Patent Issues on the Legislative Agenda for 2012 & 2013

Numerous provisions of the Leahy-Smith America Invents Act (AIA) went into effect on September 16, 2012, marking the one year anniversary of the President’s signing of the bipartisan patent reform legislation. With the passage of this regulatory milestone, does that mean that the Federal Government will simply focus on the continued implementation of the AIA and take a respite from debating other patent public policy issues? Highly unlikely.

In fact, in addition to AIA implementation issues, several patent public policy issues outside the scope of the AIA are already under consideration before Congress, the ITC, the US Patent and Trademark Office (USPTO) and other Federal Agencies. Below is a summary of some of the salient AIA and non-AIA patent issues likely to be considered during the rest of 2012-2013.

1. Implementation of the AIA

  • First Inventor to File

The USPTO has published a proposal to amend the rules of practice in patent cases to implement the “first-inventor-to-file” provision of the Leahy-Smith AIA. The provision converts the US patent system from a “first-to-invent” system to a first-inventor-to-file-system. The first-inventor-to-file provision, which takes effect March 16, 2013, also alters the scope of available prior art in determining the novelty and obviousness of a claimed invention. In addition to amending the rules of patent practice, the USPTO is proposing examination guidelines to inform the public and patent examiners of its interpretation of the first-inventor-to-file provision of the AIA. The guidelines are intended to advise the public and patent examiners how the changes introduced by the first-inventor-to-file provision impact the sections of the Manual of Patent Examining Procedure (MPEP) pertaining to novelty and obviousness.

In a separate judicial action, an independent inventor has challenged the constitutionality of the first-investor-to-file provisions of the AIA in federal court.

  • BRI

There is growing consternation over the USPTO’s plans to construe patent claims challenged in post grant review (PGR) and IP rights (IPR) on the basis of the “broadest reasonable interpretation” (BRI) standard. Because claims are interpreted more broadly using BRI, some believe its use in PGR and IPR may lead to the declaration of numerous unnecessary proceedings in which many patent owners will be forced to cancel their original patent claims and submit substitutes, thereby forfeiting substantial portions of their original patent grant. It also signals, in the eyes of pro-patent advocates, a bureaucratic power grab. How opponents of BRI plan to respond to the USPTO’s plans is unresolved.

  • GAO Report

The Government Accountability Office (GAO) was slated to release its AIA mandated report on Non-Practicing Entities (NPEs) in September. The GAO has informed the Hill that it will not be releasing the report until November.

  • Business Method Patents

Section 18 of AIA tasks the USPTO with the creation of a “Transitional Program for Covered Business Method Patents.” The program would apply the new PGR system to covered Business Method Patents. Google and some other patent stakeholders have questioned whether Business Method Patents should remain a part of the patent system, with their public policy director, Pablo Chavez, saying “one thing that we are very seriously taking a look at is the question of software patents, and whether in fact the patent system as it currently exists is the right system to incent innovation and really promote consumer-friendly policies.” Other stakeholders feel that business method patents encourage innovation and that Congress should refrain from legislating on this subject at the present time. The question of whether business method patents promotes or impedes innovation is likely to remain a significant public policy issue in the upcoming year.

2. Patent Issues Outside the Scope of the AIA

  • ITC Reform, Section 337

Some patent stakeholders and lawmakers are asserting that patent challenges at the International Trade Commission (ITC) have recently increased and that the ITC’s procedures and practices encourage non-meritorious challenges by firms that seek to make a living by bringing such challenges. These stakeholders are seeking ITC reform that would reduce such non-meritorious challenges by the following means: (1) making it clear that domestic industry is established through licensing only when that licensing is “prior to, and … promotes, the adoption” of the patented invention; (2) aligning the application of “traditional principles of equity” under both the ITC and in district court under the Supreme Court’s eBay decision; and (3) making it clear that the ITC is empowered to make a finding on the appropriateness of an exclusion order at any stage of the investigation, terminate the investigation at any time, and make recommendations concerning the public interest in each investigation. Other stakeholders argue that ITC reform is not necessary and that a ban of exclusion orders would tip the balance in favor of infringers at the expense of patent holders. They argue that such “ITC reform” would lead to few innovators participating in standard setting organizations (SSO) because their patents would be rendered unenforceable. Congress has held several hearings on the issue, and a few members of Congress have written the ITC about these issues. In part as a result, the ITC has proposed revamping its section 337 procedures. The proposed rules are aimed at increasing the efficiency of the ITC’s section 337 investigations. One significant change would be limiting the number of interrogatories and depositions that may be used in a section 337 investigation. Possible ITC reform is likely to be an ongoing debate in the next Congress.

  • The Patent Law Treaties Implementation Act of 2012 (S.3486)

The treaty implementing legislation combines two pieces of draft legislation previously transmitted to Congress by DOC (in Jan. 2010) to implement the Patent Law Treaty (PLT) and the Hague Designs Treaty. The aim of the PLT is to internationally harmonize formal procedures such as the requirements to obtain a filing date for a patent application, the form and content of a patent application, and representation. The Hague Designs Treaty would for the first time permit for design patent applicants a benefit currently enjoyed by utility patent applicants — the ability to file a single, standardized, English-language application at the USPTO to obtain patent rights in multiple countries through the Patent Cooperation Treaty. By permitting design patent applicants to file in this manner, the Hague bill should greatly reduce the cost to US applicants of obtaining foreign design rights. The treaty was ratified by US Senate in 2007. Passage of the implementing legislation is required for the US to become a member and for the treaty to take effect in the US. The Senate passed S.3486, and the bill is now headed to the House for consideration.

  • The Promoting Automotive Repair, Trade, and Sales Act (H.R. 3889)

The PARTS Act would restrict automakers from patenting the design of repair parts so it would not be an act of infringement to: (1) make, test, or offer to sell within the US, or import into the US, any article of manufacture that is similar or the same in appearance to the component part claimed in such design patent if the purpose of such article is for the repair of a motor vehicle to restore its original appearance; and (2) use or sell within the US any such same or similar articles for such restorations more than 30 months after the claimed component part is first offered for public sale as part of a motor vehicle in any country. The Act specifies that an offer to sell includes any marketing of an article of manufacture to prospective purchasers or users and any pre-sale distribution.

  • The Saving High-Tech Innovators from Egregious Legal Disputes Act (H.R. 6245)

The SHIELD Act is described in the Congressional Record as, “A bill to amend chapter 29 of title 35, United States Code, to provide for the recovery of computer hardware and software patent litigation costs in cases where the court finds the claimant did not have a reasonable likelihood of succeeding…”. The concept of “loser pays” is not a new one, but it seems to be getting more traction in the context of the current public policy discussion about whether, and if so how, to curtail “excessive” patent litigation.

  • ABA Small Claims

The American Bar Association (ABA) IP Committee has revived a legislative proposal to establish within the US Court of Claims an alternative venue for the consideration of low-dollar patent infringement actions. The concept is still in the works but would be voluntary, cap damages, and waive the right to a jury trial. The idea reportedly has the support of USPTO Director Kappos and will be the subject of a PTO forum/hearing in October.

  • The Manufacturing American Innovation Act (H.R. 6353)

Rep. Allyson Schwartz (D-PA) and Rep. Charles Boustany (R-LA) introduced the Manufacturing American Innovation Act on August 2nd. The Act would reduce business taxes by more than half, to a 10 percent rate, for companies that manufacture patented products in the US.

  • Innovative Design Protection Act of 2012 (S. 3523)

Sen. Chuck Schumer (D-NY) introduced the bill on September 10th of this year and has acquired ten cosponsors to date. If adopted, the bill would strengthen protections for designs in the fashion world.

  • Trans Pacific Partnership

On November 12, 2011, the Leaders of the nine Trans-Pacific Partnership countries – Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, and the US – announced the broad outlines of the Trans-Pacific Partnership (TPP) agreement. The treaty aims to enhance trade and investment among the partner countries, promote innovation, economic growth and development, and support the creation and retention of jobs. The next negotiating round (the 15th round) of the TPP will take place in New Zealand.

  • IT Modernization at the USPTO

XML filing: The USPTO has indicated a desire to receive patent applications in XML from applicants to feed into the Patents End to End (PE2E) system currently in development. Achieving this goal could have material benefits for the agency – assuming that the XML received from applicants is consistent and of high quality. However, as other federal agencies have found, achieving a broad-based, rapid adoption of XML e-filing by an applicant community is likely to be extremely challenging in any scenario leading to increased authoring costs, and XML inputs will often be of questionable quality leading to likely increased agency processing costs. In the upcoming Congress, patent stakeholders will wish to explore whether there are simple, cost-neutral and relatively painless ways for the USPTO to achieve its goal of high quality XML inputs to PE2E.

Text2PTO Initiative: The USPTO has announced its Text2PTO initiative to enable the USPTO to accept patent application submissions in text based format. The USTPO is seeking stakeholder feedback during the developmental phase of the project and will be holding focus sessions over the next few months to obtain input as the USPTO develops specific project requirements. Patent stakeholders will likely consider whether the initiative will increase or decrease the accuracy and integrity of the application file and whether the USPTO should be using its resources to create analytical reporting tools when private sector tools are currently available. They will also likely want to consider what it will cost to maintain an effective environment for text filing and analytics, whether it is likely that the USPTO will maintain such an environment effectively over time, and whether private sector solutions, driven by the need to be responsive to the market, could be expected to serve the IP community better in this regard at lower cost.

OCR and Quality of Patent Data: Patent stakeholders are keeping an eye on the USPTO to make sure it maintains its current “gold standard” for the publication of raw patent and trademark data. Earlier this year, Rep. Chaka Fattah, Ranking Member of the House CJS Appropriations Subcommittee, asked Director Kappos: “As PTO develops its new Patent Application Text Initiative technology, what are PTO’s plans for ensuring that this new system will help maintain PTO’s current high standard of content accuracy for PTO’s databases and published US patent content? “ Director Kappos answered: “The Patent Application Text Initiative (PATI) is one project under the Patent End-to- End (PE2E) portfolio of information technology projects. Any PE2E projects that would impact the current patent publication process would meet or exceed the current standards. ” Users of US patent information are working to make sure the USPTO – at a minimum – remains committed to maintaining its current quality standard for published patent information.

  • Global Dossier Initiative

The USPTO is introducing the Global Dossier Initiative (GDI). GDI was initially proposed by the USPTO in November 2011, and further developed jointly with the Japan Patent Office last winter for introduction to the IP5 offices this spring. At an IP5 and WIPO heads-of-offices meeting hosted by the European Patent Office in June, the GDI concept was endorsed as a way to advance the international patent system by creating new efficiencies and improving patent quality through worksharing mechanisms.

  • General Public Policy Discussion about the State of the US Patent System

In the wake of the $1 billion jury decision in Apple v. Samsung, there has been — and there will continue to be — discussions about whether the pro-IP policies that the US has advanced over a period of decades are actually helping to promote innovation or whether they have gone too far and are ultimately impeding innovation and harming consumers.

The Author

Marla Grossman & Chris Israel

Marla Grossman & Chris Israel

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 3 Comments comments.

  1. Robert K S September 26, 2012 11:36 am

    Why is NOBODY asking where the Section 3(l) “Effect on Small Business” report is? It was due no later than the 1-year anniversary. It seems the PTO, the White House, the Congress, and the SBA have all forgotten all about this mandate.

  2. Anon September 28, 2012 6:51 am

    Robert,

    Still no sign on the USPTO website.

    However, I did notice the following which I had previously missed, and it does not bode well for timing:

    by June 16, 2012, the USPTO must report to Congress the findings of the study and provide recommendations for establishing the availability of independent confirming genetic diagnostic test activity.

    On August 28, 2012, the Department of Commerce sent a letter to the House and Senate Judiciary Committee leadership updating them on the status of the genetic testing report. The letter stated in part: “Given the complexity and diversity of the opinions, comments and suggestions provided by interested parties, and the important policy considerations involved, we believe that further review, discussion and analysis are required before a final report can be submitted to Congress.” To that end, the USPTO plans to organize an additional public hearing in late Fall 2012, review the comments received during the last year, and then finalize its recommendations to Congress.

    Two and a half months late in telling Congress that it will be at least six months late with the mandated report.