The America Invents Act: Five Years Later November 10, 2016 Jessica L The America Invents Act: Five Years Later November 10, 2016 Jessica L. Susie © Brick Gentry P.C. 2016

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Outline Brief review of AIA Key Provisions First-Inventor-to-File Secret Sales Provisional Patent Applications Derivation Proceedings Prioritized Examination Post-Grant Proceedings Conclusion

Key Provisions of the AIA 1. First-Inventor-to-file 2. Expanded administrative review and Inter Partes challenge procedures 3. False marking claims and remedies 4. Litigation–Related provisions 5. New status created for Micro Entities 6. Expedited examination process 7. Business method patent provisions

First-Inventor-to-File The patent laws grant a patent to the first inventor to file an application. The grace period is much narrower. Prior art is measured from the filing date of the application and will typically include all art that publicly exists prior to the filing date, other than disclosures by the inventor within 1 year of filing.

First-Inventor-to-File and Secret Sales 35 U.S.C. Section 102 provides that a person shall be entitled to a patent unless: (1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention Under pre-AIA law, secret sales are considered sales and trigger the on-sale bar The term otherwise in the statute implies that sales must be public to qualify Has been an area of uncertainty

Helsinn Health Care S.A., et al. v. Dr. Reddy’s Laboratories 2016 District of NJ case Centered on patents covering the drug Aloxi®, which includes ingredients for treating chemotherapy-induced nausea and vomiting Issue before the court was whether the new law requires a sale or offer for sale of a claimed invention to be ‘available to the public before the effective filing date’ of the claimed invention in order for the on-sale bar to apply and possibly invalidate a patent

Helsinn Health Care S. A. , et al. v. Dr Helsinn Health Care S.A., et al. v. Dr. Reddy’s Laboratories - Analysis Precedent under the old law is clear that secret, yet public uses and confidential sales trigger the bar to patentability First considered whether the statutory language is ambiguous and the statutory scheme is coherent and consistent

Helsinn Health Care S. A. , et al. v. Dr Helsinn Health Care S.A., et al. v. Dr. Reddy’s Laboratories - Analysis Previous Supreme Court case discussing statutory interpretation: “When several words are followed by a clause which is applicable as much to the first and other words as to the last, the natural construction of the language demands that the clause be read as applicable to all.” And, “catchall clauses are to be read as bringing within a statute categories similar in type to those specifically enumerated.”

Helsinn Health Care S. A. , et al. v. Dr Helsinn Health Care S.A., et al. v. Dr. Reddy’s Laboratories - Analysis Next, the court considered United States Patent and Trademark Office guidelines on the issue While these guidelines are not binding on courts, they are a guide to attorneys and examiners and are considered by the court so long as the USPTO interpretation does not conflict with the statute The USPTO guidelines provide that a secret sale or use does not qualify as prior art

Helsinn Health Care S. A. , et al. v. Dr Helsinn Health Care S.A., et al. v. Dr. Reddy’s Laboratories - Analysis The court also considered the legislative history Committee report included support for the interpretation that sales must be public Lastly, the court considered public policy Whether secrete sales would result in extending a patent’s term

Helsinn Health Care S.A., et al. v. Dr. Reddy’s Laboratories - Result “As this Court has interpreted the post-AIA on-sale bar, the ‘sale’ prong of the on-sale bar is satisfied by a public sale or offer for sale of the claimed invention.” “…the post-AIA on-sale bar also requires that the sale or offer for sale make the claimed invention available to the public. . . . It is not sufficient that a sale or offer for sale merely occur.”

Helsinn Health Care S.A., et al. v. Dr. Reddy’s Laboratories - Result A redacted version of the agreement including the offer for sale was available to the public, which excluded the specific formulation. Further, press releases indicated the existence of an agreement including a sale but also excluded the formulation. But this is not what is meant. “[t]he post-AIA on-sale bar inquiry is not focused on the public disclosure of the sale or offer for sale; rather the ‘sale’ prong of the on-sale bar requires that the sale make the claimed invention available to the public…”

Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA Inc. Teva has appealed the case to the Federal Circuit Court of Appeals The Federal Circuit heard oral arguments in the case on October 4, 2016.

Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA Inc. Teva argued that if confidential sales do not trigger the on-sale bar, patentees would receive extension of the monopoly right granted by a patent Teva further argued that “otherwise available to the public” represents its own category of prior art such as new types of Internet disclosures A number of intellectual property law professors submitted briefs in support of Teva

Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA Inc. The United States government submitted a brief in support of Helsinn arguing that the legislative history for the AIA requires that the sale transaction must make the invention available to the public to trigger the on-sale bar The Federal Circuit has not yet issued an opinion

First-Inventor-to-File Provisional Patent Applications Allow applicants to get priority date (“effective filing date”) on file before all data is gathered or determining if invention is valuable enough to pursue non-provisional protection Since the passage of the AIA, most patent practitioners have recommended that clients file more provisional patent applications to preserve early priority dates Accordingly, it has been expected that the number of provisional patent applications are increasing.

First-Inventor-to-File Provisional Patent Applications However, there doesn’t seem to be an increase in the number of provisional patent applications filed. Study by Gaudry and Franklin published on ipwatchdog.com Reviewed the number of provisional and non- provisional patent applications wherein the first inventor is a resident of the United States from 2003 - 2015

First-Inventor-to-File Provisional Patent Applications Study by Gaudry and Franklin published on ipwatchdog.com As expected, both types of applications peaked in fiscal year 2013 – October 1, 2012 – September 30, 2013 (First-to-File went into effect March 16, 2013) Since that time, both the number of provisional and non-provisional patent applications has decreased The authors also reviewed the ratio of provisional patent applications filed to non-provisional patent applications filed. The ratio has returned to pre- 2012 levels.

First-Inventor-to-File Provisional Patent Applications Study by Gaudry and Franklin published on ipwatchdog.com Accordingly, the authors argue that the data suggests that applicants have generally not changed their filing strategies to file more provisional patent applications since the First-to- File provisions went into effect.

First-Inventor-to-File Provisional Patent Applications Why no increase? Applicants who have a history of filing foreign applications adapted to a First-to-File system before the AIA Applicants are making the effort to develop ideas sooner to file detailed applications as soon as possible Certain technology areas are less likely to use provisional patent applications (ex: software patents)

First-Inventor-to-File Provisional Patent Applications Nonetheless, most practitioners continue to recommend filing provisional patent applications Earlier effective filing date Can extend expiration of the non-provisional patent application without affecting patent term

First-Inventor-to-File Derivation Proceedings Applicable when a later filing applicant claims that an earlier filing applicant derived the invention from the later filer Replaces interference proceedings, which determine who invented first

First-Inventor-to-File Derivation Proceedings To initiate a derivation proceeding, a petitioner must: File their own patent application; and File a petition within one year of the first publication of the other party’s claim to an invention that is the same or substantially the same as the petitioner’s invention The petition is filed with the Patent Trial and Appeal Board (PTAB) The PTAB will continue with proceedings if it is determined that the petition provides substantial evidence that the claimed invention was derived from an inventor named in the petition

First-Inventor-to-File Derivation Proceedings Very few derivation proceedings have been filed Only seven have been made publically available (although several are confidential) Of those seven, three have resulted in a derivation proceeding The PTAB has put those three proceedings on hold until a party’s application is in a condition for allowance but for the derivation issue

Prioritized Examination The AIA established the Track One Prioritized Examination Program, which provides a final disposition within 12 months of filing. Limited to 10,000 accepted applications (acceptance of applications largely based on whether an application meets the Track One requirements) Requirements have been relaxed since 2011 Application must contain 4 or fewer independent claims and 30 or fewer total claims. New applications and RCEs Fee: $4000/$2000

Prioritized Examination Current Average Statistics (measured from petition grant) Months to first office action: 2.1 Months to final disposition: 6.5 Months to allowance: 5.2 Months from Filing to Petition Grant: 1.4 Cumulative Final Dispositions Just under 15,000 final rejections and allowances (slightly more final rejections) About 1000 abandonments About 2500 appeals

Post-Grant Proceedings Are heard by the Patent Trial and Appeal Board (PTAB), which replaced the Board of Patent Appeals Post Grant Review (PGR) Must be filed within 9 months of issuance Only applicable to first to file patents Bases: 101, 102, 103, 112, double patenting Inter Partes Review (IPR) Available after 9 months (FTF) or immediately (FTI) Applicable to all patents Bases: 102 and 103 based on patents and printed publications

Inter Partes Review May be filed by a person who: Is not the patent owner Has not previously filed a civil action challenging the validity of a claim of the patent Has not been served with a complaint alleging infringement more than one year prior (except certain joinder situations) To proceed with IPR, a party must establish that there is a reasonable likelihood that they will prevail on at least one claim Often complete with 18 months of filing a petition

Inter Partes Review IPR does not favor patentees The standard to prove invalidity is a preponderance of the evidence Contrasted with litigation where patents are presumed valid, and there is a higher clear and convincing evidence burden to invalidate patents The claim construction standard is broad – broadest reasonable interpretation Contrasted with litigation where claims are construed with the aim that the patent is valid Estoppel as to issues raised or reasonably could have been raised in subsequent USPTO and district court actions

Inter Partes Review The PTAB is highly criticized. It is argued that the judges believe it is their job to invalidate claims. Intended to be an alternative to litigation. However, it is estimated that 85% of IPR proceedings have associated litigation. Accordingly, costs are increased. Institution rates were initially nearly 90% but have now dropped to just under 60%. In biotechnology, IPR final written decisions over time show about 35% of trials resulting in a finding of all challenged claims to be unpatentable These statistics are criticized

Conclusion Post-grant proceedings, and particularly IPR, have become the main area of discussion at this point. However, many other issues will take more time to present themselves. Many pending applications are still subject to the pre-AIA laws. Moreover, we are only starting to see AIA issues appealed to the Federal Circuit.

Questions? Jessica L. Susie Registered Patent Attorney Brick Gentry P.C. Tel: 515.271.5906 Cell: 319.936.3280 jessica.susie@brickgentrylaw.com www.brickgentrylaw.com