By Kevin E. Noonan --
Senator Leahy (at right), reportedly determined to bring S. 1145, the Senate's patent "reform" bill to the Senate floor for a vote after the spring recess, on Friday released a number of proposed amendments to the bill. Rather than evincing an appreciation of the seriousness of the opposition building against the bill or a willingness to address the sound objections to it, these amendments seem either to be merely cosmetic, or to illustrate again how deeply committed (or indebted) to certain special interests Senator Leahy has become.
The cosmetic aspects include the following amendments:
• To Section 6 relating to the new Patent Trial and Appeal Board:
(b) Duties -- The Patent Trial and Appeal Board shall --
(1) on written appeal of an applicant, review adverse decisions of examiners upon application for patents;
(2) on written appeal of a patent owner, review adverse decisions of examiners upon patents in reexamination proceedings under chapter 30;
(3)determine priority and patentability of invention inconduct derivation proceedings under subsection 135(a); and
(4) conduct post-grant opposition proceedings under chapter 32.Each appeal and derivation proceeding shall be heard by at least 3 members of the Patent Trial and Appeal Board, who shall be designated by the Secretary of Commerce, in consultation with the Director. Only the Patent Trial and Appeal Board may grant rehearings. The Director shall assign each post-grant review proceeding to a panel of 3 administrative patent judges. Once assigned, each such panel of administrative patent judges shall have the responsibilities under chapter 32 in connection with post-grant review proceedings.
(c) AUTHORITY OF THE SECRETARY. -- The Secretary of Commerce may, in his or her discretion, deem the appointment of an administrative patent judge who prior to the date of enactment of this subsection held office pursuant to an appointment by the Director to take effect on the date that the Director initially appointed the administration patent judge.
(d) DEFENSES TO CHALLENGE OF AN APPOINTMENT. – It shall be a defense to a challenge to the appointment of an administrative patent judge originally appointed by the Director that the administrative patent judge was acting as a de facto officer.
(There is a parallel provision relating to the Secretary's capacity to appoint members of the Trademark Trial and Appeal Board);
• To Section 2, Right of the First Inventor to File:
(i) Action for Claim to Patent on Derived Invention -- Section 135(a) of title 35, United States Code, is amended to read as follows:
(b) SETTLEMENT. -- Parties to a derivation proceeding 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, 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.
(c) ARBITRATION. -- Parties to a derivation proceeding, within such time as may be specified by the Director by regulation, may 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 patentability of the invention involved in the derivation proceeding.
(j) Elimination of References to Interferences --
(10) Certain Appeals- Section 1295(a)(4)(A) of title 28, United States Code, is amended to read as follows:
(A) the Patent Trial and Appeal Board of the United States Patent and Trademark Office with respect to patent applications, interference proceedings (commenced before the date of enactment of the Patent Reform Act of 2008), derivation proceedings, and post-grant review proceedings, at the instance of an applicant for a patent or any party to a patent interference (commenced before the effective date of the Patent Reform Act of 2007), derivation proceeding, or post-grant review proceeding, and any such appeal shall waive any right of such applicant or party to proceed under section 145 or 146 of title 35;
• To Section 5, Post-grant Procedures and Other Quality Enhancements:
Sec. 337. Effect of decisions rendered in civil action on future post-grant review proceedings
If a final(a) IN GENERAL. -- If a final decision has been entered against a party in a civil action arising in whole or in part under section 1338 of title 28 establishing that the party has not sustained its burden of proving the invalidity of any patent claim --
(1) that party to the civil action and the privies of that party may not thereafter request a post-grant review proceeding on that patent claim on the basis of any grounds under section 322; and
(2) the Director may not thereafter maintain a post-grant review proceeding on that patent claim previously requested by that party or the real parties in interest of that party.
(b) FINAL DECISION DEFINED. -- For purposes of this section, the term "final decision" means a final decision issued by a United States district court or by the United States International Trade Commission.
On the other hand, amendments to other sections continue the pattern of favoring the same special interests that have supported "reform" (and, according to some reports, Senator Leahy)
• To Section 8, Venue and Jurisdiction:
(b) Interlocutory Appeals -- Subsection (c)(2) of section 1292 of title 28, United States Code, is amended by adding at the end the following:
(3) of an appeal from an interlocutory order or decree determining construction of claims in a civil action for patent infringement under section 271 of title 35. Application for an appeal under paragraph (3) shall be made to the court within 10 days after entry of the order or decree. The district court shall have discretion whether to approve the application and, if so, whether to stay proceedings in the district court during the pendency of such appeal. The district court, in its discretion, can approve an interlocutory appeal of a claim construction order if (i) there was a reasonable ground for difference of opinion and (ii) such an appeal may advance the ultimate termination of the litigation. For the first interlocutory appeal of a claim construction order in a given case, the United States Court of Appeals for the Federal Circuit shall accept the appeal if so ordered by the district court. After the first interlocutory appeal, the United States Court of Appeals for the Federal Circuit has the discretion as to whether or not to accept the appeal of a subsequent claim construction order in the same case.
This provision not only establishes a right to interlocutory appeal of claim construction issues, but makes the gatekeeper the district court, not the Federal Circuit, which appears to turn on its head the jurisdictional prerogatives of the two courts.
• To Section 4, Right of Inventor to Obtain Damages:
(c) Limitation on Damages and Other Remedies; Marking and Notice -- Section 287(a) of title 35, United States Code, is amended to read as follows:
(a)(1) Patentees, and persons making, offering for sale, or selling within the United States any patented article for or under them, or importing any patented article into the United States, may give notice to the public that the same is patented, either by fixing thereon the word 'patent' or the abbreviation 'pat.', together with the number of the patent, or when, from the character of the article, this cannot be done, by fixing to it, or to the package wherein 1 or more of them is contained, a label containing a like notice. In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice.
(2) In the case of a patented invention not covered under paragraph (1), no recovery shall be had for any infringement committed more than 2 years prior to the filing of the complaint or counterclaim for infringement in the action, except upon proof that the infringer was notified of the infringement by the patentee. Upon such proof, the patentee may recover damages for infringement for up to 2 years prior to such notice, as well as for infringement after such notice. In no event may damages be recovered for more than 6 years prior to the filing of the complaint or counterclaim for infringement in the action.(e) Willful Infringement --
(1) INCREASED DAMAGES -- A court that has determined that an infringer has willfully infringed a patent or patents may increase damages up to 3 times the amount of the damages found or assessed under subsection (a), except that increased damages under this paragraph shall not apply to provisional rights under section 154(d).
(2) PERMITTED GROUNDS FOR WILLFULNESS -- A court may find that an infringer has willfully infringed a patent only if the patent owner presents clear and convincing evidence that acting with objective recklessness --(A) after receiving written notice from the patentee --
(i) alleging acts of infringement in a manner sufficient to give the infringer an objectively reasonable apprehension of suit on such patent, and
(ii) identifying with particularity each claim of the patent, each product or process that the patent owner alleges infringes the patent, and the relationship of such product or process to such claim, the infringer, after a reasonable opportunity to investigate, thereafter performed 1 or more of the alleged acts of infringement;
(B) the infringer intentionally copied the patented invention with knowledge that it was patented; or
(C) after having been found by a court to have infringed that patent, the infringer engaged in conduct that was not colorably different from the conduct previously found to have infringed the patent, and which resulted in a separate finding of infringement of the same patent.(3) LIMITATIONS ON WILLFULNESS --
(A) IN GENERAL -- A court may not find that an infringer has willfully infringed a patent under paragraph (2) for any period of time during which the infringer had an informed good faith belief that the patent was invalid or unenforceable, or would not be infringed by the conduct later shown to constitute infringement of the patent.
(B) GOOD FAITH ESTABLISHED- An informed good faith belief within the meaning of subparagraph (A) may be established by --
(i) reasonable reliance on advice of counsel;
(ii) evidence that the infringer sought to modify its conduct to avoid infringement once it had discovered the patent; or
(iii) other evidence a court may find sufficient to establish such good faith belief.
(C) RELEVANCE OF NOT PRESENTING CERTAIN EVIDENCE -- The decision of the infringer not to present evidence of advice of counsel is not relevant to a determination of willful infringement under paragraph (2).(4) LIMITATION ON PLEADING -- Before the date on which a court determines that the patent in suit is not invalid, is enforceable, and has been infringed by the infringer, a patentee may not plead and a court may not determine that an infringer has willfully infringed a patent. The court's determination of an infringer's willfulness shall be made without a jury.
These provisions eliminate changes in the marking requirement and codify the Federal Circuit's recent In re Seagate decision requiring "objective recklessness" for a finding of willful infringement.
In addition, third party-initiated re-examination proceedings, deleted in the original version of the bill in favor of the new derivation proceedings, have been reinstated. This action seems to be a direct response to a letter from Dan Ravetcher and the Public Patent Foundation who complained that the public needed to be able to challenge a patent throughout its term rather than being limited to the twelve months after grant. While there is some substance to Mr. Ravetcher's position, these amendments illustrate which side of the patent "reform" debate continues to have the Senator's ear.
• New Section 18 is added, modifying the best mode requirement:
Section 282(b) (as designated by section 16(f) of this Act) is amended by striking paragraph (3) and inserting the following:
(3) Invalidity of the patent or any claim in suit for failure to comply with --
(A) any requirement of section 112 of this title, other than the requirement that the specification shall set forth the best mode contemplated by the inventor of carrying out his invention; or
(B) any requirement of section 251 of this title.
These provisions paradoxically retain the best mode requirement of 35 U.S.C. § 112, first paragraph, for patentability, but eliminate the requirement as a basis for finding invalidity. This amendment has been described as incorporating a similar provision of the bill passed last September by the House of Representatives (H.R. 1908). However, it is hard to see how the best mode requirement survives without the capacity to use its violation to invalidate a patent.
The final provision may indicate that the Senator is aware of efforts by patent stakeholders to resist the ill-advised "new rules" currently enjoined by Judge Cacheris of the District Court for the Eastern District of Virginia:
SEC. 18. Severability.
If any provisions of this Act or of any amendment or repeals made by this Act, or the application of such a provision to any person or circumstance, is held to be invalid or unenforceable, the remainder of this Act and the amendments and repeals made by this Act, and the applications of this Act and such amendments and repeals to any other person or circumstance, shall not be affected by such holding.
No doubt the Senator believes it will be too burdensome for the Act to be invalidated in a piecemeal fashion.
Glaringly missing from these amendments are any that address the legitimate concerns of those patent stakeholders -- universities, sole inventors and other small entities, and biotechnology and pharmaceutical patentees and patent applicants -- with regard to the damages provisions, venue restrictions, and imposition of Applicant Quality Submissions. Also untouched are the "get out of jail free" card provisions (Sections 13 and 14) introduced by special interests to transfer patent infringement liability from the banking industry onto the American taxpayer, and to permit patent term extension in instances where the statutory deadline has been inadvertently missed.
It remains to be seen whether Senator Leahy will be able to garner the votes needed to close debate and bring the bill a floor vote. The oxymoronically- named Coalition for Patent Fairness has renewed its publicity campaign in support of the bill, saying on Friday that this "package of bipartisan amendments represents yet another major step for the Patent Reform Act" and "clears the way for final negotiations on the few remaining issues and builds critical momentum that will bring the bill to the Senate floor." While it seems that the the patent "reform" crowd have the only voices Senator Leahy is hearing (or listening to), time remains to ensure that voices in opposition to the bill are heard by the rest of the Senate.
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