Issues in US Patent Law

New Issues Under the America Invents Act, signed Sep 11, 2011, 18-month phase in generally seen in the profession to disfavor independent inventors and small business.

1. Previous patent law provided right to file only to the inventor(s). Under the new law, a non-inventor, with sufficient showing of e.g. ownership interest, may file the application.

2. “First to File” – In general, the first applicant to file gets the patent, contrary to the old patent law, wherein the patent went to the first person/party to invent, even if he/she was second to file. Under the new system, the filing date is more important than the date of invention, though not entirely dispositive. In general, “first to file” is believed to favor larger companies who have substantial legal/patent budgets

a. Exception – public disclosure may inoculate a “first to invent” inventor against a later inventor who files first. But foreign filing rights may be affected in absolute novelty countries.

b. Exception – One who derives the invention from the true inventor is not accorded “first to file” status.

3. First-to-file (3/16/2013) will eventually eliminate interference process where the Patent Office currently determines who invented first.

a. Critical to not mix claims having priority date before 3/16/2013 with claims having priority date after 3/16/2013 in the same (continuing) application. Affects “first-to-invent” rights versus “first-to-file” rights. Any mixing results in all claims being treated under “first to file” status.

4. However, “derivation” processes will take the place of interference processes.

a. Can be filed only by an applicant/patentee
b. Will be decided by new Patent Trial and Appeal Board members
c. Proof of derivation is expected to be very difficult
d. Unclear how obvious variations of the claimed invention will be treated.
e. Unclear whether the original inventor’ claims, or the claims of the application being challenged, are the basis for derivation.

5. Foreign priority dates are, for the first time, effective dates as prior art for defeating a later-filed US application. So an increased scope of prior art applies.

6. The date for assessing “obviousness” changes from the “date of the invention” to the “effective filing date” of the application.

7. As of Sep 16, 2011, a new “Advanced Examination Process” is available to shorten the time from the filing date to the date a Final Action or Notice of Allowance is issued, to no more than 12 months. Government fee is US$4800. We have our first application in this process, and we have a first Office Action 4 months from the date the application was filed.

8. “Prior Use Defense” is being expanded from just “business method patents” to all patents. “Prior use” must have occurred continuously for more than one year before the filing date. Many uncertainties regarding what qualifies as a prior use, what changes can be made to the product/process, volume expansion, relocation, adding other locations, etc.

a. No “prior use defense” where invention owned by a university “when the invention was made”. Ownership of the “prior use defense” can be transferred with ownership of the invention/patent

i. Not clear what level of “ownership” is required.
ii. But university ownership does not apply where invention could not have been made using US Federal Funds.

b. Requires “clear and convincing” standard of proof of prior use
c. Defense not otherwise transferrable

9. Third party citations to the US Patent Office become available 9/16/2012

a. Within 6 months after publication, or
b. After the first Rejection/Office Action
c. But must be before issuance of a Notice of Allowance
d. No specific form or format, no limitation as to type of information that can be submitted.

10. New Post Grant Review process (PGR)

a. Available to 3rd parties
b. Must be filed within 9 months after grant of the patent
c. No provision for the patentee to counterclaim in the Patent Office
d. Heard by the new Patent Trial and Appeal Board (PTAB) – 3 administrative judges at the US Patent Office
e. No presumption of validity for the patent
f. Standard of proof is “Preponderance of the Evidence”, not the “Clear and Convincing” standard required in district court actions.
g. Generally, any evidence is acceptable.
h. Cost to petitioner, government fees only, US$38,800-89,500
i. Advantages of PGR

i. Broad scope of challenge available to 3rd parties
ii. Preponderance standard
iii. No jury
iv. No possibility of patnet owner counterclaiming patent infringement at the PTAB
v. Less costly than a court challenge
vi. 12-18 months to decision after grant of the PGR petition

j. Disadvantages of PGR

i. Less live testimony
ii. Less discovery
iii. Estoppel re civil court action
iv. Quality of judges is unknown – process not yet in place.

k. Urgency of filing complaint in Federal Court

i. If a complaint is filed in Federal Court no more than 3 months after grant of the patent, motion to Stay Preliminary Injunction, based on PGR, must fail.

11. Inter Parties Review (IPR)

a. Available after PGR time has passed (9 months after grant of the patent).
b. Generally replaces 3rd party re-exam
c. Evidence is limited to patents and printed publications
d. Can apply to any patent, regardless of grant date. So affects existing patents as well as newly-granted patents
e. Cannot use parallel court challenge to a patent. Any court challenge is automatically stayed.
f. Becomes an estoppel with respect to any issue raised in the IPR.
g. Government fee is US$27200.

12. New Supplemental Exam – 35 USC 257

a. Instituted only at the request of the patent owner
b. Can submit any evidence believed to be relevant to patentability
c. Available 9/16/2012, for any granted patent, including those granted before 9/16/2012.
d. Does not affect enforceability of the patent during the process
e. No interviews
f. No amendments
g. US$5180 government fee when submit petition
h. If petition for Supplemental Exam is granted, fee becomes US$16,120

13. Best mode is still required – kind of

a. Can be used by the examiner as basis for rejection if the examiner becomes aware of a best mode defect
b. Failure to disclose best mode cannot be used as a defense in a court action
c. Query – can best mode be raised in a PGR, IPR, or Supplemental Exam? Unknown.

14. Higher fees – overall

a. Across the board increase of 15% went into effect immediately after the law was passed, in September, 2011.
b. We can expect more fee increases, as the US Patent Office is required to be completely self-funded, which it has been for quite some time.

15. America Invents Act Timeline

a. September 16, 2011

i. Virtual marking of patent number became possible. Part of the information is on the product, part is on your web site.
ii. False marking lawsuits generally curtailed
iii. Advanced (prioritized) Examination – for a fee, currently $4800
iv. Best Mode changes
v. Micro-entities defined for purposes of paying reduced fees (on hold)

b. September 16, 2012

i. Prior user rights strengthened
ii. Post Grant Review process – partial implementation
iii. Inter Parties Review process
iv. Supplemental Examination

c. March 16, 2013 – all of the remaining provisions are implemented

i. First to File
ii. Post Grant Review – full implementation
iii. Public disclosure by inventor creates effective 1-year grace period, thus ability to file second and still get the patent over an earlier-filed application.

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