Foley & Lardner Guide to THE 1999 PATENT LAW(1)
By Members of Foley & Lardner(2)
I. MANAGEMENT OVERVIEW OF THE 1999 PATENT LAW
II. PRIOR USER RIGHTS
III. PUBLICATION OF PATENT APPLICATIONS
IV. PRE-GRANT COMPENSATION
V. REEXAMINATION REVISIONS
VI. SCOPE OF PRIOR ART FOR NOVELTY
VII. SECRET PRIOR ART FOR OBVIOUSNESS
VIII. SHORTENED BAR AGAINST CLAIM COPYING
IX. INVENTION PROMOTION PITFALL TO PRACTITIONERS
Detailed Table of Contents
I. MANAGEMENT OVERVIEW OF THE 1999 PATENT LAW
II. PRIOR USER RIGHTS
A. Elements of the Prior User Right Defense
1. "Method"
2. Prior Activity and Timing
a. Commercial Use
b. Reduction to Practice One Year Earlier
c. Abandonment of Use
d. Effective Filing Date
3. Derivation
B. Nature of the Defense
1. No General License
2. A Personal, Inalienable Right to Use.
3. Site Limitation
C. Proofs and Penalties
1. Clear and Convincing Evidence Standard
2. Penalties for Unsuccessful Assertion
D. Prophylactic Against Swearing Behind a Sec. 102(a) Prior Art Date
E. Special Treatment for Universities and Nonprofits
F. Full Retroactivity (Absent Litigation)
III. PUBLICATION OF PATENT APPLICATIONS
A. Voluntary Publication
B. File Access
C. Confidentiality (Non-Publication)
IV. PRE-GRANT COMPENSATION
A. "Reasonable Royalty"
B. Claim Identity
C. Special Rule for PCT Publications
V. REEXAMINATION REVISIONS
A. A Delayed Procedure
B. The Current Ex parte Reexamination
1. Absence of Effective Third Party Participation
2. Absence of an Appellate Review
3. "Supergroup" For Reexamination
C. Inter Partes Reexamination
1. The Procedure Itself
a. The Order Phase
b. Inter Partes Participation
c. Appeal to the Board, Only
2. Destroying the Attacker's Position for Litigation
a. Denial of Civil Action Replay of Invalidity
b. Estoppel Effect of Reexamination
c. Finality of Inter Partes Reexamination
3. Barred Inter Partes Reexamination Piggybacking
D. Technology-Specific Reexamination, a Question
E. Revoking the Right to a Civil Action
VI. SCOPE OF PRIOR ART FOR NOVELTY
A. Secret Prior Art under 35 USC Sec. 102(e)
1. Retroactive Effect as of Publication
2. Partial Parity for PCT Applications
3. Prior Patenting, the old Sec. 102(e)
4. No Sec. 102(e) for Foreign-Published PCT
5. Hilmer Status Quo
B. Foreign Invention as Prior Art
VII. SECRET PRIOR ART FOR OBVIOUSNESS
A. Overruling Land and Rogers
B. Prospective and Retroactive Impact
VIII. SHORTENED BAR AGAINST CLAIM COPYING
IX. INVENTION PROMOTION PITFALL TO PRACTITIONERS
A. "Mass Media" Exclusion
B. Other Exclusions
I. MANAGEMENT OVERVIEW OF THE 1999 PATENT LAW
A wide variety of legislative proposals were consolidated into a November 29, 1999, omnibus spending proposal, here, dubbed The 1999 Patent Law, but more formally Title IV of the Consolidated Appropriations Act, 2000, Pub. L. 106-____ [H.R. 3194]. On March 29, 1999, the Patent and Trademark Office makes major structural changes to be under a new Deputy Secretary of Commerce and Director of the Patent and Trademark Office. Of immediate concern to business managers because of the impact on current real life commercial controversies are:
-- a largely retroactive prior user right statute for certain "method" patents (statutorily, the "First Inventor Defense") useful to defend any infringement charge in any suit not already pending on November 29, 1999; see Sec. II, Prior User Right; and
-- elimination for obviousness determination of coworker-filed prior art patents; see Sec. III, Scope of Prior Art for Novelty.
Publication of patent applications has no impact until November 29, 2000, but then may be retroactively invoked by the applicant; see Sec. III, Publication of Patent Applications. Reexamination revisions can have meaning only if accompanied by strong rulemaking, but the statutory changes apply only to patents based upon an original application filing from November 29, 1999; see Sec. V, Reexamination Revisions.
A wide statutory discretion is given to the new Deputy Secretary to implement regulations that could put real meaning into both reexamination and publication reforms. There is no clear indication of which direction the rule-making process will take: Corporate management having an interest in a particular direction will have opportunities for meaningful leadership in the rulemaking process, the earlier the better.
Patent law firms that advertise on the Internet have until January 28, 2000, to make sure that their website does not fall under the "mass media" problem to invoke the invention promoter provisions of the law. See Sec. IX, Invention Promotion Pitfall to Practitioners.
II. PRIOR USER RIGHTS
The prior user right defense -- dubbed the "First Inventor Defense Act of 1999" -- is effective immediately and retroactively as a personal defense to any party that has domestically commercially used a "method" invention -- where "method" is defined as "a method of doing or conducting business". 35 USC Sec. 273(a)(3). Senator Lott, the majority leader who introduced the Senate legislation, introduced a statement contemporaneous with introduction of the legislation that gives the term "method" a very expansive meaning.
A. Elements of the Prior User Right Defense
The statute defines the prior user right defense in the following manner:
It shall be a defense to an action for [patent] infringement under [35 USC Sec.] 271 * * * with respect to any subject matter that would otherwise infringe one or more claims for a method in the patent being asserted against a person, if such person had, acting in good faith, 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.
35 USC Sec. 273(b)(1); paragraphing and emphasis added.
1. "Method"
The prior user right defense is limited to method patents for "business". But, "method" is ambiguously defined as "term `method' [is defined as] a method of doing or conducting business". 35 USC Sec. 273(a)(3). What is "a method of doing * * * business". Operating a computer? A chemical trade secret on an assembly line? What is "a method of * * * conducting business". Although there were after-inserted comments in the Congressional Record, there is a paucity of contemporaneous legislative history to determine the meaning of these terms. There is even some suggestion that the claim does not even have to be in terms of a classic "method" claim to qualify. The rough edges of the statutory wording coupled with the expansive legislative interpretation guarantee that the final scope of a "method" for purposes of this statute will be fought out for the coming years in the courts.
2. Prior Activity and Timing
a. Commercial Use
Domestic commercialization must occur at least one day prior to the filing date of the patentee, which may be a date long after the invention date of the patentee. Under 35 USC Sec. 273(a)(1), "the terms `commercially used' and `commercial use' mean use of a method in the United States, so long as such use is in connection with an internal commercial use or an actual arm's-length sale or other arm's-length commercial transfer of a useful end result, whether or not the subject matter at issue is accessible to or otherwise known to the public, except that the subject matter for which commercial marketing or use is subject to a premarketing regulatory review period during which the safety or efficacy of the subject matter is established, including any period specified in section 156(g), shall be deemed `commercially used' and in `commercial use' during such regulatory review period[.]"
b. Reduction to Practice One Year Earlier
In addition to commercialization even a day before the filing date of the patentee, the defense also requires the actual reduction to practice of the invention more than one year before that date.
c. Abandonment of Use
A party otherwise entitled to a prior user right defense abandons activity to create that right if he abandons commercial activities. 35 USC 273(a)(5) says that "[a] person who has abandoned commercial use of subject matter may not rely on activities performed before the date of such abandonment in establishing a defense under this section with respect to actions taken after the date of such abandonment."
d. Effective Filing Date
35 USC 273(a)(4) defines "the `effective filing date' of a patent [as] the earlier of the actual filing date of the application for the patent or the filing date of any earlier United States, foreign, or international application to which the subject matter at issue is entitled under section 119, 120, or 365 of this title."
3. Derivation
Someone acquiring the patented method from another is not eligible for this defense: "A person may not assert the defense under this section if the
subject matter on which the defense is based was derived from the patentee or persons in privity with the patentee." 35 USC Sec. 273(b)(3)(B).
B. Nature of the Defense
1. No General License
As stated in 35 USC Sec. 273(b)(3)(C), "[t]he defense asserted by a person * * * is not a general license under all claims of the patent at issue, but extends only to the specific subject matter claimed in the patent with respect to which the person can assert a defense under this chapter, except that the defense shall also extend to variations in the quantity or volume of use of the claimed subject matter, and to improvements in the claimed subject matter that do not infringe additional specifically claimed subject matter of the patent.
2. A Personal, Inalienable Right to Use.
The defense is personal. The only exception is the alienability that is possible as part of an overall business: As stated in 35 USC Sec. 273(b)(6), "[t]he defense * * * may be asserted only by the person who performed the acts necessary to establish the defense and, except for any transfer to the patent owner, the right to assert the defense shall not be licensed or assigned or transferred to another person except as an ancillary and subordinate part of a good faith assignment or transfer for other reasons of the entire enterprise or line of business to which the defense relates."
3. Site Limitation
Although the defense is alienable as part of the transfer of the business, someone acquiring the business cannot take over the defense for a different site. As stated in 35 USC Sec. 273(b)(6), "when acquired as part of a good faith assignment or transfer of an entire enterprise or line of business to which the defense relates, [the defense] may only be asserted for uses at sites where the subject matter that would otherwise infringe one or more of the claims is in use before the later of the effective filing date of the patent or the date of the assignment or transfer of such enterprise or line of business."
C. Proofs and Penalties
1. Clear and Convincing Evidence Standard
As stated in 35 USC Sec. 273(b)(3)(C), "[a] person asserting the defense * * * shall have the burden of establishing the defense by clear and convincing evidence."
2. Penalties for Unsuccessful Assertion
By definition, the unsuccessful assertion of a prior user right defense automatically makes the case exceptional for the purpose of awarding attorney fees. As stated in 35 USC Sec. 273(b)(8), "[i]f the defense under this section is pleaded by a person who is found to infringe the patent and who subsequently fails to demonstrate a reasonable basis for asserting the defense, the court shall find the case exceptional for the purpose of awarding attorney fees under section 285 of this title." (emphasis added).
D. Prophylactic Against Swearing Behind a Sec. 102(a) Prior Art Date
Whenever a prior art study is made for purposes of invalidation of a patent, the gold standard is a critical reference that has been published more than one year before the filing date, therefore creating a statutory bar under 35 USC Sec. 102(b) that cannot be overcome even if the patentee has an invention date more than one year before filing. What happens when the prior art reference has an effective date as a prior publication or prior-filed U.S. patent that is not such a statutory bar? Often, prudent businessmen will refrain from reliance upon such a prior art reference because of the possibility that the patentee may be able to establish a priority date early enough to remove the prior art reference.
Now, thanks to the safeguard of the prior user right provision, if the business can ascertain that it had independently made the invention more than one year before the patentee's filing date and followed through with the requisite commercialization, then there will be a prior user right personal defense as an adjunct to pleading the invalidity of the patent: Even if the patentee is able to establish prior invention, that will not defeat the prior user right which is keyed not to an invention date but to a filing date.
E. Special Treatment for Universities and Nonprofits
A nonprofit or university is given special treatment under 35 USC Sec. 273(a)(2):
[I]n the case of activities performed by a nonprofit research laboratory, or nonprofit entity such as a university, research center, or hospital, a use for which the public is the intended beneficiary shall be considered to be a use described in paragraph (1), except that the use --
(A) may be asserted as a defense under this section only for continued use by and in the laboratory or nonprofit entity; and
(B) may not be asserted as a defense with respect to any subsequent commercialization or use outside such laboratory or nonprofit entity[.]
F. Full Retroactivity (Absent Litigation)
The prior user right defense is fully retroactive unless litigation was pending on November 29, 1999 (or previously concluded):
The statute says that the prior user rights provisions "shall take effect on [November 29, 1999], but shall not apply to any action for infringement that is pending on [November 29, 1999] or with respect to any subject matter for which an adjudication of infringement, including a consent judgment, has been made before [November 29, 1999]." SEC. 4303.
III. PUBLICATION OF PATENT APPLICATIONS
Applications filed on or after November 29, 2000, will, without a request for confidentiality, automatically be published 18 months from the filing date (or as soon thereafter as practical). Whether the publication will be via print copy or electronically is within the discretion of the Director.
A. Voluntary Publication
For any patent application that is pending on November 29, 2000, the applicant can request immediate publication. (Without such a request, there will never be a publication of the application, per se, for applications in the pre-November 29, 2000, category.)
Publication of the patent application triggers a prior art date under 35 USC Sec. 102(e) and also permits provisional rights to commence, both discussed in following sections, infra.
B. File Access
One thing that is taken for granted in the many foreign systems that have an automatic publication eighteen months from filing is that the file wrapper will be open for public inspection.
The new law gives the Director the discretion to promulgate rules to either give full and complete access to the public or to virtually completely shut off access to the file wrapper.
Rulemaking to consider this issue is certain to be controversial, should the PTO determine that it wants to restrict access.
C. Confidentiality (Non-Publication)
If the patent applicant certifies that there is no foreign counterpart publication that will be created by a parallel foreign filing, secrecy of the patent application may be maintained without publication.
However, the default judgment should be to permit publication. The failure to report a belated foreign filing could lead to abandonment of the patent application.
There are a wide variety of other related changes that will be within the discretion of the Commissioner. For example, the Commissioner will have to set time limits for a claim of priority because the publication is keyed to the priority date.
IV. PRE-GRANT COMPENSATION
Where there is a publication of the patent application, a third party may be liable to the patentee upon grant of the patent under 35 USC Sec. 154(d) for "reasonable compensation" for use of the invention subsequent to actual notice (that in turn is subsequent to publication). The statute reads:
(1) * * * [A] patent shall include the right to obtain a reasonable royalty from any person who, during the period beginning on the date of publication of the application for such patent under section 122(b), or in the case of an international application filed under the [Patent Cooperation T]reaty [which is defined in section 351(a)] designating the United States under Article 21(2)(a) of such treaty, the date of publication of the application, and ending on the date the patent is issued --
(A) (i) makes, uses, offers for sale, or sells in the United States the invention as claimed in the published patent application or imports such an invention into the United States; or
(ii) if the invention as claimed in the published patent application is a process, uses, offers for sale, or sells in the United States or imports into the United States products made by that process as claimed in the published patent application; and
(B) had actual notice of the published patent application and, in a case in which the right arising under this paragraph is based upon an international application designating the United States that is published in a language other than English, had a translation of the international application into the English language.
(2) Right based on substantially identical inventions: The right under paragraph (1) to obtain a reasonable royalty shall not be available under this subsection unless the invention as claimed in the patent is substantially identical to the invention as claimed in the published patent application.
A. "Reasonable Royalty"
Pre-grant use of an invention is not patent infringement in the classic sense. Rather, a "reasonable royalty" is to be awarded as payment for the pre-grant use of the invention.
B. Claim Identity
There must be infringement of at least one claim of the patent which is virtually identical in scope and content to at least one claim in the application as published. Otherwise, this section of the law is inapplicable.
C. Special Rule for PCT Publications
The statute says that "[t]he right * * * to obtain a reasonable
royalty based upon the publication under the treaty defined in section 351(a) of an international application designating the United States shall commence on the date on which the Patent and Trademark Office receives a copy of the publication under the treaty of the international application, or, if the publication under the treaty of the international application is in a language other than English, on the date on which the Patent and Trademark Office receives a translation of the international application in the English language."
V. REEXAMINATION REVISIONS
A. A Delayed Procedure
Original proposals for this legislation had the promise of an early impact on patents. Yet, that is no longer true: The reexamination changes will be phased in over a period of years. This is because no present patents or those issuing in the near term fall under the new law. Only patents granted at some point in the future where the original application was filed on or after November 29, 1999, are covered by the amendments.
B. The Current Ex parte Reexamination
Save for the elimination of the right of a civil action under Sec. E, Revoking the Right to a Civil Action, infra, the current reexamination law for ex parte reexamination is completely untouched by the new law. The identical statutory wording and practice remain, untouched.
The problems which caused a movement for inter partes reexamination remain. Three of these key problems are statutorily untouched:
1. Absence of Effective Third Party Participation
After the order phase of reexamination, the PTO has by rule shut third parties out from participation in the reexamination proceedings themselves. Thus, there may be complicated technical arguments or showings by the patentee which the third party requester is unable to rebut.
While there is no change in the reexamination law, it should be remembered that in 1980-1981 when regulations were promulgated for the initial (and still untouched) reexamination law, there was much discussion about having third party participation. In the end, the decision was reached by the Assistant Commissioner for Patents that there should be a strict ex parte reexamination, but this was due to the policy decisions of the PTO and not due to any statutory mandate. Therefore, ex parte reexamination could be partially fixed simply by changing the rules for what has now come to be known as ex parte reexamination.
2. Absence of an Appellate Review
A huge problem has been the absence of appellate review. It is simply unthinkable that a business would play "bet the company" where it files a reexamination where, statistically, the patent will be sustained.
One partial solution would be to provide that the examination should be conducted by an independent Examiner at a high level, e.g., an Administrative Patent Judge (formerly known as Examiner-in-Chief). By having a highest level Examiner deal with the case, there would be a greater degree of reliability and predictability of outcomes. By having this level, there would be a clear independence of thought on the part of the ALJ (vis a vis the disposal-conscious Examiner or even the same Examiner who had allowed the patent).
3. "Supergroup" For Reexamination
A critical failure of the PTO in the 1980-1981 implementation of the reexamination law was that reexamination was delegated back to the examining corps, generally, and not to the "supergroup" that AIPLA and other organizations had proposed. Clearly, if the peers of a supergroup focus on quality and are free to disagree with the regular examiners, this can only be to the good in terms of fairness, reliability and expertise.
(If the average examiner in today's system gets a reexamination once every five years, clearly, he never develops the expertise to efficiently and most properly deal with reexamination cases.)
C. Inter Partes Reexamination
Inter partes reexamination is an alternative to ex parte reexamination. In view of the balance of benefits and detriments, third parties may be expected to refrain from inter partes reexamination.
1. The Procedure Itself
a. The Order Phase
Reexamination is commenced with an "order" phase akin to the current ex parte reexamination. But, unlike ex parte reexamination where a third party is given time to respond to the order which is then followed by a patentee's reply, the Commissioner has the discretion to simultaneously issue both the order and the first action on the merits.
Although third parties often refrain from using the opportunity to respond to the order, the fact is that the time period for response slows proceedings down, not to mention the fact that the Examiner will often have a cursory order for reexamination (under the lower standard of merely determining whether a "substantial new question") exists, and save the main consideration for the first action on the merits (where the issue is whether the claims are directed to patentable subject matter), which may take a considerable amount of time.
All in all, this change is disadvantageous to the patent owner because he is given less time to prepare in advance for response to the first action on the merits.
b. Inter Partes Participation
Third parties are permitted one response to every action. Under 35 USC Sec. 313(b)(3), "[e]ach time that the patent owner files a response to an action on the merits from the Patent and Trademark Office, the third-party requester shall have one opportunity to file written comments addressing issues raised by the action of the Office or the patent owner's response thereto, if those written comments are received by the Office within 30 days after the date of service of the patent."
There is nothing stated about telephone or personal interviews by the patentee. Is this within the ambit of "a response to an action on the merits" within the meaning of Sec. Sec. 313(b)(3)?
c. Appeal to the Board, Only
One of the strongest features of the proposed legislation in all but the final drafts had been a right of third party appeal both to the Board and to the court.
The new law permits a third party appeal to the Board of Patent Appeals and Interferences. But, a third party may not appeal to the court.
2. Destroying the Attacker's Position for Litigation
The third party who brings an attack via inter partes reexamination shoots all his ammunition at the PTO, with little left in reserve for a subsequent litigation:
a. Denial of Civil Action Replay of Invalidity
Under 35 USC Sec. 315(c), an inter partes reexamination that is unsuccessful destroys many opportunities to litigate the issue in court: "A third-party requester whose request for an inter partes reexamination results in an order under section 313 is estopped from asserting at a later time, in any civil action arising in whole or in part under section 1338 of title 28, United States Code, the invalidity of any claim finally determined to be valid and patentable on any ground which the third-party requester raised or could have raised during the inter partes reexamination proceedings. This subsection does not prevent the assertion of invalidity based on newly discovered prior art unavailable to the third-party requester and the Patent and Trademark Office at the time of the inter partes reexamination proceedings."
b. Estoppel Effect of Reexamination
Sec. 4607 provides that "[a]ny party who requests an inter partes reexamination * * * is estopped from challenging at a later time, in any civil action, any fact determined during the process of such reexamination, except with respect to a fact determination later proved to be erroneous based on information unavailable at the time of the inter partes reexamination decision."
c. Finality of Inter Partes Reexamination
Under 35 USC Sec. 317(b), "[o]nce a final decision has been entered against a party in a civil action arising in whole or in part under section 1338 of title 28, United States Code, that the party has not sustained its burden of proving the invalidity of any patent claim in suit or if a final decision in an inter partes reexamination proceeding instituted by a third-party requester is favorable to the patentability of any original or proposed amended or new claim of the patent, then neither that party nor its privies may thereafter request an inter partes reexamination of any such patent claim on the basis of issues which that party or its privies raised or could have raised in such civil action or inter partes reexamination proceeding, and an inter partes reexamination requested by that party or its privies on the basis of such issues may not thereafter be maintained by the Office, notwithstanding any other provision of this chapter."
However, "[t]his subsection does not prevent the assertion of invalidity based on newly discovered prior art unavailable to the third-party requester and the Patent and Trademark Office at the time of the inter partes reexamination proceedings." Id.
3. Barred Inter Partes Reexamination Piggybacking
The ex parte reexamination system has been stretched by the tactic of using a second (and third) reexamination request against the same patent as a way of adding arguments that would otherwise be proscribed due to the limitations on inter partes participation in the current ex parte reexamination.
Piggybacking in this manner is now proscribed for inter partes reexamination, only, through 35 USC Sec. 317(a), that provides that "once an order for inter partes reexamination of a patent has been issued under section 313, neither the patent owner nor the third-party requester, if any, nor privies of either, may file a subsequent request for inter partes reexamination of the patent until an inter partes reexamination certificate is issued and published under section 316, unless authorized by the Director."
D. Technology-Specific Reexamination, a Question
There is nothing to preclude the Commissioner from making regulations specific to a particular area of science of technology. There has been much made in the press about the purported unreliability of the examination system for "business method" patents: Naturally, examiners are unable to determine the scope of novel and nonobvious subject matter because they lack the requisite data bases on which to determine prior art and hence make a proper evaluation.
To the extent that the Commissioner would want to implement an industry-specific reexamination, he is free to modify the regulations.
For example, consider what would happen if the currently dubbed ex parte reexamination were modified as follows:
(1) Whenever there is a "method" claim (as defined in the prior user right statute) a special reexamination would be permitted.
(2) To utilize this special reexamination, a third party would be required to file the reexamination request within six months from grant.
(3) A special reexamination would be sent to an Administrative Patent Judge (who would in the end sit on any reviewing panel).
(4) Some inter partes participation would be permitted.
Without some innovative solution along the lines set forth above, there will be no hope for reexamination as a way out of the problems that are created by the dual factors of the importance of business method patents coupled with the absence of prior art and other capacities within the PTO to deal with a proper grant of patents in this area.
E. Revoking the Right to a Civil Action
The patentee in any reexamination based upon a patent having an original filing date on or after November 29, 1999, has a right of review from the Board of Patent Appeals and Interferences only to the Federal Circuit. The previous option of a civil action de novo under 35 USC Sec. 145 is revoked.
VI. SCOPE OF PRIOR ART FOR NOVELTY
A. Secret Prior Art under 35 USC Sec. 102(e)
1. Retroactive Effect as of Publication
Previously, a patent was given a patent-defeating date as of the filing date of the underlying application via 35 USC Sec. 102(e) only upon the grant date of a patent. Today, once there is a publication of the patent application, the patent-defeating date kicks in under new 35 USC Sec. 102(e)(1) that denies a patent if "[t]he invention was described in -- (1) an application for patent, published under section 122(b), by another filed in the United States before the invention by the applicant for patent * * *."
Current applicants who desire to create a patent-defeating effect may on or after November 29, 2000, file a request for immediate publication which, upon eventual publication (as soon as possible) create the patent-defeating date as of the first U.S. filing date.
2. Partial Parity for PCT Applications
Previously, a patent granted on a PCT application was not given a patent-defeating date under 35 USC Sec. 102(e) as of the filing date, but only upon the usually much later date that various "national stage" formalities were completely.
The new law partially gives parity to the PCT application and patent. For a PCT application to be prior art as of its filing date, it must be published in English. Hence, under 35 USC Sec. 102(e)(1), a limitation is provided for PCT applications whereby "an international [PCT] application * * * shall have the effect under this subsection of a national application published under section 122(b) only if the international application designating the United States was published under Article 21(2)(a) of such treaty in the English language[.]"
The law, here, is inconsistent with the original wording of 35 USC Sec. 374 that had denied a patent-defeating effect for a PCT application under 35 USC Sec. 102(e). The old wording of Sec. 374 was that "[t]he publication under the treaty of an international application shall confer no rights and shall have no effect under this title other than that of a printed publication." The new wording is that "[t]he publication under the treaty defined in section 351(a) of this title, of an international application designating the United States shall confer the same rights and shall have the same effect under this title as an application for patent published under section 122(b), except as provided in sections 102(e) and 154(d) [relating to provisional rights] of this title."
3. Prior Patenting, the old Sec. 102(e)
If the application results in a patent as in the case where there had been no previously published application, then the patent-defeating date kicks in as of that patenting. Under 35 USC Sec. 102(e)(2) a claim is denied where there is "a patent granted on an application for patent by another filed in the United States before the invention by the applicant for patent[.]" This essentially carries forth the meaning of previous 35 USC Sec. 102(e).
4. No Sec. 102(e) for Foreign-Published PCT
Remarkably, a U.S. patent granted based upon an international application that is published in a foreign language will never have any patent-defeating effect earlier than its actual publication date. The exclusion of such foreign-language PCT applications is considered in the discussion under 35 USC Sec. 102(e)(1), supra. Neither is the patent itself prior art as of the filing date under 35 USC Sec. 102(e)(2), because of the express exclusion in that statute. Thus, the provision applies to "a patent granted on an application for patent by another filed in the United States before the invention by the applicant for patent, except that a patent shall not be deemed filed in the United States for the purposes of this subsection based on the filing of an international application filed under the treaty defined in section 351(a)[.]"
(One thought is for the PCT applicant to file a continuation application from the PCT application so that the patent that is granted is based upon a U.S. regular national application that claims priority based upon the PCT filing.)
5. Hilmer Status Quo
Apart from the issue of first-to-file, perhaps the single most important thorn in the side of international comity and patents is the ongoing Hilmer issue, i.e., the denial of any patent-defeating effect to a U.S. patent as of the foreign priority date.
There is no change of any kind as to Hilmer issues in this legislation, i.e., unless there is a judicial reconsideration of Hilmer, the law remains that the effective date of a U.S. patent is never the foreign priority date. Whether this constitutes an ongoing violation of the Paris Convention (and hence the TRIPs) is a separate issue. Wegner, TRIPs Boomerang -- Obligations for Domestic Reform, 29 VAND. J. TRANSNAT'L. L. 535-558 (1996); see also Wegner & Pagenberg, Paris Convention Priority: A Unique American Viewpoint Denying 'The Same Effect' to the Foreign Filing, 5 INT'L REV. INDUS. PROP. & COPYRIGHT L. 361 (1974).
B. Foreign Invention as Prior Art
In 1994, the law was changed to permit foreign-based inventive activity to be used to establish priority of invention for patent interferences and through ex parte affidavit practice. This was done to a change in 35 USC Sec. 104. There was no change to 35 USC Sec. 102(g) which limited prior invention of another as prior art to acts "in this country".
Obviously, there was an inconsistency in permitting foreign-based activity under 35 USC Sec. 104 to win an interference, but the express wording of 35 USC Sec. 102(g) precluded the winner from actually winning, i.e., there was nothing in that section to permit reliance upon foreign activity.
The law has now been clarified with a continuation of the old 35 USC Sec. 102(g) practice of giving a patent-defeating effect only to inventions made "in this country": The old wording is now found in 35 USC Sec. 102(g)(2).
New 35 USC Sec. 102(g)(1) limits the foreign-based patent-defeating effect to cases involved in an interference. A patent is denied if "during the course of an interference conducted under section 135 or section 291, another inventor involved therein establishes, to the extent permitted in section 104, that before such person's invention thereof the invention was made by such other inventor and not abandoned, suppressed, or concealed[.]"
Does the party have to win the interference? The wording only says that foreign invention date has to have been "establish[ed]" not at final hearing, final judgment, but only "during the course of an interference * * *". Does this mean that a settlement agreement where evidence had been produced and the parties stipulate a particular date that this is then prior art under 35 USC Sec. 102(g)(1) against third parties? What happens in the event of a secret settlement?
VII. SECRET PRIOR ART FOR OBVIOUSNESS
A. Overruling Land and Rogers
Under In re Land and Rogers, 368 F.2d 866, 151 USPQ 621 (CCPA 1966), coworker prior-filed applications become prior art against different but overlapping inventive entities as of the grant date of the first patent via 35 USC Sec. 102(e) and what is now 35 USC Sec. 103(a) for obviousness. In this case, Edwin Land's first-filed patent application became prior art of another against the same Edwin Land and his coinventor Rogers.
Now, after 33 years, Land and Rogers is now legislatively overruled to exclude from obviousness under 35 USC 102(e), 103 the commonly assigned work of differing inventive entities. Amended 35 USC Sec. 103(c) now states that "[s]ubject 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 invention was made, owned by the same person or subject to an obligation of assignment to the same person."
B. Prospective and Retroactive Impact
It is clear that for any application filed before November 29, 1999 (and any patent granted thereon at any time), the new law does not apply. SEC. 4807(b) specifically says that this provision "shall apply to any application for patent filed on or after the date of the enactment of this Act."
A continuation application is within the genus of "any application". Although there is bound to be a test case at some point, under the literal wording such a continuation filed on or after November 29, 1999, would benefit from the new provision.
For a granted patent or a patent later granted based upon an application filed before November 29, 1999, the new law does not apply. Any reexamination filed at any time would not save such a case. However, a reissue application may be said to fall within the umbrella of "any application", and, subject to a test case, may well provide a vehicle for retroactivity.
(It should be noted that whereas "any application" is referred to for the effective date provision for 35 USC Sec. 103(c), in another portion of the same statute dealing with an entirely different provision, reexamination, the date was tied to "any patent that issues from an original application * * *". SEC. 4608(a); emphasis added.)
VIII. SHORTENED BAR AGAINST CLAIM COPYING
The old law of 35 USC Sec. 135(b) required copying claims from a granted patent within one year from grant. This is maintained as new 35 USC 135(b)(1), whilst a new provision is added:
If the claim to be copied is found in the published application, then the one year bar period runs from the date of such publication. Hence, 35 USC Sec. 135(b)(2) says that "[a] claim which is the same as, or for the same or substantially the same subject matter as, a claim of an application published under section 122(b) of this title may be made in an application filed after the application is published only if the claim is made before 1 year after the date on which the application is published."
IX. INVENTION PROMOTION PITFALL TO PRACTITIONERS
Mass media invention advertisers are the focus of the attack of the "Inventors' Rights Act of 1999". Earlier versions of the legislation would have implicated patent firms under the new law where a patent applicant was given advice as to marketing his invention, even if only in connection with the filing of a patent application.
If an organization falls under the new law it is under very severe reporting requirements, far too onerous for any law firm to follow, i.e., the default judgment will be for a law firm to avoid falling under the law even at the expense of gaining business.
A. "Mass Media" Exclusion
Now, the final version creates a definition of an invention promoter that will normally exclude a law firm because it does not advertise the requisite services in the mass media:
[T]he term "invention promoter" means any person, firm, partnership, corporation, or other entity who offers to perform or performs invention promotion services for, or on behalf of, a customer, and who holds itself out through advertising in any mass media as providing such services * * *.
35 USC Sec. 297(c)(3). Necessary to an understanding of what is comprised within the term "invention promotion services" is the definition in 35 USC Sec. 297(c)(4) that "the term `invention promotion services' means the procurement or attempted procurement for a customer of a firm, corporation, or other entity to develop and market products or services that include the invention of the customer."
In other words, the statute is triggered if an organization, including a law firm, advertises in the "mass media" that it can "develop and market products or services that include [an] invention".
What is "mass media"? Certainly print journalism. Certainly radio. Television. To what extent is a website that advertises the services of a particular individual a "mass media" advertisement? This is an open question.
B. Other Exclusions
There are other exclusions independent of the "mass media" issue. For example, a firm could advertise its services but restrict itself to services filed after the regular (non-provisional) application is filed under 35 USC Sec. 273(c)(3)(C). There are four relevant enumerated exemptions for the private sector: Under 35 USC Sec. 297(c)(3), the term "invention promoter"
does not include --
`(B) any nonprofit, charitable, scientific, or educational organization, qualified under applicable State law or described under section 170(b)(1)(A) of the Internal Revenue Code of 1986;
`(C) any person or entity involved in the evaluation to determine commercial potential of, or offering to license or sell, a utility patent or a previously filed nonprovisional utility patent application;
`(D) any party participating in a transaction involving the sale of the stock or assets of a business; or
`(E) any party who directly engages in the business of retail sales of products or the distribution of products[.]
1. This paper benefits from the comments and suggestions of numerous members of the patent bar. An earlier version was presented to a Washington Harbour Roundtable discussion of experts on December 14, 1999. Revisions to that draft are largely inspired either from special insights into the legislative process shared by participants at that session or from interchanges that focused upon specific hypothetical situations. The authors are most appreciative of the contributions of the participants at this Washington Harbour Roundtable.
2. This paper was prepared by a group of attorneys at Foley & Lardner coordinated by Harold C. Wegner (hwegner@foleylaw.com) and Stephen Maebius (smaebius@foleylaw.com). The views do not necessarily represent the views of any prior or current client nor the final thoughts of the authors on the new law.
For thoughts on proposed rules and participation in the rulemaking process please contact one of our regional experts either as above or Sharon Barner in Chicago (sbarner@foleylaw.com); Barry Grossman in Milwaukee (BGrossman@foleylaw.com); or Laurie Axford in California (laxford@foleylaw.com). Ms. Barner and Ms. Axford have previously spoken to an earlier Roundtable; Mr. Grossman for most of a decade was a principal Congressional liaison for the U.S. Patent and Trademark Office.