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.

US Patent Office PAIR Monitoring

There are numerous services to monitor Public PAIR.  This is useful to monitor the status of one’s own cases, as well as the status of the cases of one’s competitors.

For one’s own cases, for example, if an After Final Amendment or a Petition is filed, it does not stop the clock for a response.  Monitoring PAIR to ensure that any Advisory Actions or Petition responses are timely received is very helpful.  Similarly, once an Issue Fee is paid, you have until the case actually issues to file a continuation application.  While an Issue Notification is provided by the Patent Office, the Issue Notification is often provided days before the actual issue date.  Therefore, it is worth monitoring PAIR to ensure that this information is obtained at the earliest possible time.

For one’s competitors’ cases, it is useful to know when cases are going to be issuing, or substantive office actions are received.  As the post grant procedure comes into effect, starting on September 16 of this year, knowing right away that a competitor’s case is about to issue becomes even more important.

Of course, in any Reexamination, the timelines are tight, and having an extra few days by receiving the copies of any office actions or filings by the opposing party is useful.

These services range in cost.  For example,

CE Status for example provides a PAIR monitoring for $180.00 per case per year.

Cardinal IP monitors public PAIR for $10 per case per month (e.g. $120 per case per year).

Questel provides PAIR monitoring, as well as monitoring international patent offices.  I could not find pricing online. (If someone provides this data, I will update this)

Maxval also provides public PAIR monitoring for $60 per case per year.

Of course, it is possible to manually monitor PAIR as well.  There is an advantage to doing so in-house, because it enables access to Private PAIR, rather than just to Public PAIR, as with the listed services.  However, this is time consuming, and requires administrator time on a daily or weekly basis.  Currently my Admin monitors PAIR on a weekly basis, on Mondays.  The day of the week was selected because patents issue on Tuesdays, and I want to ensure I get even last minute issue notifications.

I’m working on writing a script to see if I can use Private PAIR with a script (though I may need to sign in manually).  Does anyone know of a functioning script or application that works well, and isn’t too expensive?

ITC Can Block Imports for Trade Secret Misappropriation Outside the United States

ITC can block imports for trade secret misappropriation outside the United States

In Tian Rui Group v. ITC, the Court of Appeals for the Federal Circuit ruled that the International Trade Commission (ITC) can prevent the importation of products made by a trade secret process misappropriated abroad, if the trade secret was developed in the United States.

In this case, Amsted (and American company) uses a trade secret process to make railway wheels. They license a different process to companies in China and elsewhere. Tian Rui hired former employees of Amsted, in China, to learn Amsted’s secret process. They made wheels, using the secret process, and shipped them to the U.S.

Amsted asked the ITC to block Tian Rui’s importation of the wheels produced by this trade secret method. The ITC issued an exclusion order, which was appealed to the CAFC.

The ITC relied on 19 U.S.C. § 1337(a)(1)(A) which provides the ITC authority over “Unfair methods of competition and unfair acts in the importation of articles . . . into the United States” if it will substantially injure and industry in the U.S. The ITC previously has used this section to bar products based on a variety of non-statutory unfair acts, including trade secret misappropriation. However, this was a case of first impression, with respect to actions taking place entirely outside the United States.

The CAFC, in a 2-1 decision (Bryson & Schall for the majority, Moore dissenting) ruled that while U.S. laws generally do not apply extraterritorially (e.g. outside the United States), the prevention of domestic injury from importation of products made using unfair methods justifies applying the statute to such acts.

The court further held that unfair competition bed actions are Federal, and thus ruled by federal law. Since the statute addresses importation, and provides a remedy in the ITC, federal rules should apply. By federalizing trade secret law, they could reach the conclusion, without expressly suggesting that U.S. trade secret law has extraterritorial reach. The court also noted that the statute does not require the use of the trade secret in the United States.

This ruling, which may yet be appealed, gives a powerful new weapon to U.S. companies, who face unfair competition from abroad. Since the law relied upon is not limited to trade secret misappropriation, the impact of the ruling may be quite broad.

If you believe that a product that is being imported by a competitor was produced using unfair acts, you may consider going to the ITC for a faster path to removing that competing product from the U.S. market. Keep in mind that the ITC judgment does not result in damages awards, but in exclusion orders.

Be careful where you file your case: A Lesson from Zynga v. Vostu

If you look at the pictures you will see why Zynga said “ it is one thing to be inspired by Zynga games, but it is entirely different to copy all of our key product features…”

Vostu’s purpose, according to Zynga is to copy literally every feature of every Zynga game.

Zynga sued Vostu in District Court in California, on June 16th.

Then, they filed another lawsuit on August 2nd in Brazil, Vostu’s home country. The Brazilian judge granted an injunction quickly, telling Vostu it had to shut down its games within 48 hours.

The U.S. District Judge, Edward Davila was not amused. He issued an order restraining Zynga from enfordcing the Brazilian decision. In particular, he noted “Zynga—which chose the U.S. forum first—now seeks to enforce an injunction it obtained abroad that would paralyze this Court’s ability to decide this case.”

So, while Zynga won a round in Brazil, their decision to file the case initially in the U.S. prevents them from enforcing the Brazilian court’s decision.

Lesson learned: Choose your jurisdiction carefully. Especially when looking for an injunction, consider finding a fast jurisdiction, and filing there first. U.S. judges will not look kindly upon a later suit impacting their jurisdiction.

Customer Suggestions and the Law

Customers will often send kudos, complaints, reviews, as well as requests for features and suggestions for improvements to companies.  Many of these messages may simply be an expression of like or dislike, but sometimes customers will send suggestions on how to improve the product, or for future products.  Unfortunately, this can lead to problems if those ideas overlap with the company’s plans.

While ideas as such are not patentable, a creator has some rights to his or her ideas even if they are submitted freely as suggestions.  There is also the risk that the person contacting you has a patent or copyright.  There have been a number of cases where unsolicited manuscripts or emails were used as a basis for a claim of theft of ideas, or challenging ownership of a copyright in a game or movie.  In many of these cases, the companies won, having shown that they separately developed these ideas or that the ideas were quite distinct from the suggestion that was sent.  Unfortunately just having to respond to a complaint is expensive.

In order to protect yourself, and still let your customers feel like they can contact you, I recommend you set up automatic procedures that insulate customer suggestions from your design team.

  • Have a designated contact point, who receives and handles customer contacts, who is not involved in design, or creation.
  • Ask members of the creative teams to keep an inventor’s notebook or similar log of inventive activities, especially new ideas.
  • Keep a log of client contacts, and how they were processed.
  • Automatically respond to any contacts that include suggestions with a form response requesting that the customer return a signed assignment or disclaimer of rights.
  • Do not open attachments, or review suggestions until a signed assignment or disclaimer has been received.

This should make complaints more unlikely, and if any complaints are brought it will help you quickly prove that your processes make the suggested theft impossible.