1. © 2006 Brett J. Trout www.bretttrout.com
Patent Reform Act of 2005
© 2006 Brett J. Trout

2. System Rationales Backlog of over 550,000 unexamined applications
Present system virtually unchanged since 1950s
Present system "outdated, inefficient and cumbersome"

3. Quality Rationales
From 1992 to 2004, $750M in PTO fees diverted to other government agencies for unrelated purposes
Staffing losses translate into delays and quality concerns
USPTO hiring 1,000 patent examiners/yr to catch up

4. Cost Rationales Costs have skyrocketed Challenging patent validity
Defending patent infringement claims

5. Harmonization Rationale
International harmonization
US alone in first to invent priority determination

6. Goals Reduce delays Harmonize with international practice
Reduce abusive litigation tactics
Increase quality of issued patents

7. Does Reform Act harm small inventors
Major Issue
Does Reform Act harm small inventors

8. Reforms Changes "first to invent" standard to "first to file"
Eliminates "best mode" in favor of no inequitable conduct

9. Reforms Public can challenge patent application Curtails injunctions
Post-grant opposition system

10. Reforms
Willful infringement limited
Prior Art limited
Damages limited

11. Most controversial for small inventors
1. First to File
Most controversial for small inventors

12. First to File As of date of filing
Novel
Non-obvious
Harmonizes with the rest of the world

13. 1983-2004 4,500,649 utility, plant and reissue applications filed
2,456,479 granted
3,253 interferences (.00007)

14. Small Entities 83-04 286 second to file and won
289 first to file and lost

15. Independent Inventors 83-04
167 first to file and lost
139 second to file and won

16. What are we missing? First year of marketing gone Determines viability
Generates revenue needed for patent
Much greater problem for small inventors

17. Objective vs. Subjective Criteria
2. No Best Mode
Objective vs. Subjective Criteria

18. Best Mode-Subjetive Must disclose best mode Costly issue in litigation
Determined at trial
Determined before judgment

19. Inequitable Conduct-Objective
Patent owner
Knowingly left out or misrepresented
Material Information
Knew it was material
Intent to deceive

20. Inequitable Conduct Determined by PTO
After trial has invalidated a claim
Clear and convincing evidence

21. Inequitable Conduct May reduce costs at trial Avoids tainting jury
May protect trade secrets

22. During application process
3. Public Challenge
During application process

23. Public Challenge Public can submit prior art
Must explain the relevance of the references
Must pay a fee
Increases Examiner access to prior art

24. Public Challenge Before allowance
No later than 6 months after publication
Can reference pending application

25. Currently, courts grant injunctions
4. Injunctions Limited
Currently, courts grant injunctions
“in accordance with the principles of equity … on such terms as the court deems reasonable”

26. Proposal Courts must Consider all facts
Consider interests of all parties
Stay an injunction pending an appeal
If no irreparable harm to the patentee and
balance of hardships does not favor patentee

27. Limiting Injunctions Software and IT industries support
Death knell to fast burn rate companies
Injunction can stop entire product line

28. Limiting Injunctions Biotech and pharmaceuticals against
See elimination as compulsory licensing
Only eliminates one product

29. Limiting Injunctions Federal Circuit against
Right not reserved to marketers
Leverage natural by-product of monopoly

30. Limiting Injunctions Probably fewer settlements
Patentee has less leverage
Accused infringer has less at stake

31. Settle matters before the PTO
5. Post Grant Opposition
Settle matters before the PTO

32. Post Grant Opposition Preponderance of the evidence
9 months after grant
6 months after notice of infringement
PTO must hear within 3 months and decide within 12

33. Post Grant Opposition
Sounds great in theory
Faster
Cheaper

34. Post Grant Opposition In reality Who is going to fund it?
Strong incentive for PTO to rubber stamp
Litigators prefer juries to administrators

35. Post Grant Opposition Works well in Europe
Success depends on respect for decision makers
Rubber stamping examiners will destroy process

36. 6. Undermining Willfulness
Incentive to infringe?

37. Undermining Willfulness
Continue after notice of infringement,
Deliberate copying, or
Continue after judgment

38. Undermining Willfulness
Knowledge of patent not enough
Notice of infringement must be sufficient to trigger declaratory judgment

39. Undermining Willfulness
Encourages review of patents
No discovery on willfulness prior to infringement

40. Undermining Willfulness
Encourages infringement
Discourages settlement
Hurts small inventors

41. 7. Eliminating Prior Art
On sale and public use

42. Prior Art
No “on sale” bar
No “public use” bar

43. Prior Art Must be prior to earliest domestic or foreign filing date
Must be reasonably and effectively accessible

44. 8. Damages
Apportionment

45. Damages Eliminates “entire market value” rule
Invention is reason for demand
Damages would be apportioned based upon value of product attributable to invention
Reduces damage awards

46. Conclusions
Yea or Nea

47. Conclusions Favors large corporations Incentive to infringe
Time and cost advantages unrealistic
Lots of revisions before implementation

48. Questions?