In her article Predicting Patent Litigation, recently published in the Texas Law Review (and available here.), Professor Colleen Chien proposed a model for predicting which patents are most likely to be litigated based on a combination of intrinsic and acquired patent file characteristics. The article has since spawned two short responses, one by Professor Lee Petherbridge of Loyola Los Angeles and the other by Professors Jay Kesan (Illinois), David Schwartz (Chicago-Kent), and Ted Sichelman (San Diego), both published by the Texas Law Review. Both acknowledge Chien's substantial contribution to the literature, but express caution about the extent to which it is possible to perform practically useful data-driven patent litigation prediction given the current state of knowledge.
In On Predicting Patent Litigation, Lee Petherbridge argues that data-driven patent litigation prediction presents difficult modeling problems, especially when models are constructed from the types of data identified in Predicting Patent Litigation. He points out that models used to identify which patents are likely to be litigated need to be both specific and sensitive in order for them to be useful to innovators and their advisors. He also explains that models that rely on causal relationships between acquired patent characteristics (such as reexamination) and patent litigation can be adversely affected by problems such as omitted variable bias and simultaneity. These concerns, he argues, limit such models’ predictive usefulness because they can suppress the specificity and sensitivity necessary to make models practically useful. The response is available here.
Kesan et. al. also express reservations about Professor Chien's model in Paving the Path to Accurately Predicting Legal Outcomes, but do so from the angle of methodological concerns. In particular, Kesan et. al. identify and discuss the merits and the limitations Chien's dataset and empirical methodology, also raising the endogeneity concerns discussed by Petherbridge. In addition, they question the connection between Chien’s observations and her policy recommendations regarding patent record-keeping. The response is available here.
Taken together, these three works provide both a great starting point and a useful guide for anyone considering a data-driven approach to predicting patent litigation.
Two cases where the Board found statutory subject matter:
Ex Parte Hu, App. No. 2010-000151 (BPAI 2012). The examiner rejected claims under Section 101. On appeal, the BPAI held that the claimed “computer-readable storage medium” is “directed to a tangible storage medium, which can be read by a computer” and therefore fall “within one of the four statutory classes of 35 U.S.C. § 101” and qualify as patentable subject matter. The Board distinguished from a broader claim of a “computer readable medium” that would not qualify as tangible.
Ex Parte Svendsen, App. No. 2011-012505 (BPAI 2012). The claim included some machine-like elements such as a wired communication interface. However, the machine elements were all known in the prior art. The Examiner had thus rejected the claims as lacking patentable subject matter – noting that the physical ties were merely “extra-solution activity.” On appeal, the Board reversed – holding that the “extra-solution activity” doctrine “is more properly applicable to cases where Appellant is attempting to circumvent the prohibition on patenting abstract ideas by adding insignificant and unrelated activity. . . . Here, however, the storing and transmitting steps are clearly integral to the selection and delivery of media previews.”
Three cases where the Board found no statutory subject matter:
Ex Parte Rigoutsos, App. No. 2009-010520 (BPAI 2012). The Board affirmed a Section 101 rejection of the claimed “method for annotating a query sequence.” The method included three steps: “accessing patterns associated with a database comprising annotated sequences; assigning attributes to the patterns based on the annotated sequences; and using the patterns with assigned attributes to analyze the query sequence.” In its analysis, the Board found that the claimed method failed to satisfy the Machine-or-Transformation test and therefore failed satisfy the patentable subject matter test of Section 101. “Appellant’s argument does not identify a statutory transformation, and we will sustain the rejection of representative independent claim 1 and its dependent claims 2-17.”
Ex Parte Webb, App. No. 2010-008274 (BPAI 2012) The Board affirmed a Section 101 rejection of the claimed “method for playing a card game.” The method includes the seeming physically transformative step of “dealing two cards to a player.” However, the specification was clear that the cards could be either physical or virtual. In analyzing the meaning of “cards,” the Board determined that cards as claimed “are not an apparatus [or a] machine [but rather are] directed to a general concept that is abstract and sweeping as to cover both known and unknown uses of the concept and be performed through any existing or future-devised machinery.” This rejection is akin to the Supreme Court’s rejection of Morse’s telegraph patent that attempted to claim the use of electro-magnetism to transmit a signal – regardless of the machine used to generate, transmit, or decode the signal. Here, the Board found that the “card limitation” added no patentable subject matter hook because it contains “no limitations as to the mechanism for playing the game. The claimed method does not sufficiently recite a physical instantiation. We conclude that Appellant’s claims attempt to patent and preempt an abstract idea of the game in all fields, and thus is ineligible subject matter under 35 U.S.C. § 101.”
Ex Parte Edelson, App. No. 2011-004285 (BPAI 2012). Edelson’s patent application is directed to a “computer implemented method” for creating asset backed derivatives. Other than the preamble, the claims do not recite any particular link to a particular machine. Thus, the Board easily rejected the claim as reciting “no more than the abstract concept of issuing an abstract intangible asset. As in Bilski, a patent including these claims would allow the Appellant to pre-empt the use of this approach in all fields, and would effectively grant a monopoly over an abstract idea.”
Guest Post by Scott McKeown, Greg Gardella, and Lisa M. Mandrusiak all of OBLON, SPIVAK, MCCLELLAND, MAIER & NEUSTADT, L.L.P.[1]
The Court of Appeals for the Federal Circuit is currently considering en banc the panel decision in Marine Polymer Technologies, Inc. v. Hemcon, Inc. The panel decisioncan be interpreted as suggesting that intervening rights can arise from an argument made during a post grant patent proceeding, such as a patent reexamination proceeding,[2] even if the patent owner is merely urging a claim interpretation that is consistent with the manner in which the term would have been understood at the time the underlying patent application was filed. In cases where the post grant record simply clarifies the way in which a skilled artisan would have understood a claim term at the time of filing, or reiterates the positions of the previous intrinsic record, the scope of the claims cannot properly be said to have been altered during the subsequent proceeding.
Post grant PTO patent proceedings often focus on the meaning of different aspects of originally issued claim language than were considered during the earlier application prosecution. Therefore, much of the argument made by the patent owner during the subsequent PTO proceeding is directed to new issues not previously considered by the PTO. It is to be expected that re-opening the intrinsic record via post grant file histories will often include substantively new discussion of various claim terms.
For example, during post grant proceedings patent claims are accorded the broadest reasonable interpretation ("BRI"). Determining the BRI requires a different analysis than carried out in a district court during claim construction, and notably, there is no requirement that the PTO consider the earlier prosecution record in ascertaining the BRI and meaning of an originally issued patent claim. This often places patent owners in the position of having to re-argue distinctions which were implicitly or explicitly accepted by the previous patent examiner. When the PTO requires amendment of a claim in post grant proceedings the amendment may in fact be a simple restatement of previously agreed upon claim scope, which should not give rise to intervening rights.
The rule adopted by the Court should be flexible so as to accommodate the foregoing situations and permit intervening rights only in the appropriate circumstances. The application of argument-based intervening rights should be limited to situations in which the patent owner clearly and unambiguously revises the issued claim scope by urging that a limitation has a meaning that is plainly at odds with the interpretation a court would have given the originally issued claim language.
President Obama has released his proposed FY2013 budget that would begin October 1, 2012. The budget proposes to provide the USPTO with full access to its fee collections at an estimated $2.95 billion ($250 million over FY2012 and more than $1 billion over 2009. The revenue gives Director Dave Kappos the funds he has needed to hire examiners and BPAI judges and to revamp the USPTO’s defunct IT system. Lets see how it rolls.
This is fun – Managing IP just listed me on the shortlist for its IP Thought Leader award for 2012. [List] Others on the list include Eric Goldman, Mark Lemley, Daniel Ravicher, and Hal Wegner. I obviously don’t deserve the award, but it is nice to be recognized in print. MIP is also awarding the top IP practitioner and top IP law firms in various categories.
I just received my new copy of the CIPA guide to the Patents Acts – Seventh Edition, published by Sweet & Maxwell in the UK. CIPA is the Charted Institute of Patent Attorneys and represents about 3,200 patent attorneys, trainees, and other UK intellectual property law professionals. The guide is edited by Paul Cole and Stephen Jones. The book – affectionately known as the "Black Book" – is actually black and has been in print continuously since 1980. Although the book focuses primarily on UK law, it is highly relevant to considerations of both European and American law. Both Lord Justice Jacob and Chief Judge Rader wrote forwards to the book. In his forward, Judge Rader remarked positively on the growing dialogue between US courts and those of Europe and Asia and noted that US patent courts should be prepared to understand and – at times – apply the law of other nations. Point being – this book is relevant to those in the US practice of patent law. Lord Justice Jacob wrote "I shall continue to keep the book within easy reach. So should anyone else concerned with European or British patents."
Parallel to Judge Rader's thoughts, in a working paper (not yet public) I argue that the America Invents Act further compels US courts to consider the law of other nations in order to implement the harmonization mandate found in the newly enacted legislation.
In his summary of the work, Paul Cole writes that this book is "intend to provide the most comprehensive single-volume reference work for patent law in the UK and under the EPC." The book references over 3300 decisions of the UK IP Office and courts and of the EPO Appeal Boards as well as all relevant statutes.
You can purchase the book for £250 (about $400) from the publisher. [LINK]
Congratulations and Cheers!
As an aside – I will be leading a CIPA short course this summer in London at Lord Jacob's home institution of the University College of London (UCL) Faculty of Laws. The course is primarily intended for UK and European patent law professionals and will focus on the new American law and how the changes will impact prosecution, litigation, and licensing of patent rights.
Next year, I will be teaching the required first year course here at Mizzou titled Civil Procedure II. It would not be too difficult to almost fill an entire civil procedure casebook with patent cases. In this decision, the court focused on the difference between dismissal for lack of subject matter jurisdiction and dismissal for failure to state a claim.
Here, the defendant generic pharmaceutical manufacturers filed an abbreviated new drug application (ANDA) with the Food & Drug Administration (FDA) requesting permission to begin selling a generic version of Astrazeneca's CRESTOR statin drug. The ANDA requested approval only for a limited set of drug uses. And, as it turns out, none of the applied-for uses are covered by the method patents listed in the Orange Book. (Astrazeneca has a composition patent that is being litigated in a separate lawsuit).
A generic ANDA must provide some indication as to why the generic application should be approved despite any patent rights held by the branded manufacturer. This explanation is typically identified as a Paragraph I, II, III, or IV certification.
Paragraph I Certification indicates that the Orange Book lists no patents relevant to the ANDA.
Paragraph II Certification indicates that the listed patents have expired.
Paragraph III Certification indicates that the generic manufacturer will stay off market until the patents expire.
Paragraph IV Certification indicates that the generic manufacturer believes that the listed patents are either invalid or would not be infringed by the generic compositions.
21 U.S.C. § 355(j)(2)(A)(vii)(I-IV). The generic ANDA may alternatively include a statement that excludes all uses claimed in any listed patents. 21 U.S.C. § 355(j)(2)(A)(viii). Here, the generic filers followed this alternative approach and explicitly excluded any and all uses of the compounds claimed in AZ's listed patents.
The patent statute creates a quirky cause of action for generic drug patent litigation. Rather than requiring a patentee to wait for infringement by manufacture or sale under 35 U.S.C. § 271(a), the law includes a shortcut under Section 271(e)(2) that creates a cause of action based simply on filing an ANDA for the purpose of gaining approval to manufacture or sell a generic version of a drug before the associated patent expires.
It shall be an act of infringement to submit—(A) an [ANDA] under [section 355(j)] for a drug claimed in a patent or the use of which is claimed in a patent … if the purpose of such submission is to obtain approval … to engage in the commercial manufacture, use, or sale of a drug … claimed in a patent or the use of which is claimed in a patent before the expiration of such patent.
35 U.S.C. § 271(e)(2). AZ seemingly agreed that the generic filing, by its terms did not seek approval for any use that would infringe AZ's patent claims. However, Astrazeneca sued the generic filers for infringement anyway. AZ's argument was – once approved – the drug would certainly be sold and used for infringing purposes and that the FDA will eventually require the generic filers to amend their ANDA to cover all approved uses of the drug. The district court rejected these claims and dismissed the case for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1).
On appeal, the federal circuit rejected that conclusion – holding instead that the court's subject matter jurisdiction persists because the complaint alleged infringement under the patent act. The court wrote "the requirements for jurisdiction in the district courts are met once a patent owner alleges that another's filing of an ANDA infringes its patents under §271(e)(2), and this threshold jurisdictional determination does not depend on the ultimate merits of the claims."
Although the court rejected the dismissal on Rule 12(b)(1), the court went on to affirm the judgment based on Rule 12(b)(6) – dismissal on the pleading for failure to state a viable claim. The rules of adjudging 12(b)(6) issues allow the court to consider whether it would be possible for the plaintiff to win based upon facts alleged in the pleadings. Here, the appellate panel held that the complaint failed because "an ANDA seeking to market a drug not covered by a composition patent for unpatented methods of treatment cannot infringe under § 271(e)(2)."
The patent system is sometimes frustrating to policymakers because of its market approach to invention. Innovators and investors decide the focus of research – not policymakers. As such, we tend to see research investment in areas of market value rather than areas that serve humanity in a broader or more altruistic sense. Now, these notions of market incentives and advancing humanism often overlap. A cure for cancer would serve humanity, but would be quite valuable in the marketplace as well. But, the point is that – with the patent system – the decision making is normally well outside of the control of policymakers.
When the government has specific technological advancement goals, it tends to choose non-patent development mechanisms such as finding a contractor to develop the technology, offering a grant to researchers, or perhaps offering a prize for successful development.
In a recent release, the USPTO and White House have announced a new hybrid program to provide an additional patent incentive for inventors who "do the most to apply their technologies to pressing global challenges." The way the program operates is that do-good inventors (and corporate patent owners) will receive an award certificate that can be used to accelerate the prosecution any patent application in their portfolio (a $4,800 value).
Through this initiative, the USPTO seeks to reward inventors who show that they have used their patented technologies to significantly address public health quality or to advance scientific research on neglected humanitarian issues. Such technologies may include life-saving medicines and vaccines, medical diagnostic equipment, more nutritious or heartier crops, food storage & preservation technology, water sterilization devices, cleaner sources of household light and heat, or information devices promoting literacy and education, among others. Awardees will be chosen by judges selected from academia for their expertise in medicine, law, science, engineering, public policy, or a related field.
Submissions will begin on March 1 and up to 50 winners will be chosen this calendar year.
The patent system is sometimes frustrating to policymakers because of its market approach to invention. Innovators and investors decide the focus of research – not policymakers. As such, we tend to see research investment in areas of market value rather than areas that serve humanity in a broader or more altruistic sense. Now, these notions of market incentives and advancing humanism often overlap. A cure for cancer would serve humanity, but would be quite valuable in the marketplace as well. But, the point is that – with the patent system – the decision making is normally well outside of the control of policymakers.
When the government has specific technological advancement goals, it tends to choose non-patent development mechanisms such as finding a contractor to develop the technology, offering a grant to researchers, or perhaps offering a prize for successful development.
In a recent release, the USPTO and White House have announced a new hybrid program to provide an additional patent incentive for inventors who "do the most to apply their technologies to pressing global challenges." The way the program operates is that do-good inventors (and corporate patent owners) will receive an award certificate that can be used to accelerate the prosecution any patent application in their portfolio (a $4,800 value).
Through this initiative, the USPTO seeks to reward inventors who show that they have used their patented technologies to significantly address public health quality or to advance scientific research on neglected humanitarian issues. Such technologies may include life-saving medicines and vaccines, medical diagnostic equipment, more nutritious or heartier crops, food storage & preservation technology, water sterilization devices, cleaner sources of household light and heat, or information devices promoting literacy and education, among others. Awardees will be chosen by judges selected from academia for their expertise in medicine, law, science, engineering, public policy, or a related field.
Submissions will begin on March 1 and up to 50 winners will be chosen this calendar year.
In re Google Inc. (Fed. Cir. 2012) (Nonprecedential Order) Download In re Google Panel: Lourie, Prost, and Moore (author)
Earlier this week, the Federal Circuit denied a petition for a writ of mandamus sought by Google in a dispute with Oracle. The petition sought to prevent Oracle from using a juicy email on the ground that the email was privileged. The email was sent from a Google engineer to Google's VP in charge of its Android operating platform, as well as Google's senior counsel and another engineer. The email itself is reproduced in the court's opinion; it relates to an investigation of alternatives to Java that Google was considering. Google included the final version of the email on its privilege log, but produced "autosaves" of the email as it was being drafted. After Oracle referenced the substance of the email at a hearing, Google asked Oracle to return all versions of the email, citing privilege. Oracle complied, but moved to compel. The district court subsequently held that the email was not protected under the attorney-client privilege or the work-product doctrine.
Although the court's affirmance of the district court's refusal to protect this communication under the attorney-client privilege is fact-specific (and nonprecedential), the opinion nevertheless provides a useful short primer on attorney-client privilege issues in the context of activities performed at the behest of an in-house counsel.
The opinion also illuminates one of the consequences of the dump-and-recall approach that patent litigation is trending towards: if Google had carefully reviewed all of its document before they were produced, it likely would not have produced autosaves of this email. Instead, they would likely have ended up as a few lines among an untold number of nearly anonymous entries on a privilege log. Indeed, if even Google cannot avoid the inadvertent production of documents it intended to shield via its privilege log, it is questionable that anyone can – especially as document volumes continue to grow. (But perhaps search technologies will improve as well).
This consequence is not necessarily undesirable, however. Privilege logs can include documents of questionable privilege; often, the claims of privilege are not challenged (perhaps because parties on opposite sides are concerned about a possibility of mutually assured destruction). By their very nature, dump-and-recall opens the door to the possibility of more challenges to these types of questionable documents – which may lead to more greater disclosure of significant documents that otherwise would have languished in secret.
Proposed Filing Fee for Petition for Post-Grant Opposition or Covered Business Method Patent Review: $35,800 to review up to 20 claims, $44,750 to request review of 21 to 30 claims, $53,700 to request review of 31 to 40 claims, $71,600 to request review of 41 to 50 claims, $89,500 to request review of 51 to 60 claims, and an additional $35,800 to request review of additional groups of 10 claims.
Proposed Filing Fee for a Petition for Inter Partes Review: $27,200 to review up to 20 claims, $34,000 to request review of 21 to 30 claims, $40,800 to request review of 31 to 40 claims, $54,400 to request review of 41 to 50 claims, $68,000 to request review of 51 to 60 claims, and an additional $27,200 to request review of additional groups of 10 claims.
Proposed Filing Fee for a Petition for Ex Parte Reexamination: $17,760.
Proposed Fees for Supplemental Examination: Filing Fee of $7,000; Examination Fee of $20,000.
Petition for Derivation: $400.
Third Party Submission of Prior Art in Pending Cases: $0 for up to three references with notation; $180 for up to ten.
My report to Congress last week included a statement regarding the greatest change at the USPTO since the September 16, 2011: Funding. After raising fees and receiving permission to spend fees collected, the USPTO began to quickly implement a plan to address the backlog of patent applications awaiting examination and to address particular bottlenecks in the system such as the 25,000+ queue awaiting action from the Board of Patent Appeals. Under the AIA, the USPTO has authority to set fees within certain limits. In a recent document, the Office has published a proposed patent fee schedule and will hold a hearing at the USPTO’s campus on February 15 and in Silicon Valley on February 24. (Note, the USPTO has also published a set of proposed rules to implement post-grant reforms. I will discuss those in a separate post).
The bottom line for fees is that that they are on the rise.
Proposals include:
Filing+Search+Examination Fee rising to $1,840 from $1,250.
Excess Independent Claims rising to $460 each (after 3) from $210.
Excess Total Claims rising to $100 each (after 20) from $60.
Request for Continued Examination rising to $1,700 from $930.
Notice of Appeal rising from $930 to $1,700 but issue fee is waived if Examiner withdraws rejection. Nothing more will be due at the appeal brief stage. However, once the examiner’s answer is received, applicant will need to pay $2,500 to move forward with the appeal.
Three-Stage Maintenance Fees from $8,710 to $12,800.
The one fee being reduced is for publication+issue – dropping from $2,040 to $960.
For a certain class of patent applicants, the new fee structure will not be a problem – so called “micro entities” will receive a 75% discount. The general definition of micro entities limits the scope of that class to individuals and very small companies with little patenting experience. The biggest winners in the AIA process have been universities. In the fee scenario, universities successfully lobbied to be classified as micro entities. (UC’s budget for 2011 was $22 billion…).
The idea with the fee increase is to provide the USPTO with more funding so that the office can do its job and address the various bottlenecks and backlogs in the system. However, the structure of the rules are also intended to shift patent applicant behavior. [More to come]
In a December 2011 order, the Delaware district court awarded preliminary injunctive relief to Sciele and Shionogi and forcing Lupin to stop selling generic versions of the patentee’s diabetes drug Fortamet (metformin). After an emergency motion, the district court refused to stay relief pending appeal. Based upon a separate emergency motion, the Court of Appeals for the Federal Circuit has now vacated the preliminary injunction and remanded the case for a new hearing.
Pre-hearing motions to the Federal Circuit are normally decided by a designated motions judge. Typically, the Federal Circuit judges rotate through that position on a monthly basis. Simple procedural motions are pushed-down to the clerk to handle. At times, more complex motions are pushed-up to the merits panel who will hear the substantive portion of the case. Motions for emergency stay of injunctive relief are typically in the latter category being pushed to the merits panel because judging the motion typically requires a substantive review of the merits of the appeal. In this case, Judges Lourie, Prost, and Moore decided the motion.
Under the Federal Rules of Civil Procedure, a losing party has a right to delay (stay) payment of monetary damages pending appeal of the decision. That right, however, does not extend to staying an order for injunctive relief. Thus, in those cases the losing party must file emergency motions for a stay pending appeal.
Along the lines of eBay, appellate courts apply a four factor test to determine whether to issue a stay of injunctive relief pending appeal. The party requesting the stay must show (1) a likelihood of success on the merits of the appeal; (2) that the requesting party will suffer irreparable injury absent a stay; (3) that the stay will not unduly harm other parties interested in the proceeding; and (4) that a stay serves the public interest. The Federal Circuit has held that either of the first two factors can be (and often are) dispositive. Namely, the court has held that the party can be awarded a stay based upon either (1) a strong likelihood of success on the merits of the appeal or (2) a substantial case on the merits coupled with harm factors that “militate in its favor.”
Here, the district court had rejected the defendant’s obviousness argument but did not make any proper finding of facts or conclusions of law regarding that argument. On appeal, the Federal Circuit held that the district court should have made “an independent assessment” of the obviousness defense and that failure prevents the Federal Circuit from “engaging in a meaningful review of the issue.” As such the court vacated and remanded “for a proper analysis.”
In the separate decision of Midtronics v. Aurora Performance (Fed. Cir. 2012), the Federal Circuit has also awarded an emergency stay of relief pending appeal. In the Midtronics case, Judge Shadur of the Northern District of Illinois ordered the adjudged infringer to issue a general recall of its battery testing devices and pay end users to return the infringing product. BPPower appealed and also requested an emergency stay of the order pending resolution of the appeal. Without substantive opinion, the same panel of Judges Lourie, Prost, and Moore issued a stay of relief pending the outcome of the appeal.
The US Department of Commerce recently performed an audit and evaluation of the USPTO's Hoteling program. The report shows that the average Patent Hoteling Program (PHP) examiner spends 66.3 more hours a year examining patents than does the average in-house examiner (which translates to reviewing about 3.5 more patent applications a year. However, the report shows that PHP participants are no more efficient at reviewing patent applications than individuals at the USPTO headquarters. At the end of the fiscal year 2011 over 2,600 patent examiners were Hoteling. To be able to participate in the PHP an examiner must be GS-12 or above, worked at least 2 years at the USPTO, passed the certification exam (essentially the Patent Bar), & currently not under any warnings. [Link]
U.S. House introduces bill to amend design patent law
The proposed House bill, known as the Promoting Automotive Repair, Trade, and Sales (PARTS) Act, would reduce the time period when auto manufacturers are able to enforce design patents on collision repair parts against alternative suppliers from 14 years to 30 months. The bill claims that it would save Americans money on car parts, by removing auto manufacturer monopolies from the equation. [Link]
Can University Tech Transfer save the Pharma Industry?
The pharmaceutical industry has been hit hard by the fall in revenue because of expiring patents. Pfizer's profit declined 50% because of Lipitor going into the public domain. Eli Lilly's profit dropped 27% because of Zyprexa going generic. AstraZeneca revenue declined and they plan to lay off 7,350 people, because Nexium fell out of patent protection in Europe. Also, later this year Plavix and Singulair will face competition, which will probably cause those companies' profits to drop. With all of these multi- billion dollar patents expiring, it seems that pharma companies need new compounds and drugs to increase profit. I think that Universities will be the key to the pharma industry. Universities have many patents waiting to be licensed by big companies that could be very profitable for both the University and the company. The problem that I see is that there is a lack of communication between companies and Universities. Most University Tech Transfer offices are limited in what they can do, and if they do not have an inside connection at a company, it is difficult to market an invention to a big company. This problem can be overcome in many ways; however it would seem that an intermediary may be needed. An intermediary would be of great value if they can connect pharma companies (or companies in general) with University Tech Transfer offices to help broker a deal. While this is not a new idea in the patent world, I do not think that many universities currently use individuals from the outside to help get technology licensed. [Link]
Patent Jobs:
Apple seeks to hire a Sr. IP Counsel with 6+ years of experience in patent disputes to work at their Cupertino location. [Link]
Sughrue Mion is searching for candidates for an associate or technical specialist positions with a BS in chemical fields and candidates with Ph.D. level education in Molecular/Cell biology to work in their D.C. office. [Link]
Brookstone is looking for IP Counsel with a minimum of 5 years of experience to work at their Merrimack, New Hampshire location. [Link]
Christopher & Weisberg is seeking a patent attorney with 1-5 years of experience and degree in EE to work in their Fort Lauderdale office. [Link]
Harness, Dickey & Pierce is searching for a patent prosecution associate with 3-4 years of experience and Bachelor's degree in Biotech or a Biotech-related degree to work in their Saint Louis office. [Link]
Faegre Baker Daniels is looking for an IP associate with degree in EE, ME, CE, physics, or chemistry and up to 5 years of patent prosecution experience to work in their Fort Wayne, Indiana office. [Link]
Bluestone Innovations is seeking to hire in house counsel with 5 years of patent litigation experience to work at their Reston, Virginia location. [Link]
Upcoming Events:
The New Jersey IP Association is sponsoring, The Inside Track to the Proposed Rules for Implementation of the America Invents Act on February 7 in Trenton, NJ. Featured speakers include: David Kappos, Philip Johnson, and Kenneth Nigon. [Link]
The Emory Law Journal will hold The 2012 Randolph W. Thrower Symposium, Innovation For the Modern Era: Law, Policy, and Legal Practice in a Changing World on February 9. The symposium is free and open to the public. [Link]
The Intellectual Property Law Section of the Utah State Bar is hosting its annual IP Summit in Salt Lake City, Utah, on February 17, 2012, at the Little America Hotel. This full day event includes two tracks of topics in various areas of IP law, lunch, and a networking reception. Confirmed speakers include Ted McAleer, Executive Director of USTAR; Robin Zhao, Jeekai & Partners; Hon. Dee V Benson, US Dist. Ct for the Dist. of Utah; Hon. Ted Stewart, US Dist. Ct for the Dist. of Utah; Hon. Virginia Kendall, US Dist. Ct for Northern Dist. of Illinois; Paul Marchegiani, NBC; Howard Michael, Brinks Hofer Gilson & Lione; Jeff Gee, Symantec; and Richard Chang, ICON. [Link]
IBC Legal's 20th Annual Biotech & Pharmaceutical Patenting Conference 2012 will be held on February 21-22 in Munich, Germany. Get advice and analysis from a diverse team of international life science and IP experts on recent case law and developments, patent filing, patent life cycles, SPCs, patent infringement, EC Bolar implementation and more! Patently-O readers get a 10% discount when registering with this link. [Link]
The 7th Annual Conference on EU Pharma Law & Regulation will be held on February 22-23 in London. The conference will bring together eminent in-house counsel from the world's largest pharma and biotech companies, top legal practitioners and regulatory experts in an outstanding speaker panel. (Patently-O readers register with PO 10 for a discount). [Link]
Maurer School of Law Center for IP Research will hold a CLE Fundamentals of Federal Circuit Advocacy event on February 23. Greg Castanias will lead a discussion of patent appeals before the Federal Circuit. Also appearing: Center for Intellectual Property Research senior advisor Donald Knebel, Prof. Mark D. Janis, and former Federal Circuit clerk Allison Kerndt. [Link]
The Florida Bar 3rd Annual IP Law Symposium will be held on March 1-2 on Orlando. The IP Symposium will address recent developments and important issues in IP law, including: Perspectives on the America Invents Act, Copyright Law and the First Sale Doctrine, Third Party Liability in IP, Enforcing IP on the Internet, Latest Developments in Patent, Trademark, and Copyright Law, and Recent Developments at the TTAB. Guest speakers include; Anne Gilson LaLonde, Scott Bain, John Welch, and many others. [Link]
Section 101 Gatekeepers: Finding the Patentable Subject Matter Line in a Judicial Sandstorm, webinar will be hosted by AIPLA on March 7. The webinar will be presented by Professor Christopher Holman and attorney Robert H. Fischer. [Link]
LES (USA & Canada) 2012 Winter Meeting will be held March 12-14 in Anaheim, CA. The meeting will focus on cutting-edge issues in the high tech space with overlapping content in related industries, including clean tech, nanotech, and medical devices. Featured speakers include Honorable Randall Rader, Chief Judge, U.S. Court of Appeals for the Federal Circuit; Catherine Casserly, CEO, Creative Commons; and Patrick Ennis, Head of Global Technology, Intellectual Ventures. Save $100 before January 31. [Link]
C5's 22 Forum on Biotech Patenting conference will take place March 14-15 in Munich, Germany. The conferencebrings together experienced in-house counsel from both innovator and generic pharma and biotech companies and their expert legal advisors from various jurisdictions across the globe. Session will cover the patentability of gene sequence patents in Europe and the US, current developments on biotech products and patent considerations for bio-deposits, and many other sessions. (Patently-O readers register with PO 10 for a discount). [Link]
American Conference Institute's FDA Boot Camp conference is scheduled for March 20-21 in New York, NY. ACI's FDA Boot Camp has been designed to give products or patent litigators, as well as patent prosecutors, industry in-house counsel, and life sciences investment and securities experts, a strong working knowledge of coreFDA competencies. (Patently-O readers register with PO 200 for a discount). [Link]
American Conference Institute's PTO Procedures Under the America Invents Act conference is scheduled for March 26-27 in New York, NY. This conference will serve as a practical and tactical guide for PTO practice post-Patent Reform. (Patently-O readers register with PO 200 for a discount). [Link]
The US Department of Commerce recently performed an audit and evaluation of the USPTO's Hoteling program. The report shows that the average Patent Hoteling Program (PHP) examiner spends 66.3 more hours a year examining patents than does the average in-house examiner (which translates to reviewing about 3.5 more patent applications a year. However, the report shows that PHP participants are no more efficient at reviewing patent applications than individuals at the USPTO headquarters. At the end of the fiscal year 2011 over 2,600 patent examiners were Hoteling. To be able to participate in the PHP an examiner must be GS-12 or above, worked at least 2 years at the USPTO, passed the certification exam (essentially the Patent Bar), & currently not under any warnings. [Link]
U.S. House introduces bill to amend design patent law
The proposed House bill, known as the Promoting Automotive Repair, Trade, and Sales (PARTS) Act, would reduce the time period when auto manufacturers are able to enforce design patents on collision repair parts against alternative suppliers from 14 years to 30 months. The bill claims that it would save Americans money on car parts, by removing auto manufacturer monopolies from the equation. [Link]
Can University Tech Transfer save the Pharma Industry?
The pharmaceutical industry has been hit hard by the fall in revenue because of expiring patents. Pfizer's profit declined 50% because of Lipitor going into the public domain. Eli Lilly's profit dropped 27% because of Zyprexa going generic. AstraZeneca revenue declined and they plan to lay off 7,350 people, because Nexium fell out of patent protection in Europe. Also, later this year Plavix and Singulair will face competition, which will probably cause those companies' profits to drop. With all of these multi- billion dollar patents expiring, it seems that pharma companies need new compounds and drugs to increase profit. I think that Universities will be the key to the pharma industry. Universities have many patents waiting to be licensed by big companies that could be very profitable for both the University and the company. The problem that I see is that there is a lack of communication between companies and Universities. Most University Tech Transfer offices are limited in what they can do, and if they do not have an inside connection at a company, it is difficult to market an invention to a big company. This problem can be overcome in many ways; however it would seem that an intermediary may be needed. An intermediary would be of great value if they can connect pharma companies (or companies in general) with University Tech Transfer offices to help broker a deal. While this is not a new idea in the patent world, I do not think that many universities currently use individuals from the outside to help get technology licensed. [Link]
Patent Jobs:
Apple seeks to hire a Sr. IP Counsel with 6+ years of experience in patent disputes to work at their Cupertino location. [Link]
Sughrue Mion is searching for candidates for an associate or technical specialist positions with a BS in chemical fields and candidates with Ph.D. level education in Molecular/Cell biology to work in their D.C. office. [Link]
Brookstone is looking for IP Counsel with a minimum of 5 years of experience to work at their Merrimack, New Hampshire location. [Link]
Christopher & Weisberg is seeking a patent attorney with 1-5 years of experience and degree in EE to work in their Fort Lauderdale office. [Link]
Harness, Dickey & Pierce is searching for a patent prosecution associate with 3-4 years of experience and Bachelor's degree in Biotech or a Biotech-related degree to work in their Saint Louis office. [Link]
Faegre Baker Daniels is looking for an IP associate with degree in EE, ME, CE, physics, or chemistry and up to 5 years of patent prosecution experience to work in their Fort Wayne, Indiana office. [Link]
Bluestone Innovations is seeking to hire in house counsel with 5 years of patent litigation experience to work at their Reston, Virginia location. [Link]
Upcoming Events:
The New Jersey IP Association is sponsoring, The Inside Track to the Proposed Rules for Implementation of the America Invents Act on February 7 in Trenton, NJ. Featured speakers include: David Kappos, Philip Johnson, and Kenneth Nigon. [Link]
The Emory Law Journal will hold The 2012 Randolph W. Thrower Symposium, Innovation For the Modern Era: Law, Policy, and Legal Practice in a Changing World on February 9. The symposium is free and open to the public. [Link]
The Intellectual Property Law Section of the Utah State Bar is hosting its annual IP Summit in Salt Lake City, Utah, on February 17, 2012, at the Little America Hotel. This full day event includes two tracks of topics in various areas of IP law, lunch, and a networking reception. Confirmed speakers include Ted McAleer, Executive Director of USTAR; Robin Zhao, Jeekai & Partners; Hon. Dee V Benson, US Dist. Ct for the Dist. of Utah; Hon. Ted Stewart, US Dist. Ct for the Dist. of Utah; Hon. Virginia Kendall, US Dist. Ct for Northern Dist. of Illinois; Paul Marchegiani, NBC; Howard Michael, Brinks Hofer Gilson & Lione; Jeff Gee, Symantec; and Richard Chang, ICON. [Link]
IBC Legal's 20th Annual Biotech & Pharmaceutical Patenting Conference 2012 will be held on February 21-22 in Munich, Germany. Get advice and analysis from a diverse team of international life science and IP experts on recent case law and developments, patent filing, patent life cycles, SPCs, patent infringement, EC Bolar implementation and more! Patently-O readers get a 10% discount when registering with this link. [Link]
The 7th Annual Conference on EU Pharma Law & Regulation will be held on February 22-23 in London. The conference will bring together eminent in-house counsel from the world's largest pharma and biotech companies, top legal practitioners and regulatory experts in an outstanding speaker panel. (Patently-O readers register with PO 10 for a discount). [Link]
Maurer School of Law Center for IP Research will hold a CLE Fundamentals of Federal Circuit Advocacy event on February 23. Greg Castanias will lead a discussion of patent appeals before the Federal Circuit. Also appearing: Center for Intellectual Property Research senior advisor Donald Knebel, Prof. Mark D. Janis, and former Federal Circuit clerk Allison Kerndt. [Link]
The Florida Bar 3rd Annual IP Law Symposium will be held on March 1-2 on Orlando. The IP Symposium will address recent developments and important issues in IP law, including: Perspectives on the America Invents Act, Copyright Law and the First Sale Doctrine, Third Party Liability in IP, Enforcing IP on the Internet, Latest Developments in Patent, Trademark, and Copyright Law, and Recent Developments at the TTAB. Guest speakers include; Anne Gilson LaLonde, Scott Bain, John Welch, and many others. [Link]
Section 101 Gatekeepers: Finding the Patentable Subject Matter Line in a Judicial Sandstorm, webinar will be hosted by AIPLA on March 7. The webinar will be presented by Professor Christopher Holman and attorney Robert H. Fischer. [Link]
LES (USA & Canada) 2012 Winter Meeting will be held March 12-14 in Anaheim, CA. The meeting will focus on cutting-edge issues in the high tech space with overlapping content in related industries, including clean tech, nanotech, and medical devices. Featured speakers include Honorable Randall Rader, Chief Judge, U.S. Court of Appeals for the Federal Circuit; Catherine Casserly, CEO, Creative Commons; and Patrick Ennis, Head of Global Technology, Intellectual Ventures. Save $100 before January 31. [Link]
C5's 22 Forum on Biotech Patenting conference will take place March 14-15 in Munich, Germany. The conferencebrings together experienced in-house counsel from both innovator and generic pharma and biotech companies and their expert legal advisors from various jurisdictions across the globe. Session will cover the patentability of gene sequence patents in Europe and the US, current developments on biotech products and patent considerations for bio-deposits, and many other sessions. (Patently-O readers register with PO 10 for a discount). [Link]
American Conference Institute's FDA Boot Camp conference is scheduled for March 20-21 in New York, NY. ACI's FDA Boot Camp has been designed to give products or patent litigators, as well as patent prosecutors, industry in-house counsel, and life sciences investment and securities experts, a strong working knowledge of coreFDA competencies. (Patently-O readers register with PO 200 for a discount). [Link]
American Conference Institute's PTO Procedures Under the America Invents Act conference is scheduled for March 26-27 in New York, NY. This conference will serve as a practical and tactical guide for PTO practice post-Patent Reform. (Patently-O readers register with PO 200 for a discount). [Link]
Dealertrack v. Huber (Fed. Cir. 2012) Download 09-1566 Panel: Linn (author), Plager (concurring in part and dissenting in part), and Dyk
The Federal Circuit's opinion in Dealertrack adds to the evolving law on subject matter patentablility of computer-related inventions. It should be read in connection with two other recent decisions in this area, Ultramercial v. Hulu, 657 F.3d 1323 (Fed. Cir. 2011) and CyberSource Corp. v. Retail Decisions, 654 F.3d 1366 (Fed. Cir. 2011).
At issue was the subject matter patentability of claims 1, 3, and 4 of Patent No. 7,181,427. Claim 1 is representative:
1. A computer aided method of managing a credit application, the method comprising the steps of: [A] receiving credit application data from a remote application entry and display device; [B] selectively forwarding the credit application data to remote funding source terminal devices; [C] forwarding funding decision data from at least one of the remote funding source terminal devices to the remote application entry and display device; [D] wherein the selectively forwarding the credit application data step further comprises: [D1] sending at least a portion of a credit application to more than one of said remote funding sources substantially at the same time; [D2] sending at least a portion of a credit application to more than one ofsaid remote funding sources sequen-tially until a finding [sic, funding] source returns a positive funding decision; [D3] sending at least a portion of a credit application to a first one of said remote funding sources, and then, after a predetermined time, sending to at least one other remote funding source, until one of the finding [sic, funding] sources returns a positive funding deci-sion or until all funding sources have been exhausted; or, [D4] sending the credit application from a first remote funding source to a second remote finding [sic, funding] source if the first funding source de-clines to approve the credit application.
On appeal, the CAFC agreed with the district court that these claims are "directed to an abstract idea preemptive of a fundamental concept or idea that would foreclose innovation in this area," and thus are invalid under 35 U.S.C. §101. In its simplest form, the court reasoned, the claimed process explains the basic concept of processing information through a clearinghouse. "Neither Dealertrack nor any other entity is entitled to wholly preempt the clearinghouse concept." Slip Op. at 35.
Nor was the link to a computer sufficient to limit the claims to an application of the idea. "The claims are silent as to how a computer aids the method, the extent to which a computer aids the method, or the significance of a computer to the performance of the method. The undefined phrase "computer aided" is no less abstract than the idea of a clearinghouse itself." Slip Op. at 35. "Simply adding a computer aided limitation to a claim covering an abstract concept, without more, is insufficient to render the claim patent eligible." Id. at 36. In essence, the claimed process was akin to the unpatentable binary-coded decimal to pure binary conversion in Gottschalk v. Benson, 409 U.S. 63 (1972), and covered a clearinghouse process "using any existing or future-devised machinery."
This opinion completes a trio of recent opinions dealing with the patentability of computer-related inventions, the others being Ultramercial and CyberSource. In Ultramercial, authored by Chief Judge Rader and joined by Judges Lourie and O'Malley, the court concluded that a process for monetizing copyrighted products using a computer fell on the patentable side of the abstract ideas versus patentable application divide. Reaching the opposite result on the issue of abstractness, the CyberSource panel of Judges Bryson, Dyk (author) and Prost concluded that a method of verifying a credit card transatction over the Internet constituted an unpatentable process. In Dealertrack, the court drew upon the reasoning in CyberSource while distinguishing Ultramercial.
The court also addressed issues of claim construction and indefiniteness. Particularly noteworthy was the court's conclusion that "i.e.:" in the context of a patent-in-suit could not be read definitionally. Slip Op. 17-20.
Towards a more efficient judicial process: Writing in partial dissent, Judge Plager disagreed with the majority's decision to address subject matter patentability:
[A]s a matter of efficient judicial process I object to and dissent from that part of hte opinion regarding the '427 patent and its validity under §101, the section of the Patent Act that describes what is patentable subject matter. I believe that this court should exercise its inherent power to control the processes of litigation, Chamberes v. NASCO, Inc., 501 U.S. 32, 43 (1991), and insist that litigants, and trial courts, initially address patent invalidity issues in infringement suits in terms of the defenses provided in the statute: "conditions of patentability," specifically §§102 and 103, and in addition §§112 and 251, and not foray into the jurisprudential morass of §101 unless absolutely necessary.
Judge Plager appears to be thinking in the same direction as suggested by Professors Crouch and Merges in their recent article Operating Efficiently Post-Bilski by Ordering Patent Doctrine Decision-Making, 25 Berkeley Tech. L.J. 1673 (2010), in which they proposed that "the § 101 issue of Bilski be considered only when doing so is absolutely necessary to determine the validity of a claim or claims in a patent. We believe any claim that can be invalidated under one of the less controversial and less complex requirements for patentability—§§ 102, 103, and 112, for instance—ought to be disposed of without considering subject matter patentability. In other words, the Bilski issue should be avoided wherever it is not strictly necessary."
Guest Post by Jon E. Wright and Joseph E. Mutschelknaus of Sterne Kessler Goldstein & Fox, PLLC1
On September 16, 2011, the America Invents Act (“AIA”) changed the threshold standard for initiating inter partes reexamination. The new standard requires a requester to demonstrate that:
[T]he information presented in the request shows that there is a reasonable likelihood that the requester would prevail with respect to at least 1 of the claims challenged in the request.
America Invents Act – Sec. 6(c)(3)(A)(i)-(ii). We refer to the new standard as the “RLP” standard. The RLP standard is significant because it matches the future standard for initiating inter partes review under the AIA.
This post addresses the new RLP standard. First, we review case law surrounding the “reasonable likelihood” standard as it exists in other contexts such as preliminary injunctions. Next, based on our analysis of every single post-AIA inter partes reexamination the PTO has acted upon, we analyze how the Office has been applying the new RLP standard in reexamination orders. Finally, we consider how inter partes reexamination requests (and future petitions for inter partes review) should be structured for the best chance at meeting the RLP threshold.
The “Reasonable Likelihood” Standard
Patent practitioners are familiar with the “reasonable likelihood” standard in the context of preliminary injunctions. For a court to grant a preliminary injunction, a patentee must demonstrate four factors, one of which is a “reasonable likelihood of success on the merits.” Ranbaxy Pharm., Inc. v. Apotex, Inc., 350 F.3d 1235,1239 (Fed. Cir. 2003). This standard may be instructive in learning how the Office will deal with the new RLP standard for current inter partes reexamination requests and inter partes review petitions later this year.
According to the Federal Circuit, the reasonable likelihood of success standard for preliminary injunctions must be made “in light of the presumptions and burdens that will inhere at trial on the merits….” Id. In the context of inter partes patentability proceedings at the Office, claims do not enjoy the presumption of validity that they do before a district court. Rather, the standard of proof before the Office is the “preponderance of evidence” standard. MPEP § 706.I. The same is true for the new inter partes review proceedings. See AIA § 316(e). Therefore, Requesters (or Petitioners) must demonstrate a “reasonable likelihood” that they can invalidate at least one claim of the patent for which reexamination is sought under the preponderance of the evidence standard.
But what does this really mean? In the context of preliminary injunction proceedings, the Federal Circuit has stressed that “[a]t this preliminary stage, the trial court does not resolve the validity question….” New England Braiding Co., Inc. v. A.W. Chesterton Co., 970 F.2d 878, 882-83 (Fed. Cir. 1992). Rather, the decision maker “must … make an assessment of the persuasiveness of the challenger’s evidence, recognizing that it is doing so without all evidence that may come out at trial.” Id. This is just as true in inter partes reexamination (or review) because both parties to the proceeding are permitted to submit additional evidence in support of their positions, at least during the first round of replies and comments.
Moreover, in addition to recognizing that it may not have all the facts, the decision maker must also assess the persuasiveness of the evidence. This may include making credibility determinations. As the Federal Circuit stated in New England Braiding, “[a] credibility determination is well within the court’s province when ruling on a preliminary injunction motion.” Id.
If the preliminary injunction standard for determining a reasonable likelihood of success on the merits is any guide, we can thus surmise the following with respect to requests for inter partes reexamination (or future petitions for inter partes review):
The request or petition must be based on “evidence,” which at the initial stage will likely be limited to prior art patents or printed publications;
The request or petition must reviewed by the Office under the “preponderance of evidence” standard, with the burden placed on the requester or petitioner;
The request or petition need not conclusively demonstrate unpatentability;
The Examiner (or Board) may properly make credibility determinations; and
The Examiner (or Board) must make an assessment of the persuasiveness of the evidence and accompanying argument set forth by the requester or petitioner, recognizing that it does not have all the evidence.
As shown next, the Office appears to be adhering to these standards.
The Office’s Application of the RLP Standard
As of the date of this post, the Office has acted on forty-two (42) requests for inter partes reexamination that were filed on or after September 16, 2011. The authors analyzed each one to determine how the Office is implementing the new RLP standard. Anecdotal evidence suggests that the Central Reexamination Unit is still struggling with the new standard. But nonetheless, several observations can be made from these orders.
First, despite the change, early data suggests that the Office continues to be granting reexaminations at about the same rate under the new RLP standard as it was under the old “substantial new question” or “SNQ” standard. In fiscal year 2011, for example, the Office granted 342 inter partes reexamination requests out of 366 total decisions. That accounts for a 93% grant rate under the old SNQ standard. Of the 42 orders issued under the new RLP standard, 38 have been granted (at least in part), putting the current grant rate under the RLP standard at about 90%. Thus, while the sample set is still limited, the Office appears to be granting reexamination requests at about the same rate under the RLP standard as it had been under the SNQ standard. This runs contrary to the general belief among practitioners that the RLP standard would be stricter than the SNQ standard.
Second, in finding an RLP, the Office appears to be focusing on the persuasiveness of the requester’s evidence on the merits. The Office is also correctly placing the burden of establishing the reasonable likelihood prevail on the requester. In cases where RLPs are denied, the Office frequently uses language like, “Requester has failed to show the claim step is taught by the reference.” (See, e.g., 95/001,809, p. 6.) At the same time, the Office is not shying away from addressing the underlying legal issues presented in the request, such as claim construction. For example, in several cases, the Office explicitly construed claim terms, and then made a finding that the cited references do not teach claims under that construction. (See, e.g., 95/001,785, 95/001,792.) Thus, in establishing whether there is an RLP, the Office is considering the merits of the cited prior art against the claims on both factual and legal bases.
Third, while the importance of the art’s strength against the claims may have increased with the RLP standard, the importance of the art’s “newness” may have decreased. Under the SNQ standard, the Office would almost always take into account the prosecution history and discuss whether the cited prior art was presented a new light. In contrast, of the forty-two (42) orders issued under the RLP standard, only three (3) make any discussion of the prosecution history or cumulativeness of the art. And in no case did this appear to be dispositive. This is consistent with the AIA, which made the newness requirement effectively discretionary on the Office. See AIA codified at 35 U.S.C. § 325 (“In determining whether to … order a proceeding under [the inter partes reexamination/review chapter], the Director may take into account whether, and reject the … request because, the same or substantially the same prior art or arguments were previously were presented to the Office.”) (emphasis added). In sum, the weight given to the art’s newness appears to be waning.
Practice Tips
Given the above observations, drafting a strong, persuasive request supported by quality prior art references remains paramount under the new RLP standard, just as it was under the old SNQ standard. But in view of the Office’s tendency to now focus more intently on the merits of the individual rejections under the new standard, requesters may want to provide and justify claim constructions in their initial requests. Also, requesters may want to consider including expert declarations with their request, especially if the art upon which the reexamination is based is complicated and would benefit from expert clarification or explanation. Keep in mind, though, that reexaminations must still be based on patents and prior-art publications, not expert declarations.
At the same time, requesters may need less discussion in their requests of how their art is noncumulative or new with respect to what the Office has already considered. This could result in structural change to reexamination requests. For example, prior inter partes reexamination requests usually included two separate questions, one developing and showing the SNQ and a second section with the proposed rejections—i.e., the manner and pertinency of applying the prior-art references. Now, with the increased focus on the substantive merits of the proposed rejections and the decreased focus on newness or cumulativeness of the art, the second section becomes the most important section. Indeed, a fully developed set of proposed rejections would seem to be sufficient in proving up the RLP standard.
In sum, the authors believe it was a good idea for Congress to immediately implement the RPL standard for inter partes reexaminations. It gives patent practitioners a taste of what is to come for inter partes review under the AIA, and the ability to prepare for that change. It also appears as if the Office is adopting evaluation standards similar to those used the context of preliminary injunctions. We hope this post provide some new insight into the RLP standard—a standard with which we will have to live for the foreseeable future.
1Jon Wright is a Director and Joe Mutschelknaus is an Associate at Sterne Kessler Goldstein & Fox, PLLC www.skgf.com. The views expressed herein are the authors’ alone and should not be attributed to the firm or its clients.
Edited on 2/2/2012 to reflect that it was Congress's decision to immediately implement the RPL standard.
Later today I will be testifying in Congress at a hearing on Prior User Rights being held by the House of Representatives Subcommittee on Intellectual Property, Competition and the Internet chaired by Republican Representatives Bob Goodlatte of Virginia and Ben Quayle of Arizona along with Congressman Mel Watt as the ranking member of the Subcommittee. The hearing comes in the wake of the USPTO’s recent Report on Prior User Rights. The primary focus of my testimony is my estimation that prior user rights as circumscribed in the Leahy-Smith America Invents Act are unlikely to have any real or measurable impact on the market for US patents, demand for innovation, or process of patent litigation. I explain this as follows:
There are host of conditions that must be met before the prior user defense can be exerted. Most notably, an accused infringer must be able to show that it (or its predecessor in title based upon limited transfer rights) began to commercially use the invention at least one year before the patentee’s filing date (and even further in advance if the patentee publicly disclosed the invention before filing). In the new statute, the defense only applies if the prior user’s version of the invention was created independently and without derivation from the patentee’s version and the prior user acted in good faith. When formed together, these requirements look something like the eye of the needle and are difficult to pass through.
Further marginalizing the impact of prior user rights is the reality that the defense only adds actual value when the patent being asserted is valid. I.e., if the patent is invalid then there is no need for a prior user defense. The setup of a prior user situation suggests two likely scenarios that would lead to a decision of unpatentability. First, the existence of multiple independent creators of the same invention tends to suggest that the invention itself was obvious and therefore unpatentable. This is even more so in the prior use context because the later filed patent by definition will have a priority date of at least one year later than the user’s first date of commercial use. Using the language of the Supreme Court in its KSR decision: “market forces” likely prompted researchers to take the next step. In addition, the requirement that the prior user commercially used the invention is an indicator, albeit inconclusive, that anticipating prior art may be available to invalidate the patent. Conversely, if the prior user is successful in maintaining the secrecy of its commercial use for that time period, we’re left with the suggestion that the prior user may able to continue to operate in secrecy without being uncovered and thus without being charged with infringement.
My conclusion that prior user rights will have very little impact on innovation and access is also supported by comparative analysis of the impact of prior user rights in various trading partner nations and the already existing US prior user right for business method patents. The USPTO Report correctly indicates that these defenses have seen little to no successful assertion. In the US, prior user rights have been available since 1999 for the limited class of business method patents. During that time, there have been no reported cases where the defense was successfully asserted. During this time, the Court of Appeals for the Federal Circuit decided thousands of patent appeals on almost every imaginable patent doctrine – however the court did not address prior user rights. There was no need because the impact of that defense is so limited.
Two final concepts – lack of assurances and delay in patenting – push me to the same conclusion of little impact. First, I suggest that prior user rights will be given little ex ante consideration by would-be defendants because the defense does not offer any real assurances or any vested right until years after the first commercial use. As discussed in the previous paragraphs, prior user rights only come into play under a cone of secrecy. At that time, the prior user has no assurances that it made commercial use of the invention more than a year before someone else filed a patent application on the same subject matter. The expense of searching PTO records makes the task of discovering prior patent applications quite difficult. The delay in publication of applications and later-filing of applications based on foreign priority makes this task literally impossible to complete. And, the ability of patent applicants to radically amend claims during the patent prosecution process means that any assurances identified cannot not be considered vested.
The final point on this topic – based on delay in patenting – is that most qualifying prior uses may be irrelevant and out-of-use by the time that the USPTO issues the covering patent. Most recently issued US patents have an effective original filing date of more than four years ago. This provides a window of at least five years for most prior users to legally practice the invention without recourse even in the absence of the prior user defense. In many areas of technology, the original prior use will have become obsolete by the end of that five-year timeline – allowing the prior user to move to a new technology without ever needing to obtain a license or permission from the patent holder.
In the testimony, I then identify a number of particular ways that the defense could be expanded of Congress desired a more robust system of prior user right. My darling of the list is the establishment of a vested prior user right through a registration system. Although interesting, I do not at this point have real cause to call for this type of expansion.
My testimony also includes some consideration of the relative impact of prior user rights on US and non-US entities. The table below summarizes some of my thoughts.
Stakeholder
Help or Hurt by US Prior User Rights
US Universities
Help: University derived inventions become relatively more valuable because their patents are excluded from the prior user defense.
US Manufacturers and Technology Companies
Help and Hurt: US patents belonging to US manufacturers become less valuable because they are subject to prior user rights. However, US manufacturers have the potential of avoiding infringement charges based upon their own prior use.
US Non Practicing Entities (NPEs)
Hurt: NPEs US patents become less valuable for NPEs because they are subject to prior user rights. By definition, NPEs do not practice the invention and therefore do not benefit from the prior user right defense.
Foreign Manufacturers and Technology Companies
Hurt: Foreign entities US patents become less valuable because they are subject to prior user rights. Further, the foreign entities cannot assert prior user rights based upon activities in their home countries. However, foreign entities could benefit from the prior user rights if their prior commercial use of an invention was in the US.
Of course, my perception of the scope of prior user rights would change dramatically if the courts determine that (1) a prior user need only prove prior commercial use using a more-likely-than-not standard that (2) allowed oral testimony alone to prove the case and (3) ruled that neither secret sales nor secret uses constitute prior art under the new 35 U.S.C. § 102(a).
PTO Director Dave Kappos will also be testifying as well as Bob Armitage (Lilly), Dan Lang (Cisco), and John Vaughn (AAU).
By Dennis Crouch 
by Dennis Crouch 