Taking Advantage of Changing Patent Landscapes

It should also be noted that the definition of “disclosure” is not provided in the new statute. The relevant statutory text can be read so that commercial activities are not exempted by the new grace period provisions. Companies should carefully monitor their own activities and future court interpretations of the statute to ensure that patent rights are not lost.

The USPTO

There is also a conflict between the AIA's first-to-file mandate and current USPTO examination practice, particularly with respect to how much support a filer must provide for the claimed invention to obtain broad claim scope. While the AIA may suggest that companies adopt a strategy where applications are filed sooner in the development process, with less support for the claimed invention, rather than later, the USPTO's current application of 35 USC 112 suggests otherwise. The USPTO is increasingly demanding that applicants provide more support, not less, for the claimed invention, especially in the unpredictable arts. This factor suggests a strategy of filing later in the development process when more support for the claimed invention may be provided. In-house legal departments should carefully consider both of these opposing conditions when developing filing strategies.

What In-House Legal Departments Should Do

To effectively deal with the changes introduced by the AIA, in-house legal departments should review internal IP disclosure programs and decision-making processes to make sure internal procedures are flexible enough to provide feedback earlier on in the evaluation process, and to consider the increased impact of pre-filing disclosures by inventors and third parties. In addition to expedited review of disclosures, increased due diligence on the R&D and publication activities of others in the field will be beneficial in developing timely filing strategies.

Pre-emptive Disclosures

A strategy for the use of pre-emptive disclosures, whether in the form of a public disclosure or a provisional patent filing, should also be developed. If foreign patent protection is of secondary importance, the early use of pre-filing disclosures by the inventor should be considered to preserve patent rights in the U.S., as such disclosures are subject to the grace-period exceptions and can trump disclosures of third parties made prior to filing. If foreign patent rights are important, the use of provisional patent filings should be considered to secure an early filing date for the invention while at the same time preserving options for foreign filing.

Allow the Inventor Time

In-house legal departments should make sure any disclosure strategy allows the inventor sufficient time fully develop the invention. Since filing dates may be pushed earlier into the development process, one potential strategy is to file several narrowly tailored provisional applications covering distinct embodiments that can be fully supported during the convention year rather than filing one patent application covering a range of embodiments.

Review Prior Art

Another important change in the new 35 USC 102 is that the scope of what is available as prior art against a patent applicant will be expanded. For instance, the “public use” and “on sale” criteria under the current 35 USC 102(b) were only applicable to activities that occurred in the U.S. while under the AIA the “public use” and “on sale” criteria are applied on a worldwide basis. In addition, the term “or otherwise available to the public” is also included without definition and may allow a wider scope of art to be considered depending on how the provision is interpreted. Furthermore, the current grace period provisions generally exempt disclosures made by third parties. As a result of the changes to section 102, patent filers will have to contend with a more robust collection of prior art during the prosecution process.

Evaluate R&D Activities

In anticipation of the 2013 implementation date, patent filers should immediately evaluate their research and development activities and consider filing any patent applications prior to March 16, 2013 to take advantage of the current law. Corporate IP budgets may also have to be adjusted accordingly.

The Post-Review Grant Process

The AIA also provides new tools for companies to attack patents without resorting to litigation by creating the new post-grant review process. The new law also replaces inter partes reexamination with inter partes review. Under post-grant review (effective Sept. 16, 2012), an entity that is not the patent owner can, within nine months of the issuance/reissuance of a patent, request that one or more claims of the patent be cancelled. The standard for granting review is whether the information presented, if not rebutted by the patent owner, “would demonstrate that it is more likely than not that at least one of the claims challenged” is unpatentable. (Emphasis added.) A key feature of post-grant review under the AIA is that any invalidity argument available under current law or by raising “a novel or unsettled legal question” can be presented. Current mechanisms to challenge patents at the USPTO are essentially limited to grounds under 35 USC 102 and 103, and are limited to patents and printed publications. Furthermore, the AIA allows that statements made by a patent owner in a federal court or with the USPTO can be used in post-grant review (as well as inter partes review) solely to determine the proper meaning of a claim. The post-grant review provisions prevent the petitioner from concurrently filing both a civil action and an administrative proceedings at the USPTO and contain estoppel provisions that limit the ability to set forth arguments that were raised or reasonably could have been raised during post-grant review in other proceedings before the USPTO or in subsequent civil actions.

While the standard for securing post-grant review is increased somewhat as compared with the previous standard for inter partes review and the current standard for ex parte review, the grounds under which such attacks can be made have been significantly expanded. As a result, post-grant review presents an attractive opportunity for substantive patent challenge outside of the litigation arena, and allows an opportunity to bring invalidity arguments that could not previously be presented in administrative proceedings at the USPTO.

To prepare for this change, companies should carefully evaluate their own patent applications pre-grant to identify any grounds for attack under the post-grant review process, and take steps to correct these issues during prosecution. For offensive use, companies should evaluate competitor's patents for vulnerability under the post-grant review process and consider this mechanism as a cost-effective alternative to litigation. The post-grant review procedure will also impact patent licensing activities, as the value of patent claims will need to be evaluated in light of post-grant review both for in-licensing and out-licensing activities.

Inter-Partes Review

The AIA also phases out inter partes reexamination and replaces it with inter partes review (also effective Sept. 16, 2012). Importantly, the threshold for the grant of inter partes review (reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition) is higher under the AIA than the old standard under inter partes reexamination. The new standard will also be applied to inter partes reexaminations filed after Sept. 16, 2011. In addition, a patent owner will not be able to request inter partes review under the AIA. The inter partes review provisions contain prohibitions against concurrent actions and estoppels provisions similar to those for post-grant review. The use of inter partes review should be considered when the time period for post-grant review has passed.

Pre-Issuance Submission

The AIA also adds a pre-issuance submission provision under 35 USC 122(e) (effective Sept. 16, 2012) that gives companies an additional avenue for impacting the scope
and validity of a competitor's claims before issuance. Companies may submit a patent application, a patent, a published patent application or other printed publication relevant to the claims being asserted in the competitor's application ' accompanied by a concise description of the relevance of the submitted information. Submissions must be filed either before a notice of allowance is issued, or within six months of the first publication or date of first rejection of a claim during examination, whichever is later. Using this process may have drawbacks, however, because once a company makes a submission it will have no further opportunity to comment. It could happen that the USPTO grants the competitor's application despite the submission ' effectively increasing the strength of the resulting patent. The use of the post-grant attack procedures discussed above should be considered before resorting to the pre-issuance submission provision.

The Impact on Patent Litigation

The AIA also contains several provisions that impact patent litigation. Effective immediately, the AIA brings much-needed relief to patent holders by limiting the ability of third parties to bring false marking suits. This new provision is a direct response to the recent Federal Circuit decision that spawned hundreds of frivolous suits in the patent marking arena. In addition, effective immediately, marking a product with a patent that once covered that product but has since expired no longer violates the false marking statute. Together, these new rules will significantly reduce the exposure of patent holders to suits based on false marking claims. As a result, companies currently facing such suits should consider filing motions to dismiss. The AIA also makes management of the patent-marking process more straightforward by allowing “virtual marking.”

In another provision beneficial to patent owners, joinder or multiple defendants in patent cases is now more difficult, decreasing the ability of third parties, such as non-practicing entities, to file large-scale litigation. These provisions became effective Sept. 16, 2011. Patent holders also receive much-needed protection from charges of inequitable conduct often brought during patent litigation. Patent holders may, effective Sept. 16, 2012, request supplemental examination of a patent by the USPTO to correct any deficiencies that have come to light. Regardless of whether the reexamination is granted, the information submitted cannot later be used as a basis for inequitable conduct in litigation. Patent holders should evaluate their patent estate and take advantage of this opportunity when appropriate.

Conclusion

While this article discusses certain provisions of the AIA, it does not address them all. By preparing for these changes as soon as possible, companies will be in the best position to maximize the value of their patent portfolios for continued success.

T. Gregory Peterson, Ph.D, is a partner and member of the Intellectual Property Practice Group at Bradley Arant Boult Cummings LLP (Birmingham, AL). He advises clients on a wide array of intellectual property issues. He can be reached at 205-521-8084 or [email protected].

The America Invents Act (AIA), signed into law by President Obama on Sept. 16, 2011, is widely thought to constitute the most significant set of changes to the American patent system since the 1950s. While the most publicized change is the shift from a “first-to-invent” to a “first-to-file,” system, the AIA ushers in a number of additional changes that will be phased in over the next 18 months (see www.uspto.gov/aia_implementation/aia-effective-dates.pdf for a table providing effective dates for each new provision). The exact impact of the AIA may not be known for some time, as both the federal government and the courts will no doubt provide guidance on the new law's implementation and interpretation. What is clear, however, is that in-house legal departments that are proactive in revisiting their internal strategies will be in the best position to maximize the value of their intellectual property assets in light of the AIA.

'First to File' Provisions

One section of the AIA that deserves careful scrutiny is the revised 35 USC 102. The new section 102 becomes effective March 16, 2013 and codifies the “first-to-file” provisions. The AIA actually provides a hybrid first-to-file system as it retains a modified “grace period” provision. The latter provide that a “disclosure” made one year or less before filing is not prior art if the disclosure is made by an inventor or by someone who obtained the information directly or indirectly from an inventor. In addition, a public disclosure by a third party that is before the inventor's filing date is not considered prior art if the inventor, or someone who obtained the information directly or indirectly from an inventor, made a public disclosure before the third party's disclosure and the inventor's filing was made within a year of the inventor's disclosure. As a result of this change, a first inventor who conceives and reduces an invention to practice but loses the race to file at the U.S. Patent and Trademark Office (USPTO) may lose the right to patent the invention.

It should also be noted that the definition of “disclosure” is not provided in the new statute. The relevant statutory text can be read so that commercial activities are not exempted by the new grace period provisions. Companies should carefully monitor their own activities and future court interpretations of the statute to ensure that patent rights are not lost.

The USPTO

There is also a conflict between the AIA's first-to-file mandate and current USPTO examination practice, particularly with respect to how much support a filer must provide for the claimed invention to obtain broad claim scope. While the AIA may suggest that companies adopt a strategy where applications are filed sooner in the development process, with less support for the claimed invention, rather than later, the USPTO's current application of 35 USC 112 suggests otherwise. The USPTO is increasingly demanding that applicants provide more support, not less, for the claimed invention, especially in the unpredictable arts. This factor suggests a strategy of filing later in the development process when more support for the claimed invention may be provided. In-house legal departments should carefully consider both of these opposing conditions when developing filing strategies.

What In-House Legal Departments Should Do

To effectively deal with the changes introduced by the AIA, in-house legal departments should review internal IP disclosure programs and decision-making processes to make sure internal procedures are flexible enough to provide feedback earlier on in the evaluation process, and to consider the increased impact of pre-filing disclosures by inventors and third parties. In addition to expedited review of disclosures, increased due diligence on the R&D and publication activities of others in the field will be beneficial in developing timely filing strategies.

Pre-emptive Disclosures

A strategy for the use of pre-emptive disclosures, whether in the form of a public disclosure or a provisional patent filing, should also be developed. If foreign patent protection is of secondary importance, the early use of pre-filing disclosures by the inventor should be considered to preserve patent rights in the U.S., as such disclosures are subject to the grace-period exceptions and can trump disclosures of third parties made prior to filing. If foreign patent rights are important, the use of provisional patent filings should be considered to secure an early filing date for the invention while at the same time preserving options for foreign filing.

Allow the Inventor Time

In-house legal departments should make sure any disclosure strategy allows the inventor sufficient time fully develop the invention. Since filing dates may be pushed earlier into the development process, one potential strategy is to file several narrowly tailored provisional applications covering distinct embodiments that can be fully supported during the convention year rather than filing one patent application covering a range of embodiments.

Review Prior Art

Another important change in the new 35 USC 102 is that the scope of what is available as prior art against a patent applicant will be expanded. For instance, the “public use” and “on sale” criteria under the current 35 USC 102(b) were only applicable to activities that occurred in the U.S. while under the AIA the “public use” and “on sale” criteria are applied on a worldwide basis. In addition, the term “or otherwise available to the public” is also included without definition and may allow a wider scope of art to be considered depending on how the provision is interpreted. Furthermore, the current grace period provisions generally exempt disclosures made by third parties. As a result of the changes to section 102, patent filers will have to contend with a more robust collection of prior art during the prosecution process.

Evaluate R&D Activities

In anticipation of the 2013 implementation date, patent filers should immediately evaluate their research and development activities and consider filing any patent applications prior to March 16, 2013 to take advantage of the current law. Corporate IP budgets may also have to be adjusted accordingly.

The Post-Review Grant Process

The AIA also provides new tools for companies to attack patents without resorting to litigation by creating the new post-grant review process. The new law also replaces inter partes reexamination with inter partes review. Under post-grant review (effective Sept. 16, 2012), an entity that is not the patent owner can, within nine months of the issuance/reissuance of a patent, request that one or more claims of the patent be cancelled. The standard for granting review is whether the information presented, if not rebutted by the patent owner, “would demonstrate that it is more likely than not that at least one of the claims challenged” is unpatentable. (Emphasis added.) A key feature of post-grant review under the AIA is that any invalidity argument available under current law or by raising “a novel or unsettled legal question” can be presented. Current mechanisms to challenge patents at the USPTO are essentially limited to grounds under 35 USC 102 and 103, and are limited to patents and printed publications. Furthermore, the AIA allows that statements made by a patent owner in a federal court or with the USPTO can be used in post-grant review (as well as inter partes review) solely to determine the proper meaning of a claim. The post-grant review provisions prevent the petitioner from concurrently filing both a civil action and an administrative proceedings at the USPTO and contain estoppel provisions that limit the ability to set forth arguments that were raised or reasonably could have been raised during post-grant review in other proceedings before the USPTO or in subsequent civil actions.

While the standard for securing post-grant review is increased somewhat as compared with the previous standard for inter partes review and the current standard for ex parte review, the grounds under which such attacks can be made have been significantly expanded. As a result, post-grant review presents an attractive opportunity for substantive patent challenge outside of the litigation arena, and allows an opportunity to bring invalidity arguments that could not previously be presented in administrative proceedings at the USPTO.

To prepare for this change, companies should carefully evaluate their own patent applications pre-grant to identify any grounds for attack under the post-grant review process, and take steps to correct these issues during prosecution. For offensive use, companies should evaluate competitor's patents for vulnerability under the post-grant review process and consider this mechanism as a cost-effective alternative to litigation. The post-grant review procedure will also impact patent licensing activities, as the value of patent claims will need to be evaluated in light of post-grant review both for in-licensing and out-licensing activities.

Inter-Partes Review

The AIA also phases out inter partes reexamination and replaces it with inter partes review (also effective Sept. 16, 2012). Importantly, the threshold for the grant of inter partes review (reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition) is higher under the AIA than the old standard under inter partes reexamination. The new standard will also be applied to inter partes reexaminations filed after Sept. 16, 2011. In addition, a patent owner will not be able to request inter partes review under the AIA. The inter partes review provisions contain prohibitions against concurrent actions and estoppels provisions similar to those for post-grant review. The use of inter partes review should be considered when the time period for post-grant review has passed.

Pre-Issuance Submission

The AIA also adds a pre-issuance submission provision under 35 USC 122(e) (effective Sept. 16, 2012) that gives companies an additional avenue for impacting the scope
and validity of a competitor's claims before issuance. Companies may submit a patent application, a patent, a published patent application or other printed publication relevant to the claims being asserted in the competitor's application ' accompanied by a concise description of the relevance of the submitted information. Submissions must be filed either before a notice of allowance is issued, or within six months of the first publication or date of first rejection of a claim during examination, whichever is later. Using this process may have drawbacks, however, because once a company makes a submission it will have no further opportunity to comment. It could happen that the USPTO grants the competitor's application despite the submission ' effectively increasing the strength of the resulting patent. The use of the post-grant attack procedures discussed above should be considered before resorting to the pre-issuance submission provision.

The Impact on Patent Litigation

The AIA also contains several provisions that impact patent litigation. Effective immediately, the AIA brings much-needed relief to patent holders by limiting the ability of third parties to bring false marking suits. This new provision is a direct response to the recent Federal Circuit decision that spawned hundreds of frivolous suits in the patent marking arena. In addition, effective immediately, marking a product with a patent that once covered that product but has since expired no longer violates the false marking statute. Together, these new rules will significantly reduce the exposure of patent holders to suits based on false marking claims. As a result, companies currently facing such suits should consider filing motions to dismiss. The AIA also makes management of the patent-marking process more straightforward by allowing “virtual marking.”

In another provision beneficial to patent owners, joinder or multiple defendants in patent cases is now more difficult, decreasing the ability of third parties, such as non-practicing entities, to file large-scale litigation. These provisions became effective Sept. 16, 2011. Patent holders also receive much-needed protection from charges of inequitable conduct often brought during patent litigation. Patent holders may, effective Sept. 16, 2012, request supplemental examination of a patent by the USPTO to correct any deficiencies that have come to light. Regardless of whether the reexamination is granted, the information submitted cannot later be used as a basis for inequitable conduct in litigation. Patent holders should evaluate their patent estate and take advantage of this opportunity when appropriate.

Conclusion

While this article discusses certain provisions of the AIA, it does not address them all. By preparing for these changes as soon as possible, companies will be in the best position to maximize the value of their patent portfolios for continued success.

T. Gregory Peterson, Ph.D, is a partner and member of the Intellectual Property Practice Group at Bradley Arant Boult Cummings LLP (Birmingham, AL). He advises clients on a wide array of intellectual property issues. He can be reached at 205-521-8084 or [email protected].