America Invents: The Unintended Consequences of Patent Reform

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.

1. Foreign and international filings as prior art of of filing date

There seems to be a change to existing 102(e) law relative to foreign and international filings.  Today foreign filed applications are not prior art as of their filing date abroad, but will be prior art as of their filing date starting March 16, 2013 if the foreign filing matures into an issued U.S. patent. Similarly, under the current law applicable to international patent applications filed under the Patent Cooperation Treaty (PCT) a filing is only prior art as of the international filing date if the U.S. is designated and the patent application ultimately publishes in English.  Under the new law international filings will become prior art as of the filing date regardless of whether the application publishes in English, provided a U.S. patent is issued.

Under the new 102(a)(2), which becomes effective March 16, 2013, says:

A person is entitled to a patent unless — the claimed invention was described in a patent issued under section 151, or in an application for patent published or deemed published under section 122(b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective date of the claimed invention.

(emphasis added).

The definition of “effectively filed” is provided in 100(a)(i)(2)(B) as:

[T]he filing date of the earliest application for which the patent or application is entield, as to such invention, to a right of priority under section 119, 365(a), or 365(b) or to the benefit of an earlier filing date under section 120, 121 or 365(c).

Thus, if a U.S. patent is issued under section 151 it will be deemed prior art under the new 102(a)(2) as of its filing date, including if that filing date is an international or foreign filing date.

2. Double patenting is no longer an obviousness issue

There also is a change with respect to double patenting. Today your own patents (i.e., commonly owned or having at least one inventor in common) cannot be used against you to support a double patent rejection under Section 103, provided of course you must be willing to file a terminal disclaimer.  Under new 102(b)(2)(C), however, commonly owned subject matter cannot be used as prior art under 102(a)(2) to support a novelty rejection.

The new 102(b)(2)(C), which becomes effective March 16, 2013, says:

A disclosure shall not be prior art to a claimed invention under subsection (a)(2) if — the subject matter disclosed and the claimed invention, not later than the effective filing date of the claimed invention, were owned by the same person or subject to an obligation of assignment to the same person.

Thus, a commonly owned issued patent under 151 or a commonly owned published application under 122(b) cannot be prior art for novelty purposes. That means that
certain inventions not having 102(a)(1) prior art could be re-patented to extend the life of the patent.  Moreover, under current law the critical moment to determine common ownership is the time of invention.  The new 102(b)(2)(C) alters the critical moment to the filing date.  So there no longer needs to be common ownership at the time of invention, but rather common ownership by the time the application is filed.

Where will this matter?  This will be a potentially big opportunity for pharmaceutical companies who will now be able, at least in some cases, to re-patent blockbuster drugs.   In order to re-patent the subsequently filed identical application would need to be re-filed prior to the publication or patent issuing so that the publication/patent of the first filed application will not be prior art under 102(a).

Will a strategy of re-patenting work? There will be some who say that it won’t work for one reason or another, but given the billions of dollars that could be at stake in the right circumstance it seems virtually certain that it will be attempted.  Furthermore, if you don’t try to pursue such a path would you as the patent attorney or patent agent be committing malpractice or some breach of ethical standards by not zealously representing the interests of your client?  I think you have to at least try to exploit this 102(b)(2)(C) loophole and let the Federal Circuit ultimately determine whether references that do not qualify as prior art thanks to 102(b)(2)(C) can still nevertheless be combined to support an obviousness rejection or double patenting rejection pursuant to 103.  I could see it going both ways, but I think the superior argument is that you cannot combine references that do not qualify as prior art under 102, which has always been the law.

Regardless of the ultimate efficacy of re-patenting, I suspect the insertion of 102(b)(2)(C)  is not accidental.  If it was deliberately placed with knowledge as to its meaning it wouldn’t strictly qualify as an “unintended consequence.”  Notwithstanding, I find it difficult to believe that Congress appreciated the possibility of allowing for an 18 month patent extension through re-patenting even if certain lobbyists and companies were fully well aware of the mischief that could be forthcoming.

3. Inter partes review litigation limbo

Earlier today the Patent Practice Center published an article titled Post Grant Dead Zone Coming Soon, which discusses the possibility that there once Inter Partes Review procedures go into effect it might be difficult to obtain a stay in a patent litigation. See also Unwary Litigants to Lose USPTO Review.

The new post-grant review and inter partes review procedures come on line 12 months after enactment of the America Invents Act, which will be September 16, 2012.  In the new 35 U.S.C. 311(c) the filing time for an inter partes review is defined:

A petition for inter partes review shall be filed after the later of either — (1) the date that is 9 months after the grant of a patent or issuance of a reissue of a patent; or

(2) if the post grant review is instituted under chapter 32, the date of the termination of such post-grant review.

The intent seems to clearly be to allow for inter partes review only after the conclusion of any post-grant review.  Aside from the obvious language in Subsection (2) saying that inter partes cannot begin until after the termination of a post-grant review proceeding, the intent to have inter partes begin only after post-grant review is accomplished by Subsection (1) have a 9 month timeline because according to 35 U.S.C. 321(c) a post-grant review must be filed within “9 months after the date of the grant of the patent or of the issuance of  reissue patent…”

The trouble with this timeline is that it creates a dead zone or valley.  You see, like inter partes review, post-grant review does not come online until September 16, 2012.  That means that no inter partes proceedings could start before June 16, 2013.  Complicating matters is the fact that according to 35 U.S.C. 315(b), inter partes review must be initiated no more than 1 year after the date on which the petitioner is served with a complaint alleging patent infringement.

Further complicating matters is that post-grant review is only available to challenge patents that have issued under a first to file regime.  That means that post-grant review won’t be in effect really for at least several years because first to file does not come on line until March 16, 2013.  Therefore, it won’t likely be until at least the Spring of 2015 that we will see the first post-grant review proceedings, which will make inter partes review and traditional ex parte reexamination the only option for challenging patents post grant until approximately 2015.

Let’s talk about an example to try and make this real.   Patent is issued on September 17, 2012 and a patent infringement action is brought on September 18, 2012.  There will be no opportunity to seek post-grant review because this patent application was filed under the old, first to invent regime.  The time period to file an inter partes review runs from June 17, 2012 to September 18, 2012.  Thus, no inter partes review could have been initiated for the first 9 months of the pending patent litigation.

So why is a 9 month delay in seeking inter partes review significant? The longer you take to initiate a post grant challenge to a patent after litigation commences the harder it is to obtain a stay of the litigation pending the outcome of said post grant challenge.  Of course, ex parte reexamination could be filed rather than pursuing inter partes review, but the odds of achieving the desired outcome is much greater in an inter partes challenge than it is in an ex parte challenge.  For instance, with respect to ex parte reexamination, from 1981 to June 30, 2011, 23% of cases have all claims confirmed, 11% have all claims canceled and 66% have at least some claims amended.  For inter partes reexamination, from 1999 to June 30, 2011, 13% of cases have all claims confirmed, 44% have all claims canceled and 43% have at least some claims amended.  See USPTO Reexamination Statistics. Thus, not being able to seek inter partes review and instead having to rely on ex parte reexamination to attempt to stay a litigation is less than idea.

Conclusion

There are undoubtedly other unintended consequences and peculiarities that will come to light as more and more patent attorneys review the America Invents Act.  But who could expect that the largest re-write of U.S. patent laws ever would be smooth?  While the legislation isn’t a jobs bill in the way most would like to believe, one thing is for certain — the America Invents Act will be a full employment act for patent attorneys!