America Invents Act  Date of enactment: 9/16/11  First-to-file provisions effective 18 months after enactment – March 16, 2013  Applications filed on or after 3/16/13 are examined under the AIA’s FITF provisions  Expanded § 273 defense under AIA applies immediately  AIA applies retroactively for false marking suits 1

Significant Provisions in the Bill  First-to-invent becomes first-to-file  Provides for “ post-grant review ” proceedings  Provides for supplemental examination process  Provides for IPR, a revised inter partes reexamination  Expands §273 beyond business methods  Extends time period for third party submission of prior art  Eliminates best mode as defense to infringement  False marking and virtual marking 2

First-to-File: Overview  First inventor who files a patent application will generally be entitled to the patent  Prior art fixed by filing date of the patent application  Prior art includes public use or sale in a foreign country, unlike old §102(a), (b)  “ Swearing behind ” prior art is no longer an effective technique for removing otherwise prior art 3

First-to-File: Inventor ’ s Grace Period  The inventor is allowed a one-year grace period in which the inventor ’ s “ disclosure ” is not prior art  Derived disclosures eligible for grace period  Subsequent disclosure by third-party not prior art 4

First-to-File: Effective Date  18 months after enactment – March 16, 2013  “ Derivation ” proceedings will determine inventorship beginning with effective date of AIA  Governed by §135 5

First-to-File and § 102(a)  New § 102:  (a) NOVELTY; PRIOR ART.—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; or (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. 6

First-to-File and § 102(b)(1)  (b) EXCEPTIONS.— (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. 7

First-to-File and § 102(b)(2)  Section 102(b) exceptions continued:  (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. 8

First-to-File Example timeline Under current first-to-invent system: Inventor B wins CRTP File CRTP File Under new first-to-file system: Inventor A wins Inventor B Inventor A “ C ” = Conception of invention “ RTP ” = Reduction to practice of invention “ File ” = Application filed with PTO 9

Impact of AIA on Litigation  Calmedica case as example  Under old statute, Fischell ‘166 patent was not prior art (without additional evidence) even though he had earlier filing date (12/11/89 vs. 9/5/91) because Hess arguably had earlier DOI  Under AIA, Fischell ‘166 patent is prior art to Hess  Hess can no longer swear behind it, as he did under old statute  Prior art no longer dependent on date of conception, diligence, or reduction to practice 10

First-to-File Example timeline Disclosure within grace period is not prior art Timeline: Inventor discloses invention Application filed 1 year 11

Impact of AIA on Litigation  Under old statute, inventor can make a public use or offer to sell in U.S. less than one year before filing without it becoming a statutory bar  If the inventor’s public use or offer to sell is outside the U.S., there is no statutory bar regardless of time period  Under AIA, inventor can make a public disclosure less than one year before filing without it becoming a statutory bar  If the inventor’s public disclosure is outside the U.S., there is a statutory bar if the disclosure occurred more than one year before filing 12

First-to File Example timeline Third party disclosure is not prior art Timeline: Inventor discloses invention Application filed 1 year Third party discloses invention 13

Impact of AIA on Litigation  Under old statute, third party disclosure only had an impact if it preceded inventor’s DOI  Third party disclosure after inventor’s disclosure would have had no impact because it came after inventor’s DOI  Under AIA, third party disclosure before inventor’s disclosure, whose disclosure was within year of filing, is prior art  Under AIA, third party disclosure after inventor’s disclosure, whose disclosure was within year of filing, is not prior art 14

First-to-file: Important results  Conception, diligence, reduction to practice, and abandonment no longer relevant to inventor priority  Interference proceedings eliminated  Brings U.S. in line with rest of world  Inventor’s pre-filing disclosure prevents subsequent pre-filing third-party disclosure from becoming prior art 15

Significant Provisions in the Bill  First-to-invent becomes first-to-file  Provides for “ post-grant review ” proceedings  Provides for supplemental examination process  Provides for IPR, a revised inter partes reexamination  Expands §273 beyond business methods  Extends time period for third party submission of prior art  Eliminates best mode as defense to infringement  False marking and virtual marking 16

Post-Grant Review (PGR)  Bill implements a new post-grant review procedure to challenge the validity of an issued patent  Post-grant review must be initiated within nine months of issuance of patent  Standard for instituting: more likely than not that a claim is unpatentable, or novel legal question  Board has one year from grant of petition in which to enter a final decision  Challenge can be any invalidity defense 17

Post-Grant Review: Benefits  Occurs before administrative patent judges (new Patent Trial and Appeal Board), not an examiner as with ex parte reexamination proceedings  Can include challenge to patentability on any ground, including those not allowed in reexamination  Evidence not limited to prior patents and printed publications 18

Post-Grant Review: Limitations  Not allowed where DJ action previously filed, and civil suit automatically stayed where subsequently filed (encourages administrative challenges as opposed to litigation)  If post-grant review results in a final written decision, petitioner is estopped from requesting or maintaining another proceeding based on any grounds that were or reasonably could have been raised in post-grant review (which, as discussed above, includes all grounds of patentability) 19

Impact of AIA on Litigation  Possible that a significant amount of patent litigation will shift to the PTAB, particularly cases with validity defenses that lack sex appeal  If putative infringer opts for PGR and loses, he’s estopped from attacking validity in district court litigation 20

Significant Provisions in the Bill  First-to-invent becomes first-to-file  Provides for “ post-grant review ” proceedings  Provides for supplemental examination process  Provides for IPR, a revised inter partes reexamination  Expands §273 beyond business methods  Extends time period for third party submission of prior art  Eliminates best mode as defense to infringement  False marking and virtual marking 21

Supplemental Examination Process (SEP)  Patentee may ask PTO to consider, reconsider, or correct information that may be relevant to the patent  E.g., prior art not previously cited by applicant  If PTO concludes information does not raise substantial question of patentability, it cannot later serve as basis for challenging enforceability  If PTO concludes information does raise substantial question of patentability, patent enters reexamination  SEP not available if litigation pending 22

Impact of AIA on Litigation  Solves some Catch 22’s faced by prosecuting attorneys  May reduce frequency of inequitable conduct claims in district court  Increases likelihood that prospective plaintiff patentee will conduct internal investigation into possible inequitable conduct before asserting patent 23

Significant Provisions in the Bill  First-to-invent becomes first-to-file  Provides for “ post-grant review ” proceedings  Provides for supplemental examination process  Provides for IPR, a revised inter partes reexamination  Expands infringement defense beyond business methods  Extends time period for third party submission of prior art  Eliminates best mode as defense to infringement  False marking and virtual marking 24

Inter Partes Review: What Changes?  Review procedure: PTAB, not examiner (as in old inter partes reexamination)  Very limited discovery and oral hearing  Can petition within 9 months after issue  Cannot initiate if petitioner has filed DJ action challenging the validity, or if more than 1 year has passed since petitioner was served with a complaint  IPR must be completed within one year from institution  Appeals go directly to Federal Circuit  Estoppel attaches upon final decision of PTAB  Patent owner has right to stay co-pending litigation, subject to court approval 25

Inter Partes Review: What Stays the Same?  Any patent can be challenged regardless of issue date  Grounds of invalidity remain limited to novelty and non- obviousness  Evidence remains limited to prior patents or printed publications  Standard of review for initiation of proceedings changed, but only in name: “reasonable likelihood that petitioner would prevail with respect to at least one of the claims challenged in the petition” vs. “significant new question of patentability”  Claims construed using “broadest reasonable interpretation”  Burden of proof: preponderance of the evidence 26

Impact of AIA on Litigation  PTAB viewed by many as the patent “death squad”  Few patents have survived unscathed  No presumption of validity  BRI of claims means increased prospect of invalidating prior art  Patentee effectively can’t amend claims  Estoppel arises sooner  APJ’s  Other factors making IPR’s attractive:  112, 101, 102/103 defenses not based on patents or printed publications  Lower costs than district court litigation  Shorter duration than district court litigation  Prediction: net effect of IPR’s will be dramatic reduction in district court litigation in favor of IPR’s 27

Significant Provisions in the Bill  First-to-invent becomes first-to-file  Provides for “ post-grant review ” proceedings  Provides for supplemental examination process  Provides for IPR, a revised inter partes reexamination  Expands §273 beyond business methods  Extends time period for third party submission of prior art  Eliminates best mode as defense to infringement  False marking and virtual marking 28

Section 273 defense  Current prior use defense under 35 U.S.C. § 273 limits defense to business method patents  “It shall be a defense to an action for infringement [of] claims for a method... if such person had... actually reduced the subject matter to practice at least 1 year before the effective filing date of such patent, and commercially used the subject matter before the effective filing date of such patent. ”  “ The term ‘ method ’ means a method of doing or conducting business. ”  How might this happen without the prior use invalidating the patent?  Inventor on patent conceived first 29

Section 273 defense  The bill expands this defense to any subject matter  Limitations:  Prior user must have commercially used the subject matter in the U.S. at least one year before effective filing date of the issued patent and  Commercially used the subject matter in the U.S. at least one year before any inventor disclosure under the one year grace period 30

Significant Provisions in the Bill  First-to-invent becomes first-to-file  Provides for “ post-grant review ” proceedings  Provides for supplemental examination process  Provides for IPR, a Revised inter partes reexamination  Expands §273 beyond business methods  Extends time period for third party submission of prior art  Eliminates best mode as defense to infringement  False marking and virtual marking 31

Extends Time Period for Third Party Submission of Prior Art  Permits public to submit relevant prior art to Patent Office during examination of application  Current MPEP rule limits time period to 2 months following publication of application (§ )  Bill extends time period to the earlier of:  The date a notice of allowance is given or mailed; or  The later of 6 months after publication or the date of the first rejection 32

Significant Provisions in the Bill  First-to-invent becomes first-to-file  Provides for “ post-grant review ” proceedings  Provides for supplemental examination process  Provides for IPR, a Revised inter partes reexamination  Expands §273 beyond business methods  Extends time period for third party submission of prior art  Eliminates best mode as defense to infringement  False marking and virtual marking 33

Best Mode  Best mode still required by the PTO  No longer a basis for invalidity 34

Significant Provisions in the Bill  First-to-invent becomes first-to-file  Provides for “ post-grant review ” proceedings  Provides for supplemental examination process  Provides for IPR, a revised inter partes reexamination  Expands §273 beyond business methods  Extends time period for third party submission of prior art  Eliminates best mode as defense to infringement  False marking and virtual marking 35

False Marking  A few years ago, numerous false marking cases were filed  Prompted in part by Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009):  Knowledge that a product was falsely marked is sufficient to draw inference of deceptive intent; patentee ’ s mere assertion that it did not intend to deceive will not defeat liability  Congress decided to nix further suits by enacting a false marking provision in the AIA 36

False Marking  The bill substantially changes the false marking statute:  Eliminates false marking lawsuits except for ones filed by the U.S. government or by a competitor who can prove competitive injury  Applies retroactively to all suits pending at time of enactment 37

Virtual Marking  Allows markings that direct the public to a freely- accessible Internet address where a patented article is associated with its patent number to provide public notice that an article is patented  Markings can include “ Pat. ” or “ Patented ”  Easier to update website than tooling of a product when patent expires 38

Additional Provisions  Lack of defensive opinion cannot be asserted by patentee as evidence of willful infringement  Supplement to In re Seagate Technology (holding that patentee must prove that defendant infringed despite an “ objectively high likelihood that his actions constituted infringement of a valid patent, and this objectively- defined risk was either known or so obvious that it should have been known. ” )  Opinion still can be used by accused infringer as evidence against willful infringement 39