IP Metalworks!A Cautionary Tale:

Oct 22 2005 - Patent reform gets messy. 

II. What HR 2795 will not do, a technical discussion.

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HR 2795 ― "Patent Reform Act of 2005"

For a more detailed look, link to the latest markup of Title 35 USC.

 

AN ALTERNATIVE AGENDA FOR PATENT REFORM

Bad patent reform is worse than no patent reform.  But the train is leaving the station.  Those stakeholders who want to have something to say about the next ten years of patent law should speak now.  The Senate is likely to be taking up patent reform sooner rather than later.1

The way  this bill was originally justified2,3, it was aimed at improving patent quality and industrial competitiveness.  It is now aimed primarily at weakening the patent right, a key incentive in multiple economic sectors, including biotechnology and nanotechnology. 

The principal challenge identified in the FTC and NAS reports was ‘patent quality.’ Bad patents are a load on industrial competitiveness, and the US PTO, by its own estimates, has consistently reported a patent error rate of 5% (an error is defined as at least one claim within the patent that would be held invalid in a court of law).  In Europe, where a robust mechanism for post-grant patent opposition exists, about 7% of all patents undergo adversarial challenge in a nine month window following issue, and of these, about 70% undergo substantial correction or are declared unenforceable (ie. about 5% of all issued patents).  Those that are not corrected, invalidated, or challenged gain a meaningful presumption of validity after the nine month post-grant opposition window expires.

Corrective procedures undertaken by the US PTO in response to the American Inventor’s Protection Act of 1999 have not been successful.  In addition to the little-used public comment and pre-grant submission processes, the major procedure for adversarial patent review in the US is the inter partes reexamination process, of which only 27 cases were initiated in 2004 (out of  more than 170,000 issued patents annually) .  The fee for interpartes re-examination is about $9000, but in the past 5 years since inter partes reexamination became available, a total of only 53 requests have been filed through 2004.4   Clearly, the reexamination reforms of 1999 were not effective or timely in addressing the fundamental problem of patent quality.

Therefore, Congressional adoption of a European-style post-grant opposition process, as proposed in HR 2795, seems timely and prudent.  Post-grant opposition is a stand-alone change to the patent system.  No other changes to patent law are required to implement a post-grant opposition system in the US.  The European Patent Office (EPO) has been handling over 2,000 oppositions per year for many years, a good prognosticator of success for a US program built on its model.

Unfortunately, post-grant opposition in the US is a much larger undertaking (at least 3 times as large as the EPO’s workload) and hence a much larger expense.  The current workload for the Board of Patent Appeals and Interferences, which would handle the post-grant oppositions, is only a few dozen cases a year.  Therefore, to implement this system alone, the US PTO must muster an extraordinary focus of purpose and resources that is not possible given the other demands of the legislation.  To put it in perspective, the proposed post-grant opposition system is a 1B dollar per year industry for patent attorneys, and the entire budget for the US PTO is only 1.5B.

I offer three sections of material on what HR 2795 might have been:

u    WHY THE BILL WON’T WORK

u    WHAT’S NOT IN THE BILL THAT SHOULD BE

u    THE MESS THEY'VE MADE OF 102 and 103, WHAT TO DO ABOUT IT

 

1. WHY THE BILL WON’T WORK

u    Although the much needed “post-grant opposition” proceeding is workable, a serious doubt must be raised that the US PTO can promptly implement it given the other demands of the legislation.  While major parts of the legislation take effect upon passage of the bill, post-grant opposition is to be implemented at the discretion of the Director.  Since this provision of the bill (Section 7, Coalition Print, page 23) is the most on-point reform directed at patent quality, the effect of placing it lowest in priority is that it simply won’t make a difference any time soon, fueling further discontent with a patent system that needs to be fixed, not imploded.

u    In language intended to weaken the patent holder’s right, several new defenses to suit for patent infringement and limitations on damages have been erected.  While efforts to curb the power of the courts to grant injunctive relief have been beaten back, of particular note are statutory provisions intended to weaken the power of the courts to find willfulness or negligence as a factor in assessing damages.  Astonishingly, provisions of patent law that conform with generally accepted judicial law and practice are repealed with little or no discussion.  For example, the well-established “duty of due care”, that requires a defendant to obtain opinion of counsel before continuing with tortious behavior, is swept away (Section 6, Coalition Print, page 21).  The court may not consider an infringer’s wanton decision not to consult an attorney before continuing to infringe as evidence of willful infringement.  This and other provisions attack an entire foundation of judicial law supporting the patentee’s right.  Without that support in the courts, the patent deterrent, the right to exclude, is fatally flawed and no longer serves as an incentive to monetize intellectual property in the biotechnology sector.  Like all other tort reform related provisions of the bill, this one takes effect on enactment.  Its role in improving patent quality is dubious.

u    The proposed statutory limit (Section 3, Coalition Print, page 4) on prior art to those documents that are “reasonably and effectively accessible” is an “all thumbs” circular definition that adds only billable hours to litigation costs.  It fails to deal with internet publications and has no apparent connection to patent quality.  Existing judicial standards are swept aside by this sweeping redefinition of prior art.  If an attorney can find it, is it reasonably and effectively accessible?  What if it takes five attorneys to find it?  The jokes go on.

u    In an effort to popularize inter partes re-examination, HR 2795 (Section 7, Coalition Print, page 23) proposes to repeal the estoppel clause of 315(c).  Repeal of the simple phrase, “or could have raised,” is not going to popularize the inter partes re-examination proceeding.  The act chips away at established judicial law and practice for no meritable purpose.

By placing post-grant opposition on the back burner, we see that the purported purpose of the bill, to improve patent quality, will not be achieved any time soon.  What is achieved instead is a pervasive and damaging blow to the rights of the patent holder, which, in combination with the chaos in patent law that will follow enactment, promises to do irreparable harm to a key engine for economic growth.  Patent issuance rates are currently flat, patent pendency is approaching 1 million unprocessed patent applications in the system, and the patent quality rate is flat at about 5% defects.  Only the post-grant opposition process reasonably addresses the patent quality problem, but it is the lowest priority item in the bill as far as implementation.  This is not an agenda for success.

 

2. WHAT’S NOT IN THE BILL THAT SHOULD BE 

u    Reform of the patent examination process by implementation of a timely international-type “search report” before formal examination.  At the urging of POPA[5], Congress has approached this subject gingerly, implementing only a small scale experimental program in the past year.  However, the most pressing needs of the business community, to establish predictability about patents and to effectively intervene to block bad patents, would be best served by the PTO if it published at 18 months post filing, not only the patent application, but also an international type search of the prior art, so that the owner of the application can elect to withdraw the application, so that others can comment on the prior art and introduce any relevant material that has been missed, and so that third parties can make reasonable evaluations of the patent applications prospects for issuance.  Transparency in the system has been dramatically improved by 18 month publication, but the proposed reforms introduced in HR 2795 do little to impact patent quality without the added transparency of an 18 month search report published with the application.  This is an alternative agenda.  This is thoughtful debate about the future of the patent system.  This is why a “go slow” approach to patent reform must be encouraged.

u    Despite the NAS2 recommendation, research "experimental use" exemption amendment is not addressed.  Research tool patents seem to be in conflict with a public interest to promote scientific research.  No rational judicial law on this conflict can be formulated without statutory reform.  Litigation on this issue is an unfair tax on the biotechnology industry.

u    Restriction practice reform is not addressed.  The biotech industry has complained that excess restriction of inventions by the PTO has contributed to increased pendency and redundancy of patent applications.  Fee changes put in place last year remove the argument used by the PTO to oppose changes in restriction practice.

u    Despite NAS recommendation, legislation to “revitalize” the non-obviousness statute (103) not addressed. 

u    Despite NAS recommendation, unpublished patent applications remain a 103 statutory bar as of their effective filing date in US but not in Europe.

u    Despite NAS recommendation, "Copy claim" reform to prevent the first-to-file from claiming inventive material first disclosed by subsequent patent applicants not addressed.

u    Mandatory interlocutory relief for litigants appealing to a higher court for settlement of issues where the higher court has the power of de novo review (eg. Markman type issues of claim construction that constitute double jeopardy for the appellants) is not addressed.

u    Despite NAS recommendation, the corrosive effect of prolonged pendency (now greater than 42 months for high-tech patent applications) was not addressed.  We note that the congressional decision to focus on patent quality, not timeliness, was deliberate and is perhaps justified given recent increases in US PTO funding and an apparent end to fee diversion.  It is hoped that the PTO can begin to dig itself out of its backlog on its own, starting by improving retention rates in staff while insisting on performance metrics.

 

3.  THE MESS THEY”VE MADE OF 102 and 103, WHAT TO DO ABOUT IT

Each of three published committee prints[6] has contained extensive revisions and counter-revisions of sections 102 and 103.   This should arouse suspicion that the changes are not well settled and that the implications of the changes are poorly known.  Most of the difficulty apparently arises in the treatment of the definition of “prior art” for purposes of novelty and non-obviousness. The bill's language struggles to clarify  what is global in the definition of prior art versus what is section specific.

The simplest solution is to place a global definition in the “Definitions” section of the statute (Section 1, Coalition Print, page 1), and then craft exceptions where required in the body of the title.

Proposed here is a new way to define prior art for purposes of the novelty and obviousness statutory bars to patentability.   Prior art is defined in section 100 of Title 35 so that its use in other sections of the statute can be standardized and exceptions made on a section by section basis.  This seems a logical approach to what has been a troublesome problem for the authors of HR 2795.

Parenthetically, note also the problem that has been created for the non-statutory “double patenting” rejection.  As currently formulated, co-owned prior art is not grounds for a rejection under novelty.  The bill seems to provide  legislative approval for double patenting.

A less radical approach is outlined in an Appendix here (below).  In the approach outlined, an exception is made under section 103 for unpublished patent applications.  More about this has been discussed elsewhere.  However, there are several key advantages to making patent applications prior art as of date of publication rather than date of filing for purposes of obviousness (yet retaining date of filing for novelty rejection):

  1. Conforms with practice of all Trilateral Patent Offices except the United States.
  2. Encourages disclosure of all modes for practicing the invention; overcomes possible decrement in patent quality due to repeal of subjective “best mode” requirement.
  3. Reduces misuse of  “copy claim practice” wherein the first to file can claim inventions first disclosed by another inventor who files subsequently.

I shall not explain those benefits in the interests of brevity, but I encourage all involved to put more thought into patent reform before making any commitments to support the current HR 2795 with its somewhat ill-formed and reckless assemblage of provisions.  In the words oft used by Ross Perot, I encourage all involved to “Measure twice and cut once.”

Comments are welcome.

K Karel Lambert
 

APPENDIX I -  DEFINITION OF PRIOR ART 

Proposed Amended Text of Title 35, Sections 100, 102, 103 and 112.

Insert as a definition in newly created Section 100(j):

“Prior art defined.—The term ‘prior art’ reflects the state of the art as it exists on the effective filing date of a patent application; and,

(1)    takes within its meaning everything reasonably, effectively and permanently accessible to the public, by means of written description, use, sale, teaching, or as commonly known, including publications, media, patents, and patent applications, without geographic restriction, upon that date, except as noted in subsections (2)-(4) of this section;

(2)    patents and patent applications shall be deemed prior art as of their effective date of filing, unless otherwise restricted by this statute;

(3)    ephemeral electronic publication or other impermanent record is not deemed prior art for purpose of this statute unless permanent record is made of its contents and the date of its recording upon or prior to the effective filing date in a form as set forth by the Director; and

(4)    notwithstanding subsection 100(j)(3), oral teachings or traditions are prior art if a credible witness or witnesses familiar with them upon the effective filing date subsequently declare their contents in a permanent form as set forth by the Director.”

 

Amend sections 102, 103 and 112 as follows:

“102. Conditions for patentability; novelty and loss of right to patent.—A patent for a claimed invention may not be obtained if the claimed invention was described in the prior art, unless the prior art descriptions are—

(a)  dated less than one year antecedent to the effective filing date of the claimed invention; and,

(b)  are shown to derive from the inventor or a joint inventor or from others who obtained the subject matter described either directly or indirectly from the inventor or a joint inventor.”

 

“103. Conditions for patentability; obviousness and loss of right to patent.—

(a)  A patent for a claimed invention may not be obtained though the claimed invention is not described in the prior art, if the differences between the subject matter of the claimed invention sought to be patented and the prior art are such that the subject matter as a whole would have been obvious before the effective filing date of the claimed invention at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains; unless the prior art descriptions are—

(1)    shown to derive from the inventor or a joint inventor or from others who obtained the subject matter described either directly or indirectly from the inventor or a joint inventor; or,

(2)    unpublished patent applications; or,

(3)    COMMON ASSIGNMENT EXCEPTION.— patents or patent applications, the whole of which and the claimed invention, not later than the effective filing date of the claimed invention, were owned by the same entity or subject to an obligation of assignment to the same entity; or,

(4)    JOINT RESEARCH AGREEMENT EXCEPTION.—

      (A) patents or patent applications, the whole of which and the claimed invention, not later than the effective filing date of the claimed invention, were—

(i) made by or on behalf of parties to a joint research agreement that was in effect on or before the effective filing date of the claimed invention;

(ii) made as a result of activities undertaken within the scope of the joint research agreement; and

(iii) the application for patent for the claimed invention discloses or is amended to disclose the names of the parties to the joint research agreement.

(B) For purposes of subparagraph (A), the term “joint research agreement” means a written contract, grant, or cooperative agreement entered into by two or more persons or entities for the performance of experimental, developmental, or research work in the field of the claimed invention. 

(b)  Patentability shall not be negatived by the manner in which the invention was made.”

 

“ 112. Conditions for Patentability; Specification; Claims; and Loss of Right to Patent.

 (a) IN GENERAL – The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, or the invention shall not be patentable.

(b) CONCLUSION – The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the inventor or a joint inventor regards as the invention as conceived on the effective date of filing.

(c) FORM – A claim may be written in independent or, if the nature of the case admits, in dependent or multiple dependent form.

(d) REFERENCE IN DEPENDENT FORMS – Subject to subsection (e), a claim in dependent form shall contain a reference to a claim previously set forth and then specify a further limitation of the subject matter claimed. A claim in dependent form shall be construed to incorporate by reference all the limitations of the claim to which it refers.

(e) REFERENCE IN MULTIPLE DEPENDENT FORM – A claim in multiple dependent form shall contain a reference, in the alternative only, to more than one claim previously set forth and then specify a further limitation of the subject matter claimed. A multiple dependent claim shall not serve as a basis for any other multiple dependent claim. A multiple dependent claim shall be construed to incorporate by reference all the limitations of the particular claim in relation to which it is being considered

(f) ELEMENT IN CLAIM FOR A COMBINATION – An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.” .


[2]   A Patent System for the 21st Century (2004)  (eds. Stephen A. Merrill, Richard C. Levin, and Mark B. Myers)  Committee on Intellectual Property Rights in the Knowledge-Based Economy, Board on Science, Technology, and Economic Policy Policy and Global Affairs, National Research Council, The National Academies. Nat' Academies Press, A Patent System for the 21st Century (2004)

 [3]   To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy A Report by the Federal Trade Commission. 2003.  US Govt Printing Office. http://www.ftc.gov/os/2003/10/innovationrpt.pdf

[5]  Patent Office Professionals Association: union employees of the US Patent and Trademark Office.

 

 


  Copyright K K Lambert 2001-2005.  All rights reserved.   For permissions, contact the author.