Changes to Patent Practice – High tech Intellectual Property Legal Blog

Major changes coming to Patent Practice in March: First to File and New Fees

In just over a month and a half, mid-March, two big changes — First to File and the USPTO Fee Adjustment — will shape the future of patent prosecution practice. Oddly, the Patent Office scheduled the change in fees three days after the American Invents Act’s last phase comes into effect on March 16, 2013.

First to File is becoming the law of the land for patents. In addition to granting the patent to the “first inventor to file,” the new rules have a number of other effects.

For the purposes of which law to apply, any case that “ever contains a claim that has an effective filing date on or after March 16, 2013” will be evaluated under the new rules. This means that you should consider very carefully the scope of your claims if you are converting a provisional application which was filed prior to March 16, 2013.

Some of the more important other effects include the expansion of the definition of prior art, to encompass foreign art.

Also, barring actions, such as sales, will also include foreign activity.

It is not clear whether the one year grace period, which does remain for the inventor’s own actions, applies to anything that does not include a “disclosure” of the invention. For example, would a sale or offer for sale that is private be barring? It appears from the language of the act that it would be, since the conditions which would block a patent include the claimed invention being “on sale,” while the exception is only for “disclosures.” The Patent Office has stated that they interpret disclosure as a generic term intended to encompass the documents and activities enumerated in AIA 35 U.S.C. 102(a).”

Furthermore, the Patent Office’s interpretation of the exceptions under 35 USC 102(b)(1)(B) are limited to “identical subject matter disclosed by the third party.” Thus, while nominally the grace period remains, it is only applicable for the inventor’s precise disclosure, and reprints of the same. For example, imagine an inventor that posted an article about their invention in a blog post, prior to filing the application. A blogger posted a link to the article and added an aspect that was not disclosed (e.g. “This could be implemented in way XYZ”). The Patent Office makes very clear that this aspect, e.g. the implementation detail added by the non-inventor blogger would be barred from being claimed as novel, even if the inventor had it in mind but did not include it in the article. Furthermore, potentially the entire disclosure could be removed from the grace period.

In addition to the First to File rules, starting March 16, 2013 (Saturday), the new fees will start on March 19, 2013 (Tuesday).

The new fees will increase second and subsequent RCE fees by $770, to $1700, and will increase the fee for the first RCE by $270 to $1200. The filing fee for a utility patent will also be increased to a total of $1600, while excess claim fees will be increased to $420/$80. National stage entry fees will also be increased, but only by $340, to $1480.

On a practical note, this appears to mean that if the client wishes to file in the PCT, it would be more cost effective to file directly in the PCT, and enter the US through the national phase. It also appears that it may be worthwhile to file a continuation, rather than a second or later RCE, especially given the recent change in priority handling of RCEs.

Patent Term Adjustment: PTO Rule Change via the Courts

In Exelixis, Inc. v. Kappos in the Eastern District of Virginia, Judge Ellis stated that the USPTO’s interpretation of the patent term extension for length of pendency is incorrect.

The rule that controls patent term adjustments for application pendency is 35 USC § 154(b), and section 35 USC §154(b)(1)(B)(i) states:

(B) GUARANTEE OF NO MORE THAN 3-YEAR APPLICATION PENDENCY.- Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to the failure of the United States Patent and Trademark Office to issue a patent within 3 years after the actual filing date of the application in the United States, not including-

(i) any time consumed by continued examination of the application requested by the applicant under section 132(b)

The Patent Office has interpreted this to mean that an RCE ends the term adjustment for delay by the Patent Office under Section B, regardless of when that RCE was filed.

Judge Ellis said this interpretation is contrary to the plain reading of the statute. The court stated that the statute was not ambiguous, and its interpretation was very strong. The court concluded:

The plain and unambiguous language of subparagraph (B) requires that the time devoted to an RCE tolls the running of the three year clock if the RCE is filed within the three year period. And, put simply, RCE’s have no impact on PTA if filed after the three year deadline has passed.

Though this decision may be appealed, it is significant. Exelixis got a 114 day additional term for its patent. Many other long-pending patents would likely receive equally large if not larger adjustments.

Patent owners can request a recalculation of the PTO’s Patent Term Extension for two months after a patent issues. The Request must be filed as described in MPEP 2735.

Therefore, my recommendation is that you review all patents that have issued in the last two months, and calculate the new patent term adjustment. For older patents, you have up to six months to appeal the determination to the District Court, so if you have a key patent that may get a few more years validity, this path may be an available option.

The new simple term extension calculation is as follows. First, determine whether your patent was pending for more than three years. If so, check whether an RCE was filed within the three years. If no RCE was filed in the first three years, then your patent term adjustment should be a day-for-day adjustment from the expiration of the three year period, until your patent actually issued.

I will update this post if an appeal is filed.

Information Disclosure Statement Submission After Issue Fee Payment (USPTO Pilot Project)

In an attempt to make the late submission of IDSes less costly, the Patent Office is instituting a pilot program to extend the ability to submit an Information Disclosure Statement under 37 C.F.R. 1.97(d) to after the payment of the issue fee. The pilot program starts on Wednesday, March 16, 2012, and is slated to end September 30, 2012. However, the process is somewhat complex, and unlikely to be much used.

The Patent Office issued a Press Release, and published the Federal Register Notice that includes all the rules.

Submission of such an IDS will require:

1. New transmittal form PTO/SB/09 which will be made available as a PTO form. (currently not there, I will update the link when it is added)

2. IDS including IDS submission fee ($180)

3. Declaration under 1.97(e)(1) or (2) that:

That each item of information contained in the information disclosure statement was first cited in any communication from a foreign patent office in a counterpart foreign application not more than three months prior to the filing of the information disclosure statement; or
That no item of information contained in the information disclosure statement was cited in a communication from a foreign patent office in a counterpart foreign application, and, to the knowledge of the person signing the certification after making reasonable inquiry, no item of information contained in the information disclosure statement was known to any individual designated in § 1.56(c) more than three months prior to the filing of the information disclosure statement.

4. A Petition to Withdraw from issue after payment of issue under 37 CFR 1.313(c)(2), including fee ($130)

5. A Request for Continued Examination (RCE) form, including fee ($930/$465)

The Examiner will, upon review of the IDS, determine whether prosecution needs to be reopened. If so, the RCE will be entered, and prosecution will be reopened. However, the IDS fee will not be refunded.

If the Examiner determines that the IDS does not raise new issues, the Examiner will issue a Corrected Notice of Allowability, indicating that the IDS has been considered. The RCE fee will be refunded. There will be no need to respond to the corrected Notice of Allowability, the case will automatically progress to issue.

So the new policy effectively requires exactly the same process as you would use now, upon receiving a late reference, except that the Patent Office will treat the RCE request as conditional, and will refund the RCE fee if they determine that the references do not raise new issues.

As a general policy, we do not recommend the use of declarations under 1.97(e)(2) because it requires “reasonable inquiry” that no one associated with the case was aware of any of the references. There is a real risk that someone, maybe an inventor who is no longer with the assignee, was aware of a reference. However, a declaration under 1.97(e)(1) only requires is a reference from a foreign patent office in a computerpart foreign application. Unfortunately, that does not include related patent applications, whether U.S. or foreign, only references from foreign counterpart applications.

There are two potential advantages to this procedure. First, there is the savings of the RCE fee, a savings of between $750 and $285, since the IDS fee is now required). Second, any such submission will be placed on the examiner’s “expedited” stack. Currently the wait for RCE responses has been increasing drastically, due to the pressure on Examiners to reduce wait time for the first office action. Thus, being on the expedited stack may be a significant time advantage. Despite these advantages I don’t think this procedure will significantly change existing practice, or help with the excessive RCEs.

Impact of USPTO Proposed Fee Increases

The USPTO’s published fee increase proposal is going to have an impact on every patent department in every company. You can find the Patent Office’s discussion and a PDF with the fee increases on the AIA microsite. While some fees are untouched, and a few are even reduced, many fees are significantly increased.

Some of the major fee increases:

Many fees are increased by a small amount, those are not listed in the above table. The only noticeable fee reduction is for issue fees. If an application is publishes, the issue fee will be reduced by 50% compared to an issue fee for a non-published application. While publication will still cost $300, the savings of $1,080 on the issue fee is not insignificant. However, this change is not scheduled to start until January 1, 2014, almost a full year after the new fee increases become effective.

The increases in the filing fees, RCEs, and maintenance fees are going to have a large impact on patent budgets. If you budget for prosecution and maintenance fees separately, and I recommend you do, increase your estimates for both, starting in February of 2013. Since many companies set their budgets annually, make sure your next budget cycle includes the likely increases in patent costs.

For prosecution costs, if you work with an outside firm most of the cost is attorney fees. I would estimate that this fee increase will lead to an increase of overall costs by approximately 15% across the board. Of course, if you are handling prosecution in-house, you should be increasing your budget for PTO fees by at least 60%, given the inflation of filing, RCE, and appeals fees.

More significantly, you will need to increase your budget for maintenance fees. If your portfolio is evenly distributed in terms of status, then you should increase your overall maintenance fee budget by ~50%. If your portfolio is younger, with most of your issued patents at the first or second maintenance fee stage, increase your maintenance fee budget by ~35%. If your portfolio is older, more heavily weighted toward patents in their final maintenance fee stage, you will need to increase your budget by 60%. For an evenly distributed portfolio of 100 issued patents, the additional cost would be ~$45,500, raising the annual maintenance fee budget from ~$96,700 to ~$142,200.

While the Patent Office has not finalized these fees, I attended the public hearing and there appeared to be little interest in discussing changing these fees, or acknowledging their likely impact on innovation.

America Invents Act: Summary of Sections & Effective Times

The America Invents Act is going to be changing many aspects of patent prosecution and litigation. I have divided it into four segments, patent strategy, patent prosecution, post-issue owner’s rights, and post-issue third party rights. Each change to the patent law will impact one or more areas.

These changes have been partially implemented, in September of last year. Another large group of changes will be coming in September of this year. The fee changes proposed by the Patent Office, which appear to be non-negotiable despite the many hearings held, are going to be implemented in February of next year. I will make a longer post about the fee changes, and their impact later. And finally, in March of 2013, the First to File or Disclose rules, and the associated other rules, will be coming into play. As you can see, the September 2012 changes will mostly impact third parties, starting the post-grant opposition, and other changes.

This graph is a summary of the changes, their timing and the segments which they primarily impact.

Do the new Derivation Rules published by the Patent Office include a Catch-22?

The Patent Office has published the new rules for instituting a claim of derivation. Derivation proceedings were part of the shift to First to File, which allows someone who can prove that the first filer stole their idea to obtain the patent, even though they were not first to file. It effectively replaces interferences, but requires not just first invention, but actual demonstration of theft.

The basics are that the petition must state with peculiarity the basis for the charge of derivation, must be filed under oath, and must be supported by substantial evidence. However, the new rules appear to have a built-in Catch-22 with respect to publication.

The petition must be “filed within one year of the first publication by the earlier applicant of a claim to the same or substantially the same invention.” However, “derivation is unlikely to be declared even where the Director thinks the standard for instituting a derivation proceeding is met if the petitioner’s claim is not otherwise in condition for allowance.”

The requirement that inventors monitor the Patent Office publications closely is difficult, especially when the published claims may not reflect the (derived) later claims. But more importantly, the timing can be impossible.

The senior applicant (e.g. the one accused of derivation) may request an early publication. Currently accelerated publication ensures that a patent application is published as early as possible, and generally 14 weeks after receipt of the request.

This could mean that a junior applicant’s case may not even be filed, much less examined, even under the 18 month first action standard, before the petition to initiate the derivation proceeding has its deadline. Even if the junior applicant files shortly after the senior applicant, with accelerated publication it’s unlikely that the junior applicant’s case would be in condition for allowance by the time the one year deadline rolls around.

Am I missing something?

I’m attending the Patent Office’s Sunnyvale Fee Setting Hearing

I will update this post after the hearing, or potentially during the hearing if network is accessible. I expect that my opinions will not get much traction, since the Patent Office isn’t a big fan of small inventors, but I do intend to express my dislike of the huge increases in RCE fees & Appeal fees.

I would much rather have the fees shifted to either larger patents (e.g. patent size fees increased by a lot more) or shifted to maintenance fees. If you have opinions about the fees, and want to have input, attend a hearing, or write to the Patent Office. Let your voice be heard.

Timing of Changes due to Leahy-Smith America Invents Act

This is a handy table of timings and applicability of the various changes in the Act.

Item

Date of Change and Applicability

Fee Surcharge (15%)

September 26, 2011

For all fees paid after this date

First to File

March 16, 2013

For all patent applications having an effective filing date on or after this date

Prioritized Examinations

September 26, 2011

Applications filed after this date, upon payment of fees, or request based on economy/competitiveness regulations

Public use/on sale bar

international

March 16, 2013

For all patent applications having an effective filing date on or after this date

Derivation Proceedings

March 16, 2013

For all patent applications having an effective filing date on or after this date

Submission Of Art and

Argument by Third Party

September 16, 2012

For all patents, then pending, or later filed

Assignee May File Patent

without inventor signature

September 16, 2012

All patent applications filed on or after this date.

Elimination of Tax Strategy & Human Organism patents

September 16, 2011

Applies to all patents pending on, filed on, or filed after this date.

Prior Commercial Use Defense

September 16, 2011

Applies to all patents issued on or after this date

Post Grant Review for Business Method Patents

September 16, 2012

Applies to all patents, regardless of issue date.

Post Grant Review

September 16, 2012

Applies to all patents issued less than nine months before, on, or after this date.

Inter Partes Review

September 16, 2012

Applies to all requests for inter partes reexam filed after this date.

Supplemental Examination

September 16, 2012

Applies to any patent issued before, on, or after this date

Elimination of Best Mode In Litigation

September 16, 2011

For any proceeding commenced on or after this date.

Restriction of Joinder and Venue

September 16, 2011

For any proceeding commenced on or after this date.

Virtual Marking and restriction of

Marking cases

September 16, 2011

For any proceeding pending on, or commenced on or after this date.

Some Scenarios Exploring First to File or Disclose

I’m trying to figure out corner cases under the new America Invents Act rules. In most cases, people won’t be directly affected by the rule change, but I can see the below four scenarios coming up.

• Scenario #1: Inventor A invents and immediately discloses (by publishing in obscure journal). Inventor B invents, and files a patent application, but does not disclose. Inventor A files a patent application, after Inventor B. Who if anyone gets a patent?
• Scenario #2: If Inventor A and Inventor B both disclose at the same conference. Both then file a patent, Inventor A files before Inventor B. Who if anyone gets a patent?
• Scenario #3: Inventor A discloses X. Inventor B files a patent for X+Y. Subsequently, Inventor A files a patent for X+Y. Who, if anyone, gets a patent, on X, Y, and X+Y.
• Scenario #4: Inventor A has a non-enabling disclosure. A third party C publishes an enabling disclosure. Inventor B files a patent on the invention. Subsequently, Inventor A files a patent. (Timing is A disclosure, C publication, B filing, A filing). Who, if anyone, can get a patent?

Timing of Enactment of New Rules in America Invents Act

I’ve pulled together a list of each change, and categorized it in terms of timing. I highlighted those items that will likely change the way we practice.

Effective immediately

Prior commercial use defense (any patent issued on or after date of enactment)
Venue moved to District Court for Eastern District of Virginia
Funding agreements of government with non-profit organizations
Tax strategies are part of the prior art (all patents issued after the effective date)
Best mode may not be the basis for canceling or holding invalid a patent (all proceedings commenced on or after date)
Marking statutory damages only available to US, actual damages suits available to competitors. (to all cases, including those pending)
Joinder: Restriction of joint litigation only if it’s the same product (all civil actions commenced after date)
Prohibition against human organism patents (for all pending or later filed applications)
+1 day for extension of patent term (Wilmer-Hale Act, for applications for extension of time pending, filed after, or subject to judicial review)
Inter partes review update (applicable to all patents, regardless of filing date)

Effective one year from the enactment

Post-grant review (applies to all patents, regardless of filing date)
Pre-issuance submissions to the patent office (applies to all patent applications)
Supplemental Examination (applies to all patents)
Lack of Advice of Counsel cannot be used to prove willfulness
Business Method patents available for post-grant review (valid for 8 years only)

Effective 18 months from the enactment

First inventor to file
Change in grace period (requires inventor disclosure)
Inventor’s oath and declaration changes, changes allowing entity having sufficient proprietary interest to file without inventor
Derivation proceedings
Repeal of statutory invention registration

If you see any mistakes, or items missing, please let me know so I can correct it.