Archive for February, 2011

The Debate Over Proposed Changes to First-to-Invent and the One Year Grace Period

February 28, 2011

As the Senate takes up the debate on S. 23, there is a lot of discussion on certain aspects of the bill.  IPWatchdog has a long discussion of some of these issues.

First, it is imperative that the PTO’s funding situation be addressed.  Sen. Tom Coburn (R-OK) is expected to propose an amendment to prohibit fee diversion and permit the PTO to keep all of the fees it collects from users each year.  Given the desperate state of the US treasury, it is unclear whether Congress would really tie its hands to keep from raiding the PTO in the future.

Next, there is the discussion of the change from the current first-to-invent system to the new first-inventor-to-file system, along with the accompanying changes to the grace period.

First-to-File v. First-Inventor-to-File

Under the current first-to-invent system, if two (or more) applicants file patent applications that claim the same subject matter, the PTO can declare an interference proceeding.  Either the examiner can suggest an interference or the applicant can copy one or more claims of a patent that issued within the last year or an application that published within the last year, provided he can make a prima facie showing of priority.  The party that filed the application with the earlier filing date is the senior party, while the party that filed the application with the later filing date is the junior party.

To win an interference proceeding and be entitled to a patent on the invention, the junior party must be able to demonstrate conception of the invention prior to the senior party’s filing date, and then either actual reduction to practice prior to that date or diligence in reducing the invention to practice from a date prior to the senior party’s filing date.  The junior party has the burden of proof and requires evidence to make the proof.

The theory behind a first-to-invent system is that smaller entities such as independent inventors and small companies including start-ups cannot get to the PTO as quickly as large corporations that file numerous patent applications each year.  Thus, the smaller inventors can still acquire patents for inventions that they conceived first through the interference proceeding.

The realty is that junior parties prevail in a very small percentage of interference proceedings; the proof required to ante-date the senior party’s invention date is simply too great.  Many junior parties do not even understand how to keep proper records of conception for admission into such proceedings.  Further, interference proceedings are usually like mini-trials in the PTO that require discovery, motion practice, and testimony.  Such proceedings are costly and time-consuming.  Few small inventors can afford to pursue these matters.  This has led to the argument that we currently have a de facto first-to-file system now.

Under a pure first-to-file system, there is a race to the Patent Office.  The first filer is the winner period.  Under the proposed first-inventor-to-file system, by constrast, there is still the chance for a junior filer to win the patent rights.  He would need to win a new “derivation proceeding” to prove that the senior filer “derived”–in effect stole–the invention from the junior filer. 

Now, perhaps if the inventor has left the company where the invention took place and took the invention with him, the junior party could prevail in such a proceeding, but in most cases it would seem that evidence of such theft would be difficult or impossible to obtain.  Thus, it seems logical to assume that junior parties will prevail in derivation proceedings with even less frequency than in interference proceedings.  Perhaps this change puts us even closer to the de facto first-to-invent system.

Grace Period

Under current law, you take the application’s filing date and look back one year.  During that time, it is almost irrelevant what the inventor did to disclose his invention.  To put it another way, once an inventor publicly discloses his invention or sells it or offers it for sale, he has one year to file a US patent application.  This should not change under the amendments proposed in S. 23.

Under current law, § 102(b) of the Patent Act provides that patents and printed publications are always available as prior art if they were published more than one year before the application date.  Under § 102(a) and (e), patents, published applications, and knowledge or use by others within this country are prior art provided they are dated before the invention date of the invention, which is initially presumed to be the application date.  These provisions apply to prior art dated less than one year from the application date. 

If an examiner rejects a patent claim under § 102(a) or (e), the applicant is given the opportunity to ante-date the prior art or show that the invention date is before the date of the prior art.  This is typically done by filing an affidavit signed by the inventor with evidence of such prior invention.  Unlike in interference proceedings, these affidavits are not often questioned by the examiner, so if the inventor kept invention records while he was inventing, he can really ante-date most references within a year of his application filing date.

This part of the grace period would be eliminated by S.23.  New § 102(b) would only exclude prior art within one year of the filing date if it is a disclosure of the inventor or one who obtained the subject matter directly or indirectly from the inventor.  This provision is not exactly clear, but it appears to seriously limit the ability to swear behind prior art that is not the inventor’s own disclosure. 

This will expand the amount of prior art available to examiners during prosecution, such as to make obviousness rejections.  It again expands secret prior art, that is patents and patent applications that are not published until after an application’s filing date but were filed earlier.

I have long advocated that inventors file their patent applications sooner in the process rather than later.  Although unclear, this must be Congress’ intent, to get applicants to file sooner.  Under S. 23, it is even more imperative to get the application on file, both to keep the prior art pool a bit smaller and because it will be difficult or impossible to prove that another party “derived” the invention from you.


Federal Court Holds False Marking Statute Unconstitutional

February 25, 2011

In the ongoing saga against the Patent Act’s False Marking Statute, Judge Dan Aaron Polster of the Northern District of Ohio has ruled the law unconstitutional as violating the Take Care Clause of the Constitution.  Unique Product Solutions, Ltd. v. Hy-Grade Valve, Inc.   The arguments in a similar case were previously reported.

In Hy-Grade, unlike in the GSK case reported earlier, the court noted that it had provided a great deal of notice and opportunity for the Justice Department to intervene and to file a brief regarding the statute’s constitutionality.  Despite indicating an intent to defend the statute and intervene in the case, the Justice Department did not do so. 

The court also noted that the Federal Circuit has yet to decide this question, but does have a pending case where the constitutionality of the False Marking Statute is now before it.  United States ex rel. FLFMC, LLC v. Wham-O, Inc., No. 2011-1067.

The court in Hy-Grade stated that application by the Sixth Circuit of an earlier Supreme Court decision requires that for such actions to be constitutional, the government must be given notice and the opportunity to control the action such as by intervening and even dismissing the case.

Although the Hy-Grade court claimed that it did not matter whether the False Marking Statute is deemed to be civil or criminal in nature, it seemed to rely on the Federal Circuit statement in Pequignot that the statute is a criminal one.  Criminal statutes are enforced by prosecutors who are supposed to be objective rather than by individuals who would experience a pecuniary benefit on the outcome of the case.  The doctrine of prosecutorial discretion permits government prosecutors to dismiss or settle cases through plea bargains.  No such similar provision exists in the False Marking Statute.

This case and similar ones will undoubtedly end up being decided by the Federal Circuit.  While most people believe that this statute is not well written and is subject to abuse, this does not make it unconstitutional.  It is the purview of Congress to fix bad statutes, not the courts.

Thanks to Gray on Claims for keeping track of the large number of false marking cases being filed and decided.

Patent Reform Update

February 22, 2011

Senate Judiciary Committee Chairman Patrick Leahy (D-VT) is reporting that he has accomplished something in the 112th Congress that he could not do in the 111th:  his Patent Reform Bill, S. 23, will be debated on the floor of the U.S. Senate.  Senator Leahy says that the bill will be debated when congress returns from its Presidents’ Day hiatus on Feb. 28.

Here We Go Again

February 22, 2011

In 2007, the PTO attempted to jam through a set of rules that would severely limit the number of claims in patent applications and that would severely limit the number of Requests for Continued Examination (RCEs) and continuing applications.  After a long, protracted fight where a court determined that the PTO did not have authority to implement such rules, the new PTO administration realized the error and dropped the rules.

The new PTO administration under Director Kappos believed that the problem with too many RCE filings is the fault, at least in part, of the examiners.  The PTO sought to assuage the problem of too many RCE re-files by making it less advantageous to examiners to churn applications.  This change was implemented by count reform where examiners get less credit for examining RCEs than for new applications.  Unfortunately, it does not appear that RCE filings have been reduced in any appreciable way.

It must be time to eliminate RCEs by statute!  Cecil Quillen, Jr., an IP Institute Research Fellow at the University of Richmond and former general counsel of Eastman Kodak, advocates this position in a letter to the editor of the New York Times (although he did not appear to write the letter on behalf of his current or former employer).

In his letter, Mr. Quillen argues that the problems at the PTO are not the result of insufficient number of examiners or inadequate funding.  Instead, he believes that the practice of patent applicants “refiling” patent applications is the problem with the U.S. patent system as it imposes so much rework on the patent examiners.  He cites statistics that 42% of applications filed during FY2010 were simply re-filed applications.  Elimination of re-filed applications will increase PTO resources for original applications by more than 70% without the need to hire additional examiners and will increase patent quality as examiners will only need to focus on originally filed applications.  The adoption of the Senate patent reform bill, S. 23, will somehow aggravate this problem.


I wonder if banning RCEs and continuing applications will also cure cancer.  If it’s so easy, why didn’t someone else think of this earlier.  Let’s look at some typical cases:

A patent applicant files a new patent application with a set of claims that the applicant believes to be novel and non-obvious, and important to its business.  Some time later, the applicant receives an office action.  The applicant still believes that the invention is patentable as written and uses arguments and amendments to convince the examiner to that effect.  Given our US adversarial system, we are told to fight for what we believe we are entitled to.

The examiner issues another office action, usually final, where the rejections are now more focused and the issues are narrowed.  The applicant now agrees to narrow the claims.  The examiner, however, indicates that such claim amendments “raise new issues” and won’t be considered after a final office action.  In such cases, the applicant has no choice but to file an RCE to get the examiner to consider these amendments.  Under Mr. Quillen’s system, the application must instead be abandoned.

By the time the examiner reviews the RCE, he does not have to “re-work” the application from scratch.  He has already done a search (although it may need to be updated).  The issues have been focused and narrowed.  He is not working on a blank slate.  Thus, examiners should get less credit for examining RCEs; they don’t require as much work as original filings.  I don’t know where Mr. Quillen got his 70% number, but it is clearly an exaggeration.

Or, perhaps the applicant had amended some of the claims after the first office action, but kept others as originally filed.  The final office action allows some of the amended claims, but not others.  Is the applicant stuck with the allowed claims or can he file a continuing application to continue to prosecute the rejected claims?

The US also has a fairly unique system of requiring applicants to submit material prior art, such as foreign search reports, to the PTO.  The applicant has a duty to submit such information during the entire pendency of the application.  A patent application is pending from the time it is filed until it issues or is abandoned.  Applicants will sometimes get foreign search reports after an application has been allowed.  The only way to get this art considered by the examiner is to file an RCE.  To permit the patent to issue without consideration of the art in the search report would cast a cloud over the patent.  This situation is set to get worse when the Supreme Court changes the standard for challenging patents based on prior art that has not been considered by the examiner.

One answer to these problems is to conduct examiner interviews, early and often, to get applicants and examiners to agree on allowable subject matter early in the prosecution process.  I am a huge proponent of interviews and believe that they nearly always advance prosecution.  That being said, however, too often examiners will be non-committal.  This is especially true for junior examiners.  Junior examiners do not have authority to allow claims without review by a senior examiner or supervisor.  Thus, examiner interviews with junior examiners require a senior examiner with such authority to also be present.  The problem is that the senior examiner has his or her own docket and often is not familiar with the application and issues or prepared for the interview.  Such interviews can be frustrating and maybe even unhelpful.

Situations can also arise where an applicant is required to present evidence to show non-obviousness of the invention.  Such evidence can include comparative data, sales information, third party declarations, and others.  Applicants usually do not know that such information will be required when they first file an application.  Once the issue arises during prosecution, there may not be sufficient time to acquire the information prior to a final office action.  An RCE or continuing application can be filed to permit time to acquire and present this evidence.

It is unclear from his brief letter what Mr. Quillen thinks about restriction/divisional practice.  This is also a form of “re-work” or re-filing that is not the fault of the applicant.

The bottom line is that the patent community was rightfully outraged when the 2007 PTO rules package included a severe restriction on RCE/continuation filings.  I believe that we should work with examiners to reduce RCE churning by permitting some “new issues” to be considered after a final office action.

This is simply another example of using the media to inflame public opinion on a complicated issue by making exaggerated claims.

Patent Prospector also has a response to Quillen’s letter.

House Subcommittee Hearing on Patent Reform

February 14, 2011

On Friday, the House Subcommittee on Intellectual Property, Competition, and the Internet held a hearing on patent reform, even though no bill has yet been introduced in the House in the 112th Congress.  The witnesses at the hearing included David Simon, associate general counsel, intellectual property policy, Intel Corp. and on behalf of the Coalition for Patent Fairness; Carl Horton, chief intellectual property counsel, General Electric Corp. and on behalf of the Coalition for 21st Century Patent Reform; and retired Chief Judge Paul Michel of the Federal Circuit.

David Simon

Simon began his testimony by reciting how far things have come in patent reform thanks to recent court decisions.  No longer do companies like Intel have to fear easily obtained injunctions, invalidating bad patents for obviousness is easier, the standard for willful infringement is now more than mere knowledge of a patent, and inconvenient fora for infringement suits are no longer the rule.  He also noted that damage awards are becoming more difficult to prove, especially for non-practicing entities.

Looking at the current state of the patent system, the need to address this set of issues as part of a larger comprehensive, substantive patent reform has passed.

Simon asked the Committee not to focus on things like substantive reform, but to instead focus on the PTO.  He testified that the PTO has still granted too many bad patents, the rise in false marking cases is a problem, and too many defendants are sued in the same case, even where the patents and products are not related.

He noted that the current statutory scheme places a difficult burden on the examiner.  The examiner has little time to review poorly written applications and to make rejections of bad claims.  If the examiner cannot articulate proof that a patent claim should not be granted, it will issue.  He also criticized the fact that the PTO cannot institute a long term plan because of budgetary issues and is still being flooded by too many unimportant patent applications.

The agenda of his organization proposed needed changes at the PTO.  First, they proposed computerized examination to better handle poorly written patent claims.  Second, the PTO needs to keep the current reexamination system in place.  Third, given the push to switch from first-to-invent to first-to-file, a stronger prior user rights defense is needed.  This will prevent companies from liability from poorly written applications that might flood the PTO under a new system.  Next, Congress must end fee diversion and permit the PTO to set fees at the level it needs.  Post-grant opposition must be strengthened in the bills and always permitted.  Finally, all aspects of PTO operation must be made more transparent.

Carl Horton

Horton raised several changes on behalf of his organization.  He advocated a change to a first-inventor-to-file system while maintaining the grace period.  This would greatly simplify the process.  No longer would evidence of conception and reduction to practice be necessary.  Section 102 could be simplified so that anticipatory prior art available before the filing date precludes a patent.

Next, he advocated permitting third parties to submit prior art and other information during pendency of a patent application.  He also agreed that the 12 month post-grant opposition window and the expansion of inter partes reexamination during the remaining life of the patent were needed.  Reexamination should be permitted on any basis related to patentability.  He concurred in the safeguards against abuse of these systems in S. 23.

Next, he emphasized the need for additional funding for the PTO.  He agreed with Simon that the PTO needs fee setting authority and must be permitted to keep the fees it collects.

The explosion in false marking cases requires Congress to revise the antequated statute to reduce complaints to those filed by injured parties and the United States.  State of mind factors in patent litigation should be addressed including best mode, inequitable conduct, and willful infringement.  Finally, he noted that his organization will support the Senate’s “gatekeeper” provision on damages, but that he does not believe reform is needed in the damages context.

Judge Michel addressed delay in the patent system as the biggest problem.  He advocated more resources to the PTO to permit it to conduct examination more quickly.  Fees must be set at levels to permit the PTO to do so.  He argued that patents are getting longer and more complex which makes the PTO’s job more difficult.  He advocates hiring large numbers of additional examiners and judges for the BPAI, as well as a new IT infrastructure.

Paul Michel

Judge Michel believes most of the proposed patent reform legislation is irrelevant until the PTO is adequately funded to do its job.  ALL patent applications should have examination concluded in 2 years.  Because applications are published in 18 months, many applications are available to competitors for several years before any patent issues.  During this time, they can be copied with impunity.

Even though Congress is proposing great speed for post-grant procedures and the prevention of their abuse, without adequate resources, how can it guarantee such results?  Who can even enforce them?  Reexaminations are supposed to be conducted with special dispatch, yet delays of over 3 years are common.

The Federal courts also require additional resources to handle all of the patent cases.  An inadequate number of judgeships have been authorized, and of those that have, there is substantial backlog and gridlock on confirmations.

He agreed with Simon that many of the patent reform intiatives have been handled by the courts.  Any new PTO procedures will divert resources from its primary function of examination and issuing patents.  Finally, Congress should hear from all constituents prior to enacting reform legislation.  Specifically, he believes that CEOs of start-up companies and venture capitalists have not been adquately heard in the patent reform debate.  He urged Congress to hear from them as well.

Jimmie Reyna to Finally Get Confirmation Hearing

February 10, 2011

The Senate Judiciary Committee has finally scheduled a confirmation hearing from Jimmie Reyna who was nominated by President Obama to the Federal Circuit on September 29.  The hearing is scheduled for next Wednesday, February 16.

It seems unlikely that there will be any controversy surrounding Mr. Reyna’s hearing and confirmation.  That does not mean, however, that the Senate will not play politics as it did with Judge O’Malley’s confirmation last year.  She sailed through a confirmation hearing on July 28, but was not confirmed until December 22 as part of a lame duck session compromise.  While the hearing is a necessary first step, getting a committee vote and a floor vote could still take a while.

But . . . aren’t there two Federal Circuit nominations pending?  Whither Edward DuMont?  He was nominated long before Reyna on April 14 and has yet to receive a hearing.  Is something going on here or is the Senate merely playing politics?

PTO Proposes Rules for Track I Accelerated Examination

February 7, 2011

On Friday, the PTO published proposed rules to implement Track I of its Three Track Examination proposal.

The rules are pretty straightforward.  To participate in Track I, a request must be filed with a new non-provisional utility or plant application (not a design application), the application must be filed electronically, and must include a fee for prioritized examination.  The application must be limited to 4 independent and 30 total claims.  Although the PTO does not propose to publish the applications early, the applicant must also pay the $300 publication fee with the initial filing.

The main question that will concern applicants is the required fee.  Ideally, the PTO would like to set the fee at $4,800 and $2,400 for small entities.  This is on top of the normal application fees.  The statutory provision for setting PTO fees only lists certain fees for which the PTO may provide a 50% discount for small entities.  Since the accelerated examination fee is new, there is no statutory provision for a small entity discount.  Thus, the proposed rule is to charge everybody a fee of $4,000, regardless of size.  The PTO is hoping that Congress will give it authority to charge the $4,800/$2,400 fee instead.

The PTO’s office-wide goal for Track I applications is final disposition within 12 months of initial filing.  Final disposition generally means a notice of allowance or final office action.  Further, the filing of a notice of appeal, the filing of an RCE, the declaration of an interference, or the abandonment of an application also constitute final disposition.  The rule does not provide any detriment to the office or benefit to the applicant if the PTO does not meet this goal; i.e., there is no refund.

If an applicant files a request for extension of time (by, for example, filing a response to an office action more than three months from its mailing date) or files a Request for Continued Examination (RCE), the application is dropped out of accelerated status.  The application goes back into the regular examination queue and there are no refunds.

Any new application, including continuing or divisional applications, is eligible for Track I status by complying with the requirements of the rule.

The rule would limit the number of applications on Track I to 10,000 during the first year, at which point the PTO would evaluate the procedure for subsequent years.


The PTO addressed a number of comments that it received to its original notice published last year.  The best thing the office did was to eliminate the proposed discrimination of foreign-originated applications. 

The PTO claims that the proposal is neutral on the backlog and that it won’t effect the status of applications that proceed under the normal examination pace.  The fee will permit the office to hire sufficient examiners to meet the goals of the Track I applications while leaving the others unchanged.

If an application is appealed, there is no effect on its status at the BPAI.  Track I only applies to applications before the examiner.

I’m not sure why an application loses its Track I status when an applicant requests additional time for filing a response or if an examiner requires the filing of an RCE.  For the time extensions, the PTO could simply adjust its goals accordingly.  This will require applicants to remain diligent during prosecution.

Given that many examiners are still churning RCEs, applicants should only use Track I if they are prepared to compromise significantly on the claims of an application.  Perhaps Track I could be used to get an initial patent quickly, while additional applications use normal examination to get additional and potentially broader coverage.

Finally, the ability to obtain a patent quickly comes with a potential risk of secret prior art.  Since patent applications are prior art as of their filing date once they are published (under § 102(e)), and publication is not until 18 months from the filing date, having a patent that issues in less than 18 months means there could very well be secret prior art that would invalidate the patent that has been published until after the patent issues.  Granted, this could happen under the current system as well, but is more likely with accelerated examination.

If you have comments on the proposed rules, you need to move quickly.  The comment period closes on March 7.

Senate Judiciary Committee Passes Patent Reform Bill

February 4, 2011

As expected, the Senate’s bill on Patent Reform, S. 23, was approved by the Judiciary Committee yesterday.  What might be a bit surprising was the near unanimity of the vote.  The bill now heads to floor of the Senate.

Relatively few amendments were proposed by the committee members.  Patent Docs has a complete summary of the proceedings.  The senators seemed to be in agreement about the need to pass legislation to end the patenting of business methods, including tax avoidance strategies.  They apparently don’t like the Supreme Court’s Bilski decision.

Sen. Tom Coburn (R-OK) indicated that he will raise an amendment when the bill comes to the floor for debate that would end fee diversion at the PTO.  This would seem to be straight forward, but of course any time revenue is discussed in Congress, there is no such thing as straight forward.  Sen. Coburn and Sen. Dick Durbin (D-IL) had quite a discussion as to who would oversee PTO expenditures.

Congress seems to be adicted to stealing money from the PTO.  IPWatchdog notes some sources that believe it will be difficult for an amendment to end fee diversion to pass Congress.  Without an end to fee diversion, there is no point to patent reform.

Judiciary Committee to Consider Patent Reform Bill

February 3, 2011

The Senate Judiciary Committee has scheduled a mark-up session for this morning on S. 23, the Patent Reform Act of 2011, introduced by Sen. Leahy (D-VT) last week.  The Committee Chairman would like to fast-track the bill through the Committee to get a vote by the entire Senate soon. 

The bill has been co-sponsored by 8 of the Committee’s 18 members:  the aforementioned Sen. Leahy, Ranking Member Sen. Charles Grassley (R-IA), Sen. Orrin Hatch (R-UT), Sen. Jeff Sessions (R-AL), Sen. Amy Klobuchar (D-MN), Sen. Chris Coons (D-DE), Sen. Jon Kyl (R-AZ), and Sen. Al Franken (D-MN).  Several other committee members have been rumored to be discussing potential amendments to the post-grant review procedure, willful infringement, and fee provisions of the bill.

While the business community was a bit slow in the last Congress to take positions on the bill and to participate in the debate (to the extent that there was any debate permitted by Chairman Leahy), this time there appears to be resistance at an early stage.  Politico is reporting that the Patent Fairness Coalition is opposed to the bill, while the Coalition for 21st Century Patent Reform supports it.  Large pharmaceutical companies also support the bill.  The main criticism of the bill seems to be that the bill favors big business at the expense of small businesses and individual inventors.

On the House side, Judiciary Committee Chairman Lamar Smith (R-TX) has indicated that his committee will hold a hearing on Feb. 11 to examine certain aspects of patent reform legislation.