Intellectual Property Attorneys - IP Lawyers

June 2011 Archives

Patent Reform Bill Passes in House by a 304-117 vote

By Timothy J. Maier on June 29, 2011 8:49 AM | No Comments | No TrackBacks
On June 23, 2011, the House of Representatives voted to pass H.R. 1249, also known as the America Invents Act, moving forward a proposed overhaul to U.S. patent law that some consider to be the most significant change to the system since the Patent Act of 1952.

One of the most debated changes in the patent reform bill is the shift from a "first-to-invent" system, which is unique to the United States, to a "first-to-file" system, used in the rest of the world. Under the current system, patent rights are granted to the first person who conceived of the invention and diligently reduced it to practice. While the first applicant to file would receive prima facie rights in the patent, a second applicant may initiate interference proceedings to ascertain which of the applicants was the first to invent. Under the first-to-file system, patent rights would be granted to the first person to file an application, regardless of the date of actual invention.

Opponents of the change argue that the first-to-file system puts small businesses and sole inventors, and entrepreneurs at a disadvantage, as such small entities may not have the resources available to promptly draft and file patent applications on their inventions. The change is considered to favor large entities, whose funds and resources allow them to easily cover the costs of drafting and filing applications with the USPTO.

An amendment to strike the shift to the first-to-file system was tabled by a vote of 87-13; however, some opponents vowed to continue to strike this portion of the bill.

Another significant change in the America Invents Act affects the funding of the Patent and Trademark Office. Presently, the fees collected by the USPTO are not allocated specifically to the Patent Office's budget, but may be appropriated to other programs by Congress, requiring the USPTO to participate a separate appropriations process to receive a portion of the collected fees. H.R. 1249, however, would allow the USPTO to maintain the collected fees in a dedicated account, even though the use of those funds would be subject to Congressional approval. In contrast, S. 23, which passed in the Senate in March 2011 by a 95-5 vote, calls for the creation of a "USPTO Revolving Fund," essentially letting the Office keep the collected filing fees. Greater control over funding will enable the Patent Office to better address its backlog of pending patent applications, which number over 700,000. The differences between the two versions of the bills will have to be reconciled before the bill can become law.

Other changes to the U.S. patent system proposed by the America Invents Act will be the subject of future posts on this blog.

ICANN will expand top-level domain name offerings

By Timothy J. Maier on June 23, 2011 2:58 PM | No Comments | No TrackBacks
This week, ICANN, the organization that coordinates and controls internet domain names, has announced that in 2012, it will introduce new general top-level domains (gTLDs). Presently, only 22 gTLDs are in use, such as .com, .net, and .edu.

The new TLD offerings will allow companies to have domain names with a TLD suffix that reflects their brand or their business. For example, the Coca-Cola company may choose to use a .coke gTLD, auto manufacturers may end their web addresses with .car, and local municipalities and local businesses may use a city or regional TLD, like .nyc.

These changes will be implemented 18 months from this week. Anyone seeking one of the new TLDs will have to show a legitimate claim to the domain that they are buying, as well as pay $185,000 for the privilege. These measures are expected to deter cybersquatting and counterfeiting of brand domain names. However, trademark owners will still have to remain vigilant to make sure their rights are protected. The success or failure of the new domain names will also depend on the opinion of consumers, which, after over fifteen years of commercial internet use, are used to simple, three-letter domains such as .com and .org.

Federal Circuit introduces strict new Inequitable Conduct standard in Therasense

By Timothy J. Maier on June 17, 2011 5:09 PM | No Comments | No TrackBacks
Recently, the Court of Appeals for the Federal Circuit handed down an opinion, Therasense, Inc. v. Becton, Dickinson, & Co., that will have a extensive impact on the standards used to determine when a patent must be found unenforceable due to inequitable conduct.  

USPTO Rule 56 imposes on inventors a duty of candor and good faith to disclose all information material to patentability when applying for a patent.  If a court finds that an applicant failed to do so, then under the doctrine of inequitable conduct it can rule the patent unenforceable.  

In order to prove inequitable conduct, an alleged infringer must show that the patentholder intentionally withheld or misrepresented information, and that the information was material.  Under the old standard, "material" information was defined as information that a reasonable examiner would have wanted know about when he or she was prosecuting the application.  In addition, a court could use a materiality-intent balancing framework to make determinations of inequitable conduct -- very strong showings of intent could make up for weak showings of materiality, and intent could be inferred in situations where the information was found to be very material.  

In Therasense, the Federal Circuit tightened this standard significantly.  Under the new standard, the accused infringer must prove that the patentee acted with specific intent to deceive the patent office.  In other words, it must be shown by clear and convincing evidence that the applicant "knew of the reference, knew that it was material, and made a deliberate decision to withhold it."  The materiality analysis was raised to a "but-for" standard, under which information is material only if, but for its omission, the patent would not have issued.  Finally, the court specifically rejected the materiality-intent balancing approach, ruling that both of these elements must be evaluated independently.  

The effects of this decision, while guaranteed to be far-reaching, are not entirely obvious at this time.  The court stated that its opinion was intended to reign in a doctrine that was plaguing the courts and the entire patent system, and was being abused to the detriment of the public.  Some commentators, however, have expressed concern that it will lead to fewer disclosures by patent applicants, which will in turn lead to a reduction in the quality of issued patents and a resulting increase in enforcement costs.

Supreme Court Affirms Federal Circuit in Microsoft v. i4i

By Timothy J. Maier on June 10, 2011 2:46 PM | No Comments | No TrackBacks
The Supreme Court recently handed down a very important patent law opinion concerning the evidentiary burden necessary to overcome the presumption of validity given to issued patents.

Under 35 U.S.C. §282, a patent claim that has successfully navigated the USPTO's examination process and has been granted is presumed to be valid unless sufficient evidence is presented to the contrary.  What the statute leaves unsaid is the amount of evidence is necessary to rebut this presumption -- in other words the evidentiary burden a plaintiff must meet before he or she is allowed to attempt to invalidate a patent at trial.  Since its inception almost three decades ago, the Court of Appeals for the Federal Circuit has held that only "clear and convincing" evidence is capable of removing this presumption.

In this case, Microsoft presented a two-part argument for moving to a much lower  "preponderance of the evidence" standard.  Microsoft argued that the statute is somewhat ambiguously worded, and that interpreting it to require a "clear and convincing" standard introduces redundancies.  Alternatively, Microsoft argued for a two-tier approach, in which prior art that was examined by the PTO is given the traditional "clear and convincing" consideration, but art that was never actually before the Office must only pass the lower "preponderance" standard.

A unanimous Supreme Court ultimately rejected both of these arguments, affirming the Federal Circuit's earlier decision in this case.  The Court first noted that the ambiguous nature of §282 is not unusual among statutes that set down a burden such as this, and that it was appropriate and consistent with precedent for the Federal Circuit to impose a "clear and convincing" standard.  The Court then moved to Microsoft's second argument, and ruled that there was nothing either in the statute or the precedent that supported a two-tiered standard.  The Court did concede that Microsoft's concerns about the difference between examined and unexamined art were valid, but held that those concerns were properly dealt with by the Federal Circuit's approach of simply allowing a plaintiff to explain the difference between the two to a jury.
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