Patent, Trademark & Copyright : Law Office of Kloss, Stenger & LoTempio

On June 23, 2011, the House of Representatives overwhelmingly voted 304-117 to pass H.R. 1249, a bill sponsored by House Judiciary Committee Chairman Lamar Smith (R-Texas), also known as the America Invents Act, to overhaul to U.S. patent law so as to encourage innovation, job creation and economic growth.
 

“Today’s vote is a victory for America’s innovators and job creators who rely on our patent system to develop new products and grow their businesses. The America Invents Act is the most significant jobs creation bill passed by Congress this year. No longer will American inventors be forced to protect the technologies of today with the tools of the past. H.R. 1249 brings our patent system into the 21st century, reducing frivolous litigation while creating a faster and more efficient process for the approval of patents.                       Chairman Lamar Smith (R-Texas)

Much-needed reforms to our patent system are long overdue. The last major patent reform was nearly 60 years ago. Some of the changes the America Invents Act proposes:

• a first-inventor-to-file standard for patent approval,


• patent office keeps all the fees it generates,


• creates a post-grant review system to weed out bad patents, and


• helps the Patent and Trademark Office (PTO) address the backlog of patent applications.

The House of Representatives bill diverges from the Senate version of patent reform, so the bill will not go to the desk of President Obama just yet. Now the Senate will be asked to agree with the changes made by the House of Representatives, will this game of tag never end? It's amazing that any complex bill ever makes it into law. That's probably why this bill has been hanging around for what seems like forever.

I guess the big question is whether or not Senator Patrick Leahy (D-VT) and Congressman Lamar Smith (R-TX), the respective champions of the bills in the Senate and House will compromise on language that can pass both the House and the Senate.

There are so many divergent opinions and interest groups pushing for one side or the other it seems unlikely that it will happen anytime soon.

Upon passage of the America Invents Act in the House of Representatives David Kappos, Under Secretary of Commerce for Intellectual Property and the Director of the United States Patent and Trademark Office, issued the following statement:

We are encouraged by the statements of so many Members of Congress calling for the USPTO to have full access to all of its fee collections. We are particularly thankful to Chairman Rogers for his commitment to ensure that the USPTO has full access to its fees when fee collections exceed Congress’ annual appropriation for USPTO. Full funding of the USPTO is necessary for the USPTO to successfully implement this legislation and to more effectively perform its core mission.

We are hopeful that this critical legislation can move expeditiously toward final passage and enactment.

One major difference between the House and Senate bills is how they open the door to the overburdened patent office keeping all the fees it generates. All sides agree the office needs help given it faces a backlog of at least 700,000 applications and it takes on average three years to grant a patent.

The director certainly wishes the bill becomes law so that the USPTO can have full access to the mountain of money it collects for filing fees. Certainly if they could use that money to hire more examiners the backlog could be reduced. It's almost like the national debt! Even with reform is it possible they can ever reduce it to a manageable number?

There are more than 6000 patent examiners trying to stick their fingers in the holes of the dam. If the USPTO could hire many more examiners perhaps the backlog could be reduced to a reasonable number. What if patent applicants did not have to wait three years for approval? I guess the question is "if inventors didn't have to wait so long for their patents to be granted would that alone increase productivity, jobs and efficiency in society?" Can it be accomplished through patent reform?

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The latest patent reform bill entitled “The Patent Reform Act of 2011" (PDF) , will be introduced to Congress by Sen. Patrick Leahy (D-VT), chairman of the Judiciary Committee, on Jan. 25, 2011. Could this be the year it becomes law? The Judiciary Committee has introduced patent reform bills to Congress every year since 2006.

A bipartisan group of Senators, including Senate Judiciary Committee Members Patrick Leahy (D-Vt.), Orrin Hatch (R-Utah) and Chuck Grassley (R-Iowa), will introduce patent reform legislation when the Senate returns to session next week.

Sen. Leahy plans to introduce the bill on the Committee’s first day of executive business, and has scheduled a mark-up session for Thursday, January 27, 2011.  I think he will try to fast track the bill again without permitting hearings or debate.

“This will be the first piece of legislation considered by the Judiciary Committee this year, and I hope the Senate will act promptly on this job-creating bill. Action by Congress can no longer be delayed. ..[t]he Patent Reform Act will keep America in its longstanding position at the pinnacle of innovation” Sen. Patrick Leahy (D-VT)

If the bill is legislated into law it will make the first significant changes to the nation’s patent system in nearly 60 years. But based upon the past 4 years that is a big “IF.”

Sen. Leahy notes that the bill “mirrors key improvements” to the legislation announced last March as the “Manager’s Amendment.” The Senate Judiciary Committee has held eight hearings in the last three Congresses examining the need for patent reform.

The Senate Judiciary Committee approved patent reform legislation in 2009. In September 2010 , 25 Senators joined together to urge Senate Majority Leader Harry Reid (D-Nev.) to schedule floor time to consider the legislation but it never made it to the Senate floor.

What’s in the Bill? The bill provides these specific provisions:

• Sec. 1. Short title; table of contents.
• Sec. 2. First inventor to file.
• Sec. 3. Inventor’s oath or declaration.
• Sec. 4. Damages.
• Sec. 5. Post-grant review proceedings.
• Sec. 6. Patent Trial and Appeal Board.
• Sec. 7. Preissuance submissions by third parties.
• Sec. 8. Venue.
• Sec. 9. Fee setting authority.
• Sec. 10. Supplemental examination.
• Sec. 11. Residency of Federal Circuit judges.
• Sec. 12. Micro entity defined.
• Sec. 13. Funding agreements.
• Sec. 14. Tax strategies deemed within the prior art.
• Sec. 15. Best mode requirement.
• Sec. 16. Technical amendments.
• Sec. 17. Effective date; rule of construction.

Although I have reviewed most of this before in my post Patent Reform Act of 2010: An Overview and the bill is "nearly identical" to the Manager's Amendment of S. 515 (PDF) from the 111th Congress (It includes similar or identical provisions on venue, best mode, false marking, and easing the residency requirements for Federal Circuit judges.) I’d like to highlight some of the major changes contained in the bill:

• “First-inventor-to-file” system: Under the current law, it doesn’t matter who’s the first person to file a patent application, the United States has a “first person to invent” system.

Currently there is a statutory 102B bar that says if the invention was published, offered for sale or used in public more than one year before an application for a patent then everyone is barred from filing a patent application on that invention. But all that will change.

The new bill proposes to change the law so that any disclosure before the effective filing date will be a bar. However there is an exception to the bar, it will allow a one year grace period for disclosures by the inventor or someone who obtained the disclosure from the inventor.

The proposed change:

A person shall be entitled to a patent unless— ‘‘(1) the claimed invention was patented, described in a printed publication, or in public use, on
sale, or otherwise available to the public before the effective filing date of the claimed invention; …

‘‘(b) EXCEPTIONS.— ‘‘…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— if the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.

• False marking: False marking cases will only be allowed if filed by persons who have actually been harmed by the alleged misconduct. False marking cases would also include a statute of limitations that limits the time to file such cases to 10 years after the alleged misconduct or 1 year after the plaintiff in such an action became aware of the alleged misconduct.
• Damages: Change of the procedure for determining damages. The district court judges will have more control over evidence and jury instructions on as it relates to Damages.

The damages portion of the bill is considered by many as a "grand compromise" achieved by Senators Leahy, Dianne Feinstein (D-CA), and then-Senator Arlen Spector (D-PA). 

Senator Leahy states on his web page the new law will establish a “ rigorous gate keeping role for the court, pursuant to which judges will assess the legal basis for the specific damages theories and jury instructions sought by the parties. The gate keeping provisions will ensure consistency, uniformity, and fairness in the way that courts administer patent damages law."

The proposed new law states:

“The court shall identify the methodologies and factors that are relevant to the determination of damages, and the court or jury shall consider only those methodologies and factors relevant to making such determination.'

The damages section of the bill also includes a sequencing provision. It states that “ Any party may request that a patent-infringement trial be sequenced so that the trier of fact (jury or judge) decides questions of the patent’s infringement and validity before the issues of damages and willful infringement are [decided]”

• Patent review: a person who is not the patent owner may file a petition to institute a review for a patent within 9 months of a patent’s issuance, and an inter partes proceeding before the USPTO after this time-frame.
• Preissuance submissions by third parties: Anyone can confidentially submit to the patent examiner during pendency of a patent application the following: prior art patents or publications, statements made by the patent applicant to the court or the USPTO. If you wanted to do this today you would have to do it within 2 months of publication (Good luck with that!)
• Willful infringement: The bill includes the changes to make pleading and proving intentional infringement with more specificity, including requirements of pre-suit notification and specificity in pleadings. I think a common sense proposed change is that the court can’t allow Punitive damages if it is “a close case” on the basis of infringement, validity or enforceability.
• Filing fee: additional fee of $400 for applications that are not filed electronically.

The proposed bill is 99 pages long. Could you get anyone to agree to everything contained in any 100 page document? At a first glance it appears to be very close to the previous bills. But even so, I plan on comparing the two and filing future posts on the subject. So sign up for an RSS feed on this blog or come back and check out the blog in the next week or so for updates.

If you have any questions on The Patent Reform Act of 2011 please comment below and I will do my best to respond with an answer.

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The Patent Reform Act of 2010 was recently made public in the form of an (“Amendment to S. 515”). Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) spoke at an Executive Business meeting (webcast) February 25, 2010 about this amendment to the patent reform act.

Leahy stated, “When Senator Orrin Hatch (R-Utah) and I started this process several Congresses ago, along with Congress members  John Conyers Jr.,  Howard L. Berman, Lamar Smith and others in the House, we wanted to improve patent quality and the operations at the PTO, and address runaway damage awards that were harming innovation. We are close to a compromise that will address these issues. No one will think this a perfect bill, but we are close to a comprehensive patent reform bill that benefits all corners of the patent community.”

The 2010 amendment of the "Patent Reform Act" proposes a number of so-called improvements that are the subject of other LoTempioLaw blog posts (See the list below). This post is directed at the proposed change regarding First-Inventor-to-File.

First-Inventor-to-File

The proposed change does not call for a “First To File” system as some people mistakenly believe; it proposes a “First Inventor To File” system. Remember you cannot file a patent application in either system unless you are the inventor. Because two people can independently invent the same thing at different times there may be a race to the patent office by two inventors.

The current US system awards a patent to the inventor who is the first to invent regardless of whether the application was the first to be filed in the patent office for that invention. The new system will reward the inventor who wins the race to the USPTO and files the first application.

In the current US system, when two inventors seek a patent on the same invention the fact finder must determine who invented it first (it doesn’t matter who filled it first). The proposed “First Inventor To File” system will minimize Issues such as

• whether an inventor “abandoned, suppressed, or concealed” the invention
• “when was first conception,”
• “when was actual reduction to practice” and 
• “if the inventor used reasonable diligence coming to the patent office with the invention”

People now question if a first-inventor-to-file system is put in place will big business always beat the independent inventor to the patent office to file a patent application? Under Secretary of Commerce and USPTO Director David Kappos, says that there is a big misconception regarding “First Inventor To File.”

With the “First Inventor To File” system there is no risk of business beating the independent inventor to the patent office to file a patent application because the interloper is not an inventor. All filers have to sign an oath and declaration under penalty of criminal sanctions.“This leaves only the issue of simultaneous, non-collaborative invention—what we call interferences. The chances that a patent will be subject to interference based on a first to invent claim—that’s our current system—is .01%. In 2007—the most recent year for which we have statistics. The total number of interference cases for all applicants of all sizes that were decided based on a priority claim was seven! Of those seven decisions, only one involved a small or medium sized entity, and not a single one was won by an independent inventor who was the second to file. That means we already essentially have a first inventor to file system.”

Is this a naive view of the world? Or will non-inventors race to the office to file applications and basically say, hey prove I didn’t invent this invention. Will more litigation result because of this proposed change in the patent law? Or will the independent inventor just lose out on his/her invention because they won't have the wherewithal to fight it out in court even if he/she is the only true inventor?

The Professional Inventors Alliance USA viewpoint is that this provision will not guarantee that the actual inventor will be granted the patent.

"It creates conditions for very poor prior art, which is the existing knowledge of a similar innovation known to the general public. It burdens examiners with questionable applications by non-inventors. It creates a new malpractice liability for patent practitioners who may not beat another party to the patent office, thereby increasing the potential for litigation.

Kappos thinks the benefits will be reaped in the cost savings when filling internationally,

"... all other countries in the world use a “First Inventor to File” system. The change in the Patent Reform Bill will streamline the process for you to acquire patent rights and reduce your costs in seeking rights outside of the United States as you consider entering the global marketplace. This change will make it easier for you to “go global” with your invention."

Personally, I think this argument is much to do about nothing. I haven't heard many inventors consciously say I know it is a "first inventor system" so I don't care if somebody else files before me. I think that even with the system as it is now, inventors still believe that it's vitally important to be the first to file. Being the first to file always has its advantages. Even the patent office recognizes a patent application as a "constructive reduction to practice." I'm sure that if inventor observes an application pending in the United States Patent and Trademark Office for their invention he/she is less likely to go forward and file a second in line application regardless as to whether it's a “First Inventor to File” or a "First Inventor to Invent" system.

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