America Invents Act Presented By: Jordan Becker JBecker@PerkinsCoie.com Brian Coleman BColeman@PerkinsCoie.com Ken Halpern KHalpern@PerkinsCoie.com
Old Regime: First-to-Invent • Conception and Diligent Reduction to Practice mattered, giving inventor a "priority date" of conception • One year grace period from any public disclosure • First to file had prima facie priority, but • Swearing behind could eliminate certain references • Interference proceeding determined first to invent facts, including conception and reduction • Any application with an effective filing date prior to March 16, 2013 falls under first to invent -- first to invent remains with us for some time
New Regime: First-to-File • Filing determines priority (i.e., the inventor entitled to a patent is the first to file, NOT first to invent) • March 16, 2013 Applicable to any application with an effective filing date on or after March 16, 2013 – Note long tail for first to invent rules (e.g., March 15, 2033) • Personal grace period but no grace period as to independent third party disclosures • Derivation concept becomes important, interference proceedings eliminated • Complete rewrite of 102 prior art definitions and exceptions
Prior Art 102(a) • 102(a)(1) • patented • described in a printed publication • Public use • On sale • Otherwise available to the public – does this mean no "secret" prior art?? • 102(a)(2) • Described in a U.S. patent, or a published or deemed published application • Names another inventor • Effectively filed before the effective filing date of the claimed invention
Personal Grace Period 102(b)(1) • Grace period of one year preceding effective filing date • Inventor priority not extinguished by: • Disclosures by or derived from the inventor, made within one year • Disclosures made within one year by others but after an earlier disclosure by inventor
Overcoming Prior Art by Removal • Patent and Application Art is removed when: • Subject matter was derived from inventor; or • Subject matter was publicly disclosed by inventor (or derivers) prior to effective filing date of art; or • Subject matter disclosed and claimed invention commonly owned or subject to common duty of assignment, not later than effective filing date of claimed invention
Derivation Proceeding • Patent applicant files a petition for a derivation proceeding • A petition for a derivation proceeding "may be filed only within the 1-year period beginning on 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." • The petition must set forth with particularity the basis for finding that an inventor named in the earlier application derived the claimed invention from an inventor in the petitioner's application, and the petition must be supported by “substantial evidence” as decided by the new PTAB. • Director's determination whether to institute a derivation proceeding shall be final and nonappealable • PTAB determines whether derivation occurred • PTAB may correct inventorship of any patent or application at issue • Parties may settle issues themselves, subject to review of PTAB • Narrow discovery allowed during proceeding • Deposition of anyone signing an affidavit or declaration • What is otherwise necessary in the interest of justice
Take Away • File with urgency – same as it always was • Good record keeping still important, but disclosure history now more important than proof of conception and reduction • Keep the March 16, 2013 date in mind, consider filing prior to • Disclosure to establish your own priority and create prior art for others – maybe • Disclosure not clearly defined by AIA • Monitor patents and published applications for derivation concerns
Patent Post-Grant Proceedings • "Post-grant review proceedings" as defined in AIA Sec. 6 includes: • Post-grant review (New) • Inter partes review (New) • Citation of Prior Art and Written Statements (New) • Other post-grant proceedings: • Ex parte reexamination (substantively unchanged, but cost increasing from $2,250 to $17,750 (proposed)) • Supplemental examination (New) • Reissue ('lack of deceptive intent' no longer required)
Post-Grant Review (PGR) (1) • AIA Sec. 6, §§321-329, "effective" September 16, 2012, but . . . • Only applicable to patents havingpriority date on or after March 16, 2013 (AIA § 3(n)(1)) Not practically usable until at least late 2014 or 2015 • Exception: Covered business method patents -- any priority date, but only if have been charged with infringement Third parties only • Real-party in interest cannot remain anonymous • Time limit to request PGR: 9 months after issuance of patent • Duration: PTO final determination within 1 year after instituting PGR (+ up to 6-months extension for good cause)
Post-Grant Review (PGR) (2) • Grounds of invalidity • Any ground of invalidity (not just patents or publications) • 101, 102/103, 112 (except for best mode), double patenting, etc. • Yes for product as prior art, prior use or sale • A novel or unsettled legal question that is important to other patents or patent applications • Opportunity to creatively raise issues
Post-Grant Review (PGR) (3) • Threshold: More likely than not that at least one of the challenged claims is unpatentable • Higher threshold than former SNQ threshold and new inter partes standard (reasonable likelihood petitioner will prevail) • but no "new" question of patentability is required • Expected USPTO filing fee: >$40,000 (anecdotal) • Compare: Filing fee for EPO Opposition is about $1,000
Post-Grant Review (PGR) (4) • PGRbarred if: • (1) petitioner already filed a civil action challenging validity of the same patent • unless validity challenge was filed as counterclaim • (2) petition requests cancellation of a claim in a reissue patent that is identical to or narrower than a claim in the original patent and the deadline has passed for PGR of the original patent • Impact on civil actions • Automatic stay of DJ action filed on/after the filing of petition for PGR (not granted!) • Lifted if patent owner sues for infringement or so requests • Preliminary injunction • If a civil action alleging infringement is filed within 3 months after issuance of the patent, court may not stay consideration of patent owner’s motion for preliminary injunction on the basis that a petition for PGR has been filed or PGR has been instituted
Post-Grant Review (PGR) (5) • Estoppel (in absence of settlement): • Petitioner (or its privy) cannot re-assert any ground that petitioner raised or reasonably could have raised in PGR in: • Another PTO proceeding (e.g., subsequent inter partes review) • District Court • ITC (unlike inter partes reexam) • "Reasonably could have raised" v. "Could have raised" for Inter Partes Reexam: • slightly narrower scope of estoppel • Estoppel attaches upon final written decision by PTAB • Sooner than in inter partes reexam ("all appeals exhausted") • Intervening rights apply (like reissue and current reexam)
Post-Grant Review (PGR) (6) • More litigation-like than prosecution • Discovery available (e.g., depose witnesses) expensive! • Protective order and sanctions • Evidentiary standard: preponderance • Settlement possible by joint request • unlike current inter partes reexam • No estoppel to petitioner if settled
Next: Transitional Inter Partes Reexam • Not available after September 15, 2012 • Limited to patents issued on applications filed on or after 11/29/99 (like old inter partes reexam) • Only major change: Higher threshold: Reasonable likelihood that petitioner will prevail on at least one claim (no longer need SNQ) • An "old" question or issue can be raised • New opportunity for challenging patents • Estoppel applicable to subsequent civil action only (not ITC) • Any ground "raised or could have raised"
Next: New Inter Partes Review (IPR) (1) • AIA §§ 311-319, effective Sept. 16, 2012 • Who can request? • Third party only: "a person who is not a owner of a patent" • Real party in interest must be identified • Applicable to all patents as of Sept. 16, 2012 • Regardless of filing date, priority date or issue date • Compare to Inter Partes Reexam: only patents issued on applications filed on or after 11/29/1999 • Compare to PGR: only patents with a priority date on or after 3/16/2013 • Bad news for some patent owners
Inter Partes Review (IPR) (2) • Time to file: After the later of: • (1) 9 months from issuance (or reissuance) of patent, or • (2) Termination of a PGR (Note: AIA simply says "a" PGR, so any on-going PGR of the patent (e.g., by others) will prevent IPR filing • IPR barred if: • (1) petitioner already filed a civil action challenging validity of the same patent • unless validity challenge is counterclaim • (2) petition is > 1 year after petitioner is served with a complaint • A critical bar date for patent litigation defendants to monitor • Parties sued before 9/16/2012 should consider filing inter partes reexam request before 9/16/2012, to take advantage of transitional rules (e.g., no litigation bar, no estoppel in ITC) • Automatic stay of any DJ action filed on/after the filing of IPR petition (not granted!) • Lifted if patent owner sues for infringement or so requests
Inter Partes Review (IPR) (3) • Grounds of invalidity • Issues under Section 102 or 103 and • Only on the basis of patents or printed publications • Cannot use product as prior art, prior use or sale • IPR Threshold -- Reasonable likelihood petitioner will prevail on at least one claim • Higher than previous inter partes threshold: SNQ • Lower (?) than new PGR threshold: "more likely than not that at least one of the challenged claims is unpatentable" • No "new" question is required
Inter Partes Review (IPR) (4) • Estoppel (if no settlement): • Petitioner (or its privy) cannot re-assert a ground (prior art) that petitioner raised or reasonably could have raised in PGR, in: • Applies in: • Any other PTO proceeding • District Court • ITC (unlike inter partes reexam) • Estoppel attaches at final written decision by PTAB (sooner than in inter partes reexam: "all appeals exhausted") • Intervening rights apply
Inter Partes Review (IPR) (5) • More litigation-like proceeding • Discovery available (e.g., can depose witnesses) • Protective order and sanctions • Evidentiary standard: preponderance of the evidence • Settlement possible by joint request: • Unlike inter partes reexam • No estoppel to petitioner if settled
Inter Partes Review (IPR) (6) • Process • Patentee may file a preliminary response before PTO review (new) • PTO decides whether to institute IPR within 3 months from (1) filing of patentee's preliminary response, or (2) last date for filing the preliminary response • No appeal permissible • PTO final determination within 1 year after instituting IPR (+ up to 6-months extension for good cause) • Patentee can amend/cancel claims and propose "a reasonable number of substitute claims" for each challenged claim • 1 motion for amendment as matter of right • Additional motions for amendments possible for (1) settlement when jointly requested with petitioner, or (2) as permitted by regulations prescribed by the Director • Can't enlarge scope of claims, no new matter • Appeal directly to Federal Circuit (but estoppel already takes effect)
Inter Partes Proceedings • File now rather than wait for new IPR proceedings to become effective on 9/16/2012? • After 9/16/2012, new IPR may be unavailable to some parties for some patents, due to new IPR's DJ bar and 1-year infringement claim bar • Estoppel under current rules does not include ITC, whereas estoppel under new IPR will.
Next: Supplemental Examination (1) • AIA § 257, effective September 16, 2012 • For patent owner only (like reissue & ex parte reexam) • Available to all patents • Timing: Anytime during patent term (like reissue & ex parte reexam) • Threshold: SNQ • Basis: Any information -- not limited to printed publications and patents • So what does that mean?
Supplemental Examination (2) Laundry time! • Patent cannot be held unenforceable based on conduct relating to information considered, reconsidered, or corrected during supplemental examination (note: AIA says 'unenforceable', not 'invalid') • But, only applies if reexam concluded before filing civil/ITC action • Patent owner must act early
Supplemental Examination (3) • Proposed USPTO fees: • $5,180 for Request + $16,120 for the ex parte reexam = $21,300 • compared to $2,520 for current ex parte reexam • Procedures not nailed down -- Proposed rules just published Jan. 2012.
Supplemental Examination (4) • Limitations • Can't cure existing allegations • an allegation pled with particularity in a civil action, or set forth with particularity in a notice received by the patent owner under section 505(j)(2)(B)(iv)(II) of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 355(j)(2)(B)(iv)(II)), before the date of the supplemental examination • Fraud by patent owner • USPTO can cancel claims based on reexam • USPTO shall report to Attorney General
Patent Owner Considerations • Identify & fix errors early • Review (or have outside counsel review) pending patent applications for problems/errors before issuance – make sure prosecution counsel uses a pre-issuance checklist • Much cheaper/easier to fix major problems before issuance than after • Review issued patents for problems/errors well before contemplating filing a lawsuit, if possible. • If supplemental exam desired, request it early if contemplating enforcement • For major defects: • Supplemental Examination (new) • To reap benefit, must wait until reexam concludes before suing • Expensive ($21,300 proposed) • Ex Parte Reexamination (same) • Limited to patents and printed publications • Expensive ($17,750 proposed)
Patent Challenger Considerations • Post-grant review: Challenger's silver bullet? • Short 9-month window -- Issues and disputes on legal front and market activities may not sufficiently mature for parties to take action • Estoppel attaches earlier than inter partes review • Not effectively usable until probably 2014-2015 (except for business method patents) • Likely to be very expensive (> $40K in USPTO fees) • Inter partes review more likely to be useful • Consider filing inter partes reexam before 9/16/2012 to preserve inter partes option and/or to set up concurrent processing with a later-filed IPR/ex parte reexam • Consider active monitoring of patent related filings
AIA Joinder Provision(35 USC § 299)Common Patent-in-Suit Cannot Alone Form Basis for Joinder
Former Law (Rule 20): Same T-or-O AND Common Issue of Law or Fact • FRCP 20(a)(2) – Defendants may be joined in a single action if… • (A) right to relief asserted "jointly, severally, or in the alternative w/r/t or arising out of the same transaction, occurrence, or series of transactions of occurrences; AND" • (B) "any question of law or fact common to all defendants will arise in the action" • Seems adequate to bar common-patent joinder but wasn't, at least in E. D. Texas
35 USC § 299 • "accused infringers may be joined in one action as defendants or counterclaim defendants, or have their actions consolidated for trial, or counterclaim defendants only if-- • (1) any right to relief is asserted against the parties jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences relating to the making, using, importing into the United States, offering for sale, or selling of the same accused product or process; and • (2) questions of fact common to all defendants or counterclaim defendants will arise in the action • NOT "law or fact" • (b) ALLEGATIONS INSUFFICIENT FOR JOINDER.--For purposes of this subsection, accused infringers may not be joined in one action as defendants or counterclaim defendants, or have their actions consolidated for trial, based solely on allegations that they each have infringed the patent or patents in suit.
Expressly Passed to Overturn E.D. Texas Case Law • "Section 299 legislatively abrogates the construction of Rule 20(a) adopted in MyMail, Ltd. v. America Online, Inc., 223 F.R.D. 455 (E.D. Tex. 2004) [and other cited cases, all but one from Texas or La.] effectively conforming these courts' jurisprudence to that followed by a majority of jurisdictions. --112 H. Rpt. 98, at note 61 (June 1, 2011) • MyMail (Judge Davis, now Chief Judge!) had held that Rule 20's " same transaction, occurrence, or series of transactions of occurrences" requirement was met by a "logical relationship" among the different accused products which could be "substantial similarity" • This still ignores "jointly, severally, or in the alternative," but Judge Davis deemed the clear meaning of the statutory language "hypertechnical."
Effect of § 299 on Plaintiff Behavior • Trends before the AIA were similar to 2010, with the top 7 jurisdictions same, measured by defendants and cases • BUT big DE jump before AIA, almost catching Texas • DE outpaced ED Texas after AIA • Texas drops off to 40% annualized rate of defendants in last quarter of 2011 compared to 2010 but could be anchor-defendant strategy, TBD
Delaware Goes Off the Charts • Through 9/15, DE far ahead of 2010 annualized pace (278 cases, 2014 defs in 2011, vs. 255/884 for all of 2010, i.e., triple the rate of defendants sued) • Average 7.2 defendants per case, compared to 3.5 in 2010 • Through 9/15, 8 plaintiffs, 4-5 firms, account for 52 cases, 1054 defendants • Even without these cases, DE is well ahead of its 2010 rate, still 3/2 rate of defendants sued to that point. Without these cases, average 4.2 defs per case • After 9/15, DE 206 cases, 444 defendants, annualized pace of 714 cases, 1539 defendants. • Average 2.2 defendants per case. • After 9/15, TX has 139 cases filed, 378 defendants, annualized pace of 482 cases, 1310 defendants
E.D. Texas Steady Through 9/15, Large Decline in Defendants Sued After • Through 9/15, 279 cases, 2785 defendants (annualized pace 392/3914), a small increase over the 299/3879 in 2010 • This was 11.5% of all 2011 cases filed to that point, compared to 10% in 2010 // 24.4% of all defendants, compared to "more than 25%" • Average 10 defendants per case • After 9/15, annualized pace of 482 cases, 1310 defendants, about exactly 1/3 the pace of defendants compared to before 9/15 • Average of 2.7 defendants per case
Huge Spike Overall the Week of 9/8-9/15 • 175 cases, 1787 defendants sued that week • 3660 cases, 14201 defendants in 2011 • 1/8 of all patent defendants sued last year were sued in one week, between passage and effective date of joinder provision
Why Delaware? • Was already 2d-most popular jurisdiction, and per Lemley, highest "claimant" win rate among busy districts, and highest trial rate by far (11.8%!) which suggests unwillingness to grant SJ, relatively speedy time to resolution of 1 year • Texas retirements (Ward, Everingham, Folsom from 9/10 to 6/11) • Judge Robinson signal on venue (6/11, reversed 12/11 in Link-A-Media) • 9 mandamus reversals of EDTx transfer decisions from '08-'10
Is E.D. Texas Over? • Defendants-sued rate dropped by 2/3 after the joinder provision went into effect • BUT could be part of anchor-defendant strategy, publicly discussed at Texas plaintiffs' bar event. Sue a Texas defendant, wait six months, sue the other defendants, move to consolidate • 35 USC § 299 prohibits joinder and consolidation for trial, but not consolidation for pretrial proceedings • If this is the strategy, not enough time has passed to know if this is occurring • At least some anecdotal evidence of this (Macrosolve)
Strategy • How would defendants nonetheless avoid ending up in a massive multi-defendant coordinated set of cases in the plaintiff's chosen forum? • Consider key Federal Circuit precedents assessing importance of forum's experience with patents-in-suit as a factor in a transfer analysis
In re Verizon Business Network Services, Inc. , 635 F.3d 559 (Fed. Cir. 2011) • Granted mandamus, ordered transfer from E. D. Texas • Texas court cited two efficiencies: • There had already been 2 years of litigation in the case at bar. The docket reveals there had been a case management conference and an order setting a trial date, an exchange of infringement and invalidity contentions, and even a joint claim construction statement (though the last was filed in March, 2011, after the mandamus petition had already been briefed). • E.D. Texas had already considered the same patent in a prior suit, but five years earlier. • Nonetheless, this could not overcome a “compelling showing of transfer” based on the conventional factors of the convenience of witnesses and location of evidence.