Anticipate This!™ | Patent and Trademark Law Blog

Per Zura’s 271 blog today, regarding recently release amendments to the Patent Reform Act of 2007: 

The Senate has released the latest amendments to the Patent Reform Act in advance of Senate Floor Debate:

Interlocutory appeals: limits interlocutory appeals of claim construction orders to those which the district court determines have a reasonable basis for disagreement, and the appeal may advance the ultimate termination of the litigation;

Best Mode amendment: best mode would be considered for obtaining a patent, but not for invalidating;

Reexamination amendment: restores third-party reexamination;

The “CAFC Telework” amendment: ensures that CAFC judges that do not reside within a 50-mile radius of Washington DC use chambers of an existing courthouse in the district where they reside.

Derivation proceedings amendment: clarifying procedures relating to derivation proceedings (which will “replace” interference practice when it is gone);

Interference appeals amendment: allow CAFC to hear BPAI interference decisions commenced prior to the effective date of the act;

Marking provision amendment: deletes marking provision and maintains current law;

In re Seagate amendment: codifies the “objective recklessness” standard;

Post-grant review amendment #1: corrects inconsistency between section 337 (1) and (2) by disqualifying post-grant reviews where issues were raised (or could have been raised) in the litigation;

Post-grant review amendment #2: defines “final decision” for estoppel purposes.

More amendments are expected to follow in the coming weeks.

A budget report is also now available for the patent reform bill from the Congressional Budget Office, which serves Congress.

CBO estimates that enacting the bill would increase direct spending by $26.9 billion and revenues by $25.5 billion over the 2009-2018 period. Much of the change would result from making permanent USPTO’s authority to collect and spend certain fees, thus shifting the collections and spending out of PTO’s appropriation account. 

See GovTrack for more information on the budget report.

See the previous AT! coverage on patent reform here.

Various commentators are posting today that a vote on the Patent Reform Act of 2007 may be slipping now to April at the earliest.  (See IAM Blog and the Patent Prospector).  The PLI Blog’s sources indicate that such a delay could likely mean no action will be taken on patent reform this year.

Others have taken notice of an editorial in this morning’s Washington Times, titled Meaningful Patent Reform, in which Senators Leahy and Hatch bemoan that “some would like to play political football with the [patent reform] bill to pursue other agendas.” (See PTP and Patently-O).  The outlook of the Senators, however, is optimistic:

As legislators, we know we are headed in the right direction when everyone is complaining that the entire bill is not going their way. We see this as a necessary, albeit somewhat difficult, part of the legislative process. But we welcome it. But at the end of day, we are confident that we will resolve the remaining issues in ways that should make everyone comfortable and will ensure final passage.

Opposition to the bill is also notably becoming much more vocal, as may be seen by these letters from the current administration, industry, academia, and organized labor. 

Over a dozen labor unions sent a letter yesterday to members of the U.S. Senate urging opposition to the Patent Reform Act of 2007 in its current form.  The letter expresses a deep concern over the likelihood that the Patent Reform Act of 2007 will undermine U.S. competitiveness.  See a copy of the letter here:  Fax from Unions on Patent Reform 2007.

The letter also highlighted a recent article written by Yongshun Cheng, a former Chinese judge in the high court of Beijing.  Judge Cheng runs a non-profit organization dealing with intellectual property issues and has stated the following regarding S. 1145/H.R. 1908:

Hat tip to the Patent Prospector.

A number of letters from companies, patent holders, and universities opposing the present Patent Reform Act of 2007 were sent to members of the U.S. Senate this week.  Links to individual letters are found below, provided by the Innovation Alliance.

• Letter to Senators Lamar Alexander and Bob Corker from 14 Tennessee manufacturers opposing patent reform.
• Letter to Senator John Cornyn from 54 Texas employers and patent holders opposing patent reform.
• Letter to Senators Arlen Specter and Robert P. Casey from 29 Pennsylvania manufacturers opposing patent reform.
• Letter to Senators Mitch McConnell and Jim Bunning from 51 Kentucky companies and universities opposing patent reform.
• Letter to Senators Harry Reid and John Ensign from 19 Nevada companies opposed to patent reform.
• Letter to Senator Kay Bailey Hutchison from 54 Texas employers and patent holders opposing patent reform.
• Letter to Senators John McCain and Jon Kyl from 28 Arizona employers opposing patent reform.
• Letter to Senator Wayne Allard from 33 Colorado companies opposing patent reform.
• Letter to Senators Saxby Chambliss and Johnny Isakson from 10 Georgia employers opposing patent reform.

Considering the likelihood that we may actually see the Patent Reform Act of 2007 become a legal reality this year, this post highlights initiatives in the bills presently before Congress that may be of particular interest to patent prosecutors.  Much of the following information may also be found in the CRS Report and the Senate Committee Draft Report previously commented on by the AT!.

First-Inventor-To-File:

In an effort to harmonize U.S. law with the rest of the world, the U.S. would shift to a “first-inventor-to-file” from the present “first-to-invent” system in determining which individual has a right to a patent on an invention.  Under the “first-inventor-to file” system, an inventor who first files an application at the patent office will be presumptively entitled to the patent.  Unlike the present “first-to-invent” system, whether the first applicant was actually the first individual to complete the invention in the field will be irrelevant. 

The shift will also eliminate “interference” proceedings.  Interferences are complex and costly administrative proceedings that, although not commonly used, allow the Patent Office to determine the true first inventor of a contested invention.

Notably, the “first-inventor-to-file” system will still prohibit derivation where one individual copies another individual’s invention and then races to the patent office to file first.  To prevent individuals from obtaining patents on inventions obtained by derivation, both bills provide for an “inventor’s rights contest” that will allow the Patent Office to determine which applicant is entitled to a patent on a particular invention.

One-Year Grace Period:

Under current U.S. law, a public disclosure of an invention, such as a public use, sale, or publication thereof, starts a one-year clock running in which an inventor must file a patent application or the invention is dedicated to the public domain. 

According to the present bills, and potentially contingent upon a reciprocal change to European and Japanese patent laws, disclosures will qualify as prior art if they were made by 1) the inventor more than one year before the patent application’s filing date; or 2) a third party prior to the filing date and prior to the inventor’s disclosure.  Thus, an inventor would still be protected from losing a right to a patent by the inventor’s own disclosure.  However, the grace period would not protected the inventor from an earlier disclosure of a third party.

Assignee Filing:

Presently, only an inventor may make an application for a patent.  An inventor is also required to declare by appropriate oath or declaration that he or she is the “original and first inventor”.  The proposed S.1145 initiative allows, however, that a “person to whom the inventor has assigned or is under an obligation to assign the invention may make an application for patent.”  Thus, an assignee-company would be able to file a patent application on behalf of an inventor-employee having an obligation to assign to the company.

Post-Grant Review:

Post issuance review of an issued U.S. patent is currently conducted by reexamination proceedings (available both in ex parte and inter partes types).  To initiate a reexamination, any individual may cite art that raises a new and substantial question of patentability with respect to the issued patent.  For a variety of reasons not discussed here, however, reexamination proceedings have been sparingly used.

The present bills would provide a “post-grant review” proceeding that would begin, for example, within 12 months of the date the patent was issued.  The proceeding would give the patent owner an opportunity to amend to overcome any issues raised.  Importantly, a decision from the Patent Office would be required within one year of commencement of the review, and any patent left standing would be protected from a reassertion in other legal proceedings of the issues raised during post-grant review.

Pre-Grant Publications:

Most patent applications presently publish 18 months after filing, although an applicant may decide to opt out of publication as long as the applicant certifies that the invention will not be the subject of a foreign patent application.  The House and Senate bills would eliminate a possibility of opting out of pre-grant publication.

Pre-Issuance Art Submission:

Under the current law, a protest may be filed by any member of the public against a pending application under certain, and very narrow, circumstances (i.e., prior to the first of the date the application was published or the mailing of a notice of allowance).  Under the proposed initiatives, any person would be able to submit patent documents and other printed publications to the Patent Office within the later of 1) an issuance of a notice of allowance,  or 2) six months after pre-grant publication or the rejection of any claim in the application.  The submission would have to include a concise description of the relevance of each submitted document.

Tax Planning Method Patents:

Under the House proposal, tax planning method patents would be banned.  See the previous AT! post on tax-related patents here.

Mandatory Search Reports (aka Applicant Self-Examination):

Applicants are presently under a duty of disclosure to the Patent Office to indicate any art of which they are aware that may be material to patentability.  See a previous AT! article on the duty of disclosure here.

The Senate bill would also require that “applicants submit a search report and other information and analysis relevant to patentability”.  As compliance with this requirement would be costly (not even to mention the potential for inequitable conduct ramifications), an applicant would be exempted if it would qualify as a “micro-entity”.  This determination would be based on an enumerated list of factors including: income level; number of patent applications filed; small entity status; and assignment activity.

Inequitable Conduct:

See the previous AT! article on inequitable conduct here. 

The H.R. 1908 bill would provide that a holding of inequitable conduct is appropriate only if the patentee, its agents, or another person with a duty of disclosure to the USPTO intentionally misrepresents or fails to disclose material information, such that the USPTO would “have made a prima facie finding of unpatentability.”  S. 1145 would provide that information is material if it is not cumulative to evidence already before the Examiner, and “a reasonable patent examiner would consider such information important in deciding whether to allow the patent application.”  The standard for proving inequitable conduct would be set at “clear and convincing”.

USPTO Rulemaking Authority:

The Patent Office is currently limit to establishing regulations that govern the conduct of proceedings before it, and the recognition and conduct of patent attorneys.  The Senate bill would further grant the authority to “set or adjust by rule any fee established or charged by the Office”.  The House bill would authorize the Patent Office to “promulgate regulations to ensure the quality and timeliness of applications and their examination”.  The language of the House bill could greatly affect the Patent Office’s proposed claims and continuations rules presently being litigated, and that have been enjoined from becoming effective pending the outcome of the litigation.  See AT! post on the claims and continuations rules here, here, and here.

JW Note:  We would be greatly interested in hearing about the concerns of our practitioner-readers relating to the legislation.  Leave your comments as you may!

The Congressional Research Service (CRS) is a research arm of the United States Congress that has been in operation since since 1914 (first established as the Legislative Reference Service).   CRS provides policy and legal analysis to committees and Members of both the House and Senate, regardless of party affiliation.  CRS experts assist at every stage of the legislative process, from the early considerations that precede bill drafting, through committee hearings and floor debate, and to the oversight of enacted laws and various agency activities. 

John R. Thomas, Professor of Law at the George Washington University and visiting scholar for the CRS, has prepared a CRS Report for Congress, titled Patent Reform in the 110th Congress:  Innovation Issues.  The 46-page report covers both similarities and differences between H.R. 1908 (having already passed the House) and S. 1145 (widely predicted to pass the Senate this term).  The below simple chart provided by the report nicely shows a high-level overview of the various initiatives being considered:

The report is also surprisingly well balanced, and clearly identifies many of the arguments typically made by parties both pro- and con- particular reform initiatives.  We consider this report a “must read” for any practitioner who might want a good overview of the various reforms being considered, as well as rationale and potential pitfalls associated with each.

Via the Tahoe Daily Tribune, majority leader Sen. Harry Reid outlined Democrats’ legislative priorities for the first session of 2008 during a statement on the U.S. Senate floor today.  Regarding patent law reform:

Once we work these issues out, time permitting, we will also turn to two other priorities in this first work period: patent reform and an energy package. On patent reform, we must carefully strike the right balance with a bill that promotes rather than blocks innovation from enterprising entrepreneurs. The energy package consists of dozens of land and water bills that have already passed the House and the Senate Energy committee by overwhelming bipartisan margins. Among these worthy and non-controversial measures are Senator Murray’s ‘wild sky wilderness’ bill, which she has championed now for more than five years.

If not for the obstruction of just a few Senators, we would have passed these bills last year. I am hopeful that the overwhelming majority of Senators – Democrats and Republicans alike – will have their voices heard this year.

Hat tips to Zura and Patently-O.

See also a previous AT! post on the Draft Committee Report for the Patent Reform Act of 2007 here.

A draft report on the Patent Reform Act of 2007 by the Senate Committee on the Judiciary is presently circulating the internet.  

The 106-page report includes the following:

I.  Background and Purpose of S. 1145, the Patent Reform Act of 2007
II.  History of the Bill and Committee Consideration
III.  Section-by-Section Summary of the Bill
IV.  Cost Estimate
V.  Regulatory Impact Evaluation
VI.  Changes to Existing Law Made by the Bill, as Reported 

The reported summary of changes is stated as follows:

(1) title the Act the Patent Reform Act of 2007;
(2) change the system to a “first-inventor-to-file” system;
(3) make it simpler for patent applicants to file and prosecute their applications;
(4) codify and clarify the standard for calculating reasonable royalty damage awards, as well as
awards for willful infringement;
(5) create a relatively efficient and inexpensive administrative system for resolution of patent
validity issues before the USPTO;
(6) establish the Patent Trial and Appeal Board;
(7) provide for eventual publication of all applications and enhance the utility of third parties’
submissions of relevant information regarding filed applications;
(8) improve venue in patent cases and provides for appeals of claim construction orders when
warranted;
(9) give the USPTO the ability to set its fees;
(10) remove the residency restriction for judges on the United States Court of Appeals for the
Federal Circuit;
(11) authorize USPTO to require patent searches with explanations when a patent application is
filed;
(12) codify and improve the doctrine of inequitable conduct;
(13) give the Director of the USPTO discretion to accept late filings in certain instances;
(14) limit patent liability for institutions implementing the “Check 21” program;
(15) end USPTO “fee diversion”;
(16) make necessary technical amendments; and
(17) set the effective date of the Act. 

Hat tip to the Patent Docs for bringing this report to the attention of the blogosphere.  Patently-O opines that the bill could pass. 

See also previous AT! posts on this topic here.  Do our readers have any thoughts about particular provisions in the bill?