america invents act

America Invents ActJordan [email protected] Brian Coleman [email protected] [email protected] By:

AIA SEC. 3: First Inventor to File

Old Regime: First-to-InventConception and Diligent Reduction to Practice mattered, giving inventor a "priority date" of conception One year grace period from any public disclosure First to file had prima facie priority, butSwearing behind could eliminate certain referencesInterference proceeding determined first to invent facts, including conception and reduction Any application with an effective filing date prior to March 16, 2013 falls under first to invent -- first to invent remains with us for some time

New Regime: First-to-File

Filing determines priority (i.e., the inventor entitled to a patent is the first to file, NOT first to invent) March 16, 2013 Applicable to any application with an effective filing date on or after March 16, 2013 Note long tail for first to invent rules (e.g., March 15, 2033) Personal grace period but no grace period as to independent third party disclosures Derivation concept becomes important, interference proceedings eliminated Complete rewrite of 102 prior art definitions and exceptions

Prior Art 102(a)102(a)(1)patented described in a printed publicationPublic useOn saleOtherwise available to the public does this mean no "secret" prior art?? 102(a)(2)Described in a U.S. patent, or a published or deemed published applicationNames another inventorEffectively filed before the effective filing date of the claimed invention

Personal Grace Period 102(b)(1)Grace period of one year preceding effective filing date Inventor priority not extinguished by:Disclosures by or derived from the inventor, made within one year Disclosures made within one year by others but after an earlier disclosure by inventor

Overcoming Prior Art by RemovalPatent and Application Art is removed when:Subject matter was derived from inventor; or Subject matter was publicly disclosed by inventor (or derivers) prior to effective filing date of art; or Subject matter disclosed and claimed invention commonly owned or subject to common duty of assignment, not later than effective filing date of claimed invention

Derivation ProceedingPatent applicant files a petition for a derivation proceeding A petition for a derivation proceeding "may be filed only within the 1-year period beginning on the date of 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." The petition must set forth with particularity the basis for finding that an inventor named in the earlier application derived the claimed invention from an inventor in the petitioner's application, and the petition must be supported by substantial evidence as decided by the new PTAB. Director's determination whether to institute a derivation proceeding shall be final and nonappealable PTAB determines whether derivation occurred PTAB may correct inventorship of any patent or application at issue Parties may settle issues themselves, subject to review of PTAB Narrow discovery allowed during proceedingDeposition of anyone signing an affidavit or declarationWhat is otherwise necessary in the interest of justice

Take AwayFile with urgency same as it always was

Good record keeping still important, but disclosure history now more important than proof of conception and reduction Keep the March 16, 2013 date in mind, consider filing prior to Disclosure to establish your own priority and create prior art for others maybe Disclosure not clearly defined by AIA Monitor patents and published applications for derivation concerns

Post-Grant Proceedings

Patent Post-Grant Proceedings"Post-grant review proceedings" as defined in AIA Sec. 6 includes:Post-grant review (New)Inter partes review (New)Citation of Prior Art and Written Statements (New)Other post-grant proceedings:Ex parte reexamination (substantively unchanged, but cost increasing from $2,250 to $17,750 (proposed))Supplemental examination (New)Reissue ('lack of deceptive intent' no longer required)

High Level Comparison

ProceedingThresholdBasisEstoppelPost-Grant Review More likely than not that at least one claim is unpatentableAny ground(incl. product as prior art, prior use or sale)Raised or reasonably could have raisedCurrent Inter Partes Reexam (to be phased out)Reasonable likelihood petitioner will prevail on at least one claim (was SNQ prior to 9/16/2011)Patents/printed publications onlyCould have raised (but not for ITC)Inter Partes ReviewReasonable likelihood petitioner will prevail on at least one claimPatents/printed publications onlyRaised or reasonably could have raised (incl. ITC)Ex Parte ReexaminationSNQPatents/printed publications onlyN/ASupplemental ExaminationSNQAny informationN/A

Post-Grant Review (PGR) (1)AIA Sec. 6, 321-329, "effective" September 16, 2012, but . . .Only applicable to patents having priority date on or after March 16, 2013 (AIA 3(n)(1)) Not practically usable until at least late 2014 or 2015Exception: Covered business method patents -- any priority date, but only if have been charged with infringement Third parties onlyReal-party in interest cannot remain anonymousTime limit to request PGR: 9 months after issuance of patentDuration: PTO final determination within 1 year after instituting PGR (+ up to 6-months extension for good cause)

Post-Grant Review (PGR) (2)Grounds of invalidityAny ground of invalidity (not just patents or publications)101, 102/103, 112 (except for best mode), double patenting, etc.Yes for product as prior art, prior use or sale

A novel or unsettled legal question that is important to other patents or patent applicationsOpportunity to creatively raise issues

Post-Grant Review (PGR) (3)Threshold: More likely than not that at least one of the challenged claims is unpatentableHigher threshold than former SNQ threshold and new inter partes standard (reasonable likelihood petitioner will prevail)but no "new" question of patentability is required

Expected USPTO filing fee: > $40,000 (anecdotal)Compare: Filing fee for EPO Opposition is about $1,000

Post-Grant Review (PGR) (4)PGR barred if:(1) petitioner already filed a civil action challenging validity of the same patent unless validity challenge was filed as counterclaim(2) petition requests cancellation of a claim in a reissue patent that is identical to or narrower than a claim in the original patent and the deadline has passed for PGR of the original patentImpact on civil actionsAutomatic stay of DJ action filed on/after the filing of petition for PGR (not granted!)Lifted if patent owner sues for infringement or so requestsPreliminary injunctionIf a civil action alleging infringement is filed within 3 months after issuance of the patent, court may not stay consideration of patent owners motion for preliminary injunction on the basis that a petition for PGR has been filed or PGR has been instituted

Post-Grant Review (PGR) (5)Estoppel (in absence of settlement):Petitioner (or its privy) cannot re-assert any ground that petitioner raised or reasonably could have raised in PGR in:Another PTO proceeding (e.g., subsequent inter partes review) District Court ITC (unlike inter partes reexam)"Reasonably could have raised" v. "Could have raised" for Inter Partes Reexam: slightly narrower scope of estoppelEstoppel attaches upon final written decision by PTABSooner than in inter partes reexam ("all appeals exhausted")Intervening rights apply (like reissue and current reexam)

Post-Grant Review (PGR) (6)More litigation-like than prosecutionDiscovery available (e.g., depose witnesses) expensive!Protective order and sanctions Evidentiary standard: preponderance Settlement possible by joint requestunlike current inter partes reexamNo estoppel to petitioner if settled

Next: Transitional Inter Partes ReexamNot available after September 15, 2012

Limited to patents issued on applications filed on or after 11/29/99 (like old inter partes reexam)

Only major change: Higher threshold: Reasonable likelihood that petitioner will prevail on at least one claim (no longer need SNQ)An "old" question or issue can be raisedNew opportunity for challenging patents

Estoppel applicable to subsequent civil action only (not ITC)Any ground "raised or could have raised"

Next: New Inter Partes Review (IPR) (1)AIA 311-319, effective Sept. 16, 2012Who can request?Third party only: "a person who is not a owner of a patent"Real party in interest must be identifiedApplicable to all patents as of Sept. 16, 2012Regardless of filing date, priority date or issue dateCompare to Inter Partes Reexam: only patents issued on applications filed on or after 11/29/1999Compare to PGR: only patents with a priority date on or after 3/16/2013Bad news for some patent owners

Inter Partes Review (IPR) (2)Time to file: After the later of:(1) 9 months from issuance (or reissuance) of patent, or (2) Termination of a PGR (Note: AIA simply says "a" PGR, so any on-going PGR of the patent (e.g., by others) will prevent IPR filing

IPR barred if:(1) petitioner already filed a civil action challenging validity of the same patentunless validity challenge is counterclaim(2) petition is > 1 year after petitioner is served with a complaintA critical bar date for patent litigation defendants to monitorParties sued before 9/16/2012 should consider filing inter partes reexam request before 9/16/2012, to take advantage of transitional rules (e.g., no litigation bar, no estoppel in ITC)

Automatic stay of any DJ action filed on/after the filing of IPR petition (not granted!)Lifted if patent owner sues for infringement or so requests

Inter Partes Review (IPR) (3)Grounds of invalidityIssues under Section 102 or 103 and Only on the basis of patents or printed publicationsCannot use product as prior art, prior use or sale

IPR Threshold -- Reasonable likelihood petitioner will prevail on at least one claimHigher than previous inter partes threshold: SNQLower (?) than new PGR threshold: "more likely than not that at least one of the challenged claims is unpatentable"No "new" question is required

Inter Partes Review (IPR) (4)Estoppel (if no settlement):Petitioner (or its privy) cannot re-assert a ground (prior art) that petitioner raised or reasonably could have raised in PGR, in:Applies in:Any other PTO proceedingDistrict Court ITC (unlike inter partes reexam)Estoppel attaches at final written decision by PTAB (sooner than in inter partes reexam: "all appeals exhausted")

Intervening rights apply

Inter Partes Review (IPR) (5)More litigation-like proceedingDiscovery available (e.g., can depose witnesses)Protective order and sanctions

Evidentiary standard: preponderance of the evidence

Settlement possible by joint request:Unlike inter partes reexamNo estoppel to petitioner if settled

Inter Partes Review (IPR) (6)ProcessPatentee may file a preliminary response before PTO review (new)PTO decides whether to institute IPR within 3 months from (1) filing of patentee's preliminary response, or (2) last date for filing the preliminary responseNo appeal permissible PTO final determination within 1 year after instituting IPR (+ up to 6-months extension for good cause)Patentee can amend/cancel claims and propose "a reasonable number of substitute claims" for each challenged claim1 motion for amendment as matter of rightAdditional motions for amendments possible for (1) settlement when jointly requested with petitioner, or (2) as permitted by regulations prescribed by the DirectorCan't enlarge scope of claims, no new matterAppeal directly to Federal Circuit (but estoppel already takes effect)

Inter Partes Reexam vs. Inter Partes Review (IPR)*

Inter Partes Reexam (Before 9/16/2012)Inter Partes Review (From 9/16/2012)TribunalCentral Reexamination UnitPatent Trial and Appeals BoardTiming for filing Any time during patent termAfter the later of: 1) 9 months from grant, or 2) termination of PGR (barred if IPR requested > 1 year after being sued)ThresholdReasonable likelihood petitioner will prevail on at least 1 claim (was SNQ until 9/16/2011)Reasonable likelihood petitioner will prevail on at least 1 claimDurationOpen-ended1 yr max (+ up to 6 mo. for cause)Estoppel Could have raised (but not for ITC)Reasonably could have raised (including ITC)DiscoveryN/AAllowedAppealTo BPAI, then Fed CircuitDirectly to Fed CircuitEffect of D.Ct. proceedingsNo barBarred if already filed for DJ; barred if > 1yr after being sued for infringement

File now rather than wait for new IPR proceedings to become effective on 9/16/2012?After 9/16/2012, new IPR may be unavailable to some parties for some patents, due to new IPR's DJ bar and 1-year infringement claim barEstoppel under current rules does not include ITC, whereas estoppel under new IPR will.Inter Partes Proceedings

Next: Supplemental Examination (1)AIA 257, effective September 16, 2012For patent owner only (like reissue & ex parte reexam)Available to all patentsTiming: Anytime during patent term (like reissue & ex parte reexam)Threshold: SNQBasis: Any information -- not limited to printed publications and patentsSo what does that mean?

Supplemental Examination (2)Laundry time!

Patent cannot be held unenforceable based on conduct relating to information considered, reconsidered, or corrected during supplemental examination (note: AIA says 'unenforceable', not 'invalid')But, only applies if reexam concluded before filing civil/ITC actionPatent owner must act early

Supplemental Examination (3)Proposed USPTO fees:$5,180 for Request + $16,120 for the ex parte reexam = $21,300compared to $2,520 for current ex parte reexam

Procedures not nailed down -- Proposed rules just published Jan. 2012.

Supplemental Examination (4)LimitationsCan't cure existing allegationsan allegation pled with particularity in a civil action, or set forth with particularity in a notice received by the patent owner under section 505(j)(2)(B)(iv)(II) of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 355(j)(2)(B)(iv)(II)), before the date of the supplemental examination

Fraud by patent ownerUSPTO can cancel claims based on reexamUSPTO shall report to Attorney General

Patent Owner ConsiderationsIdentify & fix errors earlyReview (or have outside counsel review) pending patent applications for problems/errors before issuance make sure prosecution counsel uses a pre-issuance checklistMuch cheaper/easier to fix major problems before issuance than afterReview issued patents for problems/errors well before contemplating filing a lawsuit, if possible.If supplemental exam desired, request it early if contemplating enforcementFor major defects:Supplemental Examination (new)To reap benefit, must wait until reexam concludes before suingExpensive ($21,300 proposed)Ex Parte Reexamination (same)Limited to patents and printed publicationsExpensive ($17,750 proposed)

Post-grant review: Challenger's silver bullet?Short 9-month window -- Issues and disputes on legal front and market activities may not sufficiently mature for parties to take actionEstoppel attaches earlier than inter partes reviewNot effectively usable until probably 2014-2015 (except for business method patents)Likely to be very expensive (> $40K in USPTO fees)Inter partes review more likely to be useful

Consider filing inter partes reexam before 9/16/2012 to preserve inter partes option and/or to set up concurrent processing with a later-filed IPR/ex parte reexam

Consider active monitoring of patent related filingsPatent Challenger Considerations

AIA Joinder Provision(35 USC 299)

Common Patent-in-Suit Cannot Alone Form Basis for Joinder

Former Law (Rule 20): Same T-or-O AND Common Issue of Law or FactFRCP 20(a)(2) Defendants may be joined in a single action if(A) right to relief asserted "jointly, severally, or in the alternative w/r/t or arising out of the same transaction, occurrence, or series of transactions of occurrences; AND"(B) "any question of law or fact common to all defendants will arise in the action"Seems adequate to bar common-patent joinder but wasn't, at least in E. D. Texas

35 USC 299"accused infringers may be joined in one action as defendants or counterclaim defendants, or have their actions consolidated for trial, or counterclaim defendants only if--

(1) any right to relief is asserted against the parties jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences relating to the making, using, importing into the United States, offering for sale, or selling of the same accused product or process; and

(2) questions of fact common to all defendants or counterclaim defendants will arise in the action

NOT "law or fact"

(b) ALLEGATIONS INSUFFICIENT FOR JOINDER.--For purposes of this subsection, accused infringers may not be joined in one action as defendants or counterclaim defendants, or have their actions consolidated for trial, based solely on allegations that they each have infringed the patent or patents in suit.

Expressly Passed to Overturn E.D. Texas Case Law"Section 299 legislatively abrogates the construction of Rule 20(a) adopted in MyMail, Ltd. v. America Online, Inc., 223 F.R.D. 455 (E.D. Tex. 2004) [and other cited cases, all but one from Texas or La.] effectively conforming these courts' jurisprudence to that followed by a majority of jurisdictions. --112 H. Rpt. 98, at note 61 (June 1, 2011)

MyMail (Judge Davis, now Chief Judge!) had held that Rule 20's " same transaction, occurrence, or series of transactions of occurrences" requirement was met by a "logical relationship" among the different accused products which could be "substantial similarity"

This still ignores "jointly, severally, or in the alternative," but Judge Davis deemed the clear meaning of the statutory language "hypertechnical."

Effect of 299 on Plaintiff BehaviorTrends before the AIA were similar to 2010, with the top 7 jurisdictions same, measured by defendants and casesBUT big DE jump before AIA, almost catching TexasDE outpaced ED Texas after AIATexas drops off to 40% annualized rate of defendants in last quarter of 2011 compared to 2010 but could be anchor-defendant strategy, TBD

2011 by Total Defendants (no FM)

January September 15, 2011 By Total Cases (no FM)

DistrictCasesPlaintiffsDefendantsDefendants per CasePlaintiffs per CaseDefendants per PlaintiffEastern District of Texas279399278510.01.47.0District of Delaware27854020147.21.93.7Central District of California2133468203.81.62.4Northern District of California1573116073.92.02.0Northern District of Illinois1241706325.11.43.7District of New Jersey1203032792.32.50.9Southern District of New York973253984.13.41.2District of Minnesota671063685.51.63.5Eastern District of Virginia58711993.41.22.8Middle District of Florida57642384.21.13.7

2011 by Total Cases (no FM)

DistrictCasesPlaintiffsDefendantsDefendants per CasePlaintiffs per CaseDefendants per PlaintiffDistrict of Delaware48491124585.11.92.7Eastern District of Texas41859331637.61.45.3Central District of California32451010363.21.62.0Northern District of California2254037713.41.81.9Northern District of Illinois2142937903.71.42.7District of New Jersey1804583842.12.50.8Southern District of New York1514256404.22.81.5District of Massachusetts911821972.22.01.1District of Minnesota841304285.11.53.3Middle District of Florida82992753.41.22.8

September 16 December 31, 2011 By Total Cases (no FM)

DistrictCasesPlaintiffsDefendantsDefendants per CasePlaintiffs per CaseDefendants per PlaintiffDistrict of Delaware2063714442.21.81.2Eastern District of Texas1391943782.71.41.9Central District of California1111642161.91.51.3Northern District of Illinois901231581.81.41.3Northern District of California68921642.41.41.8District of New Jersey601551051.82.60.7Southern District of New York541002424.51.92.4District of Massachusetts4180651.62.00.8Southern District of California2834431.51.21.3Southern District of Florida2750471.71.90.9

Delaware Goes Off the ChartsThrough 9/15, DE far ahead of 2010 annualized pace (278 cases, 2014 defs in 2011, vs. 255/884 for all of 2010, i.e., triple the rate of defendants sued)Average 7.2 defendants per case, compared to 3.5 in 2010

Through 9/15, 8 plaintiffs, 4-5 firms, account for 52 cases, 1054 defendantsEven without these cases, DE is well ahead of its 2010 rate, still 3/2 rate of defendants sued to that point. Without these cases, average 4.2 defs per case

After 9/15, DE 206 cases, 444 defendants, annualized pace of 714 cases, 1539 defendants. Average 2.2 defendants per case.

After 9/15, TX has 139 cases filed, 378 defendants, annualized pace of 482 cases, 1310 defendants

E.D. Texas Steady Through 9/15, Large Decline in Defendants Sued AfterThrough 9/15, 279 cases, 2785 defendants (annualized pace 392/3914), a small increase over the 299/3879 in 2010This was 11.5% of all 2011 cases filed to that point, compared to 10% in 2010 // 24.4% of all defendants, compared to "more than 25%"Average 10 defendants per caseAfter 9/15, annualized pace of 482 cases, 1310 defendants, about exactly 1/3 the pace of defendants compared to before 9/15Average of 2.7 defendants per case

Huge Spike Overall the Week of 9/8-9/15 175 cases, 1787 defendants sued that week 3660 cases, 14201 defendants in 2011 1/8 of all patent defendants sued last year were sued in one week, between passage and effective date of joinder provision

Why Delaware?Was already 2d-most popular jurisdiction, and per Lemley, highest "claimant" win rate among busy districts, and highest trial rate by far (11.8%!) which suggests unwillingness to grant SJ, relatively speedy time to resolution of 1 year Texas retirements (Ward, Everingham, Folsom from 9/10 to 6/11) Judge Robinson signal on venue (6/11, reversed 12/11 in Link-A-Media) 9 mandamus reversals of EDTx transfer decisions from '08-'10

Is E.D. Texas Over?Defendants-sued rate dropped by 2/3 after the joinder provision went into effect

BUT could be part of anchor-defendant strategy, publicly discussed at Texas plaintiffs' bar event. Sue a Texas defendant, wait six months, sue the other defendants, move to consolidate

35 USC 299 prohibits joinder and consolidation for trial, but not consolidation for pretrial proceedings

If this is the strategy, not enough time has passed to know if this is occurring

At least some anecdotal evidence of this (Macrosolve)

Strategy How would defendants nonetheless avoid ending up in a massive multi-defendant coordinated set of cases in the plaintiff's chosen forum? Consider key Federal Circuit precedents assessing importance of forum's experience with patents-in-suit as a factor in a transfer analysis

In re Verizon Business Network Services, Inc. , 635 F.3d 559 (Fed. Cir. 2011) Granted mandamus, ordered transfer from E. D. Texas

Texas court cited two efficiencies:

There had already been 2 years of litigation in the case at bar. The docket reveals there had been a case management conference and an order setting a trial date, an exchange of infringement and invalidity contentions, and even a joint claim construction statement (though the last was filed in March, 2011, after the mandamus petition had already been briefed).

E.D. Texas had already considered the same patent in a prior suit, but five years earlier.

Nonetheless, this could not overcome a compelling showing of transfer based on the conventional factors of the convenience of witnesses and location of evidence.

In re Vistaprint, 628 F3d 1342 (Fed. Cir., 2010) Distinguished by In re VerizonCourt construed patent-in-suit in a prior caseAnother co-pending action on the same patentNo party located in transferee venue, some witnesses thereConvenience not necessarily favored over considerations of judicial economy

In re Wyeth406 Fed. Appx. 475 (Fed. Cir. 2010) Denied writ Action was pending for 17 months before transfer was sought Cited Vistaprint for notion that convenience factors do not necessarily outweigh judicial economy concerns

Key ConsiderationsPromptness of motion to transfer

Clear weight of convenience factors

Importance of substantive engagement with patents by the CourtBut can the plaintiffs afford to wait for this to happen?

Mandamus is extraordinary remedy, for which clear right to relief must be shown under abuse of discretion standard

Implications of AIA for Existing Case LawPlaintiffs' workaround defeats the evident purpose of the joinder statute Effort to end phenomenon of massive multidefendant suits whose only common thread is the asserted patent(s), abuse of permissive joinder Treating "judicial economy" as established by a common patent seems contrary to premise of section 299

Possible ArgumentsStatutes premise that a common patent-in-suit is not a sufficient basis for joinder arguably implies that a common patent alone does not satisfy Rule 20s requisite of a common issue of law or fact

Thus, a Markman hearing in one case should not be treated as presumptively relevant to the issues in another case

Even if statute's purpose is understood as avoiding confusion, that still implies a presumption that the issues from one defendant to the next are distinct

At a minimum, the joinder statute suggests that a common patent cannot alone (under the rubric of "judicial economy") outweigh all else on a transfer motion

Possible ArgumentsIf the case is further along substantively, consider making a substantive, specific argument as to why claim construction is likely to present different issues in the case sought to be transferred.

This might be difficult to assess when one has first been sued The more extensive the docket in the anchor case, the stronger the "judicial economy" factor is likely to be

But the advanced docket also means there will be more material from which to argue that your case will be different, that claim construction will have to be conducted anew, and therefore that the real efficiencies are smaller than they appear

The Federal Circuit finds substantive patent issues irresistible, which may help

Statistics may also help on the "judicial economy" and "convenience" arguments, e.g., on docket congestion, time to trial, time to summary judgment, etc. Perkins Coie is gathering some of this data and plans to present it and to use it where appropriate in motions

Questions or Ideas?Jordan [email protected](650) 838-4365 Brian Coleman [email protected](650) 838-4441Ken [email protected](650) 838-4308

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