March 21, 2012 Charles L. Leeck Keith H. Heidmann 1

Big picture – Better use of TTO budget. File fewer applications of better quality. How to get there? 1. Disclosure evaluation. 2. Communication between TTO and patent attorneys. 3. Structure Prosecution to Control Cost. 4. Ten Practical Examples 2

Cost-related issues raised by the new America Invents Act (AIA) 3

What is the biggest financial mistake a TTO can make? What is the invention(s)? This question is the fundamental starting point and different from the question of "what can/should we claim?" 4

Who is the licensee? This question is different from "what is the market?" Big market doesn't mean big royalty. What are the market forces? This question is different from "how large is the market?" 5

Breadth of Claims. This is a large source of unnecessary spending. Inventor has one or a few data points. Likely that more will appear? Easy to envision a genus around one species? Are broader claims supported and enabled? Would broader claims be commercially valuable (consider costs of developing a broader commercial embodiment)? Would broader claims rope in more prior art? 6

Breadth of Disclosure: Licensee considerations. Example: Need for human data. The point here is not what the USPTO needs but what the licensee needs. Consider Art Unit. Policing? This may be an issue if you are limited to method claims. 7

Moving Beyond the Disclosure. Draft IP that speaks to all potential audiences. Investigators, Examiners, CEO, In-house Attorney, Corporate Engineer/Scientist, VC/Angel, Jury. Build Brands. Institutions. Inventions. Inventors. Does it save money to file a provisional application? What about cover sheet provisional applications? 8

How attorneys think: The "Drive-in Window Rule": Once you tell him/her what you want, that's what you'll get. "If you don't ask for it, you won't get it." Famous last words? Talk about it first! What dealing with teenagers can teach us about business communication. Are you getting the most value from your attorney? 9

Talk about what you want to claim. Is it worth it to go broad? What should you cover – not what can you. Short with assumptions. Simple equals less attorney time. Attorney guidelines are useful, but can't cover all situations. Inventorship disputes When can an attorney add value? 10

Consider Art Unit. Evaluate the need for speed. Accelerated Examination? Not cheap, but could save costs in the long run 11

Control foreign costs. Continuously reevaluate whether you intend to prosecute the application The average time to first action is 1.5 years. Have your plans changed? You may wish to have your attorney notify you before analysis of an Office Action. You'll save money if you reevaluate and decide not to prosecute. Are the claims now too narrow? 12

Is it a good idea to take allowance of a sub- set of the claims rather than continuing to prosecute the entire claim set? Depends on specific facts. The "commercial independence" rule. It would incur minimal attorney costs to file continuing application to the claims that are not yet allowed. 13

Utilize Interviews. Initial interviews, Office action interviews, Interviews with SPE. Provide a great deal of insight into how the Office views the case and what the best strategy would be for efficiently moving the case forward. Also provide an opportunity to educate the Examiner without time-consuming and expensive written back and forth. 14

Present expert declarations or other evidence early in prosecution Educating declarations. Declarations with additional data. 15

After-final Practice. The Office is encouraging examiners to be open to interviews after final rejection. In certain situations, an appeal (optionally including a pre-appeal brief request for review) can be more productive than continuing prosecution. 16

Use non-attorneys as resources throughout prosecution. This will both lower costs and increase quality. Use licensee as a resource. Use inventor(s) as a resource. 17

1. Issue: Incomplete disclosures that focus on the proof of the invention. Solution: Encourage inventors to supplement their initial disclosure to expand the enablement of broad claims. Even if the inventors only have raw data, they should write it up as if it were a manuscript. 18

2. Issue: Inventors sometimes provide written material in forms that cant be electronically manipulated. Solution: All material should be in electronic form so that it can be quickly cut, pasted, and edited for use in the application. Inventors should provide electronic copies of chemical structures whenever possible. 19

3. Issue: Multiple inventors, and especially multiple inventors from different institutions, can create a situation where inventors are "talking" over one another. Solution: Designate a lead inventor/institution and stick to that designation. 20

4. Issue: Initial inventor meetings to discuss a disclosure can vary in usefulness. Situation: When the inventor has provided useful disclosure materials (new developments, prior art papers, data, etc.) beforehand, the meeting can be more productive. 21

5. Issue: Inventors often continue to revise the manuscripts during the patent application drafting process, which can substantively affect the content of the application. Solution: Explain the patent drafting process to the inventor at the outset. If there are substantive changes that must be made to the manuscript, the inventor needs to point the changes out and not merely hand over a new manuscript. 22

6. Issue: When information in tables, figures, or sequences is incorrect, it can be difficult, if not impossible, to correct and can endanger the claims if the error is in the patentable subject matter. Solution: Inventors should make a separate check of this important data. 23

7. Issue: When writing an application with the goal of licensing the technology, effort should be made to have a final application that "speaks" to all potential audiences, which may require details beyond those necessary for enablement. Solution: Prepare "educational" language for some technologies and re-use the language. 24

8. Issue: Applications can have unnecessary extensions of time. Solution: Better, standardized system of planning and reminders and better understanding of priorities. 25

9. Issue: Office Action is received that cites hundreds of pages of prior art. Solution: Have attorney provide an initial review of an Office Action, ask the inventor or a licensee to pour through the hundreds of pages of prior art and see if there are additional distinctions that may be available. 26

10. Issue: Prosecution is becoming protracted and licensing revenue is stalling as a result, Solution: Utilize alternatives to continuing prosecution before the primary examiner: pre-appeal brief conference request, appeal, interview with SPE. 27

The Act will change the timing requirements for patenting and for prior art (e.g., change to a First to File system (with some modifications)) The Act will change the types of challenges that can be made against your patents TTOs may need to change and examine internal documentation procedures and disclosure strategy

Heidmann files Leeck invents Leeck Leeck files Patent to Leeck Patent to Heidmann Time Heidmann invents Hallmark: swear behind practice

Heidmann files Leeck invents Leeck Leeck files Patent to Leeck Patent to Heidmann Time Heidmann invents Heidmann files Hallmark: absolute novelty

Heidmann files Leeck invents Leeck Leeck files Patent to Leeck Patent to Heidmann Time Heidmann invents Heidmann files Hallmark: publish behind practice Heidmannpublishes Heidmann files the grace period – but only for the inventor Patent to Heidmann and Leeck is barredLeeck is barred Leeck may publish before Heidmann filedLeeck may publish before Heidmann filed 1 year

Conditions for Patentability/Novelty A person shall be entitled to a patent unless 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, EXCEPT…

Exceptions (1) Publish behind – public disclosure by applicant made one year or less before the effective filing date of the claimed invention (subsequent non-applicant disclosure also exempt) (2) Derivation – public disclosure by non- applicant who obtained information from applicant (limited to patent/published application if before grace period) (3) Team – public disclosure made by co- owner

Leeck invents Leeck Leeck files Baker invents Bakerpublishes Baker files Patent to Baker and Baker is 2 nd inventorBaker is 2 nd inventor Baker is 2 nd filerBaker is 2 nd filer 1 year

Will need to think about US vs. Foreign strategy – Should I file early and often or rush to disclose? Increased reliance on inexpensive cover sheet provisional applications?

- - Ex parte reexamination - - Inter partes reexamination - - Litigation in federal court Post-issue submissions Ex parte reexamination Post grant review Business method review Inter partes review Supplemental examination Litigation in federal court Current LawAIA

Who can file:Patentee Time to file:Any time after patent issuance Materials:Corrected or new information Action:Order reexamination if substantial new question Civil action:- Patent cannot be later held unenforceable on basis of information considered - No adverse inference

The patent owner must provide a detailed explanation for each item submitted to demonstrate a SNQ of patentability, after which an ex parte reexamination is ordered. No interview or amendments are allowed. Proposed fees: $5,180 request fee and $16,120 fee (refundable) for any resulting ex parte re-examination.

Given the expense, the requirement that the patent owner lay out a potential invalidity attack against its own patent, and the new inequitable conduct standard (Therasense), TTOs will probably want to use this procedure only in very rare circumstances. This proposed rules package also tentatively raises the ex parte reexamination fee from $2,520 to $17,750, and the PTO will keep $4,320 of that if no reexamination is ordered.

Application can be filed in assignee name (with declaration) Declaration can be combined with assignment It may be cost-effective to combine the assignment and declaration in a single document

In the past, USPTO fees were set by statute The AIA authorizes the USPTO to set its own fees, with the only limitation being that in aggregate, the fee schedule reflects the actual cost of the services provided Opens the door for the USPTO to set fees as a means for incentivizing or deincentivizing available options

The USPTO has begun to exercise its newly granted fee setting authority by publishing a proposed fee schedule. The Patent Public Advisory Committee (PPAC) will hold hearings and report back to the PTO on the proposed fees, after which a final proposal will be issued, initiating the 60-day public comment period. The new fees will be effective February of 2013, except for the decreased issue fee, which is to take effect January of 2014 Once a new fee schedule is finalized, TTOs will want to develop strategies to minimize potential budgetary impacts

ProcedureCurrent Fee (large entity)Proposed Fee (large entity) Utility – Filing, search and exam $1,250$1,840 Excess Independent Claims $210$460 Excess Total Claims$60$100 RCE$930$1,700 Notice of Appeal$930$ no appeal brief fee +$2500 appeal fee due after examiners answer to maintain appeal. Also, no issue fee if examiner withdraws final rejection before payment of appeal fee

ProcedureCurrent Fee (large entity)Proposed Fee (large entity) Maintenance Fees: All three stages $8,710$12,800 Issue/Publication Fee$1,700$930 One month extension$150$200 Three month extension$1,270$1,400 Business Method & Post- Grant Review $35,800 - $125,300+ Inter Partes Review$8,800 (inter partes re- exam) $27,200 - $95,200+

Companies may target TTO patents for post- grant review instead of taking a license (although the proposed fees make this less likely). Should we spend more time up-front? Will this change licensing time-line?

Substantial USPTO fee increases are likely More rush jobs, so more $$$ Responding to post-grant review, more $$$ (in Europe, 8% of EP patents opposed) Training and unresolved issues, more $$$

What To Do About It?

1. Expedite internal disclosure - establish good record keeping procedures - streamline disclosure process - meet more frequently 2. Expedite filing - consider simultaneous disclosure/filing - use simple or cover sheet provisionals (consider stacking) - develop application template 3. Early public disclosure - initiate grace period - preclude other filers - establish derivation claim - consider quiet disclosure

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