BioMelbourne Network
Progressing BioIndustry
Latest News
Overview of U.S. Patent Law Reform Efforts
Jeffrey S Rothstein -Sidley Austin LLP.
Efforts to overhaul the United States patent system are gaining ground. If the reform effort succeeds, the way you obtain and enforce patents in the U.S. will change significantly.
The U.S. House of Representatives and U.S. Senate are now considering separate patent reform bills (H.R. 1260 and S. 515). To become law, a bill must be approved by both chambers and signed by the President. Typically, the House and Senate adopt different versions of a bill, so the two chambers must negotiate a compromise that is acceptable to all before the bill can be submitted to the President for signature.
A recent compromise in the Senate regarding the highly-controversial subject of damages for patent infringement has led to renewed optimism that U.S. patent reform, after years of attempts, may actually occur this year. Further changes are certain as the legislative process continues, but here is a brief overview of the principal changes as they now stand.
Adoption of “First-to-File” and Other Changes to the Application Process
For years, the United States has been the only country in the world to retain a “first-to-invent” system which permits later-filing applicants to prove that they were the first to invent and are therefore entitled to the patent. This results in a lack of international consistency and adds uncertainty to the validity of patent rights in the U.S., based on the possibility of claims from potential, unknown “inventors.” This uncertainty does not exist in “first-to-file” systems in Australia and the rest of world.
The current Senate bill would implement a “first-to-file” system in the United States. Invention priority would date from the effective filing date (which includes foreign priority dates). It would also eliminate the unique U.S. “interference” proceeding, which resolves disputes between inventors over who is entitled to a patent. In its place, a “derivation” proceeding would be available to determine whether the inventor had the right to file the application.
Under the current Senate bill, the U.S. would retain a grace period of one year prior to the effective filing date for any disclosures “made by the inventor … or by others who obtained the subject matter disclosed directly or indirectly from the invention ….” This is generally similar to the one-year grace period under Australian law.
Globalizing the Definition of Prior Art
The bill would also remove the current geographic restrictions on non-documentary prior art from outside the United States. Thus, public uses, oral or other non-documented disclosures made in Australia, for example, could be cited as prior art against claimed inventions in the United States.
Simplifying Filing Requirements: Inventor’s Oath/Declaration and Assignee Filing
The Senate bill would allow an applicant to file a “substitute statement” instead of an inventor’s oath or declaration if the inventor has died, is legally incapacitated, or cannot be found. The substitute statement could also be filed for any inventor who is obligated to assign the invention but has refused to cooperate. The draft also includes permission to “withdraw, replace or otherwise correct” these statements.
The draft Senate legislation would also permit an assignee of the rights associated with an invention to file a patent application. The current system provides that an application must be filed by the “inventor” which can add to administrative burdens when filing the application.
Damages
Damages for patent infringement are perhaps the most controversial part of the patent reform effort. Some interests, mainly in the high-technology sector, have criticized damage awards under the current system as unpredictable and too likely to overvalue the patent’s contribution to the overall infringing product. Others, generally in the pharmaceutical and biotechnology industries, resist changing the current system and defend it as essential to rewarding innovation. This divergence of views led to a political stalemate.
The current Senate legislation offers a procedural approach to determining damages. The court would act as a “gatekeeper”-- i.e., it would hear the parties’ views on appropriate damages methodologies and would identify those methodologies for which there is legally-sufficient evidence. Once that determination is made, the court or jury would use only those methodologies to determine damages.
This approach looks like the beginning of a compromise on an issue that has long thwarted patent reform efforts in the United States. If you follow a single issue in the patent reform effort, follow this one. If this compromise survives, the odds for patent reform in the U.S. will be higher than they have been in years. If it collapses, patent reform is likely dead.
Willful Infringement
U.S. jurisprudence has been criticized for years for too-readily finding willful infringement, which permits damages to be increased by up to three times actual damages. The current draft codifies the recent decision of the Court of Appeals for the Federal Circuit in In re Seagate Technologies LLC, 497 F.3d 1360 (Fed. Cir. 2007) which held that willful infringement requires a finding of “objective recklessness” by the accused infringer. The draft legislation also bars a finding of willful infringement where the infringing party had a good faith belief that the patent was invalid, unenforceable, or would not be infringed.
Pre-Grant Submissions
Unlike the pre-grant opposition system in Australia, current U.S. law provides no way to oppose or protest the grant of a patent before it issues. The Senate bill would change this, and permit anyone to submit patents or other relevant publications during the examination process.
Post-Grant Procedures
The legislation would provide broader procedures for supplying relevant information to the USPTO after patent grant and would make it easier to challenge issued patents.
In particular, the changes would affect ex parte and inter partes reexamination practice. Most notably, the changes would allow issues that were not raised during reexamination to be raised in a later court proceeding. The draft House bill also would broaden the grounds for reexamination, which are currently limited to patentability issues raised by prior art.
The legislation would introduce a new post-grant review procedure to U.S. practice. Any party would be able to challenge the validity of any patent or claim before the USPTO not only on the basis of prior art (as is the case in reexamination procedures today), but also on such issues as clarity of claims and sufficiency of disclosure. Similar to the opposition system of the European Patent Office, there would be a time limit to file such a challenge—it would have to be filed within 12 months after the patent issues, or where the patent owner consents in writing.
Venue and Jurisdiction
Most states in the US have several federal courts, and any federal court in a jurisdiction that bears some relationship to a patent dispute may hear the case. Plaintiffs often seek patent-friendly courts in jurisdictions with little relationship to the parties or the case at issue. The current Senate bill would require a district court to transfer a patent case to a new venue if the new venue is “clearly more convenient” than the venue in which the action is pending. This codifies a recent Federal Circuit decision, In re TS Tech USA Corp., 551 F.3d 1315 (Fed. Cir. 2008).
More Information
You can find updates and further information about U.S. patent reform efforts at:
www.sidley.com
www.ipo.org
www.aipla.org
