I’m in New York City today at PLI headquarters on Seventh Avenue for the USPTO Post-Grant Patent Trials 2013 program. I will moderate a panel this afternoon, but as the day starts the first speaker is David Kappos, former Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office. Since leaving the USPTO at the end of January 2013, Kappos has landed at the New York offices of Cravath, Swaine & Moore, an extremely well regarded Am Law 100 firm and great place to land. It was good to see him, he says he is doing well, and he seems to have as much energy and enthusiasm as ever.

Kappos started by explaining that this is his first public speaking engagement since leaving the USPTO. From the outset he also explained that the slides he would be using for the presentation were prepared by the USPTO. This presentation was originally scheduled to be given by James Smith, Chief Judge of the PTAB, who had to beg off as the result of sequestration cuts.

This article is by no means a substitute for the presentation by Kappos. In 60 minutes he managed to bring everyone up to date on what is going on at the USPTO relative to Appeals and other post patent proceedings. Of course, there were a handful of things that particularly caught my attention, which are mentioned below, along with “my two cents.” To distinguish the Kappos presentation from my own thoughts I have put my own thoughts in italics.

Next week on Wednesday, March 27, 2013, I will be once again in New York City at Practising Law Institute headquarters on Seventh Avenue, roughly between Central Park and Times Square. The program for the day is titled USPTO Post-Grant Patent Trials 2013, which will provide 6 CLE credits for attendees.

I am a moderator for the segment titled Practice Before the PTAB Roundtable, which will discuss the first trial petitions filed, motions practice, scheduling, the possible need for rule refinements and practice tips for practitioners. Robert Sterne of Sterne Kessler and Professor Lisa Dolak of Syracuse University College of Law will be the panelists.

A new addition to the program just announced today is David Kappos, who is the immediate former Director of the United States Patent and Trademark Office. Kappos, a life-long employee of IBM prior to taking charge of the USPTO, is now with Cravath, Swaine & Moore LLP in New York City.  Kappos will discuss the Patent Trial and Appeal Board, specifically discussing ex parte reexamination, the remaining legacy inter partes reexamination cases, inter partes review and the transitional program relating to covered business method patents. His segment will run from 9:15 am to 10:15 am. In addition to being presented live in New York City the program will also be webcast.

For several years I was the lead attorney at a Taiwan company that manufactures technology and consumer electronic products, from light-emitting diodes to liquid-crystal displays.  Every month we received a new demand for patent licensing or indemnification and it was my job to dispose of them at no cost, without licensing, litigation, or outside counsel.  Usually it was possible, but occasionally we found ourselves mired in full-blown litigation.

It’s no secret patent litigation costs are immense.  According to the American Intellectual Property Law Association, the cost of an average patent lawsuit, where $1 million to $25 million is at risk, is $1.6 million through the end of discovery and $2.8 million through final disposition.  Adding insult to injury, more than 60% of all patent suits are filed by non-practicing entities (NPEs) that manufacture no products and rely on litigation as a key part of their business model.

However, whether one represents a plaintiff or defendant, manufacturer or NPE, there are actions one can take to help manage the costs.  Below are some general guidelines.

In September Silver Peak filed documents with the USPTO requesting Inter Partes Reexaminations of U.S. Patent No. 7,428,573 and U.S. Patent No. 7,849,134, which are owned by Riverbed Technology.  Riverbed has accused Silver Peak Systems of patent infringement associated with these patents.

On January 8, 2013, Silver Peak Systems, Inc. announced the United States Patent and Trademark Office (USPTO) granted Silver Peak’s requests to reexamine two Riverbed Technology (NASDAQ: RVBD) patents — Silver Peak also announced that the USPTO issued Office Actions rejecting all of the claims in each patent.  See Office Action in ’573 and Office Action in ’134.

Apparently believing that the press announcement by Silver Peak was not 100% forthcoming, Riverbed issued its own press release relative to the reexamination of the ’573 patent and the ’134 patent.

Between the legacy issue of bad patents, patent auctions and the many who purchase patents, what has started to happen is that the patent system rewards those who have the finances and ability to game the system. But the problem is extraordinarily complex. What is clear, however, is that the enforcement of bad patents is a problem within the patent and innovation industry.

But at the same time it would really be GREAT if the media and anti-patent community would get a clue and understand that the problem with bad patents is largely a legacy issue. Those that say that the United States Patent and Trademark Office continues to hand out dubious patents like candy are flat wrong. The bad patents that we witness being used in unsavory shake-downs have not been granted over the last few years, but rather were granted many years ago, under a different patent regime and when there was little findable prior art for patent examiners to use.

Those that pretend that bad patents issue today by the dozen and for a dime are living in a fantasy world that does not approximate reality. Yet the misinformation continues, undaunted by reality. So if reality doesn’t support the mountains of misinformation about the patent system and how it operates today, what is going on?

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.

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.

I have been doing a lot of research and writing on obviousness and KSR v. Teleflex lately, but not for publication on the blog so far.  Last Friday, July 6, 2012, I filed a petition for rehearing en banc in Plasmart v. Kappos.  I represent the Appellee-Patentee.  The case arose out of what was originally an inter partes reexamination of U.S. Patent No. 6,722,674. The patent examiner found some of the claims allowable, the Board found all of the claims allowable, and then in a nonprecedential opinion the Federal Circuit overturned the Board.

This case intrigued me from the start because it seemed rather odd that there should be a nonprecedential opinion in an appeal to the Federal Circuit necessitated by a completely adjudicated inter partes reexamination at the United States Patent and Trademark Office. Moreover, the original panel concluded that the combination of known elements resulted in a predictable result.  The problem with that reasoning, however, is that not all of the elements were found within the prior art.  In fact, the Board found that there are no fewer than three (3) meaningful structural differences between the invention as claimed and the prior art.

In USPTO v. Bilski, U.S. Supreme Court confronted us with a “fuzzy” composite of opinions about the standard for patent-eligibility under 35 U.S.C. § 101.  See Through the Fuzzy Bilski Looking Glass: The Meaning of Patent-Eligible under 35 U.S.C. § 101 where I noted five key “takeaways” from those composite opinions, including what to make of Justice Scalia joining the Opinion of the Court except for Part II B-2 and C-2.  The Federal Circuit is also not immune from composite opinions that make you scratch your head as to what the final ruling is.  See Ariad Pharmaceuticals, Inc. v. Eli Lilly & Company where an en banc ruling by the Federal Circuit on whether there is a separate “written description” requirement under 35 U.S.C. § 112, first paragraph, spawned (in addition to the Opinion of the Court), four additional concurring and dissenting-in-part opinions.  In affirming the judgment of the district court “by an equally divided court,” the recently issued Marine Polymer Technologies, Inc. v. Hemcon, Inc. case requires yet some more figuring about another “muddled” Federal Circuit en banc decision.

The “muddle” that became the en banc decision in Marine Polymer revolved around two primary questions:  (1) the meaning of the claim term “biocompatible”; and (2) when does “intervening rights” apply to reexamined claims?  See CAFC: Intervening Rights for Claims Unamended During Reexam* where I discussed both of these questions in the Federal Circuit panel decision in Marine Polymer.  In the en banc decision, and by a 5 “yea” to 5 “nay” vote (with Judges Moore and O’Malley not taking part), the Federal Circuit deadlocked over the district court’s interpretation of “biocompatible” to mean “low variability, high purity, and no detectable biological reactivity as determined by biological reactivity as determined by biocompatibility tests.”  In jurisprudential parlance, such a “tie vote” means the district court interpretation prevails by default.

Well the proverbial cat is now “out of the bag.” The United States Patent & Trademark Office (USPTO) has issued its long awaited (and in many quarters, apprehensively feared) proposed patent fee changes pursuant to its new authority under Section 10 of the America Invents Act. I usually refer to the AIA as the “Abominable Inane Act” and this new fee setting authority is one reason for that characterization. These proposed patent fee changes are summarized in an 8 page Table to a 34 page Executive Summary which was submitted to the Patent Public Advisory Committee on February 7, 2012. For those true “masochists,” there’s an even longer 85 page detailed Appendix on these proposed patent fee changes to digest.

Page 11 of the Executive Summary provides what it characterizes as summary of the “significant changes” to the current patent fee structure. After getting over my initial “shock” at how high some of these proposed fees are (for the new supplement examination and new post-grant review procedures, as well as the existing ex parte reexamination procedure, these proposed patent fees can be characterized as “astronomical”), as well as how much these proposed fee changes increase current fees, I then asked this question: what do these proposed patent fee changes really mean?

On September 26, 2011, the a three-judge-panel of the United States Court of Appeals for the Federal Circuit issued a ruling in Marine Polymer Technologies, Inc. v. HemCon, Inc., which found intervening rights due to certain patent claims due to the fact that Marine Polymer made arguments about claim language during reexamination, but without actually amending the claims. See Marine Polymer vacated opinion.  On January 20, 2012, the full Federal Circuit decided to hear this case en banc and ordered that the original panel decision be vacated and the appeal reinstated. No additional briefing by the parties was requested, but on January 26, 2012, the Federal Circuit issued an Order allowing amicus briefs to be filed on or before February 10, 2012. On February 10, 2012 the Biotechnology Industry Organization and Pharmaceutical Research and Manufacturers of America filed a joint Amici Curiae Brief supporting the appellee and seeking affirmance of the district court decision.

Before getting into the arguments made by the Bio/Pharma brief, let’s go over the now vacated original panel decision to set the table.

In the annual State of the Union Address President Obama explained: “Innovation is what America has always been about.”  Today the Obama Administration took major steps forward to collaboratively work with private industry to tap American ingenuity to assist in a world-wide humanitarian effort.  The United States government will work with the private sector, universities, and non-profits to foster game-changing innovations with the potential to solve long-standing development challenges in health, food security and environmental sustainability.

I had the honor of being invited to the White House today for the Innovation for Global Development Event, which was held in support of the President’s commitment to using harness the power of innovation to solve long-standing global development challenges.  As a part of this event, David Kappos, Under Secretary of Commerce for Intellectual Property and the Director of the United States Patent and Trademark Office, launched a pilot program dubbed Patents for Humanity, which is a voluntary prize competition for patent owners and licensees.  The pilot program seeks to encourage businesses of all kinds to apply their patented technology to addressing the world’s humanitarian challenges.

USPTO Publishes Proposed Rules for Supplemental Examination and to Revise Reexamination Fees

Changes will implement provisions of the America Invents Act

Washington – The United States Patent and Trademark Office (USPTO) is proposing rules of practice in patent cases to implement the supplemental examination provisions of the America Invents Act. The USPTO is also proposing to adjust the fee for filing a request for ex parte reexamination and to set a fee for petitions filed in ex parte and inter partes reexamination proceedings to more accurately reflect the cost of these processes. The USPTO published these proposed rules in the Federal Register on January 25, 2012.

The CAFC’s split panel decision this past week – In re Construction Equipment Company – extends the PTO’s authority to reexamine a patent even where its validity has already been adjudicated and confirmed by the courts.  Yet the CAFC once again fails to explain how a PTO reexamination finding that a patent is invalid effects an earlier judicial determination that the same patent is valid and infringed.

In re Swanson

The authority of the PTO to reexamine a patent that has previously been found to be valid by the courts was established by the CAFC’s 2008 decision, In re Swanson.  There, the patent owner sued for infringement.  A jury found that the patent was not infringed, but additionally found that the patent was not invalid over the so-called Duetsch reference.  The trial judge denied the various post-trial motions, confirming the jury’s verdict.  And the CAFC affirmed the trial judge’s judgment regarding validity, explicitly finding that “Deutsch” did not anticipate the patent claims.

It is virtually impossible to in any intellectually honest way truthfully determine what the legislative intent of Congress was for any particular piece of legislation.  Justice Antonin Scalia has railed against the use of legislative history for decades, saying “legislative history is irrelevant when the statutory text is clear,” and referring to the “legal fiction” that legislative history, including Committee Reports, actually reflect the intent of the Congress.  This is, of course, because it is exceptionally easy to get something into the legislative history, so anything that appears in the legislative history may only be the view of one particular Member of Congress, or worse the view of a lobbyist paying for access.  There is also the problem associated with Members of Congress saying things they simply don’t understand, and the reality that the legislative history cannot be cross examined.  Even Committee Reports are at best the view of a majority of a group that makes up a small fraction of the overall Congress.  It seems a fools errand to rely on legislative history in all but the rarest case, and Scalia’s view seems to be the prevailing view of this Supreme Court.

Notwithstanding the inherent unreliability of legislative history and the truly scary prospect of trying to get inside the head of Members of Congress, it seems fairly clear to me that the America Invents Act, which was signed into law by President Obama on September 16, 2011, contains at least a handful of things that can only be characterized as unintended consequences.  Among them are: (1) U.S. patents issued from foreign filings will be prior art as of the foreign filing date; (2) commonly owned patent applications cannot be used against each other for novelty purposes; and (3) the creation of an post grant challenge limbo because of the delay in initiating post-grant review procedures.