Significant Patent Law Reform Legislation Pending

Monday, June 20, 2005

Publication:Michigan Lawyers Weekly

Congress is currently giving active consideration to several significant changes in the U. S. patent law. Hearings have been held this spring on proposed changes in the patent law that are believed to be likely to be passed into law this summer.

The key proposed changes in the law include new post grant opposition procedures; converting to a first inventor to file system; changes in the definition of what constitutes prior art; changes in the standards for injunctions, and changes as to damages. Other proposed changes include changing the requirements for a patent to eliminate subjective determinations relating to the best mode requirement, and correction of inventorship. Substantial procedural changes are proposed for assertions of the defense of unenforceability.

The proposed post-grant opposition procedures will provide an opportunity to challenge a patent after it is issued by the US Patent and Trademark Office. Currently, patents may be challenged by third parties by filing a petition for reexamination that must be based upon prior art patents or publications that create a new issue as to the patentability of the claimed invention. A nine month time period would be established after a patent issues during which the validity of a patent can be challenged. An opposition could be based on any of the requirements for patentability – not just prior art – such indefiniteness of the claims, inventorship, enablement, prior offer for sale, and the like. Evidence may be offered in the form of expert opinions or declarations setting forth facts relating to the basis for the opposition.

Adopting a first-inventor-to-file system will eliminate first-to-invent interference proceedings in the Patent Office. An interference proceeding is an administrative action in the Patent Office that occurs when two inventors claim the same invention. Interferences are resolved by determination of who was the first to make the invention. In contrast, the proposed changes in the law to adopt a first-inventor-to-file simplifies the law. The change protects an inventor`s rights since only an inventor can file an application for a patent. A new interference procedure is proposed that would be used to resolve disputes over who is the inventor and has the right to a patent. This change is an important step towards international patent law harmonization because the U.S. is the only country that has a first-to-invent system.

The proposed first-inventor-to-file approach will add an incentive to file patent applications sooner because an inventor`s only basis for claiming priority will be the filing date of the application. A first-inventor-to-file system is expected to encourage inventors to take advantage of the provisional patent application filing procedure that allows an inventor to file an informal application. Provisional applications may be used to establish an application`s priority date to the extent that the provisional application provides an enabling disclosure of the invention. Provisional patent applications do not require formal drawings or patent claims. The law now requires a regular utility patent application to be filed within one year of the provisional patent application filing date to preserve an applicant`s provisional filing date.

Moving to a first-inventor-to-file system will change the definition of what is prior art. Provisions of the patent law that are dependent on the date of invention would be eliminated from the law. Prior art is to be defined based upon publicly accessible knowledge, such as that contained in patents and printed publications. Previously, inventors were permitted to establish a priority date based upon an earlier reduction to practice of the invention. Actual reduction to practice could be shown by proving that the inventor actually made the invention and was able to prove by testing that the invention worked for its intended purpose. A constructive reduction to practice can be established by filing a patent application. An inventor is allowed to prove an earlier reduction to practice by proof that the inventor worked diligently without substantial interruption prior to the date of the reduction to practice. These types of issues cannot be determined based upon public information and leave a measure of uncertainty in determining the state-of-the -art for all patents.

Another change in the definition of prior art that is proposed is to provide a definition of what is “publicly known.” A patent could not be obtained if the invention was publicly known more than one year prior to the date that the patent application is filed. Prior art is publicly known “when it becomes reasonably and effectively accessible, either through its use or through its disclosure by other means, or when it has been made inherently known from subject matter that has become reasonably and effectively accessible.” What is reasonably and effectively accessible is defined as subject matter that “can be accessed and comprehended, without resort to undue efforts, by persons of ordinary skill in the art to which the subject matter pertains.” This change in the law would also eliminate the current law`s requirement that prior use or knowledge of the invention must occur in the United States.

The draft legislation also proposes elimination of the best mode requirement. The best mode provision of the current patent law requires an inventor to set forth the best method of practicing the invention known to the inventor at the time the application is filed. The purpose of the best mode requirement in the current law is to prevent an inventor from filing a patent application while concealing important information relating to the invention. An inventor is not required to provide production specifications as a condition of patentability. It has been argued that elimination of the best mode requirement may reduce the cost of litigation and make the outcome of litigation more predictable.

Another subjective determination that may be modified is the duty of candor owed to the patent office by patent applicants. Under the proposed changes in the law, parties challenging patents would also be subject to a duty of candor and good faith in their conduct before the Patent Office. The patent office would have exclusive jurisdiction to adjudicate alleged violations of the duty of candor. If an issue of misconduct regarding the duty of candor arises in an action involving the validity or infringement of a patent, the court is required to refer the matter to the patent office for investigation and sanctions. The defense of unenforceability would be required to be pled only by a motion to amend the pleadings in an action in which the validity of the patent is at issue; a judgment has been entered finding a claim of the patent to be invalid; and within three months of entry of the judgment. The motion is also required to set out with particularity a substantial basis for determining that the patent office relied upon the misconduct of the patent owner in the patent office in granting the invalid claim. The proposed law would also prevent misconduct of a person registered to practice before the patent office acting in a representative capacity from being attributed to the patent owner unless the patent owner participated in the misconduct. The patent office is to establish a special office with authority to investigate possible violations of the duty of candor.

Damages for infringement would also be limited for inventions that are incorporated into a method or apparatus that is otherwise known in the art. Damages are to be based “only upon such portion of the total value of the method or apparatus as is attributable to the invention alone and shall not include value attributable to the method, apparatus, or elements otherwise known in the art or contributed by the infringer or its licensors.” This provision, if adopted, could severely limit damages for patent infringement.

Still other changes in the law may impact the availability of treble damages that are available in “exceptional cases” under the current law. The proposed changes will permit treble damages only if an infringer first receives a detailed charge of infringement identifying the patents that are alleged to be infringed and the allegedly infringing activity. Mere knowledge of a patent or failure to obtain an opinion of counsel on the issue of infringement would no longer be sufficient to justify an award of treble damages. Copying a competitor`s product or violating a court order have been proposed as reprehensible conduct meriting an award of treble damages.

Another proposed change is to add a requirement that a patentee has suffered irreparable harm to obtain an injunction after trial. Currently, permanent injunctions are generally granted after a trial on the merits due to a presumption of irreparable harm caused by infringement. The proposed change in the law would also require that courts consider the extent to which a patent owner makes use of the invention.

Other changes in the current patent law are also proposed that could have an effect on the practice of law relating to patents for years to come.