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Patent Reform - If Your Head Hurt Before . . . - UPDATED
Monday, June 27 2011 @ 09:00 AM EDT

In case you happened to miss it (this story has only been dragging on for eight plus years, so it is easy to understand if you did miss it), H.R. 1249 [PDF], the Leahy-Smith America Invents Act, passed the U.S. House of Representatives last Thursday and will now go to a Senate/House conference committee to work out the differences with S. 23 [PDF], the sister bill that passed the U.S. Senate back in March. What is interesting is that, after all of this long anticipation, the resulting bill is now coming under fire, but not by BigPharma or the IT industry. Rather, it is coming under fire from a number of academics who have made a career of studying our patent system, and they think the bill is a disaster.

First, we hear the following from the esteemed Dennis Crouch, editor and publisher of Patently-O. Dennis, only partly tongue-in-cheek, states: "The litigation involving the interpretation of the many new provisions of the Bill will occupy Patently-O posts for at least the next decade." And then we read a rather lengthy and critical article from John Duffy, professor of law and patent expert at George Washington University School of Law, entitled, "The Big Government Patent Bill." Prof. Duffy excoriates the bill for doing not much more than adding layer after layer of new bureaucracy onto the USPTO without actually addressing the underlying problems the "fixes" are intended to address. And where are most of those "fixes" aimed? At addressing the reexamination of patents that contain claims that likely should have never been allowed.

Doesn't it make more sense to focus and invest on achieving thorough examinations in the first place? Well, yes, it does, but there are serious interests out there that really don't want that to happen. Why? Because regardless of whether a claim is ultimately found valid, a patent has value by its mere existence because of the high cost of patent litigation. This legislation is not going to fix that problem.

So what are the key changes? Here is a brief summary of what the Senate bill contains and how the House bill differs:

  • First to File - The U.S. would change from a first to invent to a first to file system, theoretically conforming to the model used by most of the rest of the world. However, the U.S. would not totally abandon all of its differences. For example, under the current system an inventor has a one-year period from the first public disclosure of the invention in which to file in the U.S. without the invention being declared in the public domain. That one-year grace period remains in place under S.23. What happens if someone else can show they invented first? They are out of luck unless they can show that the first filing party "derived" their invention from the first inventor. This is the so-called derivation proceeding which will replace what is now known as an interference proceeding. For a more thorough discussion of this change, see this analysis by Prof. Ann McCrackin and students Stephen Brodsky, and Amrita Chiluwal from the Univ. of New Hampshire School of Law.
  • Reexaminations/Reviews - The current ex parte reexamination procedure would be retained. The inter partes reexamination procedure would be bifurcated into two different procedures: an inter partes review and a post-grant review. The inter partes review would be limited to prior art evidence in the form of printed publications or patents (devices would no longer satisfy the evidence requirement). An inter partes review could not be initiated earlier than nine months following the issuance of the patent or the following the end of any post-grant review. The inter partes review would also be limited to issues of novelty or obviousness. Finally, an inter partes review must be initiated, if at all, no later than six months following the serving of a complaint alleging infringement of the patent in question. By contrast with the inter partes review, a post-grant review may only occur within nine (H.R.1249 changes this to 12) months of the issuance of a patent. The grounds for contesting the patent under the post-grant review are broader than those under the inter partes review.
  • False Marking - The heyday of the false marking law suit by specialty law firms would be over. Only the government or a competitor would be allowed to bring a suit for false marking.
  • Prior Use Defense - Under current law a party who has practiced a method claimed in a patent before the effective date of the patent may assert prior use as a defense to an assertion of infringement. Under H.R.1249, that prior use defense would be extended to all claims, not just method claims.
  • Third Party Submissions - The act would permit the USPTO to ease its present formalities around third-party prior art submissions, effectively allowing the USPTO to directly implement a Peer To Patent-type system.
  • Fee Setting and Budget - The act would allow the USPTO greater freedom in setting its fees, but one of the key differences between S.23 and H.R.1249 is budgetary authority. S.23 would set the USPTO up largely as a self-funding agency with no Congressional oversight of its budget. The House has balked at that approach and would still require the USPTO to obtain an annual appropriation, thus allowing Congress to continue to siphon off filing and maintenance fees for other federal government activities.

*************

UPDATE

My apologies for throwing around some terms that deserve explanation or definition. So here are some definitions for some of the terms used above:

  • Ex parte - On one side only; by or for one party; done for, in behalf of, or on the application of, one party only. A third party may petition for an ex parte reexamination and file the prior art with that petition, but once accepted by the USPTO that third party is no longer permitted to participate in the reexamination proceedings. The cost of filing an ex parte request is less than that of filing an inter partes request.
  • Inter partes - Between parties. A third party may petition for an inter partes reexamination and file the prior art with that petition. If the USPTO accepts the petition and orders the reexamination, that third party may continue to participate in the reexamination proceedings. The cost of filing an inter partes request is more than three times that of filing an ex parte request.
  • Bifurcate - To divide or fork into two branches.
  • I hope this helps. Never hesitate to ask for an explanation of legal terms that are not clear.


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