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The America Invents Act:

The America Invents Act:. The Fundamentals Of The New U.S. Patent System And What It Means To The American Inventor. Gregory P. Sitrick Rowan P. Smith Steven J. Wietrzny. Overview. Word on the street? Jobs? Faster/better patents? Less litigation? Harmony? What is it really?

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The America Invents Act:

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  1. The America Invents Act: The Fundamentals Of The New U.S. Patent System And What It Means To The American Inventor Gregory P. Sitrick Rowan P. Smith Steven J. Wietrzny

  2. Overview • Word on the street? • Jobs? Faster/better patents? Less litigation? Harmony? • What is it really? • Essence of the new patent system • Select provisions • Which way does it lean? • Perks & Pitfalls • What to do about it • Practice tips • When to do it? • Time tables

  3. 1. Word on the street?

  4. Congress • “It is the sense of Congress that the patent system should promote industries to continue to develop new technologies that spur growth and create jobs across the country which includes protecting the rights of small businesses and inventors from predatory behavior that could result in the cutting off of innovation.”

  5. Congress • “It is the sense of the Congress that converting the United States patent system … will improve the United States patent system and promote harmonization of the United States patent system with the patent systems commonly used in nearly all other countries throughout the world with whom the United States conducts trade and thereby promote greater international uniformity and certainty in the procedures used for securing the exclusive rights of inventors to their discoveries.”

  6. The President “This much-needed reform will speed up the patent process so that innovators and entrepreneurs can turn a new invention into a business as quickly as possible… Here in America, our creativity has always set us apart, and in order to continue to grow our economy, we need to encourage that spirit wherever we find it.” – President Obama, September 2011

  7. Big Business “For six years, Congress has worked to shape a bill to modernize the U.S. patent system. Throughout this process, Microsoft has been a strong supporter of sensible reforms. Today, the Senate takes up HR 1249, the America Invents Act, a measure approved by the House in June. We urge the Senate to pass HR 1249 without amendment.” – Horacio Gutierrez, Corporate Vice President & Deputy General Counsel, Microsoft

  8. Banks “We are pleased that the House legislation includes an important section addressing poor-quality business-method patents that are plaguing the financial services industry. With inclusion of this vital language, the undersigned trades support the America Invents Act, as introduced in the House.” – Steve Bartlett, President and CEO, The Financial Services Roundtable

  9. University Tech Transfer “This, basically, is a big-business patent bill. It doesn’t benefit small business and individual inventors. And we're in an economy where you want small businesses to prosper and hire.” WARF will “do fine” under the new law, but smaller university patent offices may not. – Carl Gulbrandsen, Managing Director, Wisconsin Alumni Research Foundation

  10. Anti-Reform Groups “The ‘first-to-file’ provision grants powers not enumerated by the U.S. Constitution.  H.R. 1249 would overturn 220 years of settled practice by giving patents not to the actual inventors of discoveries but to the winners of the race to the patent office.” The ‘transitional review’ provision violates the Fifth Amendment.  Buried in Section 18 of the bill, the ‘transitional review’ or ‘bank bailout’ provision reduces the enforceability of patents related to the banking industry, which are constitutionally protected forms of private property. It does so without providing compensation to property owners, violating the Takings Clause of the Fifth Amendment.” – saveourjobs.net

  11. 2. What is it really?

  12. First-To-Invent (FTI) Hallmark: “swear behind” practice A invents A invents A files Patent to A Patent to B Time B invents B files

  13. First-To-File (FTF) Hallmark: “absolute novelty” A invents A files A files Patent to A Patent to B Time B invents B files

  14. AIA System Conditions for Patentability/Novelty A person shall be entitled to a patent unless: • the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention, or • the claimed invention was described in a patent or published application filed by another before the effective filing date of the claimed invention

  15. AIA System EXCEPT...

  16. AIA System Exceptions • Grace period/“publish behind”– public disclosure by applicant made one year or less before the effective filing date of the claimed invention (subsequent non-applicant disclosure or filing also exempt) • Derivation – public disclosure by non-applicant who obtained information from applicant (limited to patent/published application if before grace period) • Team – public disclosure made by co-owner

  17. AIA System A invents A files A files Patent to A Patent to B Time B invents B files

  18. AIA System Hallmark: “publish behind” practice A publishes A invents A files Patent to A and • B is barred • B may publish before A files Time 1 year B invents B files

  19. AIA System A invents A publishes A files Patent to A • A may be 2nd inventor • A may be 2nd filer Time 1 year B invents B files

  20. AIA System First-(Inventor)-To-File-(With Grace) OR First-(Inventor)-To-(Publish Then)-File

  21. AIA System Select Provisions • Review provisions • Derivation provisions • Litigation provisions • Miscellaneous provisions

  22. Validity Review Old Law Published appl. Submissions Ex partereexamination Inter partesreexamination Litigation in federal court AIA Pre-issue submissions Post-issue submissions Ex partereexamination Post grant review Supplemental examination Business method review Inter partes review Litigation in federal court

  23. Validity Review

  24. Validity Review

  25. Validity Review

  26. Validity Review

  27. Validity Review

  28. Validity Review

  29. Validity Review

  30. Derivation Derivation Action • The owner of a patent may have relief by civil action against the owner of another patent that claims the same invention and has an earlier effective filing date, if the invention claimed in such other patent was derived from the inventor of the patent • Must be filed within 1 year of issuance of the first patent containing a claim to the allegedly derived invention

  31. Derivation

  32. Faster Examination Prioritized Examination • Fast track exam for applications filed on or after 11/26/2011 • $4,800 fee • Limited to 10,000 applications per fiscal year and four (4) independent claims and 30 total claims • Need to prosecute promptly or may lose • Does not carry over to continuing applications • New regulations have been promulgated

  33. Miscellaneous Tax Planning/Human Organisms • Cannot patent tax strategies or human organisms • Does not apply to method, apparatus, technology, computer program product or system for taxes or financial management Assignee Applicant/Declarations • Application can be filed in assignee name (with declaration) • Declaration can be combined with assignment Micro Entity • Establishes new class entitled to ¼ fee rate • Meet patent count and income ceiling • University employees/assignors

  34. Litigation - Defenses Prior Commercial Use Previously this issue arose in the context of internal business processes in which the confidential practices (e.g., trade secrets) were not prior art available as a defense against a later filed patent.

  35. Litigation - Defenses Prior Commercial Use In 1998, the CAFC decided the State Street Bank case which held that methods of doing business can be patented if they produce a useful, concrete and tangible result.

  36. Litigation - Defenses Prior Commercial Use In 1999, Congress reacted to quell the financial industry's fear of liability with §273: “it shall be a defense to an action for infringement … [against] claims for a method in the patent being asserted … [if the defendant] commercially used the subject matter before the effective filing date of such patent”

  37. Litigation - Defenses

  38. Litigation - Defenses Best Mode • Failure not a basis to invalidate • Still requirement and may be invoked in prosecution/PGR Advice of Counsel • Failure to obtain or offer opinion cannot be used to provide willfulness/treble damages

  39. Litigation – Defenses Marking • Eliminates qui tam actions for false marking – only US government and “competitive injury” can get damages • Marking with expired patent is not a violation • (Virtual marking permitted – US Pat. www.xyz.com) Joinder • Prohibits joining unrelated defendant in single action • Joinder permitted if infringement arises out of same transaction or occurrence or common questions of fact

  40. 3. Which way does it lean?

  41. Potential Effects • Reduced predatory patent litigation (trolls) • Availability of various out-of-court pre-issue and post-issue review procedures • Easier to avoid punitive damages • Greater continuity of global patents • Expanded prior user rights • Virtual marking

  42. Other Perks & Pitfalls • Anti-derivation policy • Micro entity fee structure • Fast track examination • Early injunctions not stayed • Early filing and/or disclosure • Emphasis on monitoring

  43. Universities • Supports existing urge to publish • Prior user defense less likely • Micro entity fee structure • Fast track examination

  44. On Balance • The AIA presents a mixed bag, but seems to favor large businesses. However, some benefits are shared by, or at least do not adversely disadvantage, small businesses. Some provisions directly help small business, universities and tech transfer offices.

  45. 4. What to do about it?

  46. Practice Tips 1. Expedite internal disclosure • establish good record keeping procedures • streamline disclosure process and work with counsel to ensure expeditious filings • meet more frequently • Prioritizing technology and inventions 2. Expedite filing • consider simultaneous disclosure/filing • use provisionals (consider stacking) • develop application template 3. Early public disclosure • initiate grace period • preclude other filers • establish derivation claim • consider “quiet disclosure”

  47. Practice Tips 4. Clean House • consider supplemental reexamination • (pre-litigation or as routine) • less need to correct markings • use virtual marking – maintain free web-site • file electronically • consider non-publication request 5. Competitive surveillance • keep regular watch of competitive holdings • docket key time periods from publication/issuance • consider various validity review procedures

  48. Practice Tips Pre-Issuance within 6 months of application publication or first Office Action submit prior art patents/printed publications Within 1 yearof application publication petition for derivation proceeding in Patent Office Post-Issuance Within 9 months of patent issuance petition for post grant review based on any ground of invalidity After 9 monthsof patent issuance or conclusion of post grant review OR within1 year of service of complaint petition for inter partes review based on patent and printed publication art Within 1 yearof patent issuance file derivation action in Federal Court Any timeafter patent issuance submit prior art patents/printed publications/patentee statements in Court or Patent Office

  49. 5. When to do it?

  50. Timetables

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