On Sept. 16, President Barack Obama signed into law the Leahy-Smith America Invents Act. We asked several patent practitioners to weigh in on the new patent reform legislation, in praise or criticism.
ROBERT GREENE STERNE
Founding director of Sterne, Kessler, Goldstein & Fox
Only one thing is certain about the America Invents Act — it is definitely a new ballgame; but how the game will be played is uncertain until the new season starts on Sept. 16, 2012. The practical impact of the five new postissuance proceedings created by the AIA is of great concern to all patent community stakeholders. There is considerable uncertainty about the new standard to get an inter partes re-examination ordered. Many requestors are beefing up their requests to try to avoid a bounce as a precaution. When post-grant review, inter partes review and supplemental submissions become available in less than a year, it is likely that post-grant review will only be embraced by certain industries — pharma and biotech are the likely candidates. Accused infringers will be uncertain if they should seek an inter partes review because of the estoppel provisions measured against the one-year window of availability once suit is filed. And patent owners trying to purge possible inequitable conduct will need to decide whether to use the supplemental submission procedure before the patent is in litigation.
TIMOTHY D. St. CLAIR
Partner at Turner Padget Graham & Laney
What a charade. The 2011 patent reform act hobbles the patent laws of the most innovative country in the history of mankind to mimic that of a Europe having less than a third of the United States’ patenting zeal. Why did we do this? We are told that the new law will spur innovation, but a system that once prized inventive horsepower will now give the race to those fleet of foot to the patent office. To speed patent prosecution? We now provide the perverse incentive to file early and often instead of taking a more prudent wait-and-see approach, so even more applications will float in an already overworked patent office. To “create jobs”? Hardly — this legislation began when unemployment was 6 percent and Barack Obama was an Illinois state senator, so this latest “more jobs” justification is just Washington-speak promotional lipstick on a legislative pig.
DANIEL J. SCHWARTZ
Partner at Seyfarth Shaw
Although it has been about a month since its passage, we are already seeing the impact of the America Invents Act, in particular its dampening effect on resource-draining litigation by nonpracticing entities (NPEs) — so-called patent trolls. On the day just prior to the AIA becoming law in September, NPEs tellingly filed a record-number of multidefendant patent infringement suits. However, since the enactment of the heightened pleading standard for joinder of multiple defendants, we have seen a reduction in the number of suits being filed in key venues, including the Eastern District of Texas, which has been a haven for plaintiff suits in recent years. NPEs recognize that they can no longer simply lump multiple defendants together in one lawsuit. This assuredly drives up NPE transaction costs in pursuing litigation. One corollary trend emerging from the AIA shows a modest uptick in the number of cases filed in jurisdictions that typically do not see patent litigation. Courts not accustomed to patent litigation will be forced to learn about the new patent laws relatively quickly.
Partner at Connolly Bove Lodge & Hutz
Popular lore provides mortals with two methods of killing vampires: a wooden stake through the heart or a silver bullet. When in doubt, legend says, do both. Congress followed this tactic when it killed a different type of blood-sucking creature — the false-marking troll — two ways.
First, the America Invents Act eliminated the trolls’ standing by removing the private qui tam provision and replacing it with a requirement that a plaintiff must have been competitively harmed by the defendant’s false marking. Second, the Act provides that it is not “false marking” when a product is marked with an expired patent that once covered the product.
Rest in peace, false-marking trolls. You can cease trolling the aisles of supermarkets and hardware stores (and, for those of you who made use of your opposable thumbs, the Internet), searching for lipstick and fishing rods and crescent wrenches that bear the mark of an expired patent.
Vice president, global head of patents and chief patent counsel, Unilever PLC
The America Invents Act unfortunately does not adequately address congressional diversion of U.S. Patent and Trademark Office fees, the most critical and persistent problem that the office has faced for years now. Consequently, we are unlikely to see reduced pendency times for patent applications, and an already understaffed core of patent examiners will still not have sufficient time for a quality examination in many technical art areas. Unacceptable delays in the disposition of many patent applications will likely continue, leading to continuing uncertainty for patent applicants, investors and competitors seeking to advance technology. This, I am sad to say, will not stimulate innovation, create jobs or improve the overall economic climate. The AIA is also extremely complicated, and will include new measures on top of the existing ones to attack patents before and after issuance. Although this may be a boon to the patent attorney profession, it will not help an already overburdened PTO, or businesses working hard to keep costs down.
MICHAEL J. POWELL
Partner at Baker, Donelson, Bearman, Caldwell & Berkowitz
The America Invents Act has a number of positive features such as adopting a first-to-file system, permitting third parties to submit prior art during examination and providing post-grant review to challenge issued patents, which may well improve patent quality over time. The patent office is underfunded and understaffed, has a huge backlog of patent applications, and yet politicians are able to poach patent office fees for other purposes. Remarkably, the act further burdens the patent office with substantial additional responsibilities of overhauling current operations and procedures while permitting fee diversion to continue. Ending fee diversion is needed for the patent office to predictably plan and direct fees toward improving operations and resources. How can the patent office be expected to issue cutting-edge patents quickly if it does not have the resources or funding needed for even “state of the art” operations? Sadly, however, the act fails to stop fee diversion.
Partner and director of life sciences division at Lowe Hauptman Ham & Berner
The America Invents Act shifts the balance from encouraging disclosure toward encouraging secrecy. The Patent Act requires, among other things, that “[t]he specification…shall set forth the best mode contemplated by the inventor…of carrying out his invention.” 35 U.S.C. 112, ¶ 1. The best-mode requirement creates a statutory bargained-for exchange by which a patentee obtains the right to exclude others from practicing the claimed invention, and the public receives knowledge of the preferred embodiments for practicing the invention. Although the Patent Act still requires the best mode to be contained in the specification, the Patent Act now prohibits any claim of a patent from being canceled or held invalid or otherwise unenforceable due to lack of a best-mode disclosure. Without a means to effectively enforce it, a best mode’s disclosure will likely be done on the honor system.
PATRICK R.H. WALLER
Partner at Wolf, Greenfield & Sacks
Although international patent harmonization was one of the many goals of the America Invents Act, the statutory changes will effectively undermine the scope of patent protection that is available in the United States relative to Europe for many patent applicants. The AIA extends the scope of prior art that is available against a U.S. patent applicant to include foreign third-party patent applications as of their filing date, provided that there is a published U.S. patent application that can claim priority to the foreign application.
However, unlike the European patent system, the AIA does not distinguish between prior third-party patent applications that have published as of the filing date of a later patent application and those that only publish after the filing date of the later patent application. In Europe, only applications that have published prior to a later filing date are fully available as prior-art references. Applications that were filed before, but published after, a later-filed application are only available as novelty references. In contrast, under the AIA, all prior applications (whether published or unpublished at the time of a later-filed application) are available for both novelty and obviousness rejections. For certain patent applications, this will severely limit the scope of protection that is available in the United States relative to Europe. It is not clear whether this was an intended consequence of the AIA, but it has the potential to impact all sizes and types of applicants.
JANELLE D. WAACK
Partner at Novak Druce + Quigg
Section 6 of the America Invents Act provides a viable new avenue for parties, including accused infringers, to challenge issued patents. The new post-grant review and inter partes review will be economical, expedited proceedings before a panel of three administrative patent judges at the newly formed Patent Trial and Appeal Board. Accused patent infringers with a solid invalidity defense can potentially stay the district court patent litigation and knock out the patent claims within one year. By limiting discovery and the pursuit of all causes of action, defenses and damages in parallel, defendants will dramatically lower their costs and the burden on their employees. The fact that the administrative patent judges are technically trained may also be a comfort to high-tech companies with their most valuable and sophisticated technologies at stake. Post-grant review/inter partes review will likely be given consideration in every patent litigation once they become effective in 12 months.
Partner at Morrison & Foerster
Enactment of the America Invents Act will likely once again prove the adage that no good deed goes unpunished. The act creates new inter partes review and post-grant review procedures to clear flawed patents from the books without having to resort to costly litigation. Petitioners utilizing these procedures are promised a definitive timetable to a final determination, not later than one year plus a six-month extension for good cause. Unfortunately, the act also calls upon the same administrative patent judges tasked with handling the 25,000-plus backlog of patent appeals to hear the new post-issuance review petitions. Even if the patent office is successful in expanding the administrative patent judge corps, it seems likely that meeting the aggressive deadline imposed by the statute is going to increase the backlog of appeals. Hopefully, the good deeds intended by the act will escape the law of unintended consequences.