Any discussion of flaws in the United States patent system inevitably turns to the system’s modern villain: non-practicing entities. They are known more colorfully as patent trolls, although the business model of non-practicing entities has appeared in copyright markets as well as well as in patent markets.

In the America Invents Act, Congress directed the nonpartisan Government Accountability Office (GAO) to conduct a study “on the consequences of patent infringement lawsuits brought by non-practicing entities.” At the GAO’s request, we provided data on non?practicing entities for five years (2007-2011) using a database from Lex Machina, formerly the Stanford IP Clearinghouse.  The GAO requested only the coded data without analysis, and we provided this with the understanding that we would publish our own analysis of the data at a later time.

Our current article, which is in draft form and available at SSRN and the final study will be available from the Duke Law & Technology Review. We note that although the cases were compiled at the GAO’s request, all conclusions are our alone and not those of the GAO.

All member countries of the Paris Convention and the PCT approve the novelty of an invention claimed in the patent application going back to the priority date in the origin country.  Therefore, as to the novelty of a claimed invention, all member countries treat foreign and domestic patent applications equally.  Still, the member countries’ treatment of the “grace period” poses a serious issue: no patent law in any country recognizes the grace period as starting from the priority date, but only from the domestic filing date.

Thus, if a U.S. inventor publishes his invention, files a U.S. patent application within one year, and files a Japanese patent application within one year from the U.S. filing date claiming priority, he will get a U.S. patent but not a Japanese patent.  This is so because the Japanese Patent Law allows a six-month grace period from the Japanese filing date, not U.S. priority date. This six-month grace period is same in the rest of world except for the United States and Korea.

The AIA broke this barrier by giving both the novelty and the grace period on an effective filing date which goes back to the original filing date, so long as there is priority claim to the original foreign application date.  Thus, under AIA, both U.S. and foreign applications are completely equal with respect to both novelty and grace period.

This is extremely unusual, since no other country provides a grace period commencing from the priority date. In this respect, the AIA is the first and sole universally equal patent law in the world.

The America Invents Act (AIA) has now gone through its second phase of implementation.  Initially there were few things that went into effect over the initial 90 days after President Obama signed the legislation into law.  The first major wave of the AIA took effect on September 16, 2012.  See, for example, Citation of Prior Art, Supplemental Examination, Oath/Declaration and Post-Grant Review et al. The most significant of the changes to U.S. patent law, namely the shift from first to invent to first to file, will not take place until March 16, 2013.  This is a monumental change to U.S. patent law so it is never too early to discuss the many issues that will present with this shift.

The first and most obvious place to begin any discussion of the shift to first to file is with a very basic question: What is prior art?  This is anything but an easy, straight forward question even under first to invent laws that we know so well and have been familiar with virtually throughout the entire history of the United States.  The complexity in what seems an otherwise simple question stems from the fact that prior art is defined by statute.  There is no common sense way to conceptualize what is, or what is not, prior art.

As you may have already heard, effective — October 2, 2012 — the United States Patent and Trademark Office will be adding a significant volume of newly testable material  to the Office’s Registration Exam (i.e., the “Patent Bar Exam”). Specifically, the USPTO has added six new testable documents to the Patent Bar Exam, with these newly testable documents coming in the form of six Federal Register Notices.  All of this is thanks to the America Invents Act (AIA). See AIA Phase 2 Implemented.

Does this mean that the Patent Bar will become more difficult? The answer to that question isn’t a simply YES or NO.  So let’s break this down into two different questions.  (1) Will the questions be more difficult on the Patent Bar Exam? (2) Will it be more difficult to pass the Patent Bar Exam? While exam questions likely won’t get more difficult, it would be naive to believe the Patent Bar will not become much more difficult with the addition of complicated new rules that only add to the legal and regulatory rules administered by the USPTO.

Let’s go back to the first question about the questions on the Patent Bar.  Once upon a time the Patent Office administered the Patent Bar Exam once or twice a year to thousands of would-be patent attorneys and patent agents across the country.  The October 2003 exam was the last exam administered in this way.  The USPTO changed the examination to an on-demand examination that is prepared by the Patent Office, but administered by Prometric.  Because questions are randomly served from the database and no two people take the same exam the Patent Office had to normalize exam difficult someway, so they scored questions on a scale of 1 to 10 in terms of difficulty.  This ensures that each person gets an exam that the Patent Office deems to be of the same level of difficulty.  Thus, the new material will be fit into the database and appropriately evaluated.  There will not suddenly be questions of 11 or 12 level of difficulty. So in this respect each question will not be more difficult, at least from the Patent Office perspective.

Last week I published part 1 of my conversation with Manus Cooney, who is one of the preeminent intellectual property lobbyists in Washington, D.C. Cooney, a former Chief Counsel to the Senate Judiciary Committee, is currently a partner with American Continental Group and was intimately involved in lobbying Congress relative to the America Invents Act (AIA), primarily on behalf of his client Tessera Technologies, who aligned themselves with the Innovation Alliance.

In part 1 we discussed lobbying in general, shining some light on the process as a whole and explaining why it is unrealistic to expect you can enter the debate near the end and have any hope of affecting change. In part 2, which is reproduced below, we discuss the specifics of lobbying the AIA, as well as the fight against further erosion of patent rights. And you thought that patent reform was over. Sadly, the fight continues.

COONEY: Going back to the AIA, when it comes to passing legislation, it’s important to know how each of the Congressional bodies work. It may be an oversimplification but it is usually the case that whatever the House Majority Leadership wants to pass, it usually gets done. In the Senate, however, it’s different because of its rules. There, whatever the Majority wants to pass has a shot at getting done. In other words, if the House Leadership, the Republicans in this case today, and the Chairman of the Committee want to see a particular measure passed, more often than not, particularly on an issue as esoteric and complex as patent law, the party members of the majority party are going to adhere or defer to the wishes of Leadership, And as a result, you’re trying to either create a situation in advance of the House measure coming to the floor where you have the support of the Leadership or you have created an environment where it’s less certain to the House Leadership and the Chairman that they will in fact be able to prevail, and thereby create an environment where they have to negotiate. Oftentimes in the House, your laying the foundation for a fight in the Senate where there is less deference to the Leadership. The rules are such that, in theory, any Senator can offer an amendment to any bill at any time, and you have a better shot at winning on the merits, so to speak. That has a way of forcing consensus. So realizing that those tend to be the ground rules, the landscape you’re dealing with, you develop a strategy for your clients.

Manus Cooney is a formidable figure.  He stands 6’3”, is the consummate professional, highly intelligent and very personable.  He is the type of person you notice when he walks into a room.

Who is Manus Cooney?  Those in Washington, DC, know the name well, but many practitioners in the intellectual property space are probably not well acquainted with Cooney, but Manus Cooney is a name you should know if you are at all involved in the world of intellectual property.

Cooney is a prominent behind the scenes player in Washington, DC.  He is a partner in the American Continental Group, a D.C. based consulting and lobbying firm that boasts one of the most prominent IP practice groups in town.  His partners include Marla Grossman, who was an IP counsel for Senate Judiciary Committee Chairman Senator Patrick Leahy (D-VT), and Chris Israel, who was the nation’s first U.S. Coordinator for International IP Enforcement — the first IP Czar.  Philosophically, ACG tends toward the pro-IP side, so it is not surprising that many of the clients they represent are interested in securing and promoting a strong IP regime both in the U.S. and abroad.  In short, Cooney and others at ACG fight the good fight, helping content creators and innovators convey their message in the halls of Congress.

Washington – The most significant reform to the U.S. patent system in more than a century took a major step forward at 12:01 am Sunday, as numerous provisions of the Leahy-Smith America Invents Act of 2011 went into effect. The new rules will spur innovation and economic growth by streamlining the patent application process and introducing new procedures to ensure patent quality. Seven reforms to U.S. patent law went into effect one year after the signing of the bipartisan patent reform legislation by President Barack Obama on September 16, 2011.

Some of the new rules are as follows:

• Three new administrative trial provisions — inter partes review, post-grant review, and the transitional program for covered business method patents—will offer third parties timely, cost-effective alternatives to district court litigation to challenge the patentability of an issued patent. Additional information on third party submissions can be found here.
• The supplemental examination provision allows applicants to submit additional information relevant to the patentability of an issued patent to the Office in a new procedure that may protect the patent from an inequitable conduct charge.
• The inventors oath and declaration provision that for the first time allows assignee filing of a patent application.
• The citation of prior art and written statements provision will enable the Office to treat the claims in a patent consistent with how a patent owner represents its claims to the courts or in other Office proceedings.

In two days we will celebrate the first anniversary of the signing of the America Invents Act (AIA). Over the next week to two weeks I will be focusing on the AIA, both in retrospect and insofar as practice and procedure is concerned at the USPTO.  Yesterday I wrote about Supplemental Examination.  Today we take a look a the Final Rules packaged titled Changes To Implement Miscellaneous Post Patent Provisions of the Leahy- Smith America Invents Act, which were published in the Federal Register on August 6, 2012.

The “miscellaneous” final rules primarily implement two things.  First, section 6 of the AIA to provides for an estoppel that may attach to the filing of an ex parte reexamination request subsequent to a final written decision in a post grant review or inter partes review proceeding. See 37 CFR 1.510(b)(6).  Second, the final rules expand the scope of information that a person may cite in the file of a patent to include written statements of the patent owner filed in a proceeding before a Federal court or the Office in which the patent owner took a position on the scope of any claim of the patent.

With respect to the first, relating to ex parte reexamination, USPTO rules will now require that a third party request for ex parte reexamination contain a certification by the third party requester that the statutory estoppel provisions apply to completed inter partes reviews and post grant reviews do not bar the third party from requesting ex parte reexamination. Cosmetically, the final rules also implement Section 3(i) of the AIA, which replaces interference proceedings with derivation proceedings, and replaces the title ‘‘Board of Patent Appeals and Interferences’’ with ‘‘Patent Trial and Appeal Board.”

The America Invents Act (AIA) was signed into law by President Obama on September 16, 2011. The AIA ushered in numerous changes to patent law, but there will be even more changes to patent practice and procedure.  The way many things are done at the USPTO on behalf of clients will change, with the next wave of changes becoming effective on September 16, 2012, on the one year anniversary.  Over the next several weeks we will be taking some detailed looks at these changes, as well as flashing back to remember the passing of patent reform.

We begin our journey today with the Supplemental Examination Final Rules, which were published in the Federal Register on August 14, 2012.  Section 12 of the AIA amended chapter 25 of title 35, United States Code, to add new 35 U.S.C. 257, which permits a patent owner to request supplemental examination of a patent by the United States Patent and Trademark Office. The purpose of supplemental examination is to provide an avenue for the patent owner to ask the USPTO to consider, reconsider, or correct information believed to be relevant to the patent. Although supplemental examination goes into effect on September 16, 2012, it can be used for any patent issued on, before or after September 16, 2012.

The United States Patent and Trademark Office (USPTO) announced today that it is creating a new proceeding designed to ensure the first person to file a patent application is actually the true inventor. The new proceeding will ensure that a person will not be able to obtain a patent for an invention that he or she did not actually invent. If a true inventor is not the first to file, the true inventor may challenge the first applicant’s right to a patent by demonstrating that the first application is claiming an invention derived from the true inventor.

This new procedure, called a derivation proceeding, is required thanks to the enactment of the Leahy-Smith America Invents Act (AIA), which went into effect on September 16, 2011. The AIA ushers in a great many changes to patent law and procedure, with the most significant being the change from first to invent to first to file, which does not actually become effective until March 16, 2013. The flavor of first to file adopted by the AIA is not the typical first to file system seen in many other jurisdictions around the world. The American flavor still provides a grace period, although it is peculiar to the inventors own disclosures and can be defeated by subsequent disclosures of third parties. The grace period is, therefore, quite fragile to the point that it is virtually non-existent. Much concern was voiced, however, over whether one could learn of an invention and then win a race to the USPTO. That is where the derivation proceedings come into play. The U.S. version of first to file is better stated as “first inventor to file.”

One of the primary objectives of the America Invents Act (AIA) was to streamline the filing and prosecution of patent applications.  Under the AIA, the oath or declaration requirements for applicants have been substantially modified, with assignees now being permitted to apply for patents effective September 16, 2012.  Provisions of the AIA (35 USC § 118) allow an assignee, or one to which the inventor is obligated to assign the invention, to make an application for patent.  Additionally, a party who has a “sufficient proprietary interest” in the invention may make an application for patent as an agent of the inventor upon “proof of pertinent facts” of such interest.

35 USC § 115(d) permits the “applicant” to make a substitute statement in lieu of an oath/declaration under certain permitted circumstances, such as the death or incapacity of an inventor or an inventor’s refusal to sign an oath/declaration when the inventor is under obligation to assign the invention to the applicant.  Also, an “individual” under obligation to assign can now, in an assignment document, make the required oath/declaration and other requirements as instituted by the Director under §§ 115(b) and 115(c).

On September 6, 2012, the United States Patent and Trademark Office published proposed rules in the Federal Register setting or adjusting fees for patent related services.  In proposing patent fees the USPTO is for the first time seeking to exercise the fee setting authority established under Section 10 of the America Invents Act (AIA).  According to the Federal Register Notice, the proposed fees are appropriate to cover patent operations at the Office, as well as create a “sustainable funding model” that will work toward further reduction in the patent application backlog.  The fees are also set with an eye toward a necessary “upgrade [of] the Office’s patent business information technology (IT) capability and infrastructure.”

Now begins a two month public comment period.  In order to ensure consideration, those wishing to submit written comments must do so no later than November 5, 2012. Comments should be sent by electronic mail message over the Internet addressed to: fee.setting@uspto.gov.  Further, these proposed fees will be fair game for discussion at the AIA Roadshows scheduled throughout the United States during the month of September.

The recurring theme will be decreased fees for those who qualify for micro-entity status, but increased fees for everyone else.  Decreased fees for micro-entity status are appreciated, but they will not even apply to all independent inventors, but only a subset of independent inventors who are at the lowest end of the income scale and who have had very few patents or patent applications.  Thus, even the professional garage inventor will be a small entity and will pay more — in some cases substantially more — than they pay now.  Not to mention the small businesses that are the engine of the U.S. economy.  These fees will be a real and substantial impediment to the patent process for those individuals and businesses that we need to be encouraging and incentivizing the most.

Washington - The U.S. Department of Commerce’s United States Patent and Trademark Office (USPTO) announced today that it is taking further steps to implement the most significant reform of the U.S. patent system in more than a century. The Office will publish a Notice of Proposed Rulemaking (NPRM) in the Federal Register on Thursday, September 6, 2012, seeking public input on proposed patent fees, including reductions to fees for new procedures and programs created by the broadly bipartisan Leahy-Smith America Invents Act (AIA) that allow robust reviews of issued patents, and provides discounts to individual inventors and small businesses.

Fees are currently set by statute. The AIA directed the USPTO to set these fees on a cost-recovery basis and to seek public and stakeholder input in setting those fees, a change widely supported by businesses, entrepreneurs, and educational institutions.

The U.S. Department of Commerce’s United States Patent and Trademark Office (USPTO) will host two public events next week to provide information on and receive public input regarding the Office’s continuing implementation of the Leahy-Smith America Invents Act (AIA). The events are part of ongoing USPTO outreach efforts to gather public feedback on its continuing implementation of the AIA.

Under Secretary of Commerce for Intellectual Property and USPTO Director David Kappos will participate in both events, joined by several senior USPTO officials. An in-person roundtable addressing the upcoming shift to a first-inventor-to-file system will be held Thursday, Sept. 6, from 1:30 to 4:30 p.m. at the USPTO headquarters in Alexandria, Va. It is open to the public and will be webcast. A separate webinar will be held Sept. 7 from 12:30 to 1:30 p.m. to discuss all aspects of the AIA.

Washington - The U.S. Department of Commerce’s United States Patent and Trademark Office (USPTO) announced today that it will publish final rules in the Federal Register on August 14, 2012, to implement three administrative trial provisions of the Leahy-Smith America Invents Act (AIA); inter partes review, post-grant review, and the transitional program for covered business method patents. The administrative trial final rules offer a third party a timely, cost-effective alternative to district court litigation for challenging the patentability of a claimed invention in an issued patent. These rules become effective on September 16, 2012. With this publication, all of the administrative trial rules the USPTO was tasked by the AIA to complete will have been published.

The final rules for inter partes review and the transitional program for covered business method patents apply to any patent issued before, on, or after the September 16, 2012 effective date. By contrast, the post-grant review final rules apply to patents issuing from applications subject to the first-inventor-to-file provision of the AIA, which does not become effective until March 16, 2013.