Patent Baristas

Senators Patrick Leahy, Orrin Hatch, and Chuck Grassley introduced The Patent Reform Act of 2011, which has been placed on the Judiciary Committee’s agenda for their first executive business meeting. The provisions and language of the bill look a lot like items in the long-pending legislation that were part of a compromise that was announced last Congress.

Sen. Leahy said that the new legislation is intended to accomplish three primary goals: (1) transition to a first-to-file system; (2) improve patent quality; and (3) provide more certainty in litigation.

First-to-File System

Similar to previous patent reform bills, the Patent Reform Act of 2011 proposes to change the U.S. patent system from a first-to-invent to a first-to file system in an effort to harmonize the U.S. patent system with those of other countries. The new first-to-file system will award patents to the earliest-filed application for a claimed invention, as well as provide inventors with a one-year grace period to file an application after public disclosure of the claimed invention by the inventors.

‘‘(b) EXCEPTIONS.— ‘‘…A disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention— if the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.

The current interference system in place for determining inventorship disputes will be replaced with a derivation procedure.

Patent Damages

The Act is intended to provide more certainty in damages calculations and enhanced damages.  Specifically, the Act includes a rigorous gate keeping role for the court, pursuant to which judges will assess the legal basis for the specific damages theories and jury instructions sought by the parties.  The gate keeping provisions will ensure consistency, uniformity, and fairness in the way that courts administer patent damages law.  The Act also permits a party to request, and requires a court to grant absent good cause, that the trial be sequenced such that the trier of fact decides questions of validity and infringement prior to damages.

“The court shall identify the methodologies and factors that are relevant to the determination of damages and the court or jury shall consider only those methodologies and factors relevant to making such determination.”

In addition, the Act improves the law of willfulness and enhanced damages.  It codifies the case law that holds that a defendant may only be found to have willfully infringed a patent if the plaintiff demonstrates by clear and convincing evidence that the infringer acted with objective recklessness and the objectively-defined risk was either known or so obvious that it should have been known b y the infringer.

False Marking

Similar to last year’s compromise legislation, the Patent Reform Act of 2011 also proposes to impose more restrictive requirements on who has standing to bring a claim for false marking under 35 U.S.C. § 292. Under the proposed legislation, False marking cases will only be allowed if filed by persons who have actually been harmed by the alleged misconduct. False marking cases would also include a statute of limitations that limits the time to file such cases to 10 years after the alleged misconduct or 1 year after the plaintiff in such an action became aware of the alleged misconduct.   The United States retains the ability to bring a claim for false marking and recover the up to $500 fine per article without needing to demonstrate any competitive injury due to the violation.

Post-Grant Review Procedures

The Patent Reform Act of 2011 also includes a revised “inter partes review” procedure and a new “post-grant review” procedure. The inter partes review procedure includes proposed procedural changes that are intended to shorten the review time for most reviews to 12 months and are conducted by Administrative Patent Judges.  The challenge will be heard by a panel of three Administrative Patent Judges, and its decision is appealable directly to the Federal Circuit.. Upon meeting the threshold requirement of establishing a “reasonable likelihood” of prevailing, any party may challenge the patentability of one or more of the issued claims on the basis of any patent or printed publication. The petition for review must be filed within nine months of the grant of the patent or the conclusion of any post-grant review, whichever occurs later.

An accused infringer may not seek review (1) if it has already filed a lawsuit in district court challenging the patent, or (2) more than three months after the date the accused infringer must answer, or otherwise respond to, a complaint for patent infringement filed by the patentee.

The new post-grant review procedure allows petitioners to challenge the validity of issued claims on any ground of patentability. The Act includes a “reasonably could have raised” estoppel standard, preventing a challenger from raising in court only an argument that reasonably could have been raised during an inter partes review that the challenger instituted.

Additional Provisions

Similar to the versions proposed in past years, the Patent Reform Act of 2011 also proposes changes directed to the following:

• Allowing third parties to submit and explain prior art, and other pertinent information concerning claim construction, for consideration by the patent examiner
• Removal of residency restrictions on Federal Circuit judges
• Elimination of failure to disclose best mode as an infringement defense
• Creation of a “supplemental examination” procedure to cure potential inequitable conduct
• Fee setting authority granted to the USPTO

In addition, the Act contains a specific provision precluding the issuance of any patent claims containing subject matter directed to tax strategies.

Before you get all excited about this, don’t forget we’ve already had the Patent Reform Act of 2011, the Patent Reform Act of 2010, the Patent Reform Act of 2009, the Patent Reform Act of 2008, the Patent Reform Act of 2007 …