Fundamental Changes in U.S. Patent Law Are you on Board?

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1 Fundamental Changes in U.S. Patent Law April 17, 2013 Breakfast Seminar Rich Black Rick Koske Scott Born Rick Vershave

2 Overview Patent Process Under AIA Pre-filing / Filing Rick Koske First to Invent Micro Entity Fees Pendency Scott Born Prioritized Exam Pre-Grant Prior-Art Submissions Post Grant Rick Vershave Virtual Marking Post Grant Procedures 2

3 Overview Patent Process Under AIA Pre-filing / Filing Rick Koske First to Invent Micro Entity Fees Pendency Scott Born Prioritized Exam Pre-Grant Prior-Art Submissions Post Grant Rick Vershave Virtual Marking Post Grant Procedures 3

4 First-Inventor-to-File U.S. moved away from first-to-invent system A move to harmonize U.S. law with the rest of the world (ROW) Hybrid that retains best of both U.S. & ROW systems First-INVENTOR-to-File Not First-to-File One-year grace period 4

5 First-Inventor-to-File: a Hybrid System Must be a true inventor One-year grace period for inventor s disclosure (U.S. only) Inventorship: Interference out Derivation in Derivation concept not new but procedure is Analogy of two kids working on a school project: We both had the idea, but I thought of it first! Interference That s my idea, you didn t even think of it Derivation 5

6 Micro Entities Patent office fees increased 15% or more across the board Small Entity: 50% fee reduction New Micro Entity: 75% fee reduction 6

7 Micro Entities Requirements Must meet requirements of Small Entity (independent inventor, nonprofit, under 500 employees) Inventor in no more than four previous applications No more than 3X median household income 7

8 Micro Entities Examples Fee examples: Fee Small Entity Micro Entity Filing Fee $280 $140 $70 Issue Fee $1,780 $890 $ Year Maintenance $7,400 $3,700 $1,850 Reexam $12,000 $6,000 $3,000 8

9 Key Take-Aways Move to First-Inventor-to-File (FITF) File early Do not rely on one-year grace period Keep good records (e.g., lab notebooks) Evaluate whether you qualify as a Small or Micro Entity 9

10 Overview Patent Process Under AIA Pre-filing / Filing Rick Koske First to Invent Micro Entity Fees Pendency Scott Born Prioritized Exam Pre-Grant Prior-Art Submissions Post Grant Rick Vershave Virtual Marking Post Grant Procedures 10

11 Third-Party Submissions: Patentability, in Brief 35 U.S.C 102. Conditions for patentability; novelty (a) NOVELTY; PRIOR ART. A person shall be entitled to a patent unless (1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention... 11

12 Previous Third-Party Participation Rule 99 (37 C.F.R. 1.99) Submissions Maximum of 10 patents or publications per fee paid No explanation/commentary allowed (not even highlighting ) Must serve submission on applicant (no anonymity) Small window: earlier of two months from publication, or notice of allowance Rule 99 is now gone... 12

13 Third-Party Pre-Issuance Submissions (AIA Sec. 8) Allows expanded right of third parties to submit printed publications of potential relevance to examination Must provide, in writing, an explanation of the relevance of the submitted documents Must pay the associated fees (if required) Must include a statement by the third party making the submission affirming that the submission is being made in compliance with the new statute (35 U.S.C. 122(e)) 13

14 Comparison with Rule 99: Third-Party Pre-Issuance Submissions Applicability: Any patent application filed before, on or after September 16, 2012 Concise statement of relevance allowed/required Expanded submission window: more time for submitting party to detect and address Unlimited number of references per submission 14

15 Third-Party Pre-Issuance Submissions: Pros Concise statement of relevance allows argument to be presented Insurance against a stealth reference that ultimately strengthens any issued patent because of presumed examiner consideration Anonymity no requirement that real party in interest be identified; reduces likelihood of retribution? 15

16 Third-Party Pre-Issuance Submissions: Pros (continued) Inexpensive $180 ($90 SE) per 10 references or fraction thereof No charge if (a) first submission and, (b) three or fewer items No estoppel no prohibition on later re-asserting an item in a different context (e.g., district court) If successful, forever prevents patent from issuing, absent substantive amendment of the claims 16

17 Third-Party Pre-Issuance Submissions: Cons Little control over application of reference Chance of getting lost in art shuffle notwithstanding statement How to effectively monitor? Published apps of competitor a much larger set than issued patents 17

18 Third-Party Pre-Issuance Submissions: Cons (continued) If unsuccessful, submitted prior art is of record; results in tougher patent Tips applicant off to app s importance! Can cause extra effort/emphasis in prosecution Copending applications that would otherwise not be pursued 18

19 What to do? For your stuff Consider non-publication request Probably best for filings not pre-searched No foreign protection can be achieved, though Or, bring it on? Likely preferable if patentability search/opinion performed pre-filing Perhaps would like to know what the market finds worrisome about what we re doing 19

20 What to do? (continued) For their stuff Set up diligent monitoring of competitive application publications Docket key time periods from publication/issuance Consider various validity review procedures (e.g., Post-Grant Review and Inter Partes Review) as an alternative 20

21 Prioritized Examination Effective on September 26, 2011 Is the realization of Track 1 of the 3-Track Examination process, proposed June 2010, which was put on hold in 2011 due to budget constraints 21

22 Prioritized Examination (continued) What it should do: Provide applicants with greater control over when their utility and plant applications are examined Promote greater overall efficiency in the patent examination process What it does not do: Provide prioritized status to an application during its subjection to appeal or post-issue activity (e.g., interference/derivation) before the Patent Trial and Appeal Board Provide prioritized status to an application after the filing of a request for continued examination (RCE) 22

23 Prioritized Examination Eligibility Utility and Plant patent applications, only, filed on or after September 26, 2011 are eligible OK for continuing applications Currently not eligible for: Design Reissue Provisional Reexaminations International/national stage applications (but, could file by-pass continuation for international applications) 23

24 Prioritized Examination (Requirements) Filing requirements: Application must be complete (i.e., no missing parts, such as oath, filing fees, etc.) Fee: $4,000 ($2,000 small entity) prioritized examination fee on top of other ordinary filing fees 24

25 Prioritized Examination (Requirements) Request for Prioritized Examination (Form AIA/424) No more than four independent claims, 30 total claims and no multiple dependent claims Application must be filed electronically 25

26 Prioritized Examination Only 10,000 requests per fiscal year accepted for prioritized examination Latest stats: FY total requests FY total requests FY total requests 26

27 Prioritized Examination Timeline The Office s goal for final disposition is 12 months from grant of prioritized status Abandonment of the application Mailing of a final Office action Mailing of a notice of allowance Applicant files a notice of appeal Applicant files a request for continued examination (RCE) Only get one RCE, but can file continuation instead of second RCE 27

28 Prioritized Examination CAUTION! Prioritized exam can be terminated without a refund of the prioritized exam fee if patent applicant: Petitions for an extension of time to file a reply; Requests suspension of action; or Files an amendment that results in more than four independent/30 total claims 28

29 Prioritized Examination (AIA Sec. 25) Potential for applicant to (someday), at no extra cost, request prioritized examination of an application for products, processes, or technologies that are important to the national economy or national competitiveness. What sorts of things are those? Green? Alternative Energy Production Energy Conservation Environmentally Friendly Farming Environmental Purification, Protection or Remediation Cyber security? encryption techniques, network security, etc. 29

30 Key Take-Aways Pre-issuance submission of art may not provide the desired consequences: carefully evaluate on a case-by-case basis Prioritized exam may benefit the IP portfolios of emerging companies, in particular, by offering imminent valuation enhancement Prioritized exam may provide benefits (e.g., preview of foreign reception ) additional to a quickly obtained patent; discuss with your patent professionals Ask your patent professionals to let you know when/if Article 25 ( free prioritization ) goes into effect 30

31 Overview Patent Process Under AIA Pre-filing / Filing Rick Koske First to Invent Micro Entity Fees Pendency Scott Born Prioritized Exam Pre-Grant Prior-Art Submissions Post Grant Rick Vershave Virtual Marking Post Grant Procedures 31

32 Virtual Marking Why You Should Bother Because marking is: REQUIRED for patent infringement damages without actual notice INSURANCE against unknown potential infringers LESS RISKY as compared to actual notice 32

33 Virtual Marking Damage Requirement The Trap: The penalty for failure to mark is that the patentee may NOT recover damages from an infringer unless the infringer was duly notified of the infringement and continued to infringe after the notice. Yes someone could infringe and wouldn t owe you a dime Yes this will come up during any reasonable due diligence 33

34 Virtual Marking What it is Where a patentee marks products with reference to a website As patents issue and expire, the web address would remain the same Efficient update of patent numbers listed on a website efficiently and thus avoid false marking liability 34

35 Virtual Marking Textual Example For example, instead of marking the back of a calculator with Pat Texas Instruments could mark it with ti.com/patents/calculators This website would display the patent numbers associated with the TI-83 calculator 35

36 36

37 Virtual Marking Evidentiary Requirements Under the AIA, the patent owner must prove the virtual marking website: Existed at the time of the alleged infringement Was available for public viewing (e.g., not down due to a server failure) Included accurate patent information vis-à-vis product information 37

38 Virtual Marking The Evil Counterpart Called False Marking False Marking: When someone attempts to counterfeit, deceive, imitate or induce the public by using a wrong patent number on a product or implying that a product is patented or pending when it is not Only the U.S. government; and Private parties if they have suffered a competitive injury Federal courts will now have to determine damages that are adequate to compensate for the competitive injury 38

39 Virtual Marking Take Aways Consequences for NOT marking are HARSH Patent damages awards can reach into the millions, so virtual marking websites must conform: Create Maintain/Update Most importantly, archive Recommend working with IP Firm and/or approved service provider Ongoing dialogue with IP Counsel frequency dependent on size and activity of patent portfolio 39

40 Post Grant Procedures Types Ex Parte Reexamination (Unchanged) (Fee: $12,000) Inter Partes Review (New) (Fee: $23,000) Post Grant Review (New) (Fee: $18,000) Business Method Patent Review (New) (Fee: $18,000) Supplemental Examination (New) (Fee: $4,400) 40

41 Post Grant Procedures Why the New Types? U.S. Patent Office wasn t adequately staffed Keep parties out of the federal courts Some patents fall through the cracks More streamlined process to focus on the major issues 41

42 Post Grant Procedures As a Sword Validity challenge to another s granted patent Narrow the scope of one or more patent claims in another s granted patent Prevent or delay a competitor s patent Stave off threatened or anticipated litigation 42

43 Post Grant Procedures As a Shield Proactively strengthen scope and validity of your patent claims before enforcing In anticipation of licensing or selling Use in conjunction with an active continuation practice 43

44 Post Grant Procedures Take-Aways Use strategically planning is paramount Extensive prior-art reference search recommended Appreciate the forum and its limitations Foster Pepper is a national leader in post grant procedures 44

45 Take-Aways (i.e., this is the one slide you should keep!) Pre-Filing/Filing Pendency Virtual Marking / Post Grant Rick Koske Scott Born Rick Vershave Move to First-Inventor-to-File (FITF) File early File before public disclosure Keep good records (e.g., Lab Notebooks) Evaluate whether you qualify as a Small or Micro Entity Pre-issuance submission of art may not provide the desired consequences: carefully evaluate on a case-by-case basis Prioritized exam may benefit the IP portfolios of emerging companies, in particular, by offering imminent valuation enhancement Prioritized exam may provide benefits (e.g., preview of foreign reception ) additional to a quickly obtained patent; discuss with your patent professionals Ask your patent professionals to let you know when/if Article 25 ( free prioritization ) goes into effect Virtual Marking: Consequences for NOT marking are HARSH Conform, create, maintain/update and archive Post Grant: Use strategically planning is paramount Extensive prior-art reference search recommended Appreciate the forum and its limitations

46 Questions? 46

47 Fundamental Changes in U.S. Patent Law Rich Black Rick Koske Scott Born Rick Vershave

11 th Annual Patent Law Institute

11 th Annual Patent Law Institute John Cabeca Director, West Coast Region United States Patent and Trademark Office April 27, 2017 2017 PTO Update: Agenda Quality Initiatives Pendency Reduction Examiner