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Client Alert
September 6, 2011

Patent Reform Cloture Vote Passes the Senate

Today the U.S. Senate held a cloture vote on a motion to accept the America Invents Act, H.R. 1249, also known as the patent reform bill, passed by the House of Representatives on June 23, 2011. With the cloture vote, debate on the America Invents Act is now limited to 30 hours and only amendments entered prior to the cloture vote can be considered. Since no amendments were offered prior to the cloture vote, the Senate will consider the House bill in its form as passed.

Summary of the Major Changes in Patent Law and USPTO Operations
The major areas of change resulting from the legislation are listed below with a brief explanation of each area.

  • First-Inventor-to-File
    Changes the U.S. system such that entitlement to a patent is granted to the first-inventor-to-file for a patent. This change largely conforms U.S. law with the rest of the world by doing away with the granting of a patent to the person(s) shown to be the first inventor, but who may have been the second inventor to file for a patent on that invention.
     
  • Derivation Actions/Proceedings
    Provides a mechanism by which a petitioner who is currently a patent applicant can seek cancellation or refusal of the claims in an earlier patent or application where the inventor named in the earlier patent or application derived the invention from the petitioner and filed the earlier patent application without authorization by the petitioner. Any such petition must be filed within 1-year from the date of the first publication of a claim to an invention that is the same or substantially the same as the earlier application’s claim to the invention.
     
  • False Patent Marking
    Eliminates the ability to bring an action for false marking, except to recover actual competitive damages resulting from the false marking. The Federal Government retains the sole right to sue for and recover statutory damages based on false marking. Also, a manufacturer may now utilize virtual patent marking by using the word “Patent” or “Pat.” on a product, along with a reference to a website freely accessible by the public that provides more information about the patent.
     
  • Prior User Rights
    A party using an invention before another party files a patent application will have a defense to infringement based on the prior use. Importantly, the House bill does not provide the prior user rights defense against patents having subject matter developed pursuant to any federally funded R&D agreements or by universities without funding from private business. The House bill also provides that this defense is available with regard to all patents, not just method patents.
     
  • Advice of Counsel
    To codify the Knorr-Bremse decision, failure by an accused infringer to obtain advice of counsel with respect to any allegedly infringed patent cannot be used to prove willful infringement or inducement of infringement. 
     
  • Post-Grant Proceedings
    • Post-Grant Review
      Post-grant review provides an opportunity to challenge the validity of recently issued U.S. patents. In addition to prior art, all issues of patent invalidity, such as lack of enablement or written description, may be considered. A petition for post-grant review must be filed no later than nine months after the grant of the patent. Post –grant review will be instituted if the petitioner shows that it is more likely than not that at least one claim is not patentable, or that there is a novel or unsettled legal question that is relevant to other patents and applications. The decision whether to institute post-grant review shall be made within 3 months of either the patent owner’s preliminary response or, if no such response is filed, the last date on which a response may be filed. A post-grant review may not be instituted if, prior to the date of the petition, the petitioner filed a civil action challenging the validity of the patent. A counterclaim challenging the validity of the patent does not qualify as such a civil action. In any civil action alleging infringement filed within 3 months after the date the patent is granted, the court may not stay consideration of a motion for preliminary injunction on the basis that a petition for post-grant review has been either filed or granted. A civil action filed by the petitioner after the petition for post-grant review challenging the validity of the patent may be automatically stayed under certain circumstances. The petitioner has the burden of proving unpatentability by a preponderance of the evidence. Although the decision whether to institute post-grant review is not appealable, an adverse decision on the merits is appealable to the Federal Circuit. Generally speaking, a decision must be rendered within 1 year after the post-grant review is instituted. Parties are estopped from subsequently raising in civil litigation or International Trade Commission proceedings any issue that was raised or could have been raised during post-grant review. 
       
    • Inter Partes Review
      Replacing inter partes reexamination, inter partes review is limited to grounds of anticipation or obviousness based on prior art patents or publications. A petition for inter partes review must be filed after the later of either (1) the date that is nine months after the grant of the patent or (2) the date that a post-grant review (if instituted) is terminated. Inter partes review will be instituted if the petitioner shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition. The decision whether to institute inter partes review shall be made within 3 months of either the patent owner’s preliminary response or, if no such response is filed, the last date on which a response may be filed. An inter partes review may not be instituted if, prior to the date of the petition, the petitioner filed a civil action challenging the validity of the patent. A counterclaim challenging the validity of the patent does not qualify as such a civil action. In addition, a petition for inter partes review must be filed within 1 year after the date on which the petitioner is served with a complaint alleging infringement of the patent. A civil action filed by the petitioner after the petition for inter partes review challenging the validity of the patent may be automatically stayed under certain circumstances. The petitioner has the burden of proving unpatentability by a preponderance of the evidence. Although the decision whether to institute inter partes review is not appealable, an adverse decision on the merits is appealable to the Federal Circuit. Generally speaking, a decision must be rendered within 1 year after the inter partes review is instituted. Parties are estopped from raising in civil litigation or International Trade Commission proceedings any issue that was raised or could have been raised during inter partes review.
       
  • Prior Art Submissions
    A third party may submit references and a concise statement of the relevance of each reference to the USPTO while a patent application is pending. The submission will be entered into the record for consideration by the examiner. The deadline to submit references is the earlier of (1) a Notice of Allowance or (2) the later of six months from publication or the issuance of a first office action rejecting a claim.
     
  • Best Mode Requirement
    A patent cannot be canceled, invalidated or held unenforceable based on a failure to disclose the best mode. The best mode, however, is not removed as a requirement in the disclosure of the patent application.
     
  • PTO Funding
    Establishes for the USPTO a Reserve Fund. All fees payable under 35 U.S.C. 41 (application fees, extension fees, issues fees, maintenance fees, etc.) and 42 (fees for services performed by the PTO) are to be deposited into the Fund and available to the Director until expended. Actual funding amounts, however, are still subject to appropriation acts by Congress.
     
  • Supplemental Examination
    A patent may be corrected at the request of a patent owner, provided that a substantial new question of patentability is raised by at least one item of information, such as a newly identified reference that was not made of record during prosecution. Supplemental examination of a patent may be terminated if the USPTO Director concludes the failure to make a reference of record during prosecution was an attempt to defraud the USPTO.
     
  • Tax Strategy Patent Exclusions
    Any strategy for reducing, avoiding or deferring tax liability is unpatentable, even if the strategy was unknown at the time of the invention or application for patent.
     
  • Joinder of Parties
    A patent owner will not be able to sue multiple parties in one action unless (1) the right to relief arises out of the same transaction, occurrence or series of occurrences relating to infringement and (2) there are questions of fact common to all of the parties.
     
  • Satellite Offices
    The House bill mandates three or more satellite offices, with the first satellite office being in Detroit, Michigan.
     
  • Priority Examination
    An applicant may request priority examination of an application that claims technologies deemed important to the national economy or national competitiveness.

If you have any questions or wish to discuss how this legislation may impact you, please contact an attorney at Brinks Hofer Gilson & Lione.

View PowerPoint slides on Patent Reform.

View America Invents Act, H.R. 1249 [Report No. 112-98, Part I].
 

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This Client Alert is intended to provide information of general interest to the public and is not intended to offer legal advice about specific situations or problems. Brinks Hofer Gilson & Lione does not intend to create an attorney-client relationship by offering this information and review of the information shall not be deemed to create such a relationship. You should consult a lawyer if you have a legal matter requiring attention. For further information, please contact a Brinks Hofer Gilson & Lione lawyer.

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