New Myriad/Mayo Patent Eligibility Guidance Delayed, but Will Probably Be Improved


Sources tell us that the estimated publication date of the revised Myriad/Mayo Guidance in the Federal Register is the week of November 17, 2014 (previously was "promised" by the end of October).  However, due to the importance of the Guidance, it is being reviewed by several layers of governmental organizations, making it uncertain whether even the revised date will be met.

 

Nevertheless, the source mentioned the following proposed changes in the version currently in review, which may be helpful to Applicants, assuming these changes are present in the final published version:

  • A key difference is that the language in the prior guidance at step (2) of the flowchart (http://www.uspto.gov/patents/law/exam/myriad-mayo_guidance.pdf) which currently reads "Does the claim recite or involve judicial exception(s)?" is going to be narrowed to read something like "Is the claim directed to judicial exception(s)?"
    • This should provide the basis for an argument that the claim is patent-eligible, as it is directed to something other than a law of nature, and that it passes the test at this step.
    • We expect that the Examples in the Guidance will clarify how to apply this argument.
  • In addition, in particular for method claims, the "second level trap" of the methods reciting natural products may be explicitly rebuttable by noting that method claims are directed to steps, not the natural products in or of the steps.
  • For composition claims directed to natural products, the guidance is going to be more explicit that functional differences, and not just structural ones, can be significantly different.
 

These changes should be helpful in mitigating some of the most difficult and troublesome of the types of rejections for lack of patent eligibility under 35 U.S.C. §101.

 

For applications in which there are pending Office Actions due with rejections for lack of patent eligibility, and for which it is not possible or desirable to wait for the new Guidance to be published, these arguments can be incorporated in rebuttal of the rejection with the expectation that, by the time the Examiner picks up the response for review, the new Guidance will have been published and in effect and will include these changes.

Supreme Court rules that "insolubly ambiguous" standard permits too much ambiguity


Nautilus, Inc. v. Biosig Instruments, Inc.

On June 2, 2014, the Supreme Court held that the indefinite standard used by the Federal Circuit – "insolubly ambiguous" – was too lenient as it permitted some measure of ambiguity, and therefore did not satisfy the definiteness requirement under 35 U.S.C. 112, second paragraph. In its place, the Supreme Court established a new standard of indefiniteness: "a patent is invalid for indefiniteness if its claims, read in light of the specification delineating the patent, and the prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the patent." (emphasis added)

Biosig’s patent is directed to a heart rate monitor for use in association with exercise equipment having a structure that is gripped by the user, the structure having two sets of electrodes, wherein the electrodes in each set were "in spaced relationship with each other." On a summary judgment motion from Nautilus, the district court held the claims of Biosig’s patent to be invalid on grounds that the term "spaced relationship" was indefinite.

The Federal Circuit reversed. They initially stated that the claims were "amenable to construction" and, therefore, the claims would only be indefinite if the person of ordinary skill in the art would find "spaced relationship" to be "insolubly ambiguous." The Federal Circuit found that the specification of the patent disclosed "inherent parameters" and the claims recited functional limitations which would permit a skilled artisan to sufficiently understand the metes and bounds of "spaced relationship," and therefore the claims were not insolubly ambiguous.

The Supreme Court found that the Federal Circuit’s approach of assessing indefiniteness by first determining whether the claims were "amenable to construction" and, if so, then determining if the claims were "insolubly ambiguous," was insufficient as this approach "tolerates some ambiguous claims but not others." Additionally, the Court stated that the Federal Circuit’s amenable to construction/insolubly ambiguous standard would "breed lower court confusion." Further, the Court noted that the requirements of §112, second paragraph, should not be considered satisfied merely because "a court can ascribe some meaning to a patent’s claims." Overall, the Court stated:

To tolerate imprecision just short of that rendering a claim "insolubly ambiguous" would diminish the definiteness requirement’s public-notice function and foster the innovation-discouraging "zone of uncertainty," United Carbon, 317 U. S., at 236, against which this Court has warned.

The Court described the definiteness requirement as a "delicate balance" which must take into account the limitations of language, and thus permit some modicum of uncertainty, while also ensuring that the claims provide clear public notice so that the public can by apprised of what subject matter is not covered by the claims.

Cognizant of the competing concerns, we read §112, ¶2 to require that a patent’s claims, viewed in light of the specification and prosecution history, inform those skilled in the art about the scope of the invention with reasonable certainty. The definiteness requirement, so understood, mandates clarity, while recognizing that absolute precision is unattainable.

The Court vacated the Federal Circuit decision and remanded for further proceedings consistent with their newly articulated standard for indefiniteness.

Practice Note: Indefiniteness can creep into claims in a variety of ways. One particular situation is the case where an application claims priority to a foreign application. In such a case, the original claims may use language which, although acceptable in the home country, would violate the requirements of 35 USC 112, second paragraph. This becomes even more problematic when the application is allowed in a first Office Action. To the extent possible, the claims should be reviewed before payment of the issue fee, to clear up any potential issues. Preferably, the claims should be reviewed even before the Examiner’s first Office Action on the merits, to avoid the filing of a paper that may adversely affect the PTA calculation.

Supreme Court Holds a Direct Infringement by Single Party is Necessary to Finding Inducement of Infringement


In Limelight Networks, Inc. v. Akamai Technologies Inc. the Supreme Court overturned a Federal Circuit Decision wherein infringement was found against party performing all but final step of method claim and inducing another party to perform the final step of the claim.

The Supreme Court overruled the Federal Circuit and held that without direct infringement there can be no induced infringement.

The alleged infringer, Limelight, practiced all of the method steps of Akamai's content delivery network patent except one. Limelight, however, provided its customers instructions on how to perform this final method step to its customers and also offered technical assistance to customers attempting to perform the step.

The Federal Circuit granted en banc review of the case and held that induced infringement was possible where one party carries out some steps of the method and encourages others to carry out the remaining steps. The Federal Circuit side stepped the doctrine that there can be no indirect infringement without direct infringement by holding, "requiring proof that there has been direct infringement…is not the same as requiring proof that a single party would be liable as a direct infringer."

The Supreme Court rejected this reasoning instead reaffirming the holding from Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336, 341 (1961), that inducement liability may arise if and only if there is direct infringement from a single party. The Court held that to adopt the Federal Courts standard would "deprive §271(b) of ascertainable standards." The Court held that such a standard, "would require the courts to develop two parallel bodies of infringement law: one for liability for direct infringement and one for liability for inducement. The opinion also hints that if the law regarding inducement infringement is to be changed, it is the job of Congress to do so; "When Congress wishes to impose liability for inducing activity that does not itself constitute direct infringement, it knows precisely how to do so…the courts should not create liability for inducement of noninfringing conduct where Congress has elected not to extend that concept."

Practice Note: In view of the holding in Limelight, the best practice of drafting method claims so that they require only one step remains. Many hoped that, after the Federal Circuit decision, there would be more flexibility in drafting method claims particularly for protecting medical diagnostic method inventions. The Supreme Court decision removes that hope. . Where one step claims are impossible, care should be taken to craft the claims as best as possible so that the steps of the method cannot be conducted by multiple parties and thus avoid all parties from liability since there is no single direct infringer.

Highmark Octane: Fuel for Attorney Fees


On April 29, 2014, the U.S. Supreme Court issued rulings in two cases that will affect the recovery of attorney's fees in litigation--certainly in patent cases and likely in trademark cases too. Highmark Inc. v. Allcare Health Mgt. System, Inc. and Octane Fitness, LLC v. Icon Health & Fitness, Inc.

Octane Fitness is the lead case in which the Court overturned the standard created by the Federal Circuit, and then the Court applied the new standard to also vacate the ruling by the Federal Circuit in the Highmark case. The Patent Act (and the Trademark Act) both contain this provision: "The court in exceptional cases may award reasonable attorney fees to the prevailing party." The Court ruled that this brief provision meant what it says: an "exceptional" case is one that is not ordinary, not run-of-the-mill, or not common.

The prior standard of the Federal Circuit for an award of attorney fees against the non-prevailing party required, with respect to that party, either "some material inappropriate conduct" or that the litigation was both brought in subjective bad faith and was objectively baseless. This standard, the Supreme Court ruled, "is unduly rigid, and it impermissibly encumbers the statutory grant of discretion to district courts."

The discretion of the district courts was clearly important to the Supreme Court. In the Highmark case, specifically, the Court also overturned the Federal Circuit's prior standard for reviewing the district court's award of attorney fees. That Federal Circuit review had been de novo (anew-allowing an independent review) and the Supreme Court instead implemented the standard of review as abuse of discretion. That standard receives the lowest level of scrutiny compared to reviewing questions of law de novo and questions of fact for clear error.

In yet another overruling of the Federal Circuit, the Supreme Court rejected the prior standard of requiring clear and convincing evidence for any award of attorney fees. The correct standard, per the Court, was the usual standard for any litigation of a preponderance of the evidence (i.e., 51% or better-less than the more demanding standard of clear and convincing evidence).

The Supreme Court offered some guidance in applying this new standard: it should be based on the totality of circumstances and could consider a non-exclusive list of factors including "frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence."

Those factors come from the Court's 1994 ruling regarding the award of attorney fees in cases of infringement under the Copyright Act. The provision in that Act does not use the "exceptional" case standard, though the Court in Octane Fitness stated it was "a similar provision." That prior ruling applied an even-handed approach to both a plaintiff and defendant. Though that issue was not part of these two recent cases, one may expect to see a shift in that direction by courts, though tempered by the fact that a plaintiff and defendant have different approaches and activities associated with a case so that the matters under consideration will necessarily vary.

What else to expect for the future? The Supreme Court stated that the Federal Circuit's standard was "so demanding that it would appear to render §285 [the fee provision] largely superfluous." Under a less demanding standard, therefore, one may expect an award of attorney fees more often though still subject to the "exceptional" case standard.

Trademark law, as using the same statutory provision as patents, can expect a similar makeover. While patent cases are under the exclusive review of the Federal Circuit, trademark cases are reviewed by each of the twelve circuit courts of appeal. Judge Posner (of some renown and of the Seventh Circuit) has described the resulting case law as a "rainbow of standards" with varying requirements. These recent rulings augur for more harmonization among the circuits.

In Congress, several bills are pending and aimed at so-called abuse of litigation or cases brought by "trolls" or non-practicing entities. Some of these bills contain amendments to the Patent Act regarding the award of attorney fees to help curb this perceived abuse. These rulings may give pause to the legislators to consider whether reform is needed.

These rulings also return a considerable amount of discretion-that is, power-to the judges of the district courts who will also be aware that any ruling will be more insulated upon review by a court of appeal. At trial, while the merits of any case may be determined by a jury, the decision regarding attorney fees belongs solely to the judge. Just another of many reasons to plan and act accordingly.

A Myriad of Natural Product Claims May Be Toast, With Extra Mayo: The USPTO issues new Examiner Guidance documents expanding the scope of patent-ineligibility


On March 4, 2014, the USPTO issued a document entitled "Guidance For Determining Subject Matter Eligibility Of Claims Reciting Or Involving Laws of Nature, Natural Phenomena, & Natural Products" ("Guidance"). The new Guidance document can be found here. The accompanying "Quick Reference Sheet" can be found here.

This document expressly supersedes the June 13, 2013 memorandum to the Examining Corps, to some extent, subsumes and amplifies on the interim guidance for examination of process claims involving "laws of nature" provided in the July 3, 2012 memorandum in view of the Supreme Court decision in Mayo Collaborative Services v. Prometheus Laboratories Inc. The new Guidance document does not change the examination procedures regarding claims reciting an "abstract idea" set forth in the 2012 guidance, because the Supreme Court is scheduled to hear Alice v. CLS Bank in 2014, a case involving the abstract idea judicial exception, which may settle some current ambiguity.

The Guidance document presents three questions to be asked after establishing the broadest reasonable interpretation of the claim, as set forth in the following flow chart:



Question 1: Statutory Category?
This is the usual analysis (nothing new).

Question 2: Judicial Exception Recited (e.g., Natural Product)?
In additional to the longstanding "laws of nature/natural principles and natural phenomena" judicial exceptions to patent-eligible subject matter under 35 USC 101, the Guidance document now expressly clarifies that the USPTO is interpreting the holding of Myriad to apply to "subject matter eligibility determinations of all claims … reciting or involving … natural products" (underlined emphasis in the original, and bold emphasis added), and not just examining claims to DNA sequences. "Natural products" are defined as including, but not limited to:


chemicals derived from natural sources (e.g., antibiotics, fats, oils, petroleum derivatives, resins, toxins, etc.); foods (e.g., fruits, grains, meats and vegetables); metals and metallic compounds that exist in nature; minerals; natural materials (e.g., rocks, sands, soils); nucleic acids; organisms (e.g., bacteria, plants and multicellular animals); proteins and peptides; and other substances found in or derived from nature.

The Examples make it expressly clear that purified natural products per se are patent-ineligible, without more. This applies, for example, to claims of the familiar form "An isolated (or purified) [natural product X]." If the claim is determined to be directed to a natural product, a further question must be asked to determine whether the claim recites a significant difference from the natural product.

Question 3: Significantly/Markedly Different? There is very little guidance provided in the Guidance document regarding what is meant by "significantly different" or "markedly different" in the natural product judicial exception:


A significant difference can be shown in multiple ways, such as: (1) the claim includes elements or steps in addition to the judicial exception that practically apply the judicial exception in a significant way, e.g., by adding significantly more to the judicial exception; and/or (2) the claim includes features or steps that demonstrate that the claimed subject matter is markedly different from what exists in nature (and thus [is] not a judicial exception).

What constitutes a "significant difference" (or "markedly different" as the above statement essentially tautologically defines a "significant difference") is not further defined. However, the USPTO takes the position that eligibility requires more than the "hand of man", and that to be eligible, the claimed product must be both non-naturally occurring and markedly different from naturally occurring products. What is of interest to note is that the "markedly different" concept comes not just from Myriad but by reaching back to Chakrabarty:


Myriad relied on Chakrabarty as "central" to the eligibility inquiry, and re-affirmed the Office's reliance on Chakrabarty's criterion for eligibility of natural products (i.e., whether the claimed product is a non-naturally occurring product of human ingenuity that is markedly different from naturally occurring products). Id. at 2116-17. Myriad also clarified that not every change to a product will result in a marked difference, and that the mere recitation of particular words (e.g., "isolated") in the claims does not automatically confer eligibility. Id. at 2119. See also Mayo, 132 S. Ct. at 1294 (eligibility does not "depend simply on the draftsman's art"). Thus, while the holding in Myriad was limited to nucleic acids, Myriad is a reminder that claims reciting or involving natural products should be examined for a marked difference under Chakrabarty.

However, Chakrabarty did not define what "markedly different" means, but only used the term to distinguish the invention in contrast to the patent-ineligible combination of bacterial cultures in Funk:


Judged in this light, respondent's micro-organism plainly qualifies as patentable subject matter. His claim is not to a hitherto unknown natural phenomenon, but to a nonnaturally occurring manufacture or composition of matter - a product of human ingenuity "having a distinctive name, character [and] [447 U.S. 303, 310] use." Hartranft v. Wiegmann, 121 U.S. 609, 615 (1887). The point is underscored dramatically by comparison of the invention here with that in Funk. There, the patentee had discovered that there existed in nature certain species of root-nodule bacteria which did not exert a mutually inhibitive effect on each other. He used that discovery to produce a mixed culture capable of inoculating the seeds of leguminous plants. Concluding that the patentee had discovered "only some of the handiwork of nature," the Court ruled the product nonpatentable:

"Each of the species of root-nodule bacteria contained in the package infects the same group of leguminous plants which it always infected. No species acquires a different use. The combination of species produces no new bacteria, no change in the six species of bacteria, and no enlargement of the range of their utility. Each species has the same effect it always had. The bacteria perform in their natural way. Their use in combination does not improve in any way their natural functioning. They serve the ends nature originally provided and act quite independently of any effort of the patentee." 333 U.S., at 131.

Here, by contrast, the patentee has produced a new bacterium with markedly different characteristics from any found in nature and one having the potential for significant utility. His discovery is not nature's handiwork, but his own; accordingly it is patentable subject matter under 101. [emphasis added]

This description of the phrase "markedly different characteristics" does not help the USPTO to establish a bright line that distinguishes what the term means. Therefore, the USPTO provides a list of factors weighing towards eligibility (significantly different) and factors weighing against eligibility, and Examples A-H, which attempt to apply those factors and explain what they mean.

The Guidelines state that a significant difference can be shown in multiple ways, such as: (1) the claim includes elements or steps in addition to the judicial exception that practically apply the judicial exception in a significant way, e.g., by adding significantly more to the judicial exception; and/or (2) the claim includes features or steps that demonstrate that the claimed subject matter is markedly different from what exists in nature (and thus not a judicial exception). The memo then lists a dozen factors, six that weigh toward eligibility and six that weigh against eligibility:


For Question (3)
Factors that weigh towards
eligibility (claim does recite something significantly different)
Factors that weigh against
eligibility (claim does not recite something significantly different)
1. Product claim that initially appears to be a natural product, but after analysis is determined to be non-naturally occurring and markedly different in structure from something naturally-occurring. 1. Product claim recites something that appears to be a natural product and has a structure that reflects that.
2. Claim recites elements/steps that impose meaningful limits on claim scope beyond the judicial exceptions. (Claim is narrow enough so that others are not precluded from using idea entirely). 2. Claim recites elements/steps that impose meaningful limits on claim scope beyond the judicial exceptions, but are too generalized and overly broad.
3. Claim recites elements/steps in beyond the judicial exceptions that are more than nominally related to what is being claimed. 3. Claim recites elements/steps in addition to the idea/objecting being claimed that must be used or taken by others to be applied.
4. Claim recites elements/steps that are more than just general instructions to apply or use the idea/object being claimed. 4. Claim recites elements/steps that are well-understood and conventional.
5. Claim recites elements/steps that include a particular machine or perform a transformation of a particular article. 5. Claim recites elements/steps in addition to the idea/object being claimed, but add no meaningful limiting steps.
6. Claim recites one or more elements/steps in addition to the idea/object being claimed that add a feature that is well-understood and conventional. 6. Claim recites elements/steps that amount to nothing more than a mere field of use.

Examples A-H:


  1. A naturally occurring plasmid is not patent-eligible, nor is a naturally occurring bacteria; however, a bacteria which does not naturally contain the plasmid but is engineered to contain it is patent-eligible. (Chakrabarty)
  2. A purified naturally occurring compound is not patent-eligible, but a methylated version which creates a functional difference is patent-eligible. A functional difference is not per se necessary, but makes it more likely that a small structural difference will be deemed a significant difference. Also the guidelines suggest – without explaining in detail – that narrowing limitations may be necessary in order to convert method claims using patent-ineligible natural products into patent-eligible claims.
  3. A firework comprising a combination of naturally occurring compounds in a cardboard tube with an ignition source is patent-eligible because the compounds form a structure that is "physically integrated" and does not foreclose others "from using the natural products in other ways."
  4. A combination of naturally occurring bacteria that have not been changed is patent-ineligible. (Funk)
  5. A pair of DNA primers are patent-ineligible, because "the first and second primers have the same function as their natural counterpart DNA, i.e., to hybridize to their complementary nucleotide sequences," while the method of using them to amplify DNA, comprising specific steps of combining with Taq polymerase and thermal cycling is patent eligible, because the natural products can be used in other methods.
  6. A method for determining whether a patient has disease X, by using a novel antibody that does not exist in nature in an immunoassay is patent eligible.
  7. Three method claims for treating a mood disorder with light; the first uses natural light and is patent-ineligible; the second uses a synthetic light source, but is still patent ineligible because "the step of exposing a patient to synthetic white light for the purpose of affecting a mood disorder is just an attempt to limit the use of the natural principle to a particular technological environment (use of artificial light as opposed to sunlight)"; while the third method, which specifies with more particularity specific wavelengths of light (UV) and not others (white light), and the positioning of the patient, is deemed patent eligible.
  8. This example recites in essence the method claim from Myriad for identifying a mutant of the BRCA2 gene, which was found patent-ineligible, because it recites an abstract idea, and is to be "analyzed under the existing guidance in MPEP § 2106(II)."

Unfortunately, these Examples leave much to be desired in the way of clarity for Applicants, especially for the types of claims that they will be using to work around these expanded definitions of patent-ineligible subject matter. On March 19, 2014, the USPTO published a slide presentation which comprise the training materials used to provide further guidance to the Examiners for applying the new Guidelines, which lays out the step-by-step process that the USPTO will use to evaluate claims for compliance with these new patent-eligibility guidelines.

What is the immediate effect of these new examination guidelines?

There is no effect on issued patents. The examination guidelines have no force or effect on granted patents. Under pre-AIA law, neither ex parte nor inter partes reexamination can be granted on the basis that the patent claims patent-ineligible subject matter. A patentee might consider having his patent reissued, but it would likely be premature to do so, and certainly could put their claims at risk. Unless the patentee is already in litigation, and does not have any claims which are clearly and distinctly directed to patent-eligible subject matter, it is presumed that this procedure is unlikely to be used by many patentees. There are essentially no post-AIA patents yet which might be subject to the applicable Post-Grant Review procedures. While parties in litigation opposing patents on natural products might be able to use the legal arguments in the Guidelines, based on the underlying cases such as Myriad and Chakrabarty, the Guidelines themselves are in no way binding on the courts.

Obviously, applications currently in prosecution are being examined under the Guidelines. In fact, we have seen them applied in rejections that have already been received that were dated prior to the issuance of the Guidelines.

Will these Guidelines be challenged, and if so, how?

There was some initial suggestions in the patent bar that the Guidelines were issued improvidently, as they should have been an opportunity for public comment under the Administrative Procedures Act, for failing to allow public comment on these substantive changes in patent examination, as was done for earlier changes, e.g., in accordance with the implementation of the decisions in KSR v. Teleflex, In re Bilski, and the changes to examination guidelines for determining compliance with 35 U.S.C. 112. However, so far, we are not aware of any such challenge being launched.

A more likely possibility is through these arguments being presented during current litigation, and working their way through appeals to the Supreme Court. It is noted that under these guidelines, claims covering many commercial products currently on the market would not have been granted, and competitors and licensees may be emboldened to infringe or repudiate their licenses. This could conceivably happen before or concomitant with challenges arising from rejections at the USPTO rising through the Patent Trial and Appeals Board, through the CAFC and then to the Supreme Court.

Yet another possibility, theoretically faster, but less likely, is that businesses, professional organizations such as AIPLA and IPO, and/or trade associations such as BIO and PHARMA could reach out to legislators to inform them of the serious consequences of this overly broad expansion of the already troubling Supreme Court decisions in Mayo and Myriad.

How can Applicants overcome/avoid the broadened exclusions of patent eligibility of these Guidelines?

These issues have already been extensively discussed by many patent practitioners, legal scholars, business people and other parties having an interest in the situation since both cases were decided, and long before these Guidelines were published, and in the practical application of at least the initial versions of the interim Guidelines for both Mayo and Myriad to diagnostic, screening and DNA claims. Clearly, in most cases, there are workarounds to the Guidelines available to protect commercial aspects of our clients' inventions. Of course, the ease of applying these workarounds depends on how presciently the applications were written prior to these decisions being published, and whether there is written description to support claims which exclude the now patent-ineligible subject matter. Thus, for example, DNA sequences can be claimed as being operably linked to a heterologous promoter, or within a heterologous cell. Therapeutic proteins can be claimed as having non-naturally occurring glycosylation, or in sterile pharmaceutical compositions, as can other naturally occurring therapeutic molecules, which distinguish them from their natural form.

However, it is troubling that even these simple and obvious types of workaround claims, which were logically commercially relevant forms for enormously important therapeutic inventions that could and should have been more clearly addressed by the USPTO in these Guidelines, were not. Diagnostic-type claims have been similarly if not more difficult to address, with the guidance being provided by the USPTO often being to amend the claims to commercially irrelevant forms, such as including a step of treating the patient after the clinical laboratory-performed diagnostic tests, which make the claim unenforceable because they cannot be infringed by a single party. New applications of existing assays for different diagnoses, prognoses or theranostics assays, as well as screening assays may be similarly precluded, at least without much more limitations to the claim, as the recitation in Example F that the assay and reagents used were new suggest.

In fact, rather than positively addressing what the Supreme Court characterized with disapproval in Mayo as "interpreting patent statutes in ways that make patent eligibility 'depend simply on the draftsman's art' without reference to the 'principles underlying the prohibition against patents for [natural laws],'" these new Guidelines appear to encourage that kind of strained interpretations and exercise of "draftsman's art" of claim drafting to create convoluted claims that attempt to cover a reasonable scope of protection for Applicant's inventions, while avoiding the quicksand of the growing number of (often post-hoc) judicially created exceptions.

While these Guidelines are being implemented and we become familiar with how they will be applied in practice, as well as while the cases challenging them and/or their underlying principles wind their way through the courts and/or legislature, we will carefully follow these events, and provide practical advice to our clients for avoiding these problems to the extent possible, as well as maintaining the flexibility to protect their inventions a broadly as possible as the patent landscape continues to change and evolve.

New Rules Resulting from the Patent Law Treaty


By MWZB


As a result of the recent Patent Law Treaty Implementation Act (PLTIA), Final Rules (78 FR 62368) have been implemented to modify USPTO practice in the following respects. The new rules apply only to applications filed on or after December 18, 2013.

a) Two Month Grace Period to Make Filing based on Priority Claim

The Treaty provides for a two month grace period for claiming the right of priority to a prior-filed foreign application or provisional application after the expiration of the twelve month period (6 months in Design applications).  The fee for the petition requesting the right of priority within the grace period is $1,700.

b) Applications Can Be Filed Without Claims or By Reference to a Previously Filed Application

The Office will now allow nonprovisional applications to be filed without a claim.  Also nonprovisional applications can be filed by reference to a previously filed application in lieu of filing the specification and drawings.  By filing an application in such a matter, the applicant will receive a filing date and be given a period of time to submit the missing pieces of the application.

c) Elimination of Unavoidable Delay Excuse for non-payment of Maintenance Fee

The Patent Law Treaty also eliminates “unavoidable delay” as a reason for delay in the payment of a maintenance fee.  Henceforth, only “unintentional delay” is an acceptable reason for delay in the payment of a maintenance fee.  Petitions based on unintentional delay must be filed within 2 years of the final date when payment was due.  The fee needed with a petition based on unintentional delay is $1,700.

d) Patent Term Adjustment (PTA)

A new basis for PTA reduction is added for failing to place an application in "condition for examination" within eight months of its filing date or national stage commencement in an international PCT application. Nonprovisional applications filed without a claim or an application filed “by reference” to a previously filed application, must provide all of the required materials within eight months of the filing date or the date of the commencement of the national stage in order to avoid a reduction in patent term adjustment. The patent term will be reduced by the number of days beginning on the day after the date that is eight months from its filing date under 35 U.S.C. 111(a) or national stage commencement in an international application and ending on the date the application is in condition for examination.

Section 1.704(f) defines when an application is in condition for examination:

An application filed under 35 U.S.C. 111(a) is in condition for examination when the application:

  • includes a specification, including at least one claim and an abstract (§ 1.72(b)), and has
  • papers in compliance with § 1.52,
  • drawings (if any) in compliance with § 1.84,
  • any English translation required by § 1.52(d) or § 1.57(a),
  • a sequence listing in compliance with § 1.821 through § 1.825 (if applicable),
  • the inventor’s oath or declaration or an application data sheet containing the information specified in § 1.63(b),
  • the basic filing fee (§ 1.16(a) or § 1.16(c)),
  • the examination fee (§ 1.16(o) or § 1.16(q)),
  • any certified copy of the previously filed application required by § 1.57(a), and
  • any application size fee required by the Office under § 1.16(s).


An international application is in condition for examination when:

  • the application has entered the national stage as defined in § 1.491(b), and
  • includes a specification, including at least one claim and an abstract (§ 1.72(b)), and has
  • papers in compliance with § 1.52,
  • drawings (if any) in compliance with § 1.84,
  • sequence listing in compliance with § 1.821 through § 1.825 (if applicable),
  • the inventor’s oath or declaration or an application data sheet containing the information specified in § 1.63(b),
  • the search fee (§ 1.492(b)),
  • the examination fee (§ 1.492(c)), and
  • any application size fee required by the Office under § 1.492(j).


If required during examination, corrective papers (e.g. drawings or sequence listing) which are filed after the first Office Action will not generate a PTA reduction.

We wish to bring to your attention additional procedural changes brought about by the recent Patent Law Treaty.

The time for reply to Office actions (OA) and other Notices has, in some cases, been increased. As you know, most OAs already have a reply period of at least 3 months but some of those with shorter reply periods have been increased.

Please see chart below.



In addition to the OAs shown above, the OA response period for Accelerated Examination has also increased to two months.

We will, of course, continue to remind you of all relevant time periods for response in each of your specific applications in our regular reporting letters.

New After Final Consideration Pilot Program (AFCP 2.0)


The USPTO recently announced an updated version of an earlier pilot program, seeking to find ways to reduce the number of Requests for Continued Examination (RCEs). From now until September 30, 2013 (the program may end, be extended or changed at that time), Applicants who receive a Final Rejection may file, for no extra charge, a Request for Consideration under this program, making certain certifications, in order to get additional consideration of an after-final amendment. This program is incentivized by providing the Examiner with up to 3 additional hours for considering an after-final response under this program. AFCP 2.0 provides the possibility (not guarantee) of another "bite at the apple" after a final rejection. The difference from a normal After Final reply is that the Examiners are theoretically more likely to consider significant claim amendments (even if not overly extensive new issues are raised) and are incentivized with extra time if they do so.

The important highlights:

- AFCP can be used at any time after final rejection, although Applicant is required to pay for any necessary extensions of time; it can also be filed after the filing of a Notice of Appeal.

- AFCP can be used after receipt of an Advisory Action, whether or not the first after-final response was entered.

- However, only one request for AFCP may be filed per final rejection; therefore, consideration must be given whether to file a first attempt to respond to the final rejection to see if the Examiner will enter the amendment and to reserve the AFCP to address any remaining issues, or to offer the "gift" of three hours of AFCP time to the Examiner with the initial after-final response, up front, to encourage consideration.

- Certification must be made that at least one independent claim is being amended such that the claim is not being broadened in any aspect. New claims or even broader claims can be added, but at least one independent claim must be amended and not broadened.

- There is no guarantee that the Examiner will agree to the request, which is at the Examiner's discretion. The Examiner's decision is based on whether in the Examiner's opinion, the amendment does not necessitate additional search and/or consideration, or if the Examiner determines that additional search and/or consideration is required, it could be completed within the allotted time,

- Applicant (or counsel for Applicant) must agree to be willing and available to participate in any interview requested by the Examiner concerning the response, within 10 days of the request for interview, if the Examiner accepts the request for consideration but does not find the response to put the application in condition for allowance. If the Examiner does not have signatory authority, his/her supervisor will be in attendance at the interview. If the interview is declined or cannot be scheduled, an Advisory Action would be issued (entry of the amendment is not guaranteed). Of course, if the Examiner requests the Interview, the costs will be increased.

It is preferable under this program to file a response with a request for AFCP consideration as soon as possible after final, to avoid extensions of time if the result is not allowance, but it is not necessary. The filing of a request for consideration under AFCP does not change Patent Term Adjustment (PTA) calculations; the response is treated as a normal after-final response, so if the Examiner does not allow the case, extensions of time to take further action (and thus loss of accrued PTA) are possible.

If you have any questions about this pilot program, please let us know.

USPTO's Fee Schedule Effective March 19, 2013


The United States Patent and Trademark Office (USPTO) published its first Fee Schedule (click here to view) under the America Invents Act (AIA) that will be effective March 19, 2013. The only fees that will take effect later on January 1, 2014, are the issue and publication fee changes. Under the AIA, the USPTO has broad authority to set fees with the caveat that the set fees recover the total costs of the USPTO. The USPTO indicated that they are striving to set the individual fees to correspond to the associated costs. Thus, while the majority of fees went up, a few have decreased. Some of the most noteworthy changes are the following.

Significant maintenance fee increases will take effect. The first maintenance fee at 3.5 years will go up from $1,150 to $1,600, the second maintenance fee at 7.5 years will go up from $2,900 to $3,600, and the third maintenance fee at 11.5 years will go up from $4,810 to $7,400. Thus, some savings may be achieved by paying prior to March 19, 2013, in cases where such a fee is due.

Request for Continued Examination (RCE) fees will also be increasing. The USPTO set the first RCE fee in an application to $1,200, while any subsequently filed RCEs in the same application will cost $1,700. Previously all RCEs, irrespective of the number thereof in an application, were $930. This corresponds to the publically voiced efforts of the USPTO to lower the number of RCEs filed, and is said to encourage applicants to put the claims in condition for allowance or the record in the desired state for an appeal at an early stage of prosecution.

The Appeal fees will significantly change, including the fee structure thereof. Previously a $630 fee was due at the time of the filing of a Notice of Appeal (NOA), and another $630 fee was due at the time an Appeal Brief was filed. Under the new fee structure, an $800 fee will be due when the NOA is filed, and no fee will be due when an Appeal Brief is submitted. However, if the Examiner does not reconsider the rejection(s) on appeal upon reviewing the Appeal Brief, and the case is forwarded to the Patent Trial and Appeal Board (PTAB), a $2000 fee will be charged. Thus, in cases where the case is resolved with the Examiner, the total costs for an appeal will go down, while in cases where the PTAB's resources will be invoked, the costs will go up. This new fee structure more clearly reflects the efforts of the USPTO than the previous fee structure, where the appeal costs were the same irrespective of whether the Board was involved or not in the resolution of a case. In cases where an Appeal Brief is filed with a fee before March 19, 2013, the fee for forwarding the Appeal Brief to the PTAB will be waived. This avoids the possibility of having to pay a fee when filing an Appeal Brief, and also when the Appeal Brief is forwarded. Thus, if one wishes to avoid the possibility of a $2000 fee, an Appeal Brief may be filed before March 19, 2013 with the current fee.

While filing fees and search fees will be decreasing somewhat, the examination fees will be increasing more significantly. Thus, total fees associated with the filing of an application will be increasing about 15%.

Extra claim fees will also be increasing, thus, making it desirable to avoid or minimize them where appropriate. Claims in excess of 20 will cost $80 each, which is up from $62, and independent claims in excess of 3 will cost $420 each, which is up from $250. The multiple dependent claim fee will increase to $780, which is a one-time fee in an application, which is up from $460. As before, each multiple dependent claim will be counted as the number of claims from which it depends for fee purposes in addition to the multiple dependent claim fee. Since there is no legal benefit to having multiple dependent claims over the corresponding number of singly dependent claims, only an associated cost, we recommend not having multiple dependent claims.

Extension fees are also increasing somewhat, i.e., by about 10%.

Also noteworthy is the establishment of micro entities, which allows for the reduction of a majority of fees by 75% for certain applicants, for which the qualifying requirements are not set forth herein. Universities qualify as micro entities.

As mentioned earlier, the only fees that will go into effect later on January 1, 2014, are the reduction of issue fees and the elimination of the publication fee. For a utility application, the issue fee of $1,770 will be reduced to $960, and the $300 publication fee will be eliminated, i.e., it will go down to $0.

Numerous post issuance activities will have decreased fees and/or fee structure changes not set forth herein in detail, e.g., all of inter partes review, post grant review, ex-parte reexamination, supplemental examination and reexamination as a result of supplemental examination fees will be decreasing from those previously published. However, these are still expensive.

Since most fees impacting new applications and pending applications will be increasing, where feasible, action before March 19, 2013, may be financially advantageous.

PTO's Final Rules on First Inventor to File Provisions Effective March 16, 2013


The PTO has issued proposed rules regarding implementation of the first inventor to file provisions of the AIA Patent Reform Act to take effect on March 16, 2013. They have also issued proposed Examiner guidelines for these provisions. These are subject to change based on the comments received. Our summary of the proposals follows.

In November we provided comments on the PTO's proposed rules regarding the first inventor to file provisions of the AIA Patent Reform Act and the Examiner guidelines thereon. The PTO has made those rules and guidelines final, with some changes. Below, we provide our previous discussion of the proposed rules and guidelines with the significant changes made in the final version highlighted in red.

I) Rules to Implement First Inventor to File Provisions of AIA

In general, the rules are to help the USPTO determine which applications will be examined under the "first inventor to file" system and provide procedures to aid examination under the new system with respect to addressing prior art exceptions and perfecting priority claims.

A. Identifying Applications under the "First Inventor to File" System of the AIA

The "first inventor to file" rules under the AIA will apply to applications having at least one claim with an effective filing date on or after March 16, 2013. The new rules will not apply to applications filed before March 16, 2013. The rules will apply to applications filed on or after March 16, 2013, that do not have a priority claim before that date. The rules address possible uncertainty for those applications filed on or after March 16, 2013, having a priority claim before March 16, 2013. For such applications, the rules propose that (to have the new rules apply to the application):

1) the applicant provide a statement that at least one claim has an effective filing date on or after March 16, 2013, where such a claim exists and

2) the applicant provide a statement that subject matter within the non-provisional application is not disclosed in the priority application, where new matter has been added. (See 37 C.F.R. §1.78(a) & (c)).

Of course, these statements will not be required if the disclosure of the non-provisional application is identical to that of the priority application filed before March 16, 2013, in which case there is no basis for establishing "first to file" status for the application and the old rules apply.

There are time limits to filing these statements, i.e., 4 months from the actual filing date (or entry into the US national stage) or 16 months from the filing date of a priority application, whichever is later. If a claim is added with an effective filing date on or after March 16, 2013, during prosecution, applicant must provide a statement to that effect when the claim is presented.

The proposed rules do not require that the statements identify particular claims or that the new subject matter be identified. However, if the statement is untimely or if the statement is retracted, the Office may require the applicant identify where there is written description support in the priority application for the remaining claims in the non-provisional application.

B. Prior Art Exceptions

1) Disclosures by the Inventor

The AIA provides a twelve month grace period for prior disclosures made by an inventor or derived from an inventor. The proposed rules include amendments to 37 CFR 1.130 to provide a mechanism for filing an affidavit or declaration to establish that a disclosure is not prior art in accordance with 35 U.S.C. 102(b) as amended by the AIA — the amendments and mechanism for this were simplified in the final rules. More particularly, 37 CFR 1.130 provides for the submission of affidavits or declarations showing that (1) a prior art disclosure was by an inventor or a third party who obtained the subject matter directly or indirectly from an inventor, or (2) the subject matter in a reference was disclosed prior to the reference publication by an inventor or a third party who obtained the subject matter directly or indirectly from an inventor.

The provisions of § 1.130 are not available if a rejection is based upon a disclosure made more than one year before the effective filing date of the claimed invention.

The formal requirements of these affidavits or declarations will be comparable to the current requirements for affidavits and declarations under 37 CFR §§1.131 and 1.132.

As an alternative to a declaration, the proposed rules allow for an inventor to provide a statement regarding prior disclosures directly in an application. (37 C.F.R. §1.77(b)).

2. Common Ownership and Joint Research Agreements

The AIA expands the exclusion of patents and applications that are commonly owned or developed under a joint research agreement as prior art under 35 U.S.C. §102 (novelty), as well as under 35 U.S.C. §103 (non-obviousness). In addition, the critical time for common ownership or joint development will be "on or before the effective filing date of the application" rather than at the time of the invention.

The proposed rules provide for statements by the applicant that

1) the prior art and the claimed invention were commonly owned on or before the effective filing date (37 C.F.R. §1.104) or

2) the prior art and claimed invention were made on behalf of one or more parties to a joint research agreement in effect on or before the effective filing date of the claimed invention and the invention was made under the agreement.

Under the proposed rules the application must identify the parties to a joint research agreement. The parties can be identified in the original application or by an amendment to the application. The Office has also proposed that under certain conditions, the prior art exclusion for joint research agreements be expanded to applications and patents granted after 2004.

C) Change in Effective Prior Art Date and Perfecting Priority Claims

The AIA changes the definition of the "effective filing date" of United States patents and published applications to include the filing dates of foreign priority applications. Thus — only for applications which fall under the first inventor to file rules -- published patent applications will have a prior art effect against such applications as of their earliest priority date (foreign or US).

As a result, the Office needs to ensure that it has a copy of the priority application by the time the application is published. To accomplish this, the proposed rules require that, within the later of 4 months from the actual filing date of the US application or 16 months from the filing date of the foreign priority application,

(1) the claim for priority must be presented in an application data sheet (see 37 C.F.R. §1.78(a) and (c)) and

(2) a certified copy of any foreign priority application must be filed.

-- The final rules provide that the requirement for the certified copy of foreign priority documents will be considered satisfied if the applicant: 1) files an uncertified copy of the foreign application labeled as "Interim Copy" within the time period specified above; and 2) files the certified copy of the foreign application before the patent issues.

For a national stage application, the claim for priority and a certified copy of any foreign priority application must be filed within the period set in the PCT regulations. If a claim to a foreign priority application is unintentionally delayed, it can be made late but a petition is required.

II) Examiner Training Materials for First Inventor to File Provisions

The USPTO has provided training materials for the examining corps on how to interpret the provisions of the AIA first-inventor-to-file rule. The PTO guidelines attempt to clarify some ambiguities, and not surprisingly take an expansive view of what is considered to be prior art. A few highlights are below.

The guidelines attempt to put to rest any suggestion that what remains of the grace period under 35 U.S.C. §102 is an expansive exception that protects inventors against others, e.g., by the inventor establishing prior art by publishing an invention prior to filing a patent application. The guidelines inform examiners that, first, in order to qualify as unavailable against a later filed application, the inventor must "show" that the disclosure is by the same inventor or joint inventors, and this showing may require an affidavit. Further, even if the inventor has published a disclosure, and a third party subsequently publishes the same or similar subject matter, that third party publication is prior art against the inventor unless the invention was derived from the inventor (again, an affidavit is needed to establish that fact) or the third party publication is exactly the same as the initial inventor publication. Differences -- even "trivial or obvious variations" -- mean that the third party disclosure is not excluded from prior art against the inventor. -- The guidelines were changed to be less restrictive. They now say that there is no requirement that the mode of disclosure is the same or that the disclosure must be exactly the same for the grace period to be preserved. The guidelines state, "[I]f subject matter of the intervening disclosure is simply a more general description of the subject matter previously publicly disclosed by the inventor or a joint inventor, the exception in AIA 35 U.S.C. §102(b)(1)(B) applies to such subject matter of the intervening disclosure."

The guidelines reinforce the elimination of 35 USC §102(f) ("he himself did not invent the subject matter sought to be patented"), i.e., we now have a first-to-file system. But they make the curious statement that "inventorship may still be addressed under 35 USC §101" (whoever invents any new and useful process? etc.). This, seemingly, sets the stage for some unspecified "inventorship" rejection.

The PTO requested comments specifically on whether the phrase in §102, "otherwise available to the public" limits the "on sale" bar to public sales, noting that case law under the prior version of the statute indicated that sales could be private. However, to the extent that some commentators have suggested that even public uses or sales would not be considered to be "disclosures" giving rise to prior art, the guidelines clearly state the opposite, i.e., that the term "disclosure" is a generic expression encompassing all categories of prior art under §102, including sales and use. As with all of these proposed rules, it remains to be seen what the final rules will state on this question. — In view of the comments received, the PTO clarified that "on sale" under §102(a)(1) means a "public" sale. They further clarified that secret processes or uses do no meet the prior art requirements, stating "the Office views the ?or otherwise available to the public' residual clause of the AIA's 35 U.S.C. §102(a)(1) as indicating that secret sale or use activity does not qualify as prior art." The guidelines further indicate that information is secret and not prior art if it is kept among individuals having an obligation of confidentiality to the inventor.

Archived News & Events

Deadline of March 15, 2013, for Patent Applications to Avoid First-to-File Aspects of AIA


As a follow-up to our earlier newsletters regarding the changes in the patent laws under the America Invents Act ("AIA"), we remind you of the upcoming deadline of March 15, 2013, in which to file an application not subject to the new first-to-file system of the AIA.

As discussed in our newsletters and generally acknowledged by the patent bar, applications filed under the first-to-file system will have certain disadvantages over earlier filed applications. Among the disadvantages are an expansion of the unpublished disclosures which will be available as prior art and eligibility of such an application for post-grant review (opposition-like) attack. We refer you to our earlier newsletters for more details.

If you are contemplating filing in the US, please consider whether you may want to secure a US-effective filing date on or before March 15, 2013, either through a non-US filing to which priority in the US application will be claimed, a PCT application designating the US or a direct filing in the US of a provisional or non-provisional application. Also, even if your non-US priority case is already filed, you may want to consider making your PCT or US filing to secure a US filing date by March 15. We are not of the opinion that the advantages are so significant that filing of applications that are not yet complete is warranted. However, if the application is substantively complete, you may want to consider filing by March 15.

Also, some commentators have suggested that you may want to address any 35 U.S.C. §112 issues in pending applications by the March 15 date, because this allegedly could cause a claim (and thus the whole application) to fall under the new law/rules. This situation is unclear and we will update you if it is clarified. But, particularly since the PTO is unpredictable, you may want to consider accelerating filing of replies to outstanding Office actions with 35 U.S.C. §112 rejections to on or before March 15.

District court finds RCE's have no impact on PTA accrual if filed more than three years after the us filing date


In a recent U.S. District Court decision (Exelixis, Inc. v. Kappos No. 1:12cv96 (E.D. Va. Nov. 1, 2012), the Court found that the USPTO has been miscalculating Patent Term Adjustment (PTA) in cases where a Request for Continued Examination (RCE) was filed after three years of pendency. Currently, the USPTO's PTA calculations cut off the accrual of "B" term days when a Request for Continued Examination (RCE) is filed — regardless of when the RCE is filed.

Under the district court's interpretation, 35 USC § 154(b)(1)(B)(i) only comes into play when a Request for Continued Examination (RCE) is filed before the date that is three-years from the application's US filing date. The court found that, if a Request for Continued Examination (RCE) is filed after the date that is three-years from the application's filing date, it will not cut off the "B" term PTA accrual. Thus, once the three year clock has run, PTA should be awarded on a day for day basis. The majority of RCE's are filed after the three year clock has run.

The USPTO may appeal the Exelixis decision or pursue other avenues to avoid its enforcement. The PTO's position on the decision has not been made clear yet.

Thus, while there is no guarantee of gaining the extra PTA, there are two procedures to pursue a PTA recalculation for patents falling under the Exelixis situation after they issue. Under 37 C.F.R. 1.705(d), a Request for Reconsideration of the "B" term PTA calculation can be filed in the USPTO within two months after the patent issue date. This is a relatively simple and inexpensive procedure. Alternatively, action can be pursued in the Eastern District of Virginia, under the precedent of Exelixis. Action in the district court must be filed within 180 days of issuance of the patent. This Court action is obviously significantly more complex and expensive.

If the decision is not reversed on appeal and the USPTO has to enforce it, a significantly greater number of patents may be entitled to significantly greater PTA awards. Since a RCE filed before the three-year time period will preclude the applicant from obtaining additional PTA, applicants should consider waiting to file a RCE until three years after the application filing date (if possible).

PTO's Proposed Rules to Implement First Inventor to File Provisions of AIA


The PTO has issued proposed rules regarding implementation of the first inventor to file provisions of the AIA Patent Reform Act to take effect on March 16, 2013. They have also issued proposed Examiner guidelines for these provisions. These are subject to change based on the comments received. Our summary of the proposals follows.

I) Proposed Rules to Implement First Inventor to File Provisions of AIA

In general, the proposed rules prescribe procedures which will help the USPTO determine which applications will be examined under the "first inventor to file" system and provide procedures to aid examination under the new system with respect to addressing prior art exceptions and perfecting priority claims.

A. Identifying Applications under the "first inventor to file" system of the AIA

The "first inventor to file" rules under the AIA will apply to applications having at least one claim with an effective filing date on or after March 16, 2013. The new rules will not apply to applications filed before March 16, 2013. The rules will apply to applications filed on or after March 16, 2013, that do not have a priority claim before that date. The rules address possible uncertainty for those applications filed on or after March 16, 2013, having a priority claim before March 16, 2013. For such applications, the rules propose that (to have the new rules apply to the application):

  1. the applicant provide a statement that at least one claim has an effective filing date on or after March 16, 2013, where such a claim exists and
  2. the applicant provide a statement that subject matter within the non-provisional application is not disclosed in the priority application, where new matter has been added. (See Section 1.78(a) & (c)).

Of course, these statements will not be required if the disclosure of the non-provisional application is identical to that of the priority application filed before March 16, 2013, in which case there is no basis for establishing "first to file" status for the application and the old rules apply.

There are time limits to filing these statements, i.e., 4 months from the actual filing date (or entry into the US national stage) or 16 months from the filing date of a priority application. If a claim is added with an effective filing date on or after March 16, 2013, during prosecution, applicant must provide a statement to that effect when the claim is presented.

The proposed rules do not require that the statements identify particular claims or that the new subject matter be identified. However, if the statement is untimely or if the statement is retracted, the Office may require the applicant identify where there is written description support in the priority application for the remaining claims in the non-provisional application.

Prior Art Exceptions
1) Disclosures by the Inventor

The AIA provides a twelve month grace period for prior disclosures made by an inventor or derived from an inventor. The proposed rules include amendments to 37 CFR 1.130 to provide a mechanism for filing an affidavit or declaration to establish that a disclosure is not prior art in accordance with 35 U.S.C. 102(b) as amended by the AIA. More particularly, 37 CFR 1.130 provides for the submission of affidavits or declarations showing that (1) a prior art disclosure was by an inventor or a third party who obtained the subject matter directly or indirectly from an inventor, or (2) the subject matter in a reference was disclosed prior to the reference publication by an inventor or a third party who obtained the subject matter directly or indirectly from an inventor.

The provisions of § 1.130 are not available if a rejection is based upon a disclosure made more than one year before the effective filing date of the claimed invention.

The formal requirements of these affidavits or declarations will be comparable to the current requirements for affidavits and declarations under 37 CFR §§1.131 and 1.132.

As an alternative to a declaration, the proposed rules allow for an inventor to provide a statement regarding prior disclosures directly in an application. (Sec 1.77(b)).

2. Common Ownership and Joint Research Agreements

The AIA expands the exclusion of patents and applications that are commonly owned or developed under a joint research agreement as prior art under 35 U.S.C. §102 (novelty), as well as under 35 U.S.C. §103 (non-obviousness). In addition, the critical time for common ownership or joint development will be "on or before the effective filing date of the application" rather than at the time of the invention.

The proposed rules provide for statements by the applicant that

  1. 1) the prior art and the claimed invention were commonly owned on or before the effective filing date (Sec 1.104) or
  2. 2) the prior art and claimed invention were made on behalf of one or more parties to a joint research agreement in effect on or before the effective filing date of the claimed invention and the invention was made under the agreement.

Under the proposed rules the application must identify the parties to a joint research agreement. The parties can be identified in the original application or by an amendment to the application. The Office has also proposed that under certain conditions, the prior art exclusion for joint research agreements be expanded to applications and patents granted after 2004.

C) Change in Effective Prior Art Date and Perfecting Priority Claims

The AIA changes the definition of the "effective filing date" of United States patents and published applications to include the filing dates of foreign priority applications. Thus — only for applications which fall under the first inventor to file rules -- published patent applications will have a prior art effect against such applications as of their earliest priority date (foreign or US).

As a result, the Office needs to ensure that it has a copy of the priority application by the time the application is published. To accomplish this, the proposed rules require that, within the later of 4 months from the actual filing date of the US application or 16 months from the filing date of the foreign priority application,

(1) the claim for priority must be presented in an application data sheet (see Sections 1.78(a) and (c)) and

(2) a certified copy of any foreign priority application must be filed.

For a national stage application, the claim for priority and a certified copy of any foreign priority application must be filed within the period set in the PCT regulations. If a claim to a foreign priority application is unintentionally delayed, it can be made late but a petition is required.

II) Proposed Examiner Training Materials for First Inventor to File Provisions

The USPTO has proposed training materials for the examining corps on how to interpret the provisions of the AIA first-inventor-to-file rule. The rules are only proposed, and a comment period has been established. It is unusual for the PTO to request comment on examiner training materials, and perhaps that action reflects some difficulty in interpreting the new statute and its ambiguities as the time comes to apply it every day when examining applications. The PTO guidelines attempt to clarify some of these ambiguities, and not surprisingly take an expansive view of what is considered to be prior art. It is likely that the PTO will receive considerable comments. A few highlights are below.

The guidelines attempt to put to rest any suggestion that what remains of the grace period under 35 USC §102 is an expansive exception that protects inventors against others, e.g., by the inventor establishing prior art by publishing an invention prior to filing a patent application. The guidelines inform examiners that, first, in order to qualify as unavailable against a later filed application, the inventor must "show" that the disclosure is by the same inventor or joint inventors, and this showing may require an affidavit. Further, even if the inventor has published a disclosure, and a third party subsequently publishes the same or similar subject matter, that third party publication is prior art against the inventor unless the invention was derived from the inventor (again, an affidavit is needed to establish that fact) or the third party publication is exactly the same as the initial inventor publication. Differences -- even "trivial or obvious variations" -- mean that the third party disclosure is not excluded from prior art against the inventor.

The guidelines reinforce the elimination of 35 USC §102(f) ("he himself did not invent the subject matter sought to be patented"), i.e., we now have a first-to-file system. But they make the curious statement that "inventorship may still be addressed under 35 USC §101" (whoever invents any new and useful process... etc.). This, seemingly, sets the stage for some unspecified "inventorship" rejection.

The PTO requested comments specifically on whether the phrase in §102, "otherwise available to the public" limits the "on sale" bar to public sales, noting that case law under the prior version of the statute indicated that sales could be private. However, to the extent that some commentators have suggested that even public uses or sales would not be considered to be "disclosures" giving rise to prior art, the guidelines clearly state the opposite, i.e., that the term "disclosure" is a generic expression encompassing all categories of prior art under §102, including sales and use. As with all of these proposed rules, it remains to be seen what the final rules will state on this question.

Final Rules In Effect as of September 16, 2012



Earlier this year we provided comments on the PTO's proposed rules regarding the following provisions. The PTO has made those rules final for provisions that went into effect on September 16, 2012, with some changes. Below, we provide our previous discussion of the proposed rules with significant changes highlighted in red.

1) Inventor Declaration Requirements, Assignments and Powers of Attorney



a) Filing by Assignee (not really) — Despite that the change to the law seemed very clear to allow the assignee to file as applicant (see new statute 35 U.S.C. 118 below), the proposed changes to the rules do not effectively allow that. The proposal still requires that the inventors provide a declaration except in limited circumstances. The assignee or one who the inventors are obligated to assign can only sign the declaration on behalf of an inventor in those situations where the inventor is deceased, incapacitated, cannot be reached or refuses to sign. So, it does at least avoid the need to have a legal representative or heir sign for a deceased or incapacitated person.

35 U.S.C. 118 Filing by other than inventor. A person to whom the inventor has assigned or is under an obligation to assign the invention may make an application for patent. A person who otherwise shows sufficient proprietary interest in the matter may make an application for patent on behalf of and as agent for the inventor on proof of the pertinent facts and a showing that such action is appropriate to preserve the rights of the parties. If the Director grants a patent on an application filed under this section by a person other than the inventor, the patent shall be granted to the real party in interest and upon such notice to the inventor as the Director considers to be sufficient.

a1) Change: Assignee as Applicant — Rules will permit a person to whom the inventor has assigned or is under an obligation to assign (obligated assignee) the invention to be an additional applicant, i.e., in addition to the inventors. Also, the assignee may sign for an inventor who is deceased or otherwise unavailable.

Corresponding rules changes were made for the Declaration requirements. An assignee, an obligated assignee, or a person who otherwise shows sufficient proprietary interest in the matter, who is the applicant, may execute a substitute statement in lieu of an oath or declaration if the applicant identifies: (1) the circumstances permitting the person to execute the substitute statement in lieu of an oath or declaration; (2) identifying and indicating the relationship of the person executing the substitute statement with respect to the non-signing inventor; and (3) the last known address of the non-signing inventor. The requirement for submitting rigorous proofs of the circumstances of non-availability of the inventor has been dropped.

For an assignee or obligated assignee filing the application as the applicant, the documentary evidence of ownership (e.g., assignment or employment agreement for an obligated assignee) can be recorded as late as the date the issue fee is paid in the application. For a person who otherwise shows sufficient proprietary interest in the matter to file the application as the applicant, the showing of proprietary interest must be filed in the application, along with a petition and fee.

b) Change: Timing on Filing of Oath/Declaration — In an significant change from the proposed rules, the final rules allow applicants may postpone filing the inventor's oath or declaration until the application is otherwise in condition for allowance if the applicant provides an application data sheet before examination indicating the name, residence, and mailing address of each inventor; the surcharge for later filing of the declaration is $130.

NOTE: For PCT National Stage applications, not submitting the Declaration with or shortly after filing the application can negatively affect Patent Term Adjustment, as the statutory language of 35 U.S.C. 371(c)(4) requires the filing of the Declaration for entry into the National Stage, and the 14 month time frame for the USPTO to issue a first Office Action or Notice of Allowance cannot start until the Declaration is filed.

c) Combined Declaration/Assignment instead of Combined Declaration/POA — The proposals do not require but urge applicants to move away from filing a Combined Declaration/POA (Power of Attorney) and instead to file a Combined Declaration/Assignment by the inventors and a separate POA from the assignee to the practitioner(s). As the notice explains, this is the more logical course. In most cases, the practitioner(s)' client is the assignee, not the inventors directly. Having a POA directly from the inventors to the practitioner(s) thus could lead to confusion. The proposals will allow the inventors to sign a combined Declaration/Assignment (and will provide a form therefore). This is advantageous since there is only one paper needed to be signed by the inventors. Important to note that the old declaration forms are no longer acceptable. We can provide you electronic versions of the new Dual Assignment/Declaration, please contact us at mail@mwzb.com.

d) Declaration Requirements — Indication of citizenship is no longer required and it is no longer required to state that they are the "first" inventor. Also, it is no longer required to acknowledge the duty of disclosure in the declaration — however, it is important to note that the duty of disclosure still fully applies, as previously. There is also a change in a nuance of the specific language required to state that the application was made or authorized to be made by the person executing the declaration.

e) Change:US National phase Applications — Note that US National phase applications filed based on International applications filed before Sept. 16, 2012, are still applications under the old rules (the International filing date is the actual US filing date), so the declarations for those National stage applications will still need to comply with the old requirements.

f) Change: Continuing (CON/DIV) Applications — Contrary to what many believed, the PTO just recently clarified that (in most cases) you will not be able to use a copy of the declaration from parent applications filed under the old rules in a new continuing application filed on or after Sept. 16, 2012, under the new rules. The above-noted nuance in the specific language required under the new law is not contained in previous declarations. However, in the future, you will be able to use a copy of the parent declaration for continuations when the parent application was filed after Sept. 16, 2012, in compliance with the new rules, and thus contains the new language. Thus, the problem with declarations for continuing applications only applies to a transition period from old to new rule applications.

f1) Declarations for CIP Applications — Will now be treated like other continuing applications, i.e., if the inventors are the same, then you can use the declaration from the parent application, assuming compliance with the new rules.

g) Reissue Declarations — The requirement to state that all errors arose without deceptive intent is removed. The requirement for a supplemental declaration each time that claims are amended is removed. Previously unstated requirement to specifically state whether the claim is broadened by an amendment and clarify that if a claim is broadened in any aspect (even if narrowed in others) then it is considered a broadening reissue is now specifically stated.

g1) Change: Assignee Filing as Applicant — The revised Rules will permit an assignee of the entire interest who filed an application under 35 U.S.C. 118 that was patented to sign the inventor's oath or declaration in a reissue application of such patent (even if the reissue application is a broadening reissue).

g) Power of Attorney — Several minor changes proposed. Please contact us at mail@mwzb.com to obtain new electronic forms for the Power of Attorney.

g1) Change: New Requirement — Juristic entities (organizations) who seek to prosecute an application, including taking over prosecution of an application, will need to do so via a registered practitioner.

h) Priority Claims — The requirements for priority claims to parent applications (i.e., any of parent cases, US provisionals, PCT and foreign applications) are standardized by requiring that all such claims be listed in an ADS (no longer any need to state any priority claims in first sentence of the specification or declaration).

i) Correction of Inventorship in National phase applications — For applications with an International filing date on or after September 16, 2012, inventorship can be corrected merely by having the correct inventors in the first submission of the declaration.

j) Application Data Sheets — For several reasons, every application (including continuing ones) must now have an ADS. Any ADS not submitted with the filing of the application should be called a Supplemental ADS and must have an attorney/agent signature. The PTO urges use of EFS-Web fillable form rather than scanned ADS to ensure data gets in correctly. It was clarified that providing a Customer Number on the ADS does not result in Power of Attorney, it only provides the correspondence address.

j1) Change/Clarification: Mailing Address — Inventors may use as their mailing address on the ADS (or Declaration) the address where the inventor "customarily receives mail," including an address where the inventor works, a post office box, or other address where mail is received even if it is not the main mailing address of the inventor.

2) Supplemental Examination



a) In General — Allows patent owner to have the Office consider, reconsider or correct information relevant to the patent. Items for consideration are not limited to patents or printed publications and not limited in terms of what issues they are directed to. Claim amendments or amendments to benefit claims are not appropriate (if amendments needed, a reissue should be considered). Rules specifically exclude third party comments or participation.

Change: Initially, it was proposed that the request would be limited to 10 items per request (but can make multiple requests). In the Final Rules, the limit is increased to 12. The proposed rules required the requester to provide detailed explanation of each issue and how each item pertains to the issue, and the PTO comments indicated that this description should be quite comprehensive. However, under the Final Rules, the requirements are now similar to the requirements for listing prior art in an ex parte reexam request

b) Timing — Starting Sept. 16, 2012, can be filed on any patent in force at that time.

c) Procedure — Within three months of the filing of a complete request the PTO will issue a Supplemental Examination Certificate indicating whether or not the request raises one or more substantial new questions of patentability. Change: The Final Rules clarify that a Supplemental Examination request that does not fulfill the requirements will not be granted a filing date, however the PTO notes that the requirements for the request have been simplified. If the request raises a substantial new question of patentability, the certificate will indicate that ex parte reexamination has been ordered; which patentee has to pay for (see amount proposed for fees!). For such reexamination, no Patent Owner statement is allowed and any item submitted can be used, contrary to normal reexaminations which are limited to patents or publications. Also, the PTO will consider if material fraud (indicated to be more limited in scope than mere inequitable conduct, as established by Therasense) was committed and take appropriate action.

d) FeesChange: In the proposed rules the fee for a Supplemental Examination request was $5,180. In the Final Rules this is reduced to $5,140. In the proposed rules the fee for a reexamination ordered as a result of such request was $16,116. In the Final Rules this is increased to $16,120, which is refundable if it is then decided not to institute the reexamination. Thus, such a request could result in $21,000+ just in Government fees.

e) Enforceability Effect — With limited exceptions, a patent shall not be held unenforceable on the basis of that information not being considered, being improperly considered or being incorrect if such information was provided in the Supplemental Examination, i.e., is a means to cleanse possible inequitable conduct issues.

3) Inter-Partes Review changes from proposed rules:



Please find below the proposed rules we previously reported to you along with the relevant changes instituted by the final version of the rules:

a) In General — The rules for IPR proceedings permit a party other than the patent owner to file a petition to institute an inter partes review (IPR) of the patentability of one or more claims of a patent under 35 USC §102 or 35 USC §103 in view of one or more patents or printed publications. The petition must be filed by the later of nine months after the date of the issuance of the patent or, if a post-grant review was instituted, the termination date of the post-grant review. Petitioner will not have standing if (i) the petitioner already filed a civil action challenging the patent's validity, (ii) the petitioner filed for IPR more than a year after being served with a complaint alleging infringement or (iii) the petitioner is estopped from challenging validity (e.g., because of losing a prior IPR). The proposed rules include a statement that the pendency of the review proceeding should normally be no more than one year.

b) Effective Date — Starting September 16, 2012, IPRs can be filed on any patent in force at that time. One proposed rule gives the USPTO Director the authority to impose a limit on the number of IPRs during the first four years after this date (although USPTO says it does not expect to limit the number at this time).

c) Procedure — Petitioner files a petition (along with the requisite fee and service of filing notice on the patentee) setting forth the standing to file the petition and stating the precise relief requested for each claim challenged. The statement must indentify the claim, indentify the statutory grounds (35 USC §102 or 35 USC §103), indentify the patents or printed publications relied on, provide an explanation of how the claim is to be construed and provide an explanation of how the construed claim is not patentable. Within two months of receiving notice that a petition filing date is granted, the patent owner may file a Preliminary Response setting forth reasons why IPR should not be instituted. No testimonial evidence or amendments are permitted. The patent owner may also file a statutory disclaimer on one or more claims of the patent. If the petition supports a reasonable likelihood that at least one challenged claim is not patentable, the Patent Trial and Appeal Board (the Board) will institute the review proceeding. The patent owner can file a response to the grant of petition (default time is two months from initiation of the review proceeding). The patent owner may, after conferring with the Board, file one motion to amend the claims. Additional motions to amend the claims will require authorization from the Board. The review will be conducted according to the new Board rules.

Changes:

- The determination by the Director whether to institute an inter partes review is final and not appealable.

- The default period for filing patent owner responses (including preliminary responses) has been extended to three months.

- An additional motion to amend the claims may be authorized upon a showing of good cause or by the joint request of both sides to promote a settlement. Such a motion to amend may be denied where: (1) the amendment does not respond to a ground of unpatentability, or (2) the amendment seeks to enlarge the scope of the claims of the patent or introduce new subject matter

d) Fees - The proposed fee for an IPR request is quite high and will depend on the number of claims for which review is sought. For example, the fee will be $27,200 for 20 or fewer claims and $34,000 for 21 to 30 claims. The fee increases with each increment of 10 claims.

Changes:

- The final rules maintained the $27,200 fee for the first 20 claims, but eliminated the stair step fee model. Under the final rules each additional claim over 20 will be $600.

- A joinder provision was added to the final rules: Joinder may be requested by a patent owner or petitioner during inter partes, post-grant or covered business method patent reviews, but provides that such a request must be filed, as a motion, no later than one month after institution of any review for which joinder is requested.

4) Post Grant Review (PGR) Proceedings



a) In General — The rules for PGR proceedings permit a party other than the patent owner to file a petition to institute a post grant review (PGR) of the patentability of one or more patent claims for any reason (not limited to prior art issues). The petition must be completed and filed by nine months after the date of the issuance of the patent. Petitioner will not have standing if (i) the petitioner already filed a civil action challenging the patent's validity or (ii) the petitioner is estopped from challenging validity due to some prior action. The proposed rules include a statement that the pendency of the review proceeding should normally be no more than one year.

Changes: Grounds for post-grant review include grounds that could be raised under 35 U.S.C. 102 or 103 including those based on prior art consisting of patents or printed publications. Other grounds available for post-grant review include 35 U.S.C. 101 and 112, with the exception of compliance with the best mode requirement.

b) Effective Date — The new rules are effective September 16, 2012, but PGR is only applicable to patents falling under the new "First Inventor to File" provisions of the America Invents Act (AIA). Thus, it is only applicable to patents issued on applications with effective filing dates on or after March 16, 2013.

c) Procedure — The petition must provide a statement of the precise relief requested for each claim challenged. The statement must identify the claim, the specific statutory grounds on which the claim is challenged, how the challenged claim is to be construed and how the construed claim is not patentable under the statutory grounds raised. When the challenge is based on prior art, the petition must specify where each element of the claim is found in the prior art. When the challenge is based on statutory grounds other than prior art, the petition must identify the specific part of the claim that fails to comply with these statutory grounds and state how the identified subject matter fails to comply. It further must contain a statement setting forth, in separately numbered sentences, material facts with specific citations to supporting evidence. When a petition is incomplete, the USPTO will dismiss the request if the deficiency is not corrected within the earlier of one month after the USPTO's notice of deficiencies or the nine-month statutory deadline.

Change: The petition is limited to 80 pages

The patent owner may file a preliminary response to the petition. The proposed rules limit (i) the time period (two months from official notice), (ii) the scope and (iii) the length of the preliminary response. The response can include evidence but no new testimonial evidence can be presented. At this stage, no amendments can be presented but the patent owner can disclaim one or more claims.

Changes: The proposed rules limit (i) the time period to three months from official notice and the length of the preliminary response is limited to 80 pages. If authorized by the Board, new testimony may be presented.

The Board may proceed with review of all or some of the challenged claims on all or some of the grounds asserted if it determines it is more likely than not (from the initial filings) that a claim is not patentable. Or the Board may deny review on any or all claims or grounds.

If review is granted, the patent owner may file one motion to amend the claims under 35 USC §326(d)(1) in a way that is responsive to the grounds of challenge, but must confer with the Board first.. Further motions to amend require a demonstration of good cause and Board authorization. The petitioner may file supplemental information relevant to any ground for which the trial has been instituted, with filing to be within one month of the date the review is granted. The review will be conducted according to the new Board rules.

Changes:

Unless a due date is provided in a Board order a motion to amend must be filed no later than the filing of a patent owner response.

A motion to amend may cancel a challenged claim or propose a reasonable number of substitute claims. An additional motion to amend may be authorized when there is good cause showing a joint request of the petitioner and the patent owner.

Once a trial has been instituted a party may file a motion to submit supplemental information which is relevant to a claim.

d) Fees — The proposed fee for a PGR request is quite high and will depend on the number of claims for which review is sought. For example, the fee will be $35,800 for 20 claims or less. The fee increases for each increment of 10 claims.

Changes: An $800 per claim flat fee for each claim in excess of 20 claims

5) Business Method Patents Review



a) In General — The proposed rules relate to separate procedures for post-grant review of certain "covered business method patents." Such patents may be challenged on grounds of failing to comply with 35 U.S.C. § 101, 35 U.S.C. § 112 (except best mode), 35 U.S.C. § 102 or 35 U.S.C. § 103. A covered business method patent is: "a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of financial products or services, except that the term does not include patents for technological inventions." The "technological invention" exception pertains to patents reciting a technological feature that is novel and unobvious and solves a technical problem using a technical solution.

Petitioners for review must have been sued for or charged with infringement of the patent. Change: The final rules did not change these definitions, but did provide clarification on the terms "financial products or services" and a "technological invention" in responses to submitted comments. A summary of these comments is provided below.

b) Effective Date — September 16, 2012 on any qualifying patent in force on that date. Change: The final rule allows for review of covered business method patents issued before, on or after September 16, 2012. Unlike post-grant review, patents filed under as a first-to-invent application may be eligible for this proceeding.

c) Procedure — The petition must identify each claim that is challenged, the grounds for the challenge, a proposed claim construction of the challenged claims and specific evidence supporting the grounds for stating that the claim is not patentable. Change: According to the final rule, the Petitioner has the burden of showing that the challenged claims are covered business methods. The USPTO will decide whether to institute a trial within three months after the earlier of: (i) the submission of a patent owner preliminary response, (ii) the patent owner's waiver of a filing a preliminary response or (iii) the expiration of the time period for filing a patent owner preliminary response. Discovery will not be allowed except with a showing of good cause. Parties may choose to enter alternative dispute resolution rather than proceed to trial. Change: Further, a petition of a covered business method patent may not occur during the time a post-grant review petition may be filed, or less than 9 months after issuance of the patent.

d) Fees — The USPTO fees will be determined by the number of claims being reviewed. For example, 0-20 claims will cost $35,800, with added fees per every additional 10 claims Change: with each additional claim costing $800.

e) Change: Definition of Financial Products or Services — In response to the numerous comments received regarding the proposed definitions, the USPTO provided the following with regard to the term "financial products or services." This term should be interpreted broadly to encompass patents "claiming activities that are financial in nature, incidental to a financial activity or complementary to a financial activity," and are limited to products or services of the financial industry. A patent needs only one or more claims directed to a covered business method to be considered a covered business method patent, even if the patent includes claims to other embodiments.

In determining whether a technological invention is applicable, the claimed subject matter as a whole is considered. The Office declined to use the standards for subject matter eligibility under 35 U.S.C. 101 to define whether a patent is for a technological invention. The Office will consider what a technological invention is on a case-by-case basis. Additional guidance will be provided to the public as decisions are rendered applying the definition.

6) Pre-issuance Submissions by Third Parties



a) Effective Date — Submissions can be made starting on Sept. 16, 2012, for any application filed before, on or after that date (but see timing requirements below). Change: In addition to proposed rules it was clarified that pre-issuance submissions will not be allowed in reissue or reexamination applications.

b) Timing — It must be made before the later of (i) six months after the date the application is published (USPTO's patent publication) or (ii) the date of mailing of the first office action rejecting any claim (i.e., can be after Restriction/Election requirement). Also, it must be before a Notice of Allowance is mailed. No extension or waiver is possible; if the timing is not met the submission will be discarded.

c) What can be submitted — Only publications, i.e., patents, published applications and other printed publications. Copy must be provided unless it is US patent or US published application. English-language translation required. Submission is to be made with a listing like an IDS form.

d) Concise Explanation Required — The concise explanation required will separately explain why each document is submitted and why each is relevant to examination. The USPTO suggests that specific page and line numbers of the relevant portions of each document be pointed out. A claim chart format is also considered useful. The USPTO says it should not be lengthy but gives no limitation on size. The submitter must also state that the submission complies with the all of the statutory requirements. Also the submitter must state that they are not a person with a duty disclose under 37 C.F.R. §1.56 for the application in question (i.e., they are not the applicant or associated with the applicant).

e) Fees — $180 Fee for each 10 documents or fraction thereof submitted (i.e., 11 docs would be $360). But fee exempted for first submission by that third party (or those in privity with it) which has 3 or less documents.

f) Processing — PTO will first review compliance of submission before it is entered in the official image file wrapper (IFW). There will be a special e-filing interface for pre-issuance submissions to insure it does not appear in the IFW until found compliant. Change: The applicant will be notified when a pre-issuance submission is found to be compliant and entered on the record. In further change from proposed rules, the submitter will notified if the submission is found non-compliant, if the submitter provides an email address for such notice. If found compliant, the submission will be considered by the examiner the same as any document submitted in an IDS and a copy (including explanation) of the submission will be provided with the next Office action. The documents will be listed in the patent as having been considered and the applicant is not required to file a separate IDS for such documents.

g) Anonymity — There is no need to indicate the real party in interest making the submission. However, the person who files must be identified, so can have an unrelated party file for you to maintain anonymity.




USPTO Starts New Pilot Program for Filing Information Disclosure Statements (IDS) After Payment of Issue Fee



The USPTO is implementing a pilot program (QPIDS program) intended to reduce pendency and applicant costs when an information disclosure statement (IDS) is filed after payment of the issue fee. This pilot program will permit an examiner to consider an IDS after payment of the issue fee - in certain circumstances (see below) -- without necessarily needing to reopen prosecution. Previously, such an IDS submitted after payment of the issue fee required the filing of a petition to withdraw from issue and a request for continued examination (RCE). Under this pilot program, such an IDS will only require a conditional petition to withdraw from issue and file an RCE. If the examiner determines that no item in the IDS necessitates reopening prosecution, the Office will issue a corrected notice of allowability and the conditional Petition/RCE will not take effect (although the Petition fee will still be charged). If the examiner determines that an item in the IDS does necessitate reopening prosecution, the Petition/RCE will be processed and prosecution reopened. The IDS still must meet the requirements for an IDS filed after a Notice of Allowance, i.e., it must contain a certification under 37 C.F.R. §1.97(e) that the information was cited by another patent office in a corresponding application within the past three months or only became known to those having a duty to disclose within the past three months and include the IDS fee. Effective Date: May 16, 2012.

Patent Infringement provisions of Section 271 are not effective to prevent potential "off-label" sale of drug covered by method claims reciting approved use.



Once a drug has been approved by the Food and Drug Administration (FDA) for sale for one purpose, doctors can legally prescribe it for any purpose for which they deem it effective and safe, including for non-FDA-approved indications. This "off-label" prescribing accounts for an estimated one-fifth of all prescriptions in the US (Radley et al., "Off-label Prescribing Among Office-Based Physicians" Archives of Internal Medicine 166 (9): 1021-1026, 2006), diverting multi-billion dollar "off-label" sales from brand name drug manufacturers to generic manufacturers.

The Federal Circuit held in AstraZeneca Pharmaceuticals v. Apotex Corp, that 35 U.S.C. § 271(e)(2) does not provide basis for an infringement claim against a generic pharmaceutical manufacturer who filed an Abbreviated New Drug Application (ANDA) with the FDA for uses other than those recited in the claims of two unexpired patents listed in the Orange book.

One of the listed patents claims methods of using CRESTOR® to treat heterozygous familial hypercholesterolemia (HeFH), and the other claims methods of using CRESTOR® to lower the cardiovascular disease risk for individuals who have normal cholesterol levels but demonstrate elevated circulating C-reactive protein (CRP).

AstraZeneca's approved New Drug Application (NDA) and corresponding CRESTOR® labeling cover several indications, including treatment of HeFH in pediatric patients and preventative use in high-risk patients with elevated CRP. While the above indications fall under AstraZeneca's unexpired listed patents, the FDA also approved CRESTOR® for treating homozygous familial hypercholesterolemia (HoFH) and hypertriglyceridemia, uses not claimed by either unexpired Orange book listed patent.

Apotex requested approval of their ANDA to offer their generic version of the CRESTOR® formulation for treating only HoFH and hypertriglyceridemia while omitting the patented indications HeFH and elevated CRP. Apotex, in accord with 21 U.S.C. § 355(j)(2)(A)(viii), submitted a statement that the ANDA excludes all uses claimed in the patent (section viii statement).

AstraZeneca filed suit and alleged that Apotex's ANDA filings infringed and would cause infringement of the method patents on the theory that the approval of the ANDA would result in unlicensed sales of CRESTOR®, which has FDA-approved patent-protected uses. Such sales would inevitably infringe AstraZeneca's method patents allegedly contrary to the plain language and legislative aims of 35 U.S.C. §271(e)(2).

Section 271(e)(2) provides as follows:

It shall be an act of infringement to submit-(A) an application [i.e., an ANDA] under section 505(j) of the Federal Food, Drug, and Cosmetic Act [codified at 21 U.S.C. § 355(j)] for a drug claimed in a patent or the use of which is claimed in a patent . . . if the purpose of such submission is to obtain approval under such Act to engage in the commercial manufacture, use, or sale of a drug claimed in a patent or the use of which is claimed in a patent before the expiration of such patent.

The Federal Circuit construed the above section consistently with its holding in Warner-Lambert Co. v. Apotex Corp., 316 F.3d 1348, 65 USPQ2d 1481 (Fed. Cir. 2003), that infringement of method claims under § 271(e)(2) requires filing an ANDA wherein at least one "use" listed in the ANDA is claimed in a patent, especially in view of section viii, which allows generic manufacturers to limit the scope of regulatory approval by excluding patented indications from their ANDAs. Allowing an infringement suit in these circumstances would vitiate section viii; and as such, would be contrary to the statutory scheme.

AstraZeneca also alleged that section viii ignores market realities because, even if a generic drug is formally approved only for unpatented uses, pharmacists and doctors will nonetheless substitute the generic for all indications once it becomes available. The Federal Circuit found this argument unpersuasive. Again consistent with Warner-Lambert, they found that, by adopting AstraZeneca's views, a pioneer drug manufacturer would be able to maintain de facto indefinite exclusivity over a pharmaceutical compound by obtaining serial patents for approved methods of using the compound and then wielding § 271(e)(2) "as a sword against any competitor's ANDA seeking approval to market an off-patent drug for an approved use not covered by the patent. Generic manufacturers would effectively be barred altogether from entering the market." See Warner-Lambert.

In a decision much anticipated by the trademark community, the Fourth Circuit Court of Appeals has reversed summary judgment, opening the door to Google's liability for its AdWords program in the case brought by Rosetta Stone.



Rosetta Stone, maker of the well known language-learning software, sued Google for Google's use of the ROSETTA STONE trademark in its AdWords program. The AdWords program allows companies to bid on key words, including a trademark, to cause advertisements known as "Sponsored Links" to appear when a Google user enters a query including the key word. The result of the AdWords program was to allow companies that were not affiliated with Rosetta Stone to purchase the right to have a Sponsored Link in a user's search results when that user of Google searched for the words (and plaintiff's trademark) "Rosetta Stone."

The district court found that the material facts were undisputed and granted summary judgment for Google denying various theories of liability pursued by Rosetta Stone. This decision was one of the first to reach the merits regarding Google's advertising practices. Rosetta Stone appealed the loss. Over forty amici ("friend of the court") filed briefs weighing in on the issues.

The court of appeals vacated the district court's decision, in key parts, and ruled, instead, that the material facts were disputed such that one could rule favorably for Rosetta Stone. The case was thus remanded to the district court for a trial on the merits.

The key defenses by Google at issue were directed to theories of liability based on (A) direct infringement, (B) contributory infringement and (C) trademark dilution. Google argued that the direct infringement was only as a nominative use of the subject trademark; that is, unlike classic source confusion, the defendant is using the plaintiff's trademark to indicate plaintiff's goods or services, not to indicate those made by defendant or others.

As to direct infringement, the court of appeals examined three factors from the typical likelihood-of-confusion analysis and found disputed facts; namely, (1) Google's intent, (2) evidence of actual confusion, and (3) the purchaser's level of sophistication. Google's advertising policy had shifted over the years in allowing companies to use another's trademark and, at some point in time, Google itself recognized that confusion may result as to this practice. Thus, there was disputed evidence regarding Google's intent. The court also found that there was evidence that purchasers had been actually confused which evidence the district court had incorrectly discounted. Even though the purchasers knew that the purchased software was not made by Rosetta Stone, these purchasers believed that Rosetta Stone had in some way endorsed or sponsored this software by others. Importantly, trademark confusion can stem not only from confusion as to the source of goods/services, but also as to any consumer's erroneous belief as to sponsorship, affiliation or connection between the trademark owner and the source offering the goods/services. This evidence of actual confusion also showed that the purchaser's level of sophistication could not be regarded as undisputed since even sophisticated purchasers exhibited confusion as to sponsorship. Note that while Google intended a nominative use of the subject trademark (for example, the sponsored links would point to resellers of the plaintiff's product), this was not always the situation as shown by the disputed facts when the issue of incorrect sponsorship was correctly weighed.

As to contributory infringement, the court of appeals found that the district court's decision erred in two respects: (1) that the decision incorrectly framed the issue as whether Rosetta Stone had shown it was entitled to summary judgment based on undisputed facts when, in fact, Google had the burden to show that the undisputed facts favored its defense; and (2) that the decision relied on another court case decided, significantly, after a full trial on the merits, and thus that reliance was inappropriate for the summary judgment stage. Summary judgment must be based on undisputed material facts, not a weighing after trial of the disputed evidence.

As to trademark dilution, the court of appeals ruled that the district court's decision also erred in two respects. First, the district court held that Google's use of the trademark was a fair use that did not point to Google's goods/services. The court of appeals, however, ruled that the analysis was incomplete for failing to assess Google's good faith in using the trademark; an analysis of good faith being required for any finding of fair use. Second, the district court's decision held that the fame of the trademark Rosetta Stone had actually increased and therefore the plaintiff was not damaged. The court of appeals, however, faulted that analysis as inappropriately relying on another court decision that was focused on a defendant's parody of the plaintiff's trademark. Further, the lower court incorrectly focused on the wrong time period of 2009 when Google changed its advertising practices. Specifically, Google's advertising practices began in 2004 and thus Rosetta Stone had to prove its trademark was famous at that time. The facts as to this fame in 2004 were disputed rendering summary judgment inappropriate. As this case goes forward to trial, this required showing of fame in 2004 may prove to be a higher hurdle for Rosetta Stone.

Returning to the issue of direct infringement, one aspect of the district court's decision had generated much commentary and speculation. As an alternative basis for finding no direct infringement, the lower court ruled that Google made a "functional" use of the plaintiff's trademark. The issue of functionality has long been associated with analyzing the validity of the plaintiff's trademark, not the nature of any defense to infringement by the defendant. It was unclear whether a new doctrine of functionality would arise from the lower court decision. The court of appeals held to the traditional doctrine of functionality and rejected the district court's deviation in theory. While a new theory of functionality has been squelched by this appeal, it is believed this case will continue to generate interest and controversy since Google's advertising practices at issue are very much the lifeblood of the company's revenue and an integral part of the interface between the public and its access to the Internet.

Second Circuit Affirms Standard for "Red Flag" Knowledge of Infringement, But Opens Door for YouTube's Copyright Liability



In a case that required the court to "clarify the contours of the "safe harbor" provision of the Digital Millennium Copyright Act (DMCA)," the U.S. Court of Appeals for the Second Circuit on April 5, 2012, continued a line of cases that place the burden on content owners to alert service providers to specific infringements residing on the service providers' systems.

This case pertains to approximately 79,000 audiovisual clips that appeared on YouTube between 2005 and 2008, e.g., Premier League (soccer), Family Guy, South Park, MTV Cribs, Reno 911 and Chappell Show.

The U.S. District Court for the Southern District of New York previously held that YouTube was entitled to the DMCA's safe harbor in §512(c), which covers user-generated content. This is only available if the service provider:

(i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing ["actual knowledge"];

(ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent ["red flag knowledge"]; or

(iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to the material.

The Second Circuit affirmed the District Court's holding that "actual knowledge" and "aware[ness] of facts or circumstances" that would disqualify an online service provider from the safe harbor refers to "knowledge of specific and identifiable infringements."

In so holding, the Second Circuit was persuaded by the language of (iii). "The nature of the removal obligation itself contemplates knowledge or awareness of specific infringing material, because expeditious removal is only possible if the service provider knows which items to remove."

Plaintiffs urged the court to adopt the contrary proposition that the red flag provision requires less specificity than the actual knowledge provision. Plaintiffs argued that requiring awareness of specific infringements in order to establish awareness of facts or circumstances from which infringing activity is apparent renders the red flag provision superfluous, because that provision would be satisfied only when the actual knowledge provision is also satisfied. The court was not moved by this argument, stating that, "[t]he difference between actual and red flag knowledge is thus not between specific and generalized knowledge, but instead between a subjective and an objective standard."

Regardless of the Second Circuit's reasoning, the result is that actual knowledge and red flag knowledge are satisfied only when the service provider has knowledge of specific and identifiable infringements. This is generally consistent with other recent cases construing the same statutory provision. See, e.g., Capitol Records, Inc. v. MP3tunes, LLC, __ F.Supp. 2d __, 2011 WL 5104616, at *14 (S.D.N.Y. Oct. 25, 2011). Even if a defendant is not only generally aware of, but welcomes, copyright infringing material to be placed on its website, it is entitled to the DMCA safe harbor so long is it does not have knowledge of specific and identifiable infringements.

Although the Second Circuit agreed with the District Court's construction of the safe harbor, it disagreed with the District Court's application, reversing an award of summary judgment in YouTube's favor on claims of direct and secondary copyright infringement. According to the Second Circuit, "a reasonable jury could find that YouTube had actual knowledge or awareness of specific infringing activity on its site." Among the evidence that the Second Circuit used in reversing summary judgment were indications that YouTube's founder Jawed Kim was aware of specific clips that he perceived to be "blatantly illegal."

Although its affirmation of the standard for red flag knowledge of infringement was arguably the most significant portion of the decision, the Second Circuit instructed the District Court to consider whether the defendants made a deliberate effort to avoid guilty knowledge ("willful blindness") on remand. Further, the Second Circuit held that the District Court erred in importing a specific knowledge requirement into the control and benefit portion of the safe harbor, which states that an eligible service provider must, "not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity." 17 U.S.C. § 512(c)(1)(B). Finally, the Second Circuit reversed the District Court's holding that all of YouTube's software functions fell within the safe harbor for infringements that occur "by reason of" user storage, remanding for further fact finding to determine whether YouTube's transcoding of certain videos into a format compatible with mobile devices and licensing thereof were activities not at the "direction of a user."

Notwithstanding the Second Circuit's "clarifications", questions linger with respect to the outer reaches of the safe harbor provision, especially with respect to its relationship with inducement liability. These reaches may be explored in cases involving sites such as Grooveshark, which has been accused of failing to properly compensate artists, while unfairly exploiting loopholes in copyright law.

In the short term, however, this decision may embolden business models built on infringing content. Under the Second Circuit's construction of the safe harbor provision, websites are required to take down infringing content only when they have knowledge of specific and identifiable infringements-general awareness is not enough. Until the content owner sends a notice of claimed infringement under the DMCA, the website need do nothing to remove the infringement and instead may continue to reap the benefits that the infringing content provides: increased user base and advertising revenue. Further, even after the infringing content is removed, another user can post the infringing content again without liability to the website. These businesses even use their leverage to negotiate with content owners for one-sided licensing arrangements.

A new US Commerce Department Report Shows that Intellectual Property-Intensive Industries Contribute $5 Trillion and 40 Million Jobs to US Economy



On April 15 the U.S. Commerce Department released a report, entitled "Intellectual Property and the U.S. Economy: Industries in Focus," which finds that intellectual property (IP)-intensive industries support at least 40 million jobs and contribute more than $5 trillion dollars to U.S. gross domestic product (GDP) - - that's 38.4% of the GDP.

Commerce Secretary John Bryson said: "This first of its kind report shows that IP-intensive industries have a direct and significant impact on our nation's economy and the creation of American jobs, . . . When Americans know that their ideas will be protected, they have greater incentive to pursue advances and technologies that help keep us competitive, and our businesses have the confidence they need to hire more workers."

The report identifies 75 industries that use patent, copyright, or trademark protections most extensively. These "IP-intensive industries" are the source - directly or indirectly - of 40 million jobs - - more than a quarter of all the jobs in this country. The most IP-intensive industries include: Computer and peripheral equipment, audio and video equipment manufacturing, newspaper and book publishers, Pharmaceutical and medicines, Semiconductor and other electronic components, and Medical equipment.

The report shows that wages for jobs in IP-intensive industries are higher than average and continue to increase.

The report's findings include:

  • IP-intensive industries contributed $5.06 trillion to the U.S. economy or 34.8 percent of GDP in 2010.
  • 40 million jobs, or 27.7 percent of all jobs, were directly or indirectly attributable to the most IP-intensive industries in 2010.
  • Between 2010 and 2011, there was a 1.6 percent increase in direct employment in IP-intensive industries.
  • Merchandise exports of IP-intensive industries totaled $775 billion in 2010, accounting for 60.7 percent of total U.S. merchandise exports.

"Every job in some way, produces, supplies, consumes, or relies on innovation, creativity, and commercial distinctiveness," said Under Secretary of Commerce for Intellectual Property and USPTO Director David Kappos. "America needs to continue investing in a high quality and appropriately balanced intellectual property system that will promote innovative, open, and competitive markets while helping to ensure that the U.S. private sector remains America's innovation engine."

Patents, trademarks, and copyrights are the principal means for establishing ownership rights to inventions and ideas, and provide a legal foundation by which intangible ideas and creations generate tangible benefits to businesses and employees. IP protection affects commerce throughout the economy, including by: providing incentives to invent and create; protecting innovators from unauthorized copying; facilitating specialization in technology markets; creating a platform for financial investments in innovation; supporting startup liquidity and growth through mergers, acquisitions, and IPOs; making licensing-based technology business models possible; and, enabling a more efficient market for technology transfer and trading in technology and ideas.



Further PTO Notices of Proposed Rulemaking to Implement America Invents Act (AIA) Patent Reform Law


The following discussion relates to further proposed rule and practice changes published for public comment, and set to take effect on September 16, 2012. These are proposed rules on items different from the ones we commented on in our last newsletter several weeks ago. Again, it is expected that there will be significant public comment on these proposals, which likely will mean more changes before they take effect. However, it does give a good idea of US Patent & Trademark Office (USPTO) thinking on the new laws and many of these proposed changes or similar ones likely will be implemented.

1) Inter Partes Review (IPR) Proceedings

a) In General - The rules for IPR proceedings permit a party other than the patent owner to file a petition to institute an inter partes review (IPR) of the patentability of one or more claims of a patent under 35 USC §102 or 35 USC §103 in view of one or more patents or printed publications. The petition must be filed by the later of nine months after the date of the issuance of the patent or, if a post-grant review was instituted, the termination date of the post-grant review. Petitioner will not have standing if (i) the petitioner already filed a civil action challenging the patent's validity, (ii) the petitioner filed for IPR more than a year after being served with a complaint alleging infringement or (iii) the petitioner is estopped from challenging validity (e.g., because of losing a prior IPR). The proposed rules include a statement that the pendency of the review proceeding should normally be no more than one year.

b) Effective Date - Starting September 16, 2012, IPRs can be filed on any patent in force at that time. One proposed rule gives the USPTO Director the authority to impose a limit on the number of IPRs during the first four years after this date (although USPTO says it does not expect to limit the number at this time).

c) Procedure - Petitioner files a petition (along with the requisite fee and service of filing notice on the patentee) setting forth the standing to file the petition and stating the precise relief requested for each claim challenged. The statement must indentify the claim, indentify the statutory grounds (35 USC §102 or 35 USC §103), indentify the patents or printed publications relied on, provide an explanation of how the claim is to be construed and provide an explanation of how the construed claim is not patentable. Within two months of receiving notice that a petition filing date is granted, the patent owner may file a Preliminary Response setting forth reasons why IPR should not be instituted. No testimonial evidence or amendments are permitted. The patent owner may also file a statutory disclaimer on one or more claims of the patent. If the petition supports a reasonable likelihood that at least one challenged claim is not patentable, the Patent Trial and Appeal Board (the Board) will institute the review proceeding. The patent owner can file a response to the grant of petition (default time is two months from initiation of the review proceeding). The patent owner may, after conferring with the Board, file one motion to amend the claims. Additional motions to amend the claims will require authorization from the Board. The review will be conducted according to the new Board rules.

d) Fees - The proposed fee for an IPR request is quite high and will depend on the number of claims for which review is sought. For example, the fee will be $27,200 for 20 or fewer claims and $34,000 for 21 to 30 claims. The fee increases with each increment of 10 claims.

2) Post Grant Review (PGR) Proceedings

a) In General -- The rules for PGR proceedings permit a party other than the patent owner to file a petition to institute a post grant review (PGR) of the patentability of one or more patent claims for any reason (not limited to prior art issues). The petition must be completed and filed by nine months after the date of the issuance of the patent. Petitioner will not have standing if (i) the petitioner already filed a civil action challenging the patent's validity or (ii) the petitioner is estopped from challenging validity due to some prior action. The proposed rules include a statement that the pendency of the review proceeding should normally be no more than one year.

b) Effective Date - The new rules are effective September 16, 2012, but PGR is only applicable to patents falling under the new "First Inventor to File" provisions of the America Invents Act (AIA). Thus, it is only applicable to patents issued on applications with effective filing dates on or after March 16, 2013.

c) Procedure - The petition must provide a statement of the precise relief requested for each claim challenged. The statement must identify the claim, the specific statutory grounds on which the claim is challenged, how the challenged claim is to be construed and how the construed claim is not patentable under the statutory grounds raised. When the challenge is based on prior art, the petition must specify where each element of the claim is found in the prior art. When the challenge is based on statutory grounds other than prior art, the petition must identify the specific part of the claim that fails to comply with these statutory grounds and state how the identified subject matter fails to comply. It further must contain a statement setting forth, in separately numbered sentences, material facts with specific citations to supporting evidence. When a petition is incomplete, the USPTO will dismiss the request if the deficiency is not corrected within the earlier of one month after the USPTO's notice of deficiencies or the nine-month statutory deadline.

The patent owner may file a preliminary response to the petition. The proposed rules limit (i) the time period (two months from official notice), (ii) the scope and (iii) the length of the preliminary response. The response can include evidence but no new testimonial evidence can be presented. At this stage, no amendments can be presented but the patent owner can disclaim one or more claims.

The Board may proceed with review of all or some of the challenged claims on all or some of the grounds asserted if it determines it is more likely than not (from the initial filings) that a claim is not patentable. Or the Board may deny review on any or all claims or grounds.

If review is granted, the patent owner may file one motion to amend the claims under 35 USC §326(d)(1) in a way that is responsive to the grounds of challenge, but must confer with the Board first. Further motions to amend require a demonstration of good cause and Board authorization. The petitioner may file supplemental information relevant to any ground for which the trial has been instituted, with filing to be within one month of the date the review is granted. The review will be conducted according to the new Board rules.

d) Fees - The proposed fee for a PGR request is quite high and will depend on the number of claims for which review is sought. For example, the fee will be $35,800 for 20 claims or less. The fee increases for each increment of 10 claims.

3) Derivation Proceedings

a) In General -- The proceeding relates to determining whether one who is first to file is actually a true inventor, i.e., that they did not derive the invention from another.

b) Effective Date - Derivation proceedings are only applicable to patents/applications falling under the new "First Inventor to File" provisions of the AIA. Thus, it is only applicable to applications (or patents therefrom) with effective filing dates on or after March 16, 2013.

c) Procedure - Inventors petitioning for a derivation proceeding against a patent or application must file or have on file their own application with at least one claim to the same or substantially the same invention. The petition must be filed within one year of the the other application's first publication Such first publication may be the US published application or the PCT WO publication designating the US patent. Monitoring the claims of US and WO publications is thus warranted where derivation may be of concern. The petition must specify the basis for finding that a named inventor in the earlier application derived the claimed invention from an inventor named in the petitioner's application and that the named inventor, without authorization, filed the earlier application.

A derivation showing is not sufficient unless it is supported by substantial evidence, including at least one affidavit addressing the communication of the derived invention to another and lack of authorization that, if not rebutted, supports improper derivation. The showing of communication must be corroborated. For this reason, it may be important to keep corroborated notes demonstrating communications of an invention to others. The petitioner must also make a showing of claim construction and why the claims are not patentably distinct.

When a petition is incomplete, the USPTO will dismiss the request if the deficiency is not corrected within one month of the PTO's notice of deficiencies, or if the one-year statutory deadline has already expired. If the initial petition is granted, the derivation proceeding will be conducted according to the new Board rules.

d) Fees - The proposed fee for a petition to institute the derivation proceeding is $400.

4) Business Method Patents Review

a) In General -- The proposed rules relate to separate procedures for post-grant review of certain "covered business method patents." Such patents may be challenged on grounds of failing to comply with 35 U.S.C. § 101, 35 U.S.C. § 112 (except best mode), 35 U.S.C. § 102 or 35 U.S.C. § 103. A covered business method patent is: "a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of financial products or services, except that the term does not include patents for technological inventions." The "technological invention" exception pertains to patents reciting a technological feature that is novel and unobvious and solves a technical problem using a technical solution. Petitioners for review must have been sued for or charged with infringement of the patent.

b) Effective Date - September 16, 2012 on any qualifying patent in force on that date.

c) Procedure - The petition must identify each claim that is challenged, the grounds for the challenge, a proposed claim construction of the challenged claims and specific evidence supporting the grounds for stating that the claim is not patentable. The USPTO will decide whether to institute a trial within three months after the earlier of: (i) the submission of a patent owner preliminary response, (ii) the patent owner's waiver of a filing a preliminary response or (iii) the expiration of the time period for filing a patent owner preliminary response. Discovery will not be allowed except with a showing of good cause. Parties may choose to enter alternative dispute resolution rather than proceed to trial.

d) Fees - The USPTO fees will be determined by the number of claims being reviewed. For example, 0-20 claims will cost $35,800, with added fees per every additional 10 claims.

5) Fees

The new law provided the USPTO with more authority to set its fees without Congressional involvement. As a result, the USPTO is proposing significant changes to the fees and the relationship between them. The proposals, as a whole, would significantly raise most fees. A major exception is a significant lowering of the issue fee. The USPTO goal is to arrange the fees so that applicants have an incentive to conduct compact prosecution with limited claims, thus reducing pendency. The proposed structure would also give the USPTO more money up front to hire more examiners and reduce pendency. According to the example provided by the USPTO, if applicants have a compact application and prosecute without delay, the cost from filing through issuance will actually be slightly lower than it is now. However, maintenance fees are significantly increased. In general, costs will increase under the proposal.

6) Patent Trial and Appeal Board Rules

The USPTO has also provided proposed rules on procedural details for proceedings of the newly named Patent Trial and Appeal Board, referred to as the Board throughout this publication. These rules are quite detailed and primarily relate to the new trial proceedings (IPR, PGR and derivation) discussed above. If you want further information regarding these details, please contact us.

Recent PTO Notices of Proposed Rulemaking to Implement AIA Patent Reform Law


Except for the Prioritized Examination provisions which are already final rules, the below discussion relates to proposed rule and practice changes to take effect on September 16, 2012. It is expected that there will be much comment on these proposals and likely to be changes made. However, it does give a good idea of the USPTO's thinking on the new laws and likely many of these proposed changes or similar ones will be implemented.

1) Inventor Declaration Requirements, Assignments and Powers of Attorney

a) Filing by Assignee (not really) — Despite that the change to the law seemed very clear to allow the assignee to file as applicant (see new statute 35 U.S.C. 118 below), the proposed changes to the rules do not effectively allow that. The proposal still requires that the inventors provide a declaration except in limited circumstances. The assignee or one who the inventors are obligated to assign can only sign the declaration on behalf of an inventor in those situations where the inventor is deceased, incapacitated, cannot be reached or refuses to sign. So, it does at least avoid the need to have a legal representative or heir sign for a deceased or incapacitated person.

35 U.S.C. 118 Filing by other than inventor. A person to whom the inventor has assigned or is under an obligation to assign the invention may make an application for patent. A person who otherwise shows sufficient proprietary interest in the matter may make an application for patent on behalf of and as agent for the inventor on proof of the pertinent facts and a showing that such action is appropriate to preserve the rights of the parties. If the Director grants a patent on an application filed under this section by a person other than the inventor, the patent shall be granted to the real party in interest and upon such notice to the inventor as the Director considers to be sufficient.

b) Later Filing of Declaration — Another disappointment: Despite being given the authority to do so under the law, the PTO proposal does not allow later submission of the declaration, i.e., anytime before allowance. The PTO alleges that this would delay pendency and thus proposes to essentially keep the current system on timing of the oath/declaration.

c) Combined Declaration/Assignment instead of Combined Declaration/POA — The proposals do not require but push applicants to move away from filing a Combined Declaration/POA (Power of Attorney) and instead to file a Combined Declaration/Assignment by the inventors and a separate POA from the assignee to the practitioner(s). As the notice explains, this is the more logical course. In most cases, the practitioner(s)' client is the assignee, not the inventors directly. Having a POA directly from the inventors to the practitioner(s) thus could lead to confusion. The proposals will allow the inventors to sign a combined Declaration/Assignment (and will provide a form therefore). This is advantageous since there is only one paper needed to be signed by the inventors.

d) Declaration Requirements — Indication of citizenship no longer required and no longer required to state that they are the "first" inventor.

e) Declarations for CIP Applications — Will now be treated like other continuing applications, i.e., if the inventors are the same, then you can use the declaration from the parent application.

f) Reissue Declarations — Remove requirement to state that all errors arose without deceptive intent. Remove requirement for a supplemental declaration each time that claims are amended. Require applicants to specifically state whether the claim is broadened by an amendment and clarify that if a claim is broadened in any aspect (even if narrowed in others) than it is considered a broadening reissue.

g) Power of Attorney — Several minor changes proposed.

h) Priority Claims — Harmonize procedure regarding priority claims to parent applications, US provisional and foreign applications by requiring that all such claims be listed in an ADS (not need to state in first sentence of the specification).

i) Correction of Inventorship in National phase applications — Conform to same as regular applications, i.e., can correct merely by having correct inventors in first submission of declaration.

j) Application Data Sheets — For several reasons, every application (including continuing ones) should now have an ADS. Any ADS not submitted with the filing of the application should be called a Supplemental ADS and must have attorney/agent signature. PTO urges use of EFS-Web fillable form rather than scanned ADS to ensure data gets in correctly. Clarify that providing a Customer Number on the ADS does not result in Power of Attorney only for correspondence address.

2) Pre-issuance Submissions by Third Parties

a) Effective Date — Submissions can be made starting on Sept. 16, 2012, for any application filed before, on or after that date (but see timing requirements below).

b) Timing — It must be made before the later of (i) six months after the date the application is published (USPTO's patent publication) or (ii) the date of mailing of the first office action rejecting any claim (i.e., can be after Restriction/Election requirement). Also, it must be before a Notice of Allowance is mailed. No extension or waiver is possible; if the timing is not met the submission will be discarded.

c) What can be submitted — Only publications, i.e., patents, published applications and other printed publications. Copy must be provided unless it is US patent or US published application. English-language translation required. Submission made with listing like IDS form.

d) Concise Explanation Required — The concise explanation required will separately explain why each document is submitted and why each is relevant to examination. It is suggested that it point to specific page and line numbers of the relevant portions of each document. A claim chart format is also considered useful. The PTO says it should not be lengthy but gives no limitation on size. The submitter must also state that the submission complies with the all of the statutory requirements. Also the submitter must state that they are not a person with a duty disclose under 37 C.F.R. 1.56 for the application in question (i.e., they are not associated with the applicant).

e) Fees — $180 Fee for each 10 documents or fraction thereof submitted (i.e., 11 docs would be $360). But fee exempted for first submission by that third party (or those in privity with it) which are 3 or less documents.

f) Processing — PTO will first review compliance of submission before it is entered in the official image file wrapper (IFW). There will not be a separate notice to the applicant other than the IFW entry. The submission will be considered by the examiner and copy (including explanation) provided with the next Office action.

g) Anonymity — There is no need to indicate the real party in interest making the submission.

3) Supplemental Examination

a) In General — Allows patent owner to have the Office consider, reconsider or correct information relevant to the patent. Items for consideration are not limited to patents or printed publications and not limited in terms of what issues they are directed to. There is a limit to 10 items per request (but can make multiple requests). Must provide detailed explanation of each issue and how each item pertains to the issue (PTO comments provide much detail on this requirement and that it should be quite comprehensive). Claim amendments or amendments to benefit claims are not appropriate (if amendments needed, a reissue should be considered). Rules specifically exclude third party comments or participation.

b) Timing — Starting Sept. 16, 2012, can be filed on any patent in force at that time.

c) Procedure -- Within three months of the filing of a complete request the PTO will issue a Supplemental Examination Certificate indicating whether or not the request raises one or more substantial new questions of patentability. If it does, the certificate will indicate that ex parte reexamination has been ordered; which patentee has to pay for (see amount proposed for fees!). For such reexamination, no Patent Owner statement is allowed and any item submitted can be used, contrary to normal reexaminations which are limited to patents or publications. Also, the PTO will consider if material fraud (indicated to be more limited in scope than mere inequitable conduct, as established by Therasense) was committed and take appropriate action.

d) Fees -- $5,180 for Supplemental Examination request. $16,116 for reexamination ordered as a result of such request, which is refundable if it is then decided not to institute the reexamination. Thus, such a request could result in $21,000+ just in Government fees.

e) Enforceability Effect — With limited exceptions, a patent shall not be held unenforceable on the basis of that information not being considered, being improperly considered or being incorrect if such information was provided in the Supplemental Examination, i.e., is a means to cleanse possible inequitable conduct issues.

4) Fees for Reexamination

Proposed New or Changed Fees —
 
Ex parte Reexamination $17,750 (all but $4320 refunded if refused)
 
Most Petitions in Reexamination $1930

5) Prioritized Examination (effective Sept. 26, 2011), including by RCE (effective Dec. 19, 2011)

a) Initial Rules - The initial rules effective Sept. 26, 2011, allowed for prioritized examination when making such a request with the filing of a new application (including a continuing application). Such application has to have or be amended to have no more than 4 independent claims, no more than 30 total claims and no multiple dependent claims. The application must be complete, with all parts, upon filing and must be electronically filed. The request for prioritized examination has to be filed concurrently with the application. The fee is $4800. Such applications will be placed on the examiner's special docket and examined out of turn with the goal being to reach final disposition (i.e., Final Rejection, Allowance, Notice of Appeal, RCE or Abandonment) within 12 months of filing. If applicant amends the application so claims are no longer in compliance or a request for extension of time is made, the prioritized status will be removed and no refund given. A limit of 10,000 such application per year was imposed. Originally, US National stage applications through PCT were not allowed into the program.

b) Expansion of Prioritized Examination — Effective Dec. 19, 2011, can also file for prioritized examination in US National phase applications. And can now also file for prioritized examination when making an RCE request or even after an RCE request, if done before the first Office action after the RCE. Such RCE/prioritized requests only allowed once per application. Otherwise, requirements are the same.

d) Evaluation of Program so far — As of January 4, 2012, there were 1,835 requests for prioritized examination (855 in FY 2011 and 980 in FY 2012), so it does not look like the 10,000 limit is an issue. Of those 1,835 applications, 659 have had first Office actions and 29 have reached final disposition with 24 of those being allowed.

What You Need to Know About the Changes to US Patent Law

What You Need to Know About the Changes to US Patent Law By now, you have no doubt been bombarded by numerous notifications that the United States has passed a sweeping new patent law which changes many aspects of practice in the U.S. We suspect that, as you have read these notifications, you have asked yourselves the questions "how does this affect what I do daily," and "what do I need to know now"?

In the weeks since the new law has passed, we at MWZB have been studying the new statute with the goal of providing to you a concise explanation of what we think you need to know about the changes, providing some insights that might not be apparent from the initial read and indicating how the changes may affect your practice and our practice.

Two important things you should know are: 1) the most significant changes in the new law are not immediately effective (see noted effective dates); and, 2) the USPTO will have to pass many new rules in the coming months to provide the necessary structure to implement many of the changes. The USPTO Director has indicated that there will be about 10 notices of rulemaking coming out in the next 6 months on rules to implement the statute. Of course, we will keep you informed of these new rules. Further, the USPTO has encouraged comment on implementing the law. If you have any comments you would like us to provide, please let us know. The USPTO has established a specific webpage (AIA microsite) dedicated to the implementation of the new law, which will provide additional information on these rules as they are written: http://www.uspto.gov/aia_implementation/

We hope you find our summary to be readable and useful. Of course, we stand ready to answer any further questions you may have, or to provide more detailed explanation of any areas you desire.

Most Significant Provisions
Section 3 of AIA: First Inventor to File

EFFECTIVE DATE: March 16, 2013, i.e., applies to a claimed invention having an effective filing date on or after this date.

After many years of resistance, the US has finally gone to a first to file system with regards to applications having an effective filing date after March 13, 2011. For purposes of the new law, the effective filing date of an application will be the earlier of (a) the actual filing date of the application, or (b) the earliest filing date the application is entitled to under §119, §365(a), §365(b) (Paris Convention, US Provisional, PCT), or (c) the earliest filing date the application is entitled to under §120, §121, §365(c) (prior US Application, PCT).

Under the new 35 U.S.C. §102, prior art is defined as disclosures (patents, printed publications, in public use, on sale, or otherwise being publically available) before the effective filing date of the invention, without restriction on location, or (like the previous 102(e)) in a US patent (by another) or published US application (by another) having an "effective filing date" before the effective filing date of the inventor(s)' application. Regarding the latter, the common ownership exception will remain.

The new law also eliminates the so-called Hilmer doctrine. Thus, a US patent or published US application that is entitled to claim priority of a foreign or international patent application, pursuant to §119 or §365 (Paris Convention, PCT), will have a prior art date as of the filing date of the foreign or international patent application.

There is still a grace period under the law with respect to disclosures by the inventor(s). Disclosures made by the inventor or joint inventor (or others who obtained the subject matter from the inventor or joint inventor) within 1 year or less of the effective filing date will not constitute prior art. Notably, if the inventor or joint inventor (or others who obtained the subject matter from the inventor or joint inventor) makes such a disclosure within the 1 year period, a subsequent disclosure of the subject matter, even by another, before the effective filing date will not constitute prior art. The disclosure acts, in effect, like a priority date in the sense that references (even those by others) having dates between your disclosure date and your filing date (if within a year) cannot be used against you.

There are exceptions related to disclosures derived from others. While interferences will eventually be eliminated, they still will be around for some time since pending applications filed before the effective date can still go into interference. Also, the USPTO will set up a new proceeding to make determinations where there are disputes about the derivation of the invention.

Section 4 of AIA: Inventor's oath or declaration

EFFECTIVE DATE: September 16, 2012, i.e., applying to applications filed on or after that date.

Amendments are made to simplify allowing the assignee or person to whom there is an obligation to assign to file the application and to have the patent issued in the name of the assignee rather than the inventor. Also, there are technical amendments to the requirements for the oath/declaration which will require changes in the forms that are used. These mostly simplify the procedures for obtaining signatures (e.g., allowing the oath or declaration to be included in the assignment document, and thus not requiring separate signatures; eliminating the need for stating the citizenship of the inventors, and for apostille procedures for signatures executed in foreign countries). Also, the time for filing the oath/declaration has been moved to prior to issuance of a notice of allowance.

Section 5 of AIA: Defense to infringement based on prior commercial use.

EFFECTIVE DATE: On Enactment, September 16, 2011.

The prior commercial use defense to infringement is no longer limited to business method patents. The commercial use has to occur in the US more than 1 year prior to the earlier of the effective filing date of the application or public disclosure. The scope of "commercial use" is very broad, including premarketing regulatory review and work in a non-profit research lab. The defense is not transferable to another and does not protect an expansion of the extent of prior use. Further, the defense cannot be used against a university. This may change the strategy regarding an invention which is difficult to reverse engineer, i.e., whether to patent it or attempt to maintain it as a trade secret.

Section 6 of AIA: Post-Grant Review

EFFECTIVE DATE: September 16, 2012, i.e., applies to any patent issued before, on, or after the effective date, by which date the Director will issue regulations to conduct the post-grant review procedure.

A petition for post-grant review can be filed by any person, other than the patentee, not later than the date that is 9 months after the date of grant. In the post-grant review, the petitioner can request that one or more claims be canceled as unpatentable under any basis, i.e., under 35 U.S.C. §§101, 102 or 103 (not limited to patents/publications), 112, etc.. The patentee will have the opportunity to respond. The standard for the USPTO to initiate the review is raised from the previous reexamination standard which merely needed to "raise a substantial new question of patentability." The post-grant review procedure will be conducted by the newly formed Patent Trial and Appeal Board (in contrast to existing re-examination done by the Examining Corps). The procedure allows for some discovery, such as expert declarations and deposition of experts. The law requires completion of the review process within one year of the time the request for review is granted (but with a possible 6 month extension). Post-grant review has severe estoppel effects against the petitioner, both within the Patent Office and in civil actions. This includes estoppel for issues that could have been raised, which means estoppel against almost all issues because almost any issue can be raised in post-grant review. Based on comments by the USPTO Director, it is expected that the fees for the new post-grant and inter-partes review procedures may be quite high.

Section 7 of AIA: Inter Partes Review

EFFECTIVE DATE: September 16, 2012, i.e., applies to any patent issued before, on, or after the effective date, by which date the Director will issue regulations to conduct the post-grant review procedure.

A petition for inter-partes review can be filed by any person, other than the patentee. The petition shall be filed by the latter of: (a) 9 months after the grant of the patent, or (b) if a post-grant review was initiated (by anyone), the date of the termination of the post-grant review. In the inter-partes review, validity may be challenged only under 35 U.S.C. §§102 or 103, and only on the basis of patents or printed publications. The patentee will have the opportunity to respond. As with the post-grant review, the standard for initiating review is whether it is more likely than not that at least one claim is unpatentable and the review will be conducted by the Patent Trial and Appeal Board. Once the review is initiated, the standard for a challenger to prevail is that it is "more likely than not that at least one claim is unpatentable." This contrasts to the standard in litigation for a challenger to provide clear and convincing evidence of invalidity. The procedure allows for some discovery, such as expert declarations and deposition of experts. The law requires completion of the review process within one year of the time the request for review is granted (but with a possible 6 month extension). The inter-partes review process will carry with it estoppel effects against the petitioner, both within the Patent Office and in civil actions. While the estoppel applies to issues that could have been raised, it is more limited than the estoppel for post-grant review because the issues that can be raised are more limited.

Section 8 of AIA: Pre-Issuance Submissions

EFFECTIVE DATE: September 16, 2012

Any third party may now submit for consideration in an application any issued patent, published application, or any other printed document of relevance (e.g., from Court proceedings). Submission must be before allowance, and before the later of (i) the first office action or (ii) 6 months from publication. In a change from previous law, it allows for (even requires) that the submission include a concise description of the relevance of the document. The submission need not identify real party in interest, so it can be submitted through another party to maintain anonymity.

Section 12 of AIA: Supplemental Examination

EFFECTIVE DATE: September 16, 2012, i.e., applies to all patents issued before, on or after that date.

A patent holder can apply to the USPTO to "consider, reconsider or correct information believed to be relevant" to an issued patent. The specific requirements for entering Supplemental Examination (such as content of the Request and filing deadline) have not yet been established.

Within three months of filing a Request for Supplemental Examination, the USPTO will examine the Request and issue a certificate that the information disclosed therein does or does not raise "a substantial new question of patentability." If it does, then the "Director" will order a Reexamination of the patent (although the patentee will not be allowed to file a statement under Section 304).

The procedure provides a mechanism for patentees to correct deficiencies that might otherwise provide a basis for allegations of inequitable conduct. The procedure specifically provides that the patent shall not be held unenforceable with respect to information considered, reconsidered or corrected during a Supplemental Examination. Also, the law states that the mere filing of a Request for Supplemental Examination shall not be relevant to enforceability.

The new law does impose certain limitations on the filing of a Request for Supplemental Examination. For example, the Request can not be filed based on allegations pled with particularity in a civil proceedings before the filing of the Request.

Some commentators have noted that motivation for this provision was largely vitiated by the holding in Therasense, Inc. v. Becton, Dickenson & Co. (Fed. Cir. 2011). Commentators also have noted that the open ended subject matter of reexamination proceedings ordered pursuant to Supplemental Examination makes the procedure an avenue to ex parte reexamination to resolve issues pertaining to, for instance potential "on sale" or "public use" bars under 35 USC 102 or enablement, written description, best mode and definiteness issues under 35 USC 112, among others.

Section 15 of AIA: Best Mode

EFFECTIVE DATE: On enactment, September 16, 2011.

Eliminates the "best mode" requirement, under 35 U.S.C. §112, first paragraph, as a defense under Section 282 of the Patent Act. The best mode requirement can no longer be a basis to cancel, invalidate or render unenforceable any claim. Likewise, eliminates the best mode requirement from the Patent Act in (a) Section 119(e)(1), which in turn incorporates a provisional application under Section 111(b) and an international application under Section 363, and (b) in Section 120 for claiming priority of an earlier-filed application. The Act does not eliminate the specific best mode requirement from 35 U.S.C. §112, but appears to limit the effect of that requirement in various Sections of Title 35. The effect of its retention in 35 U.S.C. §112 is not clear and will require monitoring. However, the USPTO Director has indicated that they do not expect to stress enforcement of the best mode by examiners either.

Section 11 of AIA: Certain Fee Provisions

Penalty for Not Filing Applications Electronically: Effective Nov. 15, 2011, a $400 penalty additional fee for applications not filed electronically via EFS (we file all applications via EFS).

15% Fee Increase: As indicated in our previous notice, effective Sept. 26, 2011, most patent fees increased by 15%.

Prioritized Examination: Effective Sept. 26, 2011, a $4,800 additional fee (i.e., in addition to the normal filing fees) can be paid for an application to prioritize examination of the application so it is fast-tracked for examination within a one year period (on average). Until the USPTO sets any further restrictions/requirements for such requests, such applications must have or be amended to have no more than 4 independent claims and 30 total claims. Further, the USPTO is limited to allowing 10,000 such applications per fiscal year; thus, it is possible this ability may run out towards the end of a fiscal year. The AIA microsite has a page showing the current number of prioritized filings: (http://www.uspto.gov/aia_implementation/patents.jsp#heading-5).

Section 10 of AIA: USPTO Granted Fee Setting Authority

EFFECTIVE DATE: On Enactment, September 16, 2011.

PTO given authority to set patent and trademark fees (making it easier for USPTO to adjust fees, when needed) but fees can be set "only to recover the aggregate estimated costs to the Office for processing, activities, services, and materials relating to patents (in the case of patent fees) and trademarks (in the case of trademark fees)." A review panel and procedure including public comment will be created to review new fees or fee changes. It is expected that the USPTO will use these fees to hire thousands of new examiners and to greatly expand the new Patent Trial and Appeal Board to handle the new post-grant review procedures and lower pendency.

New "micro entity" status made in addition to small entity status. The fee reduction is 75% for micro entity and (as before) 50% for small entity. Effective date for smaller payment under micro entity status is not clear because USPTO has to use their authority first to actually set this fee. The USPTO Director has indicated this may not come into effect until Sept. 16, 2012. A micro entity must qualify as a small entity and additionally not include inventor(s) who: 1) are named inventors on 5 or more other patent applications, 2) have an income over a certain level (about $150k); or 3) have assigned the application to a company with income over that level. Alternatively, can qualify as micro entity if all inventors have the majority of their income from a certified institute of higher learning (university) or the application is assigned to such a university.

Section 17 of AIA: Advice of Counsel

EFFECTIVE DATE: On enactment, September 16, 2011.

The statute now provides that failure to obtain or produce a non-infringement opinion can not be used to prove willful infringement. This is intended to eliminate the need to waive attorney client privileged communications (and the threat of expansion of the waiver to other communications) in defending against allegations of willful infringement.

Section 20 of AIA: Technical Amendments

EFFECTIVE DATE: September 16, 2012

Makes a number of grammatical, technical, and conforming amendments to title 35. Takes effect one year after enactment of AIA. Perhaps most significantly, these amendments remove the "without deceptive intent" language from sections 116 & 256 (correcting inventorship), 184-185 (foreign filing licenses), 251 (reissues), 253 (disclaimers) and 288 (suit for infringement); thus, apparently considering whether there was deceptive intent is not an issue when taking these actions.

Other Provisions
Section 9 of AIA: Venue

EFFECTIVE DATE: November 16, 2012 Venue for District Court actions appealing disciplinary matters, USPTO Board of Appeals decisions, USPTO Board of Interferences decisions, and PTA determinations shifted from the District Court for the District of Columbia to the District Court for the Eastern District of Virginia.

Section 14 of AIA: Tax Strategy Patents Nullified

EFFECTIVE DATE: On enactment, September 16, 2011.

Effectively nullifies any patent directed to a tax strategy for reducing, avoiding or deferring a tax liability whether under any Federal, State, local or foreign law. This section, applies to any pending application or any patent issued on or thereafter. Such inventions will be assumed to be within the prior art. This section does not include an invention directed solely to preparing a tax or information return or solely to financial management to the extent it is severable from a tax strategy.

Section 16 of AIA: Patent Marking and Qui Tam actions

EFFECTIVE DATE: On enactment, September 16, 2011.

Eliminates "qui tam" provision of the patent marking requirement (which allowed private individuals who assist in a prosecution to receive all or part of any penalty imposed). This is in response to the surge in lawsuits (over 130) brought by plaintiffs who were not harmed in any way. The statute is changed so that only the US or "a person who has suffered a competitive injury" has standing for a false marking claim. Further amended to provide flexibility in marking a patented article, i.e., allowing the product to be marked with a web address where the patents which cover the product are identified. Also, a section has been added to exclude from "false marking" violations those instances where a product is marked and covered with an expired patent.

Section 18 of AIA: Transitional Program for Business Method Patents

EFFECTIVE DATE: At least by September 16, 2012, once the USPTO provides rules for such proceedings. The program terminates 8 years after it starts.

Being referred to by some as the Banking Bailout provision, section 18 establishes a transitional post-grant review proceeding for patents directed to business method patents for financial products or services. The proceeding can apply to patents issued prior to AIA enactment. But the proceeding can only be used by a defendant who is actually sued or charged with infringement of the business method patent.

Section 19 of AIA: Jurisdication and Procedure

EFFECTIVE DATE: On enactment, September 16, 2011

The CAFC has jurisdiction over appeals involving compulsory patent counterclaims. This section also limits joinder of accused infringers, for example, accused infringers may not be joined based solely on allegations they each infringed the patent.

Section 22 of AIA: USPTO Funding

EFFECTIVE DATE: On enactment, September 16, 2011

Makes the USPTO budget subject to the annual appropriations process and ensures that any excess fees collected are retained for USPTO use in a reserve fund at the U.S. Treasury. USPTO will keep all of the revenue it raises while still allowing Congressional appropriators to maintain oversight of the agency. Furthermore, authorizes the USPTO Director to adjust fees when needed but such authority would sunset after seven years.

Sections 23 & 24 of AIA: Satellite Offices

Requires the Director to establish three or more satellite offices within three years, including one in Detroit, Michigan.

Section 25 of AIA: Priority examination for important technologies

USPTO given authority to prioritize examination of applications for products, processes, or technologies that are important to the national economy or national competitiveness without recovering the aggregate extra cost of providing such prioritization, notwithstanding any other provision of law.

Section 28 of AIA: Patent Ombudsman Program for Small Entities

PTO will set up ombudsman staff to provide support and services relating to patent filings by small business concerns and independent inventors.

Sections 26-27 & 29-34 of AIA: USPTO Studies

The statute mandates that the USPTO conduct or, in some cases, jointly conduct with others a number of studies related to patents, for example: regarding the impact of gene patents on genetic diagnostic test activity, diversity of patent applicants, patent protection internationally for small businesses, misconduct before the USPTO, pro bono activity, and the economic effect of patent litigation by non-practicing entities (patent trolls).

Federal Circuit Court Issues Decision Changing Standard for Duty of Disclosure and Requirements for a Finding of Inequitable Conduct; USPTO Proposes Rule Change to Implement Decision


By Harry Shubin


Articulating a new "but for" materiality standard in Therasense, Inc. v. Becton, Dickinson & Co., the Federal Circuit has said that its decision should reduce the overuse of the defense of inequitable conduct in litigation (which the court termed the "atomic bomb" of patent law), and reduce the strain on PTO resources from submission of huge volumes of material in order to comply with the former standard. The standard previously employed by the court was a combination of the PTO's rule requiring evidence inconsistent with a position an applicant takes in prosecution and that of other, prior court decisions requiring submission of material a "reasonable examiner" would find "important." The new standard as defined by the court finds information to be material (and thus required to be submitted) "if the PTO would not have allowed a claim had it been aware of the undisclosed prior art." For a finding of inequitable conduct, the court stated that a district court "must determine" whether the claim at issue would have been granted if the PTO was aware of the reference, using the preponderance of the evidence burden and giving the claims their "broadest reasonable construction," as would have occurred during ex parte prosecution. The Court further sets forth an exception to these principles in cases of "affirmative egregious conduct", i.e., intentional withholding of a reference in order to obtain a patent.

Moreover, with respect to a finding of inequitable conduct, the Court held that an accused infringer "must prove that the patentee acted with the specific intent to deceive the PTO," Specifically, a finding of negligence, gross negligence, or the application of a "should have known" standard "does not satisfy this intent requirement," according to the court. Rather, there must be clear and convincing evidence that an applicant "made a deliberate decision to withhold a known material reference," (emphasis in the opinion). According to the Court, "the accused infringer must prove by clear and convincing evidence that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it."

Subsequent to the Therasense decision, the PTO has proposed new rules for how it will apply the Court's newly articulated standard of materiality. With a stated goal of reducing "the incentive to submit information disclosure statements containing marginally relevant information and enabling applicants to be more forthcoming and helpful to the Office", the Office has proposed modifications to "Rule 56" (37 C.F.R. §1.56) to reflect the "but for" standard of materiality, while also recognizing that affirmative, egregious misconduct" will still result in a violation of the duty of disclosure. Specifically, the proposed rule defines information as material to patentability (and thus must be cited) if:

  • (1) The Office would not allow a claim if it were aware of the information, applying the preponderance of the evidence standard and giving the claim its broadest reasonable construction; or

  • (2) The applicant engages in affirmative egregious misconduct before the Office as to the information.

At the present time, it is not known whether the Federal Circuit's decision in Therasense will be appealed, nor whether the U.S. Supreme Court will hear such an appeal. The PTO, in its proposed rule, indicates that if an appeal is taken up by the Supreme Court, the Office will consider delay of any final rule until the Supreme Court has issued a decision.

Since the proposed rule is not yet in effect, the current standard of materiality remains in effect under PTO rules, if not in the courts. As a result, we do not at the present time advise any changes in current practices respecting gathering of information for compliance with the duty of disclosure.

Applications to be Accepted for New Internet Top-Level Domain Names


By Adam Mandell


On June 20, the Internet Corporation for Assigned Names and Numbers (ICANN) approved the launch of new generic top-level domain names (gTLDs). Examples of currently available gTLDs are .com, .net, and .org. New gTLDs could include brand-type extensions (e.g., .coke). Potentially limitless extensions present new opportunities for trademark infringement and consumer confusion and jeopardize the security and stability of the domain-name system. Applications for new gTLDs will be accepted from January 12, 2012 to April 12, 2012.

What concerns should your business have about the introduction of new gTLDs as a trademark owner? What are some best practices that your business should implement to protect itself with the introduction of new gTLDs?

History of New gTLDs

ICANN has posted a series of drafts of its Applicant Guidebook. The Guidebook is a comprehensive guide for applicants of new gTLDs describing the program's requirements and evaluation process. On May 30, ICANN posted its latest version of the Guidebook. This version of the Guidebook has not yet been approved.

Concerns for Trademark Owners

There are currently 21 gTLDs (sunrise registration for the newest gTLD, .xxx, will launch in September 2011). Internet activity is dominated by a small number of registries: .com has more than 95 million registered domains while .net has roughly14 million. Conversely, .museum has less than 500 registrations.

The addition of new gTLDs may harm consumer welfare by creating confusion among consumers and imposing costs on trademark holders by necessitating inefficient "defensive" registration of domain names on new gTLDs. Further, new gTLDs will create new opportunities for others to infringe, phish, and engage in other deceptive practices. Monitoring for abuse will now have to be extended to a much wider universe. As a result, brand owners and consumers will be net losers.

Trademark owners already have to register the actual trademark, alternative spellings, misspellings and other variations (e.g., dashes), all in different generic and country-code TLDs. The potential for unlimited new extensions means these defensive efforts will multiply.

Should Your Business Apply for a New gTLD?

Buying a new gTLD will be expensive. Notable costs include an initial evaluation fee of $185,000 and annual fees of $25,000 with long-term contracts. Other potential costs include legal fees for potential challenges and complying with business, operational, and technical requirements. Further, new gTLDs will have limited benefits, particularly in the short run. We live in a .com world, where your business's consumers are trained to navigate the tried and true existing top-level domain names. New gTLDs are slow to catch on. Consider these questions:

  • Does your business own any domain names outside of .com, .net, or .org? If so, were they acquired for marketing purposes or as defensive registrations?
  • Are your consumers ready to locate your business by using the extension .trademark?
To take full advantage of a brand-type gTLD, your business may have to undertake significant training and education efforts. As the internet-using public becomes more comfortable with new gTLDs, brand-type gTLDs will become feasible for businesses, but this may take years.

Best Practices for Businesses

It is not too early to develop your business's top- and second-level domain-name strategy. Timing of applications for, or opposition against, new gTLDs will be critical.

Top-Level Domain Names

ICANN will post portions of applications within two weeks of the close of the application submission period. This will begin a comment period, allowing time for the community to review and submit comments on posted application materials. Comments received within a 60-day period from the posting of the application materials will be available to the ICANN evaluation panels performing the initial review.

The objection filing period will begin after ICANN posts the list of complete applications and will last for approximately seven months. Dispute-resolution proceedings are expected to be completed for all applications within a five-month timeframe.

Dispute-resolution filing fees are expected to range from $1,000 to $5,000 per party per proceeding, depending on the dispute-resolution services provider. However, this does not include the costs of the proceeding which are estimated by ICANN to be as high as $122,000 or more.

Second-Level Domain Names

Your business should participate in the rights-protection mechanisms expected to be available under the new gTLD program.

  1. Submit your trademark to the Trademark Clearinghouse. This is a central repository that authenticates and validates trademarks and serves as a database to provide information to new gTLD registries. One submission is sufficient to cover all new gTLDs. New gTLD operators are required to give registrants notice of your rights and alert you when someone else registers a domain name using your trademark.
  2. Participate in sunrise registration periods. A sunrise is an exclusive registration period prior to general registration when trademark owners may register desired second-level domains within new gTLDs, thereby preventing cybersquatters from registering the domains. Taking advantage of this prelaunch protection measure would be particularly useful in relevant gTLDs, e.g., sony.music. Submission to the Trademarks Clearinghouse is a prerequisite to participating in sunrise registration periods.
  3. If you learn of an infringing second-level domain name, consider filing a proceeding under the Uniform Rapid Suspension System (URS), intended to be a quicker and cheaper alternative to the Uniform Domain Name Dispute Resolution Policy (UDRP) currently available for existing gTLDs. The URS would be limited to situations involving a clearly abusive domain-name registration, and the sole remedy is suspension of the domain name.
The introduction of new gTLDs has the potential to drastically change the internet in negative ways. The time is now for your business to consider how these new gTLDs will help or harm it.

Supreme Court Upholds Purpose of Bayh-Dole Act in Stanford v. Roche


By Al Branigan


The Bayh-Dole Act (1980) was intended to give government contractors incentive to commercialize government-funded inventions by permitting the contractor to retain title, so long as the contractor paid for the patents and the government got a paid-up license (with march-in rights if the contractor ceased commercialization). An issue in Stanford v. Roche was whether the contractor still had to obtain patent rights from the inventor or whether Bayh-Dole gave patent rights directly to the contractor.

"In the article "Assignment of Inventions and the Bayh-Dole Statute," we reported that the U.S. Court of Appeals for the Federal Circuit (CAFC) held that an inventor's prior assignment of an invention acted to deprive a government contractor of title to an invention where the inventor had merely "agreed to assign" to the government contractor, but, before fulfilling that agreement, actually assigned to another.

In a seven to two decision, the U.S. Supreme Court upheld the principle that original rights to an invention belong to the inventor and the Bayh-Dole Act did not change that.

As outlined in the case, Holodniy, one of four inventors, was working with both Stanford University and Cetus (later purchased by Roche). Holodniy was a Stanford University employee whose employment agreement required him to assign inventions to Stanford (at some future date). When Holodniy began to work with, but not for, Cetus, he actually assigned his patent rights to Cetus (now Roche) about six years before he belatedly, but ineffectually, attempted to assign the same rights to Stanford.

The result was that Stanford University, pursuant to Bayh-Dole, owned the rights from only three of the inventors. Because of Holodniy's prior assignment, Roche owned Holodniy's patent rights. Hence, the patent had split ownership between Stanford and Roche. Black-letter law says both had to be joined in any suit to enforce the patents in order for either to have standing. Roche, not interested in suing itself, deprived Stanford of standing. That was the bottom-line holding of the Federal Circuit Court.

The U.S. Supreme Court rejected Stanford's argument that mere employment is sufficient to vest title to an employee's invention in the employer.

Chief Justice Roberts, writing for the majority wrote: "The Bayh-Dole Act does not confer title to federally funded inventions on contractors or authorize contractors unilaterally to take title to those inventions; it simply assures contractors that they may keep title to whatever it is they already have."

The basic purpose of Bayh-Dole is being fulfilled because the invention is still being commercialized. The government is still immune from suit because Stanford cannot join Roche in a suit against the government, which has a royalty-free license from Stanford; Stanford and Roche can still join to sue any other infringers. The purpose of Bayh-Dole was not defeated, as Stanford argued and as seminar promoters suggest.

Supreme Court Adopts Willful Blindness Standard for Inducement to Infringe Patents in Global-Tech Appliances, Inc. v. SEB, S.A.


By Mike Culver


In 1952, the U.S. Patent Act, relying on case law, recognized the statutory forms of infringement known as inducement and contributory infringement under Sections 271(b) and 271(c), respectively. In 1964, the U.S. Supreme Court, in a "badly fractured decision" applying § 271(c), determined that an infringer must know that its product when used would infringe a patent. In 1999, SEB, holder of a patent for a cool-touch deep fryer for home use, initiated an infringement action against various U.S. retailers and Global-Tech Appliances, a Hong Kong-based manufacturer held to infringe. The May 31, 2011 decision of the U.S. Supreme Court (the Court) held Global-Tech liable under § 271(b) for inducing the retailers to infringe SEB's patent.

Section 271(b) states, "Whoever actively induces infringement of a patent shall be liable as an infringer." The Court found this statement to be "short, simple, and ... inconclusive" as to the knowledge of the inducer; that is, did the inducer sell a product that just happened to infringe, or did the inducer know that its product infringed a patent? The Court in Global-Tech referred to case law spanning over a century and determined that it was split and inconclusive on this issue. This same issue of the defendant's knowledge with respect to contributory infringement under § 271(c) had lead to the fractured decision that vexed the Court in 1964, but that decision had not been overruled and thus stood as a guidepost pointing towards a similar result for § 271(b).

The Court held "that induced infringement under § 271(b) requires knowledge that the induced acts constitute patent infringement" and further that the doctrine of willful blindness may be applied to determine the inducer's requisite knowledge. The Court borrowed the doctrine of willful blindness from criminal law. Patent law, unlike trademark and copyright law, has no provisions for criminal violations. Per the Court, willful blindness has two basic requirements: "(1) the defendant must subjectively believe that there is a high probability that a fact exists and (2) the defendant must take deliberate actions to avoid learning of that fact."

Global-Tech's case came to the Court after the Federal Circuit had affirmed a finding of inducement, but did so by adopting a standard of "deliberate indifference" to satisfy the element of Global-Tech's knowledge. It was undisputed that Global-Tech did not have actual knowledge of the patent until April 1998 after one of its U.S. customers was sued by SEB. The Court rejected "deliberate indifference" as an appropriate standard: "First, it permits a finding of knowledge when there is merely a 'known risk' that the induced acts are infringing. Second, in demanding only 'deliberate indifference' to that risk, the Federal Circuit's test does not require active efforts by an inducer to avoid knowing about the infringing nature of the activities."

Nevertheless, the Court affirmed the lower judgment by applying the standard of willful blindness to the facts. Here, the Court was essentially acting as a super jury, since the original trial jury was never instructed as to the newly adopted standard of willful blindness. The Court used the same facts as the Federal Circuit had examined to find deliberate indifference, but those facts now satisfied the higher standard of willful blindness.

SEB's product, the deep fryer, was an innovative commercial success, and Global-Tech obtained the fryer in Hong Kong and copied all but the cosmetic features. SEB's overseas product lacked any marking of a U.S. patent, but Global-Tech knew it was producing its copy for U.S. consumption. After copying, Global-Tech obtained a favorable right-to-use opinion from a U.S. patent attorney, but did not inform the attorney of the copying. The attorney's search failed to disclose SEB's patent. Global-Tech's president, Kwong Ho Sham, held 29 U.S. patents.

One additional fact noted by the Federal Circuit was that Global-Tech had worked before with SEB to make a patented product. The Court concluded: "On the facts of this case, we cannot fathom what motive Sham could have for withholding this information [from the attorney] other than to manufacture a claim of plausible deniability in the event that his company was later accused of patent infringement."

What is the takeaway here? One obvious point is not to withhold information from your patent attorney when seeking an opinion. The adoption of willful blindness should have immediate application to contributory infringement under § 271(c). More broadly, there has been frequent cross fertilization among patent, trademark, and copyright cases in the area of contributory infringement, so willful blindness may grow outside of the patent field, particularly since contributory infringement is not, unlike patent law, part of the statutes for trademarks and copyrights. Willful blindness may perhaps have application to other areas of patent law wherein knowledge is a requisite element; for example, the areas of inequitable conduct and joint infringement, but the backdrop for those areas is not the same as the long history that preceded recognition and development of inducement. Finally, for those patent litigators with a Sherlock Holmes flair, this decision opens the door to investigating criminal law, well cited by the Court, for analogous cases in trying to frame in that defendant who induces others to infringe.

The Court's decision may have other ramifications in criminal law. The decision was eight to one with Justice Kennedy dissenting that it was inappropriate to mix the concepts of knowledge from criminal law into civil law. Justice Kennedy noted that the Court "received no briefing or argument from the criminal defense bar, which might have provided important counsel on this difficult issue."

After this decision, judges, attorneys, and commentators may engage in hair-splitting arguments on the different states of mind at hand. For the most part, those differences are resolved, as a practical matter, by the American jury system: the so-called "black box" of decision making that is a hallmark of American jurisprudence. The jury will now receive a correct instruction to look for "willful blindness" and its two above-noted requirements. Armed with little more than that instruction, and the facts at hand, the jury can now make a correct determination as to liability for inducing infringement.

U.S. Government Budget Cuts Cause Cutbacks at USPTO


By John Sopp


While the U.S. government avoided a shutdown over federal budget cuts, the budget agreement has had a negative effect on funding that the United States Patent and Trademark Office (USPTO) receives. Although the USPTO could cover all the funding it requires through the fees it charges, its fees go first to the central government which then decides how much the USPTO actually receives. The central government does not return to the USPTO the full amount of the fees collected. The patent community has unsuccessfully battled for years to change this process. As a result of the budget deal, the USPTO will receive even less. In response, the USPTO has announced the following cutbacks:

  • "Track One" of the "Three-Track" program introduced in February 2011, intended to offer expedited patent examination for a fee and scheduled to take effect on May 4, 2011 is postponed;
  • The opening of a planned satellite office in Detroit, as well as consideration of other possible satellite office locations, is postponed;
  • Hiring, both for new positions and backfills, is frozen;
  • IT projects will be scaled back;
  • Funding for Patent Cooperation Treaty (PCT) outsourcing (mainly for searches) will be substantially reduced;
  • Employee training will be reduced; and
  • All overtime is suspended.

The overall outcome of these changes will be to increase pendency of U.S. patent applications. Searches for PCT applications filed with the United States as searching authority may be particularly slowed. Of course, the central government's budget negotiations continue and this situation may change as a result.

Developing Caselaw on Requirement for Claims Having to be Performed by a Single Party


By Csaba Henter


A claim directed to an electronic method of communication between healthcare providers and patients involving personalized web pages for doctors and their patients was at issue in McKesson Technologies Inc. v. Epic Systems Corp. The method requires that the users-in this case the patients-initiate communication by requesting information. The alleged infringer, on the theory of induced infringement, was the software-development company, which licensed the software to healthcare providers who in turn offered it to their patients.

For there to be induced infringement, there first must be direct infringement, which is present only when each step of a claimed method is performed by a single party or when one party exercises control or direction over the entire process such that every step is attributable to the controlling party. Such control or direction has been held to exist only when there is an agency relationship between the parties that perform the method steps or when one party is contractually obligated to the other to perform the steps. In view of precedent in this area, even providing instructions to perform a single step out of a method to another party to complete a patented method is not adequate for incurring liability for direct infringement of the method. In the present case, there could not be direct infringement because one of the method steps was attributed to patients, who are not agents of the healthcare provider and are not contractually obligated to perform the one method step.

Of the three-judge panel, one strongly dissented and another concurred in the correctness of the decision only in light of recent precedent, but noted that the correctness of those precedent rulings may warrant review by the en banc court when the appropriate case arises.

In a later development, the Federal Circuit announced it will rehear en banc Akamai Technologies, Inc. v. Limelight Networks, Inc., where the decision was based on the reasoning that joint infringement of a patent requires an agency relationship or contractual obligation. The parties were asked to file new briefs addressing the following issue: "If separate entities each perform separate steps of a method claim, under what circumstances would that claim be directly infringed and to what extent would each of the parties be liable?"

For now it remains important to pursue claims that can be performed by a single party to avoid a situation where a claim for all practical reasons cannot be infringed. In this particular case, a better approach would have been to have the claim require that the doctor receive an initiated communication, or, if possible, to completely eliminate this method step.

New gTLD Applicant Guidebook Discussion Draft Released, Open for Public Comment


By Adam Mandell


On April 15, 2011, the Internet Corporation for Assigned Names and Numbers (ICANN) posted its latest version of the guidebook for applicants for new generic top-level domain names (gTLDs)-new extensions that could include brand (".deloitte"), community (".arab"), generic (".bike") or geography (".melbourne"). The Guidebook is a comprehensive guide for applicants describing the program's requirements and evaluation process. Public comment on the latest draft of the Guidebook is open until May 15, 2011.

According to ICANN, changes incorporated into this version of the Guidebook are intended to address concerns with the new gTLD program raised by the Governmental Advisory Committee (GAC) in consultation with the ICANN Board of Directors. GAC provides advice to ICANN on issues of public policy and its participants include representatives of national governments.

In addition to the Guidebook, ICANN published six explanatory memoranda on various relevant issues identified as part of Board/GAC consultations, including a memorandum on trademark protections. This memorandum highlights the following enhancements in trademark protection:

  • A requirement for gTLD registries to implement sunrise services and trademark claims services, rather than offering a choice of one or the other. A "sunrise" is an exclusive registration period prior to general registration when trademark owners may register desired second-level domains within new gTLDs, thereby preventing cybersquatters from registering the domains. "Trademark claims services" provide notice to trademark owners when someone else registers a second-level domain name using the trademark.
  • Maintaining a requirement for a demonstration of a registration based on use to participate in prelaunch sunrise mechanisms (see above), Uniform Rapid Suspension System (a low-cost and rapid means for taking down infringing domain name registrations), and Post-Delegation Dispute Resolution Procedure (disputes between the trademark holder and the gTLD operator). According to the Board, requiring use is a pro-trademark approach. For example, it would prevent a third party from obtaining a trademark registration, without showing use, for the purpose of registering a second-level domain name during the sunrise period.

As of publication, there have been few comments on the latest version of the Guidebook and no comments on the aforementioned enhancements in trademark protection. ICANN plans to post a final version of the Guidebook on May 30, 2011, in time for consideration of the new gTLD implementation program at a meeting of the ICANN Board of Directors to be held on June 20, 2011, at the ICANN meeting in Singapore. Some estimate that applications for new generic top-level domain names could be accepted as soon as October, 2011. The U.S. House Subcommittee on Intellectual Property, Competition and the Internet will conduct a hearing on new gTLDs on May 4, 2011.

Adding One Dependent Claim Sufficient Grounds for Reissue


By Ryan Pool


Recently, the U.S. Court of Appeals for the Federal Circuit (the CAFC) held that adding dependent claims is valid grounds for receiving a reissue patent in In Re Tanaka, --- F.3d ----, 2011 WL 1437887, 98 U.S.P.Q.2d 1331 (Fed.Cir. Apr 15, 2011) (NO. 2010-1262).

U.S. Patent No. 6,093,991 was issued on July 25, 2000, with one independent claim and six dependent claims (2-7). The patent claims are directed to an alternator pulley that uses a one-way clutch to improve the power-generation efficiency of an automobile's alternator. Tanaka filed a reissue application for U.S. Patent No. 6,093,991, at first seeking to broaden the claims.

During reissue, Tanaka gave up his attempt to broaden the one independent claim and instead presented the original issued claims (1-7) unamended and one new dependent claim. The examiner rejected the claims because the original issued claims remained in the current reissue application unamended and Tanaka's declaration did not specify an error that broadened or narrowed the scope of the original issued claims. Without specifying an error, there was no basis for the reissue application, and therefore the broadest scope of the patent had not changed. The Board of Patent Appeals and Interferences affirmed this decision and interpreted the language of 35 U.S.C. § 251, holding that the statute "disallow[s] reissue applications that simply add narrow claims to the reissue patent when no assertion of inoperativeness or invalidity for the reasons set forth in § 251 can be made by the patentee ... " [See Ex parte Yasuhito Tanaka, 2009 WL 5819322 (Bd.Pat.App. & Interf. Dec 09, 2009) (NO. 6,093,991, APL 2009-000234, APP 10/201,948, TECHLOGY CENTER 2800). The board effectively rejected the application as a no-defect reissue.

At issue before the CAFC is whether merely adding a narrower dependent claim is sufficient grounds for a reissue application under § 251; the relevant section of §251 is as follows:

"Whenever any patent is, through error without any deceptive intention, deemed wholly or partly inoperative or invalid, by reason of a defective specification or drawing, or by reason of the patentee claiming more or less than he had a right to claim in the patent, the Director shall, on the surrender of such patent and the payment of the fee required by law, reissue the patent for the invention disclosed in the original patent, and in accordance with a new and amended application, for the unexpired part of the term of the original patent. No new matter shall be introduced into the application for reissue."

The CAFC reversed the Board's decision, holding that the omission of a narrower claim from a patent can render a patent partly inoperative by failing to protect the disclosed invention to the fullest extent allowed by law. Thus, the addition of narrower dependent claim is, by itself, valid grounds for seeking a reissue application and is not the same as a no-defect reissue. The court explained the reasoning behind its holding, saying:

"This court recognizes that the reissue statute 'was not enacted as a panacea for all patent prosecution problems, nor as a grant to the patentee of a second opportunity to prosecute De novo his original application.' In Re Serenkin, 479 F.3d 1359 at 1362, 81 U.S.P.Q.2d (Fed.Cir. 2007)(quoting In Re Weiler, 790 F.2d 1576, 1582 (Fed. Cir. 1986)). However, the narrow rule relating to the addition of dependent claims as a hedge against possible invalidity has been embraced as a reasonable interpretation of the reissue statute by this court and its predecessor for nearly fifty years without any obvious adverse consequences. To deviate from that longstanding interpretation would be contrary to the doctrine of Stare decisis and is unwarranted." In Re Tanaka, --- F.3d ----, at 11 2011 WL 1437887, 98 U.S.P.Q.2d 1331 (Fed.Cir. Apr 15, 2011) (NO. 2010-1262).

U.S. Patent Office Response to Government Closure


By MWZB


Near midnight on Friday, the U.S. Congress reached agreement on a one-week extension of funding for federal agencies, narrowly averting a shutdown. It is expected that this week a bill funding operations through next September will be put to a vote. There is, however, no guarantee that the bill will pass, although progress seems to have been made on resolving issues that prevented agreement on even a temporary funding measure last week. The PTO has indicated previously that it has sufficient funding from user fees to operate for approximately six business days should a shutdown in fact occur, and so we do not anticipate any disruption in operations in the short term. We continue to monitor the situation and will keep our clients and associates informed.

New Fast-Track Patent Program


By MWZB


Track 1, the fast-track:
The USPTO has set a goal of bringing Track 1 applications to allowance or final rejection in only 12 months which is about 3 times faster than current average patent prosecution time. Track 1 will be available beginning May 4, 2011.

To put an application on Track 1, the applicant must pay a $4,000 fee. This fee is in addition to the standard application fees and any extra claim fees. Track 1 is not limited to any particular technology area or foreign filing status, and does not require the applicant to submit detailed search reports with the filing.

There is currently no reduction in cost for small entities, but the USPTO has sent a proposal to the US Congress asking for approval for such a reduction. If the proposal passes, the Large Entity fee will be $4800 and the Small Entity fee will be $2400.

Only new applications are eligible for Track 1 and the application must be complete at filing, i.e., all parts of the application, fees and inventor declarations must be included at the time of filing. Track 1 is a pilot program and will be limited to the first 10,000 applications in the first year.

Please note that requesting extensions of time when responding to an office action will move the application off of Track 1 and onto Track 2.

Track 2, the standard-track:
Track 2 applications will be exactly the same as the current examination process. Applications that do not include a special request to be placed on Track 1 or Track 3 will be placed on Track 2.

Track 3, the delay-track:
Track 3 is still under consideration and may be modified before its implementation, which is expected to be September 30, 2011.
Track 3, as currently conceived, will allow the applicant to delay examination of the application for up to 30 months. Track 3 will only be available to non-continuing applications first filed with the USPTO.
No additional fees are required to place an application on Track 3; however, all standard fees must be paid at the time of filing along with a special request for the application to be put in Track 3.

If you have any questions or desire implementation of Track 1 in any of your applications to be filed, please do not hesitate to contact us.

The Perils of Appeal: Chippendales Denied Trademark Registration


By Mike Culver


The Chippendales company obtained a trademark registration in 2003 for its “Cuffs & Collar” apparel that had been worn by the male dancers since 1979. Based on huge commercial success, this apparel was deemed to have acquired distinctiveness and thus served as a trademark. But Chippendales applied for a second registration on the basis that the mark was inherently distinctive; that is, the design was so unique that it immediately conveyed to the consumer the unique source of the services; here, exotic dancing for women.

Chippendales submitted an impressive amount of evidence comprising numerous declarations by management, dancers, competitors, and even an expert report (something rarely done apart from survey evidence in a case between contesting parties) to the United States Patent and Trademark Office. The expert, Rachel Shteir, Ph.D. (a professor at DePaul University) discussed the history of striptease and the tuxedo, among other subjects, infused with a sociocultural analysis of the Chippendales phenomenon. Her report contained 12 exhibits, including an article by another author containing this sentence: “The collar and cuffs, like the bunny suit which inspired them, has become a trademark recognized, wherever women take their entertainment seriously, as a symbol of professional and classy sexy fun.”

That fragment was plucked from the hefty record and became the principal reason for the refusal of registration by the Trademark Trial and Appeal Board (TTAB). One proof that a design is not inherently distinctive is that it, or a variation thereof, is in common use.

Chippendales appealed the refusal to the U.S. Court of Appeals for the Federal Circuit who affirmed using the same test. In re Chippendales USA, Inc., No. 09-1370 (Fed. Cir. Oct. 1, 2010). The CAFC went further (perhaps realizing the skimpy evidence) and took judicial notice of the registrations issued to Playboy for the also well renowned costume of the Playboy bunny. The TTAB has long refused to take judicial notice of other registrations so this may force a change in TTAB practice.

In its decision refusing registration, the CAFC had to first tackle the question of its jurisdiction over the case; namely, could Chippendales be truly injured if denied a second registration based on inherent distinctiveness when it had an existing registration based on acquired distinctiveness? On appeal, Chippendales and the USPTO had simply agreed to jurisdiction and the issue received little attention. Alas for Chippendales, the CAFC determined that jurisdiction was proper because Chippendales was injured since “whether a particular mark is inherently distinctive may affect the scope of protection accorded in an infringement proceeding.” Ouch! Not only was Chippendales denied the new registration, its prior registration was now damaged goods that may receive a lesser scope of protection. Short of the copycat, every potential imitator now had a sentence from the appellate court from which to argue noninfringement.

At the TTAB, the evidence of the pre-existing Playboy bunny costume was scant. At oral argument, the TTAB unsuccessfully attempted to have Chippendales concede that the bunny costume included cuffs and a collar. On appeal, the CAFC reached out through judicial notice to bolster the record. You can judge for yourself if a just result was achieved here; the costumes of the Chippendales and the Playboy bunny are depicted below.

Proposed Modifications to Rules Governing Appeals Before the Board of Patent Appeals and Interferences Would Bring New Challenges to Appellants


By Harry Shubin


On November 15, 2010, the United States Patent and Trademark Office (USPTO) issued a Notice of Proposed Rule Making and request for comments, proposing modifications to the rules governing appeals before the Board of Patent Appeals and Interferences in Ex Parte Appeals. The proposed rules would rescind the stayed final appeals rules originally issued on June 10, 2008, slated to take effect later that year on December 10, but stayed indefinitely in a notice issued on that date.

The presently proposed rules appear to be an attempt to simplify the current rules, principally as regards the requirements for a compliant appeal brief. Although the proposed rules do eliminate some of the problematic sections currently required in an appeal brief, these rules do impose new and equally complex requirements upon appellants. For example, while the proposed rules eliminate the absolute requirement to identify the "real party in interest," appellants must still do so otherwise the office will assume that the named inventors are the real party in interest.

Similarly, while the proposed rules eliminate the requirement for an identification of related appeals and interferences, failing to list such related proceedings raises the default assumption that none exist. Thus, appellants will still have to review these issues to ensure accuracy, if not compliance. Where these sections are omitted, under the proposed rules, no Notice of Noncompliance will be issued but the above assumptions will apply. Neither the consequences of a failure to accurately provide this information, nor any ability of the appellant to rebut the resulting assumptions, are spelled out in the rules.

Moreover, while the proposed rules eliminate the necessity to provide a listing of the status of the claims, appellants must now provide a "statement of last entered amendment" identifying, by date of filing, the last entered amendment to the claims. If no amendment is identified, the office will assume that there are no amendments to the claims. As above, the assumption replacing the Notice of Non-Compliant Brief formerly received has unstated consequences if, in fact, the claims have been amended. Appellants would be well advised to pay particular attention to this portion of the rule, should it be adopted in this form, at least until it becomes known whether the assumption is rebuttable.

Perhaps most troubling in the proposed rule change is the modification of the requirement for a Summary of Claimed Subject Matter, with that of an "annotated copy of each rejected independent claim." The proposed rules state that the annotations would appear "after each limitation in dispute by Appellant and include a reference to the specification in the record showing support for the claimed language sufficient to allow the Board to understand the claim." Unfortunately, the proposed rule does not further define when a limitation is "in dispute", i.e., whether this term is intended to be broad enough to cover any claimed feature asserted to provide patentability, or merely the limitation whose scope is the subject of disagreement between the PTO and the appellant. Moreover, this requirement does not provide further explanation of how much support is "sufficient to allow the Board to understand the claim."

One positive aspect to the proposed rule is that it substantially broadens the situations which will be considered as a new ground of rejection, thus providing appellants opportunity to reopen prosecution. The rules state that any citation for the first time of a new reference, even if "cited to support the rejection in a minor capacity," will be designated as a new ground of rejection. Moreover, a "position or rationale new to the proceedings, even if based on evidence previously of record" may be sufficient to give rise to a new ground of rejection. The discussion of the proposed rules in the Federal Register indicates that changing the statutory basis of rejection, for example, from §103 to §102, would give rise to a new ground of rejection, as would reliance on a different portion of a reference of record beyond that previously relied on.

Comments on the proposed new rules are due on January 14, 2011.

U.S. Supreme Court Splits on Application of Copyright Act's First Sale Doctrine to Gray-Market Goods, Ninth Circuit's Decision In Favor of Copyright Owners Upheld


By Adam Mandell


On December 13, 2010, an equally divided U.S. Supreme Court upheld the Ninth Circuit's decision in Omega S.A. v. Costco Wholesale Corporation, without an opinion. The 4 to 4 split was caused by the recusal of Justice Kagan, who submitted a brief regarding the case on behalf of the government while serving as Solicitor General.

This case regards the application of the first sale doctrine to “gray-market” goods. Gray-market goods are genuine products protected by a trademark or copyright. They are typically manufactured abroad and purchased and imported into the United States by third parties, thereby bypassing the authorized U.S.-distribution channels. Retailers are able to sell these products at a discount because the gray market arbitrages international discrepancies in manufacturers' pricing systems.

In this case, Omega manufactured abroad watches displaying copyrighted logos and sold them to authorized distributors overseas. Through a series of middlemen, Costco purchased the watches and sold them to consumers in California at a significant discount relative to Omega's suggested retail prices. Although Omega authorized the initial foreign sale of the watches, it did not authorize their importation into the United States or the sales made by Costco. Omega sued Costco for infringement of Omega's exclusive distribution right under U.S. copyright law.

Costco's defense was based on the first sale doctrine, which generally provides that once a copyright owner consents to the sale of particular copies of his work, he may not thereafter exercise the distribution right with respect to those copies.

At issue in this case is the effect of the Supreme Court's unanimous decision in Quality King Distributors, Inc. v. L'anza Research International, Inc., 523 U.S. 135 (1998). In that case, a product with a U.S.-copyrighted label was manufactured inside the United States, exported to unidentified parties overseas, shipped back to the United States without the copyright owner's permission, and then sold in California by unauthorized retailers (a “round trip” importation). The Supreme Court determined that the first sale doctrine provided a defense to the seller.

Unlike Quality King, the manufacture in Omega v. Costco occurred abroad. It is because of this difference that the U.S. Court of Appeals for the Ninth Circuit refused to apply the first sale doctrine, while maintaining its position that, “the [Copyright] Act presumptively does not apply to conduct that occurs abroad even when that conduct produces harmful effects within the United States.”

The application of the first sale doctrine to “one-way” importation will have broad implications in international trade. For example, Costco's supporters, including e-commerce companies such as eBay, argued that limiting the first sale doctrine to works made in the United States might encourage U.S. copyright owners to outsource manufacturing of copies of their works overseas, and would result in higher prices on secondary goods for U.S. consumers. On the other hand, Omega's supporters, including the Intellectual Property Owners Association, argued that extending the first sale defense to an unauthorized importer would encourage copyright owners to only sell their works in countries in which the works could command a relatively high price, so as to avoid undercutting the market for their works elsewhere. This would result in decreased sales of works in countries that would otherwise justify a lower price, such as developing nations. Still others, such as the film and music industries, argued that overruling the Ninth Circuit's decision would diminish the ability to plan and control the timing and manner of release of their works, thereby preventing these industries from realizing the full value of their copyrights in the United States.

The Supreme Court's split decision in Omega v. Costco likely will encourage copyright owners and one-way importers to litigate this matter in the future.

A New Route to Obtaining a Fast Office Action


By Csaba Henter


The United States Patent and Trademark Office (USPTO) is providing a temporary program under which an application will be advanced out of turn for examination, i.e., accorded “special” status, upon the filing of a petition. This temporary program allows applicants having multiple applications co-pending before the USPTO to have greater control over the timing of the examination of their applications. In turn for according special status to an application, the program also provides for the stimulation of a reduction of the backlog of unexamined patent applications pending before the USPTO by requiring applicants to expressly abandon a co-pending application for each application for which a petition is filed for achieving special status. There is no fee for the filing of a petition under this program and the program is available for only the first 10,000 applications.

If an applicant has a relatively important application for which expeditious prosecution would be beneficial, and a relatively unimportant co-pending application that is no longer desired, the USPTO is willing to examine the important application out of turn for the express abandonment of the less important patent application.

The conditions for being accorded special status for examination are as follows:

  1. The application for which special status is sought is a nonprovisional application that has an actual filing date earlier than October 1, 2009.
  2. The applicant has another complete co-pending nonprovisional application that has an actual filing date earlier than October 1, 2009.
  3. The applications under numbers one and two above must be either owned by the same party as of October 1, 2009, or name at least one inventor in common.
  4. The applicant must file a letter of express abandonment for the application under number two above before it has been taken up for examination. The applicant must include the following statements with the letter of express abandonment:
    1. The applicant has not and will not file an application that claims the benefit of the expressly abandoned application;
    2. The applicant agrees not to request a refund of any fees paid in the expressly abandoned application;
    3. A statement that the applicant has not and will not file a new application that claims the same invention claimed in the expressly abandoned application.
  5. The applicant must file a petition for the application under number one above. The petition must:
    1. Identify the expressly abandoned co-pending application as the basis for the petition;
    2. Include copies of the letter of express abandonment and of the statements provided in number four above;
    3. Identify the relationship between the applications that qualifies the application for special status, for example, name of a common inventor or owner;
    4. Identify the application that is being expressly abandoned, for example, by providing its application number;
    5. Provide a statement certifying that applicant has not filed petitions in more than 14 other applications requesting special status under this program;
    6. Provide a statement that applicant agrees to make an election without traverse in a telephonic interview if the office determines that the claims of the application to be made special are directed to two or more independent and distinct inventions.

The predecessor of this program was available only to small entity applicants, but being a small entity is no longer a requirement. The program available to small entities only has provided a more than 70 percent rate of granted petitions.

Biosimilars Regulations Being Developed in Both Europe and the United States


By Diana Hamlet-Cox


The European Medicines Agency (EMA) issued draft guidelines for "similar biological medicinal products containing monoclonal antibodies" on November 26, 2010, requesting public comment by May 31, 2011.

The EMA has been ahead of the FDA on establishing regulations for biosimilars. Last month, the FDA held two days of hearings to get input from the public on the implementing regulations for the Biologics Price Competition and Innovation Act (BPCIA). These hearings related to establishing standards that the FDA will require for clinical testing of biosimilars.

Concerns highlighted at the FDA hearings included how strictly to interpret the 12 year data exclusivity provisions, product naming issues, and how to address product "drift" in post-market products, both for innovator products and their potential biosimilar competitors. The basic issues of what is biosimilar, and the related question of what is interchangeable, remain complex and will not be resolved soon.

Since it is believed that to some extent the United States' biosimilars regulations may be influenced by what the EMA does, interested parties may wish to provide input to the EMA, as well as to the FDA, as these guidelines evolve into governing regulations.

Drug Developers' Statements Not Available as Evidence of Obviousness


By Csaba Henter


The U.S. Court of Appeals for the Federal Circuit (CAFC) in Eli Lilly & Co. v. Teva Pharmaceuticals USA, Inc.(Fed. Cir. 2010) affirmed a permanent injunction against Teva barring manufacture of a generic version of the osteoporosis drug raloxifene until the expiration of certain patents of Lilly.

Throughout the development of the drug, various studies indicated that raloxifene had poor bioavailability. Despite such concerns, Lilly developed the drug for both the indications of breast cancer and postmenopausal osteoporosis. Teva alleged obviousness and lack of enablement among the various points of attacks.

Regarding obviousness, Teva relied on statements by Lilly's Bone Biology Group chairman and on actions of Lilly's scientists in pursuing the development of the drug as evidence that they had to have a reasonable basis for believing that the drug would work in humans, otherwise they would not have proceeded. The CAFC held that the chairman had more knowledge than one of ordinary skill in the art, and that Lilly's scientists had both knowledge and credentials superior to the ordinary artisan, thereby rendering these statements and actions not available as evidence of obviousness. Rather, a person of ordinary skill in the art would have been discouraged from using raloxifene in view of its known low bioavailability, and thereby the patents were not invalid for obviousness.

Regarding enablement, Teva argued that if the concerns about bioavailability did not render the claims obvious, then the disclosures of the patents at issue could not have been enabling because of the prevailing view that raloxifene would not work in humans. The CAFC held, however, that because the patent disclosures provided more information than the prior art, i.e., the results of a further study and the details–albeit no results–of an ongoing human clinical study, the disclosures are enabling. Regarding the description of the details of a human clinical study, reliance was based on the Manual of Patent Examining Procedure (MPEP), which supports that the initiation of a clinical trial has a significant impact on the utility inquiry. The MPEP states that:

Before a drug can enter human clinical trials, the sponsor, often the applicant, must provide a convincing rationale to those especially skilled in the art (e.g., the Food and Drug Administration) that the investigation may be successful. Such a rationale would provide a basis for the sponsor's expectation that the investigation may be successful … Thus, as a general rule, if an applicant has initiated human clinical trials for a therapeutic product or process, Office personnel should presume that the applicant has established that the subject matter of that trial is reasonably predictive of having the asserted therapeutic utility.

Daiichi Sankyo v. Matrix, Mylan


By Diana Hamlet-Cox


In another application of obviousness standards after the Supreme Court's holding in KSR v. Teleflex, and its subsequent interpretation by the U.S. Court of Appeals for the Federal Circuit (CAFC), the CAFC provided additional guidance on obviousness of compounds when structurally similar compounds were known to have more favorable characteristics.

Mylan Laboratories, in collaboration with Matrix ("Mylan"), filed multiple ANDAs with Paragraph IV certifications challenging Daiichi's patent 5,616,599 ('599) covering the chemical compound olmesartan medoxomil, which was approved by FDA and commercialized by Daiichi as the active ingredient in Benicar, Benicar HCT, and Azor. Mylan asserted that the '599 patent was invalid for obviousness over very structurally similar compounds disclosed in 5,137,902 ('902), in view of 5,138,069 ('069). Both the District Court and the CAFC disagreed.

The '902 patent discloses a compound which differs from olmesartan by a single oxygen atom, which changes a lipophilic alkyl group at position four to a hydrophilic hydroxyalkyl group. Mylan argued that the motivation to make the change was provided by '069, which disclosed the lipophilic alkyl group at position four on a related compound.

However, relying on both pre-and post-KSR precedent, the CAFC upheld the District Court's findings that Mylan had not met its burden of proving a prima facie case of obviousness. Mylan did not provide clear and convincing evidence that one skilled in the art would have chosen the structurally closest of the '902 compounds as lead compounds to modify, rather than other compounds disclosed in '902 which had greater potency.

Citing several previous decisions, including Takeda v. Alphapharm (Fed. Cir. 2007), Eli Lilly v. Zenith (Fed. Cir. 2006), and in view of KSR, the CAFC held that "it is the possession of promising useful properties in a lead compound that motivates a chemist to make structurally similar compounds. Yet the attribution of a compound as a lead compound after the fact must avoid hindsight bias; it must look at the state of the art at the time the invention was made to find a motivation to select and then modify a lead compound to arrive at the claimed invention. Ortho-McNeil Pharm v. Mylan (Fed. Cir. 2008). Accordingly, proving a reason to select a compound as a lead compound depends on more than just structural similarity, but also knowledge in the art of the functional properties and limitations of the prior art compounds." (Bold emphasis added; italics in original.)

This holding should provide further support for arguing that a prior art reference requires more than a simple disclosure of a structurally similar compound and a reference disclosing a related compound having the modification at the same location. The primary reference should also disclose that the structurally closest prior art compound is in fact a preferred or lead compound with desirable properties. However, the suggestion to make the change to the claimed compound need not be explicit. In this case, other compounds disclosed in '902 were shown to have better properties, e.g.: "Potent and promising activity in the prior art trumps mere structural relationships." The validity of Daiichi's '599 patent was thus upheld.

Practice tip: When reviewing a reference cited against your claims as demonstrating mere structural obviousness, look beyond the disclosure relating to the structurally closest compounds to see if the reference teaches a preference for different compounds, as that could be argued to teach the skilled worker away from choosing the structurally closest compounds as a lead compound to modify.

USPTO Obviousness Examination Guidelines Updated


By Diana Hamlet-Cox


On September 1, the United States Patent and Trademark Office (USPTO) published 2010 KSR Guidelines Update, an update on the guidelines for examination of patent applications for obviousness under 35 U.S.C. § 103. The guidelines were made available for public comment through mail and email. These guidelines are effective immediately and can be reviewed here.

The 2010 KSR Guidelines Update incorporates additional guidance and interpretation of the Supreme Court's 2007 KSR v. Teleflex decision, including several subsequent Court of Appeals for the Federal Circuit (CAFC) decisions interpreting KSR, for proper obviousness rejections. There is a detailed table at the end of the Guidelines providing "teaching points" based on 24 obviousness cases, detailing the fact patterns that were involved. These teaching points are divided into four types of fact patterns:

  • Combining Prior Art Elements;
  • Substituting One Known Element for Another;
  • The Obvious To Try Rationale;
  • Consideration of Evidence.

Interestingly, about half of the cases reviewed relate to the biotech or chemistry arts. All patent practitioners, including ex-United States counsel preparing applications which will be prosecuted in the United States would be well-served to review the updated Guidelines.

Law Could Provide Protection for Fashion Designs


By Adam Mandell


On August 5, 2010, Democratic Senator Charles Schumer and several notable cosponsors, including four Republicans, introduced a bill to extend intellectual property protection to fashion designs for a three-year term. The bill, "Innovative Design Protection and Piracy Prevention Act", S. 3728, currently applies to articles of clothing, handbags, and eyeglasses frames.

Federal law does not currently protect fashion designs–the design that geographically sets forth the shape, style, cut, and dimensions for converting fabric into a finished dress or other clothing garment. This is distinguished from the design that is imprinted on a fabric, which in the completed dress may appear repeatedly throughout the dress fabric–designs which are copyrightable. The lack of protection for fashion design is due to its status as a "useful article", in that fashion design is an article having an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information.

In support of S. 3728, Republican Senator Orrin Hatch stated, " … [O]riginal designs are copied and the apparel is manufactured in countries with cheap labor …. [t]he garments are then shipped to the U.S. directly to compete with the garments of the original designer, sometimes before the originals have even hit the market. As a result, the U.S. apparel industry continues to lose billions of dollars to counterfeiting each year."

Supporters of the bill believe that, without protection for fashion design, fashion designers are not incentivized to create designs, because copyists will free-ride on their efforts, thereby stifling innovation. Opponents of the bill and commentators point out that, despite the lack of fashion design protection, competition, innovation, and investment are strong in the fashion design industry. They argue that copying does not deter innovation in the fashion industry because such copying is not very harmful to originators. Instead, it actually promotes innovation and benefits originators.

Similar measures have been introduced in Congress in the past, to no avail. In this instance, the existence of bipartisan support leaves its supporters hopeful.

Fashion designers are not without recourse under current law. For example, trademarks used as an indication of source by apparel and accessory firms are often used as a means to stop counterfeiters. Also, in certain limited instances, trade-dress protection is available. Please contact us for further information about how fashion designers can protect themselves both now and after the potential passage of S. 3728.

Federal Circuit Holds Infringement Liability Depends on Location of Sale


By Ryan Pool


In Transocean Offshore Deepwater Drilling, Inc. v. Maersk, the U.S. Court of Appeals for the Federal Circuit (CAFC) held that an offer to sell, deliver, or use a product made by a U.S. company within the United States to another U.S.-based company can constitute infringing conduct, even if the offer is made outside the United States.

The ruling overturned the District Court's decision, which held that, because the negotiations and execution took place outside of the United States, it was not an offer to sell within the United States under the statute.

The relevant statute is 35 U.S.C. 271(a), which contains the following definition of infringing conduct: "[W]hoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States … infringes the patent."

Maersk argued that, for there to be an offer to sell within the United States, the offer activities must occur within the United States. In Maersk, since the negotiations and execution were outside the United States, offer to sell liability was precluded.

The CAFC determined that the focus should not be on the location of the offer, but rather the location of the future sale that would occur pursuant to the offer. This is consistent with the holding in Lightcubes, LLC v. Northern Light Products, Inc., 523 F.3d 1353 (Fed. Cir. 2008), that a foreign company cannot avoid liability for a sale by delivering the product outside the United States to a U.S. customer for importation.

The CAFC addressed Maersk's argument directly stating: "[T]o adopt Maersk USA's position would have us read the statute as 'offers made within the United States to sell' or 'offers made within the United States to sell within the United States.' First, this is not the statutory language. Second, this interpretation would exalt form over substance by allowing a U.S. company to travel abroad to make offers to sell back into the U.S. without any liability for infringement."

Assignment of Inventions and The Bayh-Dole Statute


By Al Branigan


In Stanford University v. Roche, the Court of Appeals for the Federal Circuit (CAFC), held that a plaintiff lacked standing in a case related to the Bayh-Dole Statute, 583 F.3rd 832 (Fed. Cir. 2009).

In about 1963, NASA conducted a study to find that government-owned inventions were not being used much particularly in foreign countries where NASA (and other government agencies) was investing heavily in obtaining and maintaining patents. NASA began to let its foreign patents lapse and tried to get contractors to prepare applications for NASA. This ultimately gave rise to the Bayh-Dole Statute in 1980.

The Bayh-Dole Statute was intended to give contractors incentive to use patented, government-funded inventions by giving title to the contractor as long as the contractor paid for the patents and the government got a paid-up license (with "march-in" rights if the contractor ceased to commercialize).

Stanford University v. Roche is significant because it involved a biotech invention that was partially funded by the government. The invention was believed to have been owned by Stanford University, pursuant to Bayh-Dole, and Stanford sued Roche, who had worked with Stanford to develop the invention.

In reality, however, this case has little to do with the substance of Bayh-Dole. The inventions were being significantly commercialized–otherwise there would not have been the infringement suit.

Rather, the issue of standing was dispositive. The facts of the case are as follows: Holodniy, one of four inventors, was working with both Stanford University and Cetus (later purchased by Roche). Holodniy was a Stanford University employee whose employment agreement required him to assign inventions to Stanford (at some future date). When Holodniy began to work with, but not for, Cetus, he actually assigned his patent rights to Cetus (Roche) about six years before he assigned the same rights to Stanford. It does not appear that Holodniy was being duplicitous. He appears to have simply signed whatever was put in front of him.

The result was that Stanford University, pursuant to Bayh-Dole, owned the rights from three of the inventors and Roche, formerly Cetus, because of the prior assignment owned the rights of Holodniy. The patents had split ownership between Stanford and Roche. Black letter law says both had to be joined in any suit to enforce the patents in order for either to have standing. Roche, not being interested in suing itself, deprived Stanford of standing. That was the bottom-line holding of the CAFC.

As intended by Bayh-Dole, the patents are being commercialized. The government still has its royalty-free license, as Stanford could not join Roche in a suit against the government; and, Stanford and Roche can still join to sue any other infringers. The purpose of Bayh-Dole was not defeated, as seminar promoters suggest.

The lesson is that a contractor should get an actual assignment of future inventions at the time of employment, rather than a promise to assign. Had Stanford done that, it would have had standing. To avoid similar joinder problems, it is also best for the same party always to retain both ownership and the right to sue.

Federal Circuit Holds Mere Knowledge of False Marking Insufficient For Liability


By Al Branigan


In Peguignot v. Solo Cup Company, the Court of Appeals for the Federal Circuit (CAFC) held Solo Cup's knowledge of false marking was insufficient for liability under the false marking statute-intent to deceive is required.

Solo Cup manufactured drink-cup lids covered by two patents. One expired in 1988; the other expired in 2003. To comply with the marking statute (35 U.S.C. § 287) Solo Cup added the patent numbers to lid-mold cavities so that each lid had a suitable patent marking. The molds, however, lasted 15 to 20 years or longer. Hence, Solo Cup's lids were eventually marked with the numbers of expired patents.

In 2000, Solo Cup became aware that lids were still being marked for patents that had expired 12 years earlier.

Outside intellectual property counsel advised Solo Cup that wholesale replacement of mold cavities would be too costly and burdensome and old numbers did not have to be removed when a patent expires. Counsel also advised that liability hinges on "intent to deceive the public" so it is important for Solo Cup not to include any unintentional misleading information on product literature or elsewhere. Upon the advice of its counsel, Solo Cup adopted a policy that new molds would not include expired-patent marking and subsequently stated on its packaging:

"[T]his product may be covered by one or more U.S. or foreign pending or issued patents. For details contact www.solocup.com."

Pequignot sued Solo Cup in the Eastern District of Virginia for falsely marking at least 21,757,893,672 articles, claiming damages of approximately $10.8 trillion.

The "false marking" statute, 35 U.S.C. § 292, provides:

(a) " … [W]hoever marks … in connection with any unpatented article … for the purpose of deceiving the public … shall be fined not more than $500 for every such offense."

(b) " … [A]ny person may sue for the penalty, in which one-half shall go to the person suing and the other to the use of the United States."

In August 2009, Judge Leonie Brinkema entered summary judgment in favor of Solo Cup, finding no intent to deceive and hence no violation of law. Solo Cup's knowledge of its out-of-date markings merely created a rebuttable presumption of intent to deceive. The District Court also granted summary judgment for Solo Cup on the meaning of "offense." The District Court determined that Solo Cup committed at most three "offenses." Two, when it decided not immediately to stop marking each of the lids when their patents expired; and, one when it decided to add the "may be covered" language to its packaging. On this point, the District Court stated that "the marking of … different articles … in the course of single and continuous act" did not constitute multiple "distinct offenses," quoting London v. Dunbar, 179 F.506, 508 (1st Cir. 1910).

The CAFC held that the bar for proving deceptive intent is particularly high:

"Because the patent statute requires that the false marker act "for the purpose of deceiving the public" a purpose of deceit, rather than simply knowledge that a statement is false, is required."

Thus, mere knowledge that a marking is false is not sufficient to prove intent if Solo Cup could prove that it did not consciously desire the result that the public be deceived.

"Solo acted not for the purpose of deceiving the public, but in good faith reliance on the advice of counsel and out of a desire to reduce costs and business disruption … the required intent is not to perform an act, viz, falsely marking a product, but instead intent to deceive the public."

Of significance, the CAFC vacated the District Court's determination of the word, "offense". In Forest Group v. Bon Tool, Co., 590 F.3d 1295, The CAFC held that every falsely marked product constitutes an "offense" under Section 292 of the statute.

In Any Language, a Clear Victory for Google in Keywords Case


By Scott Major


The United States District Court for the Eastern District of Virginia, "the Rocket Docket," issued an order without explanation in April 2010 rejecting various claims brought by Rosetta Stone Ltd., the language-learning software firm, against Google relating to the latter's sale of trademarks as keywords in connection with its AdWords program. On August 3, the court issued its written opinion explaining the decision, and left no doubt that this was a resounding victory for Google.

A highlight is the court's granting of summary judgment in favor of Google on the trademark infringement and unfair competition claims. In order to prevail on such claims, Rosetta Stone needed to establish that Google's auctioning of its trademarks to third-party advertisers as keywords creates a likelihood of confusion among consumers as to the source of the plaintiff's goods and services. The court readily found that no reasonable judge or jury could find a likelihood of confusion in this instance. In so ruling, the court determined that Google did not intend to cause confusion among prospective purchasers; rejected as insignificant Rosetta Stone's alleged evidence of actual consumer confusion; and found that the sophistication of the plaintiff's customers-generally well-educated and willing to invest the considerable time and money required to learn a new language-mitigated the potential for confusion.

Interestingly, the court also held that Google's use of trademarked keywords as triggers for paid advertisements is functional. The court determined that such keywords have "an essential indexing function" in that they "enable Google to readily identify in its databases relevant information in response to a web user's query," and that preventing the use of Rosetta Stone's trademarks as keywords would unduly inhibit legitimate competition. This was an independent basis for the granting of summary judgment in favor of Google. Thus, even if Rosetta Stone had been successful in establishing likelihood of confusion, its trademark infringement and unfair competition claims still would have failed.

This decision is yet another blow to trademark owners in their efforts to challenge Google's policy of allowing AdWords advertisers to bid on trademarks as keywords. As the Rocket Docket tends to be influential in intellectual property matters, the court's strong support for the AdWords business model may signal that the end is near for these types of cases.

New Copyright Rule Exempts "Jailbreakers" From Anti-Circumvention Prohibitions


By Adam Mandell


On July 27, a new rule was issued, designating six classes of works as exempt from the copyright law's prohibition against anti-circumvention of access controls.

The relevant statutory provision is 17 U.S.C. § 1201(a)(2), which requires the Librarian of Congress to determine such "user exemptions" every three years. This determination is based on whether prohibition on circumvention of technological measures that control access to copyrighted works is causing or is likely to cause adverse effects on the ability of users of any particular classes of copyrighted works to make noninfringing uses of those works.

Notably, the Librarian's designation included, "[C]omputer programs that enable wireless telephone handsets to execute software applications, where circumvention is accomplished for the sole purpose of enabling interoperability of such applications, when they have been lawfully obtained, with computer programs on the telephone handset."

This user exemption applies to what is colloquially known as "jailbreaking:" The practice of circumventing encryption and authentication processes on devices, such as Apple's iPhone, to access its firmware to install and run third-party, unapproved software applications, or apps.

It is important to note that, although this designation exempts jailbreakers from liability under the anti-circumvention prohibitions, it does not exempt those that traffic in products, e.g., devices, or services that are designed for the purposes of circumventing access controls. Accordingly, persons that aid in the conduct of jailbreaking are not immune from liability. Also, the jailbreaking exemption does not affect the user's liability for copyright infringement of the underlying work, e.g., the Apple iPhone operating system. To this point, Apple has argued that modifying its operating system constituted the creation of an infringing derivative work.

Federal Court Declines to Consider Bilski Rejection of Method of Treatment Claims


By Diana Hamlet-Cox


The Court of Appeals for the Federal Circuit (CAFC) on August 2, 2010 issued its decision in King Pharmaceuticals, Inc. v. Eon Labs, Inc., (Fed. Cir. 2010)(Gajarsa, J.), affirming the summary judgment of invalidity of all claims directed to a method of administering a known drug to a patient, in conjunction with informing the patient to take the drug with food in order to increase bioavailability of the drug. However, the basis of invalidity for some of the claims was reversed.

The District Court had held that all of the claims of the two patents at issue were invalid, primarily as being anticipated by the prior art. In addition, the lower court held that claim 21 of 6,407,128 and claims 1, 6 and 8 of 6,583,102 were invalid under 35 U.S.C. § 101, "because the claim's 'informing' limitation did not 'transform the [drug] into a different state or thing,'" citing the CAFC's 2008 decision in In re Bilski.

The CAFC upheld the finding that the majority of the claims were invalid as being inherently anticipated by or obvious over the prior art teachings to take the drug with food, but also found the four claims which had been held invalid under § 101 by the lower court were instead invalid as anticipated by the prior art. The panel then said that this case "does not present the proper vehicle for determining whether claims covering medical treatment methods are eligible for patenting under § 101 because even if claim 21 recites patent eligible subject matter, that subject matter is anticipated for the reasons discussed below." The other claims previously rejected under § 101 were treated similarly, and rejected instead as being anticipated.

The CAFC said that the claims addressed the question of "whether an otherwise anticipated method claim becomes patentable because it includes a step of 'informing' someone about the existence of an inherent property of that method," and concluded that it does not: "The 'informing' limitation adds no novelty to the method, which is otherwise anticipated by the prior art."

Thus, the CAFC held the claims invalid, but for inherent anticipation, rather than for lack of including a transforming step. The CAFC's rationale included identifying that the District Court had not analyzed the claims as a whole in making the rejections under § 101, including the patent eligibility of the step of administering the drug. Moreover, the CAFC pointed to the Supreme Court's June 2010 holding in In re Bilski, in which the test for patentable-eligible subject matter in method claims was not limited to the machine-or-transformation test as being the sole test for processes under § 101, but rather an investigative tool, and stated that they "understood the Supreme Court to have rejected the exclusive nature of our [machine-or-transformation] test, but not necessarily the wisdom behind it."

Notably, the CAFC referenced the Prometheus v. Mayo case, in which the Supreme Court first granted, then vacated certification, and pointed out that the CAFC had previously (before the Supreme Court decision in Bilski) held that "medical treatment methods were patentable processes under § 101 because they fell squarely within the machine-or-transformation test applied in (the CAFC's earlier decision) In re Bilski." The CAFC then repeated the language from their holding in Prometheus, asserting that "we held that methods of treatment 'are always transformative when a defined group of drugs is administered to the body to ameliorate the effects of an undesired condition,' because such methods transform the human body."

Taken together with the CAFC's comments regarding the expansive nature of the Supreme Court's holding in Bilski, perhaps this is a preview of the outcomes we might expect in the Prometheus Laboratories, Inc. v. Mayo Collaborative Services and Classen Immunotherapies, Inc. v. Biogen Idec diagnostic method cases, which were remanded back to the CAFC by the Supreme Court after the decision in Bilski was issued in June.

Drafting note:

It appears that including a simple "informing" step (informing either the patient or the doctor of test results) to steps performed by a clinical lab, in order to avoid joint infringement, may not confer patentability on a claim where the novelty of the earlier steps is in doubt.

United States Patent and Trademark Office Issues Interim Guidance on Machine or Transformation Test


By John Sopp


In the last issue of the MWZB Newsletter, we reported on the Bilski v. Kappos decision of the U.S. Supreme Court. On July 27, 2010 the United States Patent and Trademark Office (USPTO) published interim guidance to its examiners for determining eligible subject matter under 35 U.S.C. § 101 in light of the decision. The guidance is intended to supplement and supersede their previous guidance which followed the Court of Appeals for the Federal Circuit's (CAFC) decision in Bilski that the machine or transformation test (MOT) is the sole test for patent-eligible subject matter under 35 U.S.C. §101. As interim guidance, the USPTO is seeking public comment on this issue until September 27.

The USPTO is particularly interested in the public providing examples of claims that appear to:

  1. Not meet the MOT but are patent eligible because they do not claim an abstract idea;
  2. Meet the MOT but are not patent eligible because they do claim an abstract idea.

Since Bilski held that the MOT is not the sole test, the USPTO is researching what instances occur where applying the MOT does not arrive at the proper conclusion.

The USPTO's guidance further instructs examiners that a claim may still be rejected under 35 U.S.C. § 101, even if it meets the MOT if it is drawn to an abstract idea. It notes that "abstractness" can be indicated by an absence of any limitation on the mechanisms for performing the process steps. Further, mere field-of-use limitations or insignificant post-solution activities (such as mere data gathering) do not make the claim patent eligible.

The following factors should be considered when determining patent eligibility of method claims under 35 U.S.C. § 101:

Whether the method involves or is executed by a particular machine or apparatus (which tends to support patent eligibility). A recitation of "any" machine is not "particular" and the more detail provided regarding the machine used enhances the eligibility of the claim. If the machine implements the steps, rather than merely being the subject on which the method operates, this weighs in favor of eligibility.

Whether the method results in or involves a transformation of an article (which tends to support patent eligibility). The more specificity in the transformation and in the article being transformed, the more weight given. The more significant the transformation, the more weight given towards eligibility. The "article" being transformed does not necessarily have to be a physical article but, if it is, that weighs more towards eligibility.

Whether the method involves application of a law of nature. Coverage of application of a law of nature across many fields of endeavor factors against eligibility. If the application of the law of nature involves only subjective determinations, this factors against eligibility.

Whether execution of the method steps involves only a general concept, principle, theory, plan or scheme. For example:

  • If it preempts use of the concept in many fields, this factors against eligibility;
  • If it covers many as yet unknown uses of the concept, this factors against eligibility;
  • If it can be practiced merely by mental steps, this factors against eligibility;
  • If it is drawn to all possible solutions to a problem, i.e., it identifies merely a problem rather than a defined solution, this factors against eligibility;
  • If the process is observable and verifiable, rather than subjective and not perceptible, this supports eligibility.

The following examples of general concepts to watch for were given:

  • Economic practices;
  • Legal theories;
  • Mathematical concepts;
  • Mental activities;
  • Interpersonal actions;
  • Teaching;
  • Human behavior;
  • Conducting business.

The guidance stressed that examiners must also consider all other patentability determinations, e.g., 35 U.S.C. § 112, 102 and 103, and should still examine the claim on these grounds even if making a 35 U.S.C. § 101 rejection (see the preceding article "Federal Court Declines to Consider Bilski Rejection of Method of Treatment Claims"). It points out that in Bilski, the Court stated that business-method patents may "raise special problems in terms of vagueness and suspect patentability."

An interesting note to those in the chem/bio areas: The guidance mentions nothing particular to this field, despite the activity in the Prometheus and Classen cases. This would be seen as a good thing, i.e., no express direction for examiners to apply 35 U.S.C. § 101 in these areas.

Additional Disclosure of Use Revokes Patent Validity


By Csaba Henter


In Sun Pharmaceutical Industries v. Eli Lilly and Co., the Court of Appeals for the Federal Circuit (CAFC) ruled U.S. Patent No. 5,464,826 (US '826) invalid for obviousness-type double patenting over U.S. Patent No. 4,808,614 (US '614). US '826 would have expired two-and-a-half years after the expiration of US '614.

US '614 contains claims directed to products and methods of use for treating viral infections. This patent resulted from a continuation-in-part (CIP) application where the description regarding the uses for the treatment of cancer was added when the CIP was filed. The disclosure of the parent application of US '614 did not contain disclosure related to the treatment of cancer.

US '826 resulted from an application filed on the same day as the CIP from which U.S. '614 resulted. U.S. '826 discloses and claims a method for treating cancer.

The CAFC followed its precedents holding that a claim to a method of using a product in a patent is not patentably distinct from a claim to the product in another patent in which other patent the same use is disclosed. The obviousness-type double patenting analysis for a claimed product extends to any use that is disclosed in the specification for that product. The CAFC further held that the specification that must be considered is that of the issued patent, and not the earlier application that was modified when the CIP was filed.

As such, the addition of the disclosure of uses for the treatment of cancer in the CIP, which uses were not claimed in that application, led to the invalidity of the patent providing patent protection for the method of treatment of cancer.

Patentability of Business Method Patents Addressed by Supreme Court in Bilski v. Kappos


By Diana Hamlet-Cox


In a decision narrowly crafted to the claims at issue, e.g., a method of hedging risk in commodities trading, the U.S. Supreme Court unanimously rejected the patent-eligibility of claims under 35 U.S.C. § 101 because the claims were directed to "an abstract idea." Bilski v. Kappos. The Court provided a multiply-split set of reasons for rendering its decision and, thus, an unclear picture.

In the decision, the Court did not exclude the possibility of business-method patents being patentable. Also, the Court rejected the "machine-or-transformation" test stated by the Federal Circuit decision below as the sole test for determining whether a claim recites patentable subject matter, thus leaving the door open to business method and other patents not specifically tied to a machine or transformation. But, the Court did not define what is patentable subject matter, as well as what other tests could be applied.

Affect of Bilski decision on Pharmaceuticals and Biotech Arts


Following the ruling, the Court issued further orders regarding two pending cases specifically related to pharmaceutical, biotech arts, and medical diagnostics: Prometheus Laboratories, Inc. v. Mayo Collaborative Services and Classen Immunotherapies, Inc. v. Biogen Idec. In Prometheus, the claims were directed to "A method for optimizing therapeutic efficacy for treatment of [a disease], comprising (a) administering [a drug] and (b) determining the level of [the drug or its metabolites]." The Federal Circuit held that the administering and determining steps were transformative. In contrast, in Classen, the claims were directed to "[a] method of determining whether an immunization schedule affects a ... disorder in [treated mammals] relative to [control mammals], comprising immunizing ... according to said immunization schedule, and comparing ... [characteristics of] the disorder ... [in the treated vs. control group]." In this case, the Federal Circuit–despite the immunizing step being arguably transformative–held that the two-step method was merely "data-gathering" and thus the claim as a whole was patent-ineligible.

The Supreme Court's further orders granted certiorari in Prometheus and Classen, vacated the Federal Circuit's decisions, and remanded the cases to the Federal Circuit to reconsider in view of the Bilski decision. These two cases, in which the Federal Circuit held that the facially similar diagnostic method claims covered patentable subject matter in one case and did not in the other, will be observed to see how the Federal Circuit implements the Supreme Court's guidance in Bilski in relation to the pharmaceutical and biotech arts.

Drafting Note.

When drafting diagnostic method claims in view of Bilski that meet the machine or transformation of matter test, careful consideration must be given to who might be liable for infringement of the claim. Requiring steps performed by different entities in one claim could present additional complexities.

Gene Patents Held Invalid


By Csaba Henter


Another notable biotech case to watch is Molecular Pathology v. USPTO, where the district court held that a breast cancer risk diagnostic method was invalid because it did not meet the "machine or transformation test," and gene per se claims were unpatentable.

In Molecular Pathology, contrary to established positions held by both the Federal Circuit and the U.S. Patent and Trademark Office, Myriad Genetics' patents claiming isolated gene sequences and diagnostic methods using the sequences to assess a patient's breast cancer risk were held invalid. The rationale was that isolated gene sequences and diagnostic methods using such gene sequences are not patentable subject matter because they do not constitute statutory subject matter under 35 U.S.C. § 101.

The claimed isolated DNA was held to be merely a purified product of nature which, without more, was not patentable. The method steps of analyzing and comparing DNA from a biological sample were held to be merely mental processes that fail to meet the "machine or transformation" test.

This decision is now on appeal at the Federal Circuit.

Changes at the U.S. Patent and Trademark Office


By John Sopp


In September 2009, David Kappos was appointed as the new director of the U.S. Patent and Trademark Office (USPTO). Kappos, former vice president and assistant general counsel for intellectual property at IBM, has been active in patent law for over 20 years.

Notably, Kappos has withdrawn the USPTO's controversial proposed rules to limit the number of claims and continuation applications an applicant would be permitted to file. This ended pending litigation over the proposed rules. These actions are a step toward improved relations between applicants and patent practitioners, who were generally opposed to the proposed rules.

Kappos has instituted new processes for docketing requests for continued examinations (RCEs) that are intended to expedite substantive examination and foster allowance of applications.

New Procedures for Docketing RCEs


Effective November 15, 2009, the USPTO began placing RCEs on the examiner's "special new" application docket. The "special new" application docket includes divisional applications and continuation applications. Previously, the USPTO placed RCEs on the examiner's amended docket and examiners had two months to issue a new action. Under the new system, RCEs are docketed the same as continuation and divisional applications. RCEs are still considered "special" under the new system and may be expedited to some degree, but the timing will be less predictable and will depend on an individual examiner's caseload and, apparently the status of an application.

An accompanying change has been made to the way RCEs are credited to examiners' production goals in the USPTO contract with the examiners' union. Under the new system, there is no requirement or incentive for an examiner acting expeditiously, as examiners will earn less credit for acting on an RCE than before, thereby reducing the number of unnecessary RCEs filed.

Ideally, the changes will result in a faster prosecution process and timely indication of allowable subject matter. The USPTO's notice of the new procedure states that when an applicant believes that an RCE puts the application in condition for allowance, an interview with the examiner may be requested and examiners should fairly consider such requests. While the notice is encouraging in this regard, it does not require examiners to grant such interviews.

How an RCE will be handled is highly dependent on each individual examiner. RCEs are still useful tools for continuing prosecution, but action after filing an RCE in certain cases may take more time than before. As a result, it is worth considering early interviews with examiners, soliciting examiner input on allowable subject matter, and accomplishing as much as possible early in prosecution without filing an RCE.

Federal Circuit Finds There is a Separate Written Description Requirement


By Csaba Henter


In an en banc decision, the Federal Circuit confirmed a long line of precedents holding that there is a separate written description requirement in the first paragraph of Section 112. Ariad Pharmaceuticals v. Eli Lilly. Specifically, the court held that there are two separate description requirements in the first paragraph of Section 112: [1] a written description of the invention; and [2] of the manner and process of making and using the invention.

Irrespective of whether the description is in the specification or in the original claims, an adequate written description of the claimed genus requires more than a generic statement of an invention's boundaries, e.g., by a representative number of species falling within the scope of the genus, or structural features common to the members of the genus so that one of skill in the art can "visualize or recognize" the members of the genus. "Whatever the specific articulation, the test requires an objective inquiry into the four corners of the specification from the perspective of a person of ordinary skill in the art" and, based on that inquiry, "the specification must describe an invention understandable to that skilled artisan and show that the inventor actually invented the invention claimed."

Specifically addressed were the chemical and biotechnology arts, stating that the "written description requirement also ensures that when a patent claims a genus by its function or result, the specification recites sufficient materials to accomplish that function." The following simple example was brought up as illustrative of the usefulness of a separate written description requirement apart from that of enablement in the chemical arts: A propyl or butyl compound may be made by a process analogous to a disclosed methyl compound, but, in the absence of a statement that the inventor invented propyl and butyl compounds, such compounds have not been described and are not entitled to a patent.

In the case at hand, the claims were method claims comprising the single step of reducing a newly discovered biological function NF-kB activity. The disclosure hypothesized three classes of molecules potentially capable of reducing NF-kB activity: specific inhibitors, dominantly interfering molecules, and decoy molecules. The only detailed description of the molecules involved proposed example structures for decoy molecules. However, the court found that there was no descriptive link between the proposed decoy molecules and reducing NF-kB activity. This was inadequate since the state of the art at the time of filing was primitive and uncertain, leaving applicant with insufficient prior art knowledge with which to fill the gaping holes in the disclosure. The Federal Circuit held that "whatever thin thread of support a jury might find in the decoy-molecule hypothetical simply cannot bear the weight of the vast scope of these generic claims."

Supreme Court Copyright Case


By Scott Major


Section 411(a) of the Copyright Act generally provides that no civil action for infringement of the copyright in any United States work shall be instituted until the plaintiff has preregistered or registered the pertinent work with the United States Copyright Office. In Reed Elsevier Inc. v. Muchnick, the U.S. Supreme Court held that a plaintiff's lack of a copyright registration for an allegedly infringed work does not deprive a federal court of subject-matter jurisdiction. In so holding, the Court characterized the registration mandate of Section 411(a) as merely a "claims processing rule" rather than a jurisdictional requirement.

The Court did not address the question of whether a copyright plaintiff may sue while an application for registration of the pertinent work is pending. However, with the elimination of the subject-matter jurisdiction issue, there is a sense that more federal courts may be willing to allow a copyright infringement suit to proceed under such circumstances.

What U.S. Litigants Should Consider When Selecting a Survey Method


By Jeff Cohen


When dealing with trademark litigation, utilizing likelihood of confusion surveys can either strengthen or weaken your case. Two predominant formats acceptable in U.S. courts are the Eveready and Squirt tests. Find out what each test includes and when they are appropriate to use.

Read Full Story

In re Kubin argued before the Federal Circuit


On January 7, the Federal Circuit heard oral argument in In re Kubin, a case expected to have significant impact in the area of biotechnology patents. Kubin represents the PTO's post-KSR return to a stance previously rejected by the Federal Circuit in the landmark decision of In re Deuel.

In Deuel, the court rejected the PTO position that the existence in the prior art of a purified protein, combined with routine cloning methods, renders obvious a claim to a nucleic acid encoding the protein.

Harry Shubin profiled in Forbes.

Harry Shubin and Brion Heaney will teach Chemical Patent Practice at George Mason University School of Law for the fifth straight year this spring semester.

Scott Major and MWZB secure a victory for Florists' Transworld Delivery, Inc. (FTD) in a proceeding under the Uniform Domain Name Dispute Resolution Policy to transfer the domain name ftdblog.com. See the decision here.