•     By Kevin E. Noonan

    Senate_seal_2
    As we reported on Monday, a draft of the Senate Judiciary Committee’s report on the Patent Reform Act of 2007 (S. 1145) has begun to circulate on the internet.  The 106-page draft report
    contains sections on the background and purpose of the bill, the
    legislative history of the bill, a section-by-section summary of the
    bill, a placeholder for a cost estimate, a regulatory impact
    evaluation, and a list of the changes to Titles 15, 28, and 35 that
    would result if the Senate bill were passed into law.  The circulation
    of the draft report suggests that Senator Patrick Leahy,
    Chairman of the Senate Judiciary Committee, intends to keep his
    mid-December patent reform bill pledge to seek "favorable Senate action
    as early as the floor schedule permits" (see "Patent Reform Discussed on Senate Floor").  In view of the length of the draft report, Patent Docs will be
    providing a discussion of selected sections of the bill over the next
    few days.  Today, we address section 2 of the bill.

    These amendments are intended to convert the U.S. patent system from granting patents to the first inventor to invent, to a first inventor to file system.  The amendments would replace all of the substantial portions of 35 U.S.C. § 102 (subsections (a) through (g)) with the following:

    § 102. Conditions for patentability; novelty

    (a) NOVELTY; PRIOR ART.–A patent for a claimed invention may not be obtained if–

    (1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public–

    (A) more than 1 year before the effective filing date of the claimed invention; or
    (B) 1 year or less before the effective filing date of the claimed invention, other than through disclosures made by the inventor or a joint inventor or by others who obtained the subject matter disclosed directly or indirectly from the inventor or joint inventor; or

    (2) the claimed invention was described in a patent issued under section 151, or in an application for patent published or deemed published under section 122(b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention.

    (b) EXCEPTIONS.–

    (1) PRIOR INVENTOR DISCLOSURE EXCEPTION.–Subject matter that would otherwise qualify as prior art based upon a disclosure under subparagraph (B) of subsection (a)(1) shall not be prior art to a claimed invention under that subparagraph if the subject matter had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or others who obtained the subject matter disclosed directly or indirectly from the inventor or joint inventor.
    (2) DERIVATION, PRIOR DISCLOSURE, AND COMMON ASSIGNMENT EXCEPTIONS.–Subject matter that would otherwise qualify as prior art only under subsection (a)(2), after taking into account the exception under paragraph (1), shall not be prior art to a claimed invention if–

    (A) the subject matter was obtained directly or indirectly from the inventor or a joint inventor;
    (B) the subject matter had been publicly disclosed by the inventor or a joint inventor or others who obtained the subject matter disclosed, directly or indirectly, from the inventor or a joint inventor before the effective filing date of the application or patent set forth under subsection (a)(2); or
    (C) the subject matter and the claimed invention, nor later than the effective filing date of the claimed invention, were owned by the same person or subject to an obligation of assignment to the same person.

    (3) JOINT RESEARCH AGREEMENT EXCEPTION.–

    (A) IN GENERAL.–Subject matter and a claimed invention shall be deemed to have been owned by the same person or subject to an obligation of assignment to the same person in applying the provisions of paragraph (2) if–

    (i) the claimed invention was made by or on behalf of parties to a joint research agreement that was in effect on or before the effective filing date of the claimed invention;
    (ii) the claimed invention was made as a result of activities undertaken within the scope of the joint research agreement; and
    (iii) the application for patent for the claimed invention discloses or is amended to disclose the names of the parties to the joint research agreement.

    (B) For purposes of subparagraph (A), the term "joint research agreement" means a written contract, grant, or cooperative agreement entered into by 2 or more persons or entities for the performance of experimental, developmental, or research work in the field of the claimed invention.

    (4) PATENTS AND PUBLISHED APPLICATIONS EFFECTIVELY FILED.–A patent or application for patent is effectively filed under subsection (a)(2) with respect to any subject matter described in the patent or application–

    (A) as of the filing date of the patent or the application for patent; or
    (B) if the patent or application for patent is entitled to claim a right of priority under section 119, 365(a), or 365(b) or to claim the benefit of an earlier filing date under section 120, 121, or 365(c), based upon 1 or more prior filed applications for patent, as of the filing date of the earliest such application describes the subject matter.

    In addition, Section 103 was significantly amended:

    § 103. Conditions for patentability; nonobvious subject matter

    A patent for a claimed invention may not be obtained though the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the invention was made.

    In explaining the need for the provisions of section 2, the Senate draft report first notes that "[e]very industrialized nation other than the United States uses a patent priority system commonly referred to as ‘first-to-file.’"  The draft report offers the following reasons for the amendments, including:

    There is a difference in the relevant dates for determining priority.  In a first-to-file system, the earlier filing date prevails.  This is "an objective date, simple to determine" (e.g., it is listed on the face of the patent).  In contrast, in a "first-to-invent" system, the date of invention is "uncertain," requires corroboration, and disputes involve a "lengthy, complex and costly administrative proceeding (called an ‘interference proceeding’) [that] must be conducted to determine who actually invented first."  Although admitting that interferences are needed only in the "rare" instance where two different inventors claim the same invention, the draft report catalogs a litany of negative attributes of interference proceedings:  they can take "years to complete;" "cost hundreds of thousands of dollars;" and "require extensive discovery."  The draft report also asserts that the fear of being involved in an interference requires companies to "maintain extensive recording and document retention systems in case they are later required to prove the very day they invented the claimed invention discovery."

    There is a difference in whether a reference is considered prior art.  In a first-to-file system, the prior art "includes all art that exists prior to the filing date," having the benefit (according to the draft report) of being an objective date.  In a first-to-invent system, on the other had, an applicant has the ability to "swear behind" a reference, to show that she actually invented prior to the publication date of the reference — an earlier, "amorphous" date.

    The U.S. system gives an inventor a "grace period" of one year for the inventor’s own public disclosure.  With certain exceptions, most countries impose an "absolute novelty" condition on patentability, where even the inventor’s own public disclosure can defeat patentability.  The draft report notes that in absolute novelty countries, inventors need to keep their inventions secret until filing, and acknowledges that this is a sacrifice of one of the benefits of the patent system — early, public disclosure of inventions.  In addition to this public interest aspect of retaining a grace period, the draft report states that university representatives and small inventors testified that the grace period was an important feature of the present system and should not be abandoned.

    The draft report summarizes the advantages of changing to a first-to-file system as "simplicity, efficiency and predictability . . . [a] first-to-file system avoids costly interference proceedings, provides better notice to the public, simplifies the prior art scheme that may preclude a patent from issuing, and provides more certainty to the patent system" as well as encouraging "prompt" application filing.  The draft report uses as additional justification that "[n]umerous organizations, institutions, and companies have advocated the U.S. adopt a first to file system similar to those used in the rest of the world," including the National Academy of Sciences (although the nature of that organization’s expertise in patent law is unmentioned).  Curiously, the draft report also notes that when the patent system was first adopted (whether this refers to the 18th Century or the 1952 Patent Act is unclear), filing in foreign countries was atypical, whereas now companies and even sole inventors file internationally.  This fact is intended to support the additional "disadvantage" of the current system, which U.S. applicants must comply with the two different sets of requirements "caused" by the U.S. first-to-invent system.  For all these reasons, the draft report says that a change is "long overdue."

    The discussion of the changes is straightforward, highlighting the intention to adopt the first-to-file system while retaining the U.S. one-year grace period (i.e., not adopting the absolute novelty standard).  This is purported to be a marriage of the "best aspects" of the two systems.  This change is accompanied by the creation of a "derivation" proceeding, to resolve instances where the first applicant to file derived the invention from an applicant with a later filing date.

    Certain aspects of the proposed system, however, may have escaped the drafters’ notice.  For example, the one-year grace period under the new statute is not the same as the current one-year grace period.  All that is protected under this system is the applicant’s own disclosure, not relevant third-party disclosures.  The grace period thus grants substantially less protection to the "true" inventor, and raises the possibility that patentability may be negatived by a disclosure (for example, in a scientific journal article) that may defeat patentability but does not satisfy the statutory disclosure requirements of 35 U.S.C. § 112.  Since the proposed derivation proceeding is intended only to resolve disputes between competing applicants, such third-party disclosure, even if derived from the applicant, will prevent the applicant from obtaining patent protection.  While this is bad for individual applicants, it is worse for the rest of us, since it will retard or even prevent the very benefit — disclosure of inventions — that the change is intended to promote.  Indeed, the provision would encourage prior disclosure by an applicant to trigger the grace period.

    In addition, the very same record keeping needed for interference practice will be needed for the derivation proceeding, thus blunting if not ablating any economic benefits from this aspect of the change.  And as the draft report acknowledges, interferences are rare — there have been about 106,000 interferences in contrast with more than 7,000,000 patents (about 1.5%), and the overwhelming majority are resolved without spending "hundreds of thousands" of dollars (and where those dollars are spent, it is almost a certainty that the patents are worth it and the issues are close).

    The certainty benefits with regard to prior art also appear to be overstated, since the default date for applying prior art is the application filing date (or earliest claimed priority date).  The burden is on an applicant who challenges a reference’s status as prior art, involving no burden on anyone (and certainly not the public) other than the applicant to establish the inventive right.  The change also removes the geographic boundaries in the current law, so that U.S. applicants are deprived of the protections of stringent U.S. discovery requirements and will be left to the vagaries of letter rogatory and the auspices of the Hague convention to defeat invalidity challenges by infringers.

    And while going out of its way to create an exemption for inventions produced under the CREATE Act, the change eliminated 35 U.S.C. § 103(b), a provision that while infrequently used was available for biotechnology patent applicants to avoid inequitable application of the other provisions of the statute (see "Like a Penny Saved for a Rainy Day (Albeit, Unintentionally): The Renewed Relevance of 35 U.S.C. § 103(b)").  This change is not explained; the draft report merely states that the section "is no longer necessary."  Some will beg to differ.

    Leahy_patrick
    The Senate bill, which Senator Leahy (at left) has said he intends to bring to the Senate floor for a vote as early as next week, differs substantively from the House version of the bill (HR 1908; see "Patent ‘Reform’ Bill Passes House of Representatives").  Most significantly, the House bill forestalls implementation of the changes to §§ 102 and 103 until the President certifies to Congress that major patent offices (Japan and Europe) have implemented a reciprocal grace period in their law.  This difference is important because these countries have given no indication that they intend to make such a change.  The requirement appears, however, to be an equitable quid pro quo for such a fundamental change to U.S. patent law, and raises the legitimate question of why the U.S. should bear all the burdens of worldwide patent harmonization.  Why indeed.

    For additional information on the draft report, please see:

    For additional information regarding this topic, please see:

  •   By Jason Derry —

    Uspto_seal
    In accordance with its 21st Century Strategic Plan, the U.S. Patent and Trademark Office had previously partnered with two foreign patent offices on a Patent Prosecution Highway pilot program (PPH).  The first PPH began in July 2006 with the Japanese Patent Office, and the second PPH began on September 4, 2007 with the United Kingdom Intellectual Property Office (UK IPO).  Earlier this week, the USPTO announced that it will initiate PPH pilot programs with the Korean Intellectual Property Office (KIPO) and the Canadian Intellectual Property Office (CIPO), both starting January 28, 2008 and ending January 28, 2009.

    Logo_cipo_4
    The objective of the PPH is to share results of searches in order to make examination more efficient.  The PPH allows an application that has allowable/patentable claims as determined in the Office of first filing (OFF) to have a corresponding application in the Office of second filing (OSF) to be examined despite its place in the examination queue, and give the OSF access to the search and examination results from the OFF.  Thus, the applicant can enjoy accelerated examination in the OSF, which is based on the art and examination already dealt with in the OFF.

    Kipo
    Details regarding the eligibility of applications and examination procedures can be found here for the PPH with the CIPO, and here for the PPH with the KIPO.

    In addition, the PPH with the UK IPO was revised to permit participation of certain applications based on PCT filings that do not contain a priority claim, and to require that a request for PPH participation and the requisite documents be filed electronically via the EFS-Web.  Further details on this modification are available here.

    For additional information of this and other related topics, please see:

    Jason Derry, Ph.D., who graduated with honors from DePaul University
    College of Law, is a molecular biologist and founding author of Patent Docs.

  •     By Donald Zuhn

    Senate_seal
    As we reported on Monday, a draft of the Senate Judiciary Committee’s report on the Patent Reform Act of 2007 (S. 1145) has begun to circulate on the internet.  The 106-page draft report
    contains sections on the background and purpose of the bill, the
    legislative history of the bill, a section-by-section summary of the
    bill, a placeholder for a cost estimate, a regulatory impact
    evaluation, and a list of the changes to Titles 15, 28, and 35 that
    would result if the Senate bill were passed into law.  The circulation
    of the draft report suggests that Senator Patrick Leahy,
    Chairman of the Senate Judiciary Committee, intends to keep his
    mid-December patent reform bill pledge to seek "favorable Senate action
    as early as the floor schedule permits" (see "Patent Reform Discussed on Senate Floor").  In view of the length of the draft report, Patent Docs will be
    providing a discussion of selected sections of the bill over the next
    few days.  Today, we address sections 3 and 7 of the bill.

    Noting that patent applications are now commonly assigned to corporate entities, most frequently the inventor’s employer, and that many employment contracts require employees to assign their inventions to their employer, the draft report contends that it is time that U.S. patent law be changed to eliminate the "antiquated notion" that it is the inventor who files the application.  The draft report also notes that corporate assignees sometimes have difficulty locating inventors and obtaining their signatures for the oath or declaration that must be submitted with an application.

    Section 3, entitled "Inventor’s oath or declaration," would allow an "obligated assignee" (i.e., a person to whom the inventor is obligated to assign, but has not assigned, rights to the invention) to submit a substitute statement in place of the oath or declaration when the inventor is unable to do so or is both unwilling to do so and under an obligation to assign the invention.  In addition, section 3 allows obligated assignees (or a person having a sufficient proprietary interest in an invention) to file a patent application.

    Section 7, entitled "Submissions by third parties and other quality enhancements," provides two additional changes to U.S. patent law.  First, this section institutes mandatory publication by eliminating prior publication exemptions.  In justifying the change, the draft report asserts that "[t]he publication of patent applications is beneficial to both the patent community and the general public, since it promotes the disclosure benefit of the patent system and allows the public (including competitors) to learn for which inventions patents are being sought."  The second change to be introduced under this section of the bill concerns third-party submissions.  Explaining that restrictions in current U.S. patent law often deter third parties from submitting information relevant to the examination of pending applications, the Senate bill would allow third parties to submit more than just patents or publications, and to provide explanations as to why prior art is being submitted.

    For additional information on the draft report, please see:

    • "Late Patent Filings – Section 13" January 15, 2008
    • "Draft Report on Senate Patent Reform Bill Circulated – Sections 9 and 15," January 14, 2008

    For additional information regarding this topic, please see:

    • "Patent Reform Discussed on Senate Floor," December 21, 2007
    • "Enjoined New Rules and Patent Reform Finally Appearing on Biotech Industry’s Radar," December 20, 2007
    • "Chinese IP Judge Discusses Implications of U.S. Patent Reform Bill and Two Congressmen Heed Warning," December 17, 2007
    • "IPO President Seeks Deletion of Patent Reform Provision," December 12, 2007
    • "Senate May Act on Patent ‘Reform’ Bill in the New Year," December 2, 2007
    • "The Wall Street Journal Gets It Half Right," November 5, 2007
    • "BIO CEO Provides Briefing on Follow-On Biologics and Patent Reform," September 18, 2007
    • "Patent ‘Reform’ Bill Passes House of Representatives," September 9, 2007
    • "Reversal in Microsoft Case Weakens Patent Reform Argument," August 7, 2007
    • "San Francisco Chronicle Opines on Patent Reform," August 6, 2007
    • "Patent Reform Bill to Be Delayed?" June 12, 2007
    • "Senate Judiciary Committee Holds Hearing on Patent Reform," June 10, 2007
    • "Could Creating a U.S. ‘Utility Model’ Patent Fulfill the ‘Need’ for Patent Law Reform?" May 21, 2007

  •     By Christopher P. Singer

    Uspto_seal
    In an e-mail notification sent today, the U.S. Patent and Trademark Office provided its latest e-Commerce Update, which included information regarding how to change attached files in a saved EFS-Web submission, EFS-Web 1.2 training updates, and the recurring theme of proper completion of Form PTO/SB/39 for successful electronic exchange of priority documents (the PDX program).

    Form PTO/SB/39

    This form is necessary to submit if an applicant requests that the USPTO release a copy of an unpublished U.S. patent application to a participant foreign office.  The Patent Office noted that a common mistake made when completing this form is that signatures often fail to comply with the requirement of 37 C.F.R. § 1.14(c).  An improperly signed form cannot be acted upon by the Office.  These forms can be signed by any of the following persons:  a) the applicant; b) an attorney or agent of record; c) an authorized official of an assignee of record; or d) a registered attorney or agent named in the papers accompanying the application papers under 37 C.F.R. § 1.53 or the national stage documents filed under 37 CFR § 1.495, if an executed oath or declaration pursuant to 37 C.F.R. § 1.63 or § 1.497 has not been filed.

    The USPTO suggests that early submission of the PTO/SB/39 form will help to ensure the successful transmission of the priority document to the EPO or JPO.  The forms can be submitted using EFS-Web, faxed to the Central Fax number at 1-571-273-8300, or mailed to:  Commissioner of Patents, P.O. Box 1450, Alexandria, VA 22313-1450.  For additional information regarding PDX, you can visit the FAQs page or send an e-mail to:  PDX@uspto.gov.  If you prefer to speak with someone by phone, contact persons include:  the patent Electronic Business Center (EBC) at 1-866-217-9197 (toll free); Diana Oleksa, Patent Legal Advisor at 1-571-272-3291, and Hung Vuong, Computer Specialist at 1-571-272-5727.

    EFS-Web 1.2 Training Updates Posted

    Since the release of EFS-Web, the USPTO has maintained a viewable on-line training course.  This on-line training course now includes content pertaining to the latest EFS-Web version (1.2).  This presentation can be viewed here.

    Updating an Attached File in EFS-Web

    Efsweb
    Filers wanting to make a change in a document that has been uploaded and saved for later filing in an EFS-Web submission must upload and validate the updated file  before submitting.  If you fail to upload the updated document, EFS-Web will not automatically load the newly-attached file into the Image File Wrapper (IFW).  To correct this problem, the USPTO has to manually correct the IFW, which will likely delay viewing in Private PAIR by up to two weeks.

    Public PAIR Verification System

    Users of PAIR have no doubt noticed that the USPTO has implemented a verification system for those wishing to access Public PAIR.  The verification system is named reCAPTCHA, which is based on the industry accepted CAPTCHA (Completely Automated Turing Test to Tell Computers and Humans Apart) security feature, which ensures that humans and not bots are accessing computer systems.  The USPTO’s system uses a two-word access code, which must be entered without spaces between the words.  There are no plans to implement this system in Private PAIR, as users of Private PAIR must be registered and already access the site using a digital certificate.

  •     By Christopher P. Singer

    Senate_seal
    As we reported yesterday, a draft of the Senate Judiciary Committee’s report on the Patent Reform Act of 2007 (S. 1145) has begun to circulate on the internet.  The 106-page draft report
    contains sections on the background and purpose of the bill, the
    legislative history of the bill, a section-by-section summary of the
    bill, a placeholder for a cost estimate, a regulatory impact
    evaluation, and a list of the changes to Titles 15, 28, and 35 that
    would result if the Senate bill were passed into law.  The circulation
    of the draft report suggests that Senator Patrick Leahy,
    Chairman of the Senate Judiciary Committee, intends to keep his
    mid-December patent reform bill pledge to seek "favorable Senate action
    as early as the floor schedule permits" (see "Patent Reform Discussed on Senate Floor").  In view of the length of the draft report, Patent Docs will be
    providing a discussion of selected sections of the bill over the next
    few days.  Today, we address section 13 of the bill.

    Uspto_seal
    Section 13 of the draft report expands the situations in which the Director would have authority to consider and accept filings that would otherwise be considered late.  As noted in the report, the current scope of the Director’s authority is limited to revival of an application for unintentional delay; reinstatement of a patent for unintentional delay; revival for unintentional or unavoidable delay in submitting the filing fee or oath; and revival if failure to prosecute was unavoidable.  The proposed amendment, which would introduce 35 U.S.C. § 2(e), serves to expand the Director’s authority to accept any filings which are considered late as long as the filer of the late items can demonstrate that the delay in filing was unintentional.

    Under new 35 U.S.C. § 2(e) the Director is authorized to accept a late filing when the filer (1) files a petition within 30 days after the missed deadline, and (2) demonstrates to the satisfaction of the Director that the delay was unintentional.  If the Director fails to act on the petition within 60 days of its filing date, the petition is effectively denied.  The final decision on the request is at the discretion of the Director and cannot be appealed.  This new subsection would be enforced to the extent that it would not apply to any other provision of the patent or trademark laws that allow the Director to accept late filings, or to any statutory deadlines required by treaty.  The applicability of this amendment would be to any application or other filing that (1) is filed on or after the date of the enactment of the bill, or (2) on the date of enactment, is pending before the Director or is subject to judicial review.  In such cases, the 30-day period would start from the enactment of the bill.

    According to the legislative history, this section was proposed as an amendment by Senator Kennedy.  Initially, the amendment was agreed to by unanimous consent, but subsequently Senators Grassley and Sessions changed their votes to no, which did not affect the outcome of the overall vote.

    For additional information on the draft report, please see:

    For additional information regarding this topic, please see:

  •     By Donald Zuhn

    Leahy_patrick
    As reported in today’s issue of the IPO Daily News (an e-mail and online newsletter distributed by the Intellectual Property Owners Association), a draft of the Senate Judiciary Committee’s report on the Patent Reform Act of 2007 (S. 1145) has begun to circulate on the internet.  The 106-page draft report contains sections on the background and purpose of the bill, the legislative history of the bill, a section-by-section summary of the bill, a placeholder for a cost estimate, a regulatory impact evaluation, and a list of the changes to Titles 15, 28, and 35 that would result if the Senate bill were passed into law.  The circulation of the draft report suggests that Senator Patrick Leahy (at right), Chairman of the Senate Judiciary Committee, intends to keep his mid-December patent reform bill pledge to seek "favorable Senate action as early as the floor schedule permits" (see "Patent Reform Discussed on Senate Floor").

    Senate_seal_2
    Noting that "Congress has not enacted comprehensive patent law reform in more than 50 years," the draft report asserts that "[U.S. patent law] needs to change, both to correct flaws in the system that have become unbearable, and to accommodate changes in the economy and the litigation practices in the patent realm."  The draft report states that changes proposed by "small inventors, academics, universities, government agencies, corporations, non-profit organizations, industry organizations, bar associations, and members of the general public . . . have focused Congressional attention on three major areas of concern:  (i) appropriate procedures for prosecuting, and standards for allowing, patents; (ii) rising rates and costs of patent litigation, along with uncertain damage awards, and (iii) troubling inconsistencies between the US patent system and the other major patent systems throughout the industrialized world."  While the draft report states its case for patent reform, the report also notes that "the bill as originally introduced has been significantly changed to reflect a more balanced, modest approach . . . in response to various concerns raised before the Committee."

    The version of the bill set forth in the draft report comprises seventeen sections.  According to the draft report, these sections of the bill would do the following:

    1.  title the Act the Patent Reform Act of 2007;
    2.  change the system to a "first-inventor-to-file" system;
    3.  make it simpler for patent applicants to file and prosecute their applications;
    4.  codify and clarify the standard for calculating reasonable royalty damage awards, as well as awards for willful infringement;
    5.  create a relatively efficient and inexpensive administrative system for resolution of patent validity issues before the USPTO;
    6.  establish the Patent Trial and Appeal Board;
    7.  provide for eventual publication of all applications and enhance the utility of third parties’ submissions of relevant information regarding filed applications;
    8.  improve venue in patent cases and provides for appeals of claim construction orders when warranted;
    9.  give the USPTO the ability to set its fees;
    10.  remove the residency restriction for judges on the United States Court of Appeals for the Federal Circuit;
    11.  authorize USPTO to require patent searches with explanations when a patent application is filed;
    12.  codify and improve the doctrine of inequitable conduct;
    13.  give the Director of the USPTO discretion to accept late filings in certain instances;
    14.  limit patent liability for institutions implementing the "Check 21" program;
    15.  end USPTO "fee diversion";
    16.  make necessary technical amendments; and
    17.  set the effective date of the Act.

    In view of the length of the draft report, Patent Docs will be providing a discussion of selected sections of the bill over the next few days.  Today, we will address sections 9 and 15 of the bill.

    Observing that most patent and trademark fees — such as filing, issuance, and maintenance fees — are set by Congress, the draft report contends that "[h]istory has shown that such a scheme does not allow the USPTO to respond promptly to challenges facing it."  The draft report also notes that the Patent Office "has argued for years that it must have fee setting authority to administer properly the agency and its growing workload."

    Uspto_seal
    Section 9, entitled "Patent and Trademark Office regulatory authority," would allow the Patent Office to set or adjust all of its fees, provided that such changes would do no more than reasonably compensate the Office for the services it performs.  However, before instituting any fee increases or reductions, the Director would have to give notice to, and receive input from, the Patent Public Advisory Committee (or corresponding trademark committee for trademark related fee changes), under procedures set forth in the section.  Fee changes would also have to be published in the Federal Register for notice and comment, and include the "specific rationale and purpose" for the change.  Finally, the Director would be required under the provisions of the section to notify Congress of any fee changes, with Congress then having 45 days to consider and comment on the fee change.

    The draft report notes that fees collected by the Patent Office are deposited in the U.S. Treasury, rather than being retained by the Office, and that the Office is instead funded by annual Congressional appropriations.  While the draft report argues that "Congress has fully funded the user fees to USPTO for the last several years," it acknowledges that Congress has not always done so, resulting in "fee diversion."  The Patent Office has contended that such fee diversion has yielded a growing backlog of unexamined applications and an increase in examination pendency.

    In response to the criticisms of patent applicants, who informed the Committee that they would be willing to pay higher fees, but only on the condition that none of the fees collected by the Office be diverted, the Senate bill includes Section 15, entitled "Patent and Trademark Office funding."  This section of the bill would permit the Patent Office to retain the fees it collects without relying on annual Congressional appropriations.

    The patent law reforms set forth in Sections 9 and 15 would help the Patent Office address its application backlog and pendency problems without having to resort to the draconian and significant changes that would result were the Office’s new continuation and claims rules enacted.  Not surprisingly, both of these "reforms" were proposed by Patent Docs readers in comments to our "Post-GSK: Where Do We Go from Here?" series.  The difference between the Senate and House sections on Patent Office regulatory authority is also of interest.  Whereas the Senate would only provide the Office with fee setting authority, the House bill would provide the Office with much greater authority, even going so far as to authorize the currently, but preliminarily, enjoined continuation and claims rules (albeit while reserving Congress’ right to disapprove of any rules changes within 60 days of publication).

  •     By Kevin E. Noonan

    Moatz_harry
    In the run-up to the planned implementation of the Patent and Trademark Office’s misguided new rules limiting continuation applications and claims (enjoined on October 31st by Judge Cacheris sitting in the Eastern District of Virginia), the Office made very clear its intention to strictly enforce the rules once they went into effect.  Evidence for these intentions came in remarks from Harry Moatz (at right), Director of the Office of Enrollment and Discipline (OED), at an Intellectual Property Owners (IPO) meeting in New York (see "Will Compliance with the New Rules Be Enforced by the Patent Office through the Office of Enrollment and Discipline?").  Mr. Moatz’s message:  the Office was prepared to use its capacity to discipline registered practitioners to enforce the new rules, or as they put it, those who do not "comply with the regulations promulgated under [the Office’s rulemaking authority]," despite the fact that it is far from clear that the Office had the authority they intended to enforce (see "Tafas v. Dudas; SmithKline Beecham Corp. v. Dudas (E.D. Va. 2007)").

    Another set of new rules, it appears, must be followed by another threat of enforcement by Mr. Moatz.  This time the threat comes at the 2nd Annual Patent Law Institute in New York, according to Eugene Quinn from PLI’s Patent Blog.  Robert Clarke, Director of the Office of Legal Administration at the USPTO announced at a panel discussion on patent "reform" that the Office of Enrollment and Discipline will "investigate" attorneys who file a "large number" of references that "could be used" to reject "a substantial number" of the claims presented in an application.  Mr. Clarke illustrated this new practice using a pending application where the applicant submitted 1600 references, "most of which," according to Mr. Clarke, could alone or together be used by an Examiner to reject a substantial number of claims that were filed in the application.

    Uspto_seal_no_background
    Whether this is saber-rattling or the opening salvo in the latest assault by the Patent Office on its customers and their counsel will depend, of course, on how the terms in quotes above are interpreted.  It is often the case when authority intends to impose severe restrictions on someone’s actions that the extreme case is presented first, in an effort to legitimize the restrictions.  Without more, it is impossible to be certain that the number of cited references is truly excessive, but it is a number intended to impress.  And as related by Mr. Clarke, it would seem inattentive if not irresponsible to file claims where a substantial number could be rejected "alone or in combination" by this seemingly excessive number of references.

    But anyone who has practiced before the Office knows that in hindsight (i.e., after the application has been filed) it can be easy to assert a rejection based on prior art.  For example, how many of those references were known to the applicant (or their counsel) at the time the application was filed?  While unlikely in the instance where there are 1600 references, it could easily be the case where a reference or references are cited by a foreign patent office that were unknown to the applicant upon filing (for example, a reference in Japanese).  Under these circumstances, it could be the case that a substantial number of the claims encompass this art, and although a simple amendment may be all that is needed to overcome the reference, it might not suffice to satisfy Mr. Moatz.  In addition, when applying the "could be used" to reject standard, what standard are we to use?  The standard of the particular Examiner who examines the claims (which will vary with the experience and biases of the Examiner)?  Or of members of a Patent Office "Star Chamber" (comprised of the same Examiners now charged with enforcing a "quality" standard where even one claim that is deemed unpatentable damns an entire claim set)?  In view of the fact that applicants are deemed by statute to be entitled to a patent unless they fail to comply with the statutory requirements, it is their right to claims having a scope that is at the limit of the extent of their disclosure on the one side and the prior art on the other.  The Office currently decides to draw distinctions about where the line between an applicants’ invention and the art should be drawn.  The practice announced today imposes yet another limitation on the process, not based on the statute:  whether the Office believes that an applicant’s representative should be subject to discipline for being too zealous in trying to protect his or her client’s rights.

    The Patent Office has met the enemy, and it is the patent bar.  This has been evident since the original Notice of Proposed Rulemaking with regard to the continuation and claims limitations rules, where the Office blamed the bar for the proliferation of continuation applications and alleged prolixity of claiming.  It is evident in accusations that patent attorneys are routinely guilty of incompetence, malfeasance, or misfeasance in representing their clients before the Office, and in how the Office has spent the last several years arguing that its management problems would be solved if the bar would join the Office in a partnership to improve patent pendency and quality.  So long as "partnering" means just following orders, everything will be just fine.  And if not, the Office will have the OED and Mr. Moatz decide whether a practitioner should be disciplined.  Kafka or Orwell, take your pick.

  •     By Sherri Oslick

    Gavel_37
    About
    Court Report:  Each week we will report briefly on recently filed
    biotech and pharma cases, and a few interesting cases will be selected
    for periodic monitoring.


    Eli Lilly and Company v. Mayne Pharma Limited et al.

    1:08-cv-00037; filed January 10, 2008 in the Southern District of Indiana

    Infringement of U.S. Patent Nos. 4,808,614 ("Difluoro Aantivirals and Intermediate Therefore," issued February 18, 1989) and 5,464,826 ("Method of Treating Tumors in Mammals with 2′,2′-difluoronucleosides," issued November 7, 1995) following a paragraph IV certification as part of Mayne’s filing of an ANDA to manufacture a generic version of Lilly’s Gemzar® (gemcitabine hydrochloride for injection, used to treat non-small cell lung cancer, pancreatic cancer, breast cancer, and ovarian cancer).  View the complaint here.


    Monsanto Company et al. v. LaValle

    4:08-cv-00043; filed January 10, 2008 in the Eastern District of Missouri

    Monsanto Company et al. v. Barry et al.
    3:08-cv-03012; filed January 9, 2008 in the Central District of Illinois

    Infringement of U.S. Patent Nos. 5,352,605 ("Chimeric Genes for Transforming Plant Cells Using Viral Promoters," issued October 4, 1994) and RE39,247 ("Glyphosate-tolerant 5-enolpyruvylshikimate-3-phosphate Synthases," issued August 22, 2006) based on defendant’s use of soybean seed produced from earlier planted Roundup Ready® soybean seed.  The complaints in these cases are substantially identical.  View the Barry complaint here.


    Hoang v. Abbott Laboratories, Inc. et al.

    1:08-cv-00189; filed January 9, 2008 in the Northern District of Illinois

    To the best of the ability of this Patent Docs author to discern, as the plaintiff filed pro se, correction of inventorship of U.S. Patent No. 6,667,338 ("9-amino erythromycin derivatives with antibacterial activity," issued December 23, 2003) is at issue.  View the complaint here.


    Sanofi-Aventis U.S. LLC et al. v. Barr Laboratories, Inc.

    3:08-cv-00079; filed January 4, 2008 in the District Court of New Jersey

    Infringement of U.S. Patent No. 5,338,874 ("Cis oxalato (trans 1-1,2-cyclohexanediamine) PT(II) Having Optically High Purity," issued August 16, 1994) following a paragraph IV certification as part of Barr’s filing of an ANDA to manufacture a generic version of plaintiffs’ Eloxatin® (oxaliplatin for injection, used to treat colorectal cancer).  View the complaint here.

  •     By Kevin E. Noonan

    Purdue_pharma
    In 2004, Purdue Pharma L.P. and its related companies were found to have obtained patents (U.S. Patent Nos. 5,656,295; 5,508,042; and 5,549,912) for their OxyContin® opioid pain relief formulations through inequitable conduct.  The basis for this determination was that Purdue had maintained before the Patent Office that its formulations were patentable because they were able to relieve pain in 90% of patients using a reduced dosage range compared with prior art opioid formulations.  The basis for these assertions was not clinical data but an "insight" by one of its scientists — the District Court ruling that Purdue had misled the Patent Office into believing its assertions of patentability were based on clinical data.

    The Federal Circuit initially affirmed, but on rehearing, vacated the judgment and remanded the case back to the District Court for reconsideration.  The Federal Circuit also affirmed the District Court’s judgment that defendants Endo Pharmaceuticals, Inc., Teva Pharmaceuticals, Inc., Boehringer Ingelheim GmbH, and Impax Laboratories Inc. infringed Purdue’s patents, and these defendants ultimately settled with Purdue.  In the meantime, several other generic drug manufacturers — including Mallinckrodt, Inc., KV Pharmaceutical Co, and Actavis Totowa L.L.C. — filed ANDA applications with the Food and Drug Administration, and Purdue brought suit pursuant to the provisions of the Hatch-Waxman Act (35 U.S.C. § 271(e)(2)).

    Oxycontin1
    The District Court decided to try the inequitable conduct case first, and last Monday issued its opinion.  The Court found that, while not entirely blameless, Purdue’s conduct did not rise to the level of inequitable conduct.  The defendants’ inequitable conduct assertions included the following eight bases; for each of which the Court assessed the materiality of the action and the evidence of an intent to deceive:

    1.  Purdue lacked empirical evidence for claiming a reduced dosage range.

    This basis had previously been successfully argued at the earlier trial and before the Federal Circuit.  Its basis was that Purdue "implied" to the patent Examiner that clinical studies supported the assertion that the claimed formulation was effective over a reduced dosage range, when in fact the formulation was based on an insight by one of the named inventors.

    The Federal Circuit had agreed with the District Court that Purdue’s misrepresentations in this regard were material to patentability, but had determined that the degree of its materiality "was not especially high" but was in fact "relatively low," based in part on its being merely an omission and not an affirmative representation.

    The District Court next considered the evidence of an intent to deceive.  In the first trial, the Court had relied on statements and documents relating to Purdue’s labeling claims to the Food and Drug Administration.  The Court also considered Purdue’s reduced dosage range claims in the face of its inability to titrate the dosage to indicate an intent to deceive.  The Federal Circuit held this to be erroneous, in part because the "quantum" of proof required to satisfy patentability requirements and FDA regulatory requirements were different.

    In view of the Federal Circuit’s analysis, the District Court required the defendants to come forward with additional evidence of an intent to deceive.  The District Court found that the defendants failed to adduce such evidence, proffering "only vague allegations" that Purdue’s business interests provided an incentive to obtain a patent on OxyContin®.  This, the Court said, was no more than "scant evidence" of an intent to deceive, and thus the Court refused to find inequitable conduct in this behavior.

    2.  There was inadequate support for asserting that most other opioids had an eight-fold dosage range.

    The defendants also asserted that Purdue had inadequate evidence for its assertions that, while other opioid analgesic formulations exhibited an eight-fold dosage range for controlling pain in 90% of patients, OxyContin® had a four-fold dosage range (thus requiring lower doses of drug and avoiding significant side-effects).  The defendants alleged that Purdue had no evidence for these assertions.

    The District Court disagreed, finding that Purdue had adequate evidence for morphine, from a report prepared by its expert two years prior to filing the parent patent application.  The Court also credited an American Pain Society report that suggested opioid analgesics were effective over an eight-fold dosage range, and thus found that any misrepresentation on this basis was "vanishingly small."  In view of this conclusion, the Court did not even reach the question of evidence for an intent to deceive.

    3.  Purdue failed to disclose clinical results that contradicted the dosage and titration claims.

    The defendants also cited three scientific studies alleged to contain clinical results contradicting Purdue’s assertions regarding its reduced dosage range and ease of titration.  The District Court found none of these reports to be material:  one described an experimental protocol that precluded titration, and the other two failed to test the dosage range asserted by Purdue in support of its patentability arguments (nor did either of these references study the ease of titrating other opioid analgesics).  In addition, the latter two reports had been asserted in the earlier litigation and the Court had not found them to be material.  Here, the Court said that the defendants had not provided "a sound basis to reconsider its prior determination."  Again, the Court did not reach the question of an intent to deceive in view of this determination on materiality.

    4.  Whether Purdue’s finding regarding "peak" plasma levels and duration of pain relief were "surprising."

    Purdue had asserted during patent prosecution that its finding that OxyContin® achieved peak plasma levels at 2-4 hours after administration, and provided 12 hours of pain relief was "surprising."  The defendants argued that oxycodone was the fifth opioid to exhibit this behavior, and thus it could not be a "surprising" result since Purdue had devised formulations of morphine, dihydrocodeine, hydromorphone, and codeine that exhibited the same pattern.  In response, Purdue asserted that since every drug is different, finding this relationship between peak plasma concentration and pain relief for OxyContin® was indeed surprising and was not a misrepresentation.  These assertions were supported by expert testimony regarding the unpredictability of pharmacokinetics, and by the American Pain Society report discussed above, which stated that "different patients respond differently to different opioids."

    The District Court said that the defendants had provided no scientific evidence contrary to Purdue’s assertions and evidence, but instead relied upon the "common sense proposition" that a result cannot be surprising the fifth time it is obtained.  The Court characterized this as "facile reasoning" not supported by Purdue’s "unchallenged evidence," and held that the defendants had not sustained their burden of showing that Purdue made a material misrepresentation to the Patent Office when it characterized its OxyContin® results as being "surprising."

    5.  Purdue failed to disclose other controlled-release opioid formulations.

    The defendants further maintained that Purdue committed inequitable conduct by not disclosing the existence of other controlled release opioid formulations to permit the Examiner to assess whether he agreed that the results asserted for OxyContin® were surprising.  Purdue had in fact disclosed controlled-release morphine and hydromorphine, but not codeine and dihydrocodeine.

    The District Court found that this failure to disclose the other controlled-release opioid formulations was a material omission, being inconsistent with Purdue’s representations that the results obtained with OxyContin® were surprising.  While stating that the level of materiality was low, the Court also found that the evidence of the other, undisclosed controlled-release opioids was not cumulative, since they doubled — from 2 to 4 — the number of other formulations the Examiner could have considered for comparison.

    However, the District Court did not find Purdue’s failure to disclose the existence of these additional controlled-release opioid formulations to be inequitable conduct, because it found no evidence of an intent to deceive.  The Court found credible Purdue’s explanation for the failure to disclose:  that the two opioids it did disclose were more relevant to OxyContin® because they, like OxyContin® were used to control moderate to severe pain, while the undisclosed opioids were used for controlling mild to moderate pain.  The Court characterized Purdue’s behavior in deciding whether to disclose the different opioid formulations as a "good faith" conclusion that morphine and hydromorphine were relevant to patentability of OxyContin®, and codeine and hydrocodeine were less relevant (and cumulative).  While disagreeing with this conclusion, the Court found that the defendants had provided no evidence of any intent to deceive.

    6.  Failure to disclose that their expert witness was not an independent expert.

    This allegation of inequitable conduct was based on Purdue’s failure to expressly inform the Patent Office that its declarant, Dr. Kaiko, was not an independent expert but was an employee.  The District Court’s determination that this was a material omission stemmed directly from the Federal Circuit’s decision in Ferring A.V. v. Barr Labs, Inc.

    However, the District Court found "overwhelming" evidence that the omission was made in good faith, based on Dr. Kaiko’s status as a named inventor on each of the patents-in-suit.  The Court reasoned that had Purdue wished to conceal Dr. Kaiko’s identity or interest, it would not have named him as an inventor.  The Court also considered the substance of Dr. Kaiko’s declaration to indicate to the Examiner that he was involved in developing the invention, and distinguished this case from Nilssen v. Osram Sylvania Inc., where the patentee actively concealed the affiant’s affiliation from the Examiner.

    7.  Failure to disclose U.S. Patent No. 4,861,598.

    The District Court agreed that Purdue failed to provide this patent reference to the Patent Office.  However, the omission was not material because the Examiner uncovered the reference and used it to reject certain claims during prosecution.  The Court noted that a reference cannot be found to have been withheld by the Examiner when the evidence is that the Examiner considered the reference, and thus that Purdue’s nondisclosure was not a material omission.

    8.  That Purdue’s conduct, taken as a whole, comprised a pattern that was evidence of an intent to deceive.

    Having failed to persuade the District Court with clear and convincing evidence of inequitable conduct, the defendants asserted that, taken together, Purdue’s actions were sufficient to comprise a pattern that evinced an intent to deceive.  The Court reviewed all of the defendants’ allegations, and found that at best the defendants had shown Purdue to have committed a single misrepresentation of low materiality, a single immaterial omission, and two omissions made in good faith.  On this evidence, the Court declined the defendants’ invitation to find a pattern of behavior consistent with an intent to deceive.

    Oxycontin_pills
    Having had the integrity of its patents (and reputation) restored, Purdue is now in a position to assert these patents against the defendant ANDA filers.  Provided that none of the defendants have modified the formulation in a non-infringing way, it is likely that Purdue will prevail, and consumers will need to wait for a successful challenge of these patents, or until their expiry, before generic OxyContin® will become available.

  • Calendar_35
    January 14-15, 2008 – Patent Law Institute (Practising Law Institute) – New York, NY

    January 25-26, 2008 – Buying, Selling and Licensing Patents: New Case Law, Rules, Legislation and Markets (Law Seminars International) – San Francisco, CA

    January 28-29, 2008 – Patent Law Institute (Practising Law Institute) – San Francisco, CA

    January 30-February 1, 2008 – Pharma/Biotech IP Due Diligence (American Conference Institute) – New York, NY***

    February 15, 2008 – Patent Claim Construction (Law Seminars International) – Chicago, IL

    February 25-26, 2008 – Pharma/Biotech Patent Claim Drafting and Prosecution (American Conference Institute) – New York, NY***

    February 25-26, 2008 – Strategic Intellectual Property Planning (American Conference Institute) – Scottsdale, AZ

    March 30-April 1, 2008 – Advanced Courses (Patent Resources Group) – Bonita Springs, FL

    April 3-5, 2008 – Advanced Courses (Patent Resources Group) – Bonita Springs, FL

    April 10-12, 2008 – 23rd Annual Intellectual Property Law Conference (American Bar Association) – Arlington, Virginia

    June 17-20, 2008 – BIO International Convention (Biotechnology Industry Organization) – San Diego, CA

    ***Patent Docs is a media sponsor of this conference or CLE.