The long-awaited revision of the US Patent Law was consolidated with provisions intended to curtail cybersquatting and to amend the law relating to satellite home viewing and rural local television signals to form the Intellectual Property and Communications Omnibus Reform Act 1999. This was in turn incorporated into the Budget Bill passed by both Houses of Congress on November 19, 1999. It was signed by the President on November 29, 1999 and became Public Law 106 - 113. The provisions relating to cybersquatting are discussed elsewhere in this Information Letter. The revisions to the patent law address seven major topics and contain a further group of miscellaneous amendments. The major topics are as follows:

These provisions impose disclosure requirements on invention promoters and provide for a cause of action for any customer of an invention promoter who has injured a customer by "any material false or fraudulent statement or representation or any omission of material fact".

Patent Fee Reductions

Fee reductions apply to patent filing fees, fees for reissue applications and PCT national phase entry where the PTO was the ISO but not the IPEA and the first maintenance fee. All of these became effective on December 29, 1999.

First Inventor Defense

The new first inventor defense (sometimes referred to as a prior user defense) became effective on November 29, 1999, except that it shall not apply to any action for infringement that was already pending on that date. The defense applies only to actions for infringement of claims that may be infringed by "any method of doing or conducting an entity's business". The exact scope of this provision is not entirely clear. The Senate Committee report refers to the need for such a provision as becoming more urgent following the Federal Circuit's decision in State Street Bank v. Signature Financial Group as a result of this decision having held to be patentable various business methods which until recently had been thought not to be patentable. The Senate Committee Report indicates that the provision is not intended to be confined to the facts of that case, commenting:


A further comment indicates that the provision is not intended to be restricted to any particular form of claims if the essence of what is claimed is in fact a business method, for example it is intended to cover a machine that has been programmed to carry out a business method. The Senate Committee's comments on the bill point out that trade secret law serves the public interest in a different way from patent law by protecting investments in new technology and notes that "it would be administratively and economically impossible to expect an inventor to apply for a patent for all methods and processes now deemed patentable".

The provision applies only if the party being sued had, acting in good faith, reduced the subject matter in question to practice at least one year before the effective filing date of the patent being sued on. The effective filing date is defined as including validly claimed priority dates. If the requirement is met it protects two different types of activity depending on the nature of the party asserting the defense. These are where there had been use in good faith before the effective filing date of the patent in suit that is either commercial use (which is defined as including filing an NDA (New Drug Application) or similar application for marketing approval) or in the case of a non-profit research laboratory or a non-profit entity "such as a university, research center or hospital" any use "for which the public is the intended beneficiary". The defense is personal, does not render the patent invalid and in cases where a business is sold is confined to sites where the invention was used before the effective filing date of the patent or the date of the assignment, whichever is later. The defense does however carry over to those who acquire a "useful end product produced by the patented method". In the case of non-profit organizations the defense is confined to use by the organization in question and does not extend to any subsequent commercialization of that work. Pleading such a defense which fails shall be a ground for award of attorney fees to the prevailing party.

The patent term extension provisions apply to any utility or plant patent application filed on or after May 29, 2000. The provisions are aimed at ensuring that except where the patent is subject to a terminal disclaimer, the term is extended for one day for each day that prosecution has been delayed as a result of delays caused by the PTO. The changes remove the caps on the terms of possible extensions as a result of secrecy orders, interferences and appeals that were introduced when the term of a patent was changed from seventeen years from grant to twenty years from filing and adds to the situations in which extensions may be granted. The committee report states that the objective is to ensure that "no applicant diligently seeking to obtain a patent will receive a term of less than seventeen years". Delays that will trigger such extensions include: failure to issue a first action within 14 months, failure by the PTO to respond to an applicant's response to an official action or to an appeal within four months of the applicant's response or appeal and any overall delay extending total pendency to beyond three years from the actual date of the application in the United States, which in the case of PCT applications is the date of national phase entry in the United States. However, no account is to be taken of delays requested by the applicant, including obtaining extensions of term for response to official actions unless the applicant "in spite of all due care" was unable to respond within the three-month period. Rules are to be made for establishing the need for extension and for appeals against initial determinations of the duration of any such extension. Appeals from any determination of an extension under this provision are to be by way of a civil action brought before the District Court of the District of Columbia.

Early publication will apply to applications filed on or after November 29, 2000. The provision is intended to take place "promptly after the expiration of a period of eighteen months from the earliest filing date for which a benefit is sought". There will be no early publication of design patent applications. However, if the applicant certifies that the application has not been and will not be the subject of an application in another country or under an international treaty that results in early publication, there shall be no early publication of the US application. If such a certification is made but the applicant proceeds with a foreign filing that will result in publication, the PTO must be advised within 45 days. Failure to do so will result in the US application being deemed to be abandoned unless a showing is made that the delay was unintentional. In the case where the US application includes subject matter that will not be published abroad, the applicant can request that a redacted version of the US application is published. A consequence of this change is that provision is made for the adoption of rules to tighten up the requirements as to when priority of some other application must be claimed. Another consequence is that it is now expressly stated that any pre-grant protest proceeding is subject to the express consent of the applicant. The PTO is to charge fees to cover the publication costs. These will be levied at the point at which the application is allowed.

Once publication has occurred or, in the case of a PCT application designating the United States the PTO receives a copy of the PCT publication if it is in English or an English translation of the publication if the PCT publication is not in English, the applicant has provisional rights to obtain a reasonable royalty from any one who uses the invention as long as the invention as claimed in the early publication is "substantially identical to the invention as claimed in the published application". Such rights are, however, subject to a requirement that the alleged user is given actual notice of the publication and in the case where the rights derive from a PCT publication that is not in English, an English translation of the publication. Any claim for compensation under this provision must be made within six years of the grant of the patent. At least until the law is clarified as to how similar the published claims and the granted claims must be for compensation to be paid, this provision will probably lead to an increase in the number of claims included in US patent applications to try to ensure that anything for which one may wish to seek compensation falls within a claim which is unchanged between the first publication and the grant of the patent. Early published applications will in general be effective as prior art under 35 USC 102(e). Additionally PCT applications that are published in English will have a prior art effect from their international filing date.

Optional inter partes Re-examination forms the subject matter of a new chapter added to the statute. This chapter became effective on November 29, 1999 and applies only to patents issued after that date. This form of re-examination is intended to be an alternative to the pre-existing form of re-examination which is now to be known as "ex parte reexamination". The hope is that the provision of an inter partes reexamination procedure may encourage third parties to use reexamination procedures for determination of patent validity issues and so reduce the volume of patent litigation in the district courts.

Inter partes reexamination may be requested by any third party but the real party in interest must be disclosed. Prior art to be considered is confined to prior patents and publications. Inter partes reexamination differs from regular reexamination in that a third party requester is permitted to submit comments on official actions and the patentee's responses thereto as long as such comments are filed within 30 days of the patentee's response to the action. However, it seems doubtful that these provisions will be particularly useful since they are still biased in favor of the patentee. Thus, whereas, if the reexamination results in a final rejection of a claim, the patentee may appeal against that rejection first to the PTO's Board of Patent Appeals and Interferences and if again unsuccessful may appeal to the Court of Appeals for the Federal Circuit, whereas a third party who requested reexamination may appeal a decision favorable to the patent holder only to the Board and has no possibility of appeal to the Federal Circuit. Additionally, any party that requests inter partes reexamination will be estopped from challenging at a later time in any civil action any fact that was established during the inter partes reexamination procedure unless that fact determination is later found to be erroneous based on information that was unavailable at the time of the inter partes reexamination. Finally the patent owner, but not the third party may request a court, before which litigation relating to the patent involved in the reexamination is pending, to stay the litigation and the court must grant that stay unless it "determines that a stay would not serve the interests of justice".

The reorganization of the PTO includes redesignation of the PTO as "an agency" of the United States within the Department of Commerce (as opposed to "an Office in the Department of Commerce" as was previously the case) and designating the head thereof as "Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office". There are to be separate Commissioners for Patents and for Trademarks. Additionally Public Advisory Committees are to be formed for each of the patent and trademark operations of the PTO whose purpose is to "review the policies, goals, performance, budget and user fees of the PTO in their respective areas". As an agency, the PTO is to be exempt from government-wide personnel ceilings and it is intended that it will operate without micro- management from the Department of Commerce whose role is to be that of providing guidance in policy only.

The miscellaneous provisions include:

Although included in the Act in the sections relating to the Patent Term Guarantee, one further provision which is really miscellaneous in character is a provision that after final rejection of an application it will be possible to continue prosecution by the simple expedient of paying a fee. This provision does not apply to design applications and came into effect on May 29, 2000 and applies to all applications for which a regular application or a PCT application designating the United States was filed on or after June 8, 1995. It therefore has an effect similar to the transitional provisions enacted to effect removal of finality in some cases when the patent term was changed to comply with TRIPS and may make continuing prosecution applications redundant.