UL Lafayette: Intellectual Property: Recent Changes in U.S. Patent Law

UL Lafayette: Intellectual Property: Recent Changes in U.S. Patent Law: "

Recent Changes in U.S. Patent Law
PATENT LAW YOU CAN USE™ By Howard M. Eisenberg © 2000
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Abstract - On November 29, 1999, several changes were made to the U.S. Patent laws. The changes most relevant to companies and to university technology offices include provisions for prior user rights for business methods, publication of U.S. patent applications, guarantee of a 17-year patent term, and a new optional reexamination procedure that allows for increased involvement of third parties. On November 29, 1999, President Clinton signed into law the American Inventors Protection Act. This law contains several provisions, including the First Inventor Defense Act which provides a prior use defense for business method inventions, the Domestic Publication of Foreign Filed Patent Applications Act which provides for publication of U.S. patent applications that are also filed in foreign countries, the Patent Term Guarantee Act which guarantees a patent term of at least 17 years if certain requirements are met, and the Optional Inter Partes Reexamination Act which provides for third party reexamination requesters to participate throughout a reexamination proceeding. I. First Inventor Defense Act Following a recent decision by the Court of Appeals for the Federal Circuit(1), business methods are now considered to be patentable. This decision caused some distress in the business community because of the fear that a patentee could force a competitor to stop using a business method that the competitor had been secretly using for some time. Another concern was that the only way that companies could prevent the possibility that a competitor could patent the way that they did business was to publicly disclose their methods. This would destroy the trade secret status of the methods. The First Inventor Defense Act addresses these concerns. The new law provides a "prior use" defense against infringement for those who have previously commercialized a business method. This law permits companies to keep their business methods secret with less risk that a later patentee of their business method will be able to enjoin them from using the method or be able to sue for patent infringement. The prior use defense is only available against business methods, not other types of patents, and requires the following conditions. First, the business method must have been reduced to practice at least one year before the patent application for the business method was filed. Second, the method must have been used commercially at least one day before the application was filed. These two facts must be established by clear and convincing evidence. The defense has several significant limitations. The prior use defense will be unsuccessful if the party using the business method derived the method from the patentee. The defense may only be asserted by a party that performed the acts required to establish the defense. What this means is that the prior use defense may not be licensed, assigned, or otherwise transferred to a third party except when the method is part of a transfer or assignment of the business in which the method is used. In order to invoke the defense, the prior use must be in the United States. Also, a non-profit entity may employ the prior use defense only for continued use by the non-profit entity and may not use it in regards to any later commercialization or use outside the non-profit entity. The provisions of the First Inventor Defense Act took effect on November 29, 1999. II. Domestic Publication of Foreign Filed Patent Applications Act Under previous U.S. patent law, patent applications were maintained in secret until they issued as patents(2). This differed from the situation with patent applications that were filed in foreign countries that publish patent applications 18 months after filing. Under the new law, U.S. patent applications will be published 18 months after filing. The publication will occur unless the application has been abandoned before publication, is subject to a secrecy order by the government, or the applicant requests that the application not be published. Also, provisional patent applications and design patent applications are not to be published. In order for an applicant to prevent publication of a patent application, the applicant must accompany a request with a certification that the application has not been filed, and will not be filed, in an international jurisdiction that requires publication of patent applications. If the applicant later files in such an international jurisdiction, the applicant must notify the U.S. Patent Office within 45 days of the foreign filing. The U.S. Patent Office will then publish the application at the 18 month date. Failure to timely notify the U.S. Patent Office of the foreign filing may result in abandonment of the U.S. patent application. Often, the corresponding foreign filed patent application is less extensive than that which is filed in the United States. In this case, the applicant may, within 16 months of the U.S. filing, redact portions of the U.S. patent application that are not contained in the foreign application. In this way, only the portions of the U.S. application that are foreign filed are published. Publication of U.S. patents is an important issue because trade secrets that are disclosed in a patent application will be published, even if the application never issues as a patent. However, the impact of this is minimized somewhat because only the portions of an application that are foreign filed will be published in the United States, and these portions would have been published anyway by the foreign jurisdiction. The new law also contains a provision that benefits the applicant. Under the new law, once a patent application is published, the applicant has a provisional right to a reasonable royalty during the time between the publication date of the application and the issue date of the patent. The right is provisional because it can be asserted only if the application does eventually mature into a patent. The new provisional right to a royalty has several limitations. First, it only applies when the invention claimed in the patent is "substantially identical" to the invention that was claimed in the published application. This can be a very significant limitation because claims are often changed dramatically during prosecution of an application. Also, the applicant must provide an accused infringer with actual notice of the published application and explain how the claims are being infringed in order to be entitled to royalties under this law. Another aspect of the new publication law is that published U.S. patent applications are now prior art against other patent applications as of the date they are filed, whether or not the application ever issues as a patent. Previously, U.S. patent applications were not prior art unless they issued as a patent. The new law regarding publication of patent applications goes into effect for all patent applications filed on or after November 29, 2000. III. Patent Term Guarantee Act In 1995, the patent laws were changed so that a patent would be effective from its date of issuance until a date 20 years from its filing date. Before then, a patent expired 17 years from its date of issue. Under the new Patent Term Guarantee Act, the term of a patent will be extended to be at least 17 years if the prosecution of the patent lasted more than three years. In these cases, the patent will be accorded an additional day of pendency for each day in excess of 14 months that the Patent Office failed to issue a first Office Action and for each day in excess of 4 months that the Patent Office fails to respond to other submissions by the applicant. In addition, the patent term will be prolonged by one day for delays due to interference proceedings, secrecy orders, and appellate review if the review results in a reversal of a previous determination of lack of patentability. The adjustments in patent term will be reduced by any period of time in which the applicant failed to exercise reasonable efforts to conclude patent prosecution. For example, each day in excess of three months for an applicant to respond to an Office Action will result in a one day decrease in the patent term adjustment. Therefore, it is important to be diligent in prosecuting patent applications and to avoid extensions of time in responding to the Patent Office whenever possible. The Patent Term Guarantee Act applies to all patents resulting from patent applications filed on or after May 29, 2000. IV. Optional Inter Partes Reexamination Act Any party may request that the Patent Office reexamine an issued patent by submitting to the Patent Office prior art that is pertinent to the issue of patentability(3). Under present law, following the request, the party requesting reexamination plays no further part in the reexamination procedure. Under the new Optional Inter Partes Reexamination Act, the requesting party may now elect to participate throughout the reexamination procedure. The requesting party may provide one response for each of the patentee’s responses within thirty days of the filing of the patentee’s responses. The new law permits the third party requestor to appeal an adverse decision in the reexamination procedure to the Board of Patent Appeals and Interferences. However, the third party may not appeal to the federal courts. In contrast, the patentee may appeal an adverse reexamination decision to the Board or to the courts. There are several limitations to the new reexamination law that make it unlikely that many third parties will elect to use it. A third party may not request a reexamination on the same basis that could have been raised in a previous civil action in which the third party failed to prove invalidity of the patent. Also, a third party may not request more than one reexamination on the same issues. Most importantly, a third party may not later litigate any issue that was raised, or that could have been raised, during the reexamination proceeding. Because a third party requestor gives up important rights to later litigation if active participation in reexamination is elected, most requestors will probably prefer to conduct reexamination in the old way, that is by submitting the request for reexamination and then allowing the procedure to take place solely between the Patent Office and the patentee. The law regarding the new optional reexamination procedures took effect on November 29, 1999. There are several other minor changes to the new patent laws. For a more detailed analysis of the new patent laws or to determine if they apply to your situation, please contact your patent counsel. 1 State Street Bank and Trust Co. v. Signature Financial Group, 149 F.3d 1368, 47 U.S.P.Q.2d 1596 (Fed. Cir. 1998). 2 I mentioned the secrecy of pending U.S. patent applications in my article in BioPharm in May 1999. 3 37 C.F.R. §1.501 to §1.570
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Reprinted by permission from the author. Howard M. Eisenberg is a biotechnology and life sciences patent attorney who represents a number of university clients. His particular area of concentration is in patents involving human or veterinary medicine.

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