america invents act (aia): continuing patent...

America Invents Act (AIA): Continuing

Patent Reform

Keith Grzelak

Co-Chair IEEE IP Professionals Initiative

VP Government Relations, IEEE-USA

Past Chair IEEE-USA Intellectual Property Committee

Director, Wells St. John PS

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AGENDA

AIA Overview

First Inventor To File (FITF)

Diminished grace period

Patent Reform on the Legislative Agenda

Financing of emerging technologies

Impact of AIA on venture capital funding

Company perspectives & procedures

Best practices

AMERICA INVENTS ACT (AIA)

Introduced in 112th Congress on March 30, 2011

Ordered reported from the House Committee on the Judiciary

on April 14, 2011

Passed by the House on June 23, 2011

Cloture vote on September 6, 2011

Passed by the Senate without amendment on September 8,

2011

Signed into law by President on September 16, 2011

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Section 1 – Short Title; Table of Contents.

Section 2 – Definitions.

Section 3 – First Inventor to File.

Section 4 – Inventor’s Oath or Declaration.

Section 5 – Defense to Infringement Based on Prior

Commercial Use.

Section 6 – Post-Grant Review Proceedings.

Section 7 – Patent Trial and Appeal Board.

Section 8 – Preissuance Submissions by Third

Parties. 4


Section 9 – Venue.

Section 10 – Fee Setting Authority.

Section 11 – Fees for Patent Services.

Section 12 – Supplemental Examination.

Section 13 – Funding Agreements.

Section 14 – Tax Strategies Deemed Within the Prior

Art.

Section 15 – Best Mode Requirement.

Section 16 – Marking.

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Section 17 – Advice of Counsel.

Section 18 – Transitional Program for Covered

Business Method Patents.

Section 19 – Jurisdiction and Procedural Matters.

Section 20 – Technical Amendments.

Section 21 – Travel Expenses and Payment of

Administrative Judges.

Section 22 – Patent and Trademark Office Funding.

Section 23 – Satellite Offices.

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Section 24 – Designation of Detroit Satellite Office.

Section 25 – Priority Examination for Important

Technologies.

Section 26 – Study on Implementation.

Section 27 – Study on Genetic Testing.

Section 28 – Patent Ombudsman Program for Small

Business Concerns.

Section 29 – Establishment of Methods for Studying

the Diversity of Applicants.

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Section 30 – Sense of Congress.

Section 31 – USPTO Study on International Patent

Protections for Small Businesses.

Section 32 – Pro Bono Program.

Section 33 – Limitation on Issuance of Patents.

Section 34 – Study of Patent Litigation.

Section 35 – Effective Date.

Section 36 – Budgetary Effects.

Section 37 – Calculation of 60-Day Period for

Application of Patent Term Extension.

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Transitional business method program (§ 18)

Post-grant review (§ 6)

False marking (§ 16)

Oath/Assignee filing (§ 4)

Best mode (§ 15)

Fee setting authority (§ 10)

Tax strategy inventions (§ 14)

First-inventor-to-file (§ 3)

Prior user rights (§ 5)

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AMERICA INVENTS ACT – CURRENTLY EFFECTIVE

Small business study (§ 3(l))

Prior user rights defense (§ 5)

Inter partes review threshold revised (§ 6(c))

Ex parte reexam - no District Ct. review (§ 6(h)(2))

PGR/IRP appeals to CAFC (§ 7)

E.D. VA replaces Dist. DC (§ 9)

Fee setting authority for USPTO (§ 10)

USPTO fee increases (§ 11)

Tax strategies deemed w/in prior art (§ 14)

Best mode not basis for invalidity/unenforceability

(§ 15)

False marking/virtual marking (§ 16)

Limitations on joinder (§ 19)

USPTO reserve fund established (§ 22)

Pro bono program for small/ind inventors (§ 32)

Claims covering human organisms barred (§ 33)

Patent term extension calculation 60 day (§ 37)

Electonic filing incentive (§ 10)

Inventor's oath or declaration (§ 4)

PGR and IPR (§ 6)

PTAB (§ 7)

Third party submissions of prior art (§ 8)

Supplemental Examination (§ 12)

Advice of counsel (§ 17)

Transitional business method patents (§ 18)

Priority examination for important technologies (§

25)

Patent ombudsman program for small business

concerns (§ 28)

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AMERICA INVENTS ACT – EFFECTIVE MARCH 16,

2013

First inventor to file (FITF) (§ 3) Is there a grace period?

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AMERICA INVENTS ACT (§6)

Post-grant review - Reexamination procedure is revised to

provide three ways for a third party to challenge a patent:

1) Pre-issuance third party submissions;

2) Third-party requested post-grant review; and

3) Inter partes post grant review.

* In some proceedings where USPTO upholds a patent,

petitioner is estopped from seeking reexamination or

asserting invalidity as defense.

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AMERICA INVENTS ACT

Current ways to test a patent:

1) Ex-Parte Re-exam

2) Inter Parties Review

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AMERICA INVENTS ACT

Future ways to test a patent:

1)Ex-Parte Re-exam

2)Inter-Parties Review

3)Pre-issue submission (§8)

4)Post-Grant Review (Chapter 31 – Inter Parties)

5)Post-Grant Review (Chapter 32 - Supplemental)

6)Supplemental Examination (§12)

7)Transitional Business Method Program (§18)

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AMERICA INVENTS ACT §16

False marking – Eliminates false marking

lawsuits, except for those filed by a competitor

that can prove “competitive injury” or by the U.S.

Government.

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Oath – Makes it easier for a corporation to file a

substitute inventor’s oath when an inventor

cannot be reached or is not cooperative.

16


Best Mode:

Amends the statute to exclude failure to

disclose “best mode” from being used to

invalidate an issued patent.

USPTO has a duty to only issue patents that

satisfy “best mode” requirement.

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Fee setting authority – USPTO is given authority

to adjust fees “in the aggregate” so as to recover

estimated costs of activities.

18


Tax strategy inventions – Strategy for reducing,

avoiding, or deferring tax liability (known or

unknown) shall be deemed insufficient to

differentiate a claimed invention from prior art.

19


First-inventor-to-file (FITF) – Changes U.S. patent

priority from “first-to-invent” system to a “first-to-

file” system.

1) Conception no longer matters

2) Prioritized exam – not REALLY first to file

3) Prior art redefined (worldwide “public

use” and “on sale”)

4) Watch out for “AIA poor provisional apps” 20


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Notable changes under AIA:

1) FITF and prior art redefinition

2) Eroded grace period

3) Broad expansion of prior user rights

4) Post-grant review

5) Supplemental examination

6) Fee-setting authority/micro-entity


“First-inventor-to-file” provision generates two unrelated results:

1)“Tie-breaker” rule for two near-simultaneous patent applicants

claiming same invention is changed to “first-inventor-to-file” (only

0.015% of applications).

2)“Grace period” (no tie-breaker) rules for vast majority of

applications is changed – requiring an affirmative act (pre-filing

activity) to obtain grace period, and resulting in an “inventor’s

publication grace period”.

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AIA’S RISK OF “FALSE PATENTS”

B did not derive from A. Under the AIA, B’s patent is enforceable and cannot be invalidated until A’s application is available as prior art.

Under current law, the examiner (or A later) may provoke interference without A’s publication

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A Prosecution

B Prosecution

A Published or issued

B issued

A

First to file B

may be on expedited

examination track

Duration of false patent B

(Courtesy: Ron Katznelson)


Current 35 USC 102 provides in part:

“public use" and "on sale" bar under current law in 35 USC

102(b) is as follows:

“A person shall be entitled to a patent unless — (b) the invention

was patented or described in a printed publication in this or a

foreign country or in public

use or on sale in this country, more than one year prior to the

date of the application for patent in the United States.

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AIA provides in part:

“102 (a) NOVELTY; PRIOR ART.—A person shall be

entitled to a patent unless— “(1) the claimed invention

was patented, described in a printed publication, or in

public use, on sale, or otherwise available to the public

before the effective filing date of the claimed invention;”

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Under AIA, 35 USC 102(b) provides:

102(b) Exceptions-(1) DISCLOSURES MADE 1 YEAR OR LESS BEFORE THE EFFECTIVE FILING DATE

OF THE CLAIMED INVENTION- A disclosure made 1 year or less before the effective filing date of a

claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if-- (A) the

disclosure was made by the inventor or joint inventor or by another who obtained the subject matter

disclosed directly or indirectly from the inventor or a joint inventor; or (B) the subject matter

disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or

another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint

inventor. (2) DISCLOSURES APPEARING IN APPLICATIONS AND PATENTS- A disclosure shall not be

prior art to a claimed invention under subsection (a)(2) if-- (A) the subject matter disclosed was

obtained directly or indirectly from the inventor or a joint inventor; (B) the subject matter disclosed

had, before such subject matter was effectively filed under subsection (a)(2), been publicly

disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed

directly or indirectly from the inventor or a joint inventor; or (C) the subject matter disclosed and the

claimed invention, not 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.

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Current U.S. law provides an unconditional one-year grace period:

Although under AIA there are exceptions in proposed subsection

102(b) that excuse public disclosures by the inventor if made less

than a year before filing, they are irrelevant here, as no disclosure

is involved in mere public use or sale.

A “disclosure” must enable those skilled in the art to practice

the invention.

Public use or sale, per se, are clearly not “disclosures” and

therefore do not trigger AIA’s exceptions which provide grace.

AIA eliminates the 102(a) part of grace period.

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Current U.S. law provides an unconditional one-year grace period:

AIA eliminates the 102(a) part of grace period.

• Entrepreneurs and investors can no longer speak freely – conversations

are too risky.

• Inventors will have to file patent applications before they talk to investors

and potential partners.

• Investors will soon figure out that inventors MUST FILE patent

applications before opening discussions (let alone investing).

• Inventor must have investment in hand in order to file patent

applications.

• Poor provisional patent applications create a problem.

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For these events, there is no grace period:

This provision will kill startups’ ability to launch their commercial existence.

It upsets two centuries of expertise in founding, marketing, financing and

building new technology companies.

Often, it is impossible to file an application that describes a workable

invention early before its public use or offer for sale.

In many cases, the public-use is necessarily the very first event that tests and

validates an inventive solution worth protecting in a patent application.

In these cases, public-use is an integral part of the development process and

the business practice that facilitates development.

In these cases, a patent would be barred under AIA. But not so in the rest of

the world!

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It is not required to file an application before such events in other countries:

The rest of the world does not bar a patent based on “public use” or “on sale” where no public

disclosure of the invention is involved. But AIA does.

Why do we want to impose here a constraint which no one experienced around the world?

Do we even know what the consequences will be?

Currently, American patent law encourages invention and development to remain in America

because our “public use” or “on sale” bar are subject to the one-year grace.

The rest of the world, in a perverse way, has an indefinite grace period for filing an application

after such public use or sale events, so long as there is no public disclosure involved.

Do we want patent protection under such circumstances to exist only abroad but not in America?

This would create a tilted playing field, where inventors find that they are more likely to lose patent

protection in the U.S. than elsewhere.

It appears that AIA’s drafters have concocted an orphan which resembles none of the existing

patent systems - a system that would singularly disadvantage inventors attempting to obtain

patents in this country.

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How do we change our behavior?

Prepare and file provisional patent applications with 112 first

paragraph care.

Seek out venture capitalists willing to sign NDAs during the

“dance”.

Carefully mark and document disclosures under NDA.

Educated VC community to the problems created by AIA – their

very investments are put at risk if THEY do not change their

behavior.

Seek new balance between trade secrets and patents.

Consider defensive practices and offensive practices.

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WILL INVENTOR BEHAVIOR CHANGE WITH

ADOPTION OF “FIRST TO FILE”?

A. Chilling effects on strategic partnerships and

investments – probably “OK” if everything

done in-house.

B. Increased costs to applicants.

C. Loss of rights if 102(b) exception is not

triggered.

D. Accelerate technology development and file

family tree inventions on or before March 15,

2013

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91 92 93 94 95 96 97 98 99 00 01 02 03 04 05

YEAR

Ameritech Motorola Scientific-Atlanta MotorolaAcquisition

2 2C 2C1

2CIP 2CIP1

2CIP2

3 3C 3C1

5 5CIP 5DIV

6 6C

7 8

910 10C 10CIP

11

1212C

12C1

13 14

15

15DIV

1616-1

17

2124

Core Product - Broadband Decoder (CPE)

SupportingTechnologies

Core Products - Head-End RF TX

Strategic Investments

SecondaryProducts

Continuations

HYPOTHETICAL SCENARIO: MANY MORE APPLICATIONS WOULD HAVE

BEEN FILED BY BI UNDER A ‘FIRST-TO-FILE’ PATENT SYSTEM

33 Courtesy: Ron Katznelson

24 Initial Ideas Refinements

Rethinking Practical

Refinements

Adjunct Invention

Adjunct Invention

Key Insight

Success!

Invention

Dead End

Path to Success

: Invention Path

5 Years of R&D

Complete

Practical

System

Courtesy: Steve Perlman 34

CONTINUING PATENT REFORM

1) AIA Technical Amendments (Senate proposal) – broader Prior User Rights

2) ITC Reform: Section 337 - ITC empowered to make finding on exclusion

order

3) Patent Law Treaties Implementation Act of 2012 (S. 3486) – co-joined

draft legislation between PLT and Hague Designs Treaty

4) SHIELD Act (H.R. 6245 – “One-way, (inventor) loser pays”

5) PARTS Act (H.R. 3889) – restrict automakers from patenting design of

repair parts

6) Manufacturing American Innovation Act (H.R. 6353) – reduces business

taxes by over 50% (10% rate) if patented products manufactured in US

7) Innovation Design Protection Act of 2012 (S. 3523) – protects fashion

designs

8) Trans Pacific Partnership (TPP) Agreement

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FITF PRACTICE TIPS

Seek out NDAs from venture capitalists, investors, and potential partners.

High quality provisional application (§112, ¶1 care) or “disclosure” needed

sufficient to support claims (probably not captured for $125/$250 filing fee).

Implement regular (weekly or monthly) inventor project reviews, identify ideas, force

disclosures, and create employee incentives.

Conduct rigorous exit interviews with employees that trigger “rush” disclosure and

patentability decisions.

Due diligence – reps and warranties for §273 defense.

Alleviate tensions with outside counsel for pre-filing time delays.

Educate client about increased filings for more conceptual applications.

Consider using prioritized examination.

Consider using prior user rights (trade secrets).

Do not retain “best mode” as a trade secret, if asked by a client

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The end.

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