New patent legislation would rectify some of the damage done by several court rulings and by Congress. It would reestablish the fundamental constitutional principle that a U.S. patent secures certain rights in private property.
Reps. Thomas Massie (R-KY) and Marcy Kaptur (D-OH) have introduced H.R. 6264, the Restoring America’s Leadership in Innovation Act.
H.R. 6264’s supporters include IEEE-USA, the Small Business Technology Council, the Manufacturing Policy Project, U.S. Business & Industry Council, American Business Defense Council and Conservatives for Property Rights.
The Innovation Alliance, comprised of R&D-based innovator companies in various industry sectors, praised the legislation in a statement. A blog from George Mason University’s Center for the Protection of Intellectual Property discussed the bill and the need for it. Conservatives for Property Rights tweeted its support for Massie’s and Kaptur’s bill.
The Massie-Kaptur bill’s Section 2 gives findings, stating that the U.S. government’s job is the protection of life, liberty and property, that this includes intellectual property, and a patent secures the inventor’s private property rights.
This is important to put in legislation because the U.S. solicitor general and the Patent and Trademark Office under Director Michelle Lee and Acting Director Joe Matal have advocated that patents secure nothing more than “public rights.” That theory degrades the property rights in an invention, which as any grade schooler can figure out, is a form of property that didn’t exist until the inventor created it. There’s nothing “public” about the new property or the rights to it. RALIA makes this simple proposition clear.
Section 3 restores the first-to-invent standard and ditches first-to-file, and restores the pre-America Invents Act one-year grace period before an inventor must apply for a patent. The first-to-invent basis for awarding a patent lines up with the language of our original patent law, the “first and true inventor.” It democratizes American patents — if you invented it, it inherently belongs to you and thus you should get the patent.
The first-to-file standard has diminished exclusive rights, particularly for independent inventors, and adversely “impacted collaboration among research groups,” Industry Week reports. IEEE-USA notes the “greatly increased uncertainty,” which tends to scare off investors.
A meaningful grace period is important. Before AIA, inventors had one year from first public disclosure or sale before they had to file for a patent. This enabled inventors to discuss the invention with potential investors, work with others on perfecting the design and test and improve the invention before putting in paperwork at the PTO.
Since AIA, “The grace period is so limited that inventors would be better served to consider the grace period as nonexistent, or perhaps only available to possibly fix an unfortunate mistake,” says Gene Quinn.
Coupled with AIA’s basing prior art on “effective filing date” of an invention anywhere in the world, the interaction with the first-to-file standard and the loss of the grace period hurts innovation and the ability to reduce an invention to practice without risk and greater cost.
Section 4 repeals AIA’s provisions that established inter partes review and postgrant proceedings, where the Patent Trial and Appeal Board invalidates patents at rates considerably higher than in federal court — about 80 percent of patent claims are cancelled at PTAB versus about 30 percent in an Article III court. Around 87 percent of challenged patents get hauled before both a real court and PTAB. Faster, better, cheaper it’s not.
There’s a strong argument for doing away with PTAB’s reviews. The due process and judicial standards at PTAB include zero standing requirements that would keep out speculators and mischief makers, allow adversaries to pursue repeated challenges against the same patents (even those a federal court has previously upheld), lower standard of proof, loosey-goosey evidentiary standards, a far broader standard of claim construction and worse. If PTAB reviews essentially duplicate Article III courts, but without the fairness protections and certainty once a case is decided, then get rid of the extraneous forums. That’s what RALIA does.
Section 5 abolishes PTAB and revives the former pre-AIA Board of Patent Appeals and Interferences. This removes the oppositional administrative nightmare AIA set up and restores the means for inventors to work with PTO in case patent examination ended in denial of a patent. BPAI could invalidate a patent only in ex parte reexamination. The patent owner could appeal that invalidation determination to the Federal Circuit (a federal court with patent expertise).
This provision of RALIA complements Section 4. There’s need for the administrative function BPAI formerly fulfilled. Ex parte reexams from 1981 to 2016 saw a much more reasonable set of outcomes. Of the 10,979 accepted ex parte petitions, only 12 percent saw all of a patent’s claims cancelled — much fairer and exceedingly more reasonable than AIA IPRs’ 65 percent cancellation of all of a patent’s claims. Two-thirds of patents in pre-AIA ex parte reexams saw some claims confirmed and 21 percent of patents had all their claims confirmed. A return to reviewing patents in examinations, with opportunity to amend claims, promotes better patent quality, greater ability to benefit from the right of exclusivity and a quieting of title that’s sorely missing post-AIA.
Section 6 ensures full funding of PTO. Under federal budget constraints known as sequestration, part of fees paid to agencies, including the PTO, gets siphoned off to the U.S. treasury. Ending fee diversion from PTO has enjoyed broad support (except by Congress’s appropriators). These are user fees, not general tax revenue. Full funding of the PTO promotes faster patent examination and higher patent quality. This is especially important when the patent term starts upon patent application, rather than the former start upon patent issuance.
Section 7 restores patentable subject matter as it was before the Supreme Court messed things up. This provision clarifies that any threshold assessment of whether a claimed invention is patent-eligible would result in patentability unless it “exists in nature independently of and prior to any human activity, or exists solely in the human mind.” The bill says that 35 U.S.C. Sec. 101 patentability determinations must be made independent of novelty, usefulness and obviousness, as well as beyond the claimed invention’s “inventive concept.”
This provision effectively overturns adverse rulings in AMP v. Myriad Genetics, Mayo Collaborative Services v. Prometheus Laboratories and Ariosa Diagnostics v. Sequenom, involving life sciences technologies such as diagnostics and genetics-based therapies. “Unfortunately, the Supreme Court’s recent decisions in Mayo and Myriad have substantially impaired the ability of innovators to obtain effective patent protection for DNA molecules used in diagnostic testing and for diagnostic testing methods per se,” CPIP observes.
This measure also corrects the court’s errant opinions in Alice Corp. v. CLS Bank and Bilski v. Kappos, which have disrupted software patentability. Software is in pretty much everything from automobiles to medical devices to ATM machines to microchips. Protecting the software code by copyright doesn’t do the job; you need a patent to protect the function or process that the software accomplishes.
Section 8 repeals the AIA provisions that specify grounds for novelty of an invention, restoring the pre-AIA 35 U.S.C. Sec. 102. This part of the Massie-Kaptur bill adds language that prohibits any information shared with the PTO about an invention from becoming prior art unless and until a patent is issued.
This section realigns our law’s determination of the newness of an invention or discovery with Section 3’s pre-AIA first-to-invent basis for awarding patents and one-year grace period. Section 8’s confidentiality measure ensures PTO doesn’t make preissuance disclosures about a patent-pending invention.
Which leads to Section 9. Added to Title 35 is a provision clarifying and strengthening — and faithfully reflecting the language of the Constitution — that a patent secures a private property right in an invention or discovery. The measure restores the right to be heard in an Article III court, just as the Fifth and Seventh Amendments guarantee. This measure is badly needed in light of the errant ruling in Oil States that relegates patent rights to nothing more than being considered a “public franchise.”
This section also fixes the thrust of Impression Products v. Lexmark International, which disrupted conditions a patent owner can place on licensees regarding postsale use or resale. The Lexmark opinion has adverse implications for patent licensing and assignment along with the longstanding ability to pursue patent infringement over disallowed aftermarket conduct or practices. Lexmark weakens patent rights, reduces patent values and diminishes the right to exclude. This provision revives these patent rights.
Section 10 ends the automatic publication of U.S. patent applications 18 months after being filed. This measure complements Section 8’s confidentiality requirements regarding prepatent inventions. As Pat Choate and Joan Maginnis report, automatic publication can have the unfortunate effect of disclosing inventions before patent examination is completed. Automatic publication harms U.S. competitiveness by giving the Chinese and other intellectual property thieves a head start developing a market for an applied for, but as yet unpatented new invention. A prepatent published application can risk rendering the invention no longer novel.
Section 11 of RALIA strengthens the statutory presumption of validity of an issued U.S. patent. This presumption applies in any federal or state venue. It applies to each patent claim regardless of whether it depends on another claim. Thus, an invalid claim won’t automatically cancel other dependent claims; each one must be assessed on its own merits and each one afforded the validity presumption. The bill clarifies that the person asserting patent invalidity bears the burden of proof, against the patent or any challenged patent claim. The challenger has to prove invalidity by a clear and convincing evidence standard— the standard level of proof in other property cases.
These measures set forth clear, simple elements that make it harder to invalidate an issued patent. It would reverse the easy patent cancellation seen in the age of PTAB and get the Federal Circuit straightened out. The combination of strong presumption on the whole and of each part, accompanied by the challenger carrying the burden of proof at every level, should help protect intellectual property rights against gamesmanship and expensive legal tactics employed as weapons rather than legitimate legal settling of a fact dispute.
This section creates a new protection of patent property rights. Under RALIA, the term of a challenged patent halts for as long as a patent validity case goes on. It’s like stopping the clock in basketball for the foul shots.
Section 12 rebuffs the eBay v. MercExchange ruling that makes it near-impossible to get a permanent injunction against a patent infringer. This bill directs courts to presume irreparable harm by patent infringement. The presumption is rebuttable by clear and convincing evidence. All patent owners, whether or not they make or sell their patented product, and exclusive licensees obtain this return to pre-eBay injunctive relief.
The eBay court took away the ability to stop an infringer from continuing to make, sell or use a patented invention. The only recourse patent owners now have is to try to get a licensing agreement. But what’s the leverage to force infringers to the bargaining table? And if they do negotiate, infringers have leverage to underpay what the invention’s worth. This erases the right to exclude that a patent’s supposed to give.
Section 13 restores the pre-AIA best mode requirement. Patent applicants again have to disclose the “preferred embodiment” of the invention, the best way that the invention should be reduced to practice. This requires the inventor to commit to the single-best means of carrying out the invention. It’s an important part of the patent bargain — full disclosure of the metes and bounds as the inventor intends them.
In conclusion, like the STRONGER Patents Act, RALIA seeks to change the direction of our slipping patent system. This bill simply takes a few more steps in the new direction. It’s premised on private property rights and secure rights in one’s inventions, restoring the certainty, enforceability and reliability of a U.S. patent. These reforms would be highly constructive.
Image Source: Deposit Photos.