October 28, 2011
BNA's Patent, Trademark & Copyright Journal
Authored by Patrick J. Coyne
On Sept. 16, President Obama signed into law the most sweeping revision of the patent law in the past 60 years (82 PTCJ 681, 9/23/11).
The America Invents Act changes the patent system in several important ways. Overall, it is intended to strengthen the patent system by ensuring that patents that are issued are strong and to simplify enforcement proceedings. It does this through five basic types of changes.
AIA Overview. First, it changes the present "first-to-invent" system into a "first-inventor-to-file" system. The United States is the last country in the world to move away from a "first-to-invent" system.
This change brings our system into better alignment with international patent systems and adds greater predictability to determining who has priority to an invention. The AIA accomplishes this change by modifying the definition of what prior work can be used to deny a patent.
Second, the legislation adds four new types of Patent and Trademark Office procedures that can be used to challenge, or strengthen, a patent. Although two of these procedures offer new alternatives to challenge a patent, it will be harder to institute these new challenge proceedings than it is to institute existing reissue and reexamination procedures under current law. In addition, the AIA provides a unique form of "supplemental examination" to enable the Patent Office to consider information it did not consider when it initially granted the patent.
Third, the new law expands certain defenses, and eliminates or weakens several other defenses to a patent infringement claim, to simplify and streamline the enforcement of a patent.
Fourth, the legislation includes a number of miscellaneous provisions that specify that patents are no longer available for certain types of controversial subject matter.
Fifth, the AIA gives the PTO greater control to set its own fees and to locate satellite offices.
For more than a century, the United States was the most striking hold-out on the world stage in retaining its "first-to-invent" system.
Under the first-to-invent system, the first inventor is entitled to a patent, even if he or she is not the first to file. U.S. patents have been granted, only to have someone else who filed later establish that he or she was the first-to-invent and take away the patent. As there is often no public record of the prior invention, these situations cause a great deal of concern and wasted effort and investment.
The AIA provides for the adoption of a first-inventor-to-file system by rewriting the definition of "prior art" under Section 102 of the Patent Act, 35 U.S.C. § 102. The current patent law contains seven separate conditions for patentability in Section 102. These have been eliminated under the AIA in favor of a greatly simplified structure defining two types of information that can be used as prior art to defeat patentability, along with exceptions to each.
Under the prior first–to–invent system, the patent applicant would not be entitled to a patent if:
a. the invention was known by others (102(a));
b. the invention was patented or described in a printed publication (102(b));
c. the inventor abandoned his invention (102(c));
d. an application for patent was filed anywhere more than a year before the U.S. application is filed (102(d));
e. the invention was described in prior patents or published applications of others (102(e));
f. the inventor derived the invention from someone else (102(f)); or
g. the inventor was not the first to invent (102(g)).
This bewildering array of defenses makes it extremely difficult to determine who is entitled to a patent. In many instances, the information is not publicly available and might be discovered only years later, after the parties were involved in expensive and protracted legal proceedings and have invested millions of dollars in commercializing the patented technology.
In addition, some of these provisions (a, e, and g), are determined from the date of invention, whereas others (b and d) must be more than one year before the filing date of the US application. This system stands in stark contrast to the system used in the rest of the world in which priority to the patent is determined based only on the filing date.
This first–to–invent system will be replaced by much more straightforward system based on public disclosure of the invention through publication or commercialization of the invention.
The AIA sets forth two categories of prior art under new section 102(a). The first is that the claimed invention was "patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed application."
The second is that the claimed invention was "described in a patent issued under section 151, or in an application for patent published or deemed published under section 122(b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed application."
Each of these categories of prior art is subject to an exception that disclosures made less than one year before the effective filing date can be removed as prior art under Section 102(a)(1) if they are made by an inventor or someone who obtained the information from the inventor, or if the invention was previously disclosed publicly by an inventor or someone who obtained it from the inventor.
Similarly, disclosures appearing in applications and patents under Section 102(a)(2) can be removed as prior art if they were obtained from an inventor, if the subject matter was disclosed publicly by an inventor before filing by an inventor or someone who obtained it from inventor, or if the subject matter of the alleged prior art and the claimed invention were owned by the same person by the effective filing date.
Although still complex, these provisions greatly simplify and streamline the definition of prior art. They also expand what can be considered prior art.
No longer will it be necessary to determine whether the prior art reference falls before the date of invention or before the effective filing date of the application. All prior art events are now measured from the effective filing date of the application.
The touchstone of the AIA's redefinition of prior art is public disclosure of the invention. This can be by publication of by selling the invention.
Thus, the new system incentivizes public disclosure and, in particular, the prompt filing of patent applications. If an inventor delays filing their patent application, and another independent inventor either files first, publishes the invention, or sells the invention, the inventor will lose their right to the patent.
The patent will now go to the first inventor to file.
The AIA includes five new procedures intended to strengthen the patents issued by the PTO.
The first, derivation proceedings, are integral to the grace period exceptions of the AIA. Under the old first–to–invent system, interference proceedings were used to determine who was the first to invent.
A series of factual questions were resolved, including (1) who was the first to conceive; (2) was that person diligent in reducing the invention to practice or filing the application; and (3) when did he or she reduce the invention to practice. Interference proceedings, however, become cumbersome and expensive, rivaling the delay and cost of civil litigation.
The AIA replaces these interference proceedings with a new derivation proceeding. The PTO will consider the conception of the invention and evaluate whether the invention was communicated to another who filed an application for a patent without the inventor's authorization.
Thus, the AIA institutes not a true first–to–file system but, rather, a first–inventor–to–file system. A derivation proceeding may only be instituted by an inventor who has filed an application for patent.
The derivation proceeding must be filed in the name of the applicant within a year of the publication of a claim to the same or substantially the same invention. Moreover, the party instituting the derivation proceeding will be required to prove that the first filer derived the invention from them and that the prior application was not authorized.
The AIA leaves substantial discretion with the PTO Director whether or not to institute these derivation proceedings and the Director's decision is final and not appealable. In addition, the Director may determine whether to continue or dismiss any interferences that were commenced up to a year after the passage of the legislation.
The AIA also implements three new procedures to challenge the issuance of a patent and modifies one additional procedure for a patentee to have the PTO consider additional prior art that it did not consider during the initial grant of the patent. During legislative consideration of the AIA, Congress recognized that high-quality patents promote innovation and economic growth and that low-quality patents may hinder development and investment.
For this reason, Congress instituted three new procedures to provide an opportunity to challenge patents more efficiently and less expensively than the existing challenges—namely, reissue, reexamination, and civil litigation. These new procedures, however, each have certain benefits as well as certain potential disadvantages.
The old procedure is the availability of pre-issuance submissions by third parties. Currently, a third party can submit prior art to the PTO in connection with a patent application but is prohibited from providing any explanation. The submission is also limited currently to ten documents.
The new pre-issuance submission procedure encourages and, in fact, requires a description of the relevance of each document. In addition there is no limit to the number of documents that can be submitted.
The submission must be made only during a limited period of time within six months after publication or before the first rejection, whichever is later. The procedure cannot be used after the application has been allowed.
The pre-issuance submission procedure has certain advantages. It can significantly impact prosecution. The requester can remain anonymous. In addition, the cost is low and the requester is not required to meet any threshold for the significance of the material that it is submitting. Most important, the requestor is not precluded from later challenging the patent if it is allowed.
The second new procedure, post–grant review allows a challenge within nine months of the patent grant. Unlike existing reexamination and reissue proceedings, which are limited to patents and printed publications, post-grant review challenges can be based on any ground for invalidity of a patent under the AIA: prior art; lack of utility; improper subject matter; as well as lack of written description and enablement, and indefiniteness.
A post-grant review challenge cannot be based on best mode or inventorship. The claims are given their broadest reasonable interpretation and the challenger need establish invalidity only by a mere preponderance of the evidence.
These post-grant review procedures, however, are phased-in based on the type of application and when it was filed.
Business method patents can be challenged under post-grant review beginning one year after enactment, as can any pending interferences that are transferred to post-grant review by the Board of Patent Appeals and Interferences. The Board itself will be renamed the Patent Trial and Appeal Board.
The PTO must make a decision on the request for post-grant review within three months of the application, and must render a decision within a year of deciding whether and to review the patent. Beginning one year after enactment, only patents in the first–inventor–to–file system will be eligible for post-grant review.
There will be a substantial transition period as the new act is implemented. Specifically, the PTO and the courts will need to consider whether a particular patent is subject to the first–to–invent system rules or, instead, the first–inventor–to-file rules.
The difference is whether or not every claim in the application is entitled to the benefit of an effective filing date prior to the AIA's Sept. 16 date of enactment. If any claim in the application is not entitled to an effective date before Sept. 16, even if that claim is later withdrawn, the entire application will be treated under the new first–inventor–to–file rules.
The third new procedure is inter partes review. Where post-grant review can be filed only within nine months after the patent is granted, inter partes review can be filed only after the later of nine months after the patent grant, termination of any post-grant review, or one year after an alleged infringer is sued for infringement. It is anticipated that this inter partes review procedure will eventually replace the current reexamination procedures.
Unlike post-grant review, inter partes review applies to all patents issued whether before or after the effective date of the new law. As was the case with the old reexamination procedures, however, it is limited to patents and printed publications. The other types of prior art and defenses that can be considered in post-grant review may not be considered during inter partes review.
As was the case with post-grant review, there is a threshold requirement that must be met for inter partes review. And, as was the case with post–grant review, this threshold requirement is higher than the old "substantial new question of patentability" standard for reexamination.
Specifically, inter partes review will be granted only if the requester shows a reasonable likelihood that they would prevail with respect to one or more of the claims. The standard for inter partes review appears higher than the standard for post-grant review.
In deciding whether or not it is more likely than not that at least one challenged claim is unpatentable for purposes of post-grant review, the PTO might not consider the patentee's response, although there is debate regarding this interpretation of the statute. In deciding whether or not there is a reasonable likelihood that the petitioner would prevail with respect to a claim on an inter partes review, in contrast, both the request and the patentee's response will be considered.
Effectively, depending on how the PTO and courts interpret the AIA, the requester may have a higher burden to overcome the patentee's response in order to institute an inter partes review than it does for a post-grant review.
As was the case with post-grant review, the PTO must decide within three months whether or not to proceed with inter partes review and must render its decision within a year of deciding to proceed. Unlike post-grant review, inter partes review is available for any patent, whether issued before or after implementation of the AIA.
The advantage of both post-grant review and inter partes review is that there is a lower burden of proof on the challenger than in litigation. Similar proof is required in each proceeding.
It is also anticipated that both proceedings will cost less than litigation and may be decided more quickly, namely within about a year to year and a half.
Both, however, entail certain disadvantages. Both have a higher standard to institute the proceedings than current reexamination procedures.
In addition, inter partes review is available for more limited grounds than is post-grant review. Both must identify the real party in interest.
Thus, although pre-issuance submissions may be made anonymously, neither post-grant review nor inter partes review may be. Finally, and most important, the challenger will be precluded from relitigating any defense that they did or could have raised in either inter partes review proceedings or post-grant review proceedings.
Thus, although both new challenge procedures offer a lower-cost and faster alternative to civil litigation, they must be viewed as alternatives in view of their estoppel price tags.
The fourth type of new proceeding is supplemental examination. One common defense to a patent infringement action is to claim that the patent was acquired through fraud or inequitable conduct. If successful, the patent is unenforceable. These defenses, however, are complex and time-consuming. Many courts consider them a "plague" on the system.
Recently, the U.S. Court of Appeals for the Federal Circuit required an increased showing of the importance of the allegedly withheld or misrepresented information. Specifically, in order to support a claim for fraud or inequitable conduct, the information must be so critical to the patentability of the invention that it is likely that the patent would not have been granted had the PTO been aware of it.
Yet, the PTO is not often aware of every reference that is available. The AIA offers a new procedure for the patentee to return to the PTO and have it consider the importance of innocently withheld or misrepresented information.
This supplemental examination procedure is available beginning Sept. 16, 2012. The AIA specifically provides that a patent shall not be held unenforceable based on information that was not considered or was not adequately considered in a prior examination if the information is considered, reconsidered, or corrected during a supplemental examination.
The process, however, is not free from risk. If the patentee submits information on supplemental examination and the PTO determines that it was material, a potential infringement target may be able to use that evidence against the patentee in a declaratory judgment or other action.
In addition to these procedural provisions, the AIA modifies some of the defenses that are available in a patent infringement action.
On the one hand, it broadens some of the defenses that were previously available only for business method patents. On the other hand, it eliminates some of the more subjective defenses that had been perceived as adding substantial cost and expense to district court infringement litigation without offering substantial benefits to the public.
Formerly, a business method patent could be challenged if the method was in prior commercial use a year before the effective filing date. The AIA amends the statute, making this defense available against all patents. This provision creates a broader category of prior user rights that are available to alleged infringers.
Congress also perceived problems with the joinder of multiple defendants in single actions. This practice became very common in districts, such as the Eastern District of Texas, where dozens of defendants are frequently joined in a single action, complicating the preparation and trial of the case, and, in the opinion of many defendants, prejudicing each defendant's ability to receive a fair trial.
The AIA restricts the joinder of parties and now permits defendants to be joined for trial only if the accused infringing products or methods are essentially the same.
Another defense that was considered skeptically by some is the "best mode" defense. An applicant for patent is required to disclose the best way they know how to practice the invention at the time of filing. This requirement is highly subjective, typically requires extensive discovery, and is rarely successful.
The AIA removes this requirement as a basis for invalidity.
In addition, Congress determined that certain types of inventions should not be patentable.
For example, patents directed to strategies to reduce, avoid, or defer tax liability are no longer patentable. Similarly, inventions that embrace a human being are not patentable.
For many years, the patent statute included a provision that prohibited false patent marking. This provision could be enforced by the government, or by qui tam action by any member of the public.
The government, however, rarely enforced these provisions. More recently, the plaintiffs' tort bar has moved firmly into this area, instituting a number of false marking actions. Recent case law has drawn increasing attention to these cases.
The AIA severely restricts these cases by limiting the damages that may be recovered to only the actual commercial damages suffered by the claimant. Thus, unless the claimant is a competitor who has suffered some direct competitive harm as a result of the false marking, these cases will be dismissed.
The AIA makes a number of other administrative changes as well. For example, the statutory invention registration system under current law allows a filer to create prior art using the patent system. These provisions are repealed.
As of the AIA's Sept. 16 enactment date, to achieve the same goal as a statutory invention registration, the applicant will need to file a non-provisional patent application and allow it to be published.
The PTO has also gained substantial additional authority through the AIA. The PTO now has authority to set its own fees.
This may lead to significant fee increases as the PTO uses its fee structure to manage applicant behavior. For example, several years ago the PTO attempted to prohibit requests for continued examination. These regulations were held invalid by the courts. Nonetheless, the PTO may be able to effectively restrict the practice by setting substantially higher fees for continuing applications.
In addition, the AIA permits the PTO to establish rules for priority examination. Based on the filing of an additional fee, the applicant can request expedited examination for a wider range of technologies than was previously available.
Some of the AIA's provisions became effective upon the legislation's Sept. 16 enactment. Others do not become effective until a year later. Some are not effective until March 13, 2013, when the AIA becomes fully effective. Unless a provision has another date specified in the legislation, the effective date of all the provisions of the AIA is one year from enactment, Sept. 16, 2012.
Certain provisions, however became effective immediately upon enactment of the AIA: (1) the higher threshold to enter inter partes reexamination; (2) elimination of the best mode requirement; (3) elimination of tax strategies and inventions that embrace a human being; (4) lower fees for "micro" entities; (5) restriction of false marking liability; and (6) enhanced PTO fee-setting authority.
A number of other provisions become effective a year after enactment. Thus, pre-issuance submissions, supplemental examination, and reissue amendments, all become effective on Sept. 16, 2012.
Finally, other provisions become effective 18 months after enactment. The first-to-file provisions, and the statutory invention registration provisions become effective 18 months after enactment, March 16, 2013.
The changes effected by the AIA will require substantial additional regulatory action by the PTO in order to implement them. The agency will propose new regulations to accomplish these goals.
Although many of the provisions of the AIA would become effective immediately or within a year or 18 months, other provisions will take years to become fully implemented. Nonetheless, once the first–inventor–to–file system has been fully implemented, the system should provide greater certainty and improve the quality of patents.
This will benefit all users of the patent system as well as the public.
Reproduced with permission from BNA's Patent, Trademark & Copyright Journal, 82 PTCJ 901, 10/28/2011. Copyright © 2011 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
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