRIORITY DATE (MORE ON THIS LATER)

– YOU CAN’T FIND IT IN A SEARCH, UNTIL RELATIVELY LATE

2011 31

THINGS IN THE REFORM LEGISLATION THAT HAVE BEEN TALKED ABOUT IN THE PRESS

2011 32

ASSIGNEE FILING (FINALLY)

• BUT INVENTOR’S “STATEMENT” STILL NEEDED

– RISKY TO ASSUME THERE IS AN OBLIGATION TO ASSIGN

– HARDLY WORTH IT

2011 33

PRIOR USER RIGHTS

• ARE NOW EXPANDED, FROM BUSINESS METHODS TO ALL KINDS OF PATENTS

• MIGHT BE NEEDED FOR SECRET METHODS IN FACTORIES– CURRENTLY THESE COULD BE

ENJOINED BY A LATER PATENTEE

2011 34

POST-GRANT REVIEW

• MUST FILE WITHIN 9 MONTHS OF ISSUE

• ANY GROUND OF INVALIDITY, E.G.:– INDEFINITENESS– INELIGIBLE SUBJECT MATTER– ENABLEMENT–WRITTEN DESCRIPTION

>

2011 35

• 3-JUDGE DECISION– DISCOVERY MIGHT BE ALLOWED– PROTECTIVE ORDERS MIGHT BE

FOUGHT OVER– PRIVILEGE ISSUES WILL ARISE– 18-MONTH TIME FUSE

• BROAD PRECLUSIVE EFFECT – ANY GROUND THAT WAS “RAISED OR REASONABLY COULD HAVE BEEN RAISED” >

2011 36

• COULD BE VERY EXPENSIVE

• SMALL AND MIDSIZE PATENTEES WILL BE HARD-PRESSED

• MAY HAVE TO ISSUE CHEAP LICENSE TO SETTLE

2011 37

INTER PARTES REVIEW

– CAN BE FILED ONLY AFTER 9 MONTHS FROM GRANT

– GROUNDS: PATENTS AND PRINTED PUBLICATIONS ONLY

– AGAIN, A 3-JUDGE DECISION– BROAD PRECLUSIVE EFFECT RE. ITEMS

THAT WERE OR COULD HAVE BEEN RAISED (PATENTS AND PRINTED PUBLICATIONS)

2011 38

COSTS FOR EITHER FORM OF POST-GRANT PROCEEDING

–WILL DEPEND HEAVILY ON DIRECTOR KAPPOS’S REGULATIONS

– THESE ARE DUE BY SEPTEMBER 2012

– THE PROCEEDINGS BEGIN THEN

2011 39

A FEW ADMINISTRATIVE PROBLEMS

• CURRENTLY PTO HAS 102 ADMINISTRATIVE PATENT JUDGES

• BACKLOG: 24,000 APPEALS [ABOUT 240 PER JUDGE]

• ADDING POST-GRANT REVIEWS WILL BE A BURDEN

• LOOKING FOR 100 MORE JUDGESPROBABLE BUDGET: MINUS 10% >

2011 40

• DON’T BE FOOLED BY THE “FUNDS CAN BE USED ONLY FOR” LANGUAGE

• PRESENT STATUTE HAS THIS AS WELL [35 U.S.C. § 42]

• THE WAY IT WORKS:– FREEZE PTO APPROPRIATIONS– SPEND $$ ELSEWHERE– TREASURY’S DEFICIT IS UNCHANGED

2011 41

QUI TAM ACTIONS FOR MISMARKING ABOLISHED

“QUI TAM PRO DOMINO REGE . . .”

• NEW LAW: ONLY U.S. CAN SUE IN GENERAL

• A DAMAGED PRIVATE ENTITY CAN SUE FOR THE AMOUNT OF HARM CAUSED– HIGHLY UNLIKELY

• AND NO ONE CAN SUE FOR MISMARKING WITH AN EXPIRED PATENT NUMBER

2011 42

TAX STRATEGY PATENTS ABOLISHED

• “DEEMED TO BE WITHIN THE PRIOR ART” [BILL § 14]

• MYSTERY: WHY NOT AMEND § 101?

• REJECTIONS WILL NOW BE UNDER §102??

2011 43

“HUMAN ORGANISMS” ARE NONSTATUTORY

• BUT WHAT IS EMBRACED IN THAT TERM?– CELL LINES?– STEM CELLS?– TISSUE SAMPLES?

• LEGISLATIVE HISTORY REFERS TO REP. WELDON’S AMENDMENT

• AIMED AT EMBRYOS

2011 44

TWO MINDS NEEDED!

• FOR THE NEXT 15 YEARS OR SO, WE WILL BE LITIGATING PATENTS UNDER THE OLD NOVELTY RULES– ALL FILINGS UP TO MARCH 2013, AND

THE PATENTS ISSUING ON THEM

• AND PROSECUTING UNDER THE NEW ONES

>

2011 45

• FILING ANY CLAIM AFTER 3/16/13 THAT LACKS AN EARLIER PRIORITY DATE– PUTS ALL THE CLAIMS UNDER AT LEAST

THE NEW LAW– IF SOME CLAIMS ARE ENTITLED TO PRE-

3/16/13 DATE, A HYBRID TYPE OF PRIOR ART APPLIES TO ALL THE CLAIMS: NEW LAW + OLD 102(g)

2011 46

SPECIAL TREATMENT FOR SOME BUSINESS METHODS

• SPECIAL PROCEDURE FOR CHALLENGING ALREADY-ISSUED PATENTS AND FUTURE PATENTS

• APPLICABLE ONLY TO FINANCIAL-SERVICE METHODS

>

2011 47

• SPECIAL KINDS OF PRIOR ART ARE RETAINED

• RETROACTIVITY IS PROBLEMATIC

• HOW TO EXAMINE APPLICATIONS?– THE STATUTE REFERS ONLY TO POST-

GRANT REVIEWS OF THESE PATENTS!

2011 48

AU REVOIR TO HILMER

• PATENTS AND PUBLISHED APPLICATIONS NOW EFFECTIVE AS PRIOR ART AS OF THEIR FOREIGN FILING DATES

• ON THE PLUS SIDE: FOR THAT APPLICANT, FOREIGN FILING PREVENTS ALL BARS [CF. OLD § 119]

2011 49

ADVISING CLIENTS

• FILE EARLY, AS NOW

• INCLUDE THE BEST MODE, UNTIL THE SITUATION CLARIFIES

• CONSIDER INVITING PREISSUANCE PRIOR ART SUBMISSIONS BY YOUR COMPETITORS

2011 50

• BEFORE SUING FOR INFRINGEMENT:

– SCOUR THE FILES, U.S. AND FOREIGN, AND CORPORATE RECORDS FOR OMITTED PRIOR ART

– INTERVIEW INVENTORS RE. POSSIBLE UNDISCLOSED PRIOR ART

– SCOUR THE FILE HISTORY FOR POSSIBLE MISSTATEMENTS

– USE SUPPLEMENTAL EXAMINATION IF NEEDED

2011 51

IF YOU ARE A POTENTIAL INFRINGEMENT TARGET

• MONITOR PUBLISHED APPLICATIONS FOR POTENTIAL TROUBLE– CONSIDER PREISSUANCE ART

SUBMISSIONS

• CONSIDER PROS AND CONS OF POST-GRANT PROCEEDINGS

2011 52

OVERALL ASSESSMENT OF THE NEW LAW

• PATENT PROSECUTION AND KEEPING A PATENT–MORE EXPENSIVE–MORE DANGEROUS– NOT STREAMLINED

• HELPFUL TO FOREIGN ORIGINATORS– NO BEST MODE NEEDED (MAYBE)– FOREIGN PRIORITY IS NOW COMPLETE– ALL BARS ARE NOW WORLDWIDE

2011 53

• ON THE LITIGATION FRONT: SOME STREAMLINING– ABOLITION OF PRIOR INVENTOR

DEFENSE– ABOLITION OF BEST MODE– ABOLITION OF QUI TAM– TIGHTENING OF WILLFULNESS

ARGUMENTS

2011 54

• MORE JOBS CREATED?

– CERTAINLY FOR LAWYERS

– UNLIKELY FOR ANYONE ELSE