1 The CREATE Act and Other Interesting IP Tidbits Brian R. Stanton, Ph.D. Director, Division of Policy Office of Technology Transfer National Institutes of Health U.S. Department of Health & Human Services Patent Lawyers Club of Washington 29 March 2005

2 U.S. Patent and Trademark Office Is everything the same, only different?

3 Commissioner for Patents Nicholas P. Godici To Retire March 29th

4 U.S. PTO Senior Staff John Doll Deputy Commissioner for Patent Planning and Resources Peggy Focarino Deputy Commissioner for Patent Operations Joe Rolla (NTE 1 year?) Deputy Commissioner for Patent Policy

5 USPTO Director Initiatives Reexamination –Special Dispatch PCT –Timeliness of Actions BPAI Appeals –60% never make it

6 USPTO Director Initiatives Search Quality –Search Grids –Search Recordation –Search QR Patentability Conferences –Quality & Training 2 nd Pair of Eyes –Redefine

7 USPTO Director Initiatives e-filing probably in XML tagged format –All follow on papers must be e-filed Limited number of claims –2 – 3 independent / 20 – 30 dependent Patentability search –With explanation of each reference with respect to claims Mandatory telephone restriction elections Mandatory interview either before or right after first action 2 month shortened statutory time for response –With no extensions Mandatory appeal Accelerated Examination Initiative

8 UPR Applications Filed  FY ,527  6.6% above FY 03  FY 05 plan 375,080 (5.5% above FY 04)  118,235 as of 1/28  Current projection 102.6% over plan

9 FY 04 UPR 1 Applications Filed Technology Center FY 04 FY 03 to FY04 Growth Rate Biotechnology and Organic Chemistry38, % Chemical and Materials Engineering 49, % Computer Architecture Software and Information Security 34, % Communications48, % Semiconductor, Electrical, Optical Systems81,1447.6% Transportation, Construction, Electronic Commerce47, % Mechanical Engineering, Manufacturing and Products56,5335.5% UPR Total 355,5276.6% 1 “UPR” = Utility, Plant, and Reissue Applications FY 05 TC filings not yet available. Initial processing imposes a two to four month delay in assignment to a TC.

10 FY 04 Patent Pendency Technology Center Average 1 st Action Pendency 1 (months) Average Total Pendency 2 (months) Biotechnology and Organic Chemistry Chemical and Materials Engineering Computer Architecture Software and Information Security Communications Semiconductor, Electrical, Optical Systems Transportation, Construction, Electronic Commerce Mechanical Engineering, Manufacturing and Products UPR Total “Average 1 st action pendency” is the average age from filing to first action for a newly filed application, completed during 4 th quarter FY “Average total pendency” is the average age from filing to issue or abandonment of a newly filed application, completed during 4 th quarter FY 2004.

11 FY 05 Patent Pendency (as of 12/31/04) Technology Center Average 1 st Action Pendency (months) 1 Average Total Pendency (months) Biotechnology and Organic Chemistry Chemical and Materials Engineering Computer Architecture Software and Information Security – Communications Semiconductor, Electrical, Optical Systems Transportation, Construction, Electronic Commerce Mechanical Engineering, Manufacturing and Products UPR Total (as of 12/31/2004) FY 05 Target 20.7* “Average 1 st action pendency” is the average age from filing to first action for a newly filed application, completed during 1 st quarter FY “Average total pendency” is the average age from filing to issue or abandonment of a newly filed application, completed during 1 st quarter FY * Assuming current input and output estimates, the agency should achieve first action pendency of 21.3 months by the end of FY 2005.

Total*Design New Applications 1 9/30/ ,35852,38866,64585,91757,52845,62250,280457,25411,704 New Applications 1 9/30/ ,40263,92371,77897,38077,65156,73865,005508,87818,451 Overall Pending Applications 2 9/30/ ,82792,41288, , ,89987,15391,170737,94422,533 Overall Pending Applications 2 9/30/ ,006105, , , , , ,039809,32327,599 TC Application Inventory 1 “New Application inventory” is the number of new applications designated or assigned to a technology center awaiting a first action. 2 “Overall Pending Application inventory” is the total number of applications designated or assigned to a technology center in an active status. Includes new applications; rejected awaiting response; amended; under appeal or interference; suspended; reexams and allowed applications awaiting grant publication. * Total inventory includes approximately 55,000 applications awaiting processing 9/30/2003, and approximately 22,000 applications awaiting processing 9/30/2004.

13 Inventory by Art Examples High Inventory Art Areas Months of Inventory* Low Inventory Art Areas Months of Inventory* 1614, 1615, and 1617 – Drugs, Bio-affecting and Body Treatment 47 – – Organic Chemistry – Chemical Analysis – Adhesive Bonding and Coating Apparatus – Computer Task Management – Manufacturing Control Systems and Chemical/ Mechanical/Electrical Control – Interactive Video Distribution , 2653 – Information Storage and Retrieval – Control Circuits – Electrical Conductors – Business Methods34 – – Conveying and 3737 – Medical Instruments, Diagnostic Equipment 46 – – Thermal and Combustion Technology 10 *The number of months it would take to reach a first action on the merits (e.g., an action addressing patentability issues) on a new application filed as of Jan 2005 at today’s production rate. Today’s production rate means that there are no changes in production due to hiring, attrition, changes to examination processing or examination efficiencies, and that applications are taken up in the order of filing in the given art unit/area. Of course, USPTO is taking aggressive steps to ensure changes that will significantly lower the inventory rates in high-inventory art areas.

Corps FY 04 % First Action Allowances 13.0 % 17.8 % 10.3 % 13.5 % 27.1 % 12.1% 17.9 % 17.4 % FY 05 % First Action Allowances Through 1/11/ % 15.7 % 9.7% 13.6 % 28.8 % 14.1% 17.0 % 17.5 % TC 1 st Action Allowances* *TC First Action Allowances are calculated from first action counts received by an examiner. A first action restriction performed by an examiner is not a ‘first action count’ and thus an allowance following a first action restriction is included as a first action allowance count. A first action allowance following the filing of an RCE is included. An examiner receives both a first action count and a disposal count for first action allowances.

15 Quality of Products Fiscal Year Design FY 04 Total FY 05 Target Application In-Process Review Compliance Rate %83.1%88.3%74.2%86.8%79.6%81.7%90.4%82.0%84% Patent Allowance Error Rate %8.03%3.05%2.53%3.39%7.54%9.01%3.28%5.32%4.0% 1 Compliance is the percent of office actions reviewed and found to be free of any in-process examination deficiency (an error that has significant adverse impact on patent prosecution). 2 Patent allowance error rate is the percent of allowed applications reviewed having at least one claim which is considered unpatentable on a basis for which a court would hold a patent invalid. “Allowance” occurs before a patent is issued, so these errors are caught before any patent is actually granted.

16 Hires and Attritions Corps Desig n FY 04 Hires FY 04 Attritions FY 05 BOY Examiner Staff FY 05 Hiring Goal FY 05 Hiring Summary (2/7/05)* New Hire Percentage of Total 24%8%36%23%22%21%28%23%28% *Includes hires on board and confirmed and pending offers

17 Patents e-Government Initiatives EFS Web Interface pdf 1 application submission Tri-lateral Dossier Access with EPO Priority Document Exchange Patent’s File Wrapper (PFW) - Moving from electronic image based applications (IFW) to electronic text based applications (PFW) 1 “pdf” is an internationally accepted standard format for electronic documents.

18 The CREATE Act The CREATE Act 35 U.S.C. 103(C) As Amended by the Cooperative Research and Technology Enhancement (CREATE) Act Enacted December 10, 2004

19 “The CREATE act provides a … means of extending the ‘safe harbor’ provisions of current patent law that treats inventions of a common owner similarly to inventions made by a single person.” 108 th Congress, 2d session H.R. Report

20 The CREATE Act: Section 103(c) of Title 35, United States Code: 103(c)(1) remains the same - 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.

21 The CREATE Act 35 U.S.C.103(c)(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--

22 The CREATE Act 35 U.S.C.103(c)(2) (cont.) (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.

23 For the purposes of CREATE, the term joint research agreement means:  A written Contract,  Grant, or  Cooperative Agreement which is 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.

24 “ Congress … intend[s] 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.” 108 th Congress, 2d session H.R. Report

25 The Grant Concern  While the Act uses the term “grant” broadly, it is unclear whether merely labeling it as such without the exchange of information between the parties on the claimed invention is sufficient to establish a JRA.  Based upon the Congressional report, it can be argued that Congress did not intend that a simple financial award, although called a “grant” would be considered a JRA under this Act.

26 Joint Research Agreements could also include:  CRADAs  Material Transfer Agreements (MTAs)  Clinical Trial Agreements (CTAs)  InterInstitutional Agreements (IIAs)  Others

27 § Double patenting 5. Section is added to read as follows: (a) A double patenting rejection will be made in an application or patent under reexamination if the application or patent under reexamination claims an invention that is not patentably distinct from an invention claimed in a commonly owned patent. This double patenting rejection will be made regardless of whether the application or patent under reexamination and the commonly owned patent have the same or a different inventive entity.

28 § Double patenting A judicially created double patenting rejection may be obviated by filing a terminal disclaimer in accordance with § 1.321(c). (b) A double patenting rejection will be made in an application or patent under reexamination if the application or patent under reexamination claims an invention that is not patentably distinct from an invention claimed in a non-commonly owned patent by or on behalf of parties to a joint research agreement…

29 § Double patenting … in which the inventions claimed in the application or patent under reexamination and in the other patent were made as a result of activities undertaken within the scope of the joint research agreement.

30 § Statutory disclaimers, including terminal disclaimers (1) Comply with the provisions of paragraphs (b)(2) through (b)(4) of this section; (2) Be signed in accordance with paragraph (b)(1) of this section if filed in a patent application or be signed in accordance with paragraph (a)(1) of this section if filed in a reexamination proceeding; (3) Be signed by the patentee or by the applicant, or an attorney or agent of record, of the disqualified patent or application; and (4) Include a provision that the owner of the rejected application or patent and the owner of the disqualified patent or application each:

31 § Statutory disclaimers, including terminal disclaimers. (4)(iii) Agree that such waiver and agreement shall be binding upon the owner of the rejected application or patent, its successors, or assigns, and the owner of the disqualified patent or application, its successors, or assigns.

32 PART 3—ASSIGNMENT, RECORDING AND RIGHTS OF ASSIGNEE § 3.11 Documents which will be recorded (c) A joint research agreement or an excerpt of a joint research agreement will also be recorded as provided in this part. A joint research agreement or excerpt of a joint research agreement submitted for recording by the Office must include the name of each party to the joint research agreement, the date the joint research agreement was executed, and a concise statement of the field of invention. 10. Section 3.31 is amended by adding a new paragraph (g) to read as follows:

33 Issue: § 1.71 Detailed description and specification of the invention  Should the USPTO require notification of first filing party or require signatures of both parties before an applicant may invoke the CREATE Act?  Should the specification be amended in both applications. If the party of the first filing has already issued as a patent, should the amendment be required via certificate of correction or other appropriate mechanism?

34 Issue: § 1.71 Detailed description and specification of the invention  Should the USPTO require the patent applicant to notify any party identified as a party to a Joint Research Agreement (JRA) whether or not they have a conflicting application or patent?  Should the PTO require both parties to a JRA to affirm that a JRA was in place and both parties are requesting the benefits of CREATE?

35 ISSUE: § 1.71 Detailed description and specification of the invention (ii) A concise statement of the field of the claimed invention. Should the USPTO clarify the standards by which amendments to the specifications to include the ‘field of the claimed invention’ would be judged vis-à-vis ‘new matter?’ Are the requirements of 1.71(g)(1)(ii) consistent with the requirement of 1.104(B) since the ‘scope of the JRA’ may be different from the ‘scope of the claimed invention?’

36 Issue: § Double patenting The USPTO is silent if an obviousness type double (ODP) patenting rejection will be made against both the 1 st to file and the later filed application if both are pending. Since CREATE extends the ‘common ownership’ provision of 103(c) it is possible that the 1 st to file might be rejected under ODP. If the ODP is predicated upon a pending application, would it be desirable, as a matter of patent examination policy, for the USPTO to allow the first filed application to issue to avoid creating a legal and financial burden on the party of first filing.

37 Issue: § Double patenting Should the USPTO address how it will handle situations in which a first filing applicant refuses to sign a terminal disclaimer.

38 Interesting Patent Cases What is utility? Research Exemptions? The Fate of Written Description?

39 Research Exemptions “Experimentation on the invention?” AIPLA’s proposal…will it work? 35 USC 271(e)(1)…drifting standard? –Merck KGa v. Integra

40 35 U.S.C. 271 (e)(1) It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention (other than a new animal drug or veterinary biological product (as those terms are used in the Federal Food, Drug, and Cosmetic Act and the Act of March 4, 1913) which is primarily manufactured using recombinant DNA, recombinant RNA, hybridoma technology, or other process involving site specific genetic manipulation techniques) solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.

41 Merck KGa v. Integra 2003: CAFC limits safe harbor provision of 35 USC 271(e)(1) –Judge Newman dissenting 2005: Supreme Court issues cert.

42 Merck: Amicus Briefs In Support of Merck: –NYIPLA, EON Labs, AARP, Consumer Project and the Electronic Frontier, PhRMA, Sepracor, Genentech, Biogen, US Government, Eli Lilly, Wyeth, and Pfizer In Support of Neither Party: –AIPLA, BAR Association of the District of Columbia, San Diego IPLA, and BIO In Support of Integra: –Benitc, Vaccinex, Applera, Invitrogen, WARF

43 Utility… Is there a reasonable standard?

44 In re Fisher “First generation” EST Comprising language The rejections: –Utility –Written description (Lilly type)

45 In re Fisher Appeal from the USPTO BPAI EST technology –Testing utility standard –Written description test a “no-go” Amicus Briefs –Eli Lilly, AAMC, NAS, Baxter, Dow, ACMG –Affymetrix –Genentech

46 Thank You! Brian Stanton Director, Division of Policy OTT/OD/NIH