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Political Maneuvering & Patent Reform

Next week the House is expected to begin floor debate on the America Invents Act…maybe. Further amendments are expected to be offered prior to the floor debate, however, two recent sticking points have emerged that may stall recent progress.

The first, although not new, appears to have gathered some steam lately, namely, the debate over the proposed “first inventor to file” provision. Having been unsuccessful in defeating this provision previously, opponents now insist that the U.S. Constitution requires that the “first true inventor” be protected. The reasoning goes that the language “first and true inventor” appeared in the Patent Acts of the late 1700s (which were written by the some of the same guys) so the Constitution must be interpreted similarly. The IEEE has gone as far as to suggest that the recent Supreme Court decision in Stanford v. Roche somehow impacts Patent Reform…it doesn’t.  Yet, desperate times call for desperate measures.

The second sticking point has emerged in the last few days and has the greatest potential to derail efforts until after the July 4th break, that is, renewed efforts to continue fee diversion from the USPTO.…

Continue Reading Patent Reform–Coming Distractions

Overhaul to U.S Patent System Awaits Further DebateThere has been true progress toward enacting patent reform in 2011. First, in March, S.23 was shepherded through the Senate in a matter of weeks by Senator Leahy. Next the House took up H.R. 1249. The House companion bill includes much of the same, if not identical provisions

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The Five Reexamination Proceedings of Patent ReformAs discussed earlier in the week , the USPTO has proposed changes to ex parte patent reexamination practice (substantively untouched in the legislation), and has proposed to refine inter partes patent reexamination (this proceeding will remain viable during the multi-year transition period provided for in the pending bills). The

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Supplemental Examination Request to Invite Investigation?Under current law, inequitable conduct cannot be cured through patent reissue or patent reexamination. As such, one of the more interesting aspects of the proposed patent reform legislation is the concept of “Supplemental Examination.”  Supplemental examination, as currently proposed, will permit the patent owner to cure inequitable conduct resulting from violations of the duty of candor and good faith as well as the duty of disclosure with intent to deceive the USPTO so long as it is done promptly and prior to litigation.Of course, the USPTO Director will be able to continue to investigate issues of possible misconduct and impose sanctions such as those set forth in 37 CFR 11.18(c) such as striking a paper; referring a practitioner’s conduct to the Director of Enrollment and Discipline (OED) for appropriate action; precluding a party or practitioner from submitting a paper or contesting an issue; affecting the weight given to a paper; and terminating the proceedings in the Office. Thus, the concept of Supplemental Examination appears to be directed to gray areas and close calls, as opposed to providing a second bite at the apple for true “villains.”To reinforce the idea that Supplemental Examination is not meant to provide amnesty for gross misconduct, an amendment was added to H.R. 1249 to make clear that “fraud” is to be rooted out by the Director. Not surprisingly, industry groups are less than enthusiastic about this provision. The amendment (here), proposed by Congressman Goodlatte (VA) provides:(C) FRAUD.–No supplemental examination shall be commenced by the Director on, and any pending supplemental examination shall be terminated regarding, an application or patent in connection with which fraud on the Office was practiced or attempted. If the Director determines that such a fraud on the Office was practiced or attempted, the Director shall refer the matter to the Attorney General for such action as the Attorney General may deem appropriate. The Biotechnology Industry Organization (BIO) released the following comment on the Goodlatte amendment:The supplemental examination provision as passed by the Senate and originally included in the House bill would allow patent holders to seek a review of their issued patents at their own risk.  The Goodlatte amendment undercuts this provision by creating disincentives for patent owners to use the new procedure by having the U.S. Patent and Trademark Office (PTO) act as quasi-investigative body.Since disbanding the “fraud squad” years back, the Office has not proactively pursued inequitable conduct issues, that is, aside from the few cases presented to OED by the public, or that result from final court determinations. The USPTO has made clear that the agency is ill suited to pursue investigations into inequitable conduct due to a lack of resources, subpoena power, etc.It seems that the rationale behind the Goodlatte amendment is to ensure that supplemetal examination is not abused as a “get out of jail free” card by the unscrupulous—yet, such cases are the rare exception (despite the plague of inequitable conduct charges to the contrary in almost every patent litigation). The added provision would arguably require the Director to investigate every request for the sake of rooting out the rare exception. This duty would potentially turn every request into a witch hunt—no thank y

Under current law, inequitable conduct cannot be cured through patent reissue or patent reexamination. As such, one of the more interesting aspects of the proposed patent reform legislation is the concept of “Supplemental Examination.”  Supplemental examination, as currently proposed, will permit the patent owner to cure inequitable conduct resulting from violations of the duty of candor and good faith as well as the duty of disclosure with intent to deceive the USPTO so long as it is done promptly and prior to litigation.

Of course, the USPTO Director will be able to continue to investigate issues of possible misconduct and impose sanctions such as those set forth in 37 CFR 11.18(c) such as striking a paper; referring a practitioner’s conduct to the Director of Enrollment and Discipline (OED) for appropriate action; precluding a party or practitioner from submitting a paper or contesting an issue; affecting the weight given to a paper; and terminating the proceedings in the Office. Thus, the concept of Supplemental Examination appears to be directed to gray areas and close calls, as opposed to providing a second bite at the apple for true “villains.”

To reinforce the idea that Supplemental Examination is not meant to provide amnesty for gross misconduct, an amendment was added to H.R. 1249 to make clear that “fraud” is to be rooted out by the Director. Not surprisingly, industry groups are less than enthusiastic about this provision.
Continue Reading USPTO Required to Police Fraud Under H.R. 1249?

Patent Community Awaits Crucial DecisionYesterday, the Supreme Court heard arguments in Microsoft v. i4i . As discussed at length previously, Microsoft has sought Supreme Court review of the following issue:Whether the court of appeals erred in holding that Microsoft’s invalidity defense (which rested on prior art never considered by the USPTO) must be proved by

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Manager’s Amendment of H.R. 1249 Passed, Headed to FloorPatent Reform took another step in the direction of passing into law today. In a 32-3 vote, the Manager’s Amendment was passed, along with several small amendments, to the House floor. A full list of all proposed amendments may be found (here). Several deal breaking amendments were proposed, but failed, including a proposal to ditch the first inventor to file scheme, and another to utilize the SNQ standard for Inter Partes Review. Upon passage of H.R. 1249 (and amendments) to the floor, Chairman Smith explained,Today’s vote puts much-needed patent reform one step closer to enactment.  The America Invents Act updates our patent system to make it easier for innovators to produce new technologies that drive economic growth and generate jobs.This important legislation is long overdue.  The last major patent reform was nearly 60 years ago.  Since then, American inventors have helped put a man on the moon, developed cell phones and launched the Internet. But we cannot protect the technologies of today with the tools of the past. Technological innovation from America’s intellectual property is linked to three-quarters of our economic growth.  American IP industries account for over half of all U.S. exports and provide millions of Americans with well-paying jobs. In order to have a healthy economy, we must have a healthy patent system. These reforms discourage frivolous suits, enhance patent quality and streamline international principles. After six years of bipartisan efforts, I look forward to crossing the finish line on patent reform.Expect further political maneuvers on the House floor, still, patent reform is getting very close to becoming reality. 

Patent Reform took another step in the direction of passing into law today. In a 32-3 vote, the Manager’s Amendment was passed, along with several small amendments, to the House floor. A full list of all proposed amendments may be found (here). 

Several deal breaking amendments were proposed, but failed, including a proposal to…

Continue Reading America Invents Act (H.R. 1249) Heads to House Vote

SNQ Standard Removed by Proposed Manager AmendmentToday, the Chairman of the House Judiciary Committee circulated a Manager’s Amendment to H.R. 1249. (here).  There were several notable changes to the proposed Inter Partes Review and Post Grant Review proceedings.Perhaps the most noteworthy change in the manager’s amendment from a post grant perspective is the removal of the Substantial New Question of Patentability (SNQ) standard for Inter Partes Review. Previously I explained that the SNQ standard was adopted by the House for Inter Partes Review over the proposed “reasonable likelihood of success” standard of Senate bill S.23. The House adoption of the more liberal SNQ standard was not only unpopular, but rendered other aspects of the bill wasteful. Fortunately, this change has been undone by the manager amendment.Other notable Post Grant Changes include:Inter Partes Review-expansion of window to request an Inter Partes Review once litigation is initiated (expanded from 9 months to one year)-a provision was added guaranteeing that the petitioner will get at least one opportunity to file written comments if an Inter Partes Review is instituted. (I guess if the Board sides with the Patentee at the outset, the Patentee would not need to file anything that would trigger a petitioner right of response, effectively forcing the petitioner to the CAFC?)-the section of H.R. 1249 pertaining to staying an ITC action was removed (Sec. 320)Post Grant Review-the section of H.R. 1249 pertaining to staying an ITC action was removed (Sec. 330)Other provisions and changes, perhaps most notably to the first to file provision (correction of language). Also a provision was added to study the impact of patent troll litigation and its effect on the econo

Today, the Chairman of the House Judiciary Committee circulated a Manager’s Amendment to H.R. 1249. (here).  There were several notable changes to the proposed Inter Partes Review and Post Grant Review proceedings.

Perhaps the most noteworthy change in the manager’s amendment from a post grant perspective is the removal of the Substantial New Question of Patentability (SNQ) standard for Inter Partes Review. Previously I explained that the SNQ standard was adopted by the House for Inter Partes Review over the proposed “reasonable likelihood of success” standard of Senate bill S.23. The House adoption of the more liberal SNQ standard was not only unpopular, but rendered other aspects of the bill wasteful. Fortunately, this change has been undone by the manager amendment.

Other notable Post Grant Changes include:…

Continue Reading House Reverts to Senate Inter Partes Review Standard

Inter Partes Review, 5 Months to a First Action?Should the proposed patent reform legislation pass into law, inter partes reexamination will gradually cease to exist. In place of inter partes patent reexamination will be an entirely new mechanism known as Inter Partes Review. Inter Partes Review will not be conducted by patent examiners of the Central Reexamination Unit, but instead by the Administrative Patent Judges of the Patent Trial & Appeal Board (now known as the BPAI). As the new proceeding is conducted by APJs, limited discovery practices will be provided. Beside these procedural changes, the substantive analysis remains largely the same. …at least in H.R. 1249.In H.R. 1249, the Substantial New Question of Patentability (SNQ) standard is substituted for the “likelihood of success” standard of Senate bill S.23. So, in order to initiate an Inter Partes Review under the House Bill, the same SNQ standard of inter partes patent reexamination is used.While the House bill removed the heightened standard (i.e., likelihood of success) in favor of the much more liberal SNQ standard (i.e., important to a reasonable examiner), the Senate provision providing for a preliminary Patentee response to a request for Inter Partes Review remains in the bill. In essence, Inter Partes Review of H.R. 1249 is substantive ly the same as inter partes patent reexamination, with the added provision of a patent owner statement on the front end. In the Senate Bill, a preliminary response provided a meaningful opportunity for patentees to rebut the ‘likelihood of success” showing of the request. Now that the House Bill has reverted to the SNQ standard, the preliminary response may provide nothing more than dead time to the front end of the Inter Partes Review. The preliminary response provision of H.R. 1249 reads as follows:Sec. 313. Preliminary response to petition(a) Preliminary Response- If an inter partes review petition is filed under section 311, the patent owner shall have the right to file a preliminary response within a time period set by the Director.(b) Content of Response- A preliminary response to a petition for inter partes review shall set forth reasons why no inter partes review should be instituted based upon the failure of the petition to meet any requirement of this chapter.Sec. 314. Institution of inter partes review(a) Threshold- The Director may not authorize an inter partes review to commence unless the Director determines that the information presented in the petition filed under section 311 and any response filed under section 313 shows that a substantial new question of patentability exists. (emphasis added)History has shown that roughly 96% of inter partes patent reexaminations are granted, meaning an SNQ is almost always found. Due to the relatively low standard for finding an SNQ, it seems unlikely that a patentee would deem it worthwhile to argue the issue. Whether an SNQ is presented in the request is quite different from whether or not prima facie rejections are presented. As such, one would expect the office to follow the statute and deny consideration of arguments directed to proposed rejections as premature.Although neither the House nor Senate bills identify a time frame to submit such a preliminary response, the Post Grant Review mechanism provides 2 months. Thus, it is safe to assume a similar time frame for Inter Partes Review. The date for determining whether or not the proceeding should be conducted is “within three months” of the receipt of the preliminary response, or the last date upon which one would be due. So, a first office action would not be possible until at least 5 months from filing of an Inter Partes review.Currently, as there is no patent owner statement permitted in inter partes patent reexamination, office actions have issued as quickly as 2 months. Notably, Congress has set a 12 month time frame to conclude an Inter Partes Review (18 months maximum); front loading needless delay would not seem to comport with that intent.  As the saying goes, if it aint broke, don’t fix

Should the proposed patent reform legislation pass into law, inter partes reexamination will gradually cease to exist. In place of inter partes patent reexamination will be an entirely new mechanism known as Inter Partes Review.

Inter Partes Review will not be conducted by patent examiners of the Central Reexamination Unit, but instead by the Administrative Patent Judges of the Patent Trial & Appeal Board (now known as the BPAI). As the new proceeding is conducted by APJs, limited discovery practices will be provided. Beside these procedural changes, the substantive analysis remains largely the same. …at least in H.R. 1249.

In H.R. 1249, the Substantial New Question of Patentability (SNQ) standard is substituted for the “likelihood of success” standard of Senate bill S.23. So, in order to initiate an Inter Partes Review under the House Bill, the same SNQ standard of inter partes patent reexamination is used.

While the House bill removed the heightened standard (i.e., likelihood of success) in favor of the much more liberal SNQ standard (i.e., important to a reasonable examiner), the Senate provision providing for a preliminary Patentee response to a request for Inter Partes Review remains in the bill. In essence, Inter Partes Review of H.R. 1249 is substantive ly the same as inter partes patent reexamination, with the added provision of a patent owner statement on the front end. 

In the Senate Bill, a preliminary response provided a meaningful opportunity for patentees to rebut the ‘likelihood of success” showing of the request. Now that the House Bill has reverted to the SNQ standard, the preliminary response may provide nothing more than dead time to the front end of the Inter Partes Review. …
Continue Reading House Version of Inter Partes Review & Wasted Time

Additional Grounds for Challenging Patents in Proposed Post Grant Review LegislationOn Wednesday, the House of Representatives formally introduced H.R. 1249, as previewed here last Friday. The bill includes some changes to the proposed post grant review and inter partes review proceedings.The two major changes being discussed in the House are: (1) The expansion of the Post Grant Review window to 12 months (S.23 previously provided 9 months); and (2) The reemergence of the SNQ standard as the threshold determination in the proposed inter partes review proceeding (S.23 previously proposed a likelihood of success standard). The Bio/Pharma community has been clear that the House’s adoption of the SNQ standard for inter partes review is not a welcomed change.Yet, the “additional grounds” subsection of postgrant review may prove much more troublesome for the bio/pharma community.Both the Senate and House bills prevent a post grant review proceeding form going forward unless the request demonstrates that “it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable.” (Sec. 324 subsection (a))Subsection (b) provides:(b) ADDITIONAL GROUNDS–The determination required under subsection (a) may also be satisfied by a showing that the petition raises a novel or unsettled legal question that is important to other patents or patent applications.Subsection (b) clearly addresses the concern that subsection (a) would, by virtue of the “more likely than not” outcome standard, prevent challenges on unproven theories. But, is subsection (b) necessary?  Is the USPTO the best venue for such novel legal challenges?  What kinds of “theories” would fall into this category anyway?It is hard to imagine too many novel or untested legal theories that are “important to other patents or patent applications” that would not in some way involve application of 35 U.S.C. § 101. Arguing against the patentability of gene sequencing, aspects of human cloning, genome mapping, and the like would seem to be the types of “novel or untested” legal theories having a wide ranging impact on other patents. Subsection (b) is nothing more than an invitation to take these battles to the USPTO.It seems to me that untested legal theories that have far reaching public policy implications are best left to the courts and legislators. The USPTO is best equipped to review issues of technology and prior art, not novel legal questions.Moreover, this legislation is a game changer with respect to the Board of Patent Appeals & Interferences (BPAI). The USPTO will have enough on their plate transitioning to a Patent Trial & Appeal Board to accommodate inter partes review, while simultaneously accommodating an entirely new procedure, post grant review. Encouraging the public to pursue novel and untested legal theories during this time of change seems more than a bit misguided. Clearly, the post grant aspects of the bill will be hotly debated in the coming weeks. Yet, not all aspects of the proposed post grant review mechanism are problematic for bio/pharma.  Interestingly, since the grounds of post grant review are based on the statutory defenses of 35 U.S.C. § 282, instead of patent reexamination’s “patents and printed publications,” obviousness-type double patenting is seemingly excluded from post grant review. The absence of this ground is a boon to the bio/pharma community. Many patent reexaminations that involve drug patents include such rejections with the hopes of limiting patent term.More on the various post grant options of the legislation next week.  

On Wednesday, the House of Representatives formally introduced H.R. 1249, as previewed here last Friday. The bill includes some changes to the proposed post grant review and inter partes review proceedings.

The two major changes being discussed in the House are: (1) The expansion of the Post Grant Review window to 12 months (S.23 previously provided 9 months); and (2) The reemergence of the SNQ standard as the threshold determination in the proposed inter partes review proceeding (S.23 previously proposed a likelihood of success standard). The rn-with-inter-partes-review-changes/”>Bio/Pharma community has been clear that the House’s adoption of the SNQ standard for inter partes review is not a welcomed change.

Yet, the “additional grounds” subsection of postgrant review may prove much more troublesome for the bio/pharma community.…

Continue Reading Post Grant Review Grounds