We have two papers on line the 1999 Patent Law Amendments and the related rule changes. This paper is more brief, so if you would like to see a more in depth analysis, we refer to our other paper United States - 1999 - 2000 Revisions of the Patent Law and Rules. Otherwise, read on!
The long-awaited revision of the U.S. 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 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 revisions to the patent law address seven major topics and contain a further group of miscellaneous amendments. The major topics are as follows:
1) Provisions for protection of inventors using the services of invention promotion services;
2) Reduction of some patent fees and provision for increase of some trademark fees;
3) Establishment of a first inventor (prior user) defense for prior users of business methods to allegations of patent infringement (referred to in the statute as a "First Inventor Defense");
4) Provision for extension of patent term if the application has been unduly delayed in prosecution in the PTO through no fault of the applicant;
5) Early Publication of U.S. patent applications where equivalent applications are published abroad and provision of a right to compensation from those who use the invention after such publication;
6) Optional Inter Partes Re-examination;
7) Amendments to the organization of the USPTO.
Proposed rules have been published with respect to optional inter partes reexamination, early publication of U.S. patent applications and to implement the changes relating to patent term extension (adjustment). An interim rule has been issued to address the changes in examination and provisional application practice as set out in the new law.
1. Curbing Deceptive Practices of Certain Invention Promotion Companies
These provisions impose disclosure requirements on invention promoters and provides 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."
These provisions came into effect 60 days after enactment of this new legislation, i.e., on January 28, 2000. They appear at 35 USC § 197.
2. Patent Fee Reductions and Adjustment of Trademark Fees
Fee reductions apply to patent filing fees, fees for reissue applications and PCT national phase entry where the USPTO was the ISO but not the IPEA (all reduced to $690) and the first maintenance fee (reduced to $830). All of these fee changes became effective 30 days after enactment, i.e., on December 29, 1999.
35 USC § 41(a) is amended to reflect these changes.
3. 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 is 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 but indicates that the provision is not intended to be confined to the facts of that case, commenting:
The first inventor defense is not limited to methods in any particular industry, such as financial services, but applies to any industry which relies on trade secrecy for protecting methods of doing or conducting the operations of their business.
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 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 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 assigned 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 is confined to use 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.
35 USC § 273 has been added to the Patent Law to reflect these changes.
4. Patent Term Guarantee
The patent term extension provisions will 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 an 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 applicants 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 (that is in the case of PCT applications 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.
35 USC § 154(b) and 35 USC § 132 have been revised to reflect these changes.
Under the proposed rules (see the Federal Register dated March 31, 2000, pp 17215 et seq.), almost anything that could be said to be the fault of the applicant will be treated as a failure to diligently seek the grant of a patent and will be counted against him or her so as to take days off any extension that might result from the delays caused by the PTO. Thus, among other things, failure to file a declaration or oath with the application, failure to include all papers with a PCT national phase entry, failure to include an abstract or a title in the application, failure to comply with filing the specification in compliance with the formality rules, including those relating to sequence listings, delaying filing of a preliminary amendment so that the examiner has to issue a supplemental action, failure to reply fully to an office action, failure to reply to most office actions within three months (unless the applicant can show that despite all due care the applicant was unable to reply within three months), filing a supplemental response to an office action, failure to file an appeal brief with a notice of appeal and filing an amendment after a notice of allowance, can all result in time being deducted from any extension that might be allowed. The period of any adjustment is to be set out in the notice of allowance, and applicants will have the right to petition for a different period no later than the date of payment of the issue fee.
5. Early Publication
Early publication will apply to applications filed on or after November 29, 2000. The publication 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 U.S. 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 U.S. application being deemed to be abandoned unless a showing is made that the delay was unintentional.
In the case where the U.S. application includes subject matter that will not be published abroad, the applicant can request that a redacted version of the U.S. application be published. A consequence of this change is that provision is made for the adoption of rules (see interim rule 37 CFR 1.78(a)(3) 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 U.S.P.T.O. 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 U.S. 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.
The Patent Law has been amended at 35 USC § 102(e), 35 USC § 199(b), 35 USC § 122, 35 USC § 154 and 35 USC § 374 to reflect these changes.
The comments on the proposed rules (see the Federal Register dated March 31, 2000, pp 17946 et seq.), make it clear that the USPTO intends to tighten up compliance with the rules that already exist relating to formalities in documents that are to be published, so as to ensure that the documents are in good form for publication.
Specific requirements of the rules include:
1) Any claim to convention priority in a non-PCT utility or plant patent application must be made by the later of four months from the actual filing date and sixteen months of the claimed priority date, this term being inextensible;
2) Essentially similar requirements apply in respect of continuations, continuations-in-part and divisional applications claiming priority from earlier non-provisional U.S. applications;
3) In general, objections to drawings will have to be dealt with promptly;
4) Provision is made for third parties to submit prior art to the USPTO that may be relevant to the patentability of an early-published application;
5) Requests that a particular application is not subject to early publication must include a certification that "the invention disclosed in the application has not been and will not be the subject of an application filed in another country, or under a multilateral agreement, that requires publication at eighteen months after filing";
6) Provision is made for rescinding a request that an application is not subject to early publication;
7) If a request has been made to avoid early publication and the applicant subsequently files an application for the invention in a country or under a treaty that provides for eighteen month publication, the applicant must advise the USPTO of this within forty five days of that foreign filing, failure to do which will result in the abandonment of the U.S. application affected;
8) If the applicant wishes a redacted copy of its U.S. application to be published because the U.S. application contains additional subject mater that is not included in any foreign applications that are to be published, the redacted version must be filed within sixteen months of the earliest filing date from which benefit is claimed and the redacted version must be submitted in accordance with the USPTO's electronic filing system requirements and be accompanied by additional paper copies of the foreign filed documents and of the U.S. application showing the redactions and various certifications; and
9) provision is made for submission of a translation of a PCT application published in a language other than English so as to obtain the right to claim compensation from anyone using the invention claimed therein.
6. Optional Inter Partes Reexamination
Optional inter partes reexamination 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 re-examination in that a third party requester is permitted to submit comments on official actions and the patentees responses thereto as long as such comments are filed within 30 days of the patentees response to the action. However, it seems doubtful that these provisions will be particularly useful since they are still biased in favor of the patent owner. Thus, whereas if the reexamination results in a final rejection of a claim may appeal against that rejection first to the PTO's Board of Patent Appeals and Interferences and if again unsuccessful may appeal to the Federal Circuit Court of Appeals whereas a third party whose request for 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 form 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 Patent Law has been amended to add 35 USC § § 311-308 to deal with these new provisions.
The proposed rules (see the Federal Register dated March 31, 2000, pp 18154 et seq.), include the following features:
1) The request for inter partes reexamination must include details of the real party in interest;
2) Once a request has been filed, an examiner has three months in which to determine whether any substantial new question of patentability has been raised;
3) If such a question is raised, inter partes examination will be ordered and "ordinarily conducted by an examiner other than the examiner responsible for the determination" that a substantial new issue of patentability had been raised;
4) Written papers filed by the patentee and the third party must not exceed fifty pages in length; and
5) Terms for a response to the examiner's actions and for comments by third parties may be set as short as thirty days and extensions will be granted only if sufficient cause is shown.
7. Reorganization of the PTO
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 U.S. 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.
These provisions came into effect three to four month after enactment of this new legislation, i.e., no later than March 29, 2000.
8. Miscellaneous Provisions
The miscellaneous provisions include:
a) Amending the law relating to provisional applications to allow filing of the "full" application on the next business day if the twelve month pendency period ends on a Saturday, Sunday or Federal Holiday in the District of Columbia and to allow them to be converted into regular applications at any time during their twelve month pendency. This provision has retroactive effect except for patents involved in litigation prior to November 29, 1999 - see 35 USC § 111(b)(5) and interim rules 37 CFR 1.7 and 1.53(c)(3);
b) A provision for convention priority to be able to be claimed form a plant variety right application filed abroad - see 35 USC § 119 ;
c) Provisions providing for the filing of patent applications and publication of patent documents in an electronic medium - see 35 USC § 22;
d) The commissioning of a study to determine whether or not requirements for deposit of biological materials in support of biotechnology patents contain potential risks for the U.S. biotechnology industry; and
e) Amendments to 35 USC §§ 102(g) and 103(c) to clean-up problems left by earlier amendments to the law so that invention abroad in a WHO country has the same prior art effect against a later invention as an invention made in the United States (i.e a foreign made invention date now becomes a sword as well as a shield) and that a U.S. patent in common ownership with a later filed application at the time of making the later invention ceases to be prior art against it for obviousness purposes thereby bringing 102(e) art into the same category as 102(f) and 102(g) art in common ownership. Effective for applications filed on or after November 29, 1999 - see interim rule 37 CFR 1.104(c)(4).
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 (See 35 USC § 132 and interim rule 37 CFR 1.114). This provision does not apply to design applications and will come 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. The interim rule makes it clear that the new provision applies only to applications on which an official action or notice of allowance has been issued and does not apply to provisional applications, design patent applications, reexamination applications or to applications filed before June 8, 1995. Interim rule 1.53(d) restricts the use of continuing prosecution applications (CPAs) as previously permitted to situations where the application from which the CPA claims priority was filed before May 29, 2000 (in the case of PCT applications entering the U.S. national phase that means national phase entry was completed by that date) and the CPA is filed before payment of the issue fee or abandonment or other termination of proceedings in the case whose filing date is claimed.
