Next Tuesday the Senate Judiciary Committee will hold a hearing entitled Protecting Small Businesses and Promoting Innovation by Limiting Patent Troll Abuse. The 10 AM hearing will be webcast. A witness list is not yet available. The hearing will focus issues for possible mark up so that the Senate Bill can be fast tracked in early 2014. The Senate effort is expected to track the Goodlatte bill to avoid, or significantly minimize issues for conference.
Yesterday afternoon, the Innovation Act (H.R. 3309) passed through the House with ease by a vote of 325-91. The bill was quickly debated (3 hours) and only slightly amended. The one noteworthy change was the removal of the provision designed to repeal 35 U.S.C. § 145. As a reminder, 145 actions allow unsuccessful applicants for patents to challenge the denial of patent protection by the USPTO in District Court rather than the Court of Appeals for the Federal Circuit (CAFC). (The main benefit of the district court route over the CAFC is the ability to introduce new evidence).
145 actions are exceedingly rare. When instituted such suits can be a significant drain on the Solicitor’s Office of the USPTO, hence the original proposal to repeal 145. It seems legislators failed to realize some patentees like having an option 99.9% will never use.
With the House bill passed, debate will head to the Senate. It is expected that the Leahy bill will be revised to track H.R. 3309 so that conference can be avoided, and “reforms” can delivered for presidential signature in the early weeks of 2014.
Earlier this week, the CAFC heard oral arguments in Consumer Watchdog v. Wisconsin Alumni Research Foundation (Warf). Although seemingly a routine appeal from an inter partes patent reexamination, the Court took interest in the unique procedural posture of this case a few weeks before argument on the merits. Here, the challenged claims of the patent were confirmed as patentable by the USPTO and appealed by the challenger, Consumer Watchdog, to the CAFC. The CAFC ordered late briefing on the question of Article III standing for CW’s appeal. CW brief (here), WARF brief (here)
For simple folk like me, the question of standing would seem to have a relatively straight forward response. That is, appeal from a PTAB decision is provided, by statute (old 35 U.S.C. § 315 (b)(1), to any party dissatisfied with a decision of the PTAB. This appeal right was actually added in 2002 as the original inter partes reexamination passed in 1999 had no such right. Section 13106 of Public Law 107-273, 116 Stat. 1758, 1899-1906 (2002). So, not only was standing conveyed by Congress, it was conveyed only after denying it in the first legislative go-round. (fact pattern seems rather persuasive to me)
While the CAFC was well aware of the statute, they seemed to be seeking more of an “injury” from the appellant to convey Article II standing, or some kind of indication in the legislative history that Congress intended to convey Article III standing. Read the rest of this entry »
The rules of the new patentability trials of the America Invents Act (AIA) are designed to ensure timely resolution of patentability disputes within the statutorily mandated 12 month time frame. In particular, the Patent Trial & Appeal Board (PTAB) fashioned their new rules to prevent the notorious delays and complications of the previous inter partes patent reexamination system. One way in which the new AIA post grant proceedings are vastly different from the previous inter partes patent reexamination model is the manner in which claim amendments may be proposed.
In the previous inter partes reexamination system, any number of amended claims could be added or submitted prior to the close of prosecution before the examiner. There was no numerical limit on the number of claims that could be submitted. In fact, it was not uncommon practice for patentees to submit hundreds of new claims. By doing so, patentees made it more difficult for the third party to respond to all issues within their 30 day period, and within page limits. Likewise, the addition of such extensive amendments made examiner/APJ processing all the more tedious and time consuming.
In the new AIA proceedings, Inter Partes Review (IPR) and Post Grant Review, the PTAB provides for a reasonable number of substitute claims. 37 C.F.R. § 42.121/221. The “reasonable” aspect has been explained as a one-to-one correspondence in the typical case. Further restricting the ability to amend is the requirement that amendments be presented within the bounds of a 15 page motion to amend. The combination of these controls strictly limits the ability of patentees to amend in any significant regard, which greatly aids the agency in completing the proceedings in a timely manner.
Yet, patentees argue that these strictly enforced procedural controls are inconsistent with the patentee estoppel that attaches to a failed PTAB proceeding.
Texas Court Stuns Patent Troll Business Model
Texas has become well known, some would say infamous, for their patent friendly federal district courts. Over the years, “patent trolls” have increasingly flocked to Texas District Courts such as the eastern district (Marshall) to leverage these pro-patentee forums.
Since September 16, 2012, new USPTO post grant patent proceedings have been increasingly leveraged as the first true alternative to patent litigation. Here again, Texas courts offered patentees a benefit over many other districts in the U.S. That is, historically, Texas judges have been reluctant to stay litigation pending USPTO reexamination proceedings. To date, most presumed that this historical bias against staying litigation pending USPTO reexamination would continue despite the increase in speed in the new patent challenge proceedings of the America Invents Act (AIA). Yet, as made clear last week, the heightened standard necessary to institute an Inter Partes Review at the USPTO’s Patent Trial & Appeal Board (PTAB), coupled with the recent outcome in Fresenius USA v. Baxter Int’l. (CAFC 2013), has Texas courts rethinking the wisdom of their previous anti-stay stance. Read the rest of this entry »
Now that the Goodlatte Bill, also knows as the Innovation Act (H.R. 3309), has been reported out of the Judiciary Committee there will be a second round of amendment opportunities. The new amendments will be collected from house lawmakers on Monday December 2nd, and the Rules Committee is expected to calendar floor debate shortly thereafter (likely Wednesday or Thursday). It is expected that some of the same amendments that failed during committee markup will be reintroduced, along with a raft of others. Post grant patent issues are expected to be hotly debated, especially those pertaining to the potential expansion of Covered Business Method (CBM) patent challenges.
The Innovation Act remains on the fast track heading into the close of 2013. Meanwhile, the Leahy Bill will sit idle for the time being. While significant progress can be made in the next few weeks, it seems unlikely that any legislation will be passed into law until early 2014.
One of the issues being debated in the current round of patent reform efforts is the current use of the broadest reasonable claim interpretation (BRI) in USPTO post grant patent proceedings. The rationale for this “broadest” interpretation practice of the USPTO has long been the ability to amend patent claims before the agency. That is — patent claims should be interpreted broadly in a forum where claim scope can be freely adjusted by the patentee (intervening rights aside).
Since the passage of the America Invents Act (AIA), a small, but vocal minority of bar association honchos (primarily those employed by large patent filers) have been shortsightedly advancing the notion that BRI should not be employed in the patent challenge proceedings of the AIA (Inter Partes Review (IPR) and Post Grant Review (PGR)). Instead, they argue that BRI claim construction should be replaced with the claim construction practices of the district court (i.e., Philips v. AWH). Their premise is that the new AIA proceedings are more “adjudicative in nature” as compared to examiner based patent prosecution/reexamination practices. Currently, the proposed legislation is adopting these changes for IPR and PGR proceedings (CBM is excluded).
As can be appreciated, large patent filers believe a narrower claim construction at the USPTO will help preserve the patentability of their patents that become subject to post grant patent challenges. Yet, in practice, if this change is implemented, it will have little impact on post grant proceedings. In fact, insisting that the USPTO perform the same analysis as district courts may help invalidate more patents. Read the rest of this entry »
Wasting no time…the Senate has quickly introduced a companion bill to H.R. 3309. The senate bill (here), sponsored by Senator Leahy of Leahy-Smith America Invents Act (AIA) fame, largely tracks the post grant related provisions of the existing house legislation — with one major difference. The Leahy bill does not include the technical fix to the Covered Business Method (CBM) provisions of the AIA, Section 18(a)(1)(C)(i). This fix is included in the Goodlatte bill to permit CBM challenges on prior art qualifying under 35 U.S.C. § 102(e). 102(e) is a critical class of prior art for business method patent challengers.
As explained previously, the exclusion of 102(e) was a drafting mistake of the AIA. This drafting error significantly degrades the appeal of CBM for business method patent challengers. While mark-up and evolution of H.R. 3309 /Senator Leahy’s Bill will certainly continue, it is disturbing that this critical fix was seemingly deliberately left out of the Senate bill.
Last week, the proposed patent reform legislation (HR 3309) was seemingly stalled for the remainder of 2013. This road block was primarily erected by the Business Software Alliance, and other pro software patent lobbyist that were taking issue with certain proposed changes to Section 18 of the America Invents Act (AIA). As a reminder, Section 18 of the AIA defines the Transitional Program for Covered Business Method (CBM) patents. The CBM proceeding is a post grant patent challenge program managed by the USPTO’s Patent Trial & Appeal Board (PTAB). The CBM program has proven especially successful in cost effectively combating and shutting down business method patent litigation.
The proposed changes to the CBM proceeding drawing the most heat were: 1) the recalibration of the definition of a business method patent to de-emphasize financial services aspect, while expanding the definition to embrace more generic software functionality; and 2) repeal of the “transitional” nature of the program (8 years) to make it permanent. Not surprisingly, large software patent filers were not at all enthusiastic.
Faced with the prospect of further hearings and delay, and with the White House clamoring for something, anything that can be spun as progress in the wake of the Obamacare fallout, HR 3309 has been repackaged by dropping these controversial CBM provisions (existing mark-up here).
With additional mark-up expected in the coming days (although likely very minor), look for a companion bill to be introduced on the Senate side by Senator Leahy. As was the case for the AIA, conference can be avoided if the Senate follows the Goodlatte lead, which appears to be the plan.
Patent Reform for Christmas is looking like a distinct possibility.
Last week, the USPTO issued the official tallies/progress statistics for Inter Partes Review (IPR), Post Grant Review (PGR) and the Covered Business Method (CBM) proceedings. As of November 7, 2013 the Patent Trial & Appeal Board (PTAB) has received 627 IPR petitions and 78 CBM petitions, 709 petitions in total. (While the Office is showing one PGR as being filed, this was an incorrectly filed IPR). (Click to Enlarge)
Not surprisingly, the vast majority of IPR petitions are in the predictable arts, significant concentrations being in consumer electronics and mobile communication technologies.
Although difficult to gauge from the numbers due to the lag in filing of preliminary responses across yearly boundaries, it seems that preliminary responses are pursued in roughly 75% of proceedings.
Based upon early numbers, the settlement rate appears to be leveling out at around 25%. As more proceedings mature toward written decision the rate may increase. Of course, it is within the discretion of the PTAB to continue to written decision for late stage settlements. (See CBM2012-00007)