Lots Of Change In The Patent Arena
December 2007
Dan is a prominent business leader. He stays up-to-date on changes in the areas of law that impact his company. Dan’s company has a number of good patents, and he knows the importance of a fruitful R&D program. Over the past year, he has seen several articles in the Wall Street Journal relating to patents, including articles on a recent case called KSR International Co. v. Teleflex Inc. In that case, the U.S. Supreme Court clarified the test for deciding whether an invention is clever enough to deserve a patent (the so-called “obviousness” test). Many of the news articles reported that the obviousness test had become more rigorous after the Supreme Court’s decision.
Recently, Dan was on the phone with his friendly, creative, and all-around winning patent attorney, Striker. Dan asked Striker if the Supreme Court’s decision would make it easier to invalidate some of the patents owned by Dan’s competitor, VaderCorp. Striker said:
“The obviousness test seems to have more teeth now. And I think the strong invalidity arguments you already have against those particular VaderCorp patents are even stronger now. So, this new decision probably does increase your chances of being able to invalidate some of the weak patents out there, especially ones where the Examiner never saw the closest prior art. However, you still need a convincing, well-articulated rationale as to why a patent is invalid.”
Dan replied: “This Supreme Court case seems good. My competitors get too many lousy patents.” Striker interjected: “Keep in mind, Dan, this cuts both ways. Our competitors probably think we get too many overly-broad patents! This new case law also makes it harder for us to get patents, since Examiners are now applying the more challenging patentability test.” To this, Dan said: “We’re the good guys—our patents are never too broad!"
Dan then asked about another topic: “Hey, what is going on with those new rules the Patent Office tried to enact? As I recall, they would have limited the number of patent “claims” and “continuations” that could be pursued. You told me that some companies filed a lawsuit against the Patent Office, and that the judge issued a preliminary injunction preventing the Patent Office from implementing the new rules.” Striker said: “Dan, you’re exactly right. Those rules are on hold while the lawsuit goes forward. The judge refused to allow any discovery in the case, and the deadline for briefs was set as December 20, 2007. We are watching the case closely to see how things comes out. One way or another, I expect the Patent Office will eventually implement some measures geared toward reducing the number of claims and continuations people file for each invention.”
Once again, Dan showed his finger to be on the pulse: “I’ve heard there are even more changes in the area of patents. Can you give me the scoop? I’d like to discuss them with our CEO, Lauren.” “Funny you should ask,” said Striker. “There are a host of efforts underway to make changes in our patent law. For the last few years, Congress has been working on legislation that would make numerous changes to our patent system. It’s tough to predict which parts of the legislation will survive, and in what form, but there’s a good chance some of it will be passed in both houses, perhaps by the middle of 2008. Here is a non-exhaustive list of changes they’re discussing on the Hill:”
- First to File. The U.S. is the only country in the world with a “first-to-invent” system. This means that, if company A invents something, and company B invents the same thing later but files a patent application before company A, then company A will still get the patent if it can prove it invented first, worked diligently to “reduce the invention to practice,” and promptly filed its patent application. Congress is considering legislation that would change the U.S. patent system to a “first-to-file” system. Under a first-to-file system, company B would get the patent in the scenario above, because it filed its patent application first.
- Post Grant Opposition. Currently, there are two basic options for attempting to invalidate U.S. patents. First, you can do this in court. Second, you can file a “Reexamination” in the Patent Office. Some argue that litigation is too time-consuming and costly, and that the current Reexamination options are not adequate for attacking patents. From that viewpoint, it has been proposed that another process, Opposition, should be available in the U.S. The European system has an Opposition procedure, in which you can attack a granted patent by filing an Opposition in the European Patent Office. Congress is considering legislation that would allow issued U.S. patents to be attacked by filing an Opposition in the U.S. Patent Office. The Opposition would be like a mini-trial held at a Board of the Patent Office. Opponents argue this will unfairly reduce the value of patents by exposing patent owners to harassment by endless opportunities for others to attack their patents.
- Submission Of Prior Art By Third Parties. This would make it possible for anyone to send the Patent Office prior art relevant to a pending patent application. The party submitting the prior art would also be allowed to explain why the prior art is relevant.
- Mandatory Search Reports. The Patent Office would have authority to require most patent applicants to submit a prior art search report for each patent application filed. This may resemble a formal opinion from an attorney confirming that a prior art search was conducted, reporting the results of the search, and explaining why the invention is patentable over the prior art found in the search. Opponents point out that this will substantially increase the already high costs associated with filing patent applications.
- Limits on Damages. The House of Representatives has already passed its version of the new patent legislation. In the House version, “willful infringement” is the only situation where triple damages are available, and the cases where willful infringement can be found are limited considerably. This would reduce the likelihood of a plaintiff being able to recover triple damages. Also, courts would be required to make sure damages are equal to the economic value attributable to the patent's specific contribution over the prior art. The entire value of a product could only be the basis for royalty calculations if the innovation is the predominant basis for market demand for the product. In general, this would reduce damage awards.
“Wow!” said Dan, “That would be a lot of change.” “Yes,” replied Striker “And that’s not all. The Patent Office is proposing major changes in the procedure for telling them about prior art. If these proposed rules are adopted, it would require us to give the Patent Office a detailed description of each prior art reference we send them if we are going to send them more than 20 references or if we first send them one or more references after the first Office action. In addition, we would be required to give the Patent Office a detailed explanation of the relevance of any non-English references and any references of considerable length (over 25 pages). The Patent Office believes these changes will help them issue better patents faster. However, opponents believe this change would unduly increase the costs of getting patents.”
Dan wisely concluded: “I will stay tuned.”