Not a week passes without commentators extolling the need to remedy a “broken” patent system — a system where patent trolls (also referred to an “non practicing entities” or “NPEs”) that don’t manufacture anything can garner extensive licensing fees from companies, both big and small, which do. And as the debates surrounding NPEs rage on, so too do the calls for patent reform. But if the reform to date has had the unintended effect of creating more opportunity for NPEs, while making it substantially more difficult for innovators without millions of dollars in the bank to protect their intellectual property, shouldn’t we be wary of the harm future reform may cause?
Already, Congress has passed sweeping patent reform known as the American Invents Act (“AIA”). Implemented over a multi-year period, the AIA contains several provisions designed to disrupt NPE advantages and to make it easier for defendants in patent litigation to gain the upper hand. Whereas, for instance, NPEs could previously sue as many defendants as they liked, in one case and with one filing fee, the AIA changed that, requiring the filing of multiple cases and as many filing fees. But much more significantly, the AIA created a slew of game changing, “post grant” proceedings, run very much like mini-trials, which defendants facing NPE district court litigation can file in the patent office and yield to their significant advantage.
WASHINGTON – The U.S. Department of Commerce’s United States Patent and Trademark Office (USPTO) announced that it will host seven roadshows across the country between September 16 and October 9, 2014, to increase understanding of the First Inventor to File (FITF) provisions of the America Invents Act (AIA). The public meetings will serve as an opportunity for USPTO subject matter experts and stakeholders to discuss the FITF provisions and updates since its implementation in March 2013.
The USPTO specifically wants to broaden public knowledge of the FITF provisions and assist understanding of the provision’s administrative processes to aid inventors and their representatives in the filing and prosecuting of patent applications under the FITF system. At each roadshow, panelists will discuss FITF statistics to date, the applicability of the FITF provisions on patent applications filed today, the FITF statutory framework and its exceptions, and AIA evidentiary declaration practice useful to invoke these exceptions. The experts will present a variety of sample scenarios to illustrate both the applicability of the FITF provisions as well as tips for prosecuting applications filed under the FITF provisions.
Under the Leahy-Smith America Invents Act (AIA), Inter Partes Review (IPR) proceedings became an option for challenging validity of a patent at the U.S. Patent and Trademark Office on September 16, 2012. IPR proceedings allow for a petitioner to challenge the validity of a patent under 35 U.S.C. §§ 102 and 103 on the basis of prior art consisting of patents or printed publications. They are supposed to be completed quickly in a maximum of 18 months under 35 U.S.C. §§ 326(a)(11), and the availability of IPR proceedings provides a cost-effective option in litigation tactics. Despite the benefits provided, an Inter Partes Review is not without risk, and just how much risk is not yet known.
There is a time limit for preventing certain petitioners from initiating an IPR proceeding against a patent, and there is currently a petition for writ of mandamus to the Federal Circuit as to the scope of petitioners covered by the time bar. This issue arises because 35 U.S.C. §§ 315(b). 35 U.S.C. §§ 315(b) states that “[a]n inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.” Unfortunately, the critical question regarding who exactly is covered by “privy of the petitioner” is not defined by the statute and is subject to great debate.
Bernard Knight, known throughout the industry simply as “Bernie,” was an important part of “Team Kappos” during what many are already referring to as the “Golden Years” of the United States Patent and Trademark Office. Knight has a resume full of government service, rising through the ranks to become Acting General Counsel of the Treasury Department, and then General Counsel of the United States Patent and Trademark Office during the Kappos era. That means that he was one of core group of leaders tasked with creating and then implementing the rules of practice necessitated by passage of the America Invents Act (AIA).
In September 2013, Knight left the United States Patent and Trademark Office. I bumped into him shortly thereafter and he agreed to go back on the record with me for an interview, which took place on December 16, 2013. To read my first interview with Knight please see Exclusive Interview: USPTO Attorneys Bernie Knight & Ray Chen.
Knight is now a partner in the Washington, DC, offices of McDermott, Will & Emory, where he focuses his practice on complex patent litigation matters. Knight advises clients on intellectual property cases before the United States Supreme Court, as well as engaging in oversight on patent and trademark cases before the Court of Appeals for the Federal Circuit and the district courts.
There was nothing off the table, so to speak, in this interview. We discuss how and why he choose McDermott, as well as what it was like working for David Kappos and working with Judge Ray Chen when he was Solicitor at the USPTO. We also discuss the future of the Patent Office, the appointment of Michelle Lee to be Deputy Director of the USPTO, substantively what the USPTO was trying to do with respect to post grant procedures, the new ethical rules applicable to Patent Attorneys and Agents, and a variety of other issues.
What follows is a portion of the written statement of Q. Todd Dickinson, Executive Director of the American Intellectual Property Law Association, republished here with permission. Mr. Dickinson testified today at the Senate Judiciary Committee hearing on “Protecting Small Businesses and Promoting Innovation by Limiting Patent Troll Abuse.” To read Mr. Dickinson’s full prepared statement please see Testimony of Q. Todd Dickinson.
Q. Todd Dickinson, Executive Director of the American Intellectual Property Law Association.
A recurring theme that can be traced through the patent reforms of the AIA to the current debate over patent litigation abuse is the issue of patent quality. A key component of the reported abuses is the assertion of allegedly invalid or overbroad patents, the very abuse for which AIA post-grant procedures were created, in order to improve patent quality. These matters of patent quality are being addressed by the changes made to the law by the Judiciary and by Congress in the AIA, which are only now beginning to be felt.4 It may well be premature to conclude that they are not doing the job.
Take one major example, as a former Director of the USPTO in particular, I would support, as former Director Kappos did, giving the post-grant processes in the USPTO a chance to work.
They have only been in place for less than two years, and in the case of PGR, less than one.5 Early data suggests that they are performing in many ways as Congress intended, at least at the macro level, to provide an efficient, less expensive means to address potentially low quality patents. We believe that the prudent course is to give these reforms the chance to demonstrate their efficacy to deal with the concerns for which they were created before we consider making significant additional changes which may have their own unintended consequences. In support of this proposition to wait and see how they are working, we would simply point out that the AIA itself requires that USPTO study the reforms implemented by the AIA and report back to Congress by September 16, 2015. Those reports would serve as an important and more empirically-driven body of data which would allow for greater clarity and direction in making any necessary changes.
Congressman Goodlatte (R-VA), Chair of the House Judiciary Committee
UPDATED: Monday, Nov. 18, 2013 at 1:13pm
Last week CQ Roll Call reported that House Judiciary Chairman, Congressman Bob Goodlatte (R-VA), is continuing to fast track the Innovation Act (HR 3309) despite growing concerns from both Republican and Democrat members of the House Judiciary Committee. CQ Roll Call reports that there are 8 members of the Judiciary Committee who are asking for more time to study the legislative proposal. Two of those 8 are Congressman John Conyers (D-MI), who is currently Ranking Member on the Committee and himself a former Chair of the House Judiciary Committee, and Congressman James Sensenbrenner (R-WI), also a former House Judiciary Chair.
It is hard to understand the rush to move on the Innovation Act, which was only introduced a little more than three weeks ago on October 23, 2013. Yet, despite bipartisan misgivings within the House Judiciary Committee and a growing concern among innovators and Universities, Goodlatte is planning a markup of the legislation for Wednesday, November 20, 2013.
By e-mail sent late this morning House Judiciary Committee Members were advised that if they wanted Amendments to be considered they needed to be pre-filed no later than 11:15am on Tuesday, November 19, 2013. Accompanying this e-mail were the current version of HR 3309 as well as the Manager’s Amendment.
Of course, action in Committee does not guarantee passage by the full House of Representatives, but a bill supported by a senior member of Republican leadership like Goodlatte should certainly get its day on the floor in the House if it makes it out of Committee, which I suspect it will. Even then it would have to go across the Capitol to the Senate before it would ever wind up on the President’s desk.
EDITOR’S NOTE: This year I will be speaking at the AIPLA meeting on The AIA: Traps for the Unwary. I will publish my paper here on IPWatchdog.com in segments over the next week. We also have on tap a wide ranging discussion with AIPLA Executive Director Todd Dickinson, and a few other AIPLA-centric pieces are in progress. Ultimately our AIPLA coverage will culminate, as usual, with full coverage of the AIPLA annual meeting, which takes place at the Marriott Wardman Park Hotel from October 24-26, 2013.CLICK HERE to register for the AIPLA annual meeting.
The America Invents Act (AIA),  signed by President Barack Obama on September 16, 2011,  ushered in many significant changes to U.S. patent law. The USPTO summarizes the changes that went into effect on March 16, 2013 as follows:
(1) Convert the U.S. patent system from a ‘‘first to invent’’ system to a ‘‘first inventor to file’’ system; (2) treat U.S. patents and U.S. patent application publications as prior art as of their earliest effective filing date, regardless of whether the earliest effective filing date is based upon an application filed in the United States or in another country; (3) eliminate the requirement that a prior public use or sale be ‘‘in this country’’ to be a prior art activity; and (4) treat commonly owned or joint research agreement patents and patent application publications as being by the same inventive entity for purposes of 35 U.S.C. 102, as well as 35 U.S.C. 103. These changes in section 3 of the AIA are effective on March 16, 2013, but apply only to certain applications filed on or after March 16, 2013. 
Honestly, it is impossible to in any single article or series of articles describe the magnitude of the changes ushered in by first to file. This is because Congress has fundamentally altered the definition of what is considered prior art. An applicant is still entitled to a patent unless there is prior art that renders the claimed invention unpatentable because it is not new or because it is obvious. But what references and information can be considered prior art? That is where things have fundamentally changed.
Legend #2: All companies have equal access in obtaining inter partes review of the patents of others.
Truth: Of the initial denials of inter partes petitions that we identified, 88% of them were directed at petitions filed by small entities.
David and Goliath by French painter James Tissot, 1904.
When the America Invents Act was first passed, it was contemplated by many that its post-grant challenge procedures would be “particularly useful for individuals, start-up companies, and small-to-medium enterprises.” See, Rantanen, Lee Peterbridge and Jay P. Kasen, America Invents, More or Less? (University of Iowa Legal Studies Research Paper, Number 12-09, p. 235, March 2012).
Our inter partes challenge data from pre- and post-passage of the AIA clearly show that of the relatively few initial denials made by the USPTO of an inter partes challenge request, most fell on entities that typically file as small entities. We found 88% of denied petitions for inter partes review were filed by small entities, while only 12% of those denials related to petitions filed by large entities (Fig. 6). That is, small entities are 7 times more likely to have their petitions for inter partes review denied than large entities. Of the large entity petitions for inter partes review that were denied, only one of them was by a company in the Global 2000+. It is unclear why this is occurring. It could be argued that small entities simply are not seeking the same high quality legal work that the large entities are employing. An alternative answer may simply relate to an ingrained bias in the USPTO for the reexamination requests of the largest companies (as inter partes review requests are not blinded), which is unwittingly leading to more small entity requests being denied.
Editor’s Note: This post is part 1 of 2 of an article written by Steven J. Moore and with the assistance of Marvin Wachs and Timothy Moore, also of the Kelley Drye & Warren Patent Department. Part 2 will be published on Friday, August 16, 2013. Please also see Moore’s recent 5 part series on Patent Trolls titled: A Fractured Fairy Tale: Separating Fact & Fiction on Patent Trolls.
David and Goliath by French painter James Tissot, 1904.
In this paper, we look at whether the AIA, via its ex parte reexamination and inter partes review provisions, and its transitional program for covered business method patents, has actually benefited small entity companies, as many in the press and in Congress had urged upon its passage.
This study began before passage of the AIA, and was originally designed to center on the reexamination world to determine whether the patents of small entities were actually fairing worse than those of large entities under this procedure. However, the study morphed into a larger project, as the America Invents Act changed inter partes reexamination to inter partes review, and added a new challenge procedure, the so-called transitional program for covered business method patents. The project also expanded as the USPTO raised fees exorbitantly high post-AIA, pursuant to its newly obtained fee setting authority to “recoup costs,” for all ex parte and inter partes procedures, including the transitional program for covered business method patents. In regard to reexamination/review we feared that the whole mix of filers was going to be different pre- and post-AIA. Of particular concern to us was the extremely large increase in fees associated with inter partes review which we thought might affect the ability of small entities to file inter partes challenges, the nearly three-fold increase in fees by the USPTO in regard to ex parte reexamination, and the extraordinarily high fees associated with the transitional program for covered business method patents. Thus, a study originally designed to look only at pre-AIA reexaminations, was altered into a study of the effect of the AIA on all ex parte and inter partes procedures at the USPTO. Completion of our study was held up, as we waited for more data to come out in respect of post-AIA ex parte reexamination and inter partes review, as well as the transitional program for covered business method patents.
Our study on inter partes proceedings was based on 201 random inter partes reexamination requests filed before the enactment of the inter partes review procedures of the AIA, as well as 230 inter partes review requests made after the passage of the America Invents Act. We compared these samples to determine how small entities, and small corporate America as a subset, has been affected by the new inter partes proceedings against third party patents.
For all of us mystery buffs, what makes a good story is learning at the end who is ulti-mately responsible for the skullduggery set forth at the beginning of the yarn. Were all the prob-lems due to Colonel Mustard and his ineptitude with the candlestick, or do we have another case of “the butler did it?” And so, we set up our response to the many fables swirling around the so-called “Patent Troll” to lead us to whom we now believe is ultimately responsible for the rise in litigation by such entities. In this regard, we will look at numerous statements that have been asserted in the past with respect to the “patent troll,” and see how such statements stack up against the data. By following our responses to the various “myths” of the patent troll, we be-lieve most will themselves detect the “power behind the troll” long before we specifically un-cloak the same (no, it is not the Romulans! ) But just in case, we do the unmasking at the end of the paper.
There are many myths that are attached to the fable of the so-called “patent troll.” Acting like the MythBusters, we probed some of them, and set forth our findings below.
In a recent article on this blog, Gene Quinn reported onThe Rise of Patent Litigation in America in 2010, 2011 and 2012 and propounded the question: “what explains the significant uptick in the number of patent litigations initiated?” Gene appropriately cautions readers from speculative conclusions that the rise in the number of lawsuits is somehow due to rampant patentee abuse of the legal system. He appropriately rules out as a significant factor the fact that there are more patents being issued, as this has been a trend for years. Notably, Gene is on to something as he suggests that “the prohibition against suing numerous defendants in a single case ushered in by the America Invents Act (AIA) is to blame for at least a portion of the increase that occurs after September 16, 2011.” As shown below, it is ironic and highly likely that the AIA – the legislation touted by its proponents as the instrument to reduce the number of costly patent lawsuits – is in fact the major cause for their increase in the last three years.
Several factors created by the AIA caused, and will continue to cause, increased rate of lawsuit filings. Several of these factors were building up even before passage of the AIA in September 2011, as patentees acted prophylactically or in anticipation of more adverse legal conditions at various phases of the AIA implementation. Examples follow:
President Obama signs the AIA on Sept. 16, 2011, setting the stage for first to file.
The America Invents Act (AIA) was signed by President Barack Obama on September 16, 2011. The most significant changes to U.S. patent law did not go into effect right away. Rather, there were waves or phases of implementation. The second phase of AIA implementation was ushered in on September 16, 2012, which brought with it a host of new post-grant procedures, supplemental examination, changes to the oath or declaration requirement, and other various items. By any objective measure phase two ushered in massive changes to patent law and procedure.
By comparison, however, the second phase of AIA implementation pales in comparison to the third phase of AIA implementation. Effective on Saturday, March 16, 2013, the United States is now a first to file country, abandoning the first to invent laws that were long the hallmark of U.S. patent law and practice. The oddity, however, is that what has been adopted is not really a first to file system. There are some exceptions whereby a person who files second can still prevail, but those exceptions are infinitesimally insignificant, and the law surrounding the parameters of the exceptions is non-existent and unfortunately rather ill defined by the USPTO at this point.
It is also critical to understand that the new law contains traps and loopholes. For those who have not spent adequate time considering the many nuances of the law you will be surprised to learn what it really means. For example, did you know that long held and previously unpatentable trade secrets can now be patented? It seems unthinkable, but then again it is also unthinkable that the law will allow for the re-patenting of inventions, but it does that as well.