IP Law Bulletin

The United States Patent and Trademark Office (USPTO) recently implemented a new program that allows applicants to have Requests for Continued Examination (RCE) prioritized, thereby insuring their applications will be considered more quickly following the filing of a RCE. While this program will place applications on a faster track to further examination, and thus hopefully allowance, applicants should consider this new program as another tool in their toolbox for efficient and effective patent prosecution. In fact, because patent prosecution should be a collaborative effort between applicants and examiners, there are other tools applicants should consider using before paying the $4800 fee ($2400 for small entities) to essentially “force” examiners to pick-up their applications as prioritized RCE filings.

Industries employing goods that require reprocessing often face a quandary when attempting to enforce patents on goods that have been produced by the patent holder and are now in the marketplace: the patent exhaustion doctrine. The patent exhaustion doctrine is an old but developing body of law that, as stated by the Supreme Court in Quanta Computer, Inc. v. LG Electronics, Inc., generally expounds that “[t]he authorized sale of an article that substantially embodies a patent exhausts the patent holder’s rights and prevents the patent holder from invoking patent law to control post-sale use of the article.” In practice, this general prohibition takes on new challenges as patent holders become creative in enforcing their patent rights against those that reprocess, remanufacture, or refurbish their products. This creativity has particularly materialized in one industry – printer cartridges.

On February 9, 2012, the U.S. Food and Drug Administration (FDA) issued three draft guidance documents– the first since the Biologics Price Competition and Innovation Act passed in March 2010 – for the development of biosimilars. The biosimilars market is expected to reach $8 billion by 2020. The three guidance documents are:

In a precedential decision, the Court of Appeals for the Federal Circuit (CAFC) recently interpreted means plus function claim construction under 35 U.S.C. §112 ¶ 6.  In Typhoon Touch Technologies v. Dell, Inc. and Lenovo, Inc. et al.¹, the CAFC reiterated that an algorithm may be disclosed in any form, including prose or visual form, in order to satisfy 35 U.S.C. §112.  As was the case in Typhoon Touch, it is not necessary to disclose a mathematical algorithm even in the computer software world.  Furthermore, the CAFC elected to reaffirm the requirements for infringement of functional language – holding that an accused device must actually perform, or be programmed to perform, any functional language in the claim.

The USPTO recently announced that the Extended Missing Parts Pilot Program that was implemented last year will be extended for another year. Under conventional missing parts practice, applicants must pay filing fees and submit an oath or declaration within a two-month time period after receiving a Notice to File Missing Parts. Under the Pilot Program, applicants must still pay the basic filing fee and submit an oath or declaration but can, under certain conditions, request a twelve-month period to pay the search, examination, excess claims fees, and the surcharge for late submission of these fees. The Pilot Program can benefit applicants by providing an additional year to decide whether the nonprovisional application should be completed by paying the remaining fees.

As of January 23, 2012, all Appeals filed at the U.S. Patent and Trademark Office (USPTO) are subject to new rules of practice before the Board of Patent Appeals and Interferences (BPAI). The new rules are generally intended to simplify the Appeal process.

Pictures and drawings can be used as the basis of anticipation and obviousness rejections in U.S. patent prosecution.  Similarly, pictures and drawings can form the basis of patent invalidity claims in U.S. patent litigation.  However, pictures and drawings can only be properly applied to patent claims under limited circumstances.  Although text is more commonly relied upon than pictures and drawings to reject or invalidate patent claims, familiarity with the proper application of pictures and drawings to claims can help patent applicants and patent holders best evaluate their options when pictures and drawings are relevant to claims during prosecution or litigation.

An important change to the United States patent system in the Leahy-Smith America Invents Act (AIA) is the introduction of post-grant review (PGR) proceedings that allows third parties the opportunity to request review of any newly issued or reissued U.S. patent based on a broad range of reasons. The laws enacting post allowance proceedings are found in new Sections 321–329 of 35 U.S.C. and take effect on September 16, 2012. However, only patents issuing from applications filed on or after March 16, 2013 can be challenged, so these changes will gain particular relevance in subsequent years.

Any party may challenge a patent using the PGR process. However, unlike current re-examination proceedings, a PGR challenge may be for any reason, including non-patentability under any of 35 U.S.C.§§101, 102, 103, and 112 (except for best mode), and for double patenting. A request for PGR must be filed within 9 months of patent issue or reissue. After the period for PGR has expired, third parties can challenge a patent at the U.S. Patent and Trademark Office using inter partes review, which allows a third party to request review of any U.S. patent for double patenting, anticipation, or obviousness. An additional transitional post-grant program exists for business method patents. 

On its face, the new provisions for PGR are very similar to the European Patent Office opposition practice. Thus, a greater understanding of current opposition practice is helpful in determining the risks a newly granted patent will face under the new laws. Some of the more important provisions are:
 

In Europe, approximately 5% of European patents are opposed. Approximately 1/3 of the opposed patents are maintained as granted, 1/3 are maintained with amended claims, and 1/3 are revoked.¹ Comparatively, only about 0.3% of U.S. patents are subject to the currently available, but much more limiting, inter partes re-examination procedure.² Taking into account the number of patents that are opposed in Europe, it is conceivable that, in comparison to current inter partes re-examination procedures, up to an order of magnitude more U.S. patents will be adjudicated using PGR once the new laws come into effect.

The opposed European patents can be divided by sector, with chemistry patents being opposed the most (7.8% opposed from 2000 to 2008), followed by mechanical engineering (5.6% opposed). The lowest level of opposition is in the electrical engineering sector (2.2%).³ Further refinement shows even more diversity. For example, within the chemistry sector, 2.6% of organic fine chemistry patents, 8.5% of macromolecular/polymer patents, 8.7% of pharmaceutical patents, and 14.0% of food chemistry patents are opposed.⁴ One of the reasons suggested for this difference is that oppositions are more common when a product is covered by a single patent, such as in pharmaceuticals, in contrast to products covered by multiple patents, such as in microprocessors.⁵

The characteristics of the patents that are more likely to be opposed within the European opposition system have also been analyzed.  There is no reason to suggest a similar trend would not occur for U.S. PGR proceedings. Factors that increase the likelihood of opposition include: 

• an increased economic relevance (using the number of designated states as a proxy);

• a greater number of claims;

• more references cited; and

• more forward citations (how many other patents/application cite the patent).

Each of these factors, in some way, relates to the perceived importance of the patent, either by the patentees or by the industry. Some of the factors that affect outcome of the opposition proceedings are the length of pendency (positive correlation with revocation) and number of citations (negative correlation with revocation).⁶

While the information obtained from the European system can be valuable, there are significant and substantive differences between the new PGR process and European opposition proceedings that must be taken into account as well. Perhaps the greatest difference between the two proceedings is the difference in estoppel provisions. There is no estoppel in Europe, so a third party may be quite willing to oppose an important competitor’s European patent. However, under the new 35 U.S.C. § 325(e), a third party is estopped from raising any issue that was raised or reasonably could have been raised during PGR in both civil and administrative proceedings. Thus, the third party may decide upon a different course of action than PGR in the United States. The third party may either decide to forgo use of PGR proceedings as too risky or to “throw in the kitchen sink” and raise every “reasonable” issue. Alternatively, the third party may be much more likely to exit the PGR process via settlement before a final written decision triggers the estoppel provisions under 35 U.S. C § 328.

The PGR procedure will offer more opportunities to challenge U.S. patents without resorting to litigation. However, the introduction of this procedure will require a careful analysis, both by third parties in the decision of which patents to review and by patent owners to gain an understanding of the risks new patents face under the new law.

¹ “Statistics for EPO Propositions and Appeals – Update” 2010 by James Wilding, HLBBshaw Ltd.  4.7% opposed in 2009 and 5.2% in 2008, Date of Access, Nov. 2, 2011.

² U.S. Patent Office IP Quarterly Report June 2011.  Date of Access, Nov. 2, 2011.  (Of note, within these proceedings, 71% of these patents are known to be in litigation.)

³ Scellato et.al., “Study on the quality of the patent system in Europe,” PATQUAL, March 2011.  Date of Access, Nov. 2, 2011.

⁴ Id.

⁵ European Commission, Pharmaceutical Sector Inquiry – Preliminary Report, Nov. 28, 2008.  Date of Access, Nov. 2, 2011.

⁶ See Scellato et. al.

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617-439-2000.

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.

The November 2011 edition of Nutter’s IP Bulletin features a number of articles dedicated to some of the most challenging and sweeping provisions of the Leahy-Smith America Invents Act (AIA) signed into law on September 16, 2011. This article highlights, and provides practical tips for coping with, a variety of miscellaneous, important AIA provisions that should not be overlooked by practitioners who may otherwise be focused on some of the more widely discussed provisions. The provisions discussed in this article include the best mode defense, citation of prior art in a patent file, false marking and virtual marking, inter partes review, inventor’s oath and declaration, supplemental examination, tax strategies in patent applications, and third party prior art submission.

The AIA provides different effective dates for different provisions. For each of the miscellaneous provisions discussed below, the effective date is provided, along with a brief summary of the provision and some practical tips for coping with the provision.

Best Mode Defense

Effective Date: September 16, 2011

Brief Summary: Failure to disclose best mode in a patent application is no longer a basis for invalidating a patent or rendering a patent unenforceable. (AIA § 15)

Practical Tips: While the AIA lessens the importance of best mode considerations following issuance of a patent, the best mode of carrying out an invention must still be considered during prosecution. 35 U.S.C. §112, first paragraph, requires that the specification of a patent application “shall set forth the best mode contemplated by the inventor of carrying out his invention.” Although best mode rejections during prosecution are rare, applications may still be rejected under 35 U.S.C. §112, first paragraph, on best mode grounds. It is therefore important to ensure that the inventor’s best mode of carrying out the invention is disclosed in a patent application despite the AIA taking the teeth out of best mode post-issuance.

Citation of Prior Art in a Patent File

Effective Date: September 16, 2012

Brief Summary: The AIA allows third parties to anonymously submit prior art or statements to be placed in the file of an issued patent for use in any future reexamination, inter partes reexamination, or post-grant review of the patent. In particular, new 35 U.S.C. §301(a) provides that “[a]ny person at any time may cite to the Office in writing – (1) prior art consisting of patents or printed publications which that person believes to have a bearing on patentability of any claim of a particular patent; or (2) statements of the patent owner filed in a proceeding before a Federal court or the Office in which the patent owner took a position on the scope of any claim in a particular patent.” (AIA § 6, Ch. 32)

Practical Tips: This AIA provision could be a powerful tool in ensuring that certain prior art be considered in a reexamination or post-grant review proceeding for a particular patent. By monitoring patents issued to competitors and/or in a particular technical field, it may be possible to submit prior art that limits or invalidates a patent post-issuance without requiring civil litigation. Maintaining a well-indexed library or database of potential prior art and patentee statements can help quickly identify material that may be ideal for patent file submission.

False Marking and Virtual Marking

Effective Date: September 16, 2011

Brief Summary: The AIA provides that lawsuits can be filed based on false marking, i.e., physical marking of product/packaging with patent information, and, newly by the AIA, on virtual marking, i.e., product/packaging directing the reader to a publically accessible website providing a product’s patent information. However, the AIA removed qui tam remedies that previously existed and permitted any individual to file a lawsuit based on allegations of false marking, even if the individual was not harmed by such markings. Now only the United States can sue for false or virtual marking unless the plaintiff can prove a “competitive injury.” The AIA also provides that marking a product with a patent that covered the product but has since expired is no longer considered a marking violation. (AIA § 16)

Practical Tips: While it remains good practice to review products/packaging for the addition of valid patent marks and the removal of expired patent marks, the AIA lessens the sometimes very expensive consequences of unintentional false or virtual marking. Nevertheless, it is generally advisable to carefully monitor physical patent marks on your own products/packaging and your competitors products/packaging. By now allowing lawsuits based on virtual marking, the AIA appears to encourage periodic review of not just virtual patent marks on your own website to ensure its current accuracy, but the virtual patent marks on competitors’ websites for its current accuracy.

Inter Partes Review

Effective Date: September 16, 2012

Brief Summary: Inter partes review replaces inter partes reexamination as of the effective date, thus changing 35 U.S.C. § 311. Inter partes review allows a third party to request review of any U.S. patent for double patenting, 35 U.S.C. §102, and/or 35 U.S.C. §103 reasons.  The request will be granted if there is a “reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged.”  (AIA § 6, Ch. 31)

Practical Tips: If any patents are identified as candidates for inter partes reexamination prior to September 16, 2012, it would be advisable to consider whether the rules of inter partes reexamination or the new rules of inter partes review would be more beneficial to the requestor of reexamination, and file the request on the appropriate date. The AIA details numerous requirements and procedures for inter partes review that should be consulted in making such a determination. The implications of inter partes review should likewise be weighed against post-grant review when a patent first issues or reissues and litigation.

Inventor’s Oath and Declaration

Effective Date: September 16, 2012

Brief Summary: The AIA changes the current inventor’s oath and declaration practice, namely by 1) not requiring the inventor’s oath and declaration to identify inventor citizenship, 2) requiring a statement that “the application was made or was authorized to be made” by the affiant/declarant, and 3) allowing the inventor’s oath and declaration to be made in an Assignment of Record.  (AIA § 4)

Practical Tips: The AIA should generally not have much effect on current oath/declaration and assignment practices. However, this AIA provision can make the preparation, execution, and filing of formal papers easier. For applications filed on or after September 16, 2012, in which an assignment is desired, paperwork can be reduced by combining an inventor’s oath and declaration with the assignment.

Supplemental Examination

Effective Date: September 16, 2012

Brief Summary: New 35 U.S.C. §257 provides that a “patent owner may request supplemental examination of a patent in the Office to consider, reconsider, or correct information believed to be relevant to the patent, in accordance with such requirements as the Director may establish.”  (AIA § 12)

Practical Tips: Following this provision’s effective date, it may be advisable for patent owners to review their issued patents for any incorrect information that may be appropriate to correct through supplemental examination. Supplemental examination may be used to cure various ills of a patent that would otherwise prove burdensome, if not fatal, during any subsequent litigation involving the patent. For example, supplemental examination may be requested to have a reference reviewed that was not cited during prosecution in anticipation that a third party might assert that reference in an inequitable conduct claim. It is important to note that once a reference has been asserted in a civil action for purposes of alleging unenforceability of a patent, the reference is no longer eligible for consideration using Supplemental Examination.

Multi-Party Patent Infringement Lawsuits

Effective Date: September 16, 2011

Brief Summary: 35 U.S.C. § 299(a) only permits multiple defendants to be included as parties in a lawsuit under very limited circumstances. In order for there to be multiple defendants, the patent owner must seek to hold the defendants jointly or severally liable, or the relief sought from all of the defendants must arise out of the same transaction, occurrence, or series of transactions or occurrences relating to the alleged infringing acts involving the same accused products or process. The party bringing the lawsuit must further allege that there are questions of fact common to all accused infringers. (AIA § 19)

Practical Tips: This provision was primarily directed at curtailing patent infringement lawsuits brought by “patent trolls” or non-practicing entities. Prior to enactment of the AIA, a single party could lump a host of alleged infringers in a single lawsuit in an attempt to save costs. Following the announcement of this provision, a number of last minute multi-party defendant lawsuits were brought prior to the effective date. It is anticipated that the number of lawsuits brought by “patent trolls” or non-practicing entities may be reduced in light of this provision. However, if a patent owner does meet the provisions now provided for in 35 U.S.C. § 299, the party should feel comfortable in alleging patent infringement against multiple parties.

Failure to Obtain or Present an Opinion of Counsel

Effective Date: September 16, 2012

Brief Summary: Recent Federal Circuit decisions regarding how the failure to obtain an opinion of counsel in a patent infringement case should be treated were codified in 35 U.S.C. § 298. In particular, § 298 states that “[t]he failure of an infringer to obtain the advice of counsel with respect to any allegedly infringed patent, or the failure of the infringer to present such advice to the court or jury, may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement of the patent.” (AIA § 17)

Practical Tips: This provision does not change the status quo in light of recent Federal Circuit decisions. Thus, although the failure to obtain the advice of counsel, or present such advice to the court or jury cannot be used to proved willful infringement, it remains a factor that can be considered in making a willfulness determination; it just cannot be the sole factor for arriving at the conclusion of willful infringement. Further, obtaining advice of counsel may still be prudent in a number of situations, such as to provide exculpatory evidence and to obtain the desired peace of mind prior to launching a product.

Tax Strategies in Patent Applications

Effective Date: September 16, 2011

Brief Summary: All tax strategies are deemed to be within the prior art, regardless of whether the strategies were “known or unknown at the time of the invention.” A “tax strategy” as defined by the statute includes “any strategy for reducing, avoiding, or deferring tax liability.” The AIA provides for two exceptions: 1) the part of an invention “used solely for preparing a tax or information return or other tax filing,” and 2) the part of an invention “used solely for financial management, to the extent that it is severable from any tax strategy or does not limit the use of any tax strategy by any taxpayer or tax advisor.” (AIA § 14)

Practical Tips: The AIA strictly curtails reliance on a tax strategy for patentability by deeming all tax strategies within the prior art. It is therefore important to carefully consider before filing a patent application, and during prosecution of applications pending on or after September 16, 2011, whether novel and/or nonobvious subject matter other than a tax strategy is disclosed and can be claimed. It is also important to remember that this AIA provision does not necessarily allow all tax strategies to be made, used, or otherwise practiced without fear of patent infringement. This AIA provision only applies to applications pending on or after September 16, 2011, and to patents issued on or after September 16, 2011. Patents issued before September 16, 2011, and claiming tax strategies may therefore be enforceable.

Third Party Prior Art Submission

Effective Date: September 16, 2012

Brief Summary: New 35 U.S.C. §122(e) allows “[a]ny third party” to submit prior art “for consideration and inclusion in the record” of any pending patent application provided that various conditions specified in the statute are met. Some of the conditions relate to a time window for third party prior art submission, which must be made before 1) a Notice of Allowance has been given or mailed, or 2) the later of 6 months after the date of publication, or the date of first rejection of any claim in the application by the Examiner.  (AIA § 8)

Practical Tips: This AIA provision could be a powerful tool in limiting, curtailing, or delaying issuance of others’ patent applications. By monitoring patent applications filed by competitors and/or in a particular technical field, it may be possible to submit prior art during prosecution that prevents, limits, or delays issuance of a patent application that may be potentially problematic, i.e., for infringement reasons. Maintaining a well-indexed library or database of potential prior art can help quickly identify prior art that may be ideal for third party prior art submission. Such a library or database may be particularly beneficial for in-house prior art such as publically available product brochures and conference presentations that a patent examiner may not be able to find as easily as patents and articles. Because the AIA only allows prior art to be submitted by a third party within a limited time window, any procedures to monitor and review newly published, newly allowed, and newly rejected patent applications should be time sensitive. While this AIA provision ultimately benefits patent applicants by helping to ensure that the best prior art is considered during prosecution, this AIA provision could also be a time-consuming nuisance to patent examiners and to patent applicants if prior art is submitted by a third party. However, the nuisance effect may be limited because, unlike the AIA provision related to third party submission of prior art for issued patents, the AIA does not provide that third party submission of prior art for pending patent applications can be made anonymously.

This article strives to provide an overview of various AIA provisions. For a complete understanding of these and other provisions of the AIA, and how they may affect your patent prosecution and litigation strategies, consult the text of the AIA and your legal counsel.

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617-439-2000.

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.

Perhaps none of the provisions of the recently enacted Leahy-Smith America Invents Act (AIA) will have a more significant impact on the day-to-day patent practice in the United States than the switch from the current “first-to-invent” system to a “first-to-file” system.  Indeed, the AIA substantially redefines the scope of prior art and establishes a “First-Inventor-to-File” (FITF) system. Though more akin to foreign “first-to-file” systems, the FITF system includes substantial differences that are highlighted throughout the remainder of this article to institute new best practices that address this legislation.

The race to the U.S. Patent and Trademark Office (PTO) begins in earnest on March 16, 2013.  As of that date, current sections 102 and 103 of the patent statute will be replaced with provisions of the AIA that focus on an application’s effective filing date in the determination of whether art that existed prior to that filing date bars the patentability of the claimed invention. Whereas applicants can currently “swear behind” a reference (under certain circumstances) to eliminate its effect as prior art, or establish prior invention in an interference proceeding, the determination of novelty and non-obviousness under the FITF system will no longer be based on the date of invention (e.g., conception and reduction to practice). Rather, an applicant will be entitled to a patent unless “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.” (Emphasis added.) It is worth noting that the definition of invalidating prior art has therefore expanded to include the sale or public use of the claimed invention even outside of the United States. Further, an applicant will be entitled to a patent unless “the claimed invention was described in a patent . . . or in an application for patent . . . in which the patent or application . . . names another inventor and was effectively filed before the effective filing date of the claimed invention.” In sum, the first inventor to file a patent application—with limited exceptions—will be entitled to a patent on that invention even if that inventor was not the first to invent the claimed subject matter.

Notably, unlike many foreign countries, the United States’ FITF system includes a one-year grace period for public disclosures made by an inventor or another who receives information regarding the invention from the inventor. Indeed, an early public disclosure by the inventor can prevent a later disclosure or application of another from barring the patentability of the inventor’s subsequent application directed to the earlier-disclosed subject matter and filed within the grace period. Similarly, an early public disclosure by one inventor can preempt another from obtaining a “monopoly” in the United States on the disclosed subject matter, even if the subject matter was invented (but not published or filed) prior to the disclosure.

While some commentators suggest that the FITF system of the AIA promotes an aggressive, pre-filing defensive publication strategy to block potential competitors, such a pre-filing publication can serve as invalidating prior art in foreign jurisdictions that require absolute novelty. Accordingly, before inventors decide to publish any potentially patentable inventions, inventors and assignees should consult with patent counsel regarding the ramifications of such a disclosure on their U.S. and foreign patent rights. If such protection is desired, U.S. inventors and assignees should at least file U.S. provisional applications prior to any public disclosure. Filing provisional patent applications prior to making any public disclosures can protect the applicant’s rights both domestically and abroad while still allowing for later, fast publication to get the applicant’s art on record against its competitors. Importantly, inventors and assignees should consider instituting new procedures to efficiently disclose potentially patentable subject matter to their patent counsel, and work quickly to draft and file applications on the subject matter (whether to be publicly disclosed or not prior to filing the application).

In a related aspect, the AIA also creates a new “derivation proceeding” which supplants the current interference proceedings, which is part of the expiring “first-to-invent” system. In a derivation proceeding, a party can challenge an earlier-filed application or a patent resulting from an earlier-filed application if the applicant of the earlier-filed application “derived” the invention from the challenging party.  In the case of an allegedly derived issued patent, a civil action must be filed within one year of the issue date of that patent. In the case of a derived patent application, the derivation proceeding can be instituted at the PTO by petitioning the Director within one year 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.” 35 U.S.C. § 135 (emphasis added). Though an earlier invention date will not allow an applicant to swear behind a prior art reference during prosecution under the new FITF regime, recording procedures (e.g., laboratory notebooks) nonetheless remain critical in defending against or asserting claims in a derivation proceeding.

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617-439-2000.

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.