© copyright 2011. dickstein shapiro llp. all rights reserved. the leahy-smith america invents act:...

© COPYRIGHT 2011. DICKSTEIN SHAPIRO LLP. ALL RIGHTS RESERVED.

The Leahy-Smith America Invents Act: Changes to United States Patent Law and Practice

Charles E. Miller

#2988628

2 © COPYRIGHT 2011. DICKSTEIN SHAPIRO LLP. ALL RIGHTS RESERVED.

Stated Objectives of Patent Reform

• Improve quality of patents granted by the PTO

• International harmonization of patent laws

• Early determination of rights

• Reduce patent litigation costs and risks of “alleged infringers”


Summary of Changes

• Patent Law

• Post Grant Procedures

• Litigation Related

• PTO Practice, Operations, Fees and Funding


Patent Law

• First Inventor to File

• Grace Period for Inventor Disclosure

• Definition and Scope of Prior Art

• Derivation Proceedings

• Bar to Patents Covering Certain Subject Matter


First Inventor to File

• The Act eliminates first-to-invent system

• Patent awarded to first inventor to file

• Priority is based on application filing dates

– Effective March 16, 2013

– Adoption of the First-to-File system is not conditioned on adoption by Europe and Japan of a U.S. style 1 year grace period

• Interference proceedings are abolished


Grace Period For Inventor Disclosure

• The Act includes a 12-month grace period prior to the “effective filing date” (i.e., the earliest priority date) for public disclosures by an inventor or by another who obtained the subject matter from the inventor

• Public disclosure during the 12-month grace period by another party who did not obtain the subject matter from the inventor will not prevent the inventor from obtaining a patent ONLY IF the inventor made a public disclosure of the subject matter first


Definition and Scope of Prior Art

• “Public use” and “on sale” activities in any country are prior art – not just public use or on sale in the U.S.

• These public use and on sale activities are prior art only if they are disclosures of the claimed invention

• U.S. patents and published patent applications of other persons (i.e., different listed inventors) are prior art as of their earliest claimed priority date

– When a U.S. patent or patent publication listing different inventors is owned by the same person or subject to assignment to the same person as of the earliest claimed priority date of the claimed invention, that U.S. patent or patent publication is not prior art under new §102(a)(2).


Definition and Scope of Prior Art (continued)

Priority Date

1 year before Priority Date

Disclosures before the Priority Date are prior art, with three exceptions:

1. An inventor’s own direct or indirect public disclosure and/or sales within 1 year before the Priority Date;

2. Third party disclosures within 1 year before the Priority Date ONLY IF the inventor publically disclosed the invention before the third party disclosure; and

3. Third party disclosures within 1 year before the Priority Date IF that third party disclosure was obtained directly or indirectly from the inventor


Derivation Practice

• Effectively replaces current interference practice

• Two types:

– patent v. patent: civil action

– published application v. published application: PTO

• A civil action must be filed within 1 year from the issuance of the first patent (1) containing a claim to the allegedly derived invention and (2) naming as an inventor an individual alleged to have improperly derived such invention

• A derivation proceeding in the PTO must be filed within 1 year from the first publication (1) containing a claim to an invention that is the same or substantially the same as the earlier application’s claim to the invention; and (2) naming as an inventor an individual alleged to have improperly derived such invention


Derivation Proceeding in the PTO

• The PTO will prescribe what is sufficient evidence required to prove and rebut a claim of derivation

• If an inventor in an earlier application is found to have derived the invention from the true inventor, then claims in the earlier application will be refused or cancelled

• Parties in a derivation proceeding in the PTO can settle/arbitrate any claims of derivation

– Must provide a copy of the settlement agreement to the PTO

– Must notify PTO of arbitration award to make arbitration award enforceable


Bar to Patents Covering Certain Subject Matter

• Any patent filed that has a claim covering any strategy for reducing, avoiding, or deferring tax liability is deemed insufficient to differentiate a claimed invention from the prior art

• This does not apply to (1) systems and methods for preparing a tax filing or organizing that data; and (2) methods and systems for financial management

• Patents with a claim directed to or encompassing a human organism are not permitted


Post Grant Procedures

• Ex parte Reexamination

• Supplemental Examination

• Post Grant Review

• Inter partes Review

• Review of Business Method Patents


Ex parte Reexamination

• Ex Parte Reexamination procedures will remain in effect

• Can be filed by anyone, including patent owner

• Can only cite patents or printed publications as prior art

• The current threshold of “substantial new question of patentability” will continue


Supplemental Examination

• Only patent owner can initiate procedure, and any grounds can be raised as a basis for the request

• Purpose is to permit the PTO to consider, reconsider, or correct information believed by the patentee to be relevant to the patent

• Can be used to purge inequitable conduct and unenforceability claims, except those that pled with particularity in a civil action before the filing of the Supplemental Examination request

• Threshold is whether a substantial new question of patentability has been raised

• The mere fact that a request for Supplemental Examination was or was not filed can not be used as relevant to enforceability of a patent

• If PTO becomes aware of fraud, the matter may be referred (confidentially) to the Attorney General for further investigation


Post Grant Review

• Person who is not patent owner may petition for review of a patent within 9 months from patent grant (similar to European Opposition Proceeding)

• Grounds for invalidity are any that can be raised against a patent in court

• Post grant review will be granted if it is “more likely than not” that at least one of the claims challenged is unpatentable, or if the petition raises a “novel or unsettled legal question” that is important to other patents

• Petitioner has the burden of proof by a preponderance of the evidence

• Patent owner has right to file preliminary response to petition


Post Grant Review (continued)

• Post Grant Review to be completed within 1 year and conducted before a newly formed Patent Trial and Appeal Board

• Petitions for Post Grant Review are not allowed if the petitioner challenged the validity of the patent in court prior to filing the petition, and any civil action filed by petitioner after filing petition for Post Grant Review is automatically stayed

• If a civil action is filed within 3 months from the date patent grant, the court can not stay a decision on a patent owner’s motion for a preliminary injunction

• Petitioner can not raise issues in a civil action that were or could reasonably have been raised in the Post Grant Review proceeding once a final written decision of the Patent Trial and Appeal Board is issued


Post Grant Review (continued)

• If multiple parties file petition for Post Grant Review for the same patent, then those petitions may be consolidated in a single review

• Limitation on Post Grant Review for reissue patents that have claims of the same or narrower scope than the original patent

• Appeal of final decision can only be taken to the Federal Circuit

• Post Grant Review can be settled, but a copy of the settlement agreement, and any agreements mentioned in the settlement agreement, must be filed with the PTO

– Agreement may be treated as confidential business information at the request of “a party”

• Intervening rights apply to any amendments made to the claims, and amendments can not be broadening


Inter Partes Review

• Person who is not patent owner may petition for review of a patent the later of (1) 9 months after patent is granted or (2) the date of termination of a Post Grant Review proceeding

• Grounds for invalidity limited to novelty and nonobviousness based on prior art consisting of patents and printed publications

• Inter partes Review will not be granted unless “reasonable likelihood” that petitioner would prevail with respect to at least one claim (slightly raised threshold from that of Post Grant Review)

• Patent owner has right to file preliminary response to petition

• Inter Partes Review to be completed within 1 year and conducted by the Patent Trial and Appeal Board


Inter Partes Review (continued)

• Petitions for Inter partes Review are not allowed if the petitioner challenged the validity of the patent in court prior to filing the petition, , and any civil action filed by petitioner after filing petition for Inter partes Review is automatically stayed

• A petition for Inter partes Review is also not allowed if the petition is filed more than one year after the date on which the petitioner is served with a complaint alleging infringement of the patent

• Petitioner can not raise issues in a civil action that were or could reasonably have been raised once a final written decision of the Patent Trial and Appeal Board is issued


Inter Partes Review (continued)

• Appeal of final decision can only be taken to the Federal Circuit

• Inter Partes Review can be settled, but a copy of the settlement agreement, and any agreements mentioned in the settlement agreement, must be filed with the PTO

– Agreement may be treated as confidential business information at the request of “a party”

• Intervening rights apply to any amendments made to the claims


Summary of Post Grant Procedures

Ex Parte Reexam

Supplemental Examination

Post Grant Review

Inter Partes Review

Who can file?

anyone patent owner third party only third party only

Basispatents and

printed publications

any grounds any groundspatents and

printed publications

Thresholdsubstantial new

question of patentability

substantial new question of patentability

(1) more likely than not or (2) novel or

unsettled legal question

reasonable likelihood

Timingany time after

grantany time after

grantwithin 9 months

from patent grant

later of 9 months after grant or date of termination of a Post Grant Review

Estoppel none noneyes – issues that

were or could have been raised

yes – issues that were or could have

been raised


Review of Business Method Patents

• A “transitional” post-grant review proceeding for review of the “covered” business method patents, and which take effect September 16, 2012 and expire 8 years thereafter

• A “covered” business method patent is a patent that claims a method or apparatus for performing data processing or other operations used in the practice, administration, or management of financial products or services. It does not include patents for “technological inventions.”

• Petitioner must be the real party in interest that has been sued or charged with infringement under the patent

• Proceedings are same as Post Grant Review and are conducted by the Patent Trial and Appeal Board

• Petitioner can not raise issues in a civil action that were or could reasonably have been raised in the proceeding once a final written decision of the Patent Trial and Appeal Board is issued


Litigation Related Changes

• Joinder

• Prior User Rights

• Marking and False Marking

• Best Mode

• Advice of Counsel

• Litigation Against the USPTO


Joinder

• Parties that are accused infringers may be joined in one action only if:

– the parties relate to the same accused product or process; andand

– common questions of fact will arise for all defendants

• Basis for joining unrelated parties can not just be because they all are alleged to infringe the same patent

• Can be waived by an accused infringer

• Applies to all civil actions filed on or after September 16, 2011


Prior Commercial Use Rights

• A prior commercial use rights defense is available against all patents, not just business method patents

• Prior commercial use

– Must have been in the U.S.

– Occurred at least 1 year before the earlier of (1) the earliest claimed priority date, or (2) the earliest public disclosure of the claimed invention that qualifies for the prior art “grace period” exceptions

• Person asserting prior commercial use defense has the burden of establishing the defense by clear and convincing evidence


Prior Commercial Use Rights (continued)

• Defense is available for premarketing regulatory reviews and nonprofit laboratory use

• Defense is not available if patent was owned by a university

• Defense is personal, non-assignable or licensable, unless with the entire business

• If assigned with entire business, then continued commercial use is only permitted at same sites used the earlier of (1) the earliest priority date or (2) the date of assignment

• Defense can not be used if the subject matter of the prior commercial use was derived from the patentee


Prior Commercial Use Rights (continued)

• Defense is not a general license to all claims in the patent, but only the specific subject matter of the prior use

• Abandonment of the commercial use shuts off defense as of the date of abandonment

• If defense is asserted without a reasonable basis for doing so and person asserting the defense is found to infringe the patent, then case will be deemed exception for purposes of awarding attorney fees to other party

• Patent is not invalid on this basis alone if defense is proven

• Applies to any patent issued on or after enactment


Marking and False Marking

• The Act eliminates qui tam lawsuits for false patent marking

• Only the US can sue for the statutory penalty

• Private parties can sue for damages, but this requires proof of a competitive injury

• Not false marking if product was covered by a now-expired patent

• Changes are in effect now, includes pending cases


Best Mode

• Eliminates an alleged infringer’s ability to argue that the patent owner did not identify the best mode for enablement in the patent specification

• The PTO retains the ability to reject an application for lack of best mode disclosure

• These changes are in effect now


Advice of Counsel

• Failure to obtain advice of counsel with respect to any alleged infringed patent, or failure to present such advice in defense in a civil action, can not be used to prove willful infringement or intent to induce infringement

• Obtaining advice of counsel can still help in defeating a claim of willful infringement or intent to induce infringement


Litigation Against the USPTO

• The location of litigation against the USPTO is changed to the U.S. District Court for the Eastern District of Virginia from the U.S. District Court for the District of Columbia

• Eliminates the right of de novo review of PTO reexamination decisions in the U.S. District Court for the District of Columbia – direct appeal to Federal Court will be the sole means of judicial review


PTO Practice, Operations, Fees and Funding

• Prioritized Examination

• Inventor Oath and Assignee Filing

• Pre-issuance Submissions of Prior Art

• PTO Fees

• New Micro Entity Status


Prioritized Examination

• The PTO is to “provide for prioritization of examination of applications for products, processes, or technologies that are important to the national economy or national competitiveness without recovering the aggregate extra cost of providing such prioritization.”

• Directed towards so-called “green technologies”

• Additional $4,800 fee (50% discount for small entities)

• Goal is to provide a first substantive response from the PTO within 12 months of patent application filing


Inventor’s Oath and Assignee Filing

• Employers and other assignees may file patent applications without declarations executed by the named inventors

• An inventor oath or declaration would be required before issuance of a notice of allowance

• Can provide a substitute to the inventor oath or declaration if the inventor is under obligation to assign, but refuses or can not otherwise sign


Pre-issuance Submissions of Prior Art

• Any third party may submit written prior art for consideration and inclusion in the record

• Written submission must be before the earlier of

– the date of allowance

– six months after the publication of the application

– the date of the first rejection of any claim

• Practically, there will be a 6 month window from publication for filing any written submission, unless you otherwise are aware of the application and can submit earlier than publication date


PTO Fees

• Gives permission for the PTO to set and adjust its fees

• There will be a 15% surcharge on almost all fees, including maintenance fees, effective September 26, 2011

• Implements a $400 fee for non-electronic filing


Micro-Entity Status

• The Act also establishes a new “micro entity”

• A micro entity is entitled to a 75% discount of many PTO fees.

• Micro entity is generally a person who is employed by an institution of higher education, or has not been named on more than 4 prior applications and meets certain income requirements


Summary of Effective Dates

Topic Effective Date Joinder of Accused Infringers September 16, 2011 Micro-Entity Status September 16, 2011 Prioritized Examination September 16, 2011 Inter Parte Reexamination Threshold Change September 16, 2011 Virtual Marking September 16, 2011 False Marking Actions Limited September 16, 2011 Best Mode Issue September 16, 2011 Venue Change September 16, 2011 Business Methods September 16, 2011 Priority Examination September 16, 2011 Fee Increase September 26, 2011 Inter Partes Reexamination Abolished September 16, 2012 Advice of Counsel September 16, 2012 Post-Grant Review September 16, 2012 Inter Partes Review September 16, 2012 First-to-File March 16, 2013

© COPYRIGHT 2011. DICKSTEIN SHAPIRO LLP. ALL RIGHTS RESERVED.

Thank you

Dickstein Shapiro LLP1633 Broadway

New York, NY 10019Tel No. (212) 277-6559 | Fax No. (212) 277-6501

Charles E. [email protected]

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