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.

I have done quite a bit of writing about the America Invents Act, but I have been a bit derelict in providing the sequel to America Invents: A Simple Guide to Patent Reform, Part 1.  Part of the reason, if not the entirety of the reason, is that the major parts of the American Invents Act that remain are anything but simple.

I was speaking with John White via telephone yesterday about the America Invents Act.  Yes, John and I are thoroughly immersed in this legislation and coming up with wrinkle after wrinkle that you probably never thought about.  Fun I know, but that is what two wild, crazy and tremendously charismatic patent attorneys talk about!  In any event, I told him I was having difficulty and asked him — how do you describe prior user rights, post-grant review and supplemental examination simply?  His response: “You don’t.”  We went on to talk about how first to file isn’t all that simple either, although the name suggests otherwise.  This thing, the monstrosity that is the America Invents Act, will be a full employment act for lawyers!  But when is it ever good for clients when it is good for the attorneys?

In any event, on this note I embark upon Part 2, which will seek to make sense of prior user rights, post-grant review, preissuance submission and patentability changes. This will leave inter partes review, supplemental examination and derivation proceedings for the finale — Part 3.  I will endeavor to describe these in the most straight forward way possible, but I am going to completely punt on Section 18 as it pertains to business methods and post-grant review, at least for now.  I just see no way to explain that in a “simple” way.  Notwithstanding, look for an article on Section 18 soon (a relative term I know), along with an article about specific peculiarities and likely unintended consequences of the Act.

Companies accused of patent infringement are increasingly looking at patent reexamination at the Patent Office as an attractive avenue for challenging the patent’s validity. Reexamination offers a number of well-known advantages as a forum for such validity challenges over District Court, among them the absence of a presumption of validity and a lower burden of proof. Less well-known, however, is the potential for reexamination to eliminate an accused infringer’s liability for past damages – even if the PTO confirms the validity of a patent in reexamination, the accused infringer might be entitled to “intervening rights,” effectively eliminating past damages, if the patent owner amends its claims to distinguish its invention over the prior art. Even when the patent owner succeeds in the reexamination, if it also amends its claims, it can lose its right to collect damages for infringement occurring prior to the end of the reexamination.

This possibility of “intervening rights” received a big boost last week with the CAFC’s decision in Marine Polymer Techs. v. HemCon, finding that such rights may be created even without an amendment of the claims if the patent owner presents arguments in reexamination that “effectively amend” the claims.

CAFC Rules “Intervening Rights” May Be Based on Arguments Even Though Claims Unamended During Reexamination.

I like writing about esoteric patent law topics and the question of “intervening rights” in reexaminations/reissues is one of the more esoteric. See my 1998 JPTOS article entitledIntervening Rights: A Potential Hidden Trap for Reexamined Patent. The case of Marine Polymer Technologies, Inc. v. HemCon, Inc. is one of those rare instances in this esoteric area of patent law where the Federal Circuit announced a new “wrinkle” on when “intervening rights” apply in reexamination. Unfortunately, the rule announced by the majority in Marine Polymer Technologies (“intervening rights” apply to unamended claims based on statements made during reexamination) is squarely in conflict with the express language of 35 U.S.C. § 307(b), as Judge Lourie’s dissent vigorously (and more importantly, correctly) points out.

The America Invents Act, which just recently passed by the Congress and sent to the White House for President Obama’s signature, is the most significant patent reform legislation in decades, and it promises to change virtually all of patent practice as we know it over the next 18 months. Some pieces of the legislation will go into effect almost immediately, but other aspects of the legislation will become effective 12 months and 18 months after the bill becomes law. We are in for the largest set of changes anyone practicing has ever faced. The 1952 Patent Act codified what was in existence, the American Invents Act shakes the very foundation of patent law and patent practice.

The Practising Law Institute will host a one-day program titled America Invents Act: How the New Law Impacts Your Clients and Your Patent Practice. This event will be on Monday, September 26, 2011, and will take place live at PLI’s San Francisco Center in downtown San Francisco, California. The program will be webcast live over the Internet for all those who are unable to make it to the live location.