Patent “Reform” 2011 America Invents Act: “AIA”

2. Patent “Reform” 2011America Invents Act: “AIA” Patent Law Forum Professor Hawley UNH School of Law

3. It Made IT!! • House Bill Passed • Senate Bill Passed • Senate Has Passed the House Version • All potential amendments failed • Fee Diversion continues • Signed by President Obama Friday • September 16, 2011 ~ 11:45 • March 16, 2013 – a date to remember

4. Why?? • Improve quality of patents granted by USPTO • “Opposition” System – aka “Post Grant Review” • Reduce patent litigation costs and risks • “deceptive intent” “best mode” – gone? • Move toward international harmonization • First-to-file, prior art • Provide early determination of rights • Balance “Post Grant Review” and “Inter parties Review”

5. House Committee Report • “The legislation is designed to establish a more efficient and streamlined patent system that will improve patent quality and limit unnecessary and counterproductive litigation costs.”

6. The Immediate Effect • Patent fees increase 15% on September 26 • But the USPTO can not spend the money and might even get less – operating under a “continuing resolution”, effect of the deficit reduction negotiations uncertain

7. When Effective? • The amendments made by [SEC. 3 (first-inventor-to-file)] shall take effect upon the expiration of the 18-month period beginning on the date of the enactment of this Act, and shall apply to any application for patent, and to any patent issuing thereon, that contains or contained at any time– • a claim to a claimed invention that has an effective filing date as defined in section 100(i) of title 35, United States Code, that is on or after the effective date described in this paragraph; or claims priority to such a claim under 120, 121 or 365(c)

8. When Effective? Complicated • A lot of provisions: 1 year • The most important provisions: 18 months from signing: March 16, 2013 • The date that the Leahy Smith Act is signed into law into law (September 16, 2011) is the effective date for both an invalidity challenge under 35 USC § 282 and the priority requirements for 35 USC §§119(e)(1), 120. • Some things, e.g. qui tam marking reform: retroactive

9. Immediately Effective • Changed standard for declaring reexaminations; • Tax strategies deemed within the prior art; • Human organism patents prohibited; • Filing deadline for patent term extension applications clarified; • Virtual and false marking provisions changed; • Venue for certain suits over USPTO decisions is changed from DDC to EDVA; (Courtesy AIPLA; look for IPO chart this week)

10. Immediately Effective • Changed statute of Limitations for disciplining practitioner misconduct; and • Establishment of micro-entity fee discount. • Prior User Rights: for suits filed on or after last Friday • End of Best Mode Defense

11. Going Forward – Looking Back • Going Forward: you obviously need to know the new law, particularly with respect to the definition of novelty under 102. • Some things are easier (maybe), e.g. “on sale”, because of the “publicly known” requirement • Looking Back: 20 years of patent filing subject to the old law • When you are faced with an old patent, you need to know how to analyze it. • You need to know both laws

12. First to File • International Harmonization • But see “grace period” • Elimination of all interferences • More certainty for issued patents: no threat of an earlier inventor “popping up” • Reduced record keeping burden • Encourages early filing therefore early disclosure

13. 12-Month Grace Period • Controversial: First Inventor to Disclose (not file) • Grace period for public disclosures by inventor or a party who obtained the subject matter from the inventor. What constitutes “disclosure”?? • Public disclosure during the 12 month period by another party who did not obtain the subject matter from the inventor will not prevent the inventor from obtaining a patent IF THE INVENTOR MADE A PUBLIC DISCLOSURE FIRST

14. Put Another Way • First-to-file wins, UNLESS • Second filer was first to “publically disclose” • The First filer derived the invention from the Second filer: new “derivation” procedure • The First filer abandons the application before it publishes or issues

15. “Prior Art” • “Public use” and “on sale” activities are prior art only if they are public disclosures of the invention • Wipes out? cases such as: • Metallizing Engineering???; Gore v. Garlock; Invitrogen • Paff v. Wells • Public disclosures in any country are prior art (Under current law, inventions in “public use” or “on sale” are prior art only if the public use or on sale is “in this country”) • What happens to “experimental use”? (See Atlanta Attachment v. Leggett and Platt (CAFC 2008))

16. “Prior Art” • Anywhere in the world. • No “in the U.S.” requirement • “On sale” outside U.S. defeats a U.S. application (provided “public” (I think)) • What constitutes “on sale” in non-U.S.country? – same “commercial offer for sale” UCC standards??; “ready for patenting” criteria? • Clearly must be “public”

17. Filed Applications • New 102(a)(2) “A person shall be entitled to a patent unless… the claimed invention was described in … an application … published … under [35 USC §] 122(b), in which the …application… names another inventor and was effectively filed before the effective filing date of the claimed invention.” • No “self collision” in the U.S., unlike EPO. • Available under 103?? Assume so.

18. Bye ByeHilmer • New 102(d)(2) • “For purposes of determining whether a[n] … application … is prior art to a claimed invention [as an earlier-filed later-published application], such …application shall be considered to have been effectively filed, with respect to any subject matter described in the … application … if the … application … is entitled to claim a right of priority under section 119, 365(a), or 365(b), or to claim the benefit of an earlier filing date under section 120, 121, or 365(c), based upon 1 or more prior filed applications for patent, as of the filing date of the earliest such application that describes the subject matter.”

19. Prior Art NOT in AIA • The inventor “abandoned” the invention (current 102(c)) • Another inventor made the invention but did not abandon, suppress or conceal the invention (current 102(g)) • What happens in the Dunlop v. Ram situation? • “Patented in a foreign country” (current 102(d))

20. New 102(a) • (a) Novelty; Prior Art- A person shall be entitled to a patent unless-- • (1) 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 invention; or (2) 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 invention.

21. Derivation • Necessary addition to U.S. law because of change from first-to-invent system to first-inventor-to-file system • If a party named as an inventor in an earlier application derived the invention from the true inventor, claims in the earlier application will be refused or cancelled • Expected to be even rarer than interference proceedings

22. New Section 135 • The [derivation] petition shall set forth with particularity the basis for finding that an inventor named in an earlier application derived the claimed invention from an inventor named in the petitioner's application and, without authorization, the earlier application claiming such invention was filed. Any such petition may be filed only within the 1-year period beginning on the date of the first publication of a claim to an invention that is the same or substantially the same as the earlier application's claim to the invention, shall be made under oath, and shall be supported by substantial evidence.

23. Prior User Rights • Under existing law, prior user rights defense available only for business method patents. What is a “business method patent”? • Under proposed 1249, prior user rights defense would be available against patents on any subject matter, except defense is not available if patent was owned by a university. • Should strengthen the trade secret option. But what is the scope of the right?

24. PUR Section 273 • “Defense to infringement based on prior commercial use” • Good faith • More than 1 year before the earlier of either (a) the effective filing date of the claimed invention or (b) the date on which the claimed invention was disclosed to the pubic in a manner that qualifies for the 102(b) exception

25. PUR Section 273 • Premarketing Regulatory Review is commercial use • Non-profit laboratory use is commercial use • Not really transferrable – except with the entire business • Not a general license but limited to quantity or volume. Extends to improvements that do not infringe additional claims.

26. Committee Report on PUR • “This narrow expansion of prior-user rights balances the interests of patent holders, including universities, against the legitimate concerns of businesses that want to avoid infringement suits relating to processes that they developed and used prior to another party acquiring related patents.”

27. “Best Mode” • The bill still requires disclosure of the best mode, but failure to disclose is not a basis for invalidity of granted patent. • International harmonization • So what is the consequence? (Sec.15)

28. What Best Mode?? • Section 15 • Under new 35 USC § 282(3)(A), invalidity defenses are authorized under ―”any requirement of section 112, except that the failure to disclose the best mode shall not be a basis on which any claim of a patent may be canceled or held invalid or otherwise unenforceable” • Amendment to 35 USC § 119(e)(1) eliminates compliance with the best mode requirement for priority to a provisional • A change to 35 USC § 120 eliminates the best mode as a requirement for continuing application priority.

29. “Post Grant Review” • U.S. Opposition System • Person who is not patent owner may petition for review of a patent within 9 months after patent is granted • Grounds for invalidity are grounds that can be raised against a patent in court (broader than grounds in inter partes review): broader than the current reexamination • USPTO will not order post grant review unless it is “more likely than not” that petitioner would prevail • Bill limits petitions for post grant review when suit has been filed in court

30. Committee Report PGR • “The Committee believes that this new, early-stage process for challenging patent validity and its clear procedures for submission of art will make the patent system more efficient and improve the quality of patents and the patent system.”

31. “Inter Parties Review” • Modified “inter parties reexamination” • Person who is not patent owner may petition for review of a patent beginning 9 months after patent is granted • Grounds for invalidity limited to novelty and nonobviousness based on prior art consisting of patents and printed publications (e.g. not a “disclosure” that is a public use or sale) AND written statements submitted in court – but only to determine scope of the claims • Same law as to what constitutes “printed publication”?

32. “Inter Parties Review” • USPTO will not order inter parties review unless “reasonable likelihood” that petitioner would prevail. Increased standard compared to “significant new question of patentability” • Bill limits petitions for inter parties review when suit has been filed in court

33. PGR v IPR • PGR • Up to 9 months after patent issues • Broad scope of challenge • “More likely than not” petitioner will prevail • IPR • Anytime AFTER 9 months • Limited to patents and printed publications • “Reasonable likelihood” that petitioner will prevail

34. Other Features • False Marking (Sec. 16) • “Tax Strategies” assumed to be within the Prior Art (Sec. 14) • Supplemental Examination (Sec. 12) • Submission of Prior Art by 3rd Parties (Sec. 8) • Willfulness: codify Seagate (Sec.17) • Sec. 34 – No human organism patents • Micro-entities: true independent inventors

35. Marking • Internet marking • Only the Government can sue for statutory damages • A person who has suffered competitive damage as a result of false marking can sue for damages adequate to compensate for the damages • Expired patent marking not a violation

36. The CAFC Responds • The Act was signed in the morning • THAT DAY! The CAFC issued an order to parties in a qui tam action to brief the issue of how to proceed in view of the passage of the act

37. Virtual Marking • “The Act permits patent holders to ‘‘virtually mark’’ a product by providing the address of a publicly available website that associates the patented article with the number of the patent.”

38. Third Party Submission • Current practice: patents or publications only; no statement or relevance • New practice: submitting party can make a statement regarding relevance

39. Supplemental Examination • New Section 257 • A “cure” for mistakes during prosecution? • Threshold: “new question of patentability” • If so: Ex parte reexamination • Patent can not be held to be unenforceable if the information was considered in supplemental examination • Information can not be used as a basis for IC

40. What is Missing from AIA • Injunction provision: no need? in view of eBay Sup Ct 2006 • Apportionment of Damages: Finjan v. Secure Computing (CAFC 2010) • Willful Infringement: In re Seagate CAFC 2007 • Venue: Series of cases from the Eastern District of Texas limiting jurisdiction