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CLIENT ALERT: U.S. House of Representatives Passes Patent Reform Bill Advancing Major Changes to U.S. Patent Law

June 27, 2011

By:  Janelle D. Waack and William P. Ramey III

Patent reform laws effecting some of the biggest changes in the history of U.S. patent practice are nearly here.  On June 23, 2011, the House of Representatives passed the America Invents Act (H.R. 1249), following the Senate's passage of its version in March 2011.  The only remaining steps are reconciliation of the House and Senate bills and signature by the President. 

To be prepared, the IP community needs to understand four key provisions:

(i)  Replacement of interferences with a first-to-file system
(ii)  A new post-grant review system enabling challenges to the 
validity of a U.S. patent before Administrative Patent Judges (APJs) at
the revamped PTO Board of Patent Appeals and Interferences
(iii)  Greater retention of PTO fees for funding operations of the PTO
(iv)  Limitation on who can bring false marking claims 
 

Transformation from First-to-Invent to First-to-File

 
Patent Reform will eliminate interference proceedings - the process whereby APJs of the Interference Trial Section review evidence of invention to determine who was first to invent.   Instead, the PTO will look to who was the first inventor to file a patent application in determining whom to award a patent. 
 
Pending interferences will continue to be administered by the Interference Trial Section and the first-to-file system will not take effect until one year after enactment of the new law.  Derivation proceedings will remain before the Board.  Patent owners or applicants with potentially interfering claims, however, should promptly evaluate their situation.  For example, there may be an increased urgency to initiate an interference before they are eliminated or find another avenue for meeting their IP objectives.  
 
Moreover, timely filing of patent applications is essential.  While applicants have always been urged to file applications early, that advice becomes a mantra.  Under the first inventor to file system, delay exposes an inventor to the risk and potentially irreparable damage of a speedy competitor winning the race to the mailbox. 
 

Cost-Effective Third Party Challenges to Patent Validity Before APJs at the Board

 
While the complexities of interferences are left behind, new proceedings will emerge that empower the IP community to challenge patent validity before APJs of the Board.  These proceedings will provide a cost effective, expedited alternative to district court litigation and are expected to drive the disposition of a substantial number of patent infringement litigations.

Procedurally, the new inter-partes review and post grant proceedings will parallel inter partes reexaminations formerly conducted before Examiners in the Central Reexamination Unit and the interference motions phase formerly conducted before APJs of the Interference Trial Section.  A substantial foundation has already been laid in the form of rules and procedures adopted by the Board for contested cases.  See, e.g., 37 C.F.R., Part 41, subpart D; the Contested Case Practice Guide and the Interference Trial Section Standing Order. 
 
We are ready to engage inter partes reviews and post grant proceedings with our team of patent attorneys and former Patent Office officials who have extensive experience and knowledge of contested cases.  Our dominant practices in reexaminations and interferences enable NDQ to expertly guide your most important IP issues through the new forums.  Distinctive features of the new actions include the hands-on case management style of the APJs, direct testimony of fact and expert witness testimony in the form of declarations, cross examination depositions, limited discovery (greater than current PTO proceedings but less than district court litigation), unique motions practice and briefing styles, and particular requirements for settlement discussions, forms of evidence, and electronic filing. 
 
The pending legislation provides two critical windows for inter partes and post grant review -- a first period after the initial grant of a U.S. patent and a second period after the filing of a district court patent infringement litigation.  Understanding the timing, scope of allowable issues and discovery, and potential estoppel is essential for any IP practitioner.
 

Limiting PTO Fee Diversion Provides More Resources For Prompt Issuance of Quality Patents

 
The reconciliation of the House and Senate versions of patent reform will seek to resolve different approaches to PTO fee setting authority and Congress' ability to divert PTO fees for other government purposes.  The Senate version gives the PTO fee setting authority and ends fee diversion.  The House bill establishes a separate PTO account for fees, and Congressional appropriators would have the authority to release those funds to the PTO.  Reconciliation that results in greater funding for examination operations should help the PTO pursue its goal of issuing valid patents promptly.
 

Limiting Who Can Bring False Marking Claims

 
Falsely marking a product with a patent number will still be an actionable offense under amended 35 U.S.C. § 292.  However, instead of "any person" suing for the penalty of $500 per offense, now only the United States or a party proving a competitive injury will be able to bring suit.  This change will apply to any case pending on or after the date of enactment.
 
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NDQs attorneys and advisors are actively deploying their expertise and advising clients how to adapt to the new U.S. patent practice.  Please contact us to arrange for a presentation on the details of these important proceedings and strategies for protecting and defending IP under the new patent law.

 
Janelle D. Waack is a Partner at Novak Druce + Quigg LLP and a member of the firm's Post Grant Law/Patent Reexamination Practice Group, chaired by Executive Partner Tracy W. Druce. Ms. Waack's practice focuses on interference matters before the United States Patent and Trademark Office Board of Appeals and Patent Interferences. She also has experience in patent litigation matters, reexamination and reissue proceedings, infringement and validity opinions and counseling for the strategic development of patent portfolios. Ms. Waack can be reached at janelle.waack@novakdruce.com
 
William (Bill) P. Ramey is a Partner at Novak Druce + Quigg LLP and a member of the firm's Post Grant Law/Patent Reexamination Practice Group, chaired by Executive Partner Tracy W. Druce. Mr. Ramey's practice concentrates on obtaining, enforcing and licensing intellectual property, including patents, trademarks, copyrights and trade secrets. He also has extensive technical and patent prosecution/preparation experience. Mr. Ramey has been involved in many patent, trade secret, trademark and copyright disputes and has prepared numerous opinions on intellectual property rights regarding validity, infringement and freedom to operate. He has written more than 300 patents and prosecuted many more. Mr. Ramey can be reached at william.ramey@novakdruce.com