Patents- Part II America Invents Act

This presentation does not constitute a legal opinion or legal advice, does not create an attorney-client

relationship, and is the sole opinion of the author(s), thus it may not reflect that of Troutman Sanders.

With permission from

Technology Commercialization Partners Office of the Vice President for Research

Agenda- Section I • Section I. AIA legislation – (Part 1 – Patent

Office) o “Harmonizing” international practice – first to file o New measures of prior art o During Prosecution: Third Party Submission Expanded o Post Issuance: Removing bad patents without litigation o Practice tips

First-Inventor-to-File

• First inventor to file patent application has priority rather than first to invent

• Intended to harmonize U.S. patent law with majority of the world

• New law eliminates: o Ability to swear behind under 102 (a) and

102(e) o Territorial Limit of Section 102(b) o Interference Proceedings

• Effective Date = March 16, 2013 o Applies to applications filed on or after March

16, 2013 with any claim that is not entitled to a priority date before March 16, 2013

First-Inventor-to-Disclose • Disclosure by A before patent application filing by B,

may entitle A to a patent, even if B’s patent filed first, as long as A files within a year of disclosure

• New 102(b) exceptions protect inventor from: o their own disclosures o from later public disclosures by others, and o from applications of others filed after inventor’s disclosure o so long as inventor discloses first and files patent application

within 1 year of first disclosure • Derivation proceedings in PTO available if substantial

evidence that first filer derived invention from later filer

First-Inventor-to-File §102(a) summarized • 35 U.S.C. 102. Conditions for patentability; novelty • (a) Novelty; Prior Art- A person shall be entitled to a patent

unless-- (1) Disclosure of the claimed

invention was publicly accessible before the effective filing date

(2) Claimed invention was described in a later-published US/US PCT patent application or patent of another inventor, effectively filed

before inventor’s effective filing date

First-Inventor-to-File §102(b)(1) summarized • 35 U.S.C. 102 (b) Exceptions- • (1) DISCLOSURES MADE 1 YEAR OR LESS BEFORE

THE EFFECTIVE FILING DATE OF THE CLAIMED INVENTION- A disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if –

• (B) the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint

(A) Disclosure represents inventor’s own work

(B) Subsequent disclosure by another is not prior art with respect to subject matter in an inventor’s earlier

public disclosure

First-Inventor-to-File §102(b)(2) summary • 35 U.S.C. 102 (b) Exceptions- • (2) DISCLOSURES APPEARING IN APPLICATIONS AND

PATENTS- A disclosure shall not be prior art to a claimed invention under subsection (a)(2) if--

(A) inventor’s own work

(B) earlier patent filings of others preceded by inventor’s public disclosures

(C) common ownership

First-Inventor-to-File -“Disclosure” • “Disclosure” is a new term of art without interpretation

o The term “publicly disclosed” is also used • Does a “disclosure” need to be enabling (112)? • Term “disclosure” is not used in 102(a) list of prior art • Legislative history: states that the “phrase ‘available

to the public’ is added to … emphasize the fact that it must be publicly accessible” (House Report June 1, 2011) o “A reference is considered publicly accessible if it was

‘disseminated or otherwise made available to the extent that persons interested and ordinarily skilled in the subject matter or art exercising reasonable diligence, can locate it.’” In re Lister, 583 f.3d 1225 (Fed. Cir. 2009).

Second to File Is Denied A Patent

A Files A Invents

B Files B Invents

• A invents first, but B files first. • A cannot swear behind B, even if filed within a year of

B. In this scenario, B is granted a patent.

1 year

X

Patented

Inventor’s Publication Defeats Later Publication By Another

A Files A Invents

B Invents

• A invents first and publishes first, and A files after publication has been available for less than 1 year.

• A is granted a patent.

1 year A Publishes

B Publishes

Patented

Second To Publish Denied a Patent

A Files A Invents

B Invents

• A invents first, but publishes and files after B has been publicly available for less than 1 year.

• A is denied a patent, B is granted a patent.

1 year A Publishes

B Publishes

X

B Files Patented

Publication of Inventor’s Work Does Not Defeat Patent

A Files A Invents

B Derives Invention From A

• A invents first, B derives invention from A and publishes prior to A’s filing.

• A is granted a patent.

1 year

B Publishes

Patented

Public Use or On Sale?

A Files A Invents

• A places in public use or on sale and publishes, then A files in less than 1 year.

• A’s publication is not prior art but unknown whether A’s public use or on sale activity will be prior art

1 year A Publishes

?

A places invention in Public Use or On Sale

Expanded Prior Art • Published foreign patent applications prior art as

of the effective foreign filing date (§102(d)) o Eliminates “Hilmer” rule – used U.S. filing date, not

foreign filing date, as effective date for prior art purposes of foreign applications

• Public use or on sale activities outside of United States will constitute prior art

• New category of prior art “otherwise available to the public”

• Effective Date – March 16, 2013

Third Party Prior Art Submissions • Third party submission of prior art patents and printed

publications expanded over current MPEP provision • Third party must include concise statement of relevance

o Currently barred • Increased time window (old rule gave 2 months after

publication) – new rule allows submission of prior art before notice of allowance and later of: o (1) six months after publication or o (2) date of first rejection by the Examiner

• Effective Date – September 16, 2012 and applies to all patent applications filed before, on, or after that effective date

Relaxed Oath/Declaration Requirements • Inventor’s Oath §115 now has two requirements:

o Inventor authorized patent application filing o Inventor believes herself to be an “original” inventor

• Oath/declaration will be a formality, and incorrectly named inventors can be corrected at any time under §256

• Included in Assignment Document: Required statements can now be incorporated into the inventor’s assignment document

• Effective date – Sept. 16, 2012

Micro Entity • Micro entities will be entitled to pay 25% of the

total fee amount. • Micro entity is an applicant who:

o qualifies as a small entity, o is obligated to assign to a university; OR o has not been named as inventor on more than 4

previously filed patents, and o did not having gross income exceeding 3 times the

median household income for the preceding calendar year or an obligation to assign to large entity

Increased Fees • Most patent-related fees increased by 15% • $400 fee for documents which are not filed

electronically (effective Nov. 15, 2011)

Prioritized Examination • Original utility patent application accorded special

status for expedited examination if: o $4,800 fee ($2,400 for small entity); o no more than 4 independent claims, 30 total claims, and no

multiple dependent claims; and o must file application electronically

• May be requested for a continuing application • USPTO goal for final disposition in 12 months

(allowance or final rejection) • Maximum of 10,000 per fiscal year (USPTO fiscal

year begins in October)

Patent Prosecution Strategy Tips 1. Prior to any public use or on sale activity:

a. File as comprehensive a provisional application (or utility application) as possible

b. If you can’t file an application, publish a disclosure providing as comprehensive a description of the invention as possible (caution: no guarantee that the publication will excuse the public use/on sale activity)

2. Continue to keep documenting research activities, as they may be useful in a derivation proceeding.

Patent Prosecution Strategy Tips 3. Consider disclosure practices immediately,

because disclosures made after March 16, 2012 could serve as prior art to application filed on or after March 16, 2013

4. Pay for prioritized examination on valuable or time critical applications

5. Review competitor patent publications and decide whether to submit prior art within 6 months of publication

6. Include oath language in assignments

Review Post Issuance Two New Formats For Challenger Review Requests

1. Post-Grant Review (“PGR”): • Must be filed within nine months of

issuance • Wide array of invalidity challenges

available, including 101, 102, 103, & 112

2. Inter Partes Review (“IPR”): • Can be filed on any patent after the

nine month PGR window expires or the termination of a PGR

• Invalidity challenges limited to 102 and 103 based on patents and publications

AIA Creates two new formats for third party initiated review of patents after issuance:

Review Post Issuance Provisions Common to Post-Grant Review and Inter Partes Review • Final Determination within 12 months (or 18

months by exception) • Patent Trial and Appeal Board (“PTAB”):

Reviewed by 3 Judge panel at the PTAB (skips the examining core)

• Oral Hearing: either party may request an oral hearing before the PTAB

• Federal Circuit: Appeal directly to the CAFC – no district court action allowed

Review Post Issuance Provisions Common to Post-Grant Review and Inter Partes Review

• Estoppel: challenger estopped as to any ground on invalidity raised or reasonably could have been raised

• Termination: parties can terminate on joint request prior to PTAB decision o No estoppel if terminated

• Discovery: permitted under both (extent differs)

Post-Grant Review • Filing Deadline: within 9 months of issuance • May challenge patent on any ground, including

prior public use, lack of enablement, lack of written description and lack of utility (previously not possible in reexam)

• Standard to Institute: “more likely than not that at least 1 of the claims challenged in the petition is unpatentable.”

• Expert Declarations: allowed for both parties • Discovery: into factual assertions

Post-Grant Review Not Likely A Factor For a Number of Years

• Effective Date – September 16, 2012 • Not likely to be useful for some time: it will only

apply to patents with claimed priority after 3/16/13

Post-Grant Review Not Likely A Factor For a Number of Years • Hypothetical graph of likely volume for PGR

requests

0100200300400500600700800900

1000

# of PGR Requests

Inter Partes Reexamination Changed Reexamination Standard

• The standard to institute Inter Partes patent reexamination has already changed from a “substantial new question of patentability” to a “reasonable likelihood that the requester would prevail” (9/16/11)

• No real change, as you should not assume estoppel without a reasonable likelihood of success

• The standard to institute ex parte reexamination remains a “substantial new question of patentability”

Inter Partes Review • Replaces Inter Partes Reexam. (Sept. 16, 2012) • All patents open to challenge, no matter when

filed (unlike PGR) • Petition for Inter Partes Review may be filed after

the later of: o 9 months after issuance of patent o Termination of Post-Grant Review

• Petition must be filed within 1 year of petitioner being served with complaint alleging infringement

Inter Partes Review • IPR is a more time constricted and yet more

expansive proceeding than current inter partes and ex parte reexam with four major differences: 1. Conducted by PTAB - skips the examining

core 2. Expert Declarations allowed for both parties 3. Discovery as to affiants/declarants, including

depositions, will be permitted 4. Tight deadlines to meet the statutory 12-18

month deadline

Transitional Program for Post-Grant Review of Business-Method Patents • PTO to issue regulations establishing a Post-

Grant Review for business method patents (PGRBM)

• Effective Date – September 16, 2012 & expire September 16, 2020)

• No time limit for when PGRBM can be filed • No estoppel from PGRBM for challenger • PGRBM will be available to challenge current

business method patents by a party sued for infringing a business method patent

Post Issuance Patent Challenges

Ex Parte Reexamination Inter Partes Review

Post Grant Review

Filing Deadline: Can be filed at any time after patent issues

Can be filed: 9 months after issuance or completion of PGR

Can be filed during 9 months after issuance of patent

Issues That Can be Raised: Patentability in view of prior art patents and printed publications

Patentability in view of prior art patents and printed publications

Expanded subjects – challenge patents for lack of enablement, written description, utility, prior public use or sale.

Initial Standard: Substantial new question of patentability

Reasonable likelihood that requester will prevail

More likely than not that at least one claim is unpatentable

Initial Reviewer: Examiner PTAB PTAB

Appeal: PTAB; District Court or Federal Circuit

Appeals only to Federal Circuit

Appeals only to Federal Circuit

Timing: No deadlines Must be completed within 12-18 months

Must be completed within 12-18 months

Post Issuance Patent Challenges

Ex Parte Reexamination

Inter Partes Review

Post Grant Review

Procedure: Conventional examination (office action, response, amendment, interviews and appeal)

Petition – Opening petition, response, discovery and possibly oral hearing; decision and appeal

Petition – Opening petition, response, discovery and possibly oral hearing; decision and appeal

Litigation Impacts: None (1) Estoppel in subsequent litigation - arguments petitioner made or could have raised (2) Joint termination of IPR removes estoppel (3) Petition must be filed within one year of a complaint alleging infringement being served on the petitioner (4) Petitioner’s prior DJ action challenging validity bars IPR

(1) Estoppel in subsequent litigation - arguments petitioner made or could have raised (2) Joint termination of PGR removes estoppel (3) Petitioner’s prior DJ action challenging validity bars PGR

Agenda – Section II • Section II. AIA legislation – (part 2 - Litigation)

o Best Mode Defense Eliminated o Willfulness and Enhanced Damages o Supplemental Examination o Joinder of Parties o Prior Commercial Use Defense o False Marking / Virtual Marking o The Patent Litigation Landscape

Best Mode Defense Eliminated • 35 U.S.C. § 112 requires applicant to “set forth the

best mode contemplated by the inventor of carrying out his invention”

• AIA amends U.S.C. § 282: eliminates the best mode defense as a ground for invalidity or unenforceability in patent infringement actions commenced on or after September 16, 2011

• Best mode requirement remains in § 112 -- thus can still ground a PTO rejection

• Impact of change: fairly negligible, may limit some discovery

Willfulness and Enhanced Damages • A court can award a successful patentee up to

three times the amount of compensatory damages assessed by the finder of fact – 35 U.S.C. § 284

• The Federal Circuit has interpreted this provision to require a "finding of willful infringement [as] a prerequisite to the award of enhanced damages”

• Under § 285, willful infringement qualifies as an "exceptional circumstance" justifying the award of attorney's fees to a prevailing patent holder

Willfulness – Pre-AIA • Knorr‐Bremse v. Dana Corp. (2004) – “no adverse inference

that an opinion of counsel was or would have been unfavorable” • In re Seagate (2007) (en banc) – eliminated affirmative duty of

care on behalf of accused infringer: • “to establish willful infringement, a patentee must show by clear

and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent. The state of mind of the accused infringer is not relevant to this objective inquiry.

• But counsel opinions still relevant: accused infringer's pre-litigation opinion of counsel on infringement or validity "may preclude [its] conduct from being considered reckless”

• Broadcom v. Qualcomm (2008) – in showing willfulness in inducing infringement: failure to obtain opinion may be relevant to “all of the circumstances” surrounding specific intent

Willfullness Post-AIA • Failure to obtain/present advice of counsel “may not

be used to prove” willfulness or intent to induce – effective September 16, 2012 (amends 35 U.S.C.§ 298) o Knorr‐Bremse (no adverse inference) codified o Broadcom (can present failure to obtain advice of counsel

on inducement claim) overturned • Clarifies law, eliminates some discovery and in limine

motions • Willfulness still routinely alleged, most claims go to

jury, 37% success rate, far higher before juries

Supplemental Examination • Patent owner can request supplemental examination

of its patent to consider, reconsider, or correct information believed to be relevant to the patent -- § 257

• Allows patent owner to preemptively avoid inequitable conduct allegation

• No unenforceability finding permitted as to information considered during supplemental examination

• Supplemental Examination o PTO has 3 months to determine whether substantial new

question of patentability (SNQ ) raised o Finding of SNQ leads to Reexamination o PTO may cancel claims o PTO may refer fraud to Attorney General

Supplemental Examination • Supplemental examination must be

requested: o (a) before allegation of inequitable conduct in

civil action or paragraph IV letter; or o (b) before institution of 337 action in the ITC

• Applies to any patent issued on, before, or

after September 16, 2012

Joinder of Parties • As of September 16, 2011, Plaintiff cannot join multiple

defendants alleged to infringe same patent unless: (1) action arises out of same transaction or occurrence

relating to same accused product or process or (2) action is based on common questions of fact

• Inapplicable to Hatch-Waxman (ANDA) Cases (§ 271e2) • Already changing litigation strategy for non practicing

entities

Potential Impact of New Joinder Rule • Fewer, low $$ NPE cases • More individual cases filed • More expense: certainly for plaintiffs, but also for

defendants who may otherwise have shared witnesses and costs

• Enhance prospects of transfer to different venue • Defense coordination harder; risk of inconsistent

rulings for plaintiffs • Potentially more trials, increasing court backlogs

Prior Commercial Use Defense • Infringer can avoid liability by proving, by clear and

convincing evidence, good faith, commercial use (which has not been abandoned) of an accused infringing “machine, manufacture or composition of matter used in a manufacturing or other commercial process” more than one year prior to earlier of: (a) effective filing date of patent or (b) date inventor publicly disclosed subject matter of patent

• Similar to Prior Commercial Use defense previously limited to Business Method Patents – 35 U.S.C. §273(a)

• Effective as of September 16, 2011 • Lack of reasonable basis for asserting defense warrants

exceptional case finding and awarding attorneys’ fees

False Marking / Virtual Marking • Ends false marking cases brought by anyone other

than United States or a person who has actually suffered competitive injury -- amends 35 U.S.C. § 292

• Only United States can recover statutory damages. • Competitor can only recover compensatory damages • Marking product with expired patent is not actionable • Virtual Marking - patent owner can “virtually” mark

product with word “patent” and website address containing patent numbers

• Effective Date – September 16, 2011 (applies to all pending False Marking cases)

The Patent Litigation Landscape • Immediate Term: Joinder, Willfulness, Prior

Commercial Use Defense • Medium Term – 9/16/12:

o Inter Partes Review (any patent) o Supplemental Examination o Third Party Prior Art Submissions

• Longer Term – 3/16/13: o Post Grant Review – 3.16.13 (patents with priority on or

after that date) o First-to-File 102/103 Amendments – apps with claims

filed on or after 3/16/13 not entitled to a priority date before 3/16/13

The Patent Litigation Landscape • Some Strategic Considerations Re: IPR

o Must seek within 9 months of patent issuance or after PGR o Can only assert prior art patents and printed publications o Accepted only where “there is reasonable likelihood that the

petitioner would prevail” in showing unpatentability by a preponderance of the evidence (not clear and convincing)

o If IPR sought, can’t file declaratory judgment (DJ) in district court, except where DJ claim was compulsory counterclaim;

o But DJ action will be stayed if filed after IPR sought , unless patentee counterclaims for infringement

o Limited discovery: deposition of witnesses submitting declarations and what is necessary in the interest of justice–

o One year to decision or up to 18 months for good cause o Estoppel as to any ground raised or could have been raised o Appeal is only to Federal Circuit, not also to district court

The Patent Litigation Landscape • Post Grant Review

o Must be filed within 9 months of issuance o Can assert any ground of unpatentability – not just prior art

based on patents and printed publications as in IPR o Petition must show “it is more likely than not” that at least

one challenged claim is unpatentable or by showing “novel or unsettled legal question” – like IPR burden of proof of unpatentability is preponderance

o No PGR if DJ filed; If PGR sought, later DJ action stayed – but not preliminary injunction motion if within 3 months of issuance

o Discovery limited to “evidence directly related to factual assertions advanced by either party”

o One year to decision, or up to18 months for good cause o Estoppel, like IPR o Appeal, like IPR, only to Federal Circuit

The Patent Litigation Landscape: • Fewer inequitable conduct claims – ? • Fewer willfulness holdings ? • Better and faster Board decisions? • More clarity in the law – just fewer issues? Or maybe

in the long run but what the new 102 “otherwise available to the public” means remains to be seen

• Better patents and less district court litigation? • Little or no discovery needed in litigation? • More business certainty or better predictability of

patent litigation?

Winners and Losers Under the AIA - For the Patent Owner: • Best Mode Defense Eliminated • Inter partes Review – higher standard to trigger • Oath/Declaration standards relaxed • Prior Art Narrowed – coworkers & collaborations • Supplemental Examination • Prioritized Examination • False Marking Cases Reduced

Winners and Losers Under the AIA - For the Patent Challenger: • 3rd Party Prior Art Subs. Expanded • Inter Partes Review by PTAB • Post Grant Review –nearly all grounds of

patentability • Prior Art Expanded – “foreign filings” on foreign

filing date • Prior Commercial Use Expanded • Joinder Exclusions • Overall Higher PTO Fees

Winners v. Losers Under the AIA

For the Patent Owner For the Patent Challenger Best Mode Defense Eliminated

3rd Party Prior Art Submission Pre-Allowance Expanded

Inter partes Review – higher standard to trigger.

Inter partes Review by PTAB, skips examiners

Oath/Declaration standards relaxed

Post Grant Review – based on nearly all grounds of patentability.

Prior Art Narrowed – co-workers and collaborations

Prior Art Expanded – “foreign filings” on foreign filing date

Winners v. Losers Under the AIA

For the Patent Owner For the Patent Challenger

Supplemental Examination

Prior Commercial Use Defense – expanded

Prioritized Examination Joinder Exclusions

False Marking Cases Dramatically Reduced

Overall Higher PTO Fees