Patent Docs

The Medicines Company to Get Patent Term Extension

January 24, 2012

By Kevin E. Noonan —

One of the longest patent law sagas has apparently reached an end. As announced by The Medicines Company (MDCO) today, the drug developer has reached a settlement of litigation with APP Pharmaceuticals over Angiomax® (bivalirudin). Most important for MDCO, the settlement dismisses APP's appeal of the denial of its motion to intervene in MDCO’s mandamus action against the PTO's decision denying patent term extension for its patent relating to Angiomax®, the last obstacle to MDCO obtaining patent term extention for its U.S. Patent No. 5,196,404.

The tale has been often told on the circumstances surrounding MDCO's patent term extension (PTE) Request for the ‘404 patent. Pursuant to 35 U.S.C. § 156, MDCO had 60 days from the date that Angiomax® received regulatory (FDA) marketing approval to file its PTE Request (35 U.S.C. § 156(d)(1)). The approval letter was sent by the FDA to MDCO by facsimile transmission at 6:17 pm on Friday, December 15, 2000. The FDA subsequently published the approval date for Angiomax® on its website as being December 19, 2000. MDCO filed its PTE Request on February 14, 2001, a date that is 61 days after December 15, 2000, 58 days after December 18, 2000 (the Monday following the date of the Friday night fax) and 57 days after the approval date the FDA posted on its website for Angiomax®. These calculations were complicated by a later-issued directive by the PTO that, for purposes of calculating the time period for filing a PTE Request, the Office would consider the day the FDA mailed its approval letter in the calculation (i.e., the times above are each increased by one day) (In re Patent Term Extension Application for U.S. Patent No. 5,817,338, 2008 WL 5477276 (Comm'r. Pat. Dec. December 16, 2008)). In any case, the PTO, relying on a certification from the FDA that the approval date was Friday, December 15, 2000, refused MDCO's Request, costing the company to lose 4.5 years (about 1773 days) of extension for the ‘404 patent (which nominally expired on March 23, 2010).

MDCO filed a request for reconsideration of this decision, on the grounds that the FDA faxed its letter "after hours" on a Friday, "and that under FDA's practices, facsimiles submitted to FDA after close of business are considered received by the Agency on the next business day" (emphasis added). Applying this standard, the approval notification date would have been Monday, December 18th, and MDCO's Request would have been timely filed even under an interpretation including the approval date in the 60-day period. The PTO transmitted the request for reconsideration to the FDA (since the dispute involved FDA procedures), which the FDA rejected without comment or support, maintaining that the approval date was Friday, December 15th.

The PTO did not issue a formal denial of MDCO's request, but instead permitted the company to file an amended request for reconsideration and an amended extension application, which were filed on March 13, 2007. Less than six weeks later, on April 26, 2007, the PTO denied the request, again with no explanation of the inconsistency in the FDA's position on submissions to and notices from the agency. It was at this time that the Office applied the revised calculation for determining when a PTE Request must be filed, determining in this case that MDCO had filed its Request 2 days late.

MDCO filed a petition for leave to file a second request for reconsideration on the grounds that it had not had an opportunity to address this new interpretation of the deadline date for filing its PTE Request. MDCO argued that there was no requirement in the statute that would preclude the Office from adopting its proposed "next business day" rule, and that such an interpretation would "comport with the statute's text and purpose." While the Office granted leave for filing the second request for reconsideration (based on the "extraordinary situation" occasioned by its change in how days were counted for calculating the filing deadline), it denied the request substantively. The PTO's position was that the Office did not have the authority under § 156 to adopt the proposed "next business day" rule, at least because there was no basis to distinguish "during business hours" from "after business hours" in the statute, which recites the date (per the PTO, "span[ning] the course of 24 hours").

MDCO brought suit in the Eastern District of Virginia (Claude M. Hilton, District Court Judge), and on March 16, 2010 the Court ordered on remand that the Office reconsider its position on the grounds that "§156(d)(1) was a remedial statute and that it should be liberally construed," and that "the PTO was not bound by statute or case law to reject the business day interpretation of the work date in §156(d)(1)." Three days later, the Office "without any additional hearings" issued another decision again rejecting the "next business day" interpretation of the statute advanced by MDCO. The Office went further, holding that the timing provisions of the statute were not remedial in nature, and that the Office was bound by Federal Circuit authority to interpret the word "date" in the statute as the calendar day on the FDA approval letter. In response, MDCO returned to the District Court under the Administrative Procedures Act, 5 U.S.C. §§ 551-706, arguing that the agency's action was arbitrary and capricious.

On August 3, 2010, Judge Hilton ordered the PTO to consider MDCO's patent term extension application timely filed (see "The Medicines Company Prevails in Patent Term Extension Dispute"). The period for the government to appeal the Court's August 3, 2010 decision expired without government appeal. However, on August 19, 2010, APP filed a motion to intervene for the purpose of appeal in MDCO's case against the PTO, FDA, and HHS. On September 13, 2010, the District Court denied APP's motion (see "The Medicines Company Clearing Last Hurdles to Patent Term Extension for Angiomax®"). APP appealed the denial of its motion, as well as the District Court's August 3, 2010 order (and all related and underlying orders), to the U.S. Court of Appeals for the Federal Circuit. The settlement announced today ends this appeal.

In addition, the settlement also contains an admission by APP that the patents involved in its ANDA filing, U.S. Patent No. 7,582,727 and 7,598,343, are not invalid or unenforceable against APP and would be infringed by APP's sale of its generic bivalirudin. This portion of the settlement raises other issues, however. The two later patents (i.e., the '727 and '343 patents) expire in 2028, but the settlement grants APP a license that permits APP to sell its generic bivalirudin on (or under some circumstances prior to) May 1, 2019. In addition, APP has agreed to supply MDCO with finished drug product, an advantage in view of expected increases in demand and recent loss of manufacturing capacity by cancellation of agreements between MDCO and other contract manufacturer(s). The settlement also includes an agreement whereby APP will supply under license additional generic products relating to "acute cardiovascular, neurological and infectious diseases."

These agreements must be submitted to the U.S. Department of Justice and the Federal Trade Commission under the Medicare Prescription Drug, Improvement and Modernization Act of 2003. Given the FTC’s skepticism of the motivations and legality of patent settlement agreements, it is likely that this agreement (which provides final disposition of MDCO’s PTE dispute) will be critically scrutinized, particularly in view of the notoriety surrounding the circumstances and the FDA's and PTO's recalcitrance over the proper standards for awarding PTE under the statute (see "FTC Disapproves of 'Pay-for-Delay' Drug Deals" and "FTC Continues Attempts to Block Reverse Payments").

For additional information regarding this topic, please see:

• "The Medicines Company Clearing Last Hurdles to Patent Term Extension for Angiomax®," September 16, 2010
• "USPTO Acts Quickly to Comply with Court Order," August 6, 2010
• "The Medicines Company Prevails in Patent Term Extension Dispute," August 4, 2010
• "House Passes Patent Term Extension Bill," June 27, 2008
USPTO Issues Memo on Use of Non-Patent Literature During Examination

January 23, 2012

By Donald Zuhn —

Last week, the Office of the General Counsel for the U.S. Patent and Trademark Office issued a memorandum in response to several inquiries the Office has received concerning copyright infringement and the use of non-patent literature (NPL) in the examination process. The memo, which was sent by USPTO General Counsel Bernard Knight, Jr., discusses the application of the fair use doctrine to the use of NPL during examination.

The memo begins by stating three issues involving the use of NPL:

1. Whether it is fair use for the USPTO to make copies of copyrighted non-patent literature (NPL) and provide such copies to an applicant in the course of patent examination?

2. Whether it is fair use for the USPTO to provide certified copies of entire file histories, including copyrighted NPL, to members of the public, for a fee?

3. Whether it is fair use for an applicant to make a copy of a piece of copyrighted NPL and submit it to the USPTO?

With respect to the first issue, the memo notes that the Office "currently obtains much of its NPL through licenses, and has ensured that its licenses permit it to make copies of copyrighted NPL that is used in examination." For unlicensed NPL, the memo states that the Office considers the copying and providing of such references to applicants to be protected by the doctrine of fair use. In order to prevent copyrighted NPL from being copied "for reasons unrelated to patent matters," such references are not provided on PAIR. As for the second issue, the Office considers that providing certified copies of entire file histories, including copyrighted NPL, to members of the public for a fee to also be protected by the doctrine of fair use. Finally, with regard to the third issue, the Office considers the copying of copyrighted NPL by patent applicants and their attorneys and the submission of those copies to the USPTO "pursuant to the USPTO's disclosure requirements," to be protected by the doctrine of fair use. The memo adds, however, that "[t]he USPTO takes no position on whether additional copies of such NPL made by an attorney or applicant during the course of patent prosecution (e.g. for the client, for other attorneys, for the inventor, or for the law firm's future reference) qualifies as fair use." The memo also warns that "[t]o the extent applicants have obtained copyrighted NPL pursuant to a license, applicants are responsible for ensuring that the license is not inconsistent with fair use."

The memo explains that the Copyright Act provides four factors for assessing whether a particular use is a fair use, and thus considered not to be an infringement of a copyright. Citing § 107 of the Copyright Act, the memo states that these factors are:

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.

Applying the four factors to the first issue, the Office notes that "[i]n the 1960s, as part of an initiative to expedite the examination process, the USPTO began providing copies of cited prior art to applicants." With respect to copying and providing unlicensed NPL to applicants, the Office notes that the first factor "weighs in favor of fair use because the USPTO is not using the work for a commercial purpose." The Office also cites "several cases dealing with use of copyrighted works in connection with non-commercial, government functions [that] favor[] fair use." As to the second factor, the memo states that "the USPTO and the applicants are interested in the NPL only for its factual, rather than its expressive, content," and notes that NPL typically consists of published works, which "receive less protection than unpublished works." The Office acknowledges that the third factor "tends to be neutral in this case," because "[i]n many cases . . . an entire publication (e.g., an entire journal article) is considered relevant." With regard to the fourth factor, the memo states that:

There is no basis for concluding that the USPTO' s provision of copyrighted NPL to patent applicants in the course of patent examination impairs the marketability of the copyrighted NPL. The NPL at issue has typically been published several years before the USPTO's use and by the time of the USPTO's use usually has only limited commercial value. In addition, by not providing copies of copyrighted NPL in its Public PAIR system — and thereby preventing any possibility of systematic infringement through access to USPTO's databases — the USPTO has taken steps to ensure that copies of NPL used in examination do not become freely available on the internet.

The memo therefore concludes that the Office's copying and providing of copyrighted NPL to applicants constitutes fair use.

On the second issue, the memo contends that "[t]he fair use analysis for providing file wrappers to the public for a fee (pursuant to 35 U.S.C. 9 and 37 C.F.R. 1.19( a)) is similar to the analysis for providing copies of the NPL during examination." The Office states that "[t]he fact that the USPTO charges a fee for the certified file wrapper does not alter the conclusion that the use of the work is not for profit," noting that "[t]he fee is calibrated to reflect cost recovery, and the USPTO does not profit from making copies of any particular copyrighted work." The memo therefore concludes that "the incidental inclusion of copies of copyrighted NPL in a copy of a certified file wrapper offered to the public for a fee" also constitutes fair use.

The memo next applyies the four factors to applicants' copying and submission of copyrighted NPL. The memo contends that "[t]he fair use analysis for an applicant's IDS submission is very similar to, and reaches the same result as, the fair use analyses for the USPTO uses [specified in the first two issues]." With respect to the first factor, the memo states that "[t]he case for fair use . . . might be even stronger for the applicant, because the applicant is required by law to submit the prior art to the patent office." In particular, the memo explains that "[g]iven that the applicants here are not 'exploiting' the copyrighted work, and are instead merely submitting it, pursuant to a legal requirement, based on its factual, rather than its expressive, content, the first factor weighs heavily in favor of fair use." As to the fourth factor, the memo states that "it is also worth noting that the copies of NPL that law firms typically submit to the USPTO have been obtained through legitimate, licensed databases, and thus have already been paid for once," adding that "[t]he copyright holder has already been compensated for that use (which would not typically have occurred but for the legal requirement imposed by the patent system)." The memo therefore concludes that "it is fair use for an applicant to make copies of NPL and submit those copies to the USPTO during examination in an IDS." The memo provides a bit of a disclaimer, however, reminding applicants that "to the extent they have obtained copies of NPL through licenses, they should consult those licenses to ensure that any proposed use of the NPL is within the scope of the license."

Hat tip to Greg Aharonian for alerting the readers of his e-mail newsletter to the Office's memo on the use of NPL during examination.
Court Report

January 22, 2012

By Sherri Oslick —

About Court Report: Each week we will report briefly on recently filed biotech and pharma cases.

Alnylam Pharmaceuticals, Inc. et al. V. Tekmira Pharmaceuticals Corp.
1:12-cv-10087; filed January 17, 2012 in the District Court of Massachusetts

• Plaintiffs: Alnylam Pharmaceuticals, Inc.; Isis Pharmaceuticals Inc.
• Defendant: Tekmira Pharmaceuticals Corp.

Infringement of U.S. Patent Nos. 7,695,902 ("Oligoribonucleotides and Ribonucleases for Cleaving RNA," issued April 13, 2010), 6,858,225 ("Lipid-Encapsulated Polyanionic Nucleic Acid," issued February 22, 2005), 6,815,432 ("Methods for Encapsulating Plasmids in Lipid Bilayers," issued November 9, 2004), 6,534,484 (same title, issued March 18, 2003), 6,586,410 ("Lipid-Nucleic Acid Particles Prepared Via Hydrophobic Lipid-Nucleic Acid Complex Intermediate and Use for Gene Transfer," issued July 1, 2003), and 6,858,224 ("Method of Preventing Aggregation of a Lipid: Nucleic Acid Complex," issued February 22, 2005) based on Tekmira's sale and offer to sell in, and importation into, the United States dsRNA formulations comprising SNALP (stable nucleic acid-lipid particles) for use by Bristol-Myers Squibb to use for target validation purposes. View the complaint here.

Pamlab, L.L.C. et al. v. Viva Pharmaceutical, Inc.
2:12-cv-00098; filed January 17, 2012 in the Western District of Washington

• Plaintiffs: Pamlab, L.L.C.; Metabolite Laboratories, Inc.; Breckenridge Pharmaceutical, Inc.
• Defendant: Viva Pharmaceutical, Inc.

Infringement of U.S. Patent No. 6,528,496 ("Compositions Treating, Preventing, or Reducing Elevated Metabolic Levels," issued March 4, 2003) based on Viva's manufacture for sale in the U.S. by Macoven Pharmaceuticals, L.L.C. folic acid products allegedly represented to be substitutable for plaintiffs' Foltx® and/or Folbic® products (vitamin B12, vitamin B6, and folic acid, used to treat hyperhomocysteinemia). View the complaint here.

Fresenius Medical Care Holdings, Inc. v. Nostrum Laboratories, Inc.
1:12-cv-10083; filed January 13, 2012 in the District Court of Massachusetts

Infringement of U.S. Patent No. 6,576,665 ("Encapsulated Calcium Acetate Caplet and a Method for Inhibiting Gastrointestinal Phosphorous Absorption," issued June 10, 2003) following a Paragraph IV certification as part of Nostrum's filing of an ANDA to manufacture a generic version of Fresenius' PhosLo® GelCaps (calcium acetate, used to treat renal failure). View the complaint here.

Merck Frosst Canada & Co. et al. v. Teva Pharmaceuticals USA, Inc.
3:12-cv-00210; filed January 11, 2012 in the District Court of New Jersey

• Plaintiffs: Merck Frosst Canada & Co.; Merck Canada Inc.; Merck Sharp & Dohme Pharmaceuticals
• Defendant: Teva Pharmaceuticals USA, Inc.

Infringement of U.S. Patent No. 8,007,830 ("Granule Formation," issued August 30, 2011) following a Paragraph IV certification as part of Teva's filing of an ANDA to manufacture a generic version of Merck's Singulair® (montelukast sodium, used to treat asthma and allergic rhinitis). View the complaint here.
Conference & CLE Calendar

January 22, 2012

January 25-26, 2012 – Biosimilars Forum 2012 (C5) – London, UK

January 26, 2012 – Life Under AIA: Anticipating and Surviving Post Grant Challenges (Technology Transfer Tactics) – 1:00 – 2:00 pm (Eastern)

January 31, 2012 – Obviousness Standard for Patents: Approaches to Withstand USPTO Obviousness Rejections and Attacks on Patent Validity (Strafford) – 1:00 – 2:30 pm (EST)

January 31 – February 1, 2012 – Patent Reform for Life Sciences Companies*** (American Conference Institute) – New York, NY

January 31 – February 1, 2012 – Pharma & Biotech Patent Litigation (C5) – Amsterdam, The Netherlands

February 8, 2012 – Corporate Intellectual Property Law Conference (Law Bulletin Publishing Co.) – Chicago, IL

February 13-14, 2012 – China IP Counsel Forum (C5) – Shanghai, China

February 21-22, 2012 – Biotech & Pharmaceutical Patenting*** (IBC Legal) – Munich, Germany

February 22-23, 2012 – EU Pharma Law & Regulation*** (C5) – London, England

February 22-24, 2012 – Intensive Patent Law Training Seminar (Chisum Patent Academy) – New York, NY

February 27-29, 2012 – Life Sciences Collaborative Agreements and Acquisitions*** (American Conference Institute) – New York, NY

February 28-29, 2012 – Medical Device Patents*** (American Conference Institute) – Boston, MA

March 14-15, 2012 – Biotech Patenting (C5) – Munich, Germany

March 20-21, 2012 – FDA Boot Camp*** (American Conference Institute) – New York, NY

March 26-27, 2012 – PTO Procedures under the America Invents Act*** (American Conference Institute) – New York, NY

March 28-30, 2012 – 27th Annual Intellectual Property Law Conference (American Bar Association (ABA) Section of Intellectual Property Law) – Arlington, VA

***Patent Docs is a media partner of this conference or CLE
27th Annual Intellectual Property Law Conference

January 20, 2012

The American Bar Association (ABA) Section of Intellectual Property Law will be holding the 27th Annual Intellectual Property Law Conference on March 28-30, 2012 in Arlington, VA. Among the topics that will be covered at the conference are:

• Recent developments in patent term adjustments and extensions;
• Abstract reasoning — Recent developments in the law of patentable subject matter under 35 U.S.C. § 101;
• E-discovery in patent litigation — A model order to quiet the tail that wags the dog;
• Understanding the America Invents Act — A sweeping change of U.S. patent practice before the United States Patent and Trademark Office;
• The America Invents Act — Dissection of the new rules for post-grant review and inter partes review;
• What's going on? A summary of hot IP topics;
• Diagnostics and gene patents: What is the future for personalized medicine patents? — panel includes Patent Docs author Kevin Noonan; and
• Developments in the implementation of the biosimilars act: Where are we now and where are we headed?

On March 29, the luncheon speaker will be David J. Kappos, Undersecretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office. In addition, an evening reception will be held at the U.S. Court of Appeals for the Federal Circuit.

The program schedule for the conference can be found here.

The registration fee is $295 (law students), $345 (corporate counsel and government, public interest, and academic rate), $695 (ABA-IPL section members and members of co-sponsoring section), $770 (ABA members), or $845 (non-ABA members). Those registering before March 14, 2012 will receive a $50 discount (or a $100 discount off the non-ABA member rate). Detailed registration information (and a registration form) can be found here.
Corporate Intellectual Property Law Conference

January 20, 2012

The Law Bulletin Publishing Company will be holding its 7th annual Corporate Intellectual Property Law Conference on February 8, 2012 in Chicago, IL. Among the topics to be addressed at the conference will be:

• Views from the USPTO
• Venue issues under AIA
• Update from the federal courts
• Revised MPEP's effect on budget and employees
• OED & ARDC on IP lawyer misconduct
• Post-grant review and supplemental examination
• Life after Therasense

Speakers will include:

• Hon. James Holderman, Chief Judge, U.S. District Court for the North District of Illinois
• Bruce Kisliuk, Assistant Deputy Commissioner for Patent Operations, U.S. Patent and Trademark Office
• Brian Weber, Office of Quality Review & Training, U.S. Patent and Trademark Office

The registration fee for the conference is $119. Those registering before January 25, 2012 will receive a $30 discount. Those interested in registering for the conference can do so here. Additional information about the conference can be found here.
Worldwide Patent Filings and Grants on the Rise

January 19, 2012

By Donald Zuhn —

On Tuesday, the European Patent Office announced that it received 243,000 applications in 2011, which constituted a 3% increase from the 237,500 applications the EPO received in 2010. The EPO granted 62,115 patents, which was 7% more than the number of patent grants in 2010. With regard to the geographic origin of filings, the EPO noted that EP filings from China rose from 5% of all filings to 7%, filings from Japan rose from 18% of all filings to 19%, and filings from the U.S. fell from 26% of all filings to 24%. The Top 10 countries of origin for European filings were:

A more complete list of filings by country of origin can be found here.

EPO President Benoît Battistelli stated that "[c]ontinued patent filings growth and the high percentage of non-European applicants are clear evidence of great confidence in Europe as a place for business," adding that "[t]he EPO will continue to play a leading role in the global patent system."

Earlier this month, IFI Claims Patent Services, a company that produces global patent databases, announced that 224,505 utility patents were issued in the U.S. last year, an increase of 2% over the 219,614 patents that were issued in 2010. IFI also released a list of the Top 50 companies receiving U.S. patents last year. IFI's Top 10 were:

The only life sciences company making the list was Du Pont de Nemours, E I & Co. IFI noted that Asian companies accounted for 25 of the top 50 U.S. patent recipients, with U.S. firms capturing 17 slots.

Last month, Reuters reported that China surpassed the U.S. in terms of application filings in 2010 (figures for 2011 were not yet available). Citing a Thomson Reuters research report, the article noted that published applications in China had risen by an average of 16.7% annually from 171,000 in 2006 to 314,000 in 2010. According to the report, published applications are expected to top 500,000 in 2015, with filings in the U.S. and Japan amounting to 400,000 and 300,000, respectively.

In December, the World Intellectual Property Organization announced the release of its 2011 World Intellectual Property Indicators report. The WIPO report noted that after a considerable decline in worldwide patent application filings in 2009 (a 3.6% decline), filings rose 7.2% in 2010, with China and the U.S. accounting for the greatest share of all filings. The 7.2% increase constituted the highest growth rate in five years, and the 1.98 million worldwide applications that were filed in 2010 was an all-time high. The report noted that some 5.17 million worldwide applications were "potentially pending" in 2010.

The WIPO report showed that the U.S. maintained the top spot for patent application filings, with 490,226, and that China slipped past Japan to capture second place with 391,177 filings. Japan had 344,598 filings. With regard to technology field, biotechnology filings rose 0.4% between 2005 and 2009 (the latest years for which data was available), pharmaceutical filings were down 0.1%, organic fine chemistry was down 1.3%.
USPTO News Briefs

January 18, 2012

By Donald Zuhn —

USPTO Selects Site of Detroit Satellite Office

In a press release issued earlier this month, the U.S. Patent and Trademark Office announced that it had entered into a five-year lease agreement on a 31,000 square foot space at 300 River Place Drive in Detroit, where the Elijah J. McCoy USPTO will be located. The Detroit satellite office was so designated pursuant to § 24 of the Leahy-Smith America Invents Act (see "USPTO News Briefs," December 15, 2011). According to the announcement, the Office intends to open the Detroit satellite office no later than July 2012, and the satellite office is expected to create more than 100 new jobs during its first year. The Office asks prospective employees to send e-mail inquiries to detroithiring@uspto.gov for more information. The Office also reminded applicants and practitioners that it is currently in the process of collecting information on potential locations for future satellite offices. Written comments regarding possible locations must be submitted by January 30, 2012 (see "USPTO News Briefs," December 15, 2011, for information regarding the Office's Federal Register notice requesting comments).

USPTO to Hold Seven AIA Roadshows

In a press release issued on January 9, the U.S. Patent and Trademark Office announced that it would be hosting a public series of educational "roadshows" regarding the Leahy-Smith America Invents Act. The roadshows will allow the public to speak with USPTO officials about the new patent law and its implementation. Seven roadshows have been scheduled, to be held at the following locations:

Friday, February 17
USPTO Campus
Alexandria, VA

Friday, February 24
Sunnyvale Public Library
Sunnyvale, CA

Monday, February 27
Marriott Library, University of Utah
Salt Lake City, UT

Wednesday, February 29
Dallas Public Library
Dallas, TX

Friday, March 2
Broward County Main Library
Ft. Lauderdale, FL

Monday, March 5
Boston Public Library
Boston, MA

Wednesday, March 7
Chicago Public Library
Chicago, IL

USPTO Patent Reform Coordinator Janet Gongola commented that "[t]he USPTO hopes that the public will find the roadshows to be an ideal forum to engage with the Office about our various proposed rules implementing provisions of the America Invents Act," adding that "[t]he roadshows also give the agency the opportunity to visit members of the patent community in different parts of the country as part of our ongoing effort to create a 21st century patent and trademark office."

According to the USPTO's Leahy-Smith America Invents Act Implementation webpage, the agenda of the roadshows will be as follows:

Welcoming Remarks — 10:00 – 10:30 am
Patent Related Provisions — 10:30 – 11:15 am
Break — 11:15 – 11:30 am
Patent Related Provisions — 11:30 am – 12:30 pm
Lunch — 12:30 – 1:30 pm
Contested Case Provisions — 1:30 – 3:00 pm
Break — 3:00 – 3:15 pm
Contested Case Provisions — 3:15 – 4:30 pm

Patent Docs intends to attend and report on the Chicago roadshow.

USPTO Issues AIA-Mandated Reports

In a press release issued yesterday, the U.S. Patent and Trademark Office announced that it had submitted to Congress two reports mandated by the Leahy-Smith America Invents Act. The first report concerns the scope of prior user rights defense in industrialized countries (see "USPTO Issues Report on Prior User Rights"), and the second report (prepared pursuant to AIA § 31) concerns international patent protections for small businesses.

According to the Office's announcement, the International Patent Protections for Small Businesses Report "considers how to best help small businesses with patent protection overseas, including whether a loan or grant program should be established to help small businesses cover the costs of application, maintenance, and enforcement fees or related technical assistance."

The Office noted that the AIA mandates that the USPTO conduct five more studies in the coming months. Next on the Office's agenda is the report on secondary genetic testing; the Office will be hosting public hearings and seeking written public comments as it did for the first two reports.
USPTO Issues Report on Prior User Rights

January 17, 2012

By Kevin E. Noonan —

The U.S. Patent and Trademark Office on Friday released a "Report on the Prior User Rights Defense" provisions of the Leahy-Smith America Invents Act. This Report was prepared as part of a mandate by Congress in §§ 3(m) and 31 of the Act that the Office perform studies relating to the effects of the Prior User Rights Defense (PURD) of the Act including:

(1) comparison(s) between the patent laws of the U.S. and the laws of other industrialized countries;

(2) the effect of prior user rights on innovation rates;

(3) the correlation, if any, between prior user rights and start-up enterprises as well as the ability to attract venture capital to start new companies;

(4) the effect of prior user rights, if any, on small businesses, universities, and individual inventors;

(5) legal and constitutional issues with placing trade secret law in patent law; and

(6) whether or not the change to a first-to-file patent system creates any particular need for prior user rights.

The Report, attributed to Director David Kappos and Assistant Director Teresa Stanek Rea, addresses these questions, making a number of findings and recommendations.

Findings:

1. The AIA strikes the right balance by limiting the prior user rights defense to those parties that can prove commercial use at least one year prior to the filing date of the patent application by clear and convincing evidence.

2. The scope of the prior user rights defense includes limitations on the type of continued activities, the transfer of the personal rights, and the enforcement of said right, such that the patentee's rights are not unjustly impinged and the university community may benefit, since the defense is not available in patent actions by universities.

3. There is not substantial evidence that prior user rights as established in the AIA will have a negative impact on innovation.

4. There is no substantial evidence showing that prior user rights as established in the AIA will have a disproportionately negative impact on venture-capital investments to small businesses and start-ups.

5. There is an insufficient basis to recommend a change to the scheme chosen by Congress with respect to the application of prior user rights to universities.

6. There is no substantial evidence that the limited prior user right defense as established by the AIA will have a negative impact on small businesses or independent inventors.

7. A prior use defense to patent infringement is both Constitutional and lawful and the defense is consistent with the Constitution and Supreme Court precedent recognizing that trade secret law and patent law can, and do, legally co-exist in the United States, and indeed have co-existed since our Constitution was created.

8. Trade secret protection is of considerable value to United States businesses and the United States economy, and as such, there are compelling economic and policy justifications for providing a prior user rights defense to patent infringement.

9. Providing limited prior user rights in a first-inventor-to-file system addresses the inherent inequity such a system creates between an earlier commercial user of the subject matter and a later patentee. A prior user rights defense is pro-manufacturing and pro-jobs, as it rewards businesses that put new technology promptly into commercial use, and provides protection for early commercial use when challenged by the later filing of patent applications by other entities.

10. Because the availability of a prior user rights defense to patent infringement is a fundamental aspect of many patent regimes throughout the industrialized world, there is a strong preference that United States businesses be afforded the same advantages in terms of prior use protections in the United States that their competitors enjoy abroad.

Recommendations:

1. The prior user rights defense provisions set forth in the AIA are generally consistent with those of major trading partners and need not be altered at this time.

2. The prior user right defense under the AIA should be maintained with no change at the present time because there is no substantial evidence that it will have a negative impact on innovation, venture funding, small businesses, universities, or independent inventors.

3. The USPTO should reevaluate the economic impacts of prior user rights as part of its 2015 report to Congress on the implementation of the AIA, when better evidence as to these impacts might be available.

4. United States patent law should provide for a prior user rights defense as an appropriate balance between trade secret protection and patent law, which legally co-exist to provide competitive advantages for United States businesses.

5. United States patent law should provide for a prior user rights defense to patent infringement in order to address a systemic inequity inherent in a first-inventor-to-file system and to ensure United States businesses are (i) able to protect their investments in the event of a later issued patent, and (ii) placed on similar footing as competitors in other jurisdictions.

The Report, in Section III, contains a detailed comparison of the prior user rights defense in Japan, Canada, Australia, and countries in the European Union (Denmark, France, Germany, and the UK), as well as Korea, Brazil, Mexico, China, and Russia. The results are contained in an informative table comparing these rights across these different countries:

The Report was based on testimony at an October 25, 2011 hearing and written comments; testimony was provided by Gary Griswold (on his own behalf; Mr. Griswold is a long time supporter of these provisions, see, Gary L. Griswold & F. Andrew Ubel, Prior User Right—A Necessary Part of a First-to-File System, 26 J. MARSHALL L. REV. 567, 572 (1993)); Alan Kasper (from the American Intellectual Property Law Association); Thomas Kurkowski (on his own behalf); Dan Lang (Cisco) and MaCharri Vorndran-Jones (American Bar Association-IP Group). In addition, Intellectual Property Organizations (including the AIPLA, ABA-IP Group, Coalition for Patent Fairness, Computer and Communications Industry Association, Institute of Patent and Trade Mark Attorneys of Australia, International Federation of Intellectual Property Attorneys (FICPI), Japan Intellectual Property Association Innovation Alliance, Japan Patent Attorneys Association, and New Zealand Institute of Patent Attorneys), Academic and Research Institutions (including the Wisconsin Alumni Research Foundation, Berkeley Center for Law and Technology and Greentech Industries, Regents of University of California Board and Higher Education Associations); companies (including Belz Consulting, Cisco, Google and Verizon (Joint Comments), Hospira, Inc., Lex Machina, Microsoft Corp., Space Exploration Technologies Corp., and Telstra Corporation) and individuals (including Stephan Freischem, Asamichi Kato, Thomas E. Kelley, Thomas Kowalski, Paul Morgan, Tony Tether, and Neil Thomas) provided written comments. Conspicuously absent from this list are biotechnology or innovative pharmaceutical companies.

While comprehensive, some of the language of the Report seems to bear little logical relationship to the Findings and Recommendations. For example, regarding the impact on the PURD on "innovation, start-up enterprises, small businesses, individual inventors and universities," the Report notes that "[t]he extent of benefits and harm flowing from the availability in the U.S. of a prior user rights defense is, in the end, an empirical question best answered by comprehensive data on the true impacts revealed over time" and that "[u]nfortunately, formal statistical study of prior user rights has been extremely limited, largely because the full effect of this type of policy change is inherently difficult to measure." In view of these circumstances, and despite the admittedly limited experience with the assertion of the PURD both under 35 U.S.C. § 273 and in foreign jurisdictions, the Report finds (Finding 3) that "[t]here is no substantial evidence that prior user rights as established in the AIA will have a negative impact on innovation." Of course, there is just as clearly no substantial evidence that prior user rights as established in the AIA will not have a negative impact on innovation, making the nature of the finding a political, rather than a factual, statement.

Similarly, while acknowledging the mixed nature of the written comments and testimony ("the potential for secret uses in a market would make it more difficult for investors to estimate markets and value invention, thereby depressing the attractiveness of a later patenting start-up to venture-capital funding" versus "without the prior user rights defense, the company which lost the 'race to the USPTO' in a first-to-file environment would lose all investment returns for that project") and the lack of any empirical evidence ("[a] search of the existing economic literature yielded no empirical study of the impact of prior user rights within the U.S. venture-capital investment context"), the Report concludes that "[t]he best available evidence shows, however, that the U.S. venture-capital investment environment has grown and thrived in a context of uncertainty over property rights in innovation, especially as regards patents and trade secrets" and "if prior user rights are likely to be rarely exercised in the U.S. (as is suggested by the European experience), then it is reasonable to conclude that 'switching' from patent to trade secret protection as a result of the availability of this defense may be limited in nature." Thus, Finding 4 states that "[t]here is no substantial evidence that prior user rights as established in the AIA will have a disproportionately negative impact on venture-capital investments to small businesses and start-ups" and on equally absent evidence, Finding 5 states that "[t]here is an insufficient basis to recommend a change to the scheme chosen by Congress with respect to the application of prior user rights to universities," a finding that at least properly recognizes the "first make no recommendation for change" attitude adopted by the Office in the Report. Throughout the Report, the Office concedes that there is no evidence one way or the other on an issue (such as whether the PURD will harm innovation), or on the other hand postulates scenarios where patenting would not be important to an innovator (without much supporting evidence of the likelihood of such scenarios), and concludes that the absence of evidence supports the conclusion that no changes are necessary in the statutory scheme.

The question of constitutionality of the PURD provisions is answered almost entirely by citation of Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974), which held that the existence of patent and trade secret protection was not contradictory or incompatible with one another. (Interestingly, the Report notes that the Court's conclusion was based on the idea that "the ideas protected by trade secrets will likely be discovered by others in a similar time frame," wherein the Court stated that "[n]or does society face much risk that scientific or technological progress will be impeded by the rare inventor with a patentable invention who chooses trade secret protection over patent protection [because] if a particular person had not made a discovery others would have, and in probably a relatively short period of time." The basis for the Court's thinking is this regard is unexplained.)

The Report also states that the PURD existed between 1839 and 1952, citing (anomalously) Eldred v. Ashcroft, 537 U.S. 186, 199-205 (2002), in support of this proposition. Specifically, the Report cites Act of 1839, ch. 88, § 7, 5 Stat. 353, 354 (repealed 1952), "[t]hat every person or corporation who has, or shall have purchased or constructed any newly-invented machine, manufacture, or composition of matter, prior to the application by the inventor or discoverer of a patent, shall be held to possess the right to use and vend to others to be used, the specific machine, manufacture, or composition of matter, so made or purchased, without liability therefore to the inventor, or any other person interested in such invention; and no patent shall be held invalid by reason of such purchase, sale, or use prior to the application for a patent as aforesaid, except on proof of abandonment of such invention to the public, or that such purchase, sale, or prior use has been for more than two years prior to such application for a patent" and McClurg v. Kingsland, 42 U.S. 202, 208-09 (1843), wherein the Court held that "[t]he object of this provision is evidently twofold; first, to protect the person who has used the thing patented, by having purchased, constructed, or made the machine, etc., to which the invention is applied, from any liability to the patentee or his assignee. Second, to protect the rights, granted to the patentee, against any infringement by any other persons. . . . [I]t puts the person who has had such prior use on the same footing as if he had a special license from the inventor to use his invention; which, if given before the application for a patent, would justify the continued use after it issued without liability." Of course, each example is clearly directed to continued use of a "newly-invented machine, manufacture, or composition of matter" prior to the patenting thereof, and not the continued practice of methods, including methods for producing the patented machine, manufacture, or composition of matter. While patent law and trade secret law may be compatible, the citations do not support the contention that U.S. patent law ever contained a PURD of the type embodied in the AIA.

The "real" reason behind the PURD may be contained in one paragraph of the Report:

A related issue is the consequence that, by filing a patent application, the technology is disclosed to competitors in other countries where the innovator may not, for lack of resources, have sought patent protection, or where patents are difficult to enforce. Several comments pointed out that this can have drastic effects on American businesses and jobs. A representative from a small United States company commented that the company's use of trade secret protection enables it to provide services at a price level that its Chinese competitors admitted they cannot match. Several representatives of "green" technology companies based in the United States noted that disclosure of new technologies via a patent application would allow foreign competitors to copy the innovation, using cheaper labor and with the assistance of foreign government subsidies, to undercut their businesses, at the expense of "creating much-needed jobs for American workers."

While these sentiments are powerful incentives for establishing the PURD, and it is understandable that the Office would want to fulfill the statutory mandate, presumably Congress wanted something more than a rubberstamp. If in the exercise of its "special expertise" the Office was unable to find evidence supporting the PURD (or not), it seems that this is the conclusion: it is too early to tell, not that "all is well" in the absence of any evidence. While the Report's conclusions may reflect political realities, they serve Congressional purposes only facially and do not provide any basis for deciding whether the PURD will support or inhibit innovation. The public (and those members of the public whose representatives are not satisfied with the rhetoric of job creation that swept the bill through this Congress after several years of failure to enact "patent reform") are not well served by such facile conclusions. Perhaps we will all have to wait to assess whether the PURD has these predicted beneficial effects or inhibits innovation to our detriment. But it should not be too much to ask that policymakers face that fact and simply say so.
USPTO Proposes Rules Changes for Implementing AIA Provisions — Statute of Limitations Provisions for Office Disciplinary Proceedings

January 16, 2012

By Donald Zuhn —

Earlier this month, the U.S. Patent and Trademark Office published four Federal Register notices as part of its efforts to implement the Leahy-Smith America Invents Act. Last week, we discussed the Office's notice regarding implementation of the AIA's miscellaneous post patent provisions and preissuance submissions provision (see links below). Today, we address the Office's notice regarding "Implementation of Statute of Limitations Provisions for Office Disciplinary Proceedings" (77 Fed. Reg. 457).

Section 32 of Title 35, which concerns the suspension or exclusion from practice, reads as follows

The Director may, after notice and opportunity for a hearing, suspend or exclude, either generally or in any particular case, from further practice before the Patent and Trademark Office, any person, agent, or attorney shown to be incompetent or disreputable, or guilty of gross misconduct, or who does not comply with the regulations established under section 2(b)(2)(D) of this title, or who shall, by word, circular, letter, or advertising, with intent to defraud in any manner, deceive, mislead, or threaten any applicant or prospective applicant, or other person having immediate or prospective business before the Office. The reasons for any such suspension or exclusion shall be duly recorded. The Director shall have the discretion to designate any attorney who is an officer or employee of the United States Patent and Trademark Office to conduct the hearing required by this section. The United States District Court for the District of Columbia, under such conditions and upon such proceedings as it by its rules determines, may review the action of the Director upon the petition of the person so refused recognition or so suspended or excluded.

Section 2(b)(2)(D) permits the Office to require "agents, attorneys, or other persons representing applicants or other parties before the Office, . . . to show that they are of good moral character and reputation and are possessed of the necessary qualifications to render to applicants or other persons valuable service, advice, and assistance in the presentation or prosecution of their applications or other business before the Office."

Section 3(k) of the AIA amends § 32 by adding the following sentence before the last sentence:

A proceeding under this section shall be commenced not later than the earlier of either the date that is 10 years after the date on which the misconduct forming the basis for the proceeding occurred, or 1 year after the date on which the misconduct forming the basis for the proceeding is made known to an officer or employee of the Office as prescribed in the regulations established under section 2(b)(2)(D).

Prior to the AIA's amendment of § 32, disciplinary actions for violations of the USPTO Code of Professional Responsibility were generally understood to be subject to a five-year statute of limitations pursuant to 28 U.S.C. § 2462. The Office notes that with passage of the AIA, "Congress provided the Office with five additional years to bring an action, thus ensuring that the Office had additional flexibility to initiate 'a [disciplinary] proceeding for the vast bulk of misconduct that is discovered, while also staying within the limits of what attorneys can reasonably be expected to remember'" (quoting the Congressional Record S1372–1373 (daily ed. March 8, 2011) (statement of Sen. Kyl)). The Office also notes that "[t]he one-year limitation period in the AIA reflects that disciplinary actions should be filed in a timely manner from the date when misconduct forming the basis of a disciplinary complaint against a practitioner is made known to 'that section of PTO charged with conducting section 32 proceedings.'"

The Office's Federal Register notice implementing the statute of limitations provisions set forth in AIA § 3(k) specifies the date on which the one-year statute of limitations period begins for the three types of disciplinary complaints:

1. Complaints predicated on the receipt of a probable cause determination from the Committee on Discipline — the one-year period begins on the date on which the Director for the Office of Enrollment and Discipline (OED Director) receives a complete, written response to a request for information and evidence from the practitioner.

2. Complaints seeking reciprocal discipline — the one-year period begins on the date on which the OED Director receives a certified copy of the record or order regarding the practitioner being publicly censured, publicly reprimanded, subjected to probation, disbarred, suspended, or disciplinarily disqualified.

3. Complaints seeking interim suspension based on a serious crime conviction — the one-year period begins on the date on which the OED Director receives a certified copy of the record, docket entry, or judgment demonstrating that the practitioner has been convicted of a serious crime.

Additional discussion of the rules changes, as well as revised versions of the affected rules, can be found in the Office's Federal Register notice (77 Fed. Reg. 457).

Comments regarding this notice can be submitted by e-mail to OED_SOL@uspto.gov; by regular mail addressed to: Mail Stop OED — Ethics Rules, U.S. Patent and Trademark Office, P.O. Box 1450, Alexandria, Virginia 22313–1450, marked to the attention of William R. Covey, Deputy General Counsel for Enrollment and Discipline and Director of the Office of Enrollment and Discipline; or via the Federal eRulemaking Portal. The deadline for submitting comments is March 5, 2012. Additional information regarding the submission of comments can be found in the Office's Federal Register notice (77 Fed. Reg. 457).

For information regarding the Office's implementation of other AIA provisions, please see:

• "USPTO Proposes Rules Changes for Implementing AIA Provisions — Preissuance Submissions Provision," January 12, 2012
• "USPTO Proposes Rules Changes for Implementing AIA Provisions — Miscellaneous Post Patent Provisions," January 11, 2012

recent posts

about