While studying for his patent law exam, Georgia State University Law School student William Florkowski said he was about as prepared to define claims "directed to or encompassing a human organism" on a test as he was to predict how he would feel several days into the future.
Luckily for him, Yaniv Heled, Florkowski’s professor, couldn’t really define it either. Heled said so at a panel discussion on the America Invents Act, which both the second-year student and his teacher attended in early April.
The "human organism" language, the product of a congressman’s longstanding crusade against "ghoulish" and "shemale" embryonic research, is just one of a myriad of questions hanging over the new law, the final and most far-reaching provisions of which went into effect on March 16. They have yet to be tested by the courts.
The changes wrought by the AIA are considered seismic, the biggest overhaul in U.S. patent law in a half-century, according to legal experts. That includes Heled, who called it "a major earthquake for patent practitioners."
The biggest change brought about by the new law is that it upends the longstanding and solely American "first to invent" standard by which patents are awarded in this country and replaces it with the "first inventor to file" criterion used by the rest of the world.
It gives foreign inventors trying to break into the U.S. market some protection from losing a patent to an American copycat. It also creates trial-like administrative review proceedings within the U.S. Patent and Trademark Office (USPTO) in an effort to divert some patent disputes, and the high costs that go with them, from the courts.
Some key changes include:
First to file: While many consider this the most significant change, it is not absolute. A patent application still can be thwarted if it can be shown that the same invention had been in use, or had been sold or described in a publication in any language anywhere in the world prior to the filing of the patent application. Under the previous law, "prior art" was restricted to the domestic use or sale or publication in the U.S. or internationally.
The new law gives inventors a one-year grace period to file their patents after publicizing their own inventions to prevent the thwarting of their applications by others.
Review proceedings: Direct appeals to federal circuit court in cases of adverse patent rulings by the USPTO have been eliminated. New proceedings, which were put in effect in September 2012, enable patent appeals to be heard by administrative patent judges with the newly established Patent Trial and Appeals Board. These new proceedings include Post Grant Review and Inter Partes Review.
Best mode: One of more curious changes to the law is that inventors are still required to disclose the method or "best mode" used to create their product, however, failing to disclose that information in a patent application isn’t sufficient grounds for it to be invalidated by the courts.
Prioritized examination: Filers can pay higher fees to obtain an expedited review of their patent applications within a year of filing.
Micro entities: Independent inventors who have not previously filed more than four patent applications and do not have gross income three times the median household income are entitled to a 75 percent reduction in their filing fees.
Depending on interpretation, the AIA could undermine the very changes it promotes, make it harder for small inventors to compete against corporate interests and add piles of applications on the already overwhelming backlog of hundreds of thousands of patent applications by prompting a rush to file.
Supporters say the AIA could help speed up the patent review process, take a huge bite out of the exorbitant legal costs associated with taking patent cases to court and ultimately help spur the economy and job creation by bringing new products to the market faster.
What is certain is the new law has made the graduate level study of patent law considerably harder. That’s because products holding 20-year-old patents that were filed prior to March 16 will be covered under the old law.
"My patent law class has now doubled in length because I have to teach both [versions of the law]," said Timothy R. Holbrook, an Emory University Law School professor. "I feel sorry for my students."
"I call it the America Invents Work for Patent Attorneys Act," said Holbrook. "I think it was a horrible thing. It [the AIA] was done under the auspices of harmonization. Now we have 20 years of both systems … We have all these transition costs."
However, there is fresh concern the USPTO will not be able to pay these costs.
On April 18, Acting USPTO director Teresa Rea sent an email to agency staffers warning of "budgetary pressures" stemming from sequestration and lower-than-expected patent fee collections.
"Because of the projected spike in fee collections in advance of the America Invents Act First Inventor to File changes and the new patent fee schedule," wrote Rea, "we determined that no significant actions should be taken until after the new fee schedule was in place and we had a better idea where the agency stood from a funding perspective."
"We have now reached that point, and our revenue continues to track substantially below the reduced budget plan," wrote Rea. "I have thus asked the management team to come together to identify immediate and significant spending reductions for the remainder of FY 2013."
That includes restrictions on training, travel, hiring and IT upgrade projects, Rea wrote.
Rea’s email came five months after the Patent Public Advisory Committee for the USPTO sent a report to President Barack Obama that detailed the agency’s progress on infrastructure upgrades and hiring. The report recommended that USPTO be allowed to increase its fees.
As justification, the report cited "the new and important procedures and obligations provided for by the AIA, and the costs associated with improving the USPTO’s outdated and dangerously fragile IT systems.
"The current levels of receipts are insufficient to allow the Office to make critical infrastructure improvements or improve operations and provide the service patent applicants deserve," the report stated.
Mary Ann Merchant, a Ballard Spahr patent attorney, said that if sequestration prevents the federal government from carrying out its mission under the new law, "that would be the saddest part."
"It’s like ‘Yeah! We’ve got this great legislation that might be doing a whole lot of good stuff and now we’re getting ready to hamstring them all," said Merchant. "If we say intellectual property is so important to industry and the country and all that, how are we’re going to say ‘Go back to using your pencils?’ " Merchant asked.
Merchant, who holds a Ph.D. and is writing a book on the AIA, appeared with Heled at the same April 2 panel discussion on the new law.
Merchant discussed some of the problems the new law has attempted to correct, among them: speeding up the patent review process and curtailing opportunistic cases clogging the judicial system, such as the filing of false marking claims and patent trolling.
False marking mushroomed into a patent lawsuit fest in late 2009 when a Southern Texas U.S. District Court judge’s ruling on a $500 assessment against a company that produced stilts for construction workers was overruled in federal circuit court. The case is The Forest Group Inc. v. Bon Tool Co., 590 F. 3d 1295 (Fed. Cir. 2009).
The higher court found the $500 penalty provided by the statute applies not only to the single violation, but to every instance in which a false patent number was affixed to a stilt.
Perhaps the most notable example of an attempt to cash in on this decision was a case involving a Washington, D.C., patent attorney who sued Solo Cup Corp. for a staggering $10.9 billion, after he discovered that the patent on the cup’s lids had expired two decades earlier.
"People were going into drug stores and down the shelves looking for what they could sue somebody about," Merchant said. "To me that’s a tremendous waste of court effort and time."
A provision of the AIA, which went into effect on Sept. 16, 2011, changed the law to restrict such qui tam actions to the federal government or competitors directly harmed by the improperly marked product. Under the new law, only the federal government can sue for the $500 per penalty amount provided in the statute. Victims who suffer competitive injury can only file civil actions to recover damages "adequate to compensate for the injury."
Also, the selling of products with expired patent numbers is no longer considered a violation of the "false marking" provision of the law.
Merchant and others say it is less clear how successful the new law will be at curtailing the much-despised practices of patent trolls.
Also known as "nonpracticing entities," these are patent owners who don’t necessarily produce anything beyond filing aggressive lawsuits against often-unwitting infringers of the patents they’ve acquired, sometimes by purchasing them. The aim of a patent troll is to run up artificially high settlements by holding the threat of long and expensive court fights against those they sue.
The AIA amended the law regarding joinder in patent lawsuits to allow suits against multiple defendants in cases involving "the same transaction, occurrence, or series of transactions, or occurrences relating to the making, using, importing into the United States, offering for sale, or selling of the same accused product or process," as well as "questions of fact common to all defendants or counterclaim defendants will arise in the action," 35 U.S.C. § 299(a)(1)-(2)
One of those potential fix-it parts, according to GSU’s Heled, is the "human organism" language. Heled has written about the "Weldon Amendment" and he talked about it at the panel discussion.
Its author, U.S. Rep. Dave Weldon, R-Texas, had routinely tried to tack the legislation to appropriations bills. Weldon succeeded with the America Invents Act.
On June 23, 2011, during floor debate on his amendment, Weldon stated "it is important that we as a civilized society draw the line where some vogue scientists fail to exercise restraint. Just because something can be done does not mean that it should be done."
Weldon was referring to a group of Spanish researchers whom he said had successfully transplanted cells from male human embryos into female embryos. Weldon told House colleagues the creators of these "shemale" embryos wanted to patent their research,
However, Heled said the amendment was added without specifically defining what a human organism is, or what precise patentable subject matter Congress is prohibiting.
"Arguably, if you construed ‘directed to or encompassing a human organism’ broadly, that could mean any patent on a DNA sequence, any patent on a bacteria that is genetically engineered to include a human gene, any patent involving biotechnologies," Heled said to the law students attending the panel discussion. "Maybe all of these aren’t patentable subject matter."
Heled said teaching the AIA along with the old U.S. patent law is "relatively easy," but it will get harder as patent cases under the new system begin to move through the courts.
"Right now I just teach them what this law says and how it differs from the old law. But over time there will evolve a body of case law [on the AIA] that I will have to review with my students," said Heled, "[Teaching the course] will become twice as hard."
One of his students said taking the course is hard enough already.
"I think everyone was freaking out over taking the exam because it was all so theoretical," said Reagan Charney, who was set to graduate from GSU this spring, before this story went to press. "Your answers would be like, ‘based on the language of the statute we think it might be this.’"
However, Charney sees the gain in feeling the academic pain. She works as a patent application agent for Ballard Spahr when she’s not in class and, from time to time, office superiors will drop by her desk to ask her questions about the new law.
"What’s exciting for a young lawyer like me is it gives me a leg up over some senior associates and even some partners," Charney said. "It gives me a way of distinguishing myself because they haven’t taken a whole class on this."
Supporters say the AIA could help speed up the patent review process, take a huge bite out of costs and ultimately help spur the economy.