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The practice of patent law in the United States underwent significant changes last year following the enactment of the American Inventors Protection Act of 1999 (AIPA). This article will discuss the key provisions that will impact patent prosecution strategies for both applicants and patent practitioners. The text of AIPA is contained in Title IV of S. 1948, the Intellectual Property and Communications Omnibus Reform Act of 1999. The AIPA page of the U.S. Patent and Trademark Office (PTO) Web site, located at www.PTO.gov, provides an excellent summary of the AIPA, together with the full legislation text and interim rule changes. Subtitle A of the act deals with inventors’ rights. The rules pursuant to this subtitle are found in a new Part 4 of Title 37 of the Code of Federal Regulations. The rules provide a remedy against fraudulent invention promoters by requiring them to disclose in writing past success rates over a five-year period. The rules also require that the PTO make publicly available complaints against promoters and allow an inventor to bring a civil action against a promoter to recover statutory damages of up to $5,000, actual damages, or treble damages for intentional or willful violations. Subtitle B of the AIPA deals with patent and trademark fee fairness. It provides for a reduction of patent fees and an increase in trademark fees. The provisions under this subtitle are effective as of Dec. 29, 1999, for the reduction of patent fees and as of Jan. 3, 2000, for the increase in trademark fees. Among other reductions, the basic patent filing fee for large and small entities is reduced to $690 and $345, respectively, and the first maintenance fee for patents for large and small entities is reduced to $830 and $415, respectively. As to trademarks, in addition to raising the fees, the subtitle requires that all trademark fees be used only for trademark-related activities. This subtitle creates a new 35 U.S.C. � 273(b). Subtitle C deals with the first investor defense. This section provides that prior users of an invention (e.g., first inventors relative to the patent owner) with a defense to an infringement claim alleged by an owner of a patent for doing or conducting business. The provisions of this section are effective as of Nov. 29, 1999, but do not apply to pending infringement actions where an adjudication already had been made before that date. To qualify for the first inventor defense, a prior user must show, among other things, that the prior user in good faith (1) actually reduced to practice the subject matter for doing or conducting business at least one year before the effective filing date of a third party’s patent for that subject matter; and (2) commercially used the subject matter, without any substantial changes, before the effective filing date of the third party’s patent. This prior use defense does not invalidate the subject patent and is available only to qualified prior users. This subtitle was enacted partly as a reaction to State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), where the federal court held that a business patent satisfies the utility requirement of 35 U.S.C. � 101, as long as it produces a “useful, concrete, and tangible result.” Since business methods were not considered patentable prior to the State Street decision, a situation arose where a post-State Street entity could obtain a patent for a business method that was already practiced by another U.S. entity as a trade secret. In this case, the other U.S. entity could no longer patent the business method because use of an invention as a trade secret renders the invention unpatentable on the basis of concealment. What is not explicitly stated is whether the first inventor defense applies only to business method patents or whether the statutory phrase “doing or conducting business” also applies to processes, such as chemical processes or processes of manufacture. PATENT TERM GUARANTEE Subtitle D amends three sections of the U.S. Code: (1) 35 U.S.C. � 154(b) to provide patent term extensions that guarantee diligent applicants at least a 17-year patent term; (2) 35 U.S.C. � 132 to provide changes in continued examination procedures; and (3) 35 U.S.C. � 111(b) to provide changes in provisional application practice. The amended provisions of 35 U.S.C. � 154(b) became effective on May 29, 2000, and apply to utility and plant applications that have been filed on or after May 29, 2000. The provisions do not apply to design applications or to patents whose term has been disclaimed beyond a specified date. The highlights and limitations of the three bases for extension of a patent term are as follows. 1. Delay in PTO Responses. A delayed response by the PTO extends the patent term by one day for each day of delay. Representative time frames for timely PTO responses include acting on an application within 14 months after a filing date or a national stage entry date and within four months after a Board of Patent Appeals or interferences or court decision leaving allowable claims in the application; acting on a reply or appeal within four months; and issuing a patent within four months of the date the issue fee was paid and all requirements were satisfied. 2. Failure To Issue a Patent Within Three Years of Actual Filing Date. If the PTO fails to grant a patent within three years of the actual filing date, the term of the patent shall be extended one day for each day of delay until the patent is issued. Time consumed by continued examination pursuant to applicant’s request or time consumed by interferences, secrecy orders, successful appeals or delays requested by the applicant are not counted against the three-year time frame. 3. Delays Due to Interference, Secrecy Order or Successful Appellate Review. Subject to limitations discussed below, if the issuance of a patent is delayed due to the above reasons, the term of the patent shall be extended one day for each day of pendency of the proceeding, order or review. A successful appellate review is one resulting in a final decision reversing all rejections of at least one claim. 4. Limitations. If the above bases for patent term extension overlap, the extension will not exceed the actual number of days that patent issuance was delayed. Further, a patent term extension will be reduced by one day for each day that the applicant fails to exercise due care to conclude prosecution. Actions constituting due care will be further defined by regulations established by the director, although the PTO indicates that an applicant is considered not to have exercised due care when, among other things, the applicant (a) fails to respond to a PTO request within three months of its mailing date. This reduction may be avoided if applicant petitions, together with a $450 fee, that in spite of all due care, a timely response could not be submitted; (b) converts a provisional application into a nonprovisional application; (c) fails to supply filing fee, oath/declaration or an English translation, where applicable; (d) fails to submit a specification, including abstract, drawings or, if applicable, proper sequence listings in condition for use in the 18-month publication process; and (e) submits incomplete replies, amendments after notice of allowance or preliminary amendments requiring remailing of actions. 5. Challenging the PTO Patent Term Extension Determination. An initial determination of the patent term extension, if any, will be provided with the notice of allowance. The applicant may request reconsideration of the determination, if the request and the attendant $200 fee are filed before payment of the issue fee. When the patent number and issue date are assigned, the PTO will make a final determination. The applicant will then have 30 days to request reconsideration of the determination based on the period after payment of the issue fee. Once a patent is granted, the applicant may seek judicial review of the PTO patent term extension determination; a third party also may challenge the determination. These patent term extension provisions are likely to add a certain amount of unpredictability to the expected length of any published application, although the ongoing term extension tally can be tracked by the public online through the PTO patent application information retrieval (PAIR) system. CONTINUED EXAMINATION PROCEDURES The provisions regarding continued examination became effective on May 29 and apply to all applications filed on or after June 8, 1995. Provisions in accordance with amended 35 U.S.C. � 132 are set forth in 37 C.F.R. � 1.114. The provisions introduce several changes to continued prosecution examination practice (CPA) for design applications and are intended to phase out CPA practice and replace it with a “request for continued examination” practice (RCE) for utility and plant applications. A RCE is a continued examination of the same application. A CPA is a continuing new application but is treated by the PTO as a continued examination of the same application. RCEs and CPAs are subject to different rules in connection with, among other things, filing fees and requirements, certificates of mailing, inventorship changes, small-entity status, submission of divisional and continuation-in-part applications and patent term extensions. As to patent term, filing a RCE prevents applicant from claiming any term extension based on PTO failure to issue a patent within three years of the actual filing date, but allows an applicant to claim other patent term extensions, including those accumulated in prior applications. By contrast, filing a CPA on or after May 29 in an application filed before that date makes the CPA eligible for patent term extensions but does not entitle applicant to extensions accumulated in prior applications. In addition to RCE, a further limited continued examination of the same application is provided under � 1.129(a). The rules in connection with this examination are the same as those for RCEs, with a few exceptions. For example, an examination under this section is not eligible for patent term extensions. According to amended 35 U.S.C. � 111(b), the pendency of a provisional application carries over to the next business day if the one-year anniversary date falls on a nonbusiness day. Further, the co-pendency requirement is eliminated, in that a provisional application no longer needs to be co-pending with the nonprovisional application in order for the latter to claim the benefit of the former. To claim the benefit of the provisional application, however, the provisional filing fee must be paid within the time frame set forth in the notice of missing parts. Also, according to amended 35 U.S.C. � 111(b), a provisional application can now be converted to a nonprovisional application. In this event, the patent term is measured from the filing date of the provisional application. By contrast, where a nonprovisional application claiming priority from a provisional application is filed, rather than converted, the patent term is measured from the filing date of the nonprovisional application. Therefore, filing a nonprovisional application, rather than converting it, should result in a longer patent term. DOMESTIC PUBLICATION OF PATENT APPLICATIONS PUBLISHED ABROAD Subtitle E, which is effective as of Nov. 29, creates a new 35 U.S.C. � 122(b). Pursuant to this section, all new CPA and national applications filed on or after that date must be published within 18 months from the earliest claimed filing date. The publication requirement does not apply to RCE applications, design applications, provisional applications, abandoned applications or applications that are under a secrecy order or whose disclosure would be detrimental to national security. The fee for publication is estimated at $300. Upon filing, an applicant may submit a written request that the application not be published, certifying that that the invention was not and will not be filed in another country or under an international agreement that requires 18-month publication. If the application is subsequently foreign-filed, the applicant must so notify the PTO within 45 days or the application is deemed abandoned. Alternatively, an applicant may voluntarily request publication of an eligible application pending on Nov. 29. An applicant also may voluntarily request publication of an application prior to the expiration of the 18-month pendency, but cannot request that the application be published on a specific date. Applications will be published in the same format as an issued patent. The applications will be published as filed, without preliminary or other amendments, unless applicant submits an amended copy of the specification before the later of one month from actual filing or 14 months from earliest benefit claim. If the U.S. application is more extensive than the corresponding foreign-filed application, the applicant may request publication of a redacted version, which excludes subject matter not contained in the foreign-filed application. Since an application will be published as filed, it will be necessary to provide drawings of sufficient quality to allow the published application to be used as a prior art document and to be scanned into an electronic database. Once an application is published, claims can be copied, such as when filing a continuing application, only within one year of the date of publication. A published application may be searched on the PTO electronic search database and is effective as prior art under 35 U.S.C. � 102(e) as of its filing date. If the published application is a national stage application, then it is effective as prior art under � 102(e) as of the international filing date, if the international application was published in English. Published U.S. and foreign applications are also effective as prior art under � 102(a) and 102(b) as of their publication date. Published applications, especially in the field of business-method and Internet-related arts, will become the predominate form of prior art used by examiners. Third parties will be able to obtain, for a fee, a copy of the file wrapper and contents of a published application. It is important to note that if the published application is redacted, applicant must timely submit redacted copies of the PTO correspondence and applicant submissions; otherwise, the PTO will provide access to the complete file wrapper content of the application. Third parties will be able to submit prior art in response to a published application, but a third party will not be able to file a protest or a pre-issuance opposition to a published application without the express consent of the applicant. Upon publication of a U.S. application, the applicant obtains the right to a provisional royalty for the period between the date of publication and the date of patent grant provided that actual notice of the published application is given and that the claims in the issued patent are substantially identical to the claims in the published application. The PTO projects that applicants may become more reluctant to amend or cancel claims after publication in order to preserve provisional rights. The scope of “substantially identical” remains to be construed. Applicants in published international applications also acquire provisional rights in the United States, if a copy of the published application or an English translation thereof is filed with the PTO. Among other concerns, practitioners and applicants will need to decide whether to publish nonforeign filed applications, request early publication, request voluntary publication for applications filed before Nov. 29, 1999, redact an application before publishing, amend claims after publication or request publication after an amendment (weighing secrecy and need for continuation-in-part filings against provisional rights and the prior art effect). OPTIONAL INTER-PARTES RE-EXAMINATION PROCEDURE Subtitle F offers an optional re-examination procedure in lieu of litigation and provides changes in the ex parte re-examination procedure. In addition to the optional inter partes procedure discussed below, the subtitle provides that both ex parte and optional inter-partes re-examinations that are abandoned due to failure to timely respond can be revived based on unintentional delay. The unintentional delay provisions are effective as of Nov. 29. Further, both inter-partes and ex parte re-examinations will be assigned to a different examiner rather than the one who issued the patent, unless the group director determines otherwise. According to this subtitle, the new rules will be governed by 37 C.F.R. 1.902-1.997. The rules apply only to patents that issue from original applications filed in the United States on or after Nov. 29, 1999. The PTO is expected to release a notice defining “original application.” The creation of an inter-partes re-examination arises from criticism that the 1981 re-examination statute allowed a patent owner too much control and allowed a third party to raise the same issues in district court that were resolved unfavorably against it during a re-examination, and vice versa. Pursuant to the rules, a request for an inter-partes re-examination (which comes with a $8,800 fee compared with the $2,250 for ex parte re-examination) must provide the identity of the third-party requester. By contrast to ex parte re-examination, inter-partes re-examination proceedings may be suspended by the director for good cause. A third-party requester has one opportunity to file a written response to any response by the patent owner to an office action, as long as the issues are limited to those raised in the office action and the patent owner response. The examiner must address all properly introduced grounds for rejection alleged by the third party. Interviews addressing the merits of the re-examination are not permitted by any party. A patent owner must request extensions of time to respond on or before the end of the response period. It is important to note that although the rules provide for revival of an unintentionally abandoned re-examination, these provisions are in effect only as of Nov. 29. At the close of the prosecution, which would normally occur after a second office action, the third-party requester and the patent owner may file comments and respond to each other’s comments. Upon consideration of the parties’ comments, the examiner issues a final action that includes a right of appeal notice. An expedited right of appeal can be requested after a patent owner’s response to the initial office action, if all parties stipulate that the pending issues are appropriate for final action and if the examiner determines that no other issues should be raised. Thus, an action closing the prosecution is not to be confused with a final action, which triggers appeal rights. After the final action, both the third-party requester and the patent owner may appeal to the board and may participate in each other’s appeals. Unlike the third-party requester, the patent owner may subsequently appeal the board’s decision to the Federal Circuit court. If a third party chooses to file a civil action in lieu of an optional inter-partes re-examination, the third party may not thereafter request an inter-partes re-examination of the same issues or challenge any fact determined in the civil action. However, the party may request an inter-partes re-examination based upon a newly discovered prior art that was unavailable during the civil action. The converse is true if the third party chooses the inter partes re-examination route in lieu of a civil action. Finally, within five years of the date of enactment, the director must report to Congress whether optional re-examination procedures are inequitable. The changes to ex parte re-examination are effective as of Nov. 29, 1999, for original applications filed in the United States on or after that date. Generally, the changes include a requirement that a patent owner may appeal to the board only after a final rejection, as compared to after the claims have been twice rejected, as is the case for applications filed prior to Nov. 29, 1999. Further, a patent owner can appeal the board’s decision only to the Federal Circuit court, whereas previously the patent owner had a choice between the Federal Circuit court and the district court. PATENT AND TRADEMARK OFFICE Subtitle G, which became effective on March 29, 2000, is directed to the reorganization of the PTO. According to the subtitle, the PTO is retained in the Commerce Department and is headed by an undersecretary of commerce for intellectual property and a director of the PTO, who are appointed by the president with the consent of the Senate. A deputy to the undersecretary and a deputy to the director are appointed by the secretary of commerce upon nomination by the director. Patent and trademark operations are now treated as separate units. A commissioner for patents and a commissioner for trademarks, appointed by the secretary of commerce, will serve as CEOs for their respective units for a term of five years. The commissioners will be eligible for up to 50 percent bonuses based on their performance. The author is an associate in the e-commerce group of New York’s Brown Raysman Millstein Felder & Steiner.

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