As noted in our last issue, the Patent Act of 2005 (H.R. 2795) was introduced by Congressman Lamar Smith on June 8, 2005.  Its purpose is to improve the quality of patents and reduce costs associated with their enforcement.  It proposes significant modifications to patent law in theU. S. – the most significant, per Congressman Smith, since Congress passed the 1952 Patent Act.  These changes to U.S.C. Title 35 appear to be well received (there were nine bi-partisan co-sponsors) and passage of the Bill is expected by, at least, 2006. 

We hope the brief summary of the changes proposed in the Bill that we provide below will serve to keep our readers informed.   Certainly, this pending Bill deserves the attention of anyone involved in U. S. patent activity.

The Act specifies changes in the following areas:

Right of the First Inventor to File

Currently, in the U. S. the person who is first-to-invent has the principle right to a patent.  In effect, the first person to invent something is the only one entitled, under current U.S. patent law, to be recognized as the “inventor”.  U. S. patent law differs from that of foreign patent offices which follow a first-inventor-to-file rule.  Changes proposed in the Patent Act of 2005 would make U. S. patent law consistent with patent law in most other countries.

These changes are accomplished by adding definitions which recognize that an “inventor” is someone who “invented or discovered the subject matter of the invention”.  In effect, it is recognized that more than one inventor of an invention may exist. 

A big component of existing patent law relative to inventorship are provisions which specify how someone’s claim to being an earlier inventor are to be resolved.  This component of current patent law supports the patent rights of the first-to-invent.  These are called “interference” actions because one inventor’s patent application may interfere with another’s.  The Patent Act of 2005 amends or modifies provisions of current patent law in order to make them consistent with the change to a first-inventor-to-file approach. 

In particular, section 102 is substantially rewritten and simplified.  “Interference” rights are redefined to be an “inventor’s rights contest” which addresses the rights of an inventor to patent under revised section 101.  References to “interferences” are generally eliminated and the Board of Patent Appeals and Interferences becomes just the Board of Patent Appeals.  Other changes to make the patent law consistent with a first-inventor-to-file approach are also made.

In particular, the effect of prior art on patentability is simplified.  Prior art must only be “reasonably and effectively accessible” through its use, sale, or disclosure by means not otherwise excepted in the law.  This requirement is measured in terms of information that is available to someone of ordinary skill in the art “without resort to undue efforts”.

In testimony it was noted that the existing first-to-invent approach more often that not defaults to a first-inventor-to-file approach because of the complexity of the current law and the difficulty of asserting a prior right to patent in an interference action.  This is compounded by the significant cost associated with such a proof. 

The belief is that a first-inventor-to-file rule is a recognition of a “best practices” approach.

Right of an Assignee to File

Under current U.S. law only the inventor has the right to file for a patent.

Under the first-inventor-to-file approach proposed by these amendments, one still must be an inventor to receive a patent.  However, the Patent Act of 2005 would make it possible for a person to whom an inventor has assigned (or is under obligation to assign) the invention to file for a patent in the inventor’s name. 

The revisions made to redefine the right to patent also amend section 112 to eliminate key language which requires that an applicant “shall set forth the best mode contemplated by the inventor of carrying out his invention”.  It is believed that the subjective “best mode” requirement (added by the 1952 Patent Act) is inefficiently applied in litigation. 

Duty of Candor Imposed

By the addition of two new sections, 136 and 137, the USPTO is given authority to enforce a “duty of candor and good faith” expected of individuals filing and prosecuting a patent application or assisting in this activity.  Under current patent law this enforcement is a function of the federal court system. 

Essentially the duty of candor requires any individual involved to disclose on a timely basis any information material to a patent application in a way that does not misrepresent such material.  If the USPTO finds that the duty of candor has been breached and misconduct has occurred, a patent can be held unenforceable as well as other consequences can be imposed (including monetary penalties).

Right of the Inventor to Obtain Damages

Section 284 is amended in an attempt to eliminate the “entire market value” approach used to determine damage awards.  That is, new language limits a “reasonable royalty” to the contribution to “realizable profit that should be credited to the inventive contribution as distinguished from other features of the combination, the manufacturing process, business risks, or significant features or improvements added by the infringer.”

Conditions are spelled out with respect to a determination of “willful infringement” which can result in treble damages.  The Patent Act of 2005 would limit additional damages only to situations in which the plaintiff provided written notice of infringement “identifying with particularity each claim of the patent, each product or process that the patent owner alleges infringes the patent, and the relationship of each product or process to such claim.”  That is, vague claims of infringement cannot result in a determination of “willful infringement” and treble damages.

Injunctions

The purpose of this very short section of the Patent Act of 2005 is to make it more difficult for a person claiming infringement to get injunctive relief in patent infringement actions. 

Under current law, the threat of an injunction has been used to encourage settlement.  The amendment requires the court to “consider the fairness of the remedy in light of all of the facts and relevant interests of the parties associated with the invention.”

Continuation Applications

Under current patent law patent applications can be “kept alive” by filing continuations.  It is felt that there has been abuse in this by applicants who use the procedure to track the commercial development of a technology and update their inventions related to this technology in order to encompass what others may be doing. 

However, it is recognized that there are many instances where continuation applications are entirely appropriate and necessary.  Therefore, the proposed new section 123 allows the Director to establish regulations to “limit the circumstances” under which continuation applications which claim the filing date of a prior application (other than a divisional application) may be filed.

Post Grant Opposition Procedures

A new Chapter 32 is added by the Patent Act of 2005 which inserts a new post grant opposition procedure under which anyone can request the USPTO to reconsider any claims granted in an issued patent.  Such a request could be made either:

• within 9 months after the grant of a patent; or
• within 6 months after notification by the patent holder alleging infringement.

In order to make a post grant opposition procedure and participation by the general public more workable, section 122 is amended to effectively require that almost all patent applications be published after 18 months.  Another amendment to section 122 effectively allows the public a period of time to submit prior art relative to a patent application which they feel the USPTO should consider or should have considered during the examination of the application.      

These changes are viewed as a way for the interested public to address any perceived errors or mistakes made by the USPTO in granting a patent or point to specific prior art the USPTO ought to consider during the examination of an application.

Transitional Rules

Transitional rules make the change to a first-inventor-to-file approach effective with respect to patent applications filed one or more years after the enactment of the Patent Act of 2005.  Special effective date transition rules apply with respect to nonprovisional patent applications filed before the effective date of the amendments that introduce the first-inventor-to-file rule.

The Right of an Assignee to File, the change in the right of an inventor to obtain damages, and injunctive relief would be effective from the date the Act became effective except that they would not apply with respect to any action brought in any court before such date.

The Duty of Candor requirements would apply to any patent issued on or after the effective date of the Act.  However, a patent owner may elect, with respect to a patent issued prior to the effective date of the Act, to be under the jurisdiction of the USPTO rather than a federal court with respect to any action brought on or after the effective date of the Act.

Any regulations the Director introduces to control continuation applications would be effective with respect to patent applications filed on or after the effective date of the Act.  Such regulations cannot be effective until one year after the effective date of the Act.

The changes making patent application publication after 18 months almost universal would become effective with respect to patent applications filed on or after the enactment of the Act. 

The added Post Grant Opposition Procedures would become effective on the date of enactment of the Act except that no opposition proceeding request can be made until one year after the effective date of the Act and the Director may establish an even later date for such opposition proceedings. This opposition procedure would only apply to patents filed under the first-inventor-to-file rule.    

The amendments allowing the submission of prior art by third parties would become effective one year after the enactment of the Act.

Conclusions

The most significant elements of this proposed amendment to U.S. patent law are: 

• the move to a first-inventor-to-file rule
• the elimination of some “subjective” elements from current law: “best mode” requirement eliminated; “definition of “willful infringement” clarified; and duty of candor clarifies “inequitable conduct”
• creation of a post grant opposition system.

The end result is supposed to be greater clarity and less costly legal actions to defend or assert patent rights.

Please recognize that this is a brief summary of a complex set of amendments and these amendments are subject to change as the bill works its way through congress. 
We refer you to the Intellectual Property Owner’s web site, http://www.ipo.org/, for updates on the bill and its current contents.