America Invents The Patent Reform Act of 2011 March 29, 2011

1. America Invents The Patent Reform Act of 2011 March 29, 2011

2. Background and Major Provisions

3. Background • The America Invents Act • Senate bill (S. 23), introduced January 25, 2011 • Introduced by: • Sen. Patrick Leahy (D-VT) • Bipartisan co-sponsors Coons (D-DE), Franken (D-MN), Grassley (R-IA), Hatch (R-UT), Klobuchar (D-MN), Kyl (R-AZ), Lieberman (I-CT), and Sessions (R-AL).

4. Background Full Senate passed bill on March 8, 2011. Currently awaiting House action. White House & USPTO are urging passage of the bill.

5. Major Provisions: Pre-Grant • Converts from First-to-Invent to First-to-File system. • Abolishes interference proceedings. • Creates inventor derivation proceedings. • Expands third-party filing of prior art during application. • Prohibits tax avoidance method patents.

6. Creates new inter partes review proceedings, replacing reexamination. Creates new ex parte review proceedings option apart from ex parte reexamination. Creates patent owner supplemental review procedures. Major Provisions: Post-Grant

7. Adds third-party submission of patent owner’s USPTO and litigation statements of claims’ scope. Establishes a transitional business method patent review program for accused infringers. Major Provisions: Post-Grant

8. Limits false-marking suits to U.S. government or parties suffering competitive injury. Prohibits failure to disclose best mode as grounds for invalidity. With limited exception, inequitable conduct may not be asserted as to information considered in a patent owner’s supplemental examination request. Major Provisions: Litigation

9. Codifies In re Seagate Technology in precluding infringer’s failure to obtain/offer advice of counsel as evidence of willful infringement. Imposes limits on stay of preliminary injunction for post-grant reviews. Prohibits raising invalidity arguments on same grounds once a post-grant review decision is rendered. Amendments have stricken all damages provisions. Major Provisions: Litigation

10. Virtual marking by Internet link. USPTO fee-setting authority. Non-diversion of USPTO fees in dedicated revolving account. Establishment of satellite USPTO offices. Major Provisions: Miscellaneous

11. Pre-Grant Provisions

12. First-to-File System • Conversion from First-to-Invent to First-to-File system, giving priority to the earlier-filed application by an inventor(s) for an invention. • One year grace period for inventor-related disclosures of the invention. • Exceptions for commonly-owned applications and inventions made by joint research agreement.

13. First-to-File System Interference proceedings replaced by “derivation proceedings” to determine whether the applicant of an earlier-filed application was the proper applicant. Effective: Eighteen months after enactment.

14. First-to-File System: Practical Considerations • Race to the Patent Office • Added Costs? • Prior art considerations in obviousness determinations can remain different in foreign examination. • U.S.–filing date vs. Foreign– publication date. • What constitutes a “disclosure” for prior art and exceptions? • “Non-public” sales & commercialization?

15. Derivation Proceedings • Patent owner with later-filed patent must bring civil action within one year of alleged “derived” patent issuance. • Patent applicant must request a derivation proceeding within one year of the date of first publication of a claim that is the same/substantially the same as the applicant’s invention.

16. Must set forth particular basis for finding that the published invention was derived and filed without authorization. The request must be made under oath and must be supported by substantial evidence. Final determination is made by the Patent Trial and Appeal Board and is appealable to the Federal Circuit. Derivation Proceedings

17. Prior Art Submission • Third parties may currently submit prior art in published applications within two months of publication. • Expand to submission in any application to earlier of (i) allowance or (ii) later of 6 months after publication or first rejection. • Submission must include description of relevance.

18. Tax avoidance methods are precluded from patentable subject matter. No Tax Methods

19. CLE Code: e7my9rx8

20. Post-Grant Provisions

21. Inter Partes Review • Replaces current inter partes reexamination. • An inter partes post-grant proceeding may be instituted only if: • The Petition is filed after the later of 9 months from patent issuance or termination of a post-grant review; • Must be anticipation or obviousness based on patents or printed publications.

22. The Petition must: Identify real parties in interest; Set forth grounds of challenge to each claim; Provide evidence, including copies of patents and printed publications or written testimony of a witness. Inter Partes Review

23. The review proceeding would be conducted by newly-designated Patent Trial and Appeal Board. Patent owner right to respond. The USPTO determines whether reasonable likelihood challenger prevails. If so, initiates inter partes review. Patent owner is permitted one motion to amend/add claims. Inter Partes Review

24. Inter Partes Review • Review is precluded or ends if civil action asserting invalidity is filed. • Review is also precluded if more than 6 months from service of complaint alleging infringement. • No subsequent review or civil action may be brought after written decision by challenger based on grounds that could have been raised previously.

25. Final determination is mandated to be not later than one year after the proceeding is instituted. Eighteen months for good cause. Prior to decision, parties may file written settlement and request termination. Effective: One year from passage. (Current reexaminations will continue.) Inter Partes Review

26. Additional option to current ex parte reexamination. Within nine months of patent issuance, any third party may request cancellation of any claims on any grounds. Same petition requirements: identifying parties in interest, particular grounds and submitting evidence. Similar estoppel, review termination, claims’ amendment, settlement and conduct/decision by Board (appealable). Ex Parte Review

27. Supplemental Examination • Patent owner may request supplemental examination to consider, reconsider or correct information relevant to patent. • Within three months, USPTO must decide whether to order reexamination (without owner statement) based on substantial new question of patentability. • Patent may not be held unenforceable based on information that is considered or reconsidered.

28. Information regarding invalidity received in FDA drugs application prior to the review request. Cannot preclude defenses of third-party, unless the review is concluded before the date of patent enforcement action. Supplemental Examination: Exceptions

29. Transitional Business Method Review Program • Accused infringers may institute post-grant review of business method claims. • Generally subject to new post-grant procedures without time and “first-to-file” restrictions. • Estoppel from reasserting invalidity claim on same grounds after final decision. • Four-year sunset • Effective: One year after enactment.

30. Litigation Provisions

31. Only the United States or a person suffering competitive injury may file civil action for “damage adequate to compensate for injury”. Qui tam actions of any person are eliminated. Effective: Upon enactment, including pending suits False Marking

32. Instead of listing patent numbers, the designation of “Patent” or “Pat.” may be used with Internet domain name address that includes relevant patents. Beneficial where it is undesirable to include a long list of patent numbers on products. Effective: Suits commenced after enactment. Virtual Marking

33. ‘‘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.” Codifies In reSeagate Technology Advice of Counsel: Willfulness

34. Failure to disclose best mode cannot be used to invalidate patent. Effective: Upon enactment, including pending suits Best Mode

35. Stays, Estoppel & Damages Court may not stay preliminary injunction motion based on a petition for ex parte post-grant review if the patent owner files suit within three months of patent issuance. Post-grant final written decisions estop claiming invalidity of subject patent (except as to grounds that could not otherwise have been reasonably raised).

36. Stays, Estoppel & Damages Supplemental review insulates patent owners from unenforceability on remedied deficiencies (with noted FDA and defense exceptions). All limitations on damages struck.

37. Discussion

38. Intellectual Property Contacts Eric Hanson ehanson@hunton.com Brad Grout bgrout@hunton.com Tyler Maddry tmaddry@hunton.com 34909568v1