The Patent Reform Act of 2010
The Patent Reform Act of 2010 was recently made public when details were released by the United States Senate. The Act has been presented to the Senate in the form of an Amendment in the Nature of a Substitute to S. 515. The Senate Judiciary Committee is still reviewing all of the details, and the bill must go to the full Senate for a vote and be passed in the House of Representatives and signed by the President before it becomes law. The Patent Reform Act of 2010 is intended to make significant steps to resolve and modernize patent quality and efficiency. This article explores some of the major changes to the U.S. patent system that will occur should the Act pass.
Under the proposed first-inventor-to-file system, the first inventor to file an application receives the patent for that application, regardless of who was the first to invent. Currently, the United States is one of the few countries that use a first-to-invent system. Today, if two inventors seek a patent on the same invention, the patent is granted to the one who proves that he or she was the first to invent and had not “abandoned, suppressed, or concealed” the invention. This method can be expensive, difficult, and extremely burdensome on the United States Patent and Trademark Office (USPTO). It has been shown that independent inventors lose patent rights under this first-to-invent system that they might have won under the proposed change.
Opponents of the first-inventor-to-file system believe that this change might give an advantage to larger corporations because of their greater resources available to file an application to the USPTO. Also, opponents believe that this new change will burden the examiner with questionable applications by non-inventors, thus creating malpractice liability and increased potential for litigation. Proponents, however, believe the advantages are far greater because this change will put the United States on the same page as the rest of the world. According to USPTO Director David Kappos, the change will “streamline the process for you to acquire patent rights and reduce your costs in seeking rights outside of the United States as you consider entering the global marketplace.” Proponents emphasize that this change is not a first-to-file system but a first-inventor-to-file where all filers must sign an oath and declaration under penalty of criminal sanctions. This leaves only an issue of simultaneous, non-collaborative inventions, otherwise known as interferences, which under current statistics only occurs .01% of the time. Instead of applicants participating in an “interference” to determine the first inventor, an inventor can request a derivation proceeding to show that the person who filed first actually derived the claim from the inventor, thus reducing malpractice liability.
Patent Quality and Pre-Grant Submission
The Act allows the public greater participation in the patent granting process, thus allowing the ability to strengthen patents and reduce the lengthy patent review process. The public is given the chance to submit information to patent examiners with relevant information of individual patent applications that the examiners may be working on. This will allow for a more reliable and expedient examination process by reducing reliance on post-grant procedures.
The Act provides a whole new system of post-grant reviews that will be handled directly by the Board of Patent Appeals and that must be requested within nine months after a patent is granted and completed within one year. This system will allow patents to be challenged on all issues of patentability providing a more robust post-grant review.
All patents can be challenged by inter partes reexamination after the initial nine month period, but not on all issues, only issues on prior patents and printed publications. Ex parte reexamination will still be available per current policy to patent owners and third parties.
The main emphasis of providing this post-grant review and revised inter partes reexamination is to prevent challengers from harassing patent owners with frivolous claims. The threshold to challenge a patent will increase from “substantial new question of patentability” to “reasonable likelihood.” This increased burden on the challenger will minimize unwanted and burdensome litigation. Also, the procedures will now be conducted by Administrative Law Judges instead of patent examiners.
Currently, there has been strife and discontent with the inconsistency and unfairness of reasonably royalty patent damages. The current proposal does not limit the claimed invention for damages to only “patentable features” or “specific contribution over the prior art.” Instead, there is an emphasis that the court concentrates on methodologies and factors relevant to the determination of damages, and parties must specify the relevant legal and factual bases. This creates a better situation for accused infringers with runaway jury awards, but also provides appropriate damage awards for the patent holders.
Best Mode and Inequitable Conduct
The amendment proposes to remove the “best mode” subjective and personal elements during litigation that concentrate on a party's mental state such as the inventor's ability to carry out the invention. Currently, there is already a requirement for a description of an invention to be in clear and concise terms for one skilled in the art to understand, thus the “best mode” requirement is unnecessary and time-consuming, providing the defendant with an unfair and subjective weapon during litigation. The terms and description within a patent application provide enough information to the patent examiner and general public. Therefore, this amendment removes the unnecessary “best mode” aspect.
Inequitable conduct is the concept where an inventor or patent attorney intentionally misleads the USPTO to prosecute an original patent. The amendment allows patent owners to request supplemental examination from the patent examiners to review any information relevant to the patent. Supplemental examination will not save a patent owner from sanctions for any violation committed during proceedings, but this examination will at least offer patents surviving the reexamination to not be held unenforceable on the particular information considered during reexamination.
An important reformation for false marking challenges is that the proposed reform eliminates the ability for any individual or challenger to file a false marking claim. Only challengers who have “suffered a competitive injury” will be able to file a false marking claim under the reform, allowing less costly and unnecessary litigation.
Currently, the statute states that if a plaintiff can prove “willful infringement,” then “the court may increase the damages up to three times the amount found or assessed.” Presently, there is not a clearly defined burden or threshold for willful infringement, thus allowing plaintiffs to assert this claim with little to back it up.
The proposed reform would increase the threshold to claim willful infringement to an “objective recklessness” standard that must be proven by clear and convincing evidence. Also, knowledge of the infringed patent alone, by the defendant, is not enough evidence of willful infringement. This increased burden and higher level of evidence will reduce petty and unnecessary claims against the defendant for willful infringement.
The amendment will require courts to transfer infringement cases to the appropriate venue if one venue is clearly more convenient. This will provide for convenient litigation for all parties across the nation.
“Micro Entity” Status
The USPTO has been working on creating reduced fees for inventors that fit into certain categories. The proposed amendment establishes a “micro entity” status where inventors who have been named or assigned on fewer than five patent applications can receive further USPTO fee discounts. This will provide assistance to many inventors in the current economic downturn.