PATENT LITIGATION 2.0: Is the America Invents Act an Upgrade? Michael M. Lafeber

PATENT LITIGATION 2.0: Is the America Invents Act an Upgrade? Michael M. Lafeber

Patent Litigation 2.0 “Upgrades”? • New Joinder Rules • Patentees’ Improved Ability to Correct Mistakes • Codification of Opinion of Counsel Decisions • Restriction on Qui Tam False Marking Claims

Upgrades? • Elimination of Best Mode Defense • Enhanced Ability to Cite Prior Art Against Pending Applications • Broadened Prior Use Defense • New “Post Grant” Review

Joinder Old Rule • Common Practice for NPE’s to name voluminous alleged infringers in: • Same lawsuit; and • Same venue (i.e. Eastern District of Texas.)

Joinder New Rule • 35 U.S.C. § 299 • Needsto arise out of same “transaction, occurrence or series of transactions or occurrences relating to. . .the same accused product or process.” • “[A]ccused infringers may not be joined in one action as defendants. . .based solely on allegations that they each have infringed the patent. . .in suit.”

Joinder • More difficult and costly for NPE’s • Multiple lawsuits • Multiple venues • Risk of inconsistent claim constructions • Risk of inconsistent validity determinations • Independent discovery against each defendant • Accused infringers allowed to waive protection afforded by § 299.

Eliminating the “Gotchas”! • New “Supplemental Examination” • Provides opportunity for patentee to correct omissions or misstatements during prosecution

Eliminating the “Gotchas”! • With limited exceptions, information considered, reconsidered, or corrected in Supplemental Examination cannot be cited as a basis for unenforceability of the patent. • No “Inequitable conduct” defense relating to such information.

Eliminating the “Gotchas”! • Bar to unenforceability defenses not applicable to: • “[P]rior allegations” (includes Declaratory Judgment Actions and Hatch-Waxman ¶IV certifications); or • “[P]atent enforcement actions” brought prior to the conclusion of the Supplemental Examination

Failure to Obtain Opinion of Counsel • Knorr-Bremse eliminated adverse inference for failure to obtain opinion of counsel • Seagate eliminated any affirmative obligation to obtain opinion of counsel • Qualcomm - Opinion of counsel probative of inducement, i.e., “whether the accused infringer ‘knew or should have known’ that its actions could cause another to directly infringe”

Failure to Obtain Opinion of Counsel 35 USC §298 “The failure of an infringer to obtain the advice of counsel with respect to any allegedly infringed patent, or the failure of the infringer to present such advice to the court or jury, may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement of the patent.”

Failure to Obtain Opinion of Counsel • What about determination of “enhanced damages?” (Does the AIA Codify Spectralytics?) • Can accused infringer still affirmatively utilize opinion of counsel to establish good faith?

End of Patent Marking Trolls • Strong Incentive for Patent Marking • Constitutes constructive notice under 35 U.S.C. § 287(a) • Maximizes the period during which infringement damages may be recovered • Arguably deters competitors from making or selling similar products

Prior “Qui Tam” Actions “(b) Any person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States.” 35 U.S.C. § 292(b)

Forest Group, Inc. v. Bon Tool Co. • Federal Circuit held that penalty imposed by § 292 must be assessed on a per article basis. • Pequignot v. Solo Cup Co - Estimated that Solo Cup sold over 20 billion articles alleged to be falsely marked • At that volume, a penalty of just 1¢ per article results in a fine of $200 million

False Marking Claims Under the AIA: • Only the U.S. Government may sue for a civil penalty • Private parties must establish actual competitive injury • Marking with an expired patent is not a violation • Authorizes “virtual” marking

Best Mode We Hardly Knew Ya • An accused infringer may no longer raise the “best mode” defense • Patent applicant still required to disclose the “best mode” for practicing the claimed invention • Presumably examiner can still raise best mode issues during prosecution

Citing Prior Art Against Pending Application Old Rule • Third parties allowed to submit prior art for consideration by the PTO, but no ability to comment on such prior art and explain its relevancy. • Third parties reluctant to take advantage of this procedure for fear prior art would be misinterpreted and the patent allowed over it, thereby effectively strengthening the patent.

Citing Prior Art Against Pending Application New Rule • Third parties will be allowed to submit prior art and comment on its relevancy

Broadened Prior Commercial Use Defense Old Rule • Prior Use Defense applicable only to Business Method Patents • Not an infringer if: • You reduced method to practice at least one year before the effective filing date of the patent; and • You commercially used the method before the effective filing date of the patent

Broadened Prior Commercial Use Defense Old Rule • Intuitively made sense. No such thing as “business method” patents before State Street. Before State Street, only way to protect such methods was to preserve them as a trade secret.

Broadened Prior Commercial Use Defense New Rule • Prior use defense expanded to include: • All method or process patents; and • A machine, manufacture, or composition of matter used in the subject method or process

Broadened Prior Commercial Use Defense • Limitations: • Defense is “personal” • Does not apply if patent owner is a University or related Tech Transfer Organization

New Post Grant Review • Standard for commencement: • “More likely than not that at least one (1) of the claims challenged in the petition is unpatentable.” • Lower Evidentiary Standard to Prevail • “Preponderance of the evidence” as opposed to “clear and convincing evidence.”

New Post Grant Review • Types of Challenges: • Much broader than Inter Partes Review, which is limited to obviousness and lack of novelty • All reasons provided in §282 (b)(2) and (3

New Post Grant Review • What can be considered? • Not limited to patents and printed publications • For example, can rely on prior use or prior sale

The Cutting Room Floor • Meaningful Damage Reform • Elimination of Business Method Patents • Creation of Specialized Patent Courts

Thank You! Feel free to contact me with any questions/concerns. P: 612.977.8472 mlafeber@briggs.com

PATENT LITIGATION 2.0: Is the America Invents Act an Upgrade? Michael M. Lafeber