The U.S. Patent System is Changing – A Summary of the New Patent Reform Law

Nelson Mullins Riley & Scarborough LLP The ACC, Wine, and U.S. Patent Law Reform

Nelson Mullins Riley & Scarborough LLP The ACC, Wine, and U.S. Patent Law Reform

Nelson Mullins Riley & Scarborough LLP U.S. Patent Des. 127,007 "Design for a Wine Bottle"

Nelson Mullins Riley & Scarborough LLP U.S. Patent No. 8,061,538 "Wine Rack"

Nelson Mullins Riley & Scarborough LLP “Patent Reform” is Here  The America Invents Act was passed by Congress late summer. It was signed by the President (and therefore enacted) on September 16,  So, the biggest change in our patent system since 1952 is now going to happen. (In fact, some parts of the law are already in effect.)  When signing the law, the President said: “I am pleased to sign the America Invents Act. This much-needed reform will speed up the patent process so that innovators and entrepreneurs can turn a new invention into a business as quickly as possible.”

Nelson Mullins Riley & Scarborough LLP Key Provisions  Changes U.S. to a First-to-File System  Effective March 16, 2013  Changes what is Prior Art  Effective March 16, 2013  Now for Prior User Defense  More Review Procedures in the Patent Office to Challenge Validity  Effective Sep. 16, 2012  Other Provisions of Interest  Effective now (Marking and Prioritized Examination)  Effective Sep. 16, 2012 (Assignee filing)

Nelson Mullins Riley & Scarborough LLP FIRST-TO-FILE SYSTEM

Nelson Mullins Riley & Scarborough LLP First-to-File  The First-to-File System comes into effect 18 months after enactment (March 16, 2013). Until then, the current system remains in effect.  “Race to the Patent Office”  Eliminates interference proceedings (no longer litigate "first to invent" issues)  Changes definition of “prior art” to eliminate the ability to "swear behind" prior art cited against patent application  First-to-File system will not apply to any applications with a proper claim of priority earlier than March 16, 2013.

Nelson Mullins Riley & Scarborough LLP PRIOR ART

Nelson Mullins Riley & Scarborough LLP Prior Art  Changes go into effect with First-to-File  The “prior art” against which patentability is judged has been expanded.  Anywhere (scope expansion) in the world before the filing date (time expansion):  Patented  Described in a printed publication  In public use  On sale  Otherwise available to the public (new-scope expansion- expect litigation on this point)

Nelson Mullins Riley & Scarborough LLP Prior Art  “Prior art” also includes U.S. patent applications (or PCT applications designating the U.S.) that are later patented or published  These are prior art as of their earliest effective filing date, which can be a foreign application  Prior law limited this to the earliest actual U.S. filing date  Cannot “swear behind” as allowed under prior law

Nelson Mullins Riley & Scarborough LLP Prior Art  Obviousness  Judged as of effective filing date (rather than “at the time the invention was made”)  Patent applications, even if "secret," considered as of filing and before published (most other countries base on publication except for novelty) Reform: Obviousness includes secret prior art. Effective Filing Date

Nelson Mullins Riley & Scarborough LLP Prior User Defense  The Prior User Defense has been expanded.  Previously limited to methods of doing or conducting business  Now covers any “invention”  Effective now (i.e., applies to all patents issued after September 16, 2011)  Provides a defense to infringement if --  Accused infringer made commercial use of the invention in the U.S, and  The commercial use occurred more than 1 year before effective filing date

Nelson Mullins Riley & Scarborough LLP Prior User Defense  This is a “personal” defense  Cannot be licensed or assigned by itself (or expanded by acquisition)  Must show continuous use  Not a general license for the entire patent (only extends to the thing that was used)  Interplay with Trade Secrets  May increase the value and desirability of maintaining trade secrets  If successful, allows continued commercial use of anything later patented by a third party

Nelson Mullins Riley & Scarborough LLP VALIDITY CHALLENGES

Nelson Mullins Riley & Scarborough LLP Validity Challenges and Reexamination  Third-Party Pre-Issuance Submissions  Ex Parte Reexamination  Inter Partes Reexamination  Post Grant Review (PGR)  Inter Partes Review (IPR)  Supplemental Examination  The new procedures take effect September 16, 2012

Nelson Mullins Riley & Scarborough LLP Challenges Pre-Issuance Submissions (before earlier NOA or later of first rejection/publication + 6 mths ) Ex Parte Reexam (continues as normal) Post-Grant Review (only by a third party and up 9 months after patent issues) Inter Partes Review (after the later of 9 months after issuance or after post-grant review) Patent Grant

Nelson Mullins Riley & Scarborough LLP Pre-Issuance Submissions  Any third party can file (can be a “straw man”)  Patent applications, patents, or other printed publication of potential relevance  Time limit -- earlier of (i) allowance or (ii) later of 6 months after publication or first rejection  Must include description of each document's relevance  Filer cannot otherwise communicate with the patent examiner  Applies to all applications pending on or after September 16, 2012

Nelson Mullins Riley & Scarborough LLP Post-Grant Review Inter Parties Review  Standard  "more likely than not" that at least 1 of the challenged claims is unpatentable  Grounds  Any section 102/103 prior art  Section 112 (enablement and definiteness)  Some discovery available  Standard  Substantial new question of patentability  Grounds  Prior art patents and printed publications  Anticipation or obviousness  Some discovery available  Any third party can file -- do not need to be threatened. But, there is a preclusion against using the same defenses later in litigation.  The fee to file one of these may be very steep, such as $40,000 or more. But, cheaper (and faster) than litigation.

Nelson Mullins Riley & Scarborough LLP Supplemental Examination  By Patent Owner  Consider, reconsider, or correct information believed to be relevant to patent  Patent Office has 3 months to determine if substantial new question of patentability  If initiated, addresses all identified substantial new questions (without limitation to patents and printed publications). So broader than current ex parte reexamination.  Would typically be used to “fix” a patent about to be enforced

Nelson Mullins Riley & Scarborough LLP PATENT OFFICE PROCEDURES

Nelson Mullins Riley & Scarborough LLP Patent Office Procedures  Prioritized Examination  Patent Office Funding

Nelson Mullins Riley & Scarborough LLP Prioritized Examination  Can request “prioritized examination” of an application for a fee of $4800  Request must be filed at the time the application is filed  No need to give a reason  Moves to the top of the Examiner’s queue  In effect now, but currently limited to 10,000 per year

Nelson Mullins Riley & Scarborough LLP Patent Office Funding  PTO has authority to set its own fees  The fees to approx. actual PTO costs  Immediate 15% surcharge  Proposed Fee Increases  Suppl. Exam- $5,180 + $16,120= $21,300  Reexams – Ex parte Reexam increased from $2,520 to $17,750  Inter Partes Review - $48,000?

Nelson Mullins Riley & Scarborough LLP PATENT MARKING

Nelson Mullins Riley & Scarborough LLP Patent Marking  False Marking and Virtual Marking.  False marking penalties reformed.  Can “mark” products via reference to a website.  Effective now.

Nelson Mullins Riley & Scarborough LLP CONCLUSIONS

Nelson Mullins Riley & Scarborough LLP Observations  First to File makes the U.S. patent system more similar to other countries  March 16, 2013 (critical date)  Expect companies may file more provisional applications  Even with First to File, detailed inventor records remain important.  Because of the Post-Grant Review time limit, early notice of competitor patents is even more critical— consider Monthly patent watch and assessment.  Virtual Marking – consider for patent marking  Supplemental Examination – consider before litigating

Nelson Mullins Riley & Scarborough LLP Discussion