S. 23: The U.S. Senate's Patent Reform Bill
On March 8, 2011, by a vote of 95-5, the U.S. Senate passed S. 23, the Senate’s most recent attempt at patent reform. The bill, known as the "America Invents Act," represents the first time in six years of work on patent reform that the Senate has actually passed a patent reform bill. It is now up to the House to adopt the Senate’s bill or introduce its own bill.
S. 23 is notable as much for what is absent from the bill as for what is present. Many of the litigation-related provisions that have stymied previous reform efforts have been dropped from S. 23. For example, the bill does not include any provisions on damages, willfulness, venue, or injunctions.
Significant Provisions of S. 23
While S. 23 proposes many changes to the patent system, the most significant changes involve the move from a first-to-invent to a first-to-file system and new post-grant proceedings.
Moving to a First-to-File System
One of the most significant changes in S. 23 is replacing the current first-to-invent system with a first-to-file system, which is the system followed worldwide except in the United States. Under the current first-to-invent system, if two independent inventors file for a patent on the same invention, the inventor with the earlier invention date gets the patent. On the other hand, with a first-to-file system, the inventor with the earlier filing date gets the patent. Proponents of the first-to-file system say that it will simplify the process of acquiring patent rights, while opponents claim that a first-to-file system will harm small businesses and individual inventors, who will not necessarily have the resources to win a race to the patent office. Perhaps recognizing the debate surrounding this change, S. 23 provides for a study to determine the effect that the move to first-to-file would have on small businesses, with a report to be made no later than one year after enactment. Meanwhile, the provisions relating to the switch would not take effect until 18 months after enactment.
The move from first-to-invent to first-to-file comes with corresponding changes to 35 U.S.C. § 102, which defines prior art to an invention for purposes of determining novelty. Various provisions of the present § 102 define prior art on the basis of invention date (§§ 102(a), (e), and (g)). S. 23 amends § 102 to remove these provisions, so that prior art is defined in relation to the effective filing date of the application under examination rather than the invention date. Thus, under S. 23, it would no longer be possible to "swear behind" prior art by establishing an earlier invention date. In addition, prior inventions, currently addressed in § 102(g)(2), would no longer be prior art.
S. 23 also changes § 102 in other notable ways. The overall effect of these changes appears to increase what is available as prior art.
Removal of geographic limitations for prior art
Under current law, an invention is not patentable if it was in public use or on sale in the United States more than one year prior to the date of the application in the United States (§ 102(b)) or if it was known or used by others in the United States prior to the date of invention (§ 102(a)). S. 23 eliminates this geographic limitation on prior art, providing that an invention is not patentable if it was "patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention." Thus, public use, sales, and knowledge by others available anywhere would be prior art.
Recognition of a grace period only for an inventor’s own prior art
Under current law, an invention is not patentable if it "was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application" (§ 102(b)). S. 23 eliminates this one-year grace period except in limited circumstances. In particular, the grace period applies only to disclosures made by the inventor, a joint inventor, or "another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor."
In a new section that resembles the present § 102(e) but is adjusted for filing date instead of invention date, S. 23 provides that an invention is not patentable if it "was described in a patent . . . , or in an application for [U.S.] patent published or deemed published . . . , in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention." S. 23 does provide, however, that any subject matter disclosed in a patent or patent application that was obtained from the inventor or a joint inventor cannot be used against him under this section. Owing to the definition of "effective filing date" provided in the bill, this provision permits reliance on the filing date of a foreign filed application as an effective filing date under this section. Unlike in the European Union, where prior art under a similar provision is available only for novelty challenges, "secret" prior art under this section will be available for purposes of both novelty and obviousness.
Post-Grant Proceedings and Other Third-Party Challenges
The post-grant proceedings currently available include reissue, ex parte reexamination, and inter partes reexamination. S. 23 keeps reissue and ex parte reexamination substantially the same. S. 23 significantly revises inter partes reexamination, which is renamed "inter partes review," and introduces new "post-grant review," "supplemental examination," and "transitional post-grant validity review of certain business method patents."
Inter partes review
The inter partes review provisions in S. 23 are similar to the current inter partes reexamination provisions provided in 35 U.S.C. §§ 311–318 in that a petitioner may request review only under § 102 or 103 (novelty and obviousness) and only on the basis of patents or printed publications. Similarly, inter partes review in S. 23 includes estoppel provisions as provided in inter partes reexamination and does not allow for broadening of the claims. But inter partes review includes a number of new features that will significantly change post-grant inter partes practice. For example, it:
- Limits the time period when a request can be filed to only the later of nine months after the grant of a patent or after a post-grant review (discussed below) is terminated;
- Allows a preliminary response to be filed by the patent owner to explain why the inter partes review should not go forward;
- Gives the patent office a new, higher threshold to determine whether a review should go forward, based on whether there is a "reasonable likelihood that the petitioner would prevail," as compared to the "substantial new question of patentability" threshold in current reexamination proceedings;
- Prohibits an inter partes review from being instituted or maintained if the petitioner has filed a civil action challenging the validity of the patent or if more than six months have passed since the petitioner was served with a complaint alleging infringement;
- Gives the patent office the authority to stay, transfer, consolidate, or terminate a related interference, reissue, or ex parte reexamination;
- Allows very limited discovery consisting of depositions of witnesses on their written testimony and what is otherwise necessary in the interests of justice;
- Gives the new Patent Trial and Appeal Board ("PTAB"), not the patent office’s Central Reexamination Unit, the authority to conduct inter partes reviews;
- Provides for appeal to the Federal Circuit; and
- Allows the parties to settle and therefore terminate an inter partes review based on a joint request by the petitioner and patent owner.
Post-grant review provides another way for a third party to challenge a patent. Post-grant review is similar to inter partes review in many ways, in that it provides a similar estoppel provision and allows a preliminary response by the patent owner to explain why post-grant review should not go forward. In addition, a post-grant review cannot be instituted if the petitioner has filed a civil action that challenges the validity of the patent. Post-grant reviews will also be handled by the PTAB with decisions appealable to the Federal Circuit and may be settled when the petitioner and patent owner jointly agree.
Post-grant review and inter partes review differ, however, in several significant aspects:
- Timing: A petition for post-grant review must be filed within nine months of patent issuance, whereas a petition for inter partes review cannot be filed until after the later of nine months from issuance or the termination of any post-grant review.
- Available arguments: A petitioner in a post-grant review can request that the patent be invalidated on the basis of any provision of the patent statute, whereas a petitioner in an inter partes review can rely only on prior-art patents and printed publications.
- Threshold for institution: The threshold for instituting each review is different. A post-grant review may be instituted only if "information presented in the petition, if not rebutted, would demonstrate that it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable," whereas an inter partes review may be instituted if there is a "reasonable likelihood that the requester would prevail with respect to at least 1 of the claims challenged."
- Staying of preliminary injunction: If an action alleging infringement is filed within three months of the granting of a patent, a court cannot stay consideration of a patent owner’s motion for preliminary injunction against infringement on the basis of the filing of a post-grant review or the institution of such a proceeding.
While inter partes review and post-grant review provide ways for third parties to challenge a patent, S. 23 also provides a new way for a patent owner to request supplemental examination of his own patent. A patent owner can request supplemental examination to consider, reconsider, or correct information believed to be relevant to the patent. If the patent owner’s request raises "a substantial new question of patentability," a reexamination similar to current ex parte reexamination is instituted. The effect of supplemental examination is that a patent will not be held unenforceable on the basis of conduct relating to information that had not been considered, was inadequately considered, or was incorrect in a prior examination of the patent if the information was considered, reconsidered, or corrected during a supplemental examination of the patent.
Transitional post-grant validity review of covered business method patents
S. 23 defines a "covered business method patent" as a "patent that claims a method or corresponding apparatus for performing data processing operations utilized in the practice, administration or management of a financial product or service, except that the term shall not include patents for technological inventions." S. 23 provides for a post-grant review proceeding to determine the validity of these business method patents. The only eligible petitioners are individuals who have been sued for or charged with infringement of the business method patent.
Third-party submissions of prior art, pre- and post-issuance
S. 23 permits any third party to submit any patent, published patent application, or other printed publication as part of the pre-issuance examination of an application if such submission is made within the timetable provided. S. 23 also allows any person at any time (pre- or post-issuance) to submit to the patent office prior art to any patent consisting of patents or printed publications, or statements of the patent owner filed in a proceeding before a federal court or the patent office in which the owner takes a position on the scope of any claim. Such prior art or statements become part of the official file if the requisite conditions are met.
Replacing interference proceedings with derivation proceedings
While eliminating interferences, S. 23 provides that an applicant may file a petition to institute a derivation proceeding in the patent office on grounds that the inventor of an earlier patent application derived the claimed invention from an inventor named in the petitioner’s application and, without authorization, the earlier application was filed. Any petition for such derivation proceedings must be filed within one year of the first publication of a claim to an invention that is the same or substantially the same as the earlier application’s claim to the invention.
A patent owner may file a civil action against an owner of another patent claiming the same invention and having an earlier effective filing date if the invention in such other patent was derived from the inventor of the patent owned by the person seeking relief. Such an action can be filed only within one year of the issuance of the first patent containing a claim to the allegedly derived invention and naming an individual alleged to have derived such invention as an inventor.
Restriction on standing in false-marking cases
In an attempt to curtail the increase in false-marking cases brought by private entities, S. 23 provides that only the United States has standing to sue for the statutory penalty. In addition, S. 23 provides that any person who suffered a competitive injury as a result of a false-marking violation may file a civil action for recovery of damages to compensate for the injury.
No invalidity based on failure to disclose the best mode
S. 23 amends § 282 to carve out the failure to disclose the best mode from the other § 112-based litigation defenses, precluding the use of best-mode violation as a basis for invalidating a patent. But S. 23 does not eliminate the best-mode requirement from § 112.
THE FUTURE OF PATENT REFORM
S. 23 is now being considered by the House. The President has already announced his support for S. 23 and has stated that he is looking forward to the House passing patent reform legislation that he can sign into law. Now that the controversial litigation provisions in previous patent reform bills dealing with damages, willfulness, venue, and injunctions have been dropped from S. 23, the likelihood of patent reform appears to be at a high point since Congress started this process more than six years ago. If S. 23 and its major provisions become law, the change from first-to-invent to first-to-file, the new post-grant proceedings, and other changes in the bill will have a dramatic impact on how patent applications are prosecuted in the United States and how litigations are affected by the new post-grant proceedings.
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Thomas E. Friebel
David B. Cochran
Peter G. Thurlow
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