By Jason Rantanen
Liveblogging the America Invents Act: One Year Later conference at the Indiana University Mauer School of Law. Warning and disclaimer: Quality may vary and these don't necessary reflect my opinions.
Panel 3: What did the AIA accomplish? What did it omit?
Mark Chandler (Cisco) – Not a patent lawyer; instead offers a high level perspective from tech industry.
Issues from his perspective: Predictability is a key, but certainty means different things to different people. Uncertainty in his industry is uncertainty about damages. Ranges of outcome that lead to total unpredictability about valuation. The patent system is an industrial policy; it needs to be pared with a good commercial law system where the court decisions are defined by good predictability of result. But parties aren't willing to have fruitful negotiations because of uncertainty as to damages.
Bad patents – very hard to overturn validity patents in court; estoppel provisions in inter partes reexamination made them a hard tool to use. Also, backlog of patents.
Effect of these issues was an increase value of litigation gamesmanship over the value of innovation. This was the context in which they came to the table. For his industry, uncertainty as to scope of rights/quality of rights was not as important as uncertainty over damages. But this is not something that he believes can be fixed legislatively. From the point of view of the technology industry, the AIA accomplished very little in terms of the uncertainty they care about.
In terms of bad patents, he sees the mechanisms as positive. On backlog, the funding provisions are excellent.
Looking forward, he is skeptical of having Congress dive into the damages issues. Change is coming from the courts. Judge Rader is a major mover here. Clean up the Georgia-Pacific factors is something he sees as coming.
Joinder provision – some judges, when confronted with the anti-joineder rule, are now consoldiating cases. Work needs to be done here.
Rocelle Dreyfuss (NYU) – Act focuses with laser like attention on getting a patent, but largely ignores what is being done with the patents. Her focus is on research exemptions. Long been two exemptions: Common law exemption and limited statutory Hatch-Waxman exemptions. Common law exemption has largely been undermined by CAFC, especially in Madey v. Duke and Embrex v. Service Engineering; most recently, Judge Lourie's opinion in AMP v. USPTO (Myriad).
Absence of such exception has become more worrisome over time. Earlier studies indicated that scientists largely ignored patents. More recent work has undermined this conclusion however. Studies shown that less research conducted in areas where things are patented.
Every foreign country has a substantial research exception. Japan is a good example.
Can't you always do your research off shore? But she'd like to see a strong research industry in the United States.
Overall effect of a lack of research exception has been to distort other patent law doctrines – examples: Supreme Court/Federal Circuit subject matter cases. All these cases are based on the view that patents can impact future research. To some extent, the Supreme Court's exhaustion and injunctive reliefs are based on a concern about what's going on down stream. A well drafted research exception is better served than twisting these doctrines around to allow downstream research.
Some believe (ex. Hal Wegner) that the common law will correct itself. Judge Newman's language in this vein was been picked up by Chief Judge Rader in a recent opinion. Wegner also argues that the fix would be relatively easy to accomplish with judge made law – drawing a distinction between research "on" versus research "with" a patented invention. Other commentators would go back to the commercial/noncommercial distinction. She's doubtful these will work, however. Rader's statement was part of a blistering dissent on an expansion of the statutory exemption; Judge Lourie's statement in Myriad was made just a month ago. In addition, the fix isn't as simple as distinguishing between research "on" and "with"; actual research is actually far more complex – consider the use of diagnostic patents, which could be classified as either research on or research with.
Copyright law has long had a fair use defense; it could work in patent law. But complex, so better done as a statute than as a common law rule.
John Duffy (UVA) – Likes: the new priority rule. Never been a fan of first-to-file. But this is not first to file – it's first-to-file or first-to-publicly disclose, which is a great change. Best argument for first-to-file was administrative convenience. Best argument for first-to-invent is that the lawyer shouldn't be part of the invention process. New system takes the best of both: administrative ease (have to have publicly disclosed it) and you don't have to get a lawyer to do this. Just have to get the rest of the world to follow us…
A partial accomplishment: ending asymmetric judicial review. Historically, applicants could obtain immediate judicial review of rejections, but competitors could not obtain immediate judicial review of grants. This was not good. AIA helps here, with its post-grant processes. But it still leaves significant holes in the availability of judicial review. Proposes that the PTO be subject to standard agency review – points to Exela v. Kappos, E.D. Va. (Aug. 22, 2012). May be a supreme court opinion. If the country goes to symmetric judicial review, that would be a very good thing.
A partial accomplishment: curbing claim numerosity. Patents have too many claims. Partial AIA solution: agency has power to set its own fees and thus could charge more for excessive claims. But sometimes there's a legitimate reason for large numbers of claims: legal uncertainty as to how claims will be interpreted. Ultimate problem here: departed too far from traditional principles of claim construction. We should instead focus on the invention – the contribution to the art – in interpreting claims. 261 U.S. 45, 63 (1923)
AIA's worst blemish: fueling bureacratic inflation.
Gary Grisold (Senior Policy Advisory for the Coalition for 21st Century Patent Reform and former Chief IP Counsel at 3M) – AIA presented a great opportunity to improve the speed and efficiency of the patent system. The playbook for improving the AIA was largely derived from the 2004 NAS Report. Most of the recommendations of the 2004 report were put into play in the AIA.
Goals: effective, global patent protection efficiently obtained, maintained and enforced encouraging innovation and commercialization of innovation. Showed us some of the charts that they used when building support for the patent law. A lot of progress from 2007-2011.
Process error – in the post-grant review, it allows the public to come in and be heard just after a patent is granted. At some point, someone inserted "reasonably could have raised" judicial estoppel in PGR. Shouldn't be there. Didn't realize that this happened, though. Needs to be a technical correction to fix this.
Patent claim construction – For PGR/IPR, should patent claims should be construed the same as in validity challenges under 35 USC 282(b) rather than broadest reasonable construction?
What else might happen in the future? Best mode – still there as an obligation; this creates a weird tension for the attorney and client. Inequitable conduct – he believes that supplemental examination will have a lot of utility because firms will do extensive pre-litigation analysis. Could go further with inequitable conduct, and lessen the effect even more, for the reason that it brings so much inefficiency into the process. Experimental use exception – needs to be expanded. Could expand prior user right. Doctrine of equivalents is another opportunity for change. Funding issues are always a concern – could be more secure.
Doug Norman (Eli Lilly) – Going to talk about how in-house counsel deal with specific issues.
Move to first to file – won't preciptate a lot of change in their context, because for the past 40 years they've been living in a first-inventor-to-file world. So their proceses have not had to change. The change they feel is when they look at competitors' patents, they can better evaluate patent estates that they want to do a due dilligence study on.
Grace period and international harmonization – Europeans aren't necessarily ready to accept a grace period. Have a grace period in the US that is clear, crisp and objective. And very simple.
Fees – important to point out that after a longrunning diversion of funds away from the PTO, the PTO has feesetting authority to move forward and build a new infrastructure. It will cost users more, but if it leads to higher quality and faster service, it'll be worth it.
IPR/PGR considerations – A huge unknown right now. Hopes that patent judges really will be conservative on the issue of discovery. Is a technical amendment over the "could have raised" estoppel in PGR possible? He hopes so; otherwise, it will greatly constrain the use of PGR.
Inequitable conduct/supplemental examination – high point of the bill. Thinks it will be used quite extensively, if for no other reason to have their own patents drawn into supplemental [think he means reexam] examination. Plans on doing extensive due dilligence on patent estates they intend to acquire. (comment – I suspect that in the pharmaceutical industry, there may be strong incentive to conduct extensive due dilligence. I'm much less convinced this is the case in pretty much every other industry.). He believes supplemental examination will be revolutionary, at least in the pharma/biological field.
Favors statutory research exemptions and full repeal of best mode requirement. Related a story that OED is going to take best mode very seriously.
John Vaughn (AAU): Universities and patent reform – University technology transfer plays an important role in technology innovation in this country. Univerisity organizations worked together to present the view of the universities. Two basic objectives: wanted to support those proposals that would enhance the US patent systems' ability to produce innovation, and wanted to support those proposals that would enhance the ability to licensed. Very much shaped by 2004 NAS report.
First to invent to first inventor to file – three conditions: (1) effective grace period; (2) continuation of provisional applications; (3) strong inventor declaration (?) Worked with Congress on these.
Patent certainty – university inventions inherently have uncertainty because of their early stage nature; adding other uncertainty further complicates that uncertainty. Problem with statutory instructions on damages is that they would become a cost of doing business rather than something else.
Strongly supported the new post-grant proceedure. Agrees with others about the estoppel provision. Concern that with the estoppel provision, the procedure won't be used. But very concerned about proposals for second window, additional post-grant challenge that would allow a broad capacity to challenge patents throughout their life. This was viewed as making patents more uncertain, which would make them harder to license. Compromise: revised and changed inter partes.
Debate over prior user rights. Pre-AIA, only applied to business methods. University community hated prior user rights – viewed it as a circumvention of the patent quid-pro-quo. But at the end of patent reform, prior user rights was one of the primary obstacles at the end. They worked out a compromise – a substantial expansion of prior user rights that sufficiently protect universities.
Viewed as accomplishments: FtF – will be helpful to everyone. Post-grant review – great, problem with estoppel. Third party submisison of prior art – very helpful. Enhanced fee setting – very helpful, wished better anti-fee diversion language. Supplemental examination – very helpful, better to get rid of inequitable conduct altogether. Scope of grace period – concern over how it will actually be interpreted.