Why being in the middle is the right place
This is part 2 of a 3-part column. In part 1, I presented a background of patent reform legislation, IPO’S positions and why IPO has struck a proper balance. In this and the next parts, I will address specific aspects of the proposed legislation. This part focuses on patent procurement and operations.
Permanent end to fee diversion, 18 month pendency and inequitable conduct reform -- and how these are connected
Congress needs to fund the USPTO properly and end the practice of fee diversion permanently. Stopping diversion on an annual basis does not immediately result in curing the problems caused by a decade of past practices. The USPTO should have
"IPO members would be willing to pay more to get higher quality patents and overall 18 month pendency from filing to grant."
at least all the money that users pay into the system to be able to plan and execute long range programs and improvements. IPO members would be willing to pay more to get higher quality patents and overall 18 month pendency from filing to grant. The USPTO is attempting to address the growing pendency problem through a set of proposed new procedural rules and fees designed to change applicant behavior. To reduce examiner workload, the USPTO has proposed rules designed to reduce the length of applications, reduce the number of claims, limit continuation applications, and shift some more responsibility to applicants to characterize prior art for the examiner, but this characterization is impractical in the absence of inequitable conduct reform.
Applicants could help the examiner by characterizing how the claimed invention differs from a prior art reference. However, they cannot do so under the present case law on inequitable conduct. Currently any statement is likely to subject them to a charge that the patent is unenforceable because of inequitable conduct, leading to prolonged discovery and expense.
IPO supports a legislative change to limit when an inequitable conduct allegation can be raised. It might be a significant improvement, for example, to prevent a defendant from engaging in discovery on this issue during the main liability and invalidity action. Instead such allegations might be raised only after a patent claim is found to be invalid because of prior art that was not considered by the examiner during prosecution, or to deal with real fraud or attempted fraud on the USPTO. Bifurcating inequitable conduct from the validity and infringement liability determination phase of the case could limit the frequency of such allegations, speed up the procedure, and reduce the costs associated with litigating inequitable conduct issues until they are relevant. Inequitable conduct could also be limited, for example, to the withholding of prior art that has been determined to invalidate the patent and was known to the applicant (the “but for” test), and intentional fraudulent acts of the patentee. Focusing on intent to defraud with clear and convincing rather than inferring inequitable conduct from the materiality of the prior art reference or evidence act or omission itself might constrain current abuses. Providing applicants with clarity on a safe harbor for characterizing prior art by clear rules would be useful for applicants to provide the USPTO with proper assistance regarding characterization of the prior art without fear of liability for good faith mistakes in judgment.
We need to encourage applicants to study the prior art before filing patents to assist examination and improve patent quality. We need to eliminate the perverse result where applicants can not fully engage examiners before filing a patent application and during prosecution.
Adopt First Inventor to file: Why it’s fair to independent inventors
Are independent inventors prejudiced by a first inventor to file rule compared with the current first to invent rule? Some independent inventors and universities have contended that the existing priority of invention statute effectively protects their ability to secure patent rights even if they are the later party to file their application. With the existence of provisional patent filings and increasing globalization is this reliance unjustified? Interferences are time consuming and expensive. Data [“Testimony of Hon. General J. Mossinghoff before the Subcommittee on Intellectual Property, Committee on the Judiciary, United States Senate July 26, 2005] does not support the independent inventor’s reliance on interferences as effectively protecting their interest when they are the junior party. In fact, the rigors of the interference evidentiary rules regarding research notebook recordation requirements, including witnessing and corroboration, due diligence, etc. tend, in my view, to favor larger, established organizations and not start ups, entrepreneurs, independent inventors or universities. I
"In fact, the rigors of the interference evidentiary rules... tend, in my view, to favor larger, established organizations and not start ups, entrepreneurs, independent inventors or universities."
do not believe that independent inventors or academics would be prejudiced by first to file, and would, in fact, likely benefit from such a change. Small inventors have contended they need more time to prepare and file patent applications than larger organizations. I think the exact opposite may be true; independent inventors are often more nimble, less bogged down with corporate portfolio management committees and procedures, and therefore much better able to compete with large companies in a first inventor to file system. We need, however, to preserve the defense of derivation, the one-year grace period to allow filing after publication of the idea, and the current rules of the Create Act. The current first inventor to file section of the bill may require technical cleanup in a number of places to align the section with the complexities of 35 USC 102, but its policy is sound.
Extend prior user rights to all subject matter
While there are substantial benefits to the public from disclosing patentable inventions in a patent, not everyone has the means to file for patent protection for everything one does, especially in manufacturing operations where patent protection, compliance monitoring and evidence of infringement are more difficult. Consequently manufacturers often make decisions not to patent some aspects of their operating know-how and instead maintain trade secrets. This manufacturing know-how may be process technology or factory equipment. In addition to the inherent risks associated with maintaining secrecy, such manufacturers run the risk that another party may independently invent the same know-how and decide to obtain patent protection. Is the prior secret user now an infringer? Resolving disputes between the patentee and prior secret inventor is complicated (for example: Was the subsequent invention truly independent? Was the prior invention really maintained in secret? Who really was the first inventor, etc?) with significant risks for both parties.
As we adopt the first inventor to file provision, we should use this opportunity to more closely harmonize our law with prior user rights as used in other countries. Since 1999 the only persons who have the right in the US to continue to practice what they had been doing previously are those practicing another’s patented method of doing or conducting business.
Such a prior user defense should not be limited to such methods and should cover
"Granting a limited prior user right to manufacturing entities who are practicing the patented invention or are proceeding towards commercialization before the patent grant will not cause companies to refrain from patenting important inventions and disclosing these ideas to the public."
all subject matter. Granting a limited prior user right to manufacturing entities who are practicing the patented invention or are proceeding towards commercialization before the patent grant will not cause companies to refrain from patenting important inventions and disclosing these ideas to the public. A lack of prior users rights contributes to unnecessary business uncertainty, to the filing of more questionable defensive patent applications that may be abandoned after publication, and to litigation.
Eliminate the subjective best mode requirement
Does the requirement for applicants to disclose the best mode contemplated by the inventors for practicing the invention at the time of filing really add anything to the quality of the patent, or does it simply introduce another subjective factual inquiry that is quite difficult to prove? Conversely, would eliminating the best mode requirement make patent application quality lower? An applicant for a patent should disclose sufficient information to clearly describe the invention and enable those skilled in the art to practice the invention. Does it make sense that the validity of the patent should also be determined by whether the applicant disclosed the best method available at that point in time? It is highly subjective to inquire into the state of mind of the inventors at a particular point in time. Subjective inquiries into patent validity are fraught with problems and lead to extensive discovery and litigation costs with very low possibilities of success. It is quite difficult to establish that the best mode was not disclosed, and challenges on this ground are not often successful. Are the majority of first filed foreign patent applications properly amended when they are filed in the U.S. to update the best mode contemplated by the inventors at the time of filing? IPO believes the best mode requirement is an unnecessary barrier to harmonization, and should be eliminated. We would be better off if the USPTO focused more attention on stricter compliance with the enablement requirement of 35 U.S.C. 112 than on this issue, which can become the subject of extensive litigation.
We should focus on patent law reform provisions that improve the quality of patents, improve harmonization, lower costs, and reduce uncertainty and litigation. Patent law reform should be devoted to issues such as encouraging third party prior art submissions during prosecution, permitting assignee filing, and establishing a post grant opposition procedure. It should move away from subjective issues that lead to uncertainty and litigation with no improvement in patent quality.
[Part III of this column on patent reform will discuss inter partes and litigation issues.]