By Kevin E. Noonan --
As we reported on Monday, a draft of the Senate Judiciary Committee's report on the Patent Reform Act of 2007 (S. 1145) has begun to circulate on the internet. The 106-page draft report
contains sections on the background and purpose of the bill, the
legislative history of the bill, a section-by-section summary of the
bill, a placeholder for a cost estimate, a regulatory impact
evaluation, and a list of the changes to Titles 15, 28, and 35 that
would result if the Senate bill were passed into law. The circulation
of the draft report suggests that Senator Patrick Leahy,
Chairman of the Senate Judiciary Committee, intends to keep his
mid-December patent reform bill pledge to seek "favorable Senate action
as early as the floor schedule permits" (see "Patent Reform Discussed on Senate Floor"). In view of the length of the draft report, Patent Docs will be
providing a discussion of selected sections of the bill over the next
few days. Today, we address section 2 of the bill.
These amendments are intended to convert the U.S. patent system from granting patents to the first inventor to invent, to a first inventor to file system. The amendments would replace all of the substantial portions of 35 U.S.C. § 102 (subsections (a) through (g)) with the following:
§ 102. Conditions for patentability; novelty
(a) NOVELTY; PRIOR ART.--A patent for a claimed invention may not be obtained if--
(1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public--
(A) more than 1 year before the effective filing date of the claimed invention; or
(B) 1 year or less before the effective filing date of the claimed invention, other than through disclosures made by the inventor or a joint inventor or by others who obtained the subject matter disclosed directly or indirectly from the inventor or joint inventor; 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.
(b) EXCEPTIONS.--
(1) PRIOR INVENTOR DISCLOSURE EXCEPTION.--Subject matter that would otherwise qualify as prior art based upon a disclosure under subparagraph (B) of subsection (a)(1) shall not be prior art to a claimed invention under that subparagraph if the subject matter had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or others who obtained the subject matter disclosed directly or indirectly from the inventor or joint inventor.
(2) DERIVATION, PRIOR DISCLOSURE, AND COMMON ASSIGNMENT EXCEPTIONS.--Subject matter that would otherwise qualify as prior art only under subsection (a)(2), after taking into account the exception under paragraph (1), shall not be prior art to a claimed invention if--(A) the subject matter was obtained directly or indirectly from the inventor or a joint inventor;
(B) the subject matter had been publicly disclosed by the inventor or a joint inventor or others who obtained the subject matter disclosed, directly or indirectly, from the inventor or a joint inventor before the effective filing date of the application or patent set forth under subsection (a)(2); or
(C) the subject matter and the claimed invention, nor 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.(3) JOINT RESEARCH AGREEMENT EXCEPTION.--
(A) IN GENERAL.--Subject matter and a claimed invention shall be deemed to have been owned by the same person or subject to an obligation of assignment to the same person in applying the provisions of paragraph (2) if--
(i) the claimed invention was made by or on behalf of parties to a joint research agreement that was in effect on or before the effective filing date of the claimed invention;
(ii) the claimed invention was made as a result of activities undertaken within the scope of the joint research agreement; and
(iii) the application for patent for the claimed invention discloses or is amended to disclose the names of the parties to the joint research agreement.(B) For purposes of subparagraph (A), the term "joint research agreement" means a written contract, grant, or cooperative agreement entered into by 2 or more persons or entities for the performance of experimental, developmental, or research work in the field of the claimed invention.
(4) PATENTS AND PUBLISHED APPLICATIONS EFFECTIVELY FILED.--A patent or application for patent is effectively filed under subsection (a)(2) with respect to any subject matter described in the patent or application--
(A) as of the filing date of the patent or the application for patent; or
(B) if the patent or application for patent is entitled to claim a right of priority under section 119, 365(a), or 365(b) or to claim the benefit of an earlier filing date under section 120, 121, or 365(c), based upon 1 or more prior filed applications for patent, as of the filing date of the earliest such application describes the subject matter.
In addition, Section 103 was significantly amended:
§ 103. Conditions for patentability; nonobvious subject matter
A patent for a claimed invention may not be obtained though 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 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.
In explaining the need for the provisions of section 2, the Senate draft report first notes that "[e]very industrialized nation other than the United States uses a patent priority system commonly referred to as 'first-to-file.'" The draft report offers the following reasons for the amendments, including:
There is a difference in the relevant dates for determining priority. In a first-to-file system, the earlier filing date prevails. This is "an objective date, simple to determine" (e.g., it is listed on the face of the patent). In contrast, in a "first-to-invent" system, the date of invention is "uncertain," requires corroboration, and disputes involve a "lengthy, complex and costly administrative proceeding (called an 'interference proceeding') [that] must be conducted to determine who actually invented first." Although admitting that interferences are needed only in the "rare" instance where two different inventors claim the same invention, the draft report catalogs a litany of negative attributes of interference proceedings: they can take "years to complete;" "cost hundreds of thousands of dollars;" and "require extensive discovery." The draft report also asserts that the fear of being involved in an interference requires companies to "maintain extensive recording and document retention systems in case they are later required to prove the very day they invented the claimed invention discovery."
There is a difference in whether a reference is considered prior art. In a first-to-file system, the prior art "includes all art that exists prior to the filing date," having the benefit (according to the draft report) of being an objective date. In a first-to-invent system, on the other had, an applicant has the ability to "swear behind" a reference, to show that she actually invented prior to the publication date of the reference -- an earlier, "amorphous" date.
The U.S. system gives an inventor a "grace period" of one year for the inventor's own public disclosure. With certain exceptions, most countries impose an "absolute novelty" condition on patentability, where even the inventor's own public disclosure can defeat patentability. The draft report notes that in absolute novelty countries, inventors need to keep their inventions secret until filing, and acknowledges that this is a sacrifice of one of the benefits of the patent system -- early, public disclosure of inventions. In addition to this public interest aspect of retaining a grace period, the draft report states that university representatives and small inventors testified that the grace period was an important feature of the present system and should not be abandoned.
The draft report summarizes the advantages of changing to a first-to-file system as "simplicity, efficiency and predictability . . . [a] first-to-file system avoids costly interference proceedings, provides better notice to the public, simplifies the prior art scheme that may preclude a patent from issuing, and provides more certainty to the patent system" as well as encouraging "prompt" application filing. The draft report uses as additional justification that "[n]umerous organizations, institutions, and companies have advocated the U.S. adopt a first to file system similar to those used in the rest of the world," including the National Academy of Sciences (although the nature of that organization's expertise in patent law is unmentioned). Curiously, the draft report also notes that when the patent system was first adopted (whether this refers to the 18th Century or the 1952 Patent Act is unclear), filing in foreign countries was atypical, whereas now companies and even sole inventors file internationally. This fact is intended to support the additional "disadvantage" of the current system, which U.S. applicants must comply with the two different sets of requirements "caused" by the U.S. first-to-invent system. For all these reasons, the draft report says that a change is "long overdue."
The discussion of the changes is straightforward, highlighting the intention to adopt the first-to-file system while retaining the U.S. one-year grace period (i.e., not adopting the absolute novelty standard). This is purported to be a marriage of the "best aspects" of the two systems. This change is accompanied by the creation of a "derivation" proceeding, to resolve instances where the first applicant to file derived the invention from an applicant with a later filing date.
Certain aspects of the proposed system, however, may have escaped the drafters' notice. For example, the one-year grace period under the new statute is not the same as the current one-year grace period. All that is protected under this system is the applicant's own disclosure, not relevant third-party disclosures. The grace period thus grants substantially less protection to the "true" inventor, and raises the possibility that patentability may be negatived by a disclosure (for example, in a scientific journal article) that may defeat patentability but does not satisfy the statutory disclosure requirements of 35 U.S.C. § 112. Since the proposed derivation proceeding is intended only to resolve disputes between competing applicants, such third-party disclosure, even if derived from the applicant, will prevent the applicant from obtaining patent protection. While this is bad for individual applicants, it is worse for the rest of us, since it will retard or even prevent the very benefit -- disclosure of inventions -- that the change is intended to promote. Indeed, the provision would encourage prior disclosure by an applicant to trigger the grace period.
In addition, the very same record keeping needed for interference practice will be needed for the derivation proceeding, thus blunting if not ablating any economic benefits from this aspect of the change. And as the draft report acknowledges, interferences are rare -- there have been about 106,000 interferences in contrast with more than 7,000,000 patents (about 1.5%), and the overwhelming majority are resolved without spending "hundreds of thousands" of dollars (and where those dollars are spent, it is almost a certainty that the patents are worth it and the issues are close).
The certainty benefits with regard to prior art also appear to be overstated, since the default date for applying prior art is the application filing date (or earliest claimed priority date). The burden is on an applicant who challenges a reference's status as prior art, involving no burden on anyone (and certainly not the public) other than the applicant to establish the inventive right. The change also removes the geographic boundaries in the current law, so that U.S. applicants are deprived of the protections of stringent U.S. discovery requirements and will be left to the vagaries of letter rogatory and the auspices of the Hague convention to defeat invalidity challenges by infringers.
And while going out of its way to create an exemption for inventions produced under the CREATE Act, the change eliminated 35 U.S.C. § 103(b), a provision that while infrequently used was available for biotechnology patent applicants to avoid inequitable application of the other provisions of the statute (see "Like a Penny Saved for a Rainy Day (Albeit, Unintentionally): The Renewed Relevance of 35 U.S.C. § 103(b)"). This change is not explained; the draft report merely states that the section "is no longer necessary." Some will beg to differ.
The Senate bill, which Senator Leahy (at left) has said he intends to bring to the Senate floor for a vote as early as next week, differs substantively from the House version of the bill (HR 1908; see "Patent 'Reform' Bill Passes House of Representatives"). Most significantly, the House bill forestalls implementation of the changes to §§ 102 and 103 until the President certifies to Congress that major patent offices (Japan and Europe) have implemented a reciprocal grace period in their law. This difference is important because these countries have given no indication that they intend to make such a change. The requirement appears, however, to be an equitable quid pro quo for such a fundamental change to U.S. patent law, and raises the legitimate question of why the U.S. should bear all the burdens of worldwide patent harmonization. Why indeed.
For additional information on the draft report, please see:
- "Assignee Filings, Mandatory Publication, and Third Party Submissions," Sections 3 and 7, January 16, 2008
- "Late Patent Filings," Section 13 January 15, 2008
- "Draft Report on Senate Patent Reform Bill Circulated," Sections 9 and 15, January 14, 2008
For additional information regarding this topic, please see:
- "Patent Reform Discussed on Senate Floor," December 21, 2007
- "Enjoined New Rules and Patent Reform Finally Appearing on Biotech Industry's Radar," December 20, 2007
- "Chinese IP Judge Discusses Implications of U.S. Patent Reform Bill and Two Congressmen Heed Warning," December 17, 2007
- "IPO President Seeks Deletion of Patent Reform Provision," December 12, 2007
- "Senate May Act on Patent 'Reform' Bill in the New Year," December 2, 2007
- "The Wall Street Journal Gets It Half Right," November 5, 2007
- "BIO CEO Provides Briefing on Follow-On Biologics and Patent Reform," September 18, 2007
- "Patent 'Reform' Bill Passes House of Representatives," September 9, 2007
- "Reversal in Microsoft Case Weakens Patent Reform Argument," August 7, 2007
- "San Francisco Chronicle Opines on Patent Reform," August 6, 2007
- "Patent Reform Bill to Be Delayed?" June 12, 2007
- "Senate Judiciary Committee Holds Hearing on Patent Reform," June 10, 2007
- "Could Creating a U.S. 'Utility Model' Patent Fulfill the 'Need' for Patent Law Reform?" May 21, 2007
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