Practical Effects of America Invents Act Matt Nesmith Wong, Cabello, Lutsch, Rutherford & Brucculeri, LLP April 12, 2013

Overview Overview of AIA Changes Substantive Changes Procedural Changes Miscellaneous Changes Practical Effect of Selected Changes

Substantive Changes Prior Use Defense Post-Grant Review Inter Partes Review Supplemental Examination Marking Transition to First-to-File System

Prior Use Defense Expands prior use defense from business methods to all technologies Applies to any patent issued on or after date of enactment Applies to any person that commercially used the subject matter in the United States (either internal commercial use or arm’s length sale or transfer of end result of such commercial use) if the commercial use occurred at least one year before the earlier of the effective filing date or the public disclosure date that qualified for the prior art exception under §102(b)

Post-Grant Review Inter Partes Review Replaces existing inter partes reexamination process Challenge the validity of issued patent based on prior art More formal process than inter partes reexamination Defines relationships with other actions Effective one year after the enactment date (September 16, 2012) and applies to any patent issued before, on, or after the effective date Post-Grant Review New procedure for challenging the validity of an issued patent on any ground within nine months of the issue date Procedurally similar to inter partes review Applies to any patent having a claim to a claimed invention with effective filing date on or after March 16, 2013

Post-Grant Review Supplemental Examination New procedure allows patent owner to request supplemental examination to consider, reconsider, or correct information believed to be relevant to the patent Immunizes patent from conduct relating to information that had not been considered, was inadequately considered, or was incorrect in a prior examination of the patent if the information was considered, reconsidered, or corrected during a supplemental examination of the patent Effective one year after the enactment date (September 16, 2012) and applies to any patent issued before, on, or after the effective date

Marking Virtual Marking Effective upon enactment, items may be marked with an Internet address having a posting that associates the patented article with the patent number False Marking Eliminates ability of private parties to sue for the statutory penalty on behalf of the United States Establishes avenue for private parties that suffer a competitive injury as a result of a violation of the false marking statute to seek compensatory damages Establishes that the marking of a product with matter relating to a patent that covered that product but has expired is not a violation Effective upon enactment and applies retroactively

First-to-File Transitions US Patent System to First-to-File Completely rewrites 35 U.S.C. §§ 102 and 103 Changes the scope of what constitutes prior art Effective on March 16, 2013 and applies to any application and patent issuing thereon having a claim to a claimed invention that has an effective filing date on or after March 16, 2013 or a specific reference to any patent or application that contains or contained at any time such a claim

Patently-O blog September 20, 2011 Procedural Changes Jurisdiction No state court shall have jurisdiction over any claim relating to patents, plant variety protection, or copyrights Joinder Accused infringers may not be joined based solely on allegations that they each have infringed the patent or patents in suit Patently-O blog September 20, 2011

Miscellaneous Changes Fee-setting Authority Fees for Patent Services Inventor’s Oath or Declaration Patent Trial and Appeal Board Preissuance Submission by Third Parties Best Mode Requirement Advice of Counsel

Miscellaneous Changes Fee-setting Authority Director is granted authority to set fees to recover the PTO’s estimated costs – authority is effective upon enactment and terminates seven years after enactment Electronic filing incentive imposes an additional $400 fee for applications (except design, plant, or provisional) that are not filed by electronic means – effective 60 days after enactment Establishes Micro-Entity Fees for Patent Services 15% surcharge on fees 10 days after enactment Establishes $4800 fee (in addition to normal fees) for prioritized examination 10 days after enactment

Miscellaneous Changes Inventor’s Oath or Declaration Modifies inventor’s oath requirements Oath or declaration shall state that application was made or authorized to be made by affiant or declarant and such individual believes himself or herself to be original inventor Removes citizenship requirement Authorizes substitute statement Individual that is under obligation of assignment may include the required statements in the executed assignment rather than filing statements separately Effective September 16, 2012 Patent Trial and Appeal Board Board of Patent Appeals and Interferences is renamed Patent Trial and Appeal Board

Miscellaneous Changes Preissuance Submission by Third Parties Third party may submit patent, published application, or other printed publication of relevance to the examination within specified time periods Best Mode Requirement Failure to disclose the best mode shall not be the basis on which any claim of a patent may be canceled or held invalid or otherwise unenforceable Advice of Counsel Failure of an infringer to obtain the advice of counsel with respect to any allegedly infringed patent, or the failure to present such advice to the court or jury, may not be used to prove that the accused infringer willfully infringed or intended to induce infringement

Practical Effects Micro Entity Status Declarations and Non-Inventor Applicants Fees Power of Attorney First-to-File Standard Satellite Offices

Micro Entity Status Effective upon enactment, AIA established a micro entity class entitled to a 75% reduction in certain fees Although effective upon enactment, final rules for administering micro entity status were published on December 19, 2012 and became effective March 19, 2013

Micro Entity Status Two avenues for qualifying for micro entity status Applications/Income Avenue Applicant qualifies as a small entity Applicant has not been named as an inventor on more than 4 previously filed applications (this excludes applications filed in another country, provisional applications, international applications that were not nationalized, and applications resulting from prior employment where applicant assigned or is obligated to assign all ownership rights as a result of the prior employment) None of applicant, inventor, or joint inventor had, in the calendar year preceding the year in which the fee is being paid, a gross income exceeding 3 times the median household income Applicant has not assigned, granted, or conveyed, and is not under an obligation to do so, to an entity that would not satisfy the income test

Micro Entity Status Two avenues for qualifying for micro entity status Institution of Higher Education Avenue The applicant’s employer, from which the applicant obtains the majority of applicant’s income, is an institution of higher education OR The applicant has assigned, granted, conveyed, or is under an obligation to do so, the application to an institution of higher education Final rules add that in either case, the applicant must also qualify for small entity status

Micro Entity Status Applications/Income Avenue Determination of small entity status requires its own case-by-case assessment (37 CFR 1.27(a)) but, in general, applies to: Owner of application is an individual (or individuals) who has not assigned, granted, conveyed or licensed (and is under no obligation to do so) any rights in the invention Owner is a “small business concern” as set forth in 13 CFR 121.801 – 121.805 (this is itself a non-trivial evaluation) OR Owner is a nonprofit organization that has not assigned, granted, conveyed or licensed (and is under no obligation to do so) any rights in the invention to a party that would not qualify under the first two sections and is either a university or institution of higher education in any country or meets other definitions for a nonprofit organization

Micro Entity Status Applications/Income Avenue Income determination The initial income level (for CY 2012) which will allow an applicant to qualify for micro entity status (based on most recently available 2011 data at time of USPTO rule publication) is $150,162 – PTO FAQ website indicates that PTO will publish the gross income limit on the PTO website According to PTO FAQ website, only the applicant’s income applies – not household income If applicant filed a joint return, the income limit applies only to portion of gross income that the applicant would have reported if filing a separate tax return – this would require an accounting of portions of joint income that are attributable to applicant

Micro Entity Status Institution of Higher Education Avenue Employee of Institution of Higher Education Must obtain majority of income from institution of higher education – not clear over what time period this is evaluated Institution of higher education is defined at 20 USC 1001(a) Rights owned by institution of higher education PTO FAQ website indicates that institution of higher education that is an assignee-applicant does not apply for micro entity status because it cannot assign or be under an obligation to assign to itself For now, to obtain micro entity benefits, application by employee of institution of higher education needs to be filed with the inventor as applicant

Micro Entity Status Establishing micro entity status File certification form establishing entitlement to micro entity status once in an application Separate forms for Applications/Income Avenue (PTO/SB/15A) and Institution of Higher Education Avenue (PTO/SB/15B) This differs from small entity certification which can be established by checking “Applicant claims small entity status” box on ADS or by simply paying the small entity fee at time of filing Although certification need only be filed once, entitlement must be verified each time a fee is paid For example, must verify that income still qualifies This differs from small entity where, after establishing, you can continue to pay small entity fees until filing a reissue or continuing application or paying the issue or maintenance fee

Micro Entity Status PTO/SB/15A PTO/SB/15B

Declarations and Non-Inventor Applicants Changes to Requirements for Inventor’s Oath or Declaration (Effective September 16, 2012) Content of oath/declaration Timing for filing oath/declaration Combined declaration and assignment option

Non-Inventor Applicants Application can be filed by an applicant who is: An inventor An assignee An obligated assignee A person with a “sufficient proprietary interest” in the claimed invention Non-inventor applicant need not file 3.73 statement

Non-Inventor Applicants Patent still referred to by inventor names Applications required to include names of inventors for any claimed invention How are inventors identified? Application data sheet filed before or concurrently with inventor declarations Timing is important – if ADS naming different inventor(s) filed after declarations, declaration wins – must be corrected by Rule 48 petition Executed oath/declaration (naming full inventive entity if no ADS)

Application Data Sheet Application data sheet is required for: Naming applicant other than inventor (assignee, obligated assignee, sufficient proprietary interest) Claiming foreign or domestic priority (statement in application is now ineffective) Application data sheet enables: Each oath/declaration to identify a single inventor Filing of oath/declaration to be delayed until payment of issue fee (surcharge fee applies)

Application Data Sheet Supplemental Application Data Sheet Should not use ADS form after initial ADS filing New rules provide for correction of only desired sections Can use to change applicant (for example if assigned after filing)

Inventor Oath/Declaration For each inventor, application must contain: Executed oath or declaration Substitute Statement Recorded assignment that contains the required oath/declaration language

Inventor Oath/Declaration Requirements for new inventor oath/declaration Application was made or authorized to be made by person executing Believes himself or herself to be original inventor or original joint inventor Declaration must identify application to which it applies and person executing by legal name Eliminated Requirements Names of all inventors (if included in ADS) Inventor Citizenship Inventor believes himself or herself to be first inventor Foreign priority claims Removes requirement to acknowledge duty of disclosure and state that inventor has read and understands application (this is still required but no statement necessary)

Substitute Statements Substitute statement can be filed where: Inventor is deceased Inventor is legally incapacitated Inventor cannot be located after diligent effort Inventor refuses to execute oath or declaration Substitute statement must include: Statements required in oath/declaration Identification of inventor to whom statement applies Identification of party executing and relationship to inventor Identification of basis for statement Substitute statement replaces declaration (PTO/AIA/02)

Combined Assignment/ Declaration Assignment document can satisfy oath/declaration requirement if: Executed assignment contains required oath/declaration language Assignment is recorded in the assignment database To avoid surcharge fee for late declaration, application can be filed via EFS-Web and application number can be used to record assignment on same day EFAS interface to designate assignment as containing declaration language

Declarations Summary Filing date of application Before September 16, 2012 After September 16, 2012  How many inventor documents are filed? One declaration with N signatures lines, one signature line for each inventor One form for each inventor, each with one signature line and one signature Does the declaration take a position on who the other inventors are? Yes No How many “magic words”? 203 90 Form PTO/SB/01A PTO/AIA/01 Citizenship stated in form? When an inventor cannot be found or refuses to sign? Rule 47 practice Form PTO/AIA/02 (“Substitute Statement”) Use copy of parent declaration in continuation? No (if parent filed before September 16)

Fees Pursuant to fee-setting authority granted by AIA PTO published final rules for adjusted fees on January 18, 2013 Fees became effective March 19, 2013 Purposes of new fees Recover estimated PTO costs Implement key policy considerations Staged fees for RCEs and appeals Expanded availability of reduced fees for small entities Establish fees for micro entities

Fees Notable Fee changes Description Old Fee New Fee Change ($) Total Filing $1260 $1600 $340 27% First RCE $930 $1200 $270 29% Subsequent RCE $1700 $770 83% Notice of Appeal $630 $800 $170 Appeal Brief $0 ($630) (100%) Appeal Forwarding NEW $2000 N/A Inter Partes Review $27200 $23000 ($4200) (15%) Post-Grant Review $35800 $30000 ($5800) (16%)

Power of Attorney No 3.73 form needed with Power of Attorney for non-inventor applicants Power of attorney by non-inventor applicant must be accompanied by PTO/AIA/82A (or equivalent) to identify the application to which the Power of Attorney is directed

First Inventor to File - Effective Date IN GENERAL.—Except as otherwise provided in this section, the amendments made by this section shall take effect upon the expiration of the 18-month period beginning on the date of the enactment of this Act, and shall apply to any application for patent, and to any patent issuing thereon, that contains or contained at any time— (A) a claim to a claimed invention that has an effective filing date as defined in section 100(i) of title 35, United States Code, that is on or after the effective date described in this paragraph; or (B) a specific reference under section 120, 121, or 365(c) of title 35, United States Code, to any patent or application that contains or contained at any time such a claim.

Effective Filing Date Defined 35 U.S.C. §100(i)(1) - The term ‘effective filing date’ for a claimed invention in a patent or application for patent means— (A) if subparagraph (B) does not apply, the actual filing date of the patent or the application for the patent containing a claim to the invention; or (B) the filing date of the earliest application for which the patent or application is entitled, as to such invention, to a right of priority under section 119, 365(a), or 365(b) or to the benefit of an earlier filing date under section 120, 121, or 365(c).

Effective Filing Date Defined 35 U.S.C. §100(i)(2) - The effective filing date for a claimed invention in an application for reissue or reissued patent shall be determined by deeming the claim to the invention to have been contained in the patent for which reissue was sought 35 U.S.C. §100(j) - The term ‘claimed invention’ means the subject matter defined by a claim in a patent or an application for a patent

To Which Applications Do First-to-File Provisions Apply Effective date of first-to-file provisions is defined in terms of applications and patents as a whole “Effective filing date” is defined in terms of each claimed invention (i.e., claim-by-claim) Where application contains (or at any time contained) a claim having an effective filing date on or after March 16, 2013, first-to-file applies to application as a whole Where application contains (or at any time contained) a specific reference to an application or patent that contains (or contained at any time) a claim having an effective filing date on or after March 16, 2013, first-to-file applies to application as a whole

To Which Applications Do First-to-File Provisions Apply Can applicable law change during prosecution? 1) Initially, all claims in all applications are entitled to benefit of App A filing date, so first-to-file does not apply Application A Filed 3/15/13 2) During prosecution of App B, a claim is added that is determined to not be supported by App A and therefore not entitled to benefit of App A filing date, so first-to-file applies to App B as a whole? Due to “contained at any time” language, can this even be cured by cancellation of claim? Priority Claim Application B Filed 10/15/13 Priority Claim Application C Filed 10/15/14 3) Due to “a specific reference” language of effective date provision, does the amendment to the claim in App B result in first-to-file provisions applying to App C even if all claims in App C are properly entitled to benefit of App A filing date? How would this be determined?

Pre-First-to-File Filings Patently-O Blog – March 19, 2013

Designating Applicable Law New ADS form (PTO/AIA/14) includes checkbox to designate that application claiming priority to a pre- March 16 application is subject to first-to-file rules

New §102 Eliminates all “loss of right to patent” provisions of pre-AIA §102 Eliminates §102(c) (abandoned invention), §102(d) (first patented on an application filed more than 12 months prior to US application), §102(f) (did not invent), §102(g) (prior invention by another) Combines portions of pre-AIA §§102(a) and (b) to create a public disclosure prior art paragraph Modifies pre-AIA §102(e) to create a patent prior art paragraph

New §102 Maintains pre-AIA preamble of “entitled to a patent unless” over earlier reform versions that used more logical preamble language of “a patent may not be obtained unless” Pre-AIA language was apparently maintained so as not to disturb current case law that assigns burden during examination to PTO All such case law ultimately traces its origin to In re Warner, which states that: “The precise language of 35 U.S.C. §102 that ‘a person shall be entitled to a patent unless,’ concerning novelty and unobviousness, clearly places a burden of proof on the Patent Office which requires it to produce the factual basis for its rejection of an application under sections 102 and 103.” In re Warner, 379 F.2d 1011, 1016 (C.C.P.A. 1967). See, “A Guide to the Legislative History of the America Invents Act,” The Federal Circuit Bar Journal, Vol. 21, No.3, p. 452.

New §102 Structure (a) Conditions for patentability (1) 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 (2) claimed invention was described in a patent or in a published application effectively filed before the effective filing date of the claimed invention (b) Exceptions (1) Disclosures that are exceptions to (a)(1) (2) Disclosures that are exceptions to (a)(2) (c) Common Ownership Under Joint Research Agreement (d) Patents and Published Applications as Prior Art

New §102(a)(1) (a)(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 Patented or described in a printed publication – similar to pre-AIA §102(a) except date is changed from date of invention to effective filing date In public use or on sale – similar to pre-AIA §102(b) except removes requirement that claimed invention is in public use or on sale in this country and changes date from one year prior to application date to effective filing date

New §102(a)(1) 2011 Committee Report for the AIA cites colloquy between Senators Leahy and Hatch “One of the implications of the point we are making is that subsection 102(a) was drafted in part to do away with precedent under current law that private offers for sale or private uses or secret processes practiced in the United States that result in a product or service that is then made public may be deemed patent-defeating prior art. That will no longer be the case. In effect, the new paragraph 102(a)(1) imposes an overarching requirement for availability to the public, that is a public disclosure, which will limit paragraph 102(a)(1) prior art to subject matter meeting the public accessibility standard that is well-settled in current law, especially case law of the Federal Circuit.” See, “A Guide to the Legislative History of the America Invents Act,” The Federal Circuit Bar Journal, Vol. 21, No.3, p. 467 (citing 157 Cong. Rec. S1496 (daily ed. Mar. 9, 2011)(statement of Sen. Leahy).

New §102(a)(2) (a)(2) the claimed invention was described in a patent issued under section 151, or in an application for patent published or deemed published under section 122(b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention Similar to pre-AIA §102(e) except: Date is changed from date of invention to effective filing date English language requirement is removed Definition of “effective filing date” specifically includes foreign priority dates so a US application claiming priority to a foreign application is prior art against an application as of the foreign filing date Abolishes Hilmer doctrine that establishes the exact opposite with respect to existing § 102(e)

New §102(b)(1) (b)(1) DISCLOSURES MADE 1 YEAR OR LESS BEFORE THE EFFECTIVE FILING DATE OF THE CLAIMED INVENTION.—A disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if— (A) the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or (B) the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.

New §102(b)(1) §102(b)(1) provides exceptions to (a)(1) prior art (b)(1)(A) indicates that an inventor’s own disclosure shall not be (a)(1) art if an application is filed within a year of the disclosure (b)(1)(B) seems to indicate that no disclosure (even a disclosure by another that is entirely independent of the inventor) shall be (a)(1) art if the disclosure occurs after the inventor’s public disclosure and an application is filed within a year of the inventor’s disclosure Does (b)(1)(B) create a “first to disclose” system with respect to (a)(1) art? Does a (b)(1) “disclosure” start a one year clock during which neither the original “disclosure” nor any subsequent “disclosure” is (a)(1) art to an application filed during that year?

New §102(b)(1) Does the (b)(1) “disclosure” exception apply to all types of (a)(1) art (patented, described in a printed publication, in public use, on sale, or otherwise available to the public) or only printed publications? From Leahy-Hatch Colloquy: “[T]he important point is that if an inventor’s disclosure triggers the 102(a) bar with respect to an invention, which can only be done by a disclosure that is both made available to the public and enabled, then he or she has thereby also triggered the grace period under 102(b). If a disclosure resulting from the inventor’s actions is not one that is enabled, or is not made available to the public, then such a disclosure would not constitute patent-defeating prior art under 102(a) in the first place.” See, “A Guide to the Legislative History of the America Invents Act,” The Federal Circuit Bar Journal, Vol. 21, No.3, p. 467 (citing 157 Cong. Rec. S1496 (daily ed. Mar. 9, 2011)(statement of Sen. Hatch).

New §102(b)(2) (b)(2) DISCLOSURES APPEARING IN APPLICATIONS AND PATENTS.— A disclosure shall not be prior art to a claimed invention under subsection (a)(2) if— (A) the subject matter disclosed was obtained directly or indirectly from the inventor or a joint inventor; (B) the subject matter disclosed had, before such subject matter was effectively filed under subsection (a)(2), been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or (C) the subject matter disclosed and the claimed invention, not later than the effective filing date of the claimed invention, were owned by the same person or subject to an obligation of assignment to the same person.

New §102(b)(2) §102(b)(2) provides exceptions to (a)(2) prior art (b)(2)(A) indicates that an application is not prior art to a later filed application if the subject matter of the earlier application was obtained from the inventor of the later application (b)(2)(B) indicates that a patent or application is not prior art to a later filed application if, before the filing date of the earlier application, the subject matter was disclosed by the inventor of the later application First to disclose with respect to (a)(2) art? (b)(2)(C) indicates that an application is not prior art to a later filed application if, not later than the filing date of the later application, the applications were commonly owned or subject to an obligation of assignment to the same person Expands existing § 103(c) – now applicable to novelty and obviousness

§102(a) v. §102(b) (a) Conditions for patentability (b) EXCEPTIONS.— (a)(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 (1) DISCLOSURES MADE 1 YEAR OR LESS BEFORE THE EFFECTIVE FILING DATE OF THE CLAIMED INVENTION.—A disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if— (A) the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or (B) the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor. (a)(2) the claimed invention was described in a patent issued under section 151, or in an application for patent published or deemed published under section 122(b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention (2) DISCLOSURES APPEARING IN APPLICATIONS AND PATENTS.— A disclosure shall not be prior art to a claimed invention under subsection (a)(2) if— (A) the subject matter disclosed was obtained directly or indirectly from the inventor or a joint inventor; (B) the subject matter disclosed had, before such subject matter was effectively filed under subsection (a)(2), been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or (C) the subject matter disclosed and the claimed invention, not later than the effective filing date of the claimed invention, were owned by the same person or subject to an obligation of assignment to the same person.

New §102(c)/(d) §102(c) provides conditions when, for purposes of (b)(2)(C), disclosed subject matter and a claimed invention will be deemed to have been owned or subject to an obligation to assign to the same person if they occurred as a result of a joint research agreement Amends pre-AIA CREATE act language of “a joint research agreement that was in effect on or before the date the claimed invention was made” to “a joint research agreement that was in effect on or before the effective filing date of the claimed invention” Potentially allows parties to avoid prior art by entering into joint research agreement after invention has been made but prior to filing application for the invention §102(d) incorporates the definition of ‘effective filing date’ from earlier in the Act

New §103 §103. Conditions for patentability; non-obvious subject matter A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the invention was made. Essentially restates existing §103(a) but replaces “at the time of the invention” with “before the effective filing date”

Satellite Offices Satellite office opened in Detroit, MI in July 2012 Satellite offices announced for: Dallas, TX Denver, CO San Jose, CA Each expected to have ~100 patent examiners and ~20 administrative patent judges Serve as check in point for work-from-home examiners Expected to include advanced teleconferencing equipment to enable applicants to conduct examiner interviews and argue appeals with other locations

QUESTIONS?