U.S. Patent Reform Primer

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No. 12 Senate Bill Codifies Seagate Standard for Willful Infringement and Infringement and Imposes Additional Limitations on Finding Willfulness

No. 11 Senate Bill Requires Judge, for Purposes of Calculating Damages, to Identify the “Methodologies and Factors” that have an Evidentiary Basis  

No. 10 Senate Bill Gives Patent Infringement Litigants Right to Take Interlocutory Appeals of Claim Construction Rulings to Federal Circuit

No. 9 Senate Bill Gives Patent owners “Virtual” Alternative to Marking Patent Number on Product

No. 8 Senate Bill Permits Federal Circuit Judges to Reside Anywhere in U.S.

No. 7 Senate Bill Requires USPTO Patent Search and Examination Duties to be Performed by U.S. Government Employees

No. 6 Senate Bill Changes U.S. Patent Law from First-to-Invent to “First-Inventor-to-File” System

No. 5 Senate Bill Expands Definition of “Prior Art” to Include More Activities Outside the U.S.

No. 4 Senate Bill Shifts Authority to Set Patent and Trademark Fees from Congress to USPTO; Does Not Prohibit Diversion of Fees

No. 3 Public Can Submit Prior Art Documents of Potential Relevance to Patent Applications for 6 Months after the Application is Published

No. 2 Senate Bill Modifies Exiting Inter Partes Reexamination 

No. 1 12-Month Post-Grant Review a Key Section in S. 515

 

No. 12, October 29, 2009

SENATE BILL CODIFIES SEAGATE STANDARD FOR WILLFUL INFRINGEMENT AND IMPOSES ADDITIONAL LIMITATIONS ON FINDING WILLFULNESS -- Section 4 of S. 515, the patent reform bill that was reported out of the Senate Judiciary Committee on April 2, 2009, at p. 30 amends 35 U.S.C. §284 on willful infringement.  The section continues the statutory provision that allows a court to increase damages up to triple the normal amount for willful infringement and adds extensive language to define “willfulness.”  The section incorporates the “objective recklessness” standard of the Federal Circuit’s 2007 Seagate opinion and prescribes requirements for notice of infringement.  Other permitted grounds for willfulness include intentional copying with knowledge of the patent and a second infringement finding.  Willfulness cannot not be found if there was an informed, good faith belief of patent invalidity, unenforceability or no infringement.  Willfulness cannot be pleaded until after a finding of infringement.  IPO POSITION:  IPO believes that in light of the Federal Circuit’s 2007 opinion in the Seagate case, patent reform legislation should not include any provision on willful infringement.

No. 11, October 28, 2009

SENATE BILL REQUIRES JUDGE,  FOR PURPOSES OF  CALCULATING DAMAGES, TO IDENTIFY THE “METHODOLOGIES AND FACTORS” THAT HAVE AN EVIDENTIARY BASIS -- Section 4 of S. 515, the patent reform bill that was reported out of the Senate Judiciary Committee on April 2, 2009, at p. 25 amends 35 U.S.C. §284 on patent damages. The bill requires the judge to identify the “methodologies and factors” for determining damages for which there is a sufficient evidentiary basis.  Evidence relating to damages can be introduced only if relevant to those methodologies and factors.  House bill H.R. 1260 contains different language on damages that has proved controversial.  IPO Position:  IPO supports a codification of the existing case law for calculating reasonable royalty damages. 

No. 10, October 27, 2009

SENATE BILL GIVES PATENT INFRINGEMENT LITIGANTS RIGHT TO TAKE INTERLOCUTORY APPEALS OF CLAIM CONSTRUCTION RULINGS TO FEDERAL CIRCUIT -- Section 8 of S. 515, the patent reform bill that was reported out of the Senate Judiciary Committee on April 2, 2009, at p. 61 allows a patent owner to take an interlocutory appeal of a claim construction order to the Court of Appeals for the Federal Circuit.  (An interlocutory appeal is one taken during the course of a suit before a final decision by the lower court.)  Under current law, an interlocutory appeal in patent cases or other federal cases normally can be taken only after the district court certifies that the appeal involves a controlling question of law and the appeals court consents to the appeal.  S. 515 gives a right to an interlocutory appeal of final claims construction orders (“final” is undefined) without the consent of the Federal Circuit if the district court finds that an immediate appeal “may materially advance the ultimate termination of the litigation” or “will likely control the outcome of the case.”  House bill H.R. 1260 contains a similar provision.  IPO POSITION:  IPO opposes this provision.  It will increase the workload of the Federal Circuit substantially and delay resolution of patent infringement disputes without achieving anything useful.

No. 9, October 26, 2009

SENATE BILL GIVES PATENT OWNERS “VIRTUAL” ALTERNATIVE TO MARKING PATENT NUMBER ON PRODUCT -- Section 4 of S. 515, the patent reform bill that was reported out of the Senate Judiciary Committee on April 2, 2009, at p. 36, permits a patent owner to mark the owner’s patented product with the word “patent” and the address of an Internet posting in order to give notice to the public.   Members of the public could go to the Internet posting to find the number of the patent associated with the article.  This feature of the bill is in the form of an amendment to 35 U.S.C. §287.  Existing §287 requires patent owners to give notice of their products by marking the product or its package with the word “patent” and the patent number.  In the event the product is not marked, damages for infringement of the patent can be obtained only for the period after the infringer was given actual notice of infringement.  Under the bill, virtual marking is an alternative to marking with the patent number.  House bill H.R. 1260 does not include a provision on virtual marking.

No. 8, October 22, 2009

SENATE BILL PERMITS FEDERAL CIRCUIT JUDGES TO RESIDE ANYWHERE IN U.S. -- Section 10 of S. 515, the patent reform bill that was reported out of the Senate Judiciary Committee on April 2, 2009, at p. 68 eliminates the requirement that Federal Circuit judges must reside within 50 miles of Washington, DC.   Under the bill, Federal Circuit judges could reside anywhere in the U.S.  Judges not residing within 50 miles of Washington would be provided with “appropriate facilities and administrative support services.”  In the eleven numbered federal circuits, current law requires judges to reside within their circuits, and at least one judge must be appointed from each state within the circuit.  The 50-mile residency requirement for Federal Circuit judges is sometimes called the “Baldwin Rule,” named for a judge on the Federal Circuit’s predecessor court who resided in Texas and reportedly rarely went to Washington.

No. 7, October 21, 2009

SENATE BILL REQUIRES USPTO PATENT SEARCH AND EXAMINATION DUTIES TO BE PERFORMED BY U.S. GOVERNMENT EMPLOYEES -- Section 2 of S. 515, the patent reform bill that was reported out of the Senate Judiciary Committee on April 2, 2009, at p. 17 adds language to 35 U.S.C. §131 stating that “. . . examination and search duties for the grant of a United States patent are sovereign functions which shall be performed within the United States by United States citizens who are employees of the United States Government.”  In a letter to Congress on October 5, U.S. Secretary of Commerce Gary Locke, speaking for the Obama Administration, opposed the language.  The Administration said it would prohibit or limit work-sharing with foreign patent offices, work with the public to obtain comments on patent applications, and “working with U.S.-based vendors of patent-related services.”

No. 6, October 20, 2009

SENATE BILL CHANGES U.S. PATENT LAW FROM FIRST-TO-INVENT TO “FIRST-INVENTOR-TO-FILE” SYSTEM -- Section 2 of S. 515, the patent reform bill that was reported out of the Senate Judiciary Committee on April 2, 2009, at pp. 2-17 amends 35 U.S.C. §§102 and 135 and related sections to adopt a “first-inventor-to file” system to govern which of competing inventors will receive a patent.  The system is called first-inventor-to-file instead of “first-to-file” to emphasize that the first-filing party must be an inventor in order to be entitled to a patent.  At p. 15, the bill abolishes patent interference proceedings, which are used to determine the first inventor under current law.  Interference proceedings would be replaced by “derivation proceedings” (p. 11), which would be used to resolve charges that an earlier patent applicant obtained the invention from the applicant requesting the proceeding.  The U.S. is the only country with a first-to-invent system.  IPO supports the Senate bill’s switch to first-inventor-to-file.  (A future column will cover House bill H.R. 1260, which makes first-inventor-to file contingent on a change in patent laws of other countries.) 

No. 5, October 14, 2009

SENATE BILL EXPANDS DEFINITION OF “PRIOR ART” TO INCLUDE MORE ACTIVITIES OUTSIDE THE U.S. -- Section 2 of the patent reform bill that was reported out of the Senate Judiciary Committee on April 2, 2009, S. 515, at p. 3, amends the definition of “prior art” in 35 U.S.C. §102 to accommodate a first-to-file system and expand prior art to include more prior disclosures of an invention that occur outside the U.S.  Under the bill, prior art includes an invention that was earlier “patented, described in a printed publication, or in public use, on sale, or otherwise available to the public” anywhere in the world.  (P.3, lines 23-25.)  Under existing §§ 102(a) and (b), earlier public knowledge, public use, and the invention on sale are prior art only if “in this country.”  Earlier patenting and description in a “printed publication” are prior art anywhere in the world under existing law and under the bill.  The actual words “prior art,” often used by courts and commentators, do not appear in the existing statute, but are used in the bill.

No. 4, October 13, 2009

SENATE BILL SHIFTS AUTHORITY TO SET PATENT AND TRADEMARK FEES FROM CONGRESS TO USPTO; DOES NOT PROHIBIT DIVERSION OF FEES -- Section 9 of the patent reform bill that was reported out of the Senate Judiciary Committee on April 2, 2009, S. 515, p. 63, shifts authority to set USPTO user fees from Congress to the USPTO itself.  The section gives the USPTO authority to adjust any patent or trademark fee after consultation with the Patent and Trademark Public Advisory Committees, consultation with Congress, and a pubic comment period.  Under existing law, Congress fixes most patent and trademark fees by statutes, subject to authority for the USPTO to make annual cost-of-living adjustments by rule.  S. 515 does not contain a provision to prevent diversion of fees to unrelated government programs.  IPO POSITION:  IPO for many years has opposed shifting fee-setting authority to the USPTO because of need for congressional control of USPTO spending and the increased likelihood of diversion of fees to unrelated government programs if fees can be raised more easily.  IPO’s Board of Directors opposed a patent fee increase during 2009, but has not addressed the USPTO’s projected $200 million shortfall in 2010.

No. 3, September 2, 2009

PUBLIC CAN SUBMIT PRIOR ART DOCUMENTS OF POTENTIAL RELEVANCE TO PATENT APPLICATIONS FOR 6 MONTHS AFTER THE APPLICATION IS PUBLISHED -- Section 7 of the patent reform bill reported out of the Senate Judiciary Committee on April 2, 2009, S. 515, at p. 57, allows members of the public to submit prior patents or other publications of potential relevance to the examination of a patent application to be included in the record.  Such information can be submitted for six months after the patent application is published, unless a notice of allowance or first rejection is issued earlier.  Any submission must contain a concise description of the relevance of each document submitted.  Under existing USPTO regulations, a “protest” can be filed against a pending application, but only before the application is published.  IPO supports section 7 of the Senate bill.

SUPPLEMENT TO U.S. PATENT REFORM PRIMER NO. 3 -- Under existing USPTO rule 1.99, members of the public can submit patents or publications for 2 months after a pending patent application is published and submissions cannot include any explanation of the patents or publications.

No. 2, August 31, 2009

SENATE BILL MODIFIES EXISTING INTER PARTES REEXAMINATION -- Section 6 of the patent reform bill reported out of the Senate Judiciary Committee on April 2, 2009, S. 515, modifies inter partes reexamination proceedings.  The USPTO today institutes inter partes reexamination when a “third-party requester” raises a “substantial new question of patentability.”  Reexamination can be requested only on the basis of other patents and publications that have a bearing on the patentability of a claim.  Reexamination, unlike the proposed new post-grant review proceedings (see Primer No. 1), can be requested at any time during the life of the patent.  The bill amends patent code section 315(c) to delete the words “or could have raised” from the estoppel provision that prevents a third-party requester from raising later in district court any ground for unpatentability that the requester “raised or could have raised” during reexamination.  In addition, the bill provides that inter partes reexaminations will be conducted by an administrative patent judge instead of by a patent examiner.  IPO supports inter partes reexamination in the Senate bill.

No. 1, July 23, 2009

12-MONTH POST-GRANT REVIEW A KEY SECTION IN S. 515 -- Section 5 of the patent reform bill that was reported out of the Senate Judiciary Committee on April 2, 2009, S. 515, establishes an important new procedure called “Post-Grant Review.”  The procedure allows members of the public to petition during a 12-month “window” after a patent is granted to cancel any claim on nearly any ground that can be raised to challenge validity in federal court.  Post-grant review allows challenges on more grounds than “reexamination,” which under current law is limited to challenges based on earlier patents and printed publications, but reexamination is available throughout the life of a patent.  The USPTO would institute a post-grant review if “a substantial question of patentability” existed.  Discovery would be limited to evidence directly related to factual assertions by either party.  Invalidity would be proved by a preponderance of the evidence.  Proceedings would have to be completed within 12 months after they were instituted, except the USPTO could extend proceedings for 6 months for good cause.  IPO generally supports the post-grant review procedure.  Next column: Inter partes reexamination under S. 515.