Patent Docs

AIA Overview: Supplemental Examination

By Kevin E. Noonan --

One provision in the Leahy-Smith America Invents Act (AIA) that appears to benefit (or at least be intended to benefit) patentees is the Supplemental Examination revision set forth in Section 12.

This section revises 35 U.S.C. § 257 to include a new "Request for Supplemental Examination" that is limited to filings by the patent owner (§ 257(a)).  The Request permits the patentee to "consider, reconsider, or correct information believed [by the patent owner] to be relevant to the patent," by far the most extensive grounds for Patent Office reconsideration of all the avenues of reconsideration in the statute (ex parte reexamination, inter partes review, or post-grant review).  The statute provides that the supplemental examination must be considered by the Office within three months of filing the request, and be concluded by issuance of a certificate indicating "whether the information presented in the request raises a substantial new question of patentability" (SQP).  If the Director's determines that a SQP exists, then the Director will order reexamination (§ 257(b)).

Re-examination is conducted pursuant to current ex parte re-examination practice (save the provisions of 35 U.S.C. § 304), i.e., by the examining corps and the Director "shall consider" each SQP raised in the request, "notwithstanding the limitations in chapter 30 relating to patents and printed publication or any other provision of such chapter [30]" (§ 257(b)).  The benefits of this supplemental examination are set forth in § 257(c), wherein a patent "shall not be held to be unenforceable" bsed on any information "that had not been considered, was inadequately considered, or was incorrect in a prior examination of the patent" that was considered by the Office during supplemental examination.  Moreover, the statute provides that either making or failing to make a request "shall not be relevant to enforceability of the patent under section 282" (§ 257(c)(1)).

The statute provides several exceptions to this particular form of absolution, including that the benefits of filing a supplemental examination request "shall not apply to an allegation pled with particularity in a civil action" or to an allegation contained in a Paragraph 4 notice received by the patentee under the provisions of the Hatch-Waxman Act (§ 505(j)(2)(B)(iv)(II) of the Federal Food, Drug, and Cosmetic Act, codified at 21 U.S.C. § 355(j)(2)(B)(iv)(II)) before the filing of the supplemental examination request (§ 257(c)(2)(A)).  In addition, the protections afforded by § 257(c)(1) "shall not apply" to any section 337(a) action under the Tariff Act of 1930 or a civil action for patent infringement under 35 U.S.C. § 281 "unless the supplemental examination, and any reexamination ordered pursuant to the request, are concluded before the date on which the action is brought," thus preventing a patentee to attempt to inoculate itself from an inequitable conduct allegation after litigation has ensued (§ 257(c)(2)(B)).

A significant limitation to the protections afforded by § 257(c)(1) is set forth in § 257(e), which excludes instances of "material fraud" from the provisions of § 257(c)(1).  If "material fraud" is found, the Director is empowered to take any action otherwise authorized (including cancelling a claim or claims under 35 U.S.C. § 307) and in addition is directed ("shall") to "refer the matter to the Attorney General for such further action as the Attorney General may deem appropriate" (although such referral "shall be treated as confidential, shall not be included in the file of the patent, and shall not be disclosed to the public unless the United States charges a person with a criminal offense in connection with such referral").  In this regard the statute "preclude[s] the imposition of sanctions based upon criminal or antitrust laws" (§ 257(f)(1)) or "to limit the authority of the Director to investigate issues of possible misconduct and impose sanctions for misconduct in connection with matters or proceedings before the Office" (§ 257(f)(2)).

Fees and regulations are to be set by the Director ((§ 257(d)), with the express provision that the Office is entitled to collect fees associated with ex parte reexamination in addition to supplemental examination fees if reexamination is ordered pursuant to § 257(b).

Section 12(c) of the AIA provides that the effective date of these provisions is "upon the expiration of the 1-year period beginning on the date of the enactment of this Act" (September 16, 2012) "and shall apply to any patent issued before, on, or after that effective date."

AIA Overview: Changes to Provisions Relating to Third Party Submissions of Prior Art

By Kevin E. Noonan --

The Leahy-Smith America Invents Act (AIA) revises the law relating to third-party submissions of patent and printed publications in patents (Section 6(h)) and patent applications (Section 8).  In both instances the scope of the prior art, the type of art that can be cited, and/or the timing for citing such art has changed.

Section 6(h) revises 35 U.S.C. § 301 to include "statements of the patent owner filed in a proceeding before a Federal court or the Office in which the patent owner took a position on the scope of any claim of a particular patent" (§ 301(a)(2)) to "prior art consisting of patents or printed publications which that person believes to have a bearing on the patentability of any claim of a particular patent" (§ 301(a)(1)).  In addition, § 301(b) provides that an explanation in writing of "the pertinence and manner of applying the prior art or written statements to at least 1 claim of the patent" will result in the statements and explanation becoming part of the official patent file.  In addition to the conventional categories of prior art, the AIA provides that the "written statements" can include "any other documents, pleadings, or evidence from the proceeding in which the statement was filed that addresses the written statement" (§ 301(c)).  However, the statute limits the purposes to which written statements can be used, specifically ex parte reexamination, inter partes review, or post-grant review proceedings (§ 301(d)).  Unlike other provisions of the AIA relating to third-party submissions, amended § 301(e) permits the third party to keep its identity confidential.  These provisions become effective on the one-year anniversary of the statute's enactment (i.e., September 16, 2012) and apply to any patent application filed before, on, or after" that date.

Section 8 concerns third-party submissions to the Office relating to pending applications.  Revisions to 35 U.S.C. § 122(e) provide a window for submitting "any patent, published patent application, or other printed publication of potential relevance to the examination of the application" before the earlier of the date a Notice of Allowance is issued by the Office (§ 122(e)(1)(A)) or the later of 6 months after publication of the application or the date the application was first rejected during examination (§ 122(e)(1)(B)).  The submission must be in writing and "set forth a concise description of the asserted relevance of each submitted document" (§ 122(e)(2)(A)), as well as being accompanied by any fee the Director may require (§ 122(e)(2)(B), and "include a statement by the person making such submission affirming that the submission was made in compliance with this section" (§ 122(e)(2)(C)).  These provisions become effective on the one-year anniversary of the statute's enactment (i.e., September 16, 2012) and apply to any patent application filed before, on, or after" that date.

AIA Overview: Changes to Inter Partes Re-examination

By Kevin E. Noonan --

In addition to an entirely new post-grant review procedure, the AIA contains significant revisions to the current inter partes re-examination proceedings (which are now termed "inter partes review").  Section 6(a) of the AIA sets forth these revisions to inter partes review.  The most significant of these is a change in the standard for granting a request (now termed a "petition") for inter partes review, from raising a "substantial new question of patentability" under current law to "a reasonable likelihood that the petitioner will prevail with regard to at least one claim" (§ 314(a)).  The revisions to the statute maintain the express prohibition against the patentee requesting inter partes review (§ 311(a)), as well as limiting the scope of review to patents and printed publications (§ 311(b)).  To accommodate the new post-grant review proceedings, petitions for inter partes review are permitted at the later of 9 months from the grant date of a patent or reissued patent, or the date of termination of post-grant review (§ 311(c)(1) or (2)).  Also consistent with current law are provisions that the Director's decision whether to grant inter partes review cannot be appealed (§ 314(d)).

Inter partes review petitions cannot be filed anonymously, requiring identification of all real parties in interest (§ 312(a)(2)), and must identify "in writing and with particularity, each claim challenged, the grounds on which the challenge to each claim is based, and the evidence supporting the challenge to each claim" (§ 312(a)(3)).  The petition must be accompanied by copies of all patents or printed publications and any affidavits containing supporting evidence or opinion (§§ 312(a)(3)(A) and (3)(B)), as well as "any other information that the Director may require by regulation" (§312(a)(4)).  The petition and all supporting evidence must be supplied to the patent owner or a designated representative (§312(a)(5)).  As with other proceedings concerning granted patents, inter partes review is public and made available "[a]s soon as practicable after receipt of a petition" for review (§ 312(b)).

The patentee has the option of responding to the petition within a time period set by the Director, which response is limited to providing reasons why the petition fails to meet any of the requirements for its grant (§313).  Petitions must put forth evidence (presumably in light of any evidence or argument in the patentee's response) that if unrebutted would establish a "reasonable likelihood" that at least one challenged claim would be invalidated (§ 314(a)).  The Director must make the determination to institute post-grant review within three months after receiving the patentee's response or when the time for that response has expired (§ 314(b)), by notifying the petitioner and the patentee (and the public), wherein the notice contains the date on which the review will commence (§ 314(c)).

There are additional limits to when post-grant review petitions can be filed.  The bill prohibits grant of inter partes review to a petitioner who has filed a "civil action challenging the validity of a claim of the patent" (§ 315(a)(1)) (which includes declaratory judgment actions but expressly excludes counterclaims in patent infringement litigation; § 315(a)(3)).  Should an inter partes review petitioner file such an action after filing the petition, the statute provides for an "automatic" stay of such a civil action (§ 315(a)(2)) until either the patent owner moves for the stay to be lifted (§ 315(a)(2)(A)), the patent owner files a civil action alleging infringement against the petitioner (§ 315(a)(2)(B)), or the petitioner moves for dismissal of the civil action (§ 315(a)(2)(C)).  In addition, an inter partes review proceeding will not be instituted if the petition is filed "more than one year after the date on which the petitioner . . . is served with a complaint alleging" patent infringement (§ 315(b)).  The bill grants the Director the authority to consolidate petitions in the case of multiple filings by third parties (§ 315(c)), as well as determining whether to "stay, transfer, consolidate[e] or terminat[e]" ex parte or inter partes review proceedings, interferences or (presumably) derivation proceedings (§ 315(d)).  The bill also contains estoppel provisions, wherein a petition is estopped from "request[ing] or maintain[ing] a proceeding before the Office with respect to any claim on any ground that the petition raised or reasonably could have raised during post-grant review" (§ 315(e)(1), and is also estopped from bringing a civil action (e.g., a declaratory judgment action) or an action before the International Trade Commission based on any ground that was raised or reasonably could have been raised during the inter partes review (§ 315(e)(2)).

Unlike current inter partes reexamination, however, inter partes review proceedings are to be held before the Patent Trial and Appeal Board and not replicate ex parte examination under 35 U.S.C. §§ 132-133 (§ 316(c)).  The Director is granted the authority under these provisions of the bill to establish regulations, including:

(1) providing that the file of any proceeding under this chapter shall be made available to the public, except that any petition or document filed with the intent that it be sealed shall, if accompanied by a motion to seal, be treated as sealed pending the outcome of the ruling on the motion;

(2) setting forth the standards for the showing of sufficient grounds to institute a review under section 314(a);

(3) establishing procedures for the submission of supplemental information after the petition is filed;

(4) establishing and governing inter partes review under this chapter and the relationship of such review to other proceedings under this title;

(5) setting forth standards and procedures for discovery of relevant evidence, including that such discovery shall be limited to—

(A) the deposition of witnesses submitting affidavits or declarations; and

(B) what is otherwise necessary in the interest of justice;

(6) prescribing sanctions for abuse of discovery, abuse of process, or any other improper use of the proceeding, such as to harass or to cause unnecessary delay or an unnecessary increase in the cost of the proceeding;

(7) providing for protective orders governing the exchange and submission of confidential information;

(8) providing for the filing by the patent owner of a response to the petition under section 313 after an inter partes review has been instituted, and requiring that the patent owner file with such response, through affidavits or declarations, any additional factual evidence and expert opinions on which the patent owner relies in support of the response;

(9) setting forth standards and procedures for allowing the patent owner to move to amend the patent under subsection (d) to cancel a challenged claim or propose a reasonable number of substitute claims, and ensuring that any information sub- mitted by the patent owner in support of any amendment entered under subsection (d) is made available to the public as part of the prosecution history of the patent;

(10) providing either party with the right to an oral hearing as part of the proceeding;

(11) requiring that the final determination in an inter partes review be issued not later than 1 year after the date on which the Director notices the institution of a review under this chapter, except that the Director may, for good cause shown, extend the 1-year period by not more than 6 months, and may adjust the time periods in this paragraph in the case of joinder under section 315(c);

(12) setting a time period for requesting joinder under section 315(c); and

(13) providing the petitioner with at least 1 opportunity to file written comments within a time period established by the Director.

The only constraint the Section puts on the Director is a consideration of "the effect of any such regulation on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings instituted under this chapter" (§ 316(b)).

The patentee is given the right to file one motion to amend one or more of the challenged claims, either by cancelling the claims outright or proposing a "reasonable number" of substitute claims for each cancelled claim (§ 316(d)(1)(B)).  Any further motion to amend can be filed only as an agreed motion between the patentee and the petitioner (§ 316(d)(2)) (although the Director is given the authority to promulgate regulations affecting this statutory limitation), and any amendments filed in any motion under this section "may not enlarge the scope of the claims . . . or introduce new matter" (§ 316(d)(3)).  The petitioner bears the burden of proof by a preponderance of the evidence (§ 316(e)).

An inter partes review can be terminated by settlement (§ 317) or decision of the Board (§ 318).  While similar to current provisions for settlement in interferences, the provisions differ in that whether review is terminated or the Board renders a decision is at the discretion of the Director (§ 317(a)).  Review terminated by settlement does not raise any of the estoppels provided for in (§ 315(e)).  As with interferences, any such settlement must be in writing and filed with the Office before review will be terminated and, although the settlement will not be published with the remainder of the review proceedings, settlements will be available to Federal Government agencies upon written request, or anyone upon a showing of "good cause" (§ 317(b)).

The provisions regarding decisions of the Board provide for a certificate "canceling any claim of the patent finally determined to be unpatentable, confirming any claim of the patent determined to be patentable, and incorporating in the patent by operation of the certificate any new or amended claim determined to be patentable" (§ 318(b)).  Amendments or new claims can raise intervening rights pursuant to 35 U.S.C. § 252 (§ 318(c)).  The Office is tasked with making available the length of time it takes for the Board to complete its review (§ 318(d)).

Any party is entitled to appeal a "adverse" decision after post-grant review, under any of the provisions of 35 U.S.C. §§ 141-144 (§ 319).

The Office must establish regulations for implementing these changes "not later than" a year after the enactment date of the bill into law (Section 6(c)(1)) and "shall apply to all patents issued before, on or after" the effective date (Section 6(c)(2)(A)).  The Director also has discretion to limit the number of inter partes review petitions granted for the first four years after enactment, provided that the number is at least as many requests/petitions that were granted "in the last full fiscal year prior to the enactment date" of the revised law (Section 6(c)(2)(B)).  The bill also contains "transition provisions" (Section 6(c)(3)) amending the current statute to incorporate the changed standard (from "substantial new question of patentability" under current law to "a reasonable likelihood that the petitioner will prevail with regard to at least one claim") (Section 6(c)(3)(A)) for inter partes review requests filed between the date of the bill's enactment and the effective date of the revisions (Section 6(c)(3)(B)).  Inter partes reexamination shall proceed under current law and regulation "as if subsection (a) had not been enacted" for requests filed before the effective date (September 16, 2012)(Section 6(c)(3)(C)).

AIA Overview: Post-grant Review Provisions

By Kevin E. Noonan --

For the first time in U.S. patent law, the AIA provides a mechanism for post-grant review of U.S. patents that is capable of considering reasons for unpatentability other than prior art under §§ 102 or 103.  These provisions comprise Section 6(d) of the law.

The new post-grant review provisions (codified at 35 U.S.C. §§ 321-329) are instituted by petition to the Director by any person "not the patent owner" (§ 321(a)).  Post-grant review can be based on an allegation that at least one claim is invalid under any of the provisions of 35 U.S.C. § 282(b) ("Invalidity of the patent or any claim in suit on any ground specified in part II of [Title 35] as a condition for patentability, or  . . . Invalidity of the patent or any claim in suit for failure to comply with any requirement of sections 112 or 251 of this title") and should be cancelled (§ 321(b)). A petition under the post-grant review provisions of the statute must be filed within 9 months of the patent grant or issuance of a reissue patent (§ 321(c)).

Post-grant review petitions cannot be filed anonymously, requiring identification of all real parties in interest (§ 322(a)(2)), and must identify "in writing and with particularity, each claim challenged, the grounds on which the challenge to each claim is based, and the evidence supporting the challenge to each claim" (§ 322(a)(3)).  The petition must be accompanied by copies of all patents or printed publications and any affidavits containing supporting evidence or opinion (§ 322(a)(3)(A) and (3)(B)), as well as "any other information that the Director may require by regulation" (§ 322(a)(4)).  The petition and all supporting evidence must be supplied to the patent owner or a designated representative (§ 322(a)(5)).  As with other proceedings concerning granted patents, post-grant review is public and made available "[a]s soon as practicable after receipt of a petition" for review (§ 322(b)).

The patentee has the option of responding to the petition within a time period set by the Director, which response is limited to providing reasons why the petition fails to meet the requirements for its grant (§ 323).  Petitions must put forth evidence (presumably in light of any evidence or argument in the patentee's response) that if unrebutted would make it "more likely than not" that at least one of the challenged claims is unpatentable (§ 324(a)).  Alternatively, a grantable petition may contain a showing that there is a "novel or unsettled legal question that is important to other patents or patent applications (for example, the ACLU's challenge to the patent-eligibility of gene patents; § 324(b)).  The Director must make the determination to institute post-grant review within three months after receiving the patentee's response or when the time for that response has expired (§ 324(c)), by notifying the petitioner and the patentee (and the public), wherein the notice contains the date on which the review will commence (§ 324(d)).  As with current reexamination proceedings, the Director's decision regarding whether to institute post-grant review cannot be appealed and is final (§ 324(e)).

There are additional limits to when post-grant review petitions can be filed.  The bill prohibits a petitioner from having filed a "civil action challenging the validity of a claim of the patent" (§ 325(a)(1)) (which includes a declaratory judgment actions but does not include counterclaims in patent infringement litigation; § 325(a)(3)).  In addition, if the petitioner files a civil action challenging the validity of a claim of the patent "on or after the date on which the petitioner files a petition for post-grant review," the district court is compelled to issue a stay ("automatically") unless or until the patent owner moves that the stay be lifted, the patent owner files a lawsuit or counterclaim alleging infringement, or the petitioner moves that the civil action be dismissed (with or without prejudice; § 325(a)(1)(A), (B) or (C)).  If a patent infringement suit is brought within three months of the patent grant date, a district court cannot stay its consideration of a motion for preliminary injunction based on the filing (by anyone) of a post-grant review petition (§ 325(b)), but there is nothing in the statute to prevent the court from considering the petition when assessing the likelihood of success on the merits prong of the preliminary injunction standard.  The bill grants the Director the authority to consolidate petitions in the case of multiple filings by third parties (§ 325(c)), as well as determining whether to "stay, transfer, consolidate[e] or terminat[e]" ex parte or inter partes reexamination proceedings, interferences or (presumably) derivation proceedings (§ 325(d)).  The bill also contains estoppel provisions, wherein a petitioner is estopped from "request[ing] or maintain[ing] a proceeding before the Office with respect to any claim on any ground that the petition raised or reasonable could have raised during post-grant review" (§ 325(e)(1)), and is also estopped from bringing a declaratory judgment action or an action before the International Trade Commission based on any ground that "was raised or reasonably could have been raised" during post-grant review (§ 325(e)(2)).  The latter provision does not raise an estoppel against any defense under 35 U.S.C. § 282(b) in infringement litigation, however.  For reissue patents, review is limited to broadened claims (§ 325(f)).

The Director is given broad authority to prescribe regulations for post-grant review proceedings, including:

(1)  providing that the file of any proceeding under this chapter shall be made available to the public, except that any petition or document filed with the intent that it be sealed shall be accompanied by a motion to seal, and such petition or document shall be treated as sealed pending the outcome of the ruling on the motion;

(2)  setting forth the standards for the showing of sufficient grounds to institute a review under subsections (a) and (b) of section § 324;

(3)  establishing procedures for the submission of supplemental information after the petition is filed;

(4)  in accordance with section 2(b)(2), establishing and governing a post-grant review under this chapter and the relationship of such review to other proceedings under this title;

(5)  setting forth standards and procedures for discovery of relevant evidence, including that such discovery shall be limited to evidence directly related to factual assertions advanced by either party in the proceeding;

(6)  prescribing sanctions for abuse of discovery, abuse of process, or any other improper use of the proceeding, such as to harass or to cause unnecessary delay or an unnecessary increase in the cost of the proceeding;

(7)  providing for protective orders governing the exchange and submission of confidential information;

(8)  allowing the patent owner to file a response to the petition after a post-grant review has been instituted, and requiring that the patent owner file with such response, through affidavits or declarations, any additional factual evidence and expert opinions on which the patent owner relies in support of the response;

(9)  setting forth standards and procedures for allowing the patent owner to move to amend the patent under subsection (d) to cancel a challenged claim or propose a reasonable number of substitute claims, and ensuring that any information submitted by the patent owner in support of any amendment entered under subsection (d) is made available to the public as part of the prosecution history of the patent;

(10)  providing either party with the right to an oral hearing as part of the proceeding;

(11)  requiring that the final determination in any post-grant review be issued not later than 1 year after the date on which the Director notices the institution of a proceeding under this chapter, except that the Director may, for good cause shown, extend the 1-year period by not more than 6 months, and may adjust the time periods in this paragraph in the case of joinder under section § 325(c); and

(12)  providing the petitioner with at least 1 opportunity to file written comments within a time period established by the Director.

The only constraint the Section puts on the Director is a consideration of "the effect of any such regulation on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings instituted under this chapter" (§ 326(b)).

The proceedings are to be conducted by the Patent Trial and Appeal Board (§ 326(c)).  The patentee is given the right to file one motion to amend one or more of the challenged claims, either by cancelling the claims outright (§ 326(d)(1)(A)) or proposing a "reasonable number" of substitute claims for each cancelled claim (§ 326(d)(1)(B)).  Any further motion to amend can be filed only as an agreed motion between the patentee and the petitioner (§ 326(d)(2)), and any amendments filed in any motion under this section "may not enlarge the scope of the claims . . . or introduce new matter" (§ 326(d)(3)).  The petitioner bears the burden of proof by a preponderance of the evidence (§ 326(e)), a much lower standard than the "clear and convincing evidence" standard of inter partes review or patent litigation.

Post-grant review can be terminated by settlement (§ 327(a)) or decision of the Board (§ 328).  While similar to current provisions for settlement in interferences, the provisions differ in that whether review is terminated or the Board renders a decision is at the discretion of the Director (§ 327(a)).  As with interferences, any such settlement must be in writing and filed with the Office before review will be terminated and, although the settlement will not be published with the remainder of the review proceedings, settlements will be available to Federal Government agencies upon written request, or anyone upon a showing of "good cause" (§ 327(b)).  These settlement provisions are curious in view of the avowed basis of the post-grant review proceedings being to cure the "plague" of "bad" or "poor-quality" patents; just because a petitioner may be willing to settle with the patentee the public's interests are not addressed by such private agreements.

The provisions regarding decisions of the Board (§ 328(a)) provide for a certificate "canceling any claim of the patent finally determined to be unpatentable, confirming any claim of the patent determined to be patentable, and incorporating in the patent by operation of the certificate any new or amended claim determined to be patentable" (§ 328(b)).  Intervening rights arise as the result of a post-grant review proceeding (§ 328(c)) according to the same criteria as are applied under § 252.  The Office is tasked with making available of the length of time it takes for the Board to complete its review (§ 328(d)).

Any party is entitled to appeal an "adverse" decision after post-grant review, under any of the provisions of 35 U.S.C. §§ 141-144 (§ 329).

The Director is compelled ("shall") issue regulations effecting post-grant review "not later than" one year after enactment of the bill into law (Section 6(f)(1)) and shall apply only to patents described in Section 3(n)(1) of the bill (Section 6(f)(2)).  In addition, the Director can "impose a limit on the number of post-grant reviews initiated in the first four 1-year periods following the effective date (something presumably within the Director's discretion to grant petitions in the first place under (§ 324(e)).  Section 6(f)(3) provides for the Director to determine how to integrate post-grant review provisions with interferences "commenced before the effective date" of the post-grant review provision, which can include dismissal of the interference in favor of post-grant review or "to proceed as if the Act has not been enacted."

These provisions will become applicable to any application having an effective filing date on or after March 16, 2013.

AIA Overview: Prior User Rights Defense

By Kevin E. Noonan --

Section 5 of the AIA expands prior user rights:

35 U.S.C. 273 Defense to infringement based on earlier inventor.

(a)  IN GENERAL.–A person shall be entitled to a defense under section 282(b) with respect to subject matter consisting of a process, or consisting of a machine, manufacture, or composition of matter used in a manufacturing or other commercial process, that would otherwise infringe a claimed invention being asserted against the person if—

(1)  such person, acting in good faith, commercially used the subject matter in the United States, either in connection with an internal commercial use or an actual arm's length sale or other arm's length commercial transfer of a useful end result of such commercial use; and

(2)  such commercial use occurred at least 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 public in a manner that qualified for the exception from prior art under section 102(b).

(b)  BURDEN OF PROOF.—A person asserting a defense under this section shall have the burden of establishing the defense by clear and convincing evidence.

(c)  ADDITIONAL COMMERCIAL USES.—

(1)  PREMARKETING REGULATORY REVIEW.—Subject matter for which commercial marketing or use is subject to a premarketing regulatory review period during which the safety or efficacy of the subject matter is established, including any period specified in section 156(g), shall be deemed to be commercially used for purposes of subsection (a)(1) during such regulatory review period.

(2)  NONPROFIT LABORATORY USE.—A use of subject matter by a nonprofit research laboratory or other nonprofit entity, such as a university or hospital, for which the public is the intended beneficiary, shall be deemed to be a commercial use for purposes of subsection (a)(1), except that a defense under this section may be asserted pursuant to this paragraph only for continued and noncommercial use by and in the laboratory or other nonprofit entity.

(d)  EXHAUSTION OF RIGHTS.—Notwithstanding subsection (e)(1), the sale or other disposition of a useful end result by a person entitled to assert a defense under this section in connection with a patent with respect to that useful end result shall exhaust the patent owner's rights under the patent to the extent that such rights would have been exhausted had such sale or other disposition been made by the patent owner

(e)  LIMITATIONS AND EXCEPTIONS.—

(1) PERSONAL DEFENSE.—

(A) IN GENERAL.—A defense under this section may be asserted only by the person who performed or directed the performance of the commercial use described in subsection (a), or by an entity that controls, is controlled by, or is under common control with such person.

(B) TRANSFER OF RIGHT.—Except for any transfer to the patent owner, the right to assert a defense under this section shall not be licensed or assigned or transferred to another person except as an ancillary and subordinate part of a good-faith assignment or transfer for other reasons of the entire enterprise or line of business to which the defense relates.

(C) RESTRICTION ON SITES.—A defense under this section, when acquired by a person as part of an assignment or transfer described in subparagraph (B), may only be asserted for uses at sites where the subject matter that would otherwise infringe a claimed invention is in use before the later of the effective filing date of the claimed invention or the date of the assignment or transfer of such enterprise or line of business.

(2) DERIVATION.—A person may not assert a defense under this section if the subject matter on which the defense is based was derived from the patentee or persons in privity with the patentee.

(3) NOT A GENERAL LICENSE.—The defense asserted by a person under this section is not a general license under all claims of the patent at issue, but extends only to the specific subject matter for which it has been established that a commercial use that qualifies under this section occurred, except that the defense shall also extend to variations in the quantity or volume of use of the claimed subject matter, and to improvements in the claimed subject matter that do not infringe additional specifically claimed subject matter of the patent.

(4) ABANDONMENT OF USE.—A person who has abandoned commercial use (that qualifies under this section) of subject matter may not rely on activities performed before the date of such abandonment in establishing a defense under this section with respect to actions taken on or after the date of such abandonment.

(5) UNIVERSITY EXCEPTION.—

(A) IN GENERAL.—A person commercially using subject matter to which subsection (a) applies may not assert a defense under this section if the claimed invention with respect to which the defense is asserted was, at the time the invention was made, owned or subject to an obligation of assignment to either an institution of higher education (as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)), or a technology transfer organization whose primary purpose is to facilitate the commercialization of technologies developed by one or more such institutions of higher education.

(B) EXCEPTION.—Subparagraph (A) shall not apply if any of the activities required to reduce to practice the subject matter of the claimed invention could not have been undertaken using funds provided by the Federal Government.

(f) UNREASONABLE ASSERTION OF DEFENSE.—If the defense under this section is pleaded by a person who is found to infringe the patent and who subsequently fails to demonstrate a reasonable basis for asserting the defense, the court shall find the case exceptional for the purpose of awarding attorney fees under section 285.

(g) INVALIDITY.—A patent shall not be deemed to be invalid under section 102 or 103 solely because a defense is raised or established under this section.

These prior user rights provisions of the law as enacted have some significant differences and distinctions from the language of either the Senate or the House bills.  Significantly, the defense is expressly a personal defense that can be asserted against a charge of infringement that does not act generally to invalidate a claim on novelty or obviousness grounds (Section 5(g)).  The scope of the right was also expanded from Section 273 as enacted under the American Inventor Protection Act of 1999:  under the prior provisions, business method claims alone were subject to the prior user rights defense, whereas under the AIA, prior user rights can be asserted by an accused infringer for "a process . . ., a machine, manufacture or composition of matter used in a manufacturing or commercial process" (Section 5(a)).  While more limited than the full extent of Section 101 subject matter, this is a considerable expansion of the right, and as with many other provisions of the AIA, increases the uncertainty attendant upon patent claims and creates incentives to keep commercial methods secret and disincentives patenting.

The timing of the commercial use appears to be intended to preclude "Johnny-come-lately's" from hurrying into commercial use of a method disclosed by an inventor, since it must occur "at least a year before the effective filing date or first public disclosure by the inventor," whichever occurred earlier.  As with most defenses to patent infringement, the defense must be established upon clear and convincing evidence.

The AIA expands the category of qualifying commercial use to include periods of regulatory review, e.g. "any period specified in section 156(g)" (i.e., submission of an IND or NDA to the FDA for approval of a drug; Section 5(c)(1)), or use by nonprofit research laboratories (so long as the use is restricted to noncommercial use; Section 5(c)(2)).  These rights do not transfer upon the "sale or other disposition of a useful end result" to a third party, the defense being exhausted by the sale (Section 5(d)).  And the right is limited under Section 5(e), being personal to the person or entity that performs the "commercial use" (Section 5(e)(1)(A)) and cannot be transferred (Section 5(e)(1)(B)) except as a sale or transfer of
the entire enterprise or line of business" relating to the defense, as well as a limitation on the number of sites of the commercial use entitled to the defense (Section 5(e)(1)(C)).  Also excepted are instances of derivation (Section 5(e)(2)) or abandonment of the use (for "actions taken on or after the date of such abandonment; (Section 5(e)(4)), nor does the defense effect a "general license" of an entire patent, but just those claims relating to "specific subject matter for which [it is established] that a [qualifying] commercial use [occurs] (Section 5(e)(3)).  Of the exceptions, one that may have far-reaching implications is the exception for universities, wherein patents owned by universities are exempt from the assertion of the defense (Section 5(e)(5)).  This exemption has the potential for increasing licensing of patents owned by universities that can be adapted for commercial purposes, and even the potential for providing additional impetus for research universities (or their engineering departments) to become more involved in developing and protecting inventions related to processes that can be readily commercialized.  Even this exemption has an exception, however, wherein the exemption does not apply if "the subject matter of the claimed invention could not have been undertaken using funds provided by the Federal government."   Patents directed to human embryonic stem cell research during the Bush administration are examples of patents to which the exception to the exemption may apply.

Finally, perhaps to limit a proliferation of such claims, the statute provides for a sanction against defendants who assert the defense without a "reasonable" basis for doing so, whereby a court "shall" find the case to be exceptional under section 285 (Section 5(f)).  It should be remembered, however, that while the statute can compel a district court judge to find a case exceptional on the basis of an unreasonable assertion of the prior user rights defense, the extent of the sanction remains within the sound discretion of the court.

These provisions became effective against any patent "issued on or after the date of enactment":  September 16, 2011.

AIA Overview: First-Inventor-to-File Provisions

By Kevin E. Noonan --

The provisions of the Leahy-Smith America Invents Act (AIA) relating to "First-Inventor-to-File" are set forth in Section 3.  Section 3(a) amends definitions relating to inventorship in 35 U.S.C. § 100.  The "inventor" is defined in new § 100(f) as "the individual, or if a joint invention, the individuals collectively who invented or discovered the subject matter of the invention."  A "joint inventor" is defined as "any 1 of the individuals who invented or discovered the subject matter of the joint invention" (§ 100(g)).  This section also defines a "joint research agreement" along current lines (§ 100(h)).  Importantly for the "first-inventor-to-file" regime, Section 2(a) defines the "effective filing date" either as the actual filing date of the invention (§ 100(i)(1)(A)) or "the filing date of the earliest application for which the patent or application is entitled" under §§ 119, 365(a), 365(b), 120, 121 or 365(c) (§ 100(i)(1)(B)).  Finally, this section defines "the claimed invention" as "the subject matter defined by a claim in a patent or application" (§ 100(j)).

Section 3(b) effects the changes in 35 U.S.C. § 102 that changes U.S. patent law from "first-to-invent" to "first-inventor-to-file."  Instead of subsections § 102(a) through § 102(g), new § 102 provides that:

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.

These provisions eliminate the distinction for public use, on sale or "otherwise available to the public" between acts occurring in the U.S. ("in this country") and acts occurring abroad ("in this or a foreign country") that have long been a feature of defining prior art under § 102; this effect is made explicit under Section 3(d), which repeals 35 U.S.C. § 104.  New § 102(a)(2) expressly defines the "first-inventor-to-file" aspects of the change, by defining as prior art an earlier-filed patent or application that "names another inventor"; it is likely that this provision will include (or be interpreted to include) a definition of "another inventor" as another "inventive entity," i.e., any difference in named joint inventors.  This section of the new statute also expands the scope of foreign-filed applications as prior art:  instead of being limited as prior art to their filing date (or, in the case of a PCT application, the International Filing Date) the new law gives foreign patents and applications the benefit of their earliest effective filing date, which would be the foreign filing date for such applications.

The grace period that remains under the AIA is contained in new § 102(b), which provides exceptions that include:

102(b) EXCEPTIONS

(1)  DISCLOSURES MADE 1 YEAR OR LESS BEFORE THE EFFECTIVE FILING DATE OF THE CLAIMED INVENTION- A disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if--

(A)  the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or

(B)  the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.

(2)  DISCLOSURES APPEARING IN APPLICATIONS AND PATENTS- A disclosure shall not be prior art to a claimed invention under subsection (a)(2) if--

(A)  the subject matter disclosed was obtained directly or indirectly from the inventor or a joint inventor;

(B)  the subject matter disclosed had, before such subject matter was effectively filed under subsection (a)(2), been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or

(C)  the subject matter disclosed and the claimed invention, not later than the effective filing date of the claimed invention, were owned by the same person or subject to an obligation of assignment to the same person.

New § 102(b)(1)(A) establishes the one-year grace period for the inventor's own disclosure or disclosure by another who derived the invention ("obtained directly or indirectly") from the "true" inventor.  New § 102(b)(1)(B), on the other hand, relates to a "second" disclosure of the subject matter that had previously been disclosed ("before such disclosure [had] been publicly disclosed") by the inventor or "another" who derived ("directly or indirectly") the invention from the inventor, also presumably less than one year prior to the effective filing date.  Thus, this new provision provides that the "true" inventor's public disclosure "immunizes" the inventor from disclosure by another, presumably provided that the "true" inventor files a patent application within one year of his or her initial disclosure (i.e., within the grace period).

New § 102(b)(2) disqualifies as prior art disclosure in a patent or patent application by another who "obtained [the subject matter] directly or indirectly from the inventor" (§ 102(b)(2)(A)) or wherein the subject matter had been publicly disclosed by the inventor or another who derived the invention from the inventor prior to the effective filing date of the earlier patent or application (§ 102(b)(2)(B)) or there was joint ownership ("not later than the effective filing date of the claimed invention") of the earlier disclosed subject matter and the claimed invention.  These provisions provide an incentive for early disclosure of inventions within the one-year grace period, because the effect of earlier disclosure is to eliminate as prior art any disclosure or patent or patent application that occurs after the first public disclosure by the inventor, provided the inventor files a patent application on the subject matter within the one-year grace period.  However, experience with the current law has established that such a disclosure must be an enabling disclosure, and that prior disclosure could create the possibility (if not the likelihood) that variations (obvious or otherwise) could be created and filed by "another," resulting in a diminution of the "true" inventor's patent rights.

New § 102 also defines common ownership under a joint research agreement (new § 102(c))(which seems to broaden the protections thereof from obviousness currently under § 103 to novelty under the new provisions), and the intent for "continuity" of the treatment of joint research agreements under the new law and the CREATE Act (new § 102(d)).

Section 3(c) amends current 35 U.S.C. § 103, which sub silentio repeals §§ 103(b) and (c):

A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains.  Patentability shall not be negated by the manner in which the invention was made.

Section 3(e) repeals statutory invention registrations, and §§ 3(f) and 3(g) are "conforming" amendments (§ 3(f) amends Section 120 to change "which is filed by an inventor or inventors named" to "which names an inventor or joint inventor").

Section 3(h) provides an amended § 291 defining "derived patents":

(a)  IN GENERAL- The owner of a patent may have relief by civil action against the owner of another patent that claims the same invention and has an earlier effective filing date if the invention claimed in such other patent was derived from the inventor of the invention claimed in the patent owned by the person seeking relief under this section.

(b)  FILING LIMITATION- An action under this section may only be filed within 1 year after the issuance of the first patent containing a claim to the allegedly derived invention and naming an individual alleged to have derived such invention as the inventor or joint inventor.

This section thus conforms the new regime to what were heretofore "interfering patents," under circumstances where one of the patents was derived from the "true inventor." 

Section 3(i) provides for "derivation proceedings" in the Office by amendment of 35 U.S.C. § 135:

(a)  INSTITUTION OF PROCEEDING- An applicant for patent may file a petition to institute a derivation proceeding in the Office.  The 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 only be filed within 1 year after 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.  Whenever the Director determines that a petition filed under this subsection demonstrates that the standards for instituting a derivation proceeding are met, the Director may institute a derivation proceeding.  The determination by the Director whether to institute a derivation proceeding shall be final and nonappealable.

(b)  DETERMINATION BY PATENT TRIAL AND APPEAL BOARD- In a derivation proceeding instituted under subsection (a), the Patent Trial and Appeal Board shall determine whether an inventor named in the 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.  The Director shall prescribe regulations setting forth standards for the conduct of derivation proceedings.

(c)  DEFERRAL OF DECISION- The Patent Trial and Appeal Board may defer action on a petition for a derivation proceeding until 3 months after the date on which the Director issues a patent that includes the claimed invention that is the subject of the petition.  The Patent Trial and Appeal Board also may defer action on a petition for a derivation proceeding, or stay the proceeding after it has been instituted, until the termination of a proceeding under chapter 30, 31, or 32 involving the patent of the earlier applicant.

(d)  EFFECT OF FINAL DECISION- The final decision of the Patent Trial and Appeal Board, if adverse to claims in an application for patent, shall constitute the final refusal by the Office on those claims.  The final decision of the Patent Trial and Appeal Board, if adverse to claims in a patent, shall, if no appeal or other review of the decision has been or can be taken or had, constitute cancellation of those claims, and notice of such cancellation shall be endorsed on copies of the patent distributed after such cancellation.

(e)  SETTLEMENT- Parties to a proceeding instituted under subsection (a) may terminate the proceeding by filing a written statement reflecting the agreement of the parties as to the correct inventors of the claimed invention in dispute.  Unless the Patent Trial and Appeal Board finds the agreement to be inconsistent with the evidence of record, if any, it shall take action consistent with the agreement.  Any written settlement or understanding of the parties shall be filed with the Director.  At the request of a party to the proceeding, the agreement or understanding shall be treated as business confidential information, shall be kept separate from the file of the involved patents or applications, and shall be made available only to Government agencies on written request, or to any person on a showing of good cause.

(f)  ARBITRATION- Parties to a proceeding instituted under subsection (a) may, within such time as may be specified by the Director by regulation, determine such contest or any aspect thereof by arbitration.  Such arbitration shall be governed by the provisions of title 9, to the extent such title is not inconsistent with this section.  The parties shall give notice of any arbitration award to the Director, and such award shall, as between the parties to the arbitration, be dispositive of the issues to which it relates.  The arbitration award shall be unenforceable until such notice is given.  Nothing in this subsection shall preclude the Director from determining the patentability of the claimed inventions involved in the proceeding.

The right is limited to an "applicant for patent" within one year after first publication of the derived application, thus imposing an obligation to monitor publication databases for any possibly derived patent applications.  Whether these proceedings will include patents (as current interference practice does) is unclear; an argument can be made that Section 291 is restricted to derived patents and new Section 135 for derived applications.  This interpretation is supported by the limitation that derivation proceedings in the Office must be initiated within one year of publication (an event that should precede patenting in most cases). In addition, the petition must be supported by "substantial evidence," but without any of the provisions for discovery (or obligations to provide evidence) currently available under interference provisions of current law.  In addition, the Board is given broad discretion to delay action on any petition until after the putatively derived patent has granted, without capacity to appeal such a decision (other than, perhaps, a "civil action").  And, while other portions of the bill establish the Patent Trial and Appeal Board that will be related to the current Board of Patent Appeals and Interferences, the Office will need to create the infrastructure for this "new" adjudicative body.  Section 3(j) of the bill strips current law of all references to interferences wherever they appear in the statute.

Section 3(k) introduces a 10-year "statute of limitations" into 35 U.S.C. § 32 regarding disciplinary proceedings before the Office and a biennial description of incidents that were barred from being brought under this section by the statute of limitations.  Section 3(l) relates to a small business study to determine the effects of the change to "first-inventor-to-file," with a Report to be provided to Congress not later than one year after the Act is enacted.  Similarly, Section 3(m) provides for a Report to Congress on prior user rights in the U.S. and abroad in Europe, Japan, Canada, and Australia and their effects "if any[] on small businesses, universities and individual inventors."

Section 3(n) provides that the effective date of this bill, if enacted, is 18 months from the date of enactment, and continuing present interference practice for all patents and applications having an effective filing date prior to the date of enactment of the provisions set forth in Section 3 of the Act.  Finally, Sections 3(o) and 3(p) express the "Sense of the Congress" that the changes effected by these provisions of the Act "will promote the progress of science and the useful arts" and will "promote harmonization of the U.S. patent system with patent systems" in the rest of the world and "promote greater national uniformity and certainty" in patenting.

USPTO Seeking Comment on AIA Mandated Studies

By Donald Zuhn --

On Friday, the U.S. Patent and Trademark Office announced that it was seeking comments with regard to two studies it must conduct under the Leahy-Smith America Invents Act (AIA).  The studies, on the operation of prior user rights in selected countries in the industrialized world and international patent protection for small businesses, are mandated by §§ 3(m) and 31 of the AIA.

The Office's request for comments with regard to the prior user rights study came via a notice in the Federal Register (76 Fed. Reg. 62388).  The Office notes that it is seeking information regarding the following:

(1)  comparison(s) between the patent laws of the U.S. and the laws of other industrialized countries;
(2)  the effect of prior user rights on innovation rates;
(3)  the correlation, if any, between prior user rights and start-up enterprises as well as the ability to attract venture capital to start new companies;
(4)  the effect of prior user rights, if any, on small businesses, universities, and individual inventors;
(5)  legal and constitutional issues with placing trade secret law in patent law; and
(6)  whether or not the change to a first-to-file patent system creates any particular need for prior user rights.

Written comments can be sent by e-mail to IP.Policy@uspto.gov or by regular mail addressed to:  Mail Stop OPEA, P.O. Box 1450, Alexandria, VA 22313–1450, ATTN: Elizabeth Shaw, and must be submitted by November 8, 2011.

The Office also notes that it will be holding a public hearing on the prior user rights study from 8:30 to 11:30 am (EDT) on October 25, 2011 in the Madison Auditorium at the USPTO.  Those wishing to present oral testimony at the hearing must send a request to do so by e-mail to IP.Policy@uspto.gov by October 18, 2011.  Requests must be accompanied by the name of the person testifying, the person's contact information (telephone number and e-mail address), the organizations the person represents, if any, and a preliminary written copy of the person's testimony.  The USPTO plans to webcast the hearing.

The notice concludes with a list of seven topics/questions for which the Office seeks comment and testimony.  Additional information regarding the submission of comments and the hearing can be found in the notice.

The Office set forth its request for comments concerning international patent protection for small businesses in a second Federal Register notice (76 Fed. Reg. 62389).  Written comments regarding the study can be sent by e-mail to SMEpatenting@uspto.gov or by regular mail addressed to:  Saurabh Vishnubhakat, Attorney Advisor, Office of Chief Economist, United States Patent and Trademark Office, Mail Stop External Affairs, P.O. Box 1450, Alexandria, VA 22313–1450, and must be submitted by November 8, 2011.

The notice also indicates that the Office will be holding two hearings regarding the study:  the first from 1 to 4 pm (EDT) on October 27, 2011, and the second from 9 am to 12 pm (EDT) on November 1, 2011.  The first hearing will be held in the Madison Auditorium at the USPTO and the second hearing will be held in the Gould School of Law at the University of Southern California.  Those wishing to present oral testimony at either hearing must send a request to do so by e-mail to SMEpatenting@uspto.gov by October 20, 2011 for the first meeting and by October 25, 2011 for the second meeting.  Requests must be accompanied by the name of the person testifying, the person's contact information (telephone number and e-mail address), the organizations the person represents, if any, and a preliminary written copy of the person's testimony.  The USPTO plans to webcast both hearings.

The notice concludes with a list of ten topics/questions for which the Office seeks comment and testimony.  Additional information regarding the submission of comments and the hearings can be found in the notice.

USPTO Implements AIA Changes to Inter Partes Reexamination

By Donald Zuhn --

The U.S. Patent and Trademark Office continues the process of implementing the many changes to U.S. patent law brought about by the enactment of the Leahy-Smith America Invents Act (AIA) on September 16.  In one of its more recent steps, the Office issued a notice in the Federal Register (76 Fed. Reg. 59055) that revises the standard for granting requests for inter partes reexamination.  In the notice, the Office indicates that the rules of practice regarding inter partes reexamination have been revised to reflect the new standard for granting an inter partes reexamination provided in § 6(c)(3)(A) of the AIA, as well as provide for the termination of inter partes reexamination on September 16, 2012 as provided in § 6(c)(3) of the AIA.

With regard to the revised standard, the AIA specifies that a request for inter partes reexamination will not be granted unless the information presented in the request shows that there is a reasonable likelihood that the requester will prevail with respect to at least one of the claims challenged in the request.  The old standard for granting a request for inter partes reexamination required that the request raise a substantial new question of patentability (SNQ) affecting any claim of the patent -- the same standard for granting an ex parte reexamination request, which remains unchanged by the AIA.  The new standard for inter partes reexamination requests applies to any request that is filed on or after September 16, 2011 (i.e., the date of enactment of the AIA), but before September 16, 2012 (i.e., the effective date of the inter partes review provisions of the AIA).  The notice indicates that a rulemaking regarding inter partes review will be forthcoming.

In discussing the new reasonable likelihood standard, the Office cites to the report on the AIA by the House Committee on the Judiciary, released June 1, 2011, which states at page 47 that:

The threshold for initiating an inter partes review is elevated from 'significant new question of patentability' -- a standard that currently allows 95% of all requests to be granted --to a standard requiring petitioners to present information showing that their challenge has a reasonable likelihood of success.

The House report also contained Additional Views presented by Representatives Howard Berman (D-CA), Melvin Watt (D-NC), and Zoe Lofgren (D-CA), in which the legislators noted at page 165 that "the practical meaning of the new [reasonable likelihood] standard in H.R. 1249 is not clear and creates a risk that the PTO will reject legitimate petitions at the outset of the procedure, without further inquiry."

The Office's Federal Register notice indicates that the old standard will apply for all inter partes reexaminations requested prior to September 16, 2011 (including reexaminations ordered under the old standard and conducted after September 16, 2011), the new standard will apply to reexaminations requested on or after September 16, 2011, but before September 16, 2012 (including reexaminations ordered under the new standard and conducted after September 16, 2012), and that the Office will not grant requests for inter partes reexamination filed on or after September 16, 2012.

USPTO Implements Prioritized Examination Track under AIA

By Donald Zuhn --

Five months after postponing the launch date of the prioritized examination (or Track I) portion of the Enhanced Examination Timing Control Procedures Initiative, the U.S. Patent and Trademark Office announced on Friday that it would begin accepting requests for prioritized examination today.  The program was postponed in April due to "funding limitations," which would have prevented the Office from "meet[ing] the twelve-month pendency goal in prioritized examination applications without impacting the non-prioritized examination applications at this time" (see "USPTO Publishes Notice Regarding Prioritized (Track I) Examination Delay").

In a notice published in the Federal Register on Friday (76 Fed. Reg. 59060), the Office noted that "[t]he Leahy-Smith America Invents Act [AIA] includes provisions for prioritized examination [§ 11(h) of the AIA] that emulate the requirements of the Office’s Track I final rule, with revised fee amounts for prioritized examination (including a small entity discount) and a provision that addresses the funding limitations that required a delay in the implementation of the Track I final rule."  In April, the Office indicated that applicants would be allowed to request prioritized (or Track I) examination of an application for an additional fee of $4,000 beginning in May (see "USPTO to Launch Prioritized Examination on May 4th").  The start of the Track I program, however, was delayed when the President signed the FY 2011 budget, preventing the USPTO from spending $85-100 million in fees collected during the fiscal year.

The AIA sets forth a prioritized examination fee of $4,800, which applicants must pay in addition to filing, search, and examination fees (including any applicable excess claims and application size fees) and processing and publication fees (the prioritized examination fee for small entities is reduced by 50%).  In addition, the AIA specifies that to be eligible for prioritized examination, an application must contain (or be amended to contain) no more than 4 independent claims and no more than 30 total claims.  The AIA limits the number of requests for prioritized examination that the Director may accept to 10,000 per fiscal year.  Under the AIA, the effective date of the above changes is September 26, 2011 (i.e., 10 days after the date of enactment of the AIA).

While the Office will accord prioritized examination applications special status and place them on the examiner's special docket, the following actions taken by the applicant will terminate prioritized examination:

• Filing a request for continued examination (RCE);
• Filing a petition for an extension of time to file a reply;
• Filing a request for a suspension of action; or
• Filing an amendment that results in more than four independent claims, more than thirty total claims, or a multiple dependent claim.

To participate in the Track I program, applicants have to fulfill the following requirements:

• File a new original utility or plant nonprovisional application under 35 U.S.C. § 111(a) on or after September 26, 2011 (the procedure does not apply to international, design, reissue, or provisional applications, or reexamination proceedings, but can be used for continuing applications);
• File an application that is complete under 37 C.F.R. § 1.51(b), including the oath or declaration, and payment of the filing, search, and examination fees, any applicable excess claims fee, and any applicable application size fee at the time of filing;
• File the application via the Office's electronic filing system (EFS-Web);
• The application cannot contain more than four independent claims and thirty total claims or any multiple dependent claims;
• Request prioritized examination (preferably by using Form PTO/SB/424); and
• Pay the required fees for requesting prioritized examination at the time of filing (i.e., the prioritized examination fee set forth in 37 C.F.R. § 1.17(c), the processing fee set forth in 37 C.F.R. § 1.17(i), and the publication fee set forth in 37 C.F.R. § 1.18(d)).

For additional information regarding this topic, please see:

• "USPTO Publishes Notice Regarding Prioritized (Track I) Examination Delay," May , 2011
• "USPTO News Briefs," April 27, 2011
• "USPTO News Briefs," April 21, 2011
• "USPTO to Launch Prioritized Examination on May 4th," April 10, 2011
• "USPTO Provides More Details Regarding 'Three Track' Examination Proposal," February 7, 2011
• "USPTO Publishes Notice Regarding Enhanced Examination Timing Control Initiative," June 14, 2010

President Signs AIA into Law; USPTO Begins Implementation of Act

By Donald Zuhn --

On Friday, President Obama signed the Leahy-Smith America Invents Act (H.R. 1249) into law.  In a press release issued after the signing, the White House said the legislation would "help American entrepreneurs and businesses bring their inventions to market sooner, creating new businesses and new jobs."  President Obama noted that he was pleased to sign the Act, adding that "[t]his much-needed reform will speed up the patent process so that innovators and entrepreneurs can turn a new invention into a business as quickly as possible."

The U.S. Patent and Trademark Office responded to the signing by updating the website the Office recently established to provide information and seek input on the implementation of the Leahy-Smith America Invents Act (AIA).  New information being provided on the website includes a seven-page table of effective dates provided under the AIA.  Among the effective dates listed in the table are:

• September 16, 2011 -- micro-entities established under § 10 of AIA
• September 26, 2011 -- prioritized examination fee of $4,800 established under § 11 of AIA
• September 26, 2011 -- 15% surcharge on all fees charged or authorized under Title 35 imposed under § 11 of AIA
• November 15, 2011 -- additional fee of $400 for non-electronic filing of applications (other than design, plant, or provisional applications) established under § 10 of AIA
• September 16, 2012 -- inventor's oath or declaration provisions under § 4 of AIA take effect
• September 16, 2012 -- third-party submission provisions under § 8 of AIA take effect
• September 16, 2012 -- supplemental examination provisions under § 12 of AIA take effect
• September 16, 2012 -- post-grant review provisions under § 6 of AIA take effect
• March 16, 2013 -- first-inventor-to-file provisions under § 3 of AIA take effect
• March 16, 2013 -- derivation proceedings provisions under § 3 of AIA take effect

The Office's AIA website also provides the following timeline of major milestones under the legislation:

With respect to the 15% surcharge on all fees charged or authorized under Title 35, the Office has posted the new fee schedule that will take effect on September 26, 2011.  The current fee schedule can be found here.

Finally, the Office's AIA website provides a list of upcoming AIA-related events, which includes an American Conference Institute (ACI) webinar on the AIA by Commissioner Robert Stoll on September 27, 2011 at 1:00 pm (ET).  Registration for the webinar is complimentary; those interested in registering can do so here.

Reaction to Senate Passage of H.R. 1249

By Donald Zuhn --

On Thursday, the Senate passed the House version of the Leahy-Smith America Invents Act (H.R. 1249) by an 89-9 vote (see "Senate Passes H.R. 1249").  The legislation now awaits the President's signature before becoming law.  That signing could come as early as Monday, after the President spent Friday morning and early afternoon in Richmond, VA discussing his jobs creation plan, and Sunday attending September 11 10th Anniversary Commemoration Ceremonies in New York, Shanksville, PA, and the Pentagon.  While the patent community awaits the bill's signing, a number of organizations and trade groups have issued statements regarding the Senate's passage of H.R. 1249.

In a statement issued by the Biotechnology Industry Organization (BIO), the group "applaud[ed] the Senate's passage of The Leahy-Smith America Invents Act as it marks the conclusion of a long and vigorous debate on how to best modernize our nation's patent system."  BIO stated that "[t]he improvements made by the bill will benefit all sectors of the national economy by enhancing patent quality and the efficiency, objectivity, predictability and transparency of the U.S. patent system."  Noting that "[s]trong intellectual property protection is critical for [small biotech] companies," the biotech industry group contended that such companies would "benefit from the improvements to our nation's patent system made by this legislation.  While commending Senate Judiciary Chairman Patrick Leahy (D-VT) and Ranking Member Charles Grassley (R-IA) as well as House Judiciary Chairman Lamar Smith (R-TX) and Ranking Member John Conyers (D-MI) "for their tireless efforts over the past several years," and noting that the group was "pleased that this bill is now headed to President Obama for his signature," BIO also "urge[d] the Congress to fulfill its commitments as part of this bill to end fee diversion at the U.S. Patent and Trademark Office (USPTO) once and for all."

The Innovation Alliance released a statement in which the group commended Chairman Leahy, Ranking Member Grassley, Chairman Smith, Ranking Member Conyers, House Subcommittee on Intellectual Property, Competition, and the Internet Chairman Bob Goodlatte (R-VA) and Ranking Member Melvin Watt (D-NC), Senators Jon Kyl (R-AZ), Dianne Feinstein (D-CA), Tom Coburn (R-OK), "and other congressional leaders too numerous to list . . . for their leadership and unwavering commitment to trying to get the policy right."  However, the Innovation Alliance expressed its "regrets that the Act does not end once and for all the diversion of patent office user fees for general federal government purposes," noting that "[e]nding fee diversion is the one issue in this debate that has united all patent stakeholders and most policymakers."  The group "believe[s] that as long as the possibility of fee diversion continues, the United States Patent and Trademark Office (USPTO) cannot reliably make multi-year plans, hire and retain personnel, and improve operations and information technology, all of which are critical to processing the nearly 700,000 patents in the backlog of pending patent applications," adding that "[d]elayed patent issuance is tantamount to foregone innovation and unrealized American jobs."  Despite the now likely enactment of the Leahy-Smith America Invents Act, the Innovation Alliance stated that it "remains committed to continuing our efforts in conjunction with other patent stakeholders to ensure that the USPTO retains all of the user fees it earns."  According to the Innovation Alliance website, the group "represents innovators, patent owners and stakeholders from a diverse range of industries that believe in the critical importance of maintaining a strong patent system that supports innovative enterprises of all sizes."

The Coalition for 21st Century Patent Reform opened its statement by suggesting that "after six years of hard work and debate in both the House and Senate, [the Senate's passage of H.R 1249 was] the last legislative step necessary for significantly strengthening the U.S. patent system for all American inventors."  The group contended that "[t]he Leahy-Smith America Invents Act gives our nation a modern, world-class patent system that allows innovation to flourish and create new industries that will add thousands of well-paying jobs for American workers," adding that the "landmark bill . . . will encourage American innovation for years to come."  Stating that the legislation "provides a package of clearly needed improvements to our patent system that will help innovators compete in today's global marketplace," the Coalition stated that "[i]nventors and patent applicants will have a simpler, more transparent and objective path to patent protection," and "[a]t the same time, [will] benefit from a reduction in the time, costs and unpredictability associated with the current system."  The group concluded by noting that it "will closely monitor the new Patent and Trademark Fee Reserve Fund to ensure that all patent fees remain within the Patent and Trademark Office and are promptly available to serve the needs of inventors and the public."

In a short statement issued by the Coalition for Patent Fairness, the group (which members include Adobe, Apple, Cisco, Dell, Google, Intel, Intuit, Micron, Oracle, RIM, SAP, and Symantec) "congratulate[d] Chairman Leahy, Chairman Smith, and additional key Members of Congress on the passage of H.R. 1249, the Leahy-Smith America Invents Act," and "applaud[ed] the House and the Senate for passing a bill that takes significant steps toward strengthening America's patent system and promoting innovation."  Noting that the Senate's passage of H.R. 1249 "marks the end of more than six years of debate and represents a consensus amongst many critical stakeholders," the CPF declared that "[t]he bill contains critical provisions that will advance and harmonize our patent system, while making the U.S. more competitive in the international marketplace."

Senate Passes H.R. 1249

By Donald Zuhn --

After considering three amendments, rejecting two and tabling a third, the Senate today voted 89 to 9 in favor of H.R. 1249, the House version of the Leahy-Smith America Invents Act.  Opposing passage of the bill were Senators Barbara Boxer (D-CA), Maria Cantwell (D-WA), Tom Coburn (R-OK), Jim DeMint (R-SC), Ron Johnson (R-WI), Mike Lee (R-UT), John McCain (R-AZ), Claire McCaskill (D-MO), and Rand Paul (R-KY); Senators John Rockefeller IV (D-WV) and Marco Rubio (R-FL) did not vote; a list of Senators voting for passage can be found here.  While proponents of the bill secured a wide margin in favor of passage of the legislation, the margin was not as overhwelming as the Senate's 95-5 vote in favor of S. 23 in March (see "Senate Passes S. 23").

Before voting on H.R. 1249, the Senate considered three amendments to the legislation.  The first amendment to be considered, SA 600 (Congressional Record (September 7, 2011) p. S5392), was submitted by Sen. Jeff Sessions (R-AL).  This amendment, which would have struck Section 37 concerning the calculation of the 60-day period for application of patent term extension (the so-called MedCo amendment), was rejected by a narrow 51-47 vote.  The second amendment to be considered, SA 595 (Congressional Record (September 7, 2011) p. S5390), was submitted by Sen. Cantwell.  This amendment, which offered a replacement for Section 18 providing a transitional program for covered business-method patents, was rejected by a 85-13 vote (with one Senator voting present).  The third and final amendment to be considered, SA 599 (Congressional Record (September 7, 2011) p. S5391), was submitted by Sen. Coburn.  This amendment, which would have replaced Section 22 of the House bill concerning USPTO funding with the USPTO funding provisions of S. 23, was tabled by a close 50-48 vote.  Under Senate rules, the agreement to table the third amendment was equivalent to defeating the amendment tabled.

H.R. 1249 will now be sent to the President for his signature (based on the President's schedule, any signing is unlikely to occur tomorrow).

Senate Votes to Invoke Cloture on H.R. 1249

By Donald Zuhn --

Earlier today, the Senate voted 93-5 to invoke cloture on a motion to proceed to H.R. 1249, the House version of the Leahy-Smith America Invents Act.  Opposing the motion were Senators Tom Coburn (R-OK), Jim DeMint (R-SC), Ron Johnson (R-WI), Mike Lee (R-UT) and Rand Paul (R-KY); Senators John Rockefeller IV (D-WV) and Marco Rubio (R-FL) did not vote on the motion; a list of Senators voting in favor of the motion can be found here.  The motion required a three-fifths majority vote of the Senate (i.e., 60 votes) to pass.

As a result of the passage of the cloture motion, further consideration of H.R. 1249 by the Senate will now be limited to thirty hours (which includes the time used for roll call votes, quorum calls, reading of amendments, points of order, and inquiries to and responses by the Chair), no Senator will be allowed to speak on the legislation for more than one hour (Senators wishing to speak on the bill will be permitted to do so on a "first come, first served" basis), and only amendments to the bill presented prior to the cloture vote will be permitted.  According to the Senate Calendar of Business for Wednesday, September 7, the Senate will resume consideration of the motion to proceed to H.R. 1249 upon the conclusion of tomorrow's morning business.

In a press release posted on his website today, Sen. Coburn (at left) provided a reason for his opposition to the cloture motion, declaring that "[f]ee diversion saps the lifeblood of the American economy -- innovation and invention -- in order to subsidize the desire of career politicians and appropriators in Congress to avoid hard choices," and adding that "[f]ee diversion operates like a tax on innovation, because it requires entrepreneurs to spend more money and time on activities than they would otherwise if patent fees remained fees."  Reviewing the history of the fee diversion provisions in the Senate version of the America Invents Act, Sen. Coburn states that:

The Senate has already voted to end fee diversion, by a margin of 95 to 5.  That version of the bill the Senate passed included my amendment that sets up a new revolving fund at the Treasury in which user fees that are paid to the Patent and Trademark Office for a patent or a trademark go directly into the revolving fund for the office to use to cover its operating expenses.  Congress would no longer have the ability to take those fees and divert them to other programs; fee diversion would be ended once and for all -- no more games, no more gimmicks.  My amendment was also in the bill that was passed by the House Judiciary Committee by a vote of 32 to 3.

Unfortunately, the House gutted my amendment after negotiations with the House Appropriations Committee.  The appropriators are insisting, of course, that they have no intention of diverting fees.  History suggests they are not to be trusted.  They promised to end this practice in the past and kept doing it.

There have been some reports that Sen. Coburn introduced a pre-cloture amendment to restore his previous anti-fee diversion provisions to H.R. 1249.  The Senator gives some credence to those reports by stating that:

I intend to give Senate appropriators the chance to back up that claim by voting on my amendment to end fee diversion.  If my amendment fails, I will do everything in my power to slow the bill and highlight this egregious tax on innovation.

Senate Cloture Vote on H.R. 1249 Scheduled for Tuesday

By Donald Zuhn --

Tomorrow, the Senate will vote to invoke cloture on a motion to proceed to H.R. 1249, the House version of the Leahy-Smith America Invents Act.  The vote to invoke cloture is scheduled to take place immediately after the Senate considers Bernice Bouie Donald for U.S. Circuit Judge for the Sixth Circuit and then votes on Judge Donald's nomination.  Debate on Judge Donald's nomination is scheduled to begin at 5:00 pm (ET) and last for 30 minutes with her confirmation vote to follow.

The cloture motion was made by Sen. Harry Reid (D-NV) on August 2.  The Senate cloture rule (Rule XXII) provides the only process for imposing limits on further consideration of an issue, and requires that a cloture motion (or petition) be supported by at least sixteen Senators.  In the case of Sen. Reid's motion, Senators Patrick Leahy (D-VT), Thomas Carper (D-DE), Joseph Lieberman (I-CT), Richard Blumenthal (D-CT), Charles Schumer (D-NY), Amy Klobuchar (D-MN), Robert Menendez (D-NJ), Jeanne Shaheen (D-NH), John Kerry (D-MA), Mark Udall (D-CO), Mark Warner (D-VA), Ben Nelson (D-NE), Jeff Bingaman (D-NM), Max Baucus (D-MT), Mark Begich (D-AK), and Robert Casey, Jr. (D-PA) joined Sen. Reid in signing the cloture petition.  If cloture is invoked, which requires a three-fifths majority vote of the Senate, debate on H.R. 1249 will be limited to thirty hours, no Senator will be allowed to speak on the legislation for more than one hour, and only amendments to the bill presented prior to the cloture vote will be permitted.

Patent Docs will provide updates regarding the cloture vote on the Patent Docs Twitter account, which can be reached at www.twitter.com/PatentDocs.

Patent Reform News Briefs

By Donald Zuhn --

Sen. Reid's Cloture Motion Brings Senate Closer to Vote on H.R. 1249

On August 2, Sen. Harry Reid (D-NV) (at right) presented a cloture motion to bring to a close the debate on the House version of the Leahy-Smith America Invents Act (H.R. 1249) so that the Senate can proceed to vote on the bill.  The Senate cloture rule (Rule XXII) provides the only process for imposing limits on further consideration of an issue, and requires that a cloture motion (or petition) be supported by at least sixteen Senators.  In the case of Sen. Reid's motion, Senators Patrick Leahy (D-VT), Thomas Carper (D-DE), Joseph Lieberman (I-CT), Richard Blumenthal (D-CT), Charles Schumer (D-NY), Amy Klobuchar (D-MN), Robert Menendez (D-NJ), Jeanne Shaheen (D-NH), John Kerry (D-MA), Mark Udall (D-CO), Mark Warner (D-VA), Ben Nelson (D-NE), Jeff Bingaman (D-NM), Max Baucus (D-MT), Mark Begich (D-AK), and Robert Casey, Jr. (D-PA) joined Sen. Reid in signing the cloture petition.  Sen. Reid's motion calls for a vote to invoke cloture on Tuesday, September 6, which requires a three-fifths majority of the Senate.  If cloture is invoked, debate on H.R. 1249 will be limited to thirty hours, no Senator will be allowed to speak on the legislation for more than one hour, and only amendments to the bill presented prior to the cloture vote will be permitted.

Rep. Rogers: Fees Collected by USPTO "Reserved Only for Use By the PTO"

On June 22, the day before the House passed H.R. 1249, Rep. Harold Rogers (R-KY) (at right), the Chairman of the House Committee on Appropriations, sent a letter to the Speaker of the House and the House Majority Leader addressing the USPTO funding provisions of H.R. 1249.  Rep. Rogers, along with Rep. Paul Ryan (R-WI), the Chairman of the House Committee on the Budget, was primarily responsible for convincing the House to change the USPTO funding provisions of H.R. 1249 so that the Patent Office would require Congressional approval in order to spend all of the fees it collects.  In his letter, Rep. Rogers notes that (emphasis added):

The language [in H.R. 1249] ensures: the PTO budget remains part of the annual appropriations process; all PTO collected fees will be available only for PTO services and activities in support of the fee paying community; and finally, this important agency will continue to be subject to oversight and accountability by the Congress on an annual basis.

To assure that all fees collected for PTO remain available for PTO services, H.R. 1249 provides that if the actual fees collected by the PTO exceed its appropriation for that fiscal year, the amount would continue to be reserved only for use by the PTO and will be held in a "Patent Trademark Fee Reserve Fund".

At the same time, consistent with the language included in H.R. 1249, the Committee on Appropriations will also carry language that will ensure that all fees collected by PTO in excess of its annual appropriated level will be available until expended only to PTO for support services and activities in support of the fee paying community, subject to normal Appropriations Committee oversight and review.

However, the resolution to the debt ceiling crisis may make it difficult (if not impossible) for Rep. Rogers to keep his promise.  Under the legislation that raised the debt ceiling, which was signed into law on August 2, a joint committee of Congress will have to produce debt reduction legislation with at least $1.2 trillion in cuts by November 23, 2011 or face across-the-board cuts of spending, equally split between defense and non-defense programs.  How the joint committee's proposal (or automatic spending cuts) will ultimately impact the funding provisions of H.R. 1249 (if passed by the Senate in September and signed by the President) is yet to be determined.

Washington Post Supports Patent Reform Legislation

In an op-ed piece appearing in Sunday's Washington Post, the newspaper says that President Obama is right when he states that patent reform will allow inventors and entrepreneurs to "cut the red tape" that prevents them from "quickly turning new ideas into thriving businesses."  Arguing that "the patent system has become creaky" since the 1952 Patent Act was passed, the article contends that the Patent Office "struggles under an enormous backlog, takes far too long to approve legitimate patents, and paradoxically at times blesses weak ones that undermine serious innovation and expose legitimate inventors to costly damages after their products have gone to market."  According to the Post, the Leahy-Smith America Invents Act will "go a long way toward curing these problems."  While conceding that H.R. 1249 "unfortunately weakens an important funding change that would have ensured needed resources for the perennially beleaguered U.S. Patent and Trademark Office," the Post says "[t]he change is unfortunate, but it is a small price to pay for passage of a broad package of changes that should lift burdens that for far too long have stood in the way of innovation and economic growth."

USPTO Seeks Input on Implementation of Leahy-Smith America Invents Act

By Donald Zuhn --

The U.S. Patent and Trademark Office recently established a website to provide information and seek input on the implementation of the Leahy-Smith American Invents Act, which the House of Representatives passed on June 23.  Although the Office notes that the legislation is still pending before the Senate and "neither its passage nor enactment can be presumed," the Office has decided "to proactively engage with the public to best prepare for the timely and effective implementation of the legislation should it be enacted."

Noting that implementation of the legislation will require "a series of . . . expeditious rulemaking proceedings," the new website indicates that the process of implementing the legislation might be facilitated by collecting input and comments from stakeholders and the public prior to enactment of the legislation.  The Office points out, however, that any input received will not be treated as a formal request for comments or a rulemaking, and that if the legislation is enacted, the Office will issue formal notices of proposed rulemaking.

The website provides five categories of "implementation documents":

• Patents
• Board of Patent Appeals and Interferences (BPAI)
• Fees and Budgetary Issues
• Congressionally-Directed Studies and Reports
• Miscellaneous

For the "Patents" category, the Office provides a 6-page list of potential items to aid the public in focusing its comments with respect to that category, and a single page list of changes having effective dates of 60 days or less.  Under the "Board of Patent Appeals and Interferences (BPAI)" category, the Office provides a 3-page list of potential items to aid the public in focusing its comments with respect to that category.  The "Fees and Budgetary Issues" category includes a fee setting flow chart and a timeline for setting fees under § 10 of the legislation.  Under the "Congressionally-Directed Studies and Reports" category, the Office provides a table listing the seven reports, two studies, and single program that are mandated by the legislation.  The "Miscellaneous" category currently lists no implementation documents.

The website also provides a list of resources, including a useful 6-page section-by-section summary of the changes to be implemented by the Leahy-Smith American Invents Act.

Comments should be submitted to the attention Hiram Bernstein, Senior Legal Advisor, Office of Patent Legal Administration (Patents and Miscellaneous); Michael P. Tierney, Administrative Patent Judge, Board of Patent Appeals and Interferences (Board of Patent Appeals and Interferences); Michelle Picard, Senior Advisor for Financial Management, Office of the Chief Financial Officer (Fees and Budgetary Issues); or Janet Gongola, Associate Solicitor, Office of the Solicitor (Congressionally-Directed Studies and Reports), and should also reference one of the five categories and the specific issue being addressed in the subject line.  Comments can be submitted by e-mail to:  aia_implementation@uspto.gov, or by regular mail to:  Mail Stop Comments-Patents, Commissioner for Patents, P.O. Box 1450, Alexandria, VA 22313–1450, marked to the attention of Hiram Bernstein.

Bio/Pharm Legislation Watch

By Donald Zuhn --

While the patent community has been focusing on Congress' efforts to enact patent reform legislation over the past few months, a number of other bills have been introduced that could, if enacted, significantly impact the biotech and pharma sectors.

Stem Cell Research Advancement Act of 2011

Last month, Rep. Diana DeGette (D-CO) introduced the Stem Cell Research Advancement Act of 2011 (H.R. 2376).  The bill is similar to legislation that Rep. DeGette introduced in 2006 and 2007.  While her previous efforts in Congress were successful, President Bush vetoed both of the earlier bills.

Rep. DeGette's latest effort would amend the Public Health Service Act (Title 42) to provide that "the Secretary shall conduct and support research that utilizes human stem cells, including human embryonic stem cells."  In particular, the bill would require that the Secretary, in consultation with the Director of the NIH, "maintain guidelines applicable to the conduct or support of human stem cell research by the Department of Health and Human Services," review the guidelines every three years, and update the guidelines "as scientifically warranted."  The legislation also prohibits funding for human cloning, which is defined as "the implantation of the product of transferring the nuclear material of a human somatic cell into an egg cell from which the nuclear material has been removed or rendered inert into a uterus or the functional equivalent of a uterus."  The bill has been referred to the House Committee on Energy and Commerce.

In a press release posted on her website, Rep. DeGette said that the legislation "would place into statute a framework to ensure such critical research can be conducted unimpeded by political interference."

Confirming Genetic Diagnostic Test Activity Legislation

Prior to House passage of the Leahy-Smith America Invents Act (H.R. 1249), Rep. Debbie Wasserman Schultz (D-FL) was able to squeeze a provision into House Judiciary Chairman Lamar Smith's (R-TX) Manager's Amendment that would allow a "genetic diagnostic test provider" to perform "confirming genetic diagnostic test activity" without fear of facing a patent infringement action (see "Manager's Amendment (and Others) to H.R. 1249 -- Second Opinions in Genetic Diagnostic Testing").  That provision of the House bill was eventually replaced with a provision calling for a study to be conducted by the USPTO Director "on effective ways to provide independent, confirming genetic diagnostic test activity where gene patents and exclusive licensing for primary genetic diagnostic tests exist."  The Senate bill contains no provisions regarding confirming genetic diagnostic test activity.

On June 22, one day before the House passed H.R. 1249, Rep. Wasserman Schultz introduced a standalone bill (H.R. 2276) that would "require the Director of the United States Patent and Trademark Office to conduct a study on effective ways to provide confirming genetic diagnostic test activity where gene patents and exclusive licensing exist."  As with H.R. 1249, H.R. 2276 would require that the Director's study include an examination of:

(1) The impact that the current lack of independent second opinion testing has had on the ability to provide the highest level of medical care to patients and recipients of genetic diagnostic testing, and on inhibiting innovation to existing testing and diagnoses.

(2) The effect that providing independent second opinion genetic diagnostic testing would have on the existing patent and license holders of an exclusive genetic test.

(3) The impact that current exclusive licensing and patents on genetic testing activity has on the practice of medicine, including but not limited to the interpretation of testing results and performance of testing procedures.

(4) The role that cost and insurance coverage have on access to and provision of genetic diagnostic tests.

The bill has been referred to the House Committee on the Judiciary and Committee on Energy and Commerce.

Medical Innovation Prize Fund Act

In May, Sen. Bernard Sanders (I-VT) introduced the Medical Innovation Prize Fund Act (S. 1137), which is intended "[t]o provide incentives for investment in research and development for new medicines, [and] to enhance access to new medicines."  The bill would accomplish these objectives by establishing a Medical Innovation Prize Fund (equal to 0.55% of the gross domestic product -- or $80,000,000,000 in 2011) and "by eliminating legal monopolies on the manufacture, distribution, and sale of . . . medicines."  Section 5 of the bill, entitled "Elimination of Exclusive Rights to Market Drug and Biological Products," states that "no person shall have the right to exclusively manufacture, distribute, sell, or use a drug, a biological product, or a manufacturing process for a drug or biological product in interstate commerce."

The legislation provides that "in lieu of any remuneration the person would have otherwise received for the exclusive marketing, distribution, sale, or use of a drug, biological product, or manufacturing process for a drug or biological product," and "in addition to any other remuneration that such person receives by reason of the nonexclusive marketing, distribution, sale, or use of the drug, biological product, or manufacturing process for a drug or biological product," the person would be "eligible for prize payments from the Fund."  The bill would create a 13-member Board of Trustees for the Fund that would, in part, "award prize payments for medical innovation in accordance with this Act."  The bill also sets forth prize eligibility criteria to be considered by the Board.  Following its introduction, the bill was referred to the Senate Committee on Health, Education, Labor, and Pensions.

Sen. Sanders introduced a similar bill (the Prize Fund for HIV/AIDS Act, S. 1138) for "de-link[ing] research and development incentives from drug prices for new medicines to treat HIV/AIDS."  S. 1138 would create a Prize Fund for HIV/AIDS in an amount equal to 0.02% of the gross domestic product.

Seed Availability and Competition Act of 2011

Earlier this year, Rep. Marcy Kaptur (D-OH) introduced the Seed Availability and Competition Act of 2011 (H.R. 307).  The legislation specifies that "[a]ny person who plants patented seed or seed derived from patented seed may retain seed from the harvest of the planted seed for replanting," provided that the person retaining such seed "submits to the Secretary of Agriculture notice, in such form as the Secretary may require, of the type and quantity of seed to be retained," and "pays the fee established by the Secretary."  The fees collected by the Secretary will be deposited in a Patented Seed Fund, and the Secretary "shall pay the collected fees to the appropriate patent holders, at a frequency that the Secretary determines is appropriate, from the Patented Seed Fund."  The bill would also allow the Secretary of the Treasury to impose a duty on products of certain exported genetically modified seeds when those products are imported into the United States.  The bill was referred to the House Committee on Agriculture and Committee on Ways and Means following its introduction in January, and was referred to the Subcommittee on Nutrition and Horticulture and Subcommittee on Rural Development, Research, Biotechnology, and Foreign Agriculture (both of which are part of the Committee on Agriculture) in March.

Patent Continuing Disclosure Act

Both the House and Senate versions of the Leahy-Smith America Invents Act (H.R. 1249 and S. 23) would amend the false marking statute (§ 292) of Title 35.  In the House version of the bill, § 292 would be amended to state that "[o]nly the United States may sue for the penalty authorized by [subsection (a)]" and replace current subsection (b) with the following:  "A person who has suffered a competitive injury as a result of a violation of this section may file a civil action in a district court of the United States for recovery of damages adequate to compensate for the injury" (the Senate version would make nearly identical changes to § 292).  The House bill would also amend § 292 such that "[t]he marking of a product . . . with matter relating to a patent that covered that product but has expired is not a violation of this section."

In March, Rep. Darrell Issa (R-CA) introduced the Patent Continuing Disclosure Act (H.R. 1056), which also addresses the marking of products with an expired patent.  In particular, the bill would amend § 292 such that an item that is marked "shall not be fined under this section after the patent expires if-- (A) no change in the manufacturing or production process of the item occurs after the expiration of the patent; or (B) in a case in which a change in the manufacturing or production process of the item occurs after the expiration of the patent, the word 'expired' is placed before the word 'patent' or the patent number."  The bill was referred to the Subcommittee on Intellectual Property, Competition and the Internet of the House Committee on the Judiciary.

Patent Reform News Briefs

By Donald Zuhn --

Reports Suggest Senate Action on Patent Reform Bill Could Be Weeks Away

In Monday's IPO Daily News, the Intellectual Property Owners Association (IPO) suggested that H.R. 1249, which the House passed on June 23 (see "House Passes H.R. 1249"), might not be brought up by the Senate until after Congress' August recess, which is scheduled to begin on August 6.  The IPO report also noted that while Sen. Patrick Leahy (D-VT) is seeking Senate passage of the bill passed by the House, other Senators are objecting to a few provisions in the bill, including § 37 (the so-called MedCo amendment; see "The Medicines Company Clearing Last Hurdles to Patent Term Extension for Angiomax®"), which would amend 35 U.S.C. § 156(d)(1) by adding the following text:

For purposes of determining the date on which a product receives permission under the second sentence of this paragraph, if such permission is transmitted after 4:30 P.M., Eastern Time, on a business day, or is transmitted on a day that is not a business day, the product shall be deemed to receive such permission on the next business day.  For purposes of the preceding sentence, the term 'business day' means any Monday, Tuesday, Wednesday, Thursday, or Friday, excluding any legal holiday under section 6103 of title 5.

On Saturday, Hal Wegner (at left) stated in his e-mail newsletter that "[a]n early Senate vote is now considered unlikely on the Leahy-Smith America Invents Act, with the strong likelihood that any full Senate consideration will take place at the earliest after Labor Day" (emphasis in original).

A copy of the House bill as it was received in the Senate and placed on the Senate legislative calendar on June 27 can be found here.

Economist Asks Congress to "Let the Patent Office Keep Its Money"

In an Op-Ed published last week by Bloomberg Businessweek, Economist Dr. Scott Shane contends that "[f]ee diversion is wreaking havoc on the patent system and undermining our national competitiveness" ("Let the Patent Office Keep Its Money").  Dr. Shane (at right), a Professor of Economics at Case Western Reserve University, should be familiar to Patent Docs readers for his contributions to the patent reform debate (particularly with respect to patent damages) in 2009 (see "Manufacturing Alliance on Patent Policy: Apportionment of Damages Provision Will Have Adverse Effects"; "MAPP Economist Advises Congress on Damages Provision"; and "Patent Reform Efforts Opposed by Small Business Group").

Noting that between 2000 and 2010 the annual number of applications filed rose 65%, Dr. Shane argues in his article that "[t]o meet this demand, the USPTO needs more patent examiners to handle the greater volume of applications," and that "[b]y taking away a portion of the patent office's fees, Congress has prevented the USPTO from hiring enough examiners to evaluate patent applications in a timely manner."  He concludes that "[i]f the House adopts the Senate's version [of the USPTO funding provisions], fee diversion will end, but if the Senate adopts the House's version, then I'm much less optimistic that the USPTO will get the money it needs to operate successfully."

American Action Forum Urges Senate to Retain USPTO Funding Provisions of S. 23

The American Action Forum, an organization that describes itself as "a forward-looking policy institute dedicated to keeping America strong, free and prosperous," which "seeks to promote common-sense, innovative, and solutions-based policies that will reform government, challenge out-dated assumptions, and create a smaller, smarter government that will serve its citizens better," issued a statement today calling on Senate leadership to prevent fee diversion in the U.S. Patent and Trademark Office.  American Action Forum President Doug Holtz-Eakin, a former Director of the Congressional Budget Office, pointed out that "[e]ach year over $800 million in user fees are diverted away from the USPTO through the Congressional appropriations process."  He urged Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY) "to adopt the language in S.23, a bill that will effectively end this process."

In a letter to Sen. Reid and Sen. McConnell, Mr. Holtz-Eakin stated that "[t]he establishment of the Patent and Trademark Fee Reserve Fund in H.R. 1249 would be ineffective in stopping the diversion of fees from USPTO."  In contrast, he explained that "the Senate bill [S. 23] creates a USPTO Public Enterprise Fund at the Treasury Department, which would receive all fees paid to USPTO and which would be available to USPTO when needed," stating that "[t]he funds would not be funneled through the Congressional appropriations process and would, therefore, not be exposed to the threat of being diverted to general government spending."  "If it is, in fact, the goal of Congress to end fee diversion and ensure that the USPTO is authorized to spend the fees it collects from its users," Mr. Holtz-Eakin contended that "the language contained in S.23 is clearly superior to the language of H.R.1249."

House Passes H.R. 1249

By Donald Zuhn --

The House of Representatives earlier today passed H.R. 1249, the America Invents Act, by a 304-117 vote.  All told, 168 Republicans and 136 Democrats voted in favor of the bill and 67 Republicans and 50 Democrats voted against the legislation (ten members did not vote; the final vote results can be viewed here).  While H.R. 1249 garnered more than 70% of the House vote, the victory for proponents of the House bill was not nearly as decisive as that for the Senate version of the bill, which was passed in March by a 95-5 margin (see "Senate Passes S. 23").  The House bill will now be reconciled with the Senate bill before being sent to the President.

Before voting on the bill, the House spent almost four hours debating and voting on a number of amendments.  The House voted 283-140 in favor of the Manager's Amendment offered by House Judiciary Chairman Lamar Smith (R-TX), and 223-198 in favor of an amendment offered by Rep. John Conyers, Jr. (D-MI) that would restore language concerning the calculation of the 60-day period for applying for patent term extension that was stricken from H.R. 1249 by the Manager's Amendment.  Amendments that would direct the USPTO to develop methods for studying the diversity of patent applicants (offered by Rep. Gwen Moore (D-WI)), add a sense of Congress that it is important to protect the rights of small businesses and inventors (offered by Rep. Sheila Jackson Lee (D-TX)), add requirements to the satellite office location selection process (offered by Rep. Ben Ray Lujan (D-NM)), mandate a USPTO-led study on what the USPTO, SBA, and other agencies can do to help small businesses obtain, maintain, and enforce foreign patents (offered by Rep. Gary Peters (D-MI)), and prescribe a requirement that parties provide sufficient evidence to prove and rebut a claim of derivation (offered by Rep. Jackie Speier (D-CA)) were agreed to by voice vote.

Among the amendments that failed to secure enough votes for passage were those that would condition the U.S. move to a first-to-file system only upon a Presidential finding that other major patent authorities had adopted a one-year grace period (offered by Rep. Conyers; rejected 316-105), strike Section 5 on prior user rights (offered by Rep. Tammy Baldwin (D-WI); rejected 342-81), strike Section 3 of the bill, which would convert the U.S. patent system from "first-to-invent" to "first-to-file" (offered by Rep. James Sensenbrenner, Jr. (R-WI); rejected 295-129), eliminate the ability of the USPTO Director to set fees, retaining that authority for Congress (offered by Rep. Donald Manzullo (R-IL); rejected 329-92), eliminate the burden of post-grant reviews and reexaminations on individual inventors and small businesses with 100 or fewer employees (offered by Rep. Dana Rohrabacher (R-CA); rejected 342-81), and strike section 18, which concerns the transitional program for covered business method patents (offered by Rep. Aaron Schock (R-IL); rejected 262-158).

Reaction to the House's passage of H.R. 1249 was (not surprisingly) swift.  In a statement posted on the House Committee on the Judiciary website, Chairman Smith (at left) called H.R 1249 "the most significant jobs creation bill passed by Congress this year."  Asserting that "the [current patent] system intended to protect and promote new inventions has become a barrier to innovation and job creation," Chairman Smith said that the legislation "represents a fair compromise and creates a better patent system for inventors and innovative industries."

Rep. Manzullo, who was unsuccessful in his bid to amend the bill to take fee-setting authority away from the USPTO Director, posted a statement on his website in which he explained that he "voted against a so-called 'patent reform' bill that will dramatically alter America's 220-year-old patent law, giving large corporations advantages over small inventors and sending more American jobs overseas."  Rep. Manzullo called the move from a first-to-invent to a first-to-file system a "fatal flaw" of the legislation that "would put America's small inventors at a huge disadvantage against their larger, foreign competitors with resources to more quickly patent their products."

In an e-mail distributed by the Biotechnology Industry Organization (BIO), the industry group "praised" the House's passage of the bill, stating that "[s]mall biotechnology companies rely heavily on their patents to attract investment to fund the lengthy and expensive research and development process necessary to bring breakthrough medical therapies and other products to patients and consumers," and that the bill "will bring our patent system into the 21st century . . . by enhancing patent quality and the efficiency, objectivity, predictability and transparency of the U.S. patent system."

In a statement posted on its website, the Innovation Alliance noted that it was "disappointed that the House of Representatives has approved legislation that will not end permanently the diversion of user fees from the U.S. Patent and Trademark Office."  The group promised to "continue to work with lawmakers and other stakeholders to ensure that any patent bill that becomes law ends fee diversion permanently."

Patent Reform Update II

By Donald Zuhn --

BIO Reaffirms Support for H.R. 1249

In a statement released earlier today, the Biotechnology Industry Organization (BIO) reaffirmed its support for H.R. 1249 and urged the House to pass the bill this week.  BIO President and CEO Jim Greenwood noted that the organization was "pleased that Judiciary Committee Chairman Lamar Smith (R-TX) and Appropriations Committee Chairman Harold Rogers (R-KY) have reached agreement on U.S. Patent and Trademark Office (PTO) funding and that the appropriators are committed to ensuring that the PTO will retain the entirety of the fees it collects from inventors."

Patent Reform Coalition Also Reaffirms Support for H.R. 1249

Like BIO, the Coalition for 21st Century Patent Reform issued a statement today reaffirming its support for moving H.R. 1249 to the House floor this week for a vote.  Although the group noted that it "preferred Section 22 of H. R. 1249, as reported by the Judiciary Committee, addressing the diversion of fees paid by users of USPTO services," the Coalition "decided to support the USPTO funding agreement that, if fully implemented, is intended to provide the Office with full access to the fees paid by inventors."  The group indicated that it "will be vigilant as the full implementation of the commitments made under the agreement is completed."

Innovation Alliance Reiterates Opposition to House Bill

In a follow-up to a statement the group released on Monday, the Innovation Alliance reiterated that in view of changes to the bill's USPTO funding provisions, the group "has no choice but to vigorously oppose the version of the America Invents Act scheduled to be considered by the full House of Representatives [on Wednesday]."  In today's statement, the Innovation Alliance noted that it had "consistently said that it would oppose any patent bill that does not end permanently the diversion of user fees from the U.S. Patent and Trademark Office," and that "[u]nfortunately, we have come to that point" with the current version of the bill.

In defending its position, the group explained that:

The compromise language released yesterday does not end fee diversion permanently and enable USPTO to plan predictably and on a sustainable basis.  In fact, it requires the USPTO to continue to rely upon the appropriators to have access to and use of all the application and other user fees it earns.  Any future appropriations bill could easily divert USPTO funds to other uses.  As a result, it will be difficult if not impossible for USPTO to make multi-year plans, to hire and retain personnel, and to improve operations and information technology, all of which are critical to decrease the substantial backlog of pending patent applications.

"While appropriators have promised not to divert the fees USPTO collects," the group suggested that "current and future budget pressures will only increase, and future appropriators may not feel as constrained from diverting USPTO fees to other uses."  The Innovation Alliance contended that "[w]ithout a permanent end to fee diversion and USPTO's guaranteed access to collected fees -- such as was contained in the Senate-passed bill and Section 22 of the bill as approved by the House Judiciary Committee -- the America Invents Act is an unfunded mandate on an important agency that is already overburdened and under-resourced."

AIPR Urges Adoption of Conyers/Sensenbrenner/Manzullo Amendment

The American Innovators for Patent Reform (AIPR) announced its support earlier today for an amendment to H.R. 1249 that was introduced by Representatives John Conyers, Jr. (D-MI), James Sensenbrenner, Jr. (R-WI), and Don Manzullo (R-IL) on June 13, 2011, and which would strike the entire bill except for sections 2 (Definitions), 22 (Patent and Trademark Office funding), and 31 (Budgetary effects).  According to the group's statement, "[t]he amendment would end fee division and establish full funding for the U.S. Patent and Trademark Office (USPTO), enabling the agency to keep all fees it collects."  The statement "urges all members of the House to vote in favor of the amendment when H.R. 1249 comes to the floor for a vote, probably this week."  AIPR President Alexander Poltorak asserted that "[d]iverting fees that the Patent Office collects from inventors and patent applicants is nothing short of a tax on innovation," adding that "[p]ermanently ending fee diversion should be a core feature of any patent reform."  The AIPR concluded today's statement by urging supporters of the amendment to contact their Representatives immediately.

Six Organizations Add Support to Conyers/Sensenbrenner/Manzullo Amendment

In a joint letter sent to all House members, six organizations representing small businesses, start-up entrepreneurs, independent inventors, and technical professionals urged lawmakers to adopt the Conyers/Sensenbrenner/Manzullo amendment, that the coalition contended "will stop the diversion of patent user fee revenue to other governmental uses."  The six organizations signing onto the letter were IEEE-USA, National Congress of Inventor Organizations, IP Advocate, National Small Business Association, National Association of Patent Practitioners, and the Professional Inventors Alliance USA.  The letter states that by removing most sections of H.R. 1249, the amendment "would eliminate many harmful provisions in the bill that, if enacted, would cause innovation disruption and create legal uncertainty for many years to come."  One of the "harmful provisions" highlighted in the letter is Section 10, which the coalition contends "would otherwise grant the PTO broad authority to set fees based on no guidance or policy constraints except the PTO’s opaque and unknown interpretations of 'aggregate costs'."  The letter also asserts that H.R. 1249 contains "a major legal flaw which indicates lack of adequate forethought in drafting and amending this bill."  In particular, the letter explains that:

Owing to substantial spread in examination timing across examiner workgroups at PTO, a later-filed application can be issued well before an earlier-filed prior-art application reaches an examiner’s desk for examination.  With no effective legal recourse available to the first-filer of the pending application for removing the later-filed issued patent, the second-filer would end up with a valid patent, solely due to PTO administrative delay variations.  This result is in direct contradiction to H.R. 1249’s stated purpose of awarding patents to the first-inventor-to-file.

Four Representatives Seek "No" Vote on H.R. 1249

Last week, Representatives John Conyers, Jr. (D-MI), Donald Manzullo (R-IL), F. James Sensenbrenner, Jr. (R-WI), and Marcy Kaptur (D-OH) circulated a letter to their colleagues, asking other House members to join them "in opposing H.R. 1249, patent legislation that would favor large multinational corporations over U.S. inventors" (see "Patent Reform News Briefs," June 13, 2011).  Today, Representatives Conyers (at right), Sensenbrenner, and Manzullo, joined this time by Rep. Dana Rohrabacher (R-CA), distributed a similar letter once again asking their colleagues to vote "no" on H.R. 1249.  While noting that the three legislators "may have different concerns with the legislation," the letter's authors state that "as Members of Congress including two former Chairs of the House Judiciary Committee, a former Chair of the Small Business Committee, and a former Chair of two Science, Space and Technology Subcommittees, we agree that this special interest bill will cost jobs, harm small start-up inventors, and stifle innovation and investment here in the United States."  In addition, the letter indicates that:

[A]ccording to the Congressional Budget Office, the Manager's Amendment would violate the new cut-go rules [recently adopted by the Republican Majority].  This is because the base bill is estimated to have a discretionary cost of $446 million over the next five years ($1.1 billion over the next ten years) and, the Manager's Amendment, by undoing the anti-fee diversion language, eliminates a procedure that would have decreased the budget deficit by $ 717 million over five years.  The net result is that the Manager's Amendment will leave us with a bill that increases discretionary costs by almost one-half billion dollars over five years.

As in last week's letter, the group itemizes "additional concerns" with the bill, including: (1) Section 22 of the latest Manager's Amendment, which "codifies the status quo: funding for the USPTO will be at the discretion of the appropriators"; (2) Section 18, which "provides large banks a special, new bailout at the expense of inventors and the American taxpayer, and even worse, would do so on a retroactive basis"; (3) the change from a first-to-invent to first-to-file system, which some groups believe is "a dangerous and unconstitutional effort to overturn over 220 years of patent practice"; (4) Section 27 of the latest Manager's Amendment, which "requires a study on methods to provide independent, confirming genetic diagnostic test activity where gene patents and exclusive licensing for primary genetic diagnostic tests exist," and therefore, "has the potential to complicate pending litigation on the legality of patents on human genes"; and (5) Section 16, which "undermines the false marking statute by retroactively changing the law applicable to pending enforcement actions."

The letter concludes by providing a link to a list of letters and statements from groups opposing H.R. 1249 that have been posted on a webpage on the Democrats' House Committee on the Judiciary website.