Archive for February, 2013

New SHIELD Bill Introduced in House

February 28, 2013

Last year, several members of Congress sought to limit patent infringement suits concerning computer hardware and software.  If the suit did not have a “reasonable likelihood of succeeding,” the losing party would be required to pay all of the legal costs of the lawsuit, including attorneys’ fees.  This was sought to be a deterrent to frivolous litigation.

Now, Reps. Jason Chaffetz (R-UT) and Peter DeFazio (D-OR) are at it again.  They have introduced H.R. 845, Saving High Tech Innovators from Egregious Legal Disputes (SHIELD).  Now, instead of targeting the computer hardware and software industries, they have set their sights on non-practicing entities (NPE) or patent trolls.

The new bill discards the “reasonable likelihood of succeeding” standard (presumably because it was too vague) in favor of simply requiring any losing NPE to pay the costs and fees associated with the litigation.  Put simply, if you don’t practice the patent and bring an infringement suit, if you lose, you pay.

The bill defines an NPE in the negative.  A party is not an NPE if (1) it is the original inventor or co-inventor of the patent, (2) it is the original assignee of the patent, (3) it is a university or technology transfer organization associated with a university, or (4) “[s]uch party can provide documentation to the court of substantial investment made by such party in the exploitation of the patent through production or sale of an item covered by the patent.”

The defendant in such litigation would simply file a motion with the court that the patent owner is an NPE.  The patent owner would then have 90 days to prove that it meets one of the four criteria to not be deemed an NPE.  If the court determines that the patent owner is an NPE, the patent owner would be required to post a bond to cover the entire costs of the litigation.  This amount would be awarded to the defendant in the event it prevails.


The bill is an improvement over the previous one in that it doesn’t target a specific technology area.  It is still, however, completely unnecessary.  The power to award attorneys’ fees to the prevailing party already exists under § 285.  Perhaps this section should be applied with more frequency than it currently is.  This would be a simpler fix than that proposed by the SHIELD bill.

There are definitely entities that seek to exploit the fact that patent litigation is very expensive by filing lawsuits that lack substantial factual or legal basis.  These lawsuits are a drain on the target’s resources.  A patent, however, is a property right.  As such, it may be bought, sold, transferred, or otherwise alienated as its owner sees fit.  If an inventor cannot transfer or sell its patent to an NPE, that patent now has less value as the market for its exploitation is smaller.  In this regard, the SHIELD bill seems misguided.

Weeding out frivolous lawsuits, not just in patent law but in all areas of the law, is an admirable idea.  The SHIELD bill, however, does not appear to be the answer.


What Grace Period? Another Reason to File by March 16

February 25, 2013

The deadline for the transition of the US patent system from first-to-invent to first-to-file is fast approaching.  This change is significant and will result in applicants not being permitted to swear behind or prove prior invention of prior art references cited against applications filed after March 16 with claims that don’t have support in an earlier application.

There is, however, another significant reason to file by March 16.  The grace period is being significantly curtailed.

In the US, applicants have typically had a year to file a patent application after first public use or sale.  They could also pre-date prior art used in obviousness rejections that relied on prior art dated within a year of their application’s filing date.  This is changing.

Disclosure v. Public Use or Sale

While the PTO and a number of others argue that applicants will retain the ability to publicly use or disclose their inventions or offer them for sale for a year prior to filing a patent application, until the courts (read:  Federal Circuit) rule on the difference between a disclosure and a public use or sale, it would be risky for applicants to rely on the grace period.  The new law seems to literally protect disclosures, but not public uses or sales.  The courts (including the Supreme Court) have previously ruled that there is a difference between these activities.

Third Party Disclosures/Derivations

Perhaps just as importantly, the PTO has issued guidelines that indicate that there is no grace period for third party disclosures that pre-date an application’s filing that are obvious variants of the claimed invention.  There are several implications of this issue.

First, as seems to be intended by Congress, applicants cannot file patent applications that are obvious variations of inventions on which third parties have already filed.  Under current law (pre-March 16), if the applicant could prove an earlier invention date, it does not matter if the invention is obvious in light of the third party’s prior filing.

Second, this is a significant limitation of the grace period.  Under the letter of the new law, applicants can still publicly disclose their inventions and then file an application within a year.  Their own disclosures are not prior art.  If a third party sees that disclosure, however, and files a patent application that is not exactly what was disclosed by the applicant, but is instead an obvious variation of that disclosure, there is no grace period for the third party’s filing.  The applicant’s claims will be rejected as being obvious over the third party’s earlier filing.

It does not matter whether the third party “derived” the invention from the inventor or not.  Derivation protection only applies for identical disclosures.

What to Do

Until this situation is resolved and clarified (and perhaps even after depending on the results), applicants would do well to assume there is no longer an effective grace period in the US.  They should at least file a provisional application prior to any public use, sale, or disclosure.

HT:  Hal Wegner has been writing on this issue.

Patent Malpractice Cases Belong in State Court

February 21, 2013

Yesterday, a unanimous Supreme Court has overturned the Federal Circuit practice of keeping malpractice cases against patent attorneys in Federal court with appeals to the Federal Circuit.  Gunn v. Minton.

In this case, the Texas Supreme Court had followed the Federal Circuit’s rule and dismissed the case for lack of subject matter jurisdiction.  The Federal Circuit’s rule was that such cases required resolution of significant issues of patent law, including whether the complainant would have prevailed if not for the alleged malpractice.  Would the complainant have received its patent in prosecution or prevailed on infringement claims in litigation?  The Federal Circuit was concerned that state courts are not adequately experienced in deciding patent cases which have exclusive Federal jurisdiction.  There could also be cases with conflicting results.

Judge O’Malley had recently been dissenting from the court’s prevailing view on this issue.

The Supreme Court held that although the state courts must answer questions of patent law to resolve the malpractice claims, the answer has no broader effects.  It is not binding precedent on future patent claims and will not effect the validity of the patent.  Therefore, state courts may retain jurisdiction over such malpractice claims.

The question next becomes whether the resolution of this case will effect other cases.  For example, is a dispute over a license or other contract whose subject matter is a patent belong exclusively in Federal court?  Contract disputes are typically decided under state law.  This question is presented in another case where a petition is pending before the Supreme Court.  Regents of Univ. of California v. Caldera Pharm., Inc.

As noted by Patently-O, however, the AIA changed the jurisdictional requirement from whether the dispute “arises under” the patent laws to whether it involves “any claim for relief arising under any Act of Congress relating to patents.”

Obama Says AIA Only Went About Halfway on Patent Reform

February 19, 2013

ObamaLast week, President Obama appeared on Google + Hangout to review topics he covered in his State of the Union address.  One big topic that he addressed was the need for more patent reform.

Specifically, he castigated patent trolls.  They don’t actually produce anything, but are “just trying to essentially leverage and hijack somebody else’s idea and see if they can extort some money out of them.”

He called on Congress to pass additional patent reform legislation.  The AIA “only went about halfway to where we need to go.”  He called for involvement from more stakeholders to build consensus on “smarter” patent laws.

The president also addressed internet issues such as privacy and civil liberties and also called for high schools to become more “high tech.”  He did recognize the need for IP laws to promote innovation.

First-to-File Final Rules and Examination Guidelines

February 14, 2013

Today, the PTO is publishing Final Rules and Examination Guidelines for the implementation of the first-to-file provisions of the AIA that take effect March 16, 2013.  These documents are extremely lengthy and detailed.

The most important provisions to remember are that the new rules apply to all applications filed after the March 16, 2013 effective date, unless the application claims the benefit of an earlier filed application (foreign, international, provisional, or non-provisional) and all claims of the later-filed application are fully supported by the earlier filed application.

In the case where the later-filed application claims the benefit of an earlier-filed application, but includes at least one claim that is not fully supported by an earlier application, the rules require the applicant to provide a statement to that effect.  This rule applies if the application contains such an unsupported claim at any time.  It does not matter if the claim is later cancelled.  The rules also contain strict time frames for applicants to file such a statement.  “This procedure will permit the Office to readily determine whether the nonprovisional application is subject to the changes to 35 U.S.C. 102 and 103 in the AIA.”

Thus, the burden is squarely on the applicant to be certain that the application is to be governed by the first-to-invent rules rather than the first-to-file rules.

Several suggestions for avoiding any questions as to whether the application will be governed by the old rules or the new rules are listed below.

  1. File any possible application before the March 16 deadline.  This includes any foreign application or international application where the deadline may be several months away, as well as any provisional applications that may not expire for several months, and even continuation, divisional, or continuation-in-part applications that are being contemplated prior to that date.
  2. After March 16, if you plan to file an application that will include some claims that are supported by an earlier application and some that are not, segregate the claims into separate applications.  At least the entire application will not be “contaminated” by the claims that are not supported.
  3. Consider this issue carefully when preparing new applications or when adding new claims to pending applications.

First-to-invent rules are clearly more applicant friendly; applicants should seek to remain under those rules for as long as possible.  The transition period will be one of confusion as to which rules should apply during prosecution and litigation.  Planning ahead can only help avoid the confusion.

Patent Docs includes a good analysis of the rules and PTO responses to comments.

Raymond Chen and Todd Hughes Nominated to Federal Circuit

February 8, 2013

President Obama has nominated Raymond Chen and Todd Hughes to fill Federal Circuit seats vacated by Judges Linn and Bryson when they took senior status.

Raymond Chen

Raymond_T._ChenSince 2008, Raymond T. Chen has served as the Deputy General Counsel for Intellectual Property Law and Solicitor for the USPTO.  He began his career as an intellectual property litigator with Knobbe Martens in California.  From 1996-98, he served as a Technical Assistant at the Federal Circuit where he acted as a staff attorney.  In 1998, he joined the PTO as Associate Solicitor before rising to his current position in 1998.

Chen has extensive experience before the Federal Circuit while working in the Solicitor’s Office.  He has argued over 20 cases, including BilskiNuijten, and Comiskey, and advises the PTO’s examining corps on developing legal issues.

Todd Hughes

Since 2007, Hughes has served as Deputy Director of the Commercial Litigation Branch of the Civil Division at the United States Department of Justice.  He has worked in the Justice Department since 1994 in the Commercial Litigation Branch.  He has extensive experience before the Court of Federal Claims, as well as the Federal Circuit and Court of International Trade.

If confirmed, Hughes would be the first openly gay Federal appeals court judge.  Obama previously nominated openly gay attorney Edward DuMont to the court, but he withdrew his nomination which was stalled before the Senate Judiciary Committee.

Federal Circuit

The Federal Circuit is statutorily entitled to 12 judges, but is currently operating with only 9.  Richard Taranto was nominated in November 2011 and approved by the Judiciary Committee last March.  Yet, his nomination has failed to reach the floor of the Senate.

Both nominees seem to be highly qualified for positions on the court.  Raymond Chen is especially well known in the IP community and at the Federal Circuit.  Given the Senate’s inability to confirm judicial nominees, even those that shouldn’t be contentious, it is unclear when any of these nominees may join the court.

IEEE Comments on RCE Practice

February 6, 2013

ieeeusa-logoIn December, the PTO requested comments on RCE practice.  Specifically, the PTO asked for comments on 11 questions.  The Institute for Electrical and Electronics Engineers (IEEE) submitted a detailed response that includes a proposal to reduce the number of RCE filings.

A large portion of the comments relate to proposed changes to the PTO’s “count” practice of rewarding examiners for piecemeal production.  Instead, the PTO should provide incentives to examiners to bring examination to a conclusion.  The practice of “churning” RCEs has become quite common under the PTO’s current incentive model.

The PTO should continue efforts to ensure that examination is complete at the earliest stages of prosecution and provide incentives for second non-final office actions when warranted.  Under current practice, the PTO is strongly discouraging second non-final office actions.  This causes examiners to prematurely issue final office actions at times when they are not warranted.

The PTO charges applicants a higher fee when the application includes a greater number of claims, as well as a longer application with a greater number of pages.  The PTO should similarly provide examiners with greater incentives when they examine applications of greater complexity.  Under the current system, examiners receive similar credits whether they examine simpler applications or more complex applications.

The PTO should provide greater transparency in the process.  Examiners should be required to address each claim limitation in detail when writing rejections and should be required to address every argument submitted by the applicant.  Perfunctory rejection explanations and simply indicating that the applicants arguments “were not persuasive” does not meet this standard.  This would provide an earlier meeting of the minds between applicants and examiners to more efficiently conclude the examination process.  Similarly, the PTO should require participants in Pre-Appeal conferences to provide written explanations for rejections submitted to the Board of Appeals.

Examiners should suggest amendments and point to potentially allowable subject matter during prosecution.  This would also increase examination efficiency.

A summary of the specific IEEE suggestions include:

o IEEE-USA believes that the PTO’s “count” and “production unit” metrics and compensation systems are counterproductive, as we discuss in Attachment A, § 2.2 starting at page 18.

o RCEs would decline if the examiner “count” system were modified to reward examiners for concluding examination, not extending it, as we discuss in § 2.3 starting at page 19.

o RCEs would decline if examiner counts were scaled with application complexity, as we discuss in § 2.4 starting at page 19.

o RCEs would decline if supervisor compensation metrics were recalibrated to incentivize efficiently concluding examination, as we discuss in § 2.5 starting at page 21.

o RCEs would fall if the 2009 redocketing of RCEs were rescinded, as we discuss in § 2.6 starting at page 21.

 37 C.F.R. § 1.104(c) should be revised to state an unambiguous requirement that an examiner must provide a clear written explanation for every material issue, including limitation-by-limitation consideration of claim language (see § 3.1 at page 24).

 The PTO should improve compliance and enforcement of 37 C.F.R. § 1.104(c)(2), requiring precise disclosure of the examiner’s analysis of references (see § 3.2 at page 29).

 The duty to “answer all material traversed” is a near-absolute obligation set by the Administrative Procedure Act, 5 U.S.C. § 555(b), not a “should” recommended practice—MPEP § 707.07(f) should be revised to clarify that duty, and that no Action may be made final if there is any failure to answer an applicant’s argument (see § 3.3 at page 29).

 The PTO should set clear and enforceable standards for completeness required for final rejection and to survive Pre-Appeal. Any omission in a purportedly-final action (omission of claim language, omission of an element of a required legal showing, etc.) should prevent final rejection, and should result in per se grant of reopen on Pre-Appeal (see § 3.4 at page 30, and Attachment C).

 RCEs would be reduced if Pre-Appeal conferees were required to provide a written explanation of all grounds referred to the Board, not a single all-or-nothing “X” (see § 3.5 starting at page 32).

 The PTO should add a fair restatement of the Federal Circuit’s definition of “new ground of rejection” to the MPEP, and enforce standards for premature final rejection (see § 3.6 at page 32 and Attachment D).

 RCE’s would be reduced if the petitions process were a reliable way to seek enforcement of the PTO’s regulations governing its own conduct. The petitions process is not reliable. One source of that unreliability would be removed if the PTO included a written statement of the scope of petitionable subject matter jurisdiction, as we recommend in § 3.7 at page 38, and in Attachment E).

 The PTO should reiterate to its employees that obligations of PTO employees stated in the MPEP are binding on and enforceable against examiners, and waiver requires formal clearance—there are no on-the-fly exceptions (see § 3.8.1 at page 39).

 RCEs would be reduced if the rejection form paragraphs were updated to provide more “handholding” (see § 3.9 starting at page 46).

 MPEP § 2144.03(C) creates unwarranted RCE’s and delay by misstating the law of intraagency Official Notice—Official Notice is adequately traversed by simply “calling for” substantial evidence under 37 C.F.R. § 1.104(d)(2) (see § 3.10 at page 46).

 37 C.F.R. § 1.111(a)(2) should be returned to its pre-2004 state, allowing supplementary amendments until they would “unduly interfere” with examination (see § 3.11 at page 49).

 MPEP §§ 2106(II)(C) and 2111.04 should be corrected to accurately state the law and give ascertainable standards for certain “questionable” claim language (see § 3.12 at page 51).

 RCEs would be reduced if the PTO published its internal examination memoranda (see § 3.14 starting at page 54).

 The PTO should improve supervisory enforcement of existing guidance and regulations (see § 4 starting at page 55).

 The PTO should implement the Good Guidance Bulletin issued by the Executive Office of the President in 2007 (see § 5 starting at page 57). IEEE-USA has brought this directive to the PTO’s attention on several occasions—IEEE-USA is surprised at the PTO’s continued failure to implement a directive issued on the authority of the President, especially when the Bulletin sets procedures and policies that would advance the goals the PTO professes to seek.

 RCE’s would be reduced if the “in process review” metric were improved and made more transparent (see § 6 starting at page 58).

First-to-File Takes Effect March 16

February 1, 2013

The U.S. patent system transitions from a first-to-invent to a first-to file regime on MARCH 16, 2013.  For patent applications filed after that date that include claims that do not have priority to an application filed prior to that date, inventors will no longer be able to rely on earlier inventive activity to pre-date prior art.  If you have been working on an invention for a year and someone else has been working on it for a week, if that person files an application one day before you, after March 16, 2013 you cannot get a patent.

During the next six weeks, inventors should file applications for inventions they might otherwise feel are not ready for patenting.  This is good practice simply to be the magic date.  This is even important if you have pending applications for which you wish to add new claims that are not supported by an earlier application (CIP), as these will be examined under the first-to-file rules.

After March 16, 2013, inventors should file applications early and frequently during the invention process so that they do not lose the race to the patent office.  If a competitor files first, even by one day, there will be no patent for you.  Each time there is a significant improvement to the invention, a new application should be filed to prevent competitors from winning the race on the improvement as well.


Inventors will often file a quick provisional application before a public disclosure and then wait a year to file a full non-provisional application that includes sufficient detail to warrant a patent.  Under the first-to-file system, if the first provisional is not adequately supported and enabled, an intervening filing by a competitor may trump the first provisional.  That first provisional still has merit, but inventors should consider filing additional provisional applications as details of the invention are developed to prevent the harm from intervening applications.  Applicants will no longer be able to rely on inventive activity to pre-date prior art.


The new provisions seem to include a grace period once an inventor discloses the invention as long as an application is filed within one year of that disclosure.  Outside of the potential loss of foreign patent rights, applicants should also be aware that competitors may see the disclosure and develop alternative solutions to the problem the invention solves.  They could create prior art that may render the invention obvious.