Patent Law Blog (Patently-O)

Patent Reform Act of 2005

The Patent Reform Act of 2005 is changing as it moves through congress.  In the latest amendment, Representative Smith has eliminated some of the most controversial aspects of the bill, including the injunction provision and the provision that would limit the scope of claims in continuing applications.

The reform measures still include a move to first-to-file; changes to the duty of candor; limitations on infringement and willfulness damages; post grant opposition procedures; and a revised venue statue.

Links:

• Newly Amended Patent Reform Act of 2005;
• Redline version of the Amended Version (by K. Karel Lambert) *NOTE I have not reviewed this redlined version;
• Promote-the-Progress Patent Reform Library.

 

Patent Reform: Redlined Version of Patent Statute

Shashank Upadhye of Eon Labs & I have created a marked-up version of the Patent Act showing changes that would be implemented if the Act was enacted into law.  This document is very useful to help better understand what changes are being made and what sections are left unchanged.

• Download Redlined Patent Act of 2005.doc (NOTE: In this version, we do not include sections that were not changed.  Full version of the Patent Act to follow). [Last updated June 21, 2005]

Patent Reform: Congress Choosing Sides

The partisan nature of politics often falls apart on patent reform issues. For instance, IP subcommittee leaders Lamar Smith (R) and Howard Berman (D) both support patent reform efforts — although it is unclear if either support all the provisions in the proposed draft legislation.  Now, the New Democrat Coalition (NDC), a group 43 of “pro-growth” Democratic Representatives, has sent an open letter to Smith and Berman supporting the legislative initiative.  The NDC is specifically supporting some of the most controversial aspects of the legislation — including limits to injunctions and damages.

[W]e urge you to include the following among the many important patent reform items in your legislation:

1) Third Party Submission of Prior Art. . .

2) Injunctions: We believe injunctive relief is an important legal reform element of patent reform and we encourage the Committee to take aim at those who seek to abuse the patent system for profit.

3) Treble Damages: . . . this legal standard should be revised. While courts should be able to assess higher damage amounts when a defendant’s actions warrant, treble damages should be limited to those cases where intentional or egregious conduct warrants a punitive measure of damages.

4) Apportionment of Damages: . . . Today, complex products such as semiconductors or software programs include thousands of features, many of which are patented.  As these products have become more complex, the old methods for determining the value of infringement have become strained and have led to some unfair results.

From the side of special interests, I see three major coalitions forming:

1) Large high-tech companies, including Microsoft and Intel, with the goal of reducing the strength of patents. These companies have major patent portfolios, but fear small companies and individuals that may develop blocking patents.  This group is also garnering support from denouncers of software patents.

2) Other large patent holders, including Big Pharma, with the goal of strengthening and streamlining patents by changing to a first-to-file system and encouraging a post-grant opposition.

3) Start-ups and individual inventors, with the goal of keeping the status quo.

The question is: where does your company fit into the picture?

Links:

• Read Matt Buchanan’s take;
• File Attachment: PatentReformNDCLetter.pdf (274 KB) (provided by Buchanan);
• Lawyers Weekly USA article on patent reform (quoting both me and Buchanan).

Does the Constitution Provide for a Right to an Injunction in Patent Cases?

Summer is almost here — How would you fare on this final exam question:

The Progress Clause (Article I, Section 8, Clause 8) of the U.S. Constitution provides that:

"Congress shall have the power... To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."

Using this clause as a basis for analysis:  

1. Would it be Constitutional for Congress to eliminate the right to an injunction for patent infringement?
2. Would it be Constitutional for Congress to modify the right to an injunction so that one is only available if the patentee is “making use” of the invention?

Patent Practitioner Organization Supports Certain Patent Reform Measures, Rejects Others

The National Association of Patent Practitioners (NAPP) has provided its comments on the proposed patent reform legislation.  NAPP is primarily made-up of patent agents, and the organization’s viewpoint is seen as an important representation of the views of individual inventors.

In its introduction, NAPP takes-on the flippant usage of the term patent troll.

Some of the rhetoric by proponents of the Patent Act of 2005 has been highly troubling and obscures the debate. . . . A “patent troll” is apparently a derogatory term used by people or entities to refer to an inventor who has the audacity to assert a patent against them.  Such usage is an attempt to apply colored language, in a mindless way, to attack the entire U.S. patent system. . . . To the extent that the term is used to derogate inventors who do not develop corporate structures or manufacture products, NAPP believes that inventors who merely invent but do not manufacture products – which, after all, includes most university and government researchers – do not deserve epithets or less patent protection.  Finally, to the extent that the term is used to refer to people who try to enforce invalid patents, NAPP believes that there are sufficient existing disincentives against such practices.

With regards to the individual provisions, NAPP supports post-grant opposition proceedings and the proposed changes to the duty of candor procedures.  However the organization also has stated quarrels with the following provisions:

First-to-File: This is a controversial issue. “Congress should not be fooled into thinking that this proposal has become less controversial or more accepted over time.”  Practically, this change makes things difficult for a patent practitioner who operates with a backlog of cases.  NAPP expects that the provision would decrease patent disclosure quality because practitioners will rush to file the documents. This increases the opportunity for attorney-malpractice.

Limits on Broadening Claim Scope: This “is an ill-conceived, poorly worded, and unworkable proposal. . . . NAPP strongly opposes this provision.” 

Universal 18–Month Publication: NAPP is against universal publication. One problem is that it would prevent “applicants from adopting the strategy of trying to get a patent and relying on trade secret protection as a fall-back if satisfactory patent protection cannot be secured.”

Inter Partes Reexamination Estoppel: NAPP is against removal of the provision that prevents a patent challenger from first bringing (and losing) an inter partes reexamination request challenging validity, then challenging validity of the same patent again in a court proceeding. [UPDATED TO FIX CORRECTION]

Limiting Damages to Components: This would just result in claim drafting mischief.

. . .

Link:

• NAPP Comments
• NIPPER’s Coverage
• BUCHANAN’s Coverage

 

PATENT REFORM: Quick highlights from the Senate hearings.

The Senate Intellectual Property subcommittee held hearings on Monday, April 25, 2005 to discuss patent reform.  Some highlights:

• Jon Dudas, Director of the Patent Office believes in the goal of “educating the world on the importance of patents.”  I believe that a major part of this should be to restore the mystique of the American inventor/entrepreneur.
• On behalf of the AIPLA, Michael Kirk shot down BSA proposals to limit the availability of injunctive relief and the size of damage awards.  Kirk also mentioned that Congress should consider repealing 35 U.S.C. 271(f).
• David Simon from Intel promoted changes to the notion of when an injunction should be granted.  In his viewpoint, there should be “a return equitable principles to determine whether an injunction should be granted.”

PATENT REFORM: House and Senate to Hold Hearings this Week

House Subcommittee on the Courts, the Internet and Intellectual Property, chaired by Congressman Lamar Smith (R Tex) has released a patent legislation discussion draft that includes a number of proposed patent reform measures.  The House Subcommittee is scheduled to hold an oversight hearing on the discussion draft on Wednesday, April 20, 2005 at 4:30 PM. [Link].  The witness list includes J. Jeffrey Hawley of Eastman Kodak testifying on behalf of the Intellectual Property Owners Association (IPO); Richard J. Lutton of Apple, testifying on behalf of the Business Software Alliance; Jeffrey Kusham, testifying on behalf of Genentech; and William LaFuze of the ABA.  In a parallel action, the Senate’s newly formed Subcommittee on Intellectual Property is scheduled to hold a hearing on the patent system April 21. [Link]. [NOTE -- Strong indications are that the Senate will postpone the hearing to April 25].

Links:

• Patent Reform Proposal

PATENT REFORM: Injunctions Only When Money Is Not Enough

This post is part of our continuing series discussing a US House of Representatives working draft of patent legislation, by Marcus Thymian, Jennifer Swartz, and Dennis Crouch.

The current patent statute (35 USC §283) allows courts to grant injunctions to prevent violation of patent rights, but provides little guidance, specifying only that injunctions be "in accordance with the principles of equity."  The terms of the injunctions need only be "as the court deems reasonable."

The proposed statute would keep the current language intact, but would add another section spelling out the grounds for granting such injunctions.  Under the new language, "a court shall not grant an injunction unless it finds that the patentee is likely to suffer irreparable harm that cannot be remedied by the payment of money damages."  In making this finding, the court is not to presume the existence of irreparable harm, but is instead required to "consider and weigh evidence" relating to equitable factors.  One of these factors is "the extent to which the patentee makes use of the invention."

One result of the proposed new language is that, in a preliminary injunction determination, a reasonable likelihood of success on the merits would no longer lead to a presumption of irreparable harm.  The concept of "irreparable harm" has been extensively adjudicated; that body of case law would seem to remain largely relevant in making the determination called for by the proposed statute.

PATENT REFORM: Overturn Eolas v. Microsoft

This post is part of our continuing series discussing a US House of Representatives working draft of patent legislation, by Marcus Thymian, Jennifer Swartz, and Dennis Crouch.

In the recent case of Eolas v. Microsoft, the Court of Appeals for the Federal Circuit expanded the scope of Section 271(f) – a section that creates a cause of action for infringement due to foreign sales when a component of a patented invention is supplied from the U.S., knowing that the component will be combined in an infringing manner outside the U.S.  The court ruled that the statute (i) had no tangibility requirement and (ii) was not limited to apparatus claims.

The proposed legislation would make it clear that a component "is a tangible item that is itself combined physically with other components to create the combination that is alleged to infringe."

This change would essentially overrule Eolas v. Microsoft.

• File Attachment: Draft Patent Statute (182 KB)

PATENT REFORM: Proposed Changes Allow Assignee to File Patent Application

This post is part of our continuing series discussing a US House of Representatives working draft of patent legislation, by Marcus Thymian, Jennifer Swartz, and Dennis Crouch.

Under the current statute, an employer has quite a bit of trouble filing a patent application when the inventor refuses to sign a declaration or is otherwise unavailable.

In order to file the application without the inventor’s help, the statute (35 U.S.C § 118) requires a proof that such action is “necessary to preserve the rights of the parties or to prevent irreparable damage.”

The proposed changes make it easier for the company to file the application without the inventor’s assistance.  Specifically, the proposal allows an assignee (or a person owed an obligation to assign) to apply for a patent after showing that the action is “appropriate.”

• File Attachment: Draft Patent Statute (182 KB)

PATENT REFORM: House IP Subcommittee Prepares Sweeping Patent Law Changes

The attached legislative proposal was prepared by the House Subcommittee on Intellectual Property chaired by Congressman Lamar Smith (R Tex).  Although the proposal is merely a discussion draft at this point, it is expected that a parallel Bill will be introduced within the next few days.  The Senate’s newly formed Subcommittee on Intellectual Property is scheduled to hold a hearing on the patent system April [25th].  It is quite possible that this proposal will serve as an agenda for the Senate hearings.

The proposed legislation includes changes to:

• Creating a post-grant opposition procedures;
• Willfulness: Increased damages may not be awarded based merely on the knowledge of a patent or its contents;
• Taking away the clear right for an injunction for infringing activity;
• First-to-file (rather than first-to-invent) rights;
• Expanded definitions of prior art;
• Assignee may file for the application and be granted a patent (rather than the inventor);
• Elimination of the best mode requirement;
• Changes to the duty of candor and unenforceability;
• Damages: when invention is a portion of a larger product, royalties are only calculated for a portion of the product;
• Publication of all patent applications after 18 months;
• Prior user rights;
• Overruling Microsoft v. Eolas — component must be tangible;
• and more.

Over the past year, the AIPLA, IPO, Microsoft, and others have all been beating the patent reform drum — each with a separate agenda.  This proposal appears to be an amalgamation of all the proposals — with enough controversial points to get most everyone up in arms. 

Over the next few weeks, Marcus Thymian, Jennifer Swartz, and I will discuss the various sections of the proposal in a series of posts.

• File Attachment: Draft Patent Statute (182 KB)

Congress Discusses Which Court Should Hear Patent Cases

The AIPLA is supporting a measure to legislatively overrule the 2002 Supreme Court case of Holmes Group v. Vornado.  The House Subcommittee on Courts, the Internet, and Intellectual Property is holding a hearing today to discuss the matter. 

Specifically, the AIPLA argues that the holding will allow regional circuits and even state courts to begin to hear patent counterclaims.  This scenario was suggested by the Indiana Supreme Court ruling in Green v. Hendrickson Publishers, Inc., 770 NE2d 784, 63 USPQ2d 1852 (Ind. 2002).  In moderation, the AIPLA believes that if patent claims are raised in a compulsory counterclaim then the Federal Circuit should have jurisdiction.  On the other hand, if the patent claims are raised in a permissive counterclaim then the regional circuit or state court should have jurisdiction. 

The Subcommittee hearing is scheduled for 3:30 p.m. Eastern and will be broadcast over the Internet here.  Those testifying include Edward Reines on behalf of the Federal Circuit Bar Association; Professor Arthur Hellman from the University of Pittsburgh School of Law and expert on the structure of the Courts; Sanjay Prasad, Chief Patent Counsel for Oracle Corporation, and Meredith Martin Addy from Brinks Hofer.

Although the cameras would normally be focused tightly on the patent hearing, as Matthew Buchanan points out, MLB is also testifying today on the Hill.

LINK:

• AIPLA letter to the House Subcommittee

 

Proposed Amendment to Section 271 of the Patent Act

Last week, I wrote the Federal Circuit should re-hear the BlackBerry Case (RIM v. NTP).  Today, I propose a simple legislative change to move the debate concerning extra-territorial application of U.S. Patent laws to the legislature.

Section 271(a) of the patent act currently provides a definition of infringement.

Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.

Generally, in order show that a patent is infringed, the plaintiff must prove that the defendant (or his agent) performed each element of the claimed invention.  In this case, RIM was found liable for infringement for using a patented method.  However, as the diagram shows, RIM performs an element of its infringing activity in Canada. 

From my point of view, RIM should not be held liable for patent infringement because a portion of the patented method was performed on foreign soil, and the statute requires that the use take place within the united states.  The Court, however, read an exception into the statute -- that internationally performed elements of the invention did not defeat an infringement charge so long as the "control and beneficial use" of the infringing system was within the United States. 

Rather than legislating from the bench, I would propose the following draft amendment that incorporates the rule created by the court in RIM. 

Proposed Amendment to 35 U.S.C. Section 271(j): Whoever without authority uses any patented invention, under the control and beneficial use of persons within the United States, shall be liable as an infringer so long as the preponderance of components of the invention are within the United States.

Does anyone have anything against my proposed legislation?

Update I: I have received several excellent comments on the proposed legislation. 

(i) A major issue is the "preponderance" language that requires a preponderance of components to be located within the United States.  This arises from the RIM v. NTP case where the court, in finding infringement, included as a factor that only one or two of the components of RIM's system were located outside of the United States.  Preponderance is a little vague and subject to too much interpretation -- so we need a better word.

(ii) Initially, I only included the "use" of a patented invention within the statute.  However, a reader asked that this be extended to include making and selling.  I agree that these actions should be included as well.

(iii) A colleague pointed out that the statute should be more clearly written to indicate that it is the patented invention that is under the control and beneficial use of persons in the U.S. 

Here is a new version of the Revised Amendment:

Revised Proposed Amendment to 35 U.S.C. Section 271(j): Whoever without authority makes, uses or sells any patented invention, where the patented invention is under the control and beneficial use of persons within the United States, shall be liable as an infringer so long as the clear majority of components of the invention are within the United States.

Update II:

CE Petit added more comments.  Rather than looking at the number of "components" of an invention he suggests looking at the number of elements of a given claim.  "This is particularly relevant when some or all of a claim concerns a process or an intangible. Since 'elements of claims' are parseable as a matter of law by the court."

Petit's version III of the Proposed Amendment to 35 U.S.C. Section 271(j) looks like this:

New Revised Proposed Amendment to 35 U.S.C. Section 271(j): Whoever without authority makes, uses, or sells any patented invention, where the invention is under the control and beneficial use of persons within the United States, shall be liable as an infringer so long as the clear majority of the elements of an otherwise infringed claim of the invention are within the United States.

I wonder what our blogging legislative guru has to say on this issue?

Update III: A couple of clients contacted me directly with more ideas and edits for the proposed legislation.  Our newly edited version is here, with changes underlined. 

271(j): Whoever without authority makes, uses, or sells any patented invention, where the invention is under the control and beneficial use of entities or persons within the United States, shall be liable as an infringer so long as either (i) at least one key claimed element is within the United States or (ii) at least one key claimed step takes place within the United States.

271(j) Definitions: A Key Claimed Element or Step is one that if missing, makes the invention inoperable, or that makes the claim patentable in view of cited prior art.

Let me know if you think that we should include other changes.  Either leave a comment below or e-mail me ([email protected]).

Update IV: The real trick here is, as Ken Hobday correctly pointed out, eliminating the potential for a company to set up computer servers in some foreign land, practicing claimed methods using those servers, and then simply providing a point of access through the internet to U.S. customers.  Any proposed legislation should be carefully examined to ensure that we capture this type of activity as infringement of U.S. patents. I'm not sure that the draft proposal is there yet.

Update V: Matt Buchanan made the point that we may be getting off-track.  He has a solution that is directly related to the "extra-territorial server farm" problem.

Matt's Proposal -- 271(j): Whoever without authority makes, uses, or sells any patented invention by providing persons located in the United States electronic access to a process performed by an extraterritorial computer shall be liable as an infringer notwithstanding the extraterritorial location of the computer so long as the provision of electronic access and the performance of the process is required by the claim at issue.

USPTO Implements Changes to Patent Act: Cooperative Research

The USPTO has released an interim rule of practice that implements provisions of the CREATE Act that amended 35 U.S.C. 103(c).  (Published at 70 FR 1818).  The purpose of the Act is to promote cooperative research -- such as between a university and start-up company.  The main thrust of the new law is to exclude some prior art from obviousness (103) consideration if the prior art arose from a joint research agreement.

According to the new rules, to overcome a 103(a) rejection by invoking the CREATE Act, an applicant must:

• Provide a statement that a joint research agreement was in place and that the claimed invention was made as a result of that agreement.
• Amend the specification to disclose the names of parties to the agreement.
• Amend the specification to specify the dates of the research agreement (or point to an assignment recorded in the patent office that describes the agreement)

The new rules cannot be used to overcome rejections based on anticipation.  Likewise, the PTO indicated that the new rules will likely not apply to reissue applications that were initially granted prior to December 10, 2004.

The PTO asks for your comments on the design of the final rule.  Please contact [email protected] by February 10, 2005 with you comments.

The Bar Association of the District of Columbia PTC Section roundtable that will be held at 3:30 PM EST on January 12 will discuss the changes. A telephone hookup remains available for that meeting. For information on either personal attendance or about the telephone hookup, please contact Jean Shim, [email protected], who is the registrar for this meeting. The meeting will be held at Suite 500, 3000 K Street NW in Georgetown. (Thanks to Hal Wegner for information on the meeting).

India Greatly Increases Patent Coverage

Chandra Joshi, an Indian associate of mine filled me in on the recent amendments to Indian patent law. The amendments not only make Indian law TRIPs compliant, but also rationalize the procedures for patent prosecution.  These changes now allow patents on products and remove provisions relating to EMRs (Exclusive Marketing Rights).

India, as you know, had so far permitted Patents only for processes and not products. With the new amendment to the Patent Act, it would now be possible to obtain Patents for product patents in Pharmaceuticals and Agro Chemicals. Under the Product Patent regime no new–use Patents would be granted.

The ordinance seeks to strengthen opposition proceedings by allowing for both pre-grant and post-grant opposition. The ordinance also seeks to simplify and rationalize the time-frame for process of patents. The time limit for giving requests for examination has been reduced to 36 months from 48 months earlier. Security provisions will also be tightened particularly for dual-use patent applications. Such patents will now be scrutinized by the patent office.

Further, software would continue to be copyright protected, embedded software that has technical applications can now be patented.

DDC Comment: I expect the change to have its greatest impact in the pharmaceutical area -- up to now, India has been a pharma maverick -- producing generics almost at-will.

35 U.S.C. Section 103 Amended to Encourage Cooperative Research

The 'Cooperative Research and Technology Enhancement Act (CREATE Act) of 2004' easily passed both the House and Senate and has been signed into law by President Bush today, December 10, 2004. (see Thomas).  The purpose of the Act is to promote cooporative research -- such as between a university and start-up company.  The main thrust of the new law is to exclude some prior art from obviousness (103) consideration if the invention arose from a joint research agreement.

What You Need to Know:

If you are involved in cooperative research, you need to have a joint research agreement to ensure that your work will not invalidate patents that you apply for sometime in the future.  If you already have a joint agreement, you may need to make amendments to the agreement to ensure that it qualifies under the new law.

In order to qualify under the law, currently pending applications should be amended to disclose the names of the parties to the joint areement.  You may also consider a broadening reissue if your claims were restricted by now excluded prior art.

Text of the Act:

Section 103(c) of title 35, United States Code, is amended to read as follows:

(c)(1) Subject matter developed by another person, which qualifies as prior art only under one or more of subsections (e), (f), and (g) of section 102 of this title, shall not preclude patentability under this section where the subject matter and the claimed invention were, at the time the claimed invention was made, owned by the same person or subject to an obligation of assignment to the same person.

(2) For purposes of this subsection, subject matter developed by another person and a claimed invention shall be deemed to have been owned by the same person or subject to an obligation of assignment to the same person if--

(A) the claimed invention was made by or on behalf of parties to a joint research agreement that was in effect on or before the date the claimed invention was made;

(B) the claimed invention was made as a result of activities undertaken within the scope of the joint research agreement; and

(C) the application for patent for the claimed invention discloses or is amended to disclose the names of the parties to the joint research agreement.

(3) For purposes of paragraph (2), the term `joint research agreement' means a written contract, grant, or cooperative agreement entered into by two or more persons or entities for the performance of experimental, developmental, or research work in the field of the claimed invention.

EFFECTIVE DATE

(a) IN GENERAL- The amendments made by this Act shall apply to any patent granted on or after the date of the enactment of this Act. (Exception: The legislation does not not affect the right of any party in any action pending before the United States Patent and Trademark Office or a court on the date of the enactment of this Act to have that party's rights determined on the basis of the provisions of title 35, United States Code, in effect on the day before the date of the enactment of this Act.

MESSAGE TO RESEARCHERS:

If you work collaborate on work with individuals from other legal entities, you need to have an agreement up front as to how that collaboration is going to be handled. Contact your patent attorney to ensure that the agreement is properly created to fall within the scope of the new law.

BACKGROUND ON THE LAW:

Texas Republican Lamar Smith introduced the legislation in 2003 to promote research between universities and the private sector.

According to co-sponsor Senator Leahy, this Bill will circumvent the ruling in OddzOn Products, Inc. v. Just Toys, Inc. (Fed. Cir. 1997) (holding that non-public information may be used as prior art under certain circumstances), thus allowing more collaboration. Philip McGarrigle published an article in IDEA discussing the OddzOn Products. Brian Murphy disagreed with OddzOn Products in the Fordham IP Law Journal. Additionally, James Gambrell discusses the use of section 102(f)/103 prior art in the Federal Circuit Bar Journal.

Analysis and discussion of the Act from the House Committee Report:

In particular, Sec. 103(c) is amended to add a new paragraph that permits reliance on the provisions of 103(c) by parties that have not commonly assigned their rights to subject matter and the invention at the time a claimed invention was made. It does so by construing the phrase `owned by the same person or subject to an obligation of assignment' in newly redesignated 103(c)(1), to include circumstances in which the parties have entered into a qualifying joint research agreement before to making the invention. The amendments made in this Act do not alter existing law governing inventions under 103(c) where the invention and the subject matter at issue are commonly owned or subject to an obligation of common assignment.

A party who seeks to gain the benefit of the amended Sec. 103(c) must comply with certain conditions. First, the invention and the subject matter (i.e., prior art or information qualifying solely under 35 U.S.C. 102(f)) that is being excluded must be owned by, or otherwise subject to the control of, one or more of the parties to the joint research agreement. While the subject matter being excluded may pre-date the joint research agreement, the claimed invention must be made after the date of such agreement. Second, the invention must arise from work performed by or on behalf of the natural or legal persons that are party to the eligible joint research agreement. Third, the identities of the parties to the joint research agreement must be disclosed in the patent. This information may be included in the original application, through an amendment to the application, or added by an amendment to the patent (e.g., by a certificate of correction) pursuant to the amended law. The omission of the names of parties to the agreement is not an error that would justify commencement of a reissue or reexamination proceeding.

Thus, by entering into a joint research agreement before making the claimed invention, disclosing the names of the parties in the patent application or amendment, and ensuring that the claimed invention resulted from activities under the agreement, subject matter developed by another person and the claimed invention will be deemed to be commonly owned.

Section 2 also defines the term `joint research agreement' as a `written contract, grant, or cooperative agreement.' By doing so, Congress does not intend to prescribe the specific form of the agreement parties must use to benefit from this Act nor to require the writing be contained in a single instrument. Congress does intend the writing to demonstrate that a qualifying collaboration existed prior to the time the claimed invention was made and that the claimed invention was derived from activities performed by or on behalf of parties that acted within the scope of the agreement.

The term `joint research agreement,' used in section 2 of the Act, is not limited to joint research agreements under the Bayh-Dole Act (Sec. 200 et seq. of the Patent Code), but also includes other governmental or private sector cooperative research agreements, development agreements, and other transaction agreements, including Government Cooperative Research and Development Agreements (15 U.S.C. 3701a), and Department of Defense or National Aeronautics and Space Administration (NASA) `other transaction' agreements (10 U.S.C. 2371, 42 U.S.C. 2473).

USPTO News: Changes to 35 U.S.C. 103(c)

In addition to changes to the PTO Fees, Congress has also passed the "Cooperative Research and Technology Enhancement (CREATE) Act of 2004." The Act is now awaiting Presidenet Bush's signature.  The purpose of the Act is to promote collaborative research.  As such, some previously considered prior art will be excluded from consideration if it arose from a joint research agreement.

There may be a need for your clients to immediately make amendments in joint research agreements to make sure that they qualify under the new law.  Second, currently pending applications may be amended to disclose the names of the parties to the joint agreement.  In addition, in some cases, broadening reissues (granted in last two years) may be obtained if the narrowly issued claims were restricted because of now excluded prior art.

-- Dennis

The text of the Act is listed below:

AMENDMENTS TO 35 USC 103(c)

    “(c)(1) Subject matter developed by another person, which qualifies as prior art only under one or more of subsections (e), (f), and (g) of section 102 of this title, shall not preclude patentability under this section where the subject matter and the claimed invention were, at the time the claimed invention was made, owned by the same person or subject to an obligation of assignment to the same person.

    “(2) For purposes of this subsection, subject matter developed by another person and a claimed invention shall be deemed to have been owned by the same person or subject to an obligation of assignment to the same person if--

    “(A) the claimed invention was made by or on behalf of parties to a joint research agreement that was in effect on or before the date the claimed invention was made;

    “(B) the claimed invention was made as a result of activities undertaken within the scope of the joint research agreement; and

    `”(C) the application for patent for the claimed invention discloses or is amended to disclose the names of the parties to the joint research agreement.

    “(3) For purposes of paragraph (2), the term `joint research agreement' means a written contract, grant, or cooperative agreement entered into by two or more persons or entities for the performance of experimental, developmental, or research work in the field of the claimed invention.”.

   SEC. 3. EFFECTIVE DATE.

    (a) IN GENERAL.--The amendments made by this Act shall apply to any patent granted on or after the date of the enactment of this Act.

Intellectual Property Association (AIPLA) calls for the creation of a post-grant opposition procedure

Michael Kirk, Executive Director of the American Intellectual Property Law Association, recently testified before congress and called for the creation of an effective post-grant opposition procedure in the Patent Office.

Appearing at a congressional oversight hearing, Kirk pointed out that issued patents of questionable validity undermine the confidence of business and consumers. While the validity of such patents may be tested through litigation, reexamination, reissue, and interference proceedings, he observed that these options all suffer significant deficiencies. What is needed is a procedure that satisfies a competitor’s need for an adequate opportunity to challenge, the patent owner’s need for a prompt resolution of that challenge, and both parties’ need for an inexpensive proceeding.

Calendar of AIPLA Events:

Aug. 11-13: Practical Patent Prosecution Training for New Lawyers
Hyatt Regency Crystal City, Arlington, VA

Oct. 14-16:2004 Annual Meeting
Grand Hyatt Washington, Washington, DC

Central American Free Trade Agreement

The U.S., Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua signed the U.S.-Central American Free Trade Agreement ("CAFTA") last week. The agreement would extend patent rights for pharmaceuticals in the Central American countries.

Agreement text
News report
Information from the USTR

Charitable Contributions of Patents and other Intellectual Property

Yesterday, the Senate overwhelmingly passed S.1637 that limits tax deductions for charitable contributions of patent, copyright, trademark, trade name, trade secret, know-how, or software. The limit is the lesser of 5% of the market value (at the time of contribution) or $1,000,000. The House bill is in the Ways and Means committee.

For more tax related news, see the TaxProf.

Playwright Licensing and Antitrust

Senator Hatch recently inroduced the Playwrights Licensing Antitrust Initiative Act of 2004 in the Senate. (S. 2349). According to the Bill,

the antitrust laws shall not apply to any joint discussion, . . . or agreement for the express purpose of, and limited to the development of a standard form contracting minum terms of artistic production and levels of compensation for playwrights.

The Bill appears to essentially allow playwrights to collectively bargain against producers. Arthur Miller testified in favor of the legislation.

His testimony came 48 years after he was cited for contempt for not cooperating with the House Un-American Activities Committee. He was also blacklisted by Hollywood for refusing to identify fellow artists with possible links to the Communist Party.

(Article)

Patent Office Funding III: Filing Fees

The patent office funding bill (H.R. 1561) seems to become law. Here are some of the proposed changes:

	Current Fees	Fees in Bill
Filing Fee	$770	Filing: $300 Search: $500 Examination: $200 Total: $1000
Extra independent claims >3	$86	$100
Claims >20	$18	$50
Long disclosure	$0	$250 for ea. 50 sheets over 100
Electronic Filing	$0	$225 discount
Issue Fee	$1330	$1400

Small entities retain 50% cut.

More patent related legislation commentary is available here.

Patent Office Funding II

Matthew Buchanan recently reported on the widespread support for the United States Patent and Trademark Fee Modernization Act of 2004.

It's very interesting that this bill is enjoying such broad support, considering that it represents a large increase in patent fees. Apparently, the anti-fee diversion provisions and the promises that USPTO will initiate further reforms once diversion ends are so attractive that a significant fee increase has become secondary. (Commenting on the IP Coalition letter (PDF)).

Most patentees spend several thousand dollars on attorney fees but much less on patent office fees. If a modest increase in fees can either 1) increase patent office efficiency or 2) increase patent quality, then most of us will be happy. The patent office has been getting a bad rap lately, perhaps this funding will help turn the tide.

See Part I.

Patent Office Funding

Michael Posner of Congress Daily has the early wire on patent office funding:

Without a whisper of dissent, the Senate Judiciary Committee endorsed Thursday a House bill that raises fees for the Patent and Trademark Office and lets the agency keep its own money.

Senate approval is expected.

Read more patent related legislative news.

Patent Related Legislation

Congressional bills and floor proceedings are captured in the Library of Congress - Thomas service ("in the spirit of Thomas Jefferson"). Click here to search for recent legislation involving patents.

Citation of Unpublished Opinions

Litigants in appellate courts may soon be citing unpublished opinions if the Federal Rules of Appellate Procedure are amended to conform to a recent advisory committee recommendation. (article). Federal Circuit Chief Judge Robert Mayer has a problem with citing unpublished opinions because they are generally "not written with the extra care and concern for language" evident in published opinions. Federal Circuit Judge William Bryson also indicated that he would write opinions differently if he knew they could be cited. The Federal Circuit Judges have unanimously voiced their opposition (pdf) to the proposed changes.

In the view of the judges of the Federal Circuit, the adoption of Rule 32.1, which will override our local rule, may adversely affect the administration of justice by skewing the allocation of judicial resources, delaying issuance of precedential opinions, increasing the issuance of judgments without an accompanying opinion, and harming litigants.

J. Craig Williams' opinion is that "citing an unpublished opinion is something like citing part of the law. It just doesn't work."

Kerry's Small Business Grant

Senators Kerry and Daschle have introduced a Bill in the Senate (S.1886) that includes a “Small Business Foreign Patent Protection Grant Fund.” The fund is intended provide funds to small businesses who are hoping to file foreign patent applications.

To help small manufacturers and small R&D firms, we need to reduce trade barriers, so that they are able to sell their products and technologies in other countries. Small-business owners commonly cited the expense required to secure foreign patent protection as a significant barrier to their ability to operate in international markets. Part of encouraging the spread of their innovations into other countries is decreasing their vulnerability to big foreign corporations that can take their ideas when they try to sell their products around the world. Our small businesses need patent protection. However, the costs associated with filing such patents are often prohibitively expensive.

(Link to Kerry's speech discussing the Bill).

Proposed Amendments to 35 U.S.C. 102(f) and 103(c)

Representative Smith (R Texas) talks on the Congressional floor about three recent Bills that have passed the House and are awaiting action in the Senate. Rep. Smith recently gave a speech to the ABA IP Section discussing the bills and other IP matters.

One of the recently passed Bills is the "Cooperative Research and Technology Enhancement (CREATE)." Under the Bill's proposed amendments, 35 U.S.C. 102(f) references will not be considered prior art or as evidence of obviousness under section 103. (Section 102(f) references show the subject matter to be patented was not invented by the one applying for the patent.)

In addition, section 103(c) would be amended so that subject matter developed by another person and prior art under 102(e) or (g) will not preclude patentability if the subject matter and the clamed invention were, "at the time of the earliest filing date for which benefit is sought . . . owned by the same person or subject to an obligation of assignment to the same person." The new law would not be retroactively applied.

The parallel Senate Bill S.2192 was introduced by Senator Hatch (R Utah). You can read Senator Hatch's introduction of the Bill. According to co-sponsor Senator Leahy, this Bill will circumvent the ruling in OddzOn Products, Inc. v. Just Toys, Inc. (Fed. Cir. 1997) (holding that non-public information may be used as prior art under certain circumstances), thus allowing more collaboration. Philip McGarrigle published an article in IDEA discussing the OddzOn Products. Brian Murphy disagreed with OddzOn Products in the Fordham IP Law Journal. Additionally, James Gambrell discusses the use of section 102(f)/103 prior art in the Federal Circuit Bar Journal.

Taxing Patent Donations

Parallel Bills have been introduced in the House and Senate to limit income tax deductions for charitable contributions of patents and similar property by requiring a "qualified appraisal." S2103 H3867

Michigan State University provides some details for giving a charitable contribution of intellectual property as does giftlaw.com. Janal Kalis provides a story on changes made at the IRS regarding patent donations. According to the story, the IRS is cracking down because corporations were claiming greater donations than they were entitled to. Nipper provides more information and a link to the Intellectual Property Owners (IPO) commentary. The IPO has sent an open letter to Senator Grassley opposing the Bills.