Patent Reform Act of 2010: An Overview

The Senate has revived interest in the patent reform act with a substitute bill entitled the “Patent Reform Act of 2010.” The new bill is very similar to its predecessor, the Patent Reform Act of 2009.

First-To-File: The proposed reform would largely eliminate US’s unique first-to-invent priority system. The bigger deal is that the proposal would eliminate the one-year grace period unless the inventor was the “first-discloser.” A “derivation” proceeding would replace interferences.

False Marking: The proposed reform would eliminate the right of “any person” to file a false marking claim. Rather, those claims would be limited to individuals who have “suffered a competitive injury.” This change would apply to eliminate standing of already-filed cases.

Damages: The damages revision is no longer as major. Under the proposed revision, a court would be required to “identify the methodologies and factors that are relevant to the determination of damages, and the court or jury, shall consider only those methodologies and factors relevant to making such determination.” The parties would also be required to “state, in writing and with particularity, the methodologies and factors the parties propose for instruction to the jury in determining damages … specifying the relevant underlying legal and factual bases for their assertions.” The provision would also provide a right for summary judgment on damages if one party’s contentions lack evidentiary basis and only the approved-of methodologies would be allowed in court. It is already the law that the jury may only consider relevant information – this approach looks to primarily create a greater likelihood for appeal. The provision generally creates a better situation for accused infringers, but it does not necessarily limit damage awards.

Trial: Right to split trial into segments infringement & validity; damages; willfulness. This approach tends to favor defendants.

Willful Infringement: Spell out that the enhanced damages are for “willful infringement” that is at least objectively reckless by clear and convincing evidence. (current statute reads “the court may increase the damages up to three times the amount found or assessed.”). The statute would make clear that “knowledge alone” is not sufficient for a finding of willful infringement and that any “close case” should be decided against willfulness.

Post-Grant Review: The statute would provide for a whole new system of post-grant reviews that would be handled directly by the patent appeals board. [I will write more on this later]. The proposal also calls for a new “supplemental examination” to ensure that the patentee has fulfilled the duty of disclosure.

Pre-Issuance Submissions of Prior Art by Third Parties: These would be allowed.

Litigation Venue: Cases should be transferred to venues that are “clearly more convenient.”

Fee Setting Authority: The USPTO would be given authority to adjust its fees so long as the fees are “in the aggregate set to recover the estimated cost to the Office for processing, activities, services and materials relating to patents and trademarks, respectively.”

Federal Circuit Judicial Residency: Judges for the Federal Circuit would no longer be required to live in the DC area.

Micro-Entity: A new type of entity defined as a “micro entity” that has fewer than 5 patent applications that would qualify for even further reduced fees.

Best Mode Requirement: The best mode requirement would remain as part of the law. However, failure to fulfill the best mode requirement would no longer be an invalidity defense nor could it serve as a basis for holding a patent unenforceable.

61 thoughts on “Patent Reform Act of 2010: An Overview

  1. Dear Mr Cohen, I want to encourage you. Keep going. American corporations are already, of necessity, “harmonised” with the rest of the world, but the single inventor is not.

    If I understand you right, it is today’s non-corporate guy who thinks more deeply, and so is going to keep the USA top nation, through C21. In that case, as you so perspicaceously observe, vital to the American national interest is to subordinate the interests of shallow-thinking corporate America to those of the long-suffering single inventor, regardless how long it takes him to bring his invention to the PTO. “As long as it takes” should be the watchword, eh, in the national interest?

    FtF pulls in exactly the opposite direction, of getting specifications and claims (enabling disclosures of new and non-obvious technology) filed and out into the open as early as possible. You are just the latest to point out how harmful to the national interest is this ultra-early dissemination of claims to new technology, which is reason enough to resist with all possible vigour the introduction of FtF into the USA.

  2. I’d like to comment about the proposed opposition law. As I understand it, for a period of one year after issue any party can file an opposition to the granting of the patent. In the abstract that would seem a good idea. why not let anyone challenge the issuing of a patent. I don’t like it.
    First, lets keep in mind that we have worked very well without it on the basis that a patent is presumed valid. That presumption gives legitimacy to the work of the PTO and the patent system. By the way, it makes the little guy’s patent just as valuable as the wealthy companies patents. Both are equally presumed valid. Who will file the oppositions. Not the small companies and individuals. To file an opposition requires a process of watching the patents that issue each Tuesday. It’s a costly process that a big company can do.
    It also deprives the patent owner of a year of the value of the patent, because another way to get your patent opposed is to present it to a company that you think should take a license or stop making a product. Obviously, the first response will be an opposition. So, patent owners will wait until the opposition year is over. It just doesn’t make sense.
    Also, keep in mind that we do have a re-examination system that allows anyone who feels the need and has evidence to get a patent re-examined to see if it is good. That puts the issue back in the hands of the PTO where it belongs. Re-examinations are sometimes filed by the patent owner to clear up a problem and sometimes filed by an accused infringer to get the patent invalidated or limited by the PTO. That’s a good system, maybe a little tweaking to make it more even handed.
    My comments will normally point out that the “reforms” are generated by the powerful to disadvantage the small and un-powerful. More to come.

  3. To me FTI is the jewel in the crown of our patent system. It honors the most important and fair element which is the first inventor gets the patent. I don’t want to argue the issue of whether “inventor” has to mean the first, or could mean anyone who independently invents. My point is what is the most fair. FTF is a bureaucratic convenience. And, it favors the wealthy big companies who can file early and often against those who have to wait until development is further along. Also, we know that first to invent really means the ability to swear behind a reference but subject to the one year limit of 102(b) which is a fair compromise. That rule is eminently fair if the invention was before the effective date of the reference. FTF will eliminate that fairness. Also, the argument of harmonization is a red herring. There is no disharmony, every inventor is subject to the independent laws of each country equally. We should not surrender a fundamentally fair position to go along with other countries who elect a flawed approach.

  4. As a novice in this field, when would this act see the light of day? Does it always get stuck in committee hearings or get killed on the floor? When will Patent Reform Act become law? Thanks.

  5. Currently, at least in practice, the PTO rarely, if ever, issues best mode rejections. So does this change effectively write best mode out of the Patent Act?

  6. Will that requirement for a “clearly more convenient” venue even mean anything when so many NPEs have already set up shop in East Texas?

  7. “And a requirement that they read the whole application, not just the claims?”

    6 can answer this.

    (raises hand for another beer).

  8. “How about a requirement that Examiner’s pass an English language literacy test?”

    How about one for attorney’s? We could test for misplace’d apostrophe’s, and other common English mistake’s to.

    “Everyone has an opinion re FTF, but the constitution says “inventors” and you have to define that as “filers”.”

    Every country gives patents to inventors. That means “someone who invented”, not “the first person who invented”. FTF vs. FTI is simply a question of how you determine priority between two inventors of the same invention, a question on which the constitution is silent.

    FTF is simple and objective. You get to the patent office first, you win. The only problematic aspect timing-wise is the grace period, which many countries don’t even have at all, if you’re trying to manipulate it to get a patent even though you lost the race to the patent office. Scrap the grace period entirely in the absence of fraud/theft/shenanigans, and you’ve got a harsh but fair system.

  9. How about a requirement that Examiner’s pass an English language literacy test? And a requirement that they read the whole application, not just the claims?

    I am curious about the best mode issue.

    Everyone has an opinion re FTF, but the constitution says “inventors” and you have to define that as “filers”.

  10. Ping, I don’t understand your comment. Article 1, Section 8 states: “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” What’s your point?

    Hobbes, keep a tight watch. If Germany cosigns those massive loans for Greece, you’ll get to see Germany’s economy collapse in person this time.

  11. Hobbes, I was referring to the Weimar Republic phase where they spent beyond their means, inflation insued, and the country was taken over by the state (socialist, fascist, whatever label you want to stick on state control).

    Oh. Good. I was afraid Germany had slipped down the tubes while I wasn’t watching. The Weimar Republic thing happened before I was on duty.

  12. “…until you run out of other people’s money…”

    Actually I thought of including that before hitting the “Post” button, but I’m in full agreement.

  13. “Patented” should mean something. Isn’t that the point of the false marking statute? Everyone who could file a patent application, i.e., “any person” is at a competive disadvantage compared to a false marker.

  14. Hobbes, I was referring to the Weimar Republic phase where they spent beyond their means, inflation insued, and the country was taken over by the state (socialist, fascist, whatever label you want to stick on state control).

  15. IANAE, you really should wrap your mind around the US Constitution some time. Try reading the actual text. It will be enlightening, I promise. And sure, throw down Iran and Democratic People’s Republic of Korea while you’re at it. Do you have any idea what their commerce and economies look like? How’s innovation over there?

    PS: Do you know what “enumerated powers” means? It’ll be helpful in the future when discussing the role of the US federal govn’t as defined by the Constitution. Here’s a hint; they include patents.

  16. I find it amusing that the guy who said “Wow, can you say indoctrinated?” is the one who launched into a completely unprovoked knee-jerk anti-big-government rant, and another clearly-not-indoctrinated person has followed suit by naming all the evil communist countries that have gone “down the tubes” because of it. You left out Iran and North Korea, but at least you got Germany and Portugal.

    I suppose we should get government out of the patent-granting business. All this big-government meddling in the free market is just awful.

  17. If “making life better for everyone” is the natural purpose of a big central govn’t”

    Nice strawman.

  18. Reread it IANAE. That’s why they “do ordain and establish this Constitution.” It then goes on TO LIMIT THE ROLE OF THE FEDERAL GOVN’T to certain enumerated powers.

    let’s recap:
    We’re writing this Constitution to limit the federal govn’ts powers in order to:
    - form a more perfect union
    - establish justice
    - insure tranquility
    - promote the general welfare
    - secure liberty

    The LIMITATION of central govn’t to the ESSENTIAL roles is what makes this country the best. If “making life better for everyone” is the natural purpose of a big central govn’t, then why did the Soviet Union, Cuba, Venuzuala, Germany, Italy, Portugal, Spain, etc. all go down the tubes? And why is China the biggest human rights abuser in the world? Big govn’t fails because people are flawed. Our Constitution is intended to acknowledge that FACT and prevent any group of people from having too much control over the individual.

  19. Adam, “Big Government makes life better for people with government jobs and people on the govn’t dole.”

    Until you run out of other people’s money. You should check with Greece on the current state of Big Government.

  20. Wow, can you say indoctrinated?

    Wow, can you say “did not read entire post before responding”?

    “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

    Let’s recap:
    - form a more perfect union
    - establish justice
    - insure tranquility
    - promote the general welfare
    - secure liberty

    That’s why this particular government was constituted. To make life better for everyone. It’s more than just the army thing.

  21. …oh excuse me, Big Government makes life better for people with government jobs and people on the government dole.

  22. “The government exists to make life better for the country as a whole.”

    Wow, can you say indoctrinated?

    Government exists to provide for national defense and other essential public services and staying out of people’s way. In performing their limited role they “make life better.” Big government does not “make life better” for anyone. Quite the contrary.

  23. IANAE, you shouldn’t take shills like Munson terribly seriously,

    As much as I love an obviously partisan rant website with bad spelling and grammar sprinkled in to make it look “folksy”, I think you’ll find that I was responding to a completely different shill.

  24. IANAE, you shouldn’t take shills like Munson terribly seriously, especially when they use strawmen like “Gee, all of the changes benefit infringers and those that do not benefit no one.”

  25. Never pretend to have any idea what America is or the Constitution says, because you clearly don’t.

    The government exists to make life better for the country as a whole. It’s not terrific at it, but that’s what it’s for and that’s what the constitution says it’s for. If you want your own life made better, you’re on your own.

  26. “Besides which, tax cuts only go to people who pay taxes, and they’re not the ones who need help the most.”

    “Full Marx for effort, though.”

    Marx indeed. Never pretend to have any idea what America is or the Constitution says, because you clearly don’t.

  27. IANAE, you need to think this through. “In a bad economy, people are more likely to save the extra money, or use it to save their house from a…” blah blah blah, communist crap. Banks don’t make money by sitting on it. They make money by loaning it out to creditworthy borrowers. When you “save” money, it’s still being invested. When you “save your house” by paying according to the contract you signed, you’re freeing capital for the bank to re-loan.

    Now when the government (i.e., Obama and his geniuses) changes the lending to capital reserve ratio required for banks, yeah, they’re going to stop lending.

    You should look into the financial system a bit instead of just rehashing the “goverment is the only one that can save us” talking points.

  28. 5 patent applications is quite a few for an entity that would be sensitive to the difference between the micro entity fee and the small entity fee.

    Depends how you count. It might be one invention, a couple of continuations and a couple of divisionals. It also depends on the inventors even when the application has been assigned, so that will be fun for companies who find out the inventor they hired already invented something before.

    Also, now that I’ve re-read the micro-entity definition, I’m surprised they haven’t done away with the inventor-as-applicant silliness.

  29. A micro entity as defined would include nearly no one.

    5 patent applications is quite a few for an entity that would be sensitive to the difference between the micro entity fee and the small entity fee.

  30. Even Kennedy knew that cutting taxes and reducing government spending would have a HUGE expansive effect on the economy.

    Far be it from me to question Kennedian Economic Theory, but cutting taxes only has a huge expansive effect on the economy when it results in increased consumer spending. In a bad economy, people are more likely to save the extra money, or use it to save their house from a bank that won’t turn around and lend out that money once it receives it. Besides which, tax cuts only go to people who pay taxes, and they’re not the ones who need help the most.

    If the government spends the money directly, on employing actual unemployed people rather than simply handing it to large corporations who sequester it, those people will put the money back into the economy because they need to spend the money to live.

    Full Marx for effort, though.

  31. Even Kennedy knew that cutting taxes and reducing government spending would have a HUGE expansive effect on the economy.

    Mooney, go back to your steam grate.

  32. “Seriously, increased government spending would do far more to get the economy moving again than “reducing taxes”, ”

    Karl Marx called, he wants his crazy ideas back…

  33. “A new type of entity defined as a “micro entity” that has fewer than 5 patent applications that would qualify for even further reduced fees.”

    Gee, all of the changes benefit infringers and those that do not benefit no one. A micro entity as defined would include nearly no one. Who would have thought that to be with Microsoft and its pals writing the bill!

    Patent reform is a fraud on America. It is patently un-American.
    Please see link to truereform.piausa.org for a different/opposing view on patent reform.

  34. Here is a link to a side-by-side summary comparison of each section of the current amendment to S.515 with the prior version and the House bill.

    link to ptslaw.com

    Generally, the bill fixes most of the technical issues which I had identified in my article last December with the FITF provisions. Which leaves the underlying question of whether moving from FTI to FITF is, on balance, good public policy. That is an issue on which reasonable minds can differ.

  35. Willton: Assuming that is true, I still don’t understand how that increases costs for start-ups.

    I’m not sure how this particular bill would impact start-ups. I was responding to your comment on participation in the patent system being optional for start-ups. Because of how their capital is necessarily distributed, participation in the patent system is more important for start-ups than for large or established businesses. I personally think the micro entity fee structure is a good idea, provided the fees don’t rise too steeply for the small entities. There should also be higher fees for large entities, IMO.

  36. Why does every summary of the bill leave out Section 13?

    (at page 87 and 88 of the PDF)

    If only a fraction of the inventions made at federal labs get commercialized as a result of new investment because of this change, there could be thousands of new jobs. This is an unsung aspect of this bill. Most of the rest of this makes me yawn. We’ve seen it before and not much of it will be of momentous consequences.

  37. Damages limitations and venue restrictions are pretty minimal. It looks watered-down already and I doubt it is going to get stronger as the process continues.

  38. “Assuming that is true, I still don’t understand how that increases costs for start-ups.”

    Allegedly they’ll have to file more often on more inventions because they can’t differ the decision to file for the extra period we now allow them by allowing them to swear behind. Where astute observers will note that due diligence should prevent that swear behind time anyway.

    At least that’s what I’ve heard. I personally don’t waste my time thinking about such nonsense.

  39. “umpty humpyeah…let’s print more money and spend our way to prosperity, works in my house.”

    Wow, what an incisive and intelligent comment. You obviously know more than economists (and you are probably “one of ordinary skill in the art” for every invention). I’m pretty sure your “house” isn’t a country (or maybe you a crazy loon in Montana who thinks it is). Try reading up on Keynesian economics.

  40. HH the sillyness of your position

    There’s nothing silly about it. People need jobs and the economy is not going to improve without them. There are some unemployed people out there who would rather have a “tax break” than a job, but those people are either so wealthy that they do not need to work, or they are m0r0ns of the sort who get their news from Rush Limbaugh.

  41. bananas: Good luck getting funding without patent protection or plans for obtaining patent protection if you are a high-tech startup of any flavor. The less that protection is worth, the less funding will be available.

    Assuming that is true, I still don’t understand how that increases costs for start-ups.

  42. Humpty: completely unresponsive to the sillyness of your position, but ok, you deflect any way you want…LOL

    Pot, meet Kettle.

  43. completely unresponsive to the sillyness of your position, but ok, you deflect any way you want…LOL

  44. umpty humpyeah…let’s print more money and spend our way to prosperity, works in my house.

    The Federal government bears little resemblance to your house. Most of the country considers that a good thing.

  45. yeah…let’s print more money and spend our way to prosperity, works in my house. Why, just yesterday I opended up the ole Monopoly game and sent the little gold $500 bills cash into the IRS for my tax debt, Obama will understand, he does it, why can’t I!!

  46. PB I’ve got a great idea, let’s really put congress to work getting the economy moving instead by lowering taxes and reducing government spending.

    Yes and let’s all be sure to clap really loud so Tinkerbell can hear us!

    Seriously, increased government spending would do far more to get the economy moving again than “reducing taxes”, provided the spending is on worthwhile infrastructure projects that would create jobs for the large number of unemployed people (about 0.00001% of whom are unemployed inventors) AND fimprove the country’s aging infrastructure. Even the most dense and corrupt Republican congresspeople admit (when they’re not on FOX news) that the weak Federal stimulus monies provided to their districts have created jobs and benefited their contituents. It just hasn’t been enough (as predicted in real-time by many economists) and for that we can thank … the Republicans who fought the stimulus in the first place.

    If the issue is reducing the deficit (created, as we all know, by the Bush Administration and Republicans who stoopitly engineered a massively expensive and unjustified war, created new programs without funding them, and simultaneously cut taxes on the wealthiest people in the world), then we should start by getting out of Iraq and Afghanistan, cutting the military budget in half and raising taxes on the upper class to where they were say, during the Reagan era (still to low, but it would be a start).

  47. Here is the full text of the proposed new “best mode” provision:

    SEC. 15. BEST MODE REQUIREMENT.
    8 (a) IN GENERAL.—Section 282(b), as so designated
    9 and amended by section 17(g), is further amended by
    10 striking paragraph (3) and inserting the following:
    11 ‘‘(3) Invalidity of the patent or any claim in
    12 suit for failure to comply with—
    13 ‘‘(A) any requirement of section 112, ex14
    cept that the failure to disclose the best mode
    15 shall not be a basis on which any claim of a
    16 patent may be canceled or held invalid or other17
    wise unenforceable; or
    18 ‘‘(B) any requirement of section 251.’’.
    19 (b) EFFECTIVE DATE.—The amendments made by
    20 this section shall take effect upon the date of the enact 21
    ment of this Act and shall apply to proceedings com 22
    menced on or after that date.”
    [cut & paste line formatting errors curtesy of MS]

  48. Dennis, every one of these proposed changes reads like it was drafted with some particular special interest in mind, and there is not much here that seems directed to advancing the general public interest. How about naming names – who fought for what? Also, given the nature of our national legislature, what are the odds of this or any other patent reform legislation making it through to Obama’s desk?

  49. Willton: How does the above legislation increase costs for start-ups? Last I checked, the patent system was elective, not mandatory.

    Good luck getting funding without patent protection or plans for obtaining patent protection if you are a high-tech startup of any flavor. The less that protection is worth, the less funding will be available.

  50. How does the above legislation increase costs for start-ups? Last I checked, the patent system was elective, not mandatory.

  51. ProBusiness, this is just more ANTI economy legislation. It will increase costs for startups and protect entrenched market participants by reducing their damages, even for knowingly infringing a patent.

    The only bone I see for the little guy is the 5 or fewer patents rule for reduced fees. That lasts through about 1 product for a startup.

  52. Just what we need, more reform proposals. Looks like congress doesn’t have enough to do and wants to put forth a proposal, just for the sake of changing something to foster the illusion that they are actually doing something useful. Bad idea.

    I’ve got a great idea, let’s really put congress to work getting the economy moving instead by lowering taxes and reducing government spending. Otherwise, I guess the zealous reform proponents in congress may find themselves on the street looking for work with the rest of the American public.

  53. Apart from shift to FTF, lots of band-aids and tinkering, but not much of fundamental substance, except for maybe pre-grant submission of PA by TP’s.

    Think about what are really the worst aspects of the current patent system, and ask yourself if any of these measures will help.

    Maybe everything but FTF will pass? Then Congress can be seen to be doing something.

  54. Here is that languge:
    “24 ‘‘(c) EFFECT.—
    25 ‘‘(1) IN GENERAL.—A patent shall not be held
    26 unenforceable under section 282 on the basis of con

    page 82
    GRA10134 S.L.C.
    1 duct relating to information that had not been con2
    sidered, was inadequately considered, or was incor 3
    rect in a prior examination of the patent if the infor 4
    mation was considered, reconsidered, or corrected
    5 during a supplemental examination of the patent.
    6 The making of a request under subsection (a), or
    7 the absence thereof, shall not be relevant to enforce8
    ability of the patent under section 282.”

  55. Thanks Dennis.
    There are other interesting differences from the prior draft legislation as well, such a raising the threshold for starting an inter partes reexamination, plus some confusing entirely new language.
    In particular, what you have briefly described as “a new ‘supplemental examination’ to ensure that the patentee has fulfilled the duty of disclosure” more accurately is providing a novel and controversial way to “cure” any prior inequitable conduct, even affirmative misrepresentations, but leaving quite a number of open questions that need to be addressed.

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