Michael Barbella, Managing Editor09.05.12
“The patent system...added the fuel of interest to the fire of genius, in the discovery and production of new and useful things.”
Thomas J. McGinnis has been an intellectual property law attorney for the last six years, but the former software solutions specialist hasn’t totally abandoned his past professional life.
When consulting with clients interested in protecting intellectual property (IP) or a new invention, McGinnis usually will ask a few questions that are more reflective of his tenure as a product development manager with Alpharetta, Ga.-based Radiant Systems Inc.
“Most large organizations have inventors who are very technically savvy and are experienced in the industry. They usually have good instincts regarding what is novel and non-obvious,” said McGinnis, an associate at Lando & Anastasi LLP, an IP law firm based in Cambridge, Mass. “So I ask them what’s cool? What’s neat about the idea or invention? What gets you excited about it? You ask those questions and if they have industry expertise, they naturally gravitate to the things that are different.
The follow-up question, of course, is whether [the idea] is commercially valuable. There has to be a nexus of both commercial value and patentability for [the idea] to make sense for investment.”
Finding the right balance of commercial value and patentability has been key to the development of innovative new products and technologies over the last several decades. Without this balance, such modern medical marvels as hip and knee implants, coronary stents, artificial hearts and synthetic bone grafts would not exist.
Innovation and the creativity it inspires has long been a central driver of economic growth. It fosters job creation, enables companies to compete in the global marketplace, and helps societies cure their social and economic ills.
But the face of innovation is changing. A growing number of multinational organizations now are investing enormous amounts of money in the creation of intangible assets—new ideas, technologies, designs, brands, organizational know-how and business models, IP experts note. Many of these entities are experimenting with different innovation models to better leverage existing sources of knowledge. The methods vary in size and scope, ranging from the simple (user feedback surveys or industry-focused competitions) to the complex (encouraging potential partners to submit new research projects or apply for new collaborative opportunities).
DuPont, for instance, has taken the simple path, sponsoring a global competition to track down promising new surface technologies. The Center for Integration of Medicine & Innovative Technology has followed suit with an annual national contest for technology innovations in primary healthcare (this year’s top prize went to a graduate student team at the Massachusetts Institute of Technology for devising a rapid imaging retinal scan that does not require dilating eye drops). Farther up the experimental innovation model spectrum is DesignCrowd, a website that connects clients to international design professionals, and OpenIDEO, an Internet portal that bills itself as an “innovative platform for creative thinkers.”
The proliferation of global idea-sharing has helped level the playing field of innovation-driven growth, enabling lower- and middle-income markets to contribute to technology production and invention. China’s rise to the upper echelon of economic supremacy has triggered a corresponding rise in demand for IP protection. Between 2009 and 2010 (the latest year for which statistics are available), the number of patent applications in China ballooned 24.3 percent to 391,177, according to data from the World Intellectual Property Organization (WIPO), a United Nations agency that promotes the development and use of the international IP system. Applications in Russia jumped 10.2 percent during that 12-month period, while submissions in Brazil climbed 3.4 percent and forms filed in Korea increased 4 percent. U.S. patent applications, by comparison, swelled 7.5 percent to 490,226 in 2010, WIPO figures show.
The emergence of new IP contributors is prompting a growing number of companies to seek international protection for their ingenuity. The desire for such a safeguard invariably has led to increased worldwide demand for IP protection. Global patent applications more than doubled over the last three decades, going from roughly 800,000 in the early 1980s to 1.8 million by 2009, according to WIPO’s 2011 report, “The Changing Face of Innovation.” IP demand accelerated most quickly during the mid-1990s as China and India began to experience explosive economic growth. Over the last 15 years, in fact, the share of global patent applications from Europe, Japan and the United States dropped from 77 percent in 1995 to 59 percent in 2009. At the same time, China’s share rose by more than 15 points, WIPO data indicate.
“Patent applicants increasingly seek to protect their patents abroad and, indeed, in a larger number of countries, reflecting greater economic integration,” WIPO’s 2011 report states.
Such integration, however, is straining the world’s patent offices—in 2010, the number of unprocessed applications worldwide stood at 5.17 million. Much of the backlog is concentrated in Japan, the United States and Europe, though several developing markets are experiencing significant logjams as well.
While the U.S. Patent and Trademark Office (USPTO) has made substantial strides in reducing its backlog (whittling 64,137 applications from its caseload between March 2011 and March 2012), data reported on patent law blog Patently-O show that requests for continued examination (RCE) rose by 22,144 cases and appeals increased by 5,280 cases. In an attempt to reduce RCEs, patent officials initiated a program earlier this year that gives applicant reviewers extra time to consider submissions after final rejection. Patent officials hope the program will help administrators determine whether the extra time for considering a response after an application is rejected will accelerate allowances and reduce the number of RCEs filed.
“The U.S. Patent Office has a backlog of nearly 650,000 patent applications waiting to be examined. This means inventors often wait two years or longer to hear from the Patent Office after filing a patent application,” explained patent attorney David J. Dykeman, co-chair of the Intellectual Property Department in the Boston, Mass., office of international law firm Greenberg Traurig LLP. “The patent backlog exists because the number of patent applications filed has seen tremendous growth over the last decade. More patent applications are being filed because patents are the currency of the innovation economy. In the changing patent landscape, Congress, the president, and the Supreme Court are all trying to address perceived problems with the U.S. patent system.”
A Race to the Finish Line
The fix proposed by U.S. Congress was the Leahy-Smith America Invents Act (AIA), a sweeping piece of legislation that essentially overhauled the nation’s antiquated patent system. The Act—signed into law on Sept. 16, 2011—makes a number of important changes to U.S. patent law, but one of the most significant is the adoption of a “first-inventor-to-file” rule for identifying inventors.
Set for implementation on March 16, 2013, the first-inventor-to-file rule rewards the first inventor to file an application at the Patent Office. The edict harmonizes U.S. patent law with the rest of the world, but ends the nation’s traditional, centuries-old “first-to-invent” system, in which the Patent Office (in an interference proceeding) or a court (in a patent infringement suit) determines the first inventor.
The change is important, since disputes over the timing of inventions arise fairly frequently in patent law. One of the most renowned cases of simultaneous discovery—a phenomenon science historians call “multiples”—involved eminent scientist, inventor and engineer Alexander Graham Bell and Elisha Gray, a Quaker from rural Ohio who invented the telegraph printer, a precursor to the Teletype machine. Both Bell and Gray filed applications for their telephone inventions with the Patent Office in Washington, D.C., on the same day—Feb. 14, 1876. Bell filed first (his was the fifth entry received that day) but Gray filed a caveat, or a request for more time to submit a standard application. The caveat would have prevented other applicants with the same idea from having their submissions processed for 90 days while Gray worked on his application. But the USPTO gave Bell the patent, setting off a legal and professional feud between the two men that lasted most of their lives.
A first-inventor-to-file system easily resolves such disputes. And while it will reduce much of the uncertainty, time and expense of obtaining priority under the current first-to-invent system, the new measure is not without its own challenges. IP attorneys contend a first-inventor-to-file system favors large corporations with both the financial and legal resources to win the race to the patent office. They also claim that first-to-file rules could pressure companies into filing patents for technologies that either are incomplete or not yet fully understood.
“Most of the larger clients, and those that spend a considerable amount on IP, are not concerned about first-to-file,” McGinnis noted. “The reason they are not is because the rest of the world has been first-to-file for a long time. And because the larger organizations have been patenting around the world where it’s first-to-file and there are more onerous requirements about disclosure, they tend to play it safe and get something on file before any kind of disclosure.”
He continued: “But this particular change in the law does not help the small guy. Filing costs money, period. You can file a provisional application, you can even file pro se, but you still have to pay. It may not be that much, but if you’re someone working out of your garage, do you want to spend extra money on a patent or would you rather spend time developing and documenting your invention?”
Michael R. Hamlin would advise that garage inventor to invest in a patent. Hamlin, an IP attorney who specializes in medical device and mechanical engineering patent prosecution, is a staunch supporter of a first-inventor-to-file system.
“We’ve been telling clients for years that they need to move quickly to get applications on file before their competitors because even though we are currently under the first-to-invent system, there are many reasons why it’s very important to get an earlier filing date,” explained Hamlin, a principal in the Boston office of global law firm Fish & Richardson P.C. “It’s been very difficult traditionally to prove you were the first to invent if one of your competitors had an earlier filing date. For that reason, you want to avoid a situation where you allow a competitor to file a patent application on an invention before you do. There’s a presumption that the first to file is the first inventor, and the latter inventor has to prove otherwise. The Patent Office has set a pretty high bar to prove that.”
Hamlin believes the first-inventor-to-file switch is not the most difficult challenge posed by the AIA. That title possibly could go to one or both of two new administrative procedures that enable third parties to question the validity of a granted patent.
On Sept. 16 (2012), the first anniversary of AIA being signed into law, the Patent Office will implement two additional administrative procedures to resolve the validity of granted patents—Post-Grant Review (PGR) and Inter Partes Review (IPR). The procedures, however, apply only to patent applications filed under the first-inventor-to-file system.
PGR allows inventors to file a petition seeking the review of a patent within nine months of its issuance. Petitions that include one or more allegations of unpatentability on any grounds will be granted. When the nine-month PGR window closes, or at the end of a PGR, third parties can then petition the Patent Office for an IPR of a patent on the more limited grounds of prior art patents or printed publications. The IPR petition will be granted if the allegations in the IPR petition would likely prevail in at least one challenged patent claim, a higher standard than PGR. Both PGR and IPR proceedings will be conducted by the Patent Trial and Appeal Board, a new tribunal within the Patent Office. To help reduce dispute resolution costs, the AIA includes an automatic stay of any district court patent litigation begun on or after a PGR or IPR is initiated. While both PGR and IPR provide companies with new ways to invalidate their opponents’ patents, patent attorneys consider the procedures to be another competitive tool for larger companies.
While both PGR and IPR provide companies with new ways to invalidate their opponents’ patents, IP attorneys consider the procedures to be another competitive tool for rich conglomerates.
“Post-grant review is another huge change in the [patent] process,” Dykeman said. “Post-grant review is expensive, and bigger companies are more likely to initiate post-grant review proceedings.
Established companies will have the resources and budget to monitor their competitors’ patents to know what is being issued, and then pursue post-grant review. Smaller companies will lack these monetary resources and may not be able to oppose their bigger competitors’ issued patents. The over-arching goal of post-grant review is to have issued patents that are of higher quality and truly deserving of patent rights.”
In addition to switching to a first-inventor-to-file system and introducing Post-Grant and Inter Partes reviews, the AIA also allows third parties an expanded opportunity to submit prior art in pending patent applications. Further, the AIA expands the scope of materials that may be considered prior art. The law amends 35 U.S.C. § 102 to eliminate the “in this country” limitation on prior art. Under new rules, the prior art will include all prior art available as of the filing date of the application rather than the date of invention, which is an earlier date. In a significant, pro-defendant development that is also an acknowledgement of the globally interconnected nature of innovation, patent claims now will be subject to attack by evidence of prior public use of the invention anywhere in the world. The scope of prior art searches that must be conducted by patentees and accused infringers will widen drastically as a result of these changes, but its effects will not be felt until 18 months after enactment of the law, legal experts note.
Determining Patent Validity
For much of the last decade, the U.S. Supreme Court has purposely sidestepped patent cases, leaving the decisions up to a lower court with jurisdiction over the disputes. But the high court has taken a greater interest in these cases lately as companies increasingly turn to patents and innovation to secure long-term growth.
Such growth, however, could be stymied by a March 20 Supreme Court decision that challenges the validity of gene patents. The court’s ruling against San Diego, Calif.-based Prometheus Laboratories Inc. could impede biomedical researchers’ ability to protect discoveries in medical diagnostics, an especially important concern for scientists working in personalized medicine.
Prometheus has been locked in an eight-year battle with Mayo Collaborative Services (a division of the Rochester, Minn.-based Mayo Clinic) over its unique method of determining proper drug dosage. The patents at the center of the dispute cover the process of administering thiopurine drugs to patients with autoimmune disorders and then measuring the levels of certain metabolites in the blood to determine whether the patient had received a safe and effective dose.
In 2010, the U.S. Court of Appeals for the Federal Circuit upheld the patents, claiming the administration of drugs and the measurement of metabolites in the blood “transformed a particular article into a different state or thing.” But the Supreme Court disagreed, contending Prometheus’ ingenuity covered “a law of nature,” which, for all intents and purposes, cannot be patented unless it somehow is altered by humans.
A week after rendering its ruling in the Prometheus case, the Supreme Court set aside a July 2011 ruling by the Federal Circuit Court which upheld the validity of two patents owned by Myriad Genetics Inc., a Salt Lake City, Utah-based molecular diagnostics firm. The company was sued three years ago by the American Civil Liberties Union (ACLU) over its desire to patent “isolated” genes associated with most inherited forms of breast and ovarian cancer (known as BRCA1 and BRCA2). The ACLU argued that patents on human genes violate the First Amendment and patent law because genes are “products of nature.”
After re-examining the case, the Federal Court last month ruled (again) in favor of Myriad, supporting its right to patent the BRCA1 and BRCA2 genes but denied the company’s effort to patent methods of “comparing” or “analyzing” DNA sequences.
Attorneys and industry executives believe the Prometheus case (and to a lesser extent, the Myriad ruling) could stifle innovation and make it more difficult to protect an idea based on natural law.
“This decision [Prometheus] makes an utter mess out of the already convoluted doctrine of statutory subject matter,” patent attorney Steven R. Hansen wrote in response to the Biotechnology Industry Organization’s online reaction to the Prometheus decision. Hansen is a principal at Birmingham, Mich.-based Hansen IP Law PLLC. “Now we are told that the statutory subject matter inquiry requires us to disaggregate patent claims and determine whether individual features are separately novel and non-obvious. This needlessly conflates the issues of novelty and non-obviousness with statutory subject matter.”
“Moreover, in this particular case, the portion of the claim that recited the ‘natural law’ required no manipulative steps,” Hansen’s response read. “As a result, the ‘natural law’ step should have been given no patentable weight. In that case, and if the SCOTUS (Supreme Court of the United States) opinion is correct in stating that the remaining claim elements were known, presumably the claim could have readily been invalidated on obviousness grounds.”
The legal commentary was just as colorful in February—about a month before the Prometheus decision—after the Federal Circuit Court upheld a 2007 jury ruling that convicted W.L. Gore & Associates (the manufacturer of Gore-Tex) of willfully infringing upon a patent held by Bard (formerly C.R. Bard Inc.) through the development of its vascular grafts, devices used to bypass or replace blood vessels to ensure sufficient blood flow to various parts of the body. Gore appealed the ruling, and a three-judge panel of the same court reversed part of its decision on June 14, remanding the case back to the trial court for reconsideration.
Bard received a patent for its vascular grafts in 2002, roughly 28 years after it first filed an application with the USPTO (talk about backlogs!). The Murray Hill, N.J.-based company sued Gore for infringement the following year; an Arizona jury awarded Bard $185.6 million for lost profit and unpaid royalties, but a judge later doubled that amount based on the finding that Gore willfully infringed Bard’s patent. But in an odd bit of irony, the Federal Circuit Court refused to grant Bard an injunction in the case, claiming “it was in the public interest to allow competition in the medical device arena.”
Patent attorneys contend the Bard-Gore decision could adversely impact companies’ legal recourse against competitors.
“Many people found this decision a little surprising. In a marketplace where two companies are direct competitors, the thought was that a court would grant a permanent injunction after a finding of infringement,” said Craig R. Smith, an intellectual property trial attorney and partner at Lando & Anastasi. “If you’re a medical device company, one of the reasons for building a strong patent portfolio is to prevent others from using the technology you invented. One of the concerns with the Bard case is that the ability to exclude others may be lost. As a result, you might be limited to damages from an infringing company in certain circumstances. It’s a concern to companies that want to prevent competitors from entering into their technology space by using their patents. This case could signal that it’s going to be harder to get a permanent injunction even when you have a direct competitor.”
* * *
Creativity and innovation are critical to the success of business, industry, and the economy. When ideas are developed into constructive goods and services and are protected through strong intellectual property rights, consumer interest and demand are spurred. As a result, jobs are created, economies grow, and societies advance. Studies have shown that innovation magnified growth during the upturns and led economies out of downturns.
The protection and enforcement of IP rights are imperative for creating strong incentives for innovation and safeguarding it from counterfeiting, piracy, and other forms of IP theft. But the role of intellectual property gradually has changed over the last several decades as emerging markets have risen to power and companies have dedicated more resources to protecting their inventions abroad.
Consequently, shifts in the IP landscape have triggered a growing demand for patents and IP protection. Congress, the USPTO and the U.S. Supreme Court have imposed reforms on the nation’s patent system to accommodate its new role in the “innovation economy.” The result, according to Greenberg Traurig’s Dykeman, is a “dynamic patent environment” that is addressing weaknesses in the nation’s patent system, but unintentionally creating future challenges. With Congress, the president, and the Supreme Court, there are a lot of cooks in the kitchen trying to change the patent system, but they are addressing patent reform from different perspectives, he explained. “With the sweeping new rules of the AIA and recent major Supreme Court patent decisions, there will be a tremendous number of new patent rules over the next six months,” Dykeman said. “While the intentions of the new patent rules are noble, there will be some unintended consequences that will likely need to be corrected down the line.”
Corrected, perhaps, by one of those “cooks.”
—Abraham Lincoln, second lecture on discoveries and inventions, Feb. 11, 1859.
Thomas J. McGinnis has been an intellectual property law attorney for the last six years, but the former software solutions specialist hasn’t totally abandoned his past professional life.
When consulting with clients interested in protecting intellectual property (IP) or a new invention, McGinnis usually will ask a few questions that are more reflective of his tenure as a product development manager with Alpharetta, Ga.-based Radiant Systems Inc.
“Most large organizations have inventors who are very technically savvy and are experienced in the industry. They usually have good instincts regarding what is novel and non-obvious,” said McGinnis, an associate at Lando & Anastasi LLP, an IP law firm based in Cambridge, Mass. “So I ask them what’s cool? What’s neat about the idea or invention? What gets you excited about it? You ask those questions and if they have industry expertise, they naturally gravitate to the things that are different.
The follow-up question, of course, is whether [the idea] is commercially valuable. There has to be a nexus of both commercial value and patentability for [the idea] to make sense for investment.”
Finding the right balance of commercial value and patentability has been key to the development of innovative new products and technologies over the last several decades. Without this balance, such modern medical marvels as hip and knee implants, coronary stents, artificial hearts and synthetic bone grafts would not exist.
Innovation and the creativity it inspires has long been a central driver of economic growth. It fosters job creation, enables companies to compete in the global marketplace, and helps societies cure their social and economic ills.
But the face of innovation is changing. A growing number of multinational organizations now are investing enormous amounts of money in the creation of intangible assets—new ideas, technologies, designs, brands, organizational know-how and business models, IP experts note. Many of these entities are experimenting with different innovation models to better leverage existing sources of knowledge. The methods vary in size and scope, ranging from the simple (user feedback surveys or industry-focused competitions) to the complex (encouraging potential partners to submit new research projects or apply for new collaborative opportunities).
DuPont, for instance, has taken the simple path, sponsoring a global competition to track down promising new surface technologies. The Center for Integration of Medicine & Innovative Technology has followed suit with an annual national contest for technology innovations in primary healthcare (this year’s top prize went to a graduate student team at the Massachusetts Institute of Technology for devising a rapid imaging retinal scan that does not require dilating eye drops). Farther up the experimental innovation model spectrum is DesignCrowd, a website that connects clients to international design professionals, and OpenIDEO, an Internet portal that bills itself as an “innovative platform for creative thinkers.”
The proliferation of global idea-sharing has helped level the playing field of innovation-driven growth, enabling lower- and middle-income markets to contribute to technology production and invention. China’s rise to the upper echelon of economic supremacy has triggered a corresponding rise in demand for IP protection. Between 2009 and 2010 (the latest year for which statistics are available), the number of patent applications in China ballooned 24.3 percent to 391,177, according to data from the World Intellectual Property Organization (WIPO), a United Nations agency that promotes the development and use of the international IP system. Applications in Russia jumped 10.2 percent during that 12-month period, while submissions in Brazil climbed 3.4 percent and forms filed in Korea increased 4 percent. U.S. patent applications, by comparison, swelled 7.5 percent to 490,226 in 2010, WIPO figures show.
The emergence of new IP contributors is prompting a growing number of companies to seek international protection for their ingenuity. The desire for such a safeguard invariably has led to increased worldwide demand for IP protection. Global patent applications more than doubled over the last three decades, going from roughly 800,000 in the early 1980s to 1.8 million by 2009, according to WIPO’s 2011 report, “The Changing Face of Innovation.” IP demand accelerated most quickly during the mid-1990s as China and India began to experience explosive economic growth. Over the last 15 years, in fact, the share of global patent applications from Europe, Japan and the United States dropped from 77 percent in 1995 to 59 percent in 2009. At the same time, China’s share rose by more than 15 points, WIPO data indicate.
“Patent applicants increasingly seek to protect their patents abroad and, indeed, in a larger number of countries, reflecting greater economic integration,” WIPO’s 2011 report states.
Such integration, however, is straining the world’s patent offices—in 2010, the number of unprocessed applications worldwide stood at 5.17 million. Much of the backlog is concentrated in Japan, the United States and Europe, though several developing markets are experiencing significant logjams as well.
While the U.S. Patent and Trademark Office (USPTO) has made substantial strides in reducing its backlog (whittling 64,137 applications from its caseload between March 2011 and March 2012), data reported on patent law blog Patently-O show that requests for continued examination (RCE) rose by 22,144 cases and appeals increased by 5,280 cases. In an attempt to reduce RCEs, patent officials initiated a program earlier this year that gives applicant reviewers extra time to consider submissions after final rejection. Patent officials hope the program will help administrators determine whether the extra time for considering a response after an application is rejected will accelerate allowances and reduce the number of RCEs filed.
“The U.S. Patent Office has a backlog of nearly 650,000 patent applications waiting to be examined. This means inventors often wait two years or longer to hear from the Patent Office after filing a patent application,” explained patent attorney David J. Dykeman, co-chair of the Intellectual Property Department in the Boston, Mass., office of international law firm Greenberg Traurig LLP. “The patent backlog exists because the number of patent applications filed has seen tremendous growth over the last decade. More patent applications are being filed because patents are the currency of the innovation economy. In the changing patent landscape, Congress, the president, and the Supreme Court are all trying to address perceived problems with the U.S. patent system.”
A Race to the Finish Line
The fix proposed by U.S. Congress was the Leahy-Smith America Invents Act (AIA), a sweeping piece of legislation that essentially overhauled the nation’s antiquated patent system. The Act—signed into law on Sept. 16, 2011—makes a number of important changes to U.S. patent law, but one of the most significant is the adoption of a “first-inventor-to-file” rule for identifying inventors.
Set for implementation on March 16, 2013, the first-inventor-to-file rule rewards the first inventor to file an application at the Patent Office. The edict harmonizes U.S. patent law with the rest of the world, but ends the nation’s traditional, centuries-old “first-to-invent” system, in which the Patent Office (in an interference proceeding) or a court (in a patent infringement suit) determines the first inventor.
The change is important, since disputes over the timing of inventions arise fairly frequently in patent law. One of the most renowned cases of simultaneous discovery—a phenomenon science historians call “multiples”—involved eminent scientist, inventor and engineer Alexander Graham Bell and Elisha Gray, a Quaker from rural Ohio who invented the telegraph printer, a precursor to the Teletype machine. Both Bell and Gray filed applications for their telephone inventions with the Patent Office in Washington, D.C., on the same day—Feb. 14, 1876. Bell filed first (his was the fifth entry received that day) but Gray filed a caveat, or a request for more time to submit a standard application. The caveat would have prevented other applicants with the same idea from having their submissions processed for 90 days while Gray worked on his application. But the USPTO gave Bell the patent, setting off a legal and professional feud between the two men that lasted most of their lives.
A first-inventor-to-file system easily resolves such disputes. And while it will reduce much of the uncertainty, time and expense of obtaining priority under the current first-to-invent system, the new measure is not without its own challenges. IP attorneys contend a first-inventor-to-file system favors large corporations with both the financial and legal resources to win the race to the patent office. They also claim that first-to-file rules could pressure companies into filing patents for technologies that either are incomplete or not yet fully understood.
“Most of the larger clients, and those that spend a considerable amount on IP, are not concerned about first-to-file,” McGinnis noted. “The reason they are not is because the rest of the world has been first-to-file for a long time. And because the larger organizations have been patenting around the world where it’s first-to-file and there are more onerous requirements about disclosure, they tend to play it safe and get something on file before any kind of disclosure.”
He continued: “But this particular change in the law does not help the small guy. Filing costs money, period. You can file a provisional application, you can even file pro se, but you still have to pay. It may not be that much, but if you’re someone working out of your garage, do you want to spend extra money on a patent or would you rather spend time developing and documenting your invention?”
Michael R. Hamlin would advise that garage inventor to invest in a patent. Hamlin, an IP attorney who specializes in medical device and mechanical engineering patent prosecution, is a staunch supporter of a first-inventor-to-file system.
“We’ve been telling clients for years that they need to move quickly to get applications on file before their competitors because even though we are currently under the first-to-invent system, there are many reasons why it’s very important to get an earlier filing date,” explained Hamlin, a principal in the Boston office of global law firm Fish & Richardson P.C. “It’s been very difficult traditionally to prove you were the first to invent if one of your competitors had an earlier filing date. For that reason, you want to avoid a situation where you allow a competitor to file a patent application on an invention before you do. There’s a presumption that the first to file is the first inventor, and the latter inventor has to prove otherwise. The Patent Office has set a pretty high bar to prove that.”
Hamlin believes the first-inventor-to-file switch is not the most difficult challenge posed by the AIA. That title possibly could go to one or both of two new administrative procedures that enable third parties to question the validity of a granted patent.
On Sept. 16 (2012), the first anniversary of AIA being signed into law, the Patent Office will implement two additional administrative procedures to resolve the validity of granted patents—Post-Grant Review (PGR) and Inter Partes Review (IPR). The procedures, however, apply only to patent applications filed under the first-inventor-to-file system.
PGR allows inventors to file a petition seeking the review of a patent within nine months of its issuance. Petitions that include one or more allegations of unpatentability on any grounds will be granted. When the nine-month PGR window closes, or at the end of a PGR, third parties can then petition the Patent Office for an IPR of a patent on the more limited grounds of prior art patents or printed publications. The IPR petition will be granted if the allegations in the IPR petition would likely prevail in at least one challenged patent claim, a higher standard than PGR. Both PGR and IPR proceedings will be conducted by the Patent Trial and Appeal Board, a new tribunal within the Patent Office. To help reduce dispute resolution costs, the AIA includes an automatic stay of any district court patent litigation begun on or after a PGR or IPR is initiated. While both PGR and IPR provide companies with new ways to invalidate their opponents’ patents, patent attorneys consider the procedures to be another competitive tool for larger companies.
While both PGR and IPR provide companies with new ways to invalidate their opponents’ patents, IP attorneys consider the procedures to be another competitive tool for rich conglomerates.
“Post-grant review is another huge change in the [patent] process,” Dykeman said. “Post-grant review is expensive, and bigger companies are more likely to initiate post-grant review proceedings.
Established companies will have the resources and budget to monitor their competitors’ patents to know what is being issued, and then pursue post-grant review. Smaller companies will lack these monetary resources and may not be able to oppose their bigger competitors’ issued patents. The over-arching goal of post-grant review is to have issued patents that are of higher quality and truly deserving of patent rights.”
In addition to switching to a first-inventor-to-file system and introducing Post-Grant and Inter Partes reviews, the AIA also allows third parties an expanded opportunity to submit prior art in pending patent applications. Further, the AIA expands the scope of materials that may be considered prior art. The law amends 35 U.S.C. § 102 to eliminate the “in this country” limitation on prior art. Under new rules, the prior art will include all prior art available as of the filing date of the application rather than the date of invention, which is an earlier date. In a significant, pro-defendant development that is also an acknowledgement of the globally interconnected nature of innovation, patent claims now will be subject to attack by evidence of prior public use of the invention anywhere in the world. The scope of prior art searches that must be conducted by patentees and accused infringers will widen drastically as a result of these changes, but its effects will not be felt until 18 months after enactment of the law, legal experts note.
Determining Patent Validity
For much of the last decade, the U.S. Supreme Court has purposely sidestepped patent cases, leaving the decisions up to a lower court with jurisdiction over the disputes. But the high court has taken a greater interest in these cases lately as companies increasingly turn to patents and innovation to secure long-term growth.
Such growth, however, could be stymied by a March 20 Supreme Court decision that challenges the validity of gene patents. The court’s ruling against San Diego, Calif.-based Prometheus Laboratories Inc. could impede biomedical researchers’ ability to protect discoveries in medical diagnostics, an especially important concern for scientists working in personalized medicine.
Prometheus has been locked in an eight-year battle with Mayo Collaborative Services (a division of the Rochester, Minn.-based Mayo Clinic) over its unique method of determining proper drug dosage. The patents at the center of the dispute cover the process of administering thiopurine drugs to patients with autoimmune disorders and then measuring the levels of certain metabolites in the blood to determine whether the patient had received a safe and effective dose.
In 2010, the U.S. Court of Appeals for the Federal Circuit upheld the patents, claiming the administration of drugs and the measurement of metabolites in the blood “transformed a particular article into a different state or thing.” But the Supreme Court disagreed, contending Prometheus’ ingenuity covered “a law of nature,” which, for all intents and purposes, cannot be patented unless it somehow is altered by humans.
A week after rendering its ruling in the Prometheus case, the Supreme Court set aside a July 2011 ruling by the Federal Circuit Court which upheld the validity of two patents owned by Myriad Genetics Inc., a Salt Lake City, Utah-based molecular diagnostics firm. The company was sued three years ago by the American Civil Liberties Union (ACLU) over its desire to patent “isolated” genes associated with most inherited forms of breast and ovarian cancer (known as BRCA1 and BRCA2). The ACLU argued that patents on human genes violate the First Amendment and patent law because genes are “products of nature.”
After re-examining the case, the Federal Court last month ruled (again) in favor of Myriad, supporting its right to patent the BRCA1 and BRCA2 genes but denied the company’s effort to patent methods of “comparing” or “analyzing” DNA sequences.
Attorneys and industry executives believe the Prometheus case (and to a lesser extent, the Myriad ruling) could stifle innovation and make it more difficult to protect an idea based on natural law.
“This decision [Prometheus] makes an utter mess out of the already convoluted doctrine of statutory subject matter,” patent attorney Steven R. Hansen wrote in response to the Biotechnology Industry Organization’s online reaction to the Prometheus decision. Hansen is a principal at Birmingham, Mich.-based Hansen IP Law PLLC. “Now we are told that the statutory subject matter inquiry requires us to disaggregate patent claims and determine whether individual features are separately novel and non-obvious. This needlessly conflates the issues of novelty and non-obviousness with statutory subject matter.”
“Moreover, in this particular case, the portion of the claim that recited the ‘natural law’ required no manipulative steps,” Hansen’s response read. “As a result, the ‘natural law’ step should have been given no patentable weight. In that case, and if the SCOTUS (Supreme Court of the United States) opinion is correct in stating that the remaining claim elements were known, presumably the claim could have readily been invalidated on obviousness grounds.”
The legal commentary was just as colorful in February—about a month before the Prometheus decision—after the Federal Circuit Court upheld a 2007 jury ruling that convicted W.L. Gore & Associates (the manufacturer of Gore-Tex) of willfully infringing upon a patent held by Bard (formerly C.R. Bard Inc.) through the development of its vascular grafts, devices used to bypass or replace blood vessels to ensure sufficient blood flow to various parts of the body. Gore appealed the ruling, and a three-judge panel of the same court reversed part of its decision on June 14, remanding the case back to the trial court for reconsideration.
Bard received a patent for its vascular grafts in 2002, roughly 28 years after it first filed an application with the USPTO (talk about backlogs!). The Murray Hill, N.J.-based company sued Gore for infringement the following year; an Arizona jury awarded Bard $185.6 million for lost profit and unpaid royalties, but a judge later doubled that amount based on the finding that Gore willfully infringed Bard’s patent. But in an odd bit of irony, the Federal Circuit Court refused to grant Bard an injunction in the case, claiming “it was in the public interest to allow competition in the medical device arena.”
Patent attorneys contend the Bard-Gore decision could adversely impact companies’ legal recourse against competitors.
“Many people found this decision a little surprising. In a marketplace where two companies are direct competitors, the thought was that a court would grant a permanent injunction after a finding of infringement,” said Craig R. Smith, an intellectual property trial attorney and partner at Lando & Anastasi. “If you’re a medical device company, one of the reasons for building a strong patent portfolio is to prevent others from using the technology you invented. One of the concerns with the Bard case is that the ability to exclude others may be lost. As a result, you might be limited to damages from an infringing company in certain circumstances. It’s a concern to companies that want to prevent competitors from entering into their technology space by using their patents. This case could signal that it’s going to be harder to get a permanent injunction even when you have a direct competitor.”
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Creativity and innovation are critical to the success of business, industry, and the economy. When ideas are developed into constructive goods and services and are protected through strong intellectual property rights, consumer interest and demand are spurred. As a result, jobs are created, economies grow, and societies advance. Studies have shown that innovation magnified growth during the upturns and led economies out of downturns.
The protection and enforcement of IP rights are imperative for creating strong incentives for innovation and safeguarding it from counterfeiting, piracy, and other forms of IP theft. But the role of intellectual property gradually has changed over the last several decades as emerging markets have risen to power and companies have dedicated more resources to protecting their inventions abroad.
Consequently, shifts in the IP landscape have triggered a growing demand for patents and IP protection. Congress, the USPTO and the U.S. Supreme Court have imposed reforms on the nation’s patent system to accommodate its new role in the “innovation economy.” The result, according to Greenberg Traurig’s Dykeman, is a “dynamic patent environment” that is addressing weaknesses in the nation’s patent system, but unintentionally creating future challenges. With Congress, the president, and the Supreme Court, there are a lot of cooks in the kitchen trying to change the patent system, but they are addressing patent reform from different perspectives, he explained. “With the sweeping new rules of the AIA and recent major Supreme Court patent decisions, there will be a tremendous number of new patent rules over the next six months,” Dykeman said. “While the intentions of the new patent rules are noble, there will be some unintended consequences that will likely need to be corrected down the line.”
Corrected, perhaps, by one of those “cooks.”