America Invents Act Presented By: Brian Coleman BColeman@PerkinsCoie.com Jordan Becker Ken Halpern JBecker@PerkinsCoie.com KHalpern@PerkinsCoie.com AIA SEC. 3: First Inventor to File Old Regime: First-to-Invent Conception and Diligent Reduction to Practice mattered, giving inventor a "priority date" of conception One year grace period from any public disclosure First to file had prima facie priority, but Swearing behind could eliminate certain references Interference proceeding determined first to invent facts, including conception and reduction Any application with an effective filing date prior to March 16, 2013 falls under first to invent -- first to invent remains with us for some time New Regime: First-to-File Filing determines priority (i.e., the inventor entitled to a patent is the first to file, NOT first to invent) March 16, 2013 Applicable to any application with an effective filing date on or after March 16, 2013 – Note long tail for first to invent rules (e.g., March 15, 2033) Personal grace period but no grace period as to independent third party disclosures Derivation concept becomes important, interference proceedings eliminated Complete rewrite of 102 prior art definitions and exceptions Prior Art 102(a) 102(a)(1) patented described in a printed publication Public use On sale Otherwise available to the public – does this mean no "secret" prior art?? 102(a)(2) Described in a U.S. patent, or a published or deemed published application Names another inventor Effectively filed before the effective filing date of the claimed invention Personal Grace Period 102(b)(1) Grace period of one year preceding effective filing date Inventor priority not extinguished by: Disclosures by or derived from the inventor, made within one year Disclosures made within one year by others but after an earlier disclosure by inventor Overcoming Prior Art by Removal Patent and Application Art is removed when: Subject matter was derived from inventor; or Subject matter was publicly disclosed by inventor (or derivers) prior to effective filing date of art; or Subject matter disclosed and claimed invention commonly owned or subject to common duty of assignment, not later than effective filing date of claimed invention Derivation Proceeding Patent applicant files a petition for a derivation proceeding A petition for a derivation proceeding "may be filed only within the 1-year period beginning on the date of the first publication of a claim to an invention that is the same or substantially the same as the earlier application's claim to the invention." The petition must set forth with particularity the basis for finding that an inventor named in the earlier application derived the claimed invention from an inventor in the petitioner's application, and the petition must be supported by “substantial evidence” as decided by the new PTAB. Director's determination whether to institute a derivation proceeding shall be final and nonappealable PTAB determines whether derivation occurred PTAB may correct inventorship of any patent or application at issue Parties may settle issues themselves, subject to review of PTAB Narrow discovery allowed during proceeding Deposition of anyone signing an affidavit or declaration What is otherwise necessary in the interest of justice Take Away File with urgency – same as it always was Good record keeping still important, but disclosure history now more important than proof of conception and reduction Keep the March 16, 2013 date in mind, consider filing prior to Disclosure to establish your own priority and create prior art for others – maybe Disclosure not clearly defined by AIA Monitor patents and published applications for derivation concerns Post-Grant Proceedings Patent Post-Grant Proceedings "Post-grant review proceedings" as defined in AIA Sec. 6 includes: Post-grant review (New) Inter partes review (New) Citation of Prior Art and Written Statements (New) Other post-grant proceedings: Ex parte reexamination (substantively unchanged, but cost increasing from $2,250 to $17,750 (proposed)) Supplemental examination (New) Reissue ('lack of deceptive intent' no longer required) High Level Comparison Proceeding Threshold Basis Estoppel Post-Grant Review More likely than not that at least one claim is unpatentable Any ground (incl. product as prior art, prior use or sale) Raised or reasonably could have raised Current Inter Partes Reexam (to be phased out) Reasonable likelihood petitioner will prevail on at least one claim (was SNQ prior to 9/16/2011) Patents/printed publications only Could have raised (but not for ITC) Inter Partes Review Reasonable likelihood petitioner will prevail on at least one claim Patents/printed publications only Raised or reasonably could have raised (incl. ITC) Ex Parte Reexamination SNQ Patents/printed publications only N/A Supplemental Examination SNQ Any information N/A Post-Grant Review (PGR) (1) AIA Sec. 6, §§321-329, "effective" September 16, 2012, but . . . Only applicable to patents having priority date on or after March 16, 2013 (AIA § 3(n)(1)) Not practically usable until at least late 2014 or 2015 Exception: Covered business method patents -- any priority date, but only if have been charged with infringement Third parties only Real-party in interest cannot remain anonymous Time limit to request PGR: 9 months after issuance of patent Duration: PTO final determination within 1 year after instituting PGR (+ up to 6-months extension for good cause) Post-Grant Review (PGR) (2) Grounds of invalidity Any ground of invalidity (not just patents or publications) 101, 102/103, 112 (except for best mode), double patenting, etc. Yes for product as prior art, prior use or sale A novel or unsettled legal question that is important to other patents or patent applications Opportunity to creatively raise issues Post-Grant Review (PGR) (3) Threshold: More likely than not that at least one of the challenged claims is unpatentable Higher threshold than former SNQ threshold and new inter partes standard (reasonable likelihood petitioner will prevail) but no "new" question of patentability is required Expected USPTO filing fee: > $40,000 (anecdotal) Compare: Filing fee for EPO Opposition is about $1,000 Post-Grant Review (PGR) (4) PGR barred if: (1) petitioner already filed a civil action challenging validity of the same patent unless validity challenge was filed as counterclaim (2) petition requests cancellation of a claim in a reissue patent that is identical to or narrower than a claim in the original patent and the deadline has passed for PGR of the original patent Impact on civil actions Automatic stay of DJ action filed on/after the filing of petition for PGR (not granted!) Lifted if patent owner sues for infringement or so requests Preliminary injunction If a civil action alleging infringement is filed within 3 months after issuance of the patent, court may not stay consideration of patent owner’s motion for preliminary injunction on the basis that a petition for PGR has been filed or PGR has been instituted Post-Grant Review (PGR) (5) Estoppel (in absence of settlement): Petitioner (or its privy) cannot re-assert any ground that petitioner raised or reasonably could have raised in PGR in: Another PTO proceeding (e.g., subsequent inter partes review) District Court ITC (unlike inter partes reexam) "Reasonably could have raised" v. "Could have raised" for Inter Partes Reexam: slightly narrower scope of estoppel Estoppel attaches upon final written decision by PTAB Sooner than in inter partes reexam ("all appeals exhausted") Intervening rights apply (like reissue and current reexam) Post-Grant Review (PGR) (6) More litigation-like than prosecution Discovery available (e.g., depose witnesses) expensive! Protective order and sanctions Evidentiary standard: preponderance Settlement possible by joint request unlike current inter partes reexam No estoppel to petitioner if settled Next: Transitional Inter Partes Reexam Not available after September 15, 2012 Limited to patents issued on applications filed on or after 11/29/99 (like old inter partes reexam) Only major change: Higher threshold: Reasonable likelihood that petitioner will prevail on at least one claim (no longer need SNQ) An "old" question or issue can be raised New opportunity for challenging patents Estoppel applicable to subsequent civil action only (not ITC) Any ground "raised or could have raised" Next: New Inter Partes Review (IPR) (1) AIA §§ 311-319, effective Sept. 16, 2012 Who can request? Third party only: "a person who is not a owner of a patent" Real party in interest must be identified Applicable to all patents as of Sept. 16, 2012 Regardless of filing date, priority date or issue date Compare to Inter Partes Reexam: only patents issued on applications filed on or after 11/29/1999 Compare to PGR: only patents with a priority date on or after 3/16/2013 Bad news for some patent owners Inter Partes Review (IPR) (2) Time to file: After the later of: (1) 9 months from issuance (or reissuance) of patent, or (2) Termination of a PGR (Note: AIA simply says "a" PGR, so any on-going PGR of the patent (e.g., by others) will prevent IPR filing IPR barred if: (1) petitioner already filed a civil action challenging validity of the same patent unless validity challenge is counterclaim (2) petition is > 1 year after petitioner is served with a complaint A critical bar date for patent litigation defendants to monitor Parties sued before 9/16/2012 should consider filing inter partes reexam request before 9/16/2012, to take advantage of transitional rules (e.g., no litigation bar, no estoppel in ITC) Automatic stay of any DJ action filed on/after the filing of IPR petition (not granted!) Lifted if patent owner sues for infringement or so requests Inter Partes Review (IPR) (3) Grounds of invalidity Issues under Section 102 or 103 and Only on the basis of patents or printed publications Cannot use product as prior art, prior use or sale IPR Threshold -- Reasonable likelihood petitioner will prevail on at least one claim Higher than previous inter partes threshold: SNQ Lower (?) than new PGR threshold: "more likely than not that at least one of the challenged claims is unpatentable" No "new" question is required Inter Partes Review (IPR) (4) Estoppel (if no settlement): Petitioner (or its privy) cannot re-assert a ground (prior art) that petitioner raised or reasonably could have raised in PGR, in: Applies in: Any other PTO proceeding District Court ITC (unlike inter partes reexam) Estoppel attaches at final written decision by PTAB (sooner than in inter partes reexam: "all appeals exhausted") Intervening rights apply Inter Partes Review (IPR) (5) More litigation-like proceeding Discovery available (e.g., can depose witnesses) Protective order and sanctions Evidentiary standard: preponderance of the evidence Settlement possible by joint request: Unlike inter partes reexam No estoppel to petitioner if settled Inter Partes Review (IPR) (6) Process Patentee may file a preliminary response before PTO review (new) PTO decides whether to institute IPR within 3 months from (1) filing of patentee's preliminary response, or (2) last date for filing the preliminary response No appeal permissible PTO final determination within 1 year after instituting IPR (+ up to 6months extension for good cause) Patentee can amend/cancel claims and propose "a reasonable number of substitute claims" for each challenged claim 1 motion for amendment as matter of right Additional motions for amendments possible for (1) settlement when jointly requested with petitioner, or (2) as permitted by regulations prescribed by the Director Can't enlarge scope of claims, no new matter Appeal directly to Federal Circuit (but estoppel already takes effect) Inter Partes Reexam vs. Inter Partes Review (IPR) Inter Partes Reexam (Before 9/16/2012) Inter Partes Review (From 9/16/2012) Tribunal Central Reexamination Unit Patent Trial and Appeals Board Timing for filing Any time during patent term After the later of: 1) 9 months from grant, or 2) termination of PGR (barred if IPR requested > 1 year after being sued) Threshold Reasonable likelihood petitioner will prevail on at least 1 claim (was SNQ until 9/16/2011) Reasonable likelihood petitioner will prevail on at least 1 claim Duration Open-ended 1 yr max (+ up to 6 mo. for cause) Estoppel Could have raised (but not for ITC) Reasonably could have raised (including ITC) Discovery N/A Allowed Appeal To BPAI, then Fed Circuit Directly to Fed Circuit Effect of D.Ct. proceedings No bar Barred if already filed for DJ; barred if > 1yr after being sued for infringement 26 Inter Partes Proceedings File now rather than wait for new IPR proceedings to become effective on 9/16/2012? After 9/16/2012, new IPR may be unavailable to some parties for some patents, due to new IPR's DJ bar and 1-year infringement claim bar Estoppel under current rules does not include ITC, whereas estoppel under new IPR will. Next: Supplemental Examination (1) AIA § 257, effective September 16, 2012 For patent owner only (like reissue & ex parte reexam) Available to all patents Timing: Anytime during patent term (like reissue & ex parte reexam) Threshold: SNQ Basis: Any information -- not limited to printed publications and patents So what does that mean? Supplemental Examination (2) Laundry time! Patent cannot be held unenforceable based on conduct relating to information considered, reconsidered, or corrected during supplemental examination (note: AIA says 'unenforceable', not 'invalid') But, only applies if reexam concluded before filing civil/ITC action Patent owner must act early Supplemental Examination (3) Proposed USPTO fees: $5,180 for Request + $16,120 for the ex parte reexam = $21,300 compared to $2,520 for current ex parte reexam Procedures not nailed down -- Proposed rules just published Jan. 2012. Supplemental Examination (4) Limitations Can't cure existing allegations an allegation pled with particularity in a civil action, or set forth with particularity in a notice received by the patent owner under section 505(j)(2)(B)(iv)(II) of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 355(j)(2)(B)(iv)(II)), before the date of the supplemental examination Fraud by patent owner USPTO can cancel claims based on reexam USPTO shall report to Attorney General Patent Owner Considerations Identify & fix errors early Review (or have outside counsel review) pending patent applications for problems/errors before issuance – make sure prosecution counsel uses a preissuance checklist Much cheaper/easier to fix major problems before issuance than after Review issued patents for problems/errors well before contemplating filing a lawsuit, if possible. If supplemental exam desired, request it early if contemplating enforcement For major defects: Supplemental Examination (new) To reap benefit, must wait until reexam concludes before suing Expensive ($21,300 proposed) Ex Parte Reexamination (same) Limited to patents and printed publications Expensive ($17,750 proposed) Patent Challenger Considerations Post-grant review: Challenger's silver bullet? Short 9-month window -- Issues and disputes on legal front and market activities may not sufficiently mature for parties to take action Estoppel attaches earlier than inter partes review Not effectively usable until probably 2014-2015 (except for business method patents) Likely to be very expensive (> $40K in USPTO fees) Inter partes review more likely to be useful Consider filing inter partes reexam before 9/16/2012 to preserve inter partes option and/or to set up concurrent processing with a later-filed IPR/ex parte reexam Consider active monitoring of patent related filings AIA Joinder Provision (35 USC § 299) Common Patent-in-Suit Cannot Alone Form Basis for Joinder Former Law (Rule 20): Same T-or-O AND Common Issue of Law or Fact FRCP 20(a)(2) – Defendants may be joined in a single action if… (A) right to relief asserted "jointly, severally, or in the alternative w/r/t or arising out of the same transaction, occurrence, or series of transactions of occurrences; AND" (B) "any question of law or fact common to all defendants will arise in the action" Seems adequate to bar common-patent joinder but wasn't, at least in E. D. Texas 35 USC § 299 "accused infringers may be joined in one action as defendants or counterclaim defendants, or have their actions consolidated for trial, or counterclaim defendants only if-- (1) any right to relief is asserted against the parties jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences relating to the making, using, importing into the United States, offering for sale, or selling of the same accused product or process; and (2) questions of fact common to all defendants or counterclaim defendants will arise in the action NOT "law or fact" (b) ALLEGATIONS INSUFFICIENT FOR JOINDER.--For purposes of this subsection, accused infringers may not be joined in one action as defendants or counterclaim defendants, or have their actions consolidated for trial, based solely on allegations that they each have infringed the patent or patents in suit. Expressly Passed to Overturn E.D. Texas Case Law "Section 299 legislatively abrogates the construction of Rule 20(a) adopted in MyMail, Ltd. v. America Online, Inc., 223 F.R.D. 455 (E.D. Tex. 2004) [and other cited cases, all but one from Texas or La.] effectively conforming these courts' jurisprudence to that followed by a majority of jurisdictions. --112 H. Rpt. 98, at note 61 (June 1, 2011) MyMail (Judge Davis, now Chief Judge!) had held that Rule 20's " same transaction, occurrence, or series of transactions of occurrences" requirement was met by a "logical relationship" among the different accused products which could be "substantial similarity" This still ignores "jointly, severally, or in the alternative," but Judge Davis deemed the clear meaning of the statutory language "hypertechnical." Effect of § 299 on Plaintiff Behavior Trends before the AIA were similar to 2010, with the top 7 jurisdictions same, measured by defendants and cases BUT big DE jump before AIA, almost catching Texas DE outpaced ED Texas after AIA Texas drops off to 40% annualized rate of defendants in last quarter of 2011 compared to 2010 but could be anchor-defendant strategy, TBD 2011 by Total Defendants (no FM) January – September 15, 2011 By Total Cases (no FM) Cases Plaintiffs Defendants Defendants per Case Plaintiffs per Case Defendants per Plaintiff Eastern District of Texas 279 399 2785 10.0 1.4 7.0 District of Delaware 278 540 2014 7.2 1.9 3.7 Central District of California 213 346 820 3.8 1.6 2.4 Northern District of California 157 311 607 3.9 2.0 2.0 Northern District of Illinois 124 170 632 5.1 1.4 3.7 District of New Jersey 120 303 279 2.3 2.5 0.9 Southern District of New York 97 325 398 4.1 3.4 1.2 District of Minnesota 67 106 368 5.5 1.6 3.5 Eastern District of Virginia 58 71 199 3.4 1.2 2.8 Middle District of Florida 57 64 238 4.2 1.1 3.7 District 2011 by Total Cases (no FM) Cases Plaintiffs Defendants Defendants per Case Plaintiffs per Case Defendants per Plaintiff District of Delaware 484 911 2458 5.1 1.9 2.7 Eastern District of Texas 418 593 3163 7.6 1.4 5.3 Central District of California 324 510 1036 3.2 1.6 2.0 Northern District of California 225 403 771 3.4 1.8 1.9 Northern District of Illinois 214 293 790 3.7 1.4 2.7 District of New Jersey 180 458 384 2.1 2.5 0.8 Southern District of New York 151 425 640 4.2 2.8 1.5 District of Massachusetts 91 182 197 2.2 2.0 1.1 District of Minnesota 84 130 428 5.1 1.5 3.3 Middle District of Florida 82 99 275 3.4 1.2 2.8 District September 16 – December 31, 2011 By Total Cases (no FM) Cases Plaintiffs Defendants Defendants per Case District of Delaware 206 371 444 2.2 1.8 1.2 Eastern District of Texas 139 194 378 2.7 1.4 1.9 Central District of California 111 164 216 1.9 1.5 1.3 Northern District of Illinois 90 123 158 1.8 1.4 1.3 Northern District of California 68 92 164 2.4 1.4 1.8 District of New Jersey 60 155 105 1.8 2.6 0.7 Southern District of New York 54 100 242 4.5 1.9 2.4 District of Massachusetts 41 80 65 1.6 2.0 0.8 Southern District of California 28 34 43 1.5 1.2 1.3 Southern District of Florida 27 50 47 1.7 1.9 0.9 District Plaintiffs per Case Defendants per Plaintiff Delaware Goes Off the Charts Through 9/15, DE far ahead of 2010 annualized pace (278 cases, 2014 defs in 2011, vs. 255/884 for all of 2010, i.e., triple the rate of defendants sued) Average 7.2 defendants per case, compared to 3.5 in 2010 Through 9/15, 8 plaintiffs, 4-5 firms, account for 52 cases, 1054 defendants Even without these cases, DE is well ahead of its 2010 rate, still 3/2 rate of defendants sued to that point. Without these cases, average 4.2 defs per case After 9/15, DE 206 cases, 444 defendants, annualized pace of 714 cases, 1539 defendants. Average 2.2 defendants per case. After 9/15, TX has 139 cases filed, 378 defendants, annualized pace of 482 cases, 1310 defendants E.D. Texas Steady Through 9/15, Large Decline in Defendants Sued After Through 9/15, 279 cases, 2785 defendants (annualized pace 392/3914), a small increase over the 299/3879 in 2010 This was 11.5% of all 2011 cases filed to that point, compared to 10% in 2010 // 24.4% of all defendants, compared to "more than 25%" Average 10 defendants per case After 9/15, annualized pace of 482 cases, 1310 defendants, about exactly 1/3 the pace of defendants compared to before 9/15 Average of 2.7 defendants per case Huge Spike Overall the Week of 9/8-9/15 175 cases, 1787 defendants sued that week 3660 cases, 14201 defendants in 2011 1/8 of all patent defendants sued last year were sued in one week, between passage and effective date of joinder provision Why Delaware? Was already 2d-most popular jurisdiction, and per Lemley, highest "claimant" win rate among busy districts, and highest trial rate by far (11.8%!) which suggests unwillingness to grant SJ, relatively speedy time to resolution of 1 year Texas retirements (Ward, Everingham, Folsom from 9/10 to 6/11) Judge Robinson signal on venue (6/11, reversed 12/11 in Link-A-Media) 9 mandamus reversals of EDTx transfer decisions from '08-'10 Is E.D. Texas Over? Defendants-sued rate dropped by 2/3 after the joinder provision went into effect BUT could be part of anchor-defendant strategy, publicly discussed at Texas plaintiffs' bar event. Sue a Texas defendant, wait six months, sue the other defendants, move to consolidate 35 USC § 299 prohibits joinder and consolidation for trial, but not consolidation for pretrial proceedings If this is the strategy, not enough time has passed to know if this is occurring At least some anecdotal evidence of this (Macrosolve) Strategy How would defendants nonetheless avoid ending up in a massive multi-defendant coordinated set of cases in the plaintiff's chosen forum? Consider key Federal Circuit precedents assessing importance of forum's experience with patents-in-suit as a factor in a transfer analysis In re Verizon Business Network Services, Inc. , 635 F.3d 559 (Fed. Cir. 2011) Granted mandamus, ordered transfer from E. D. Texas Texas court cited two efficiencies: There had already been 2 years of litigation in the case at bar. The docket reveals there had been a case management conference and an order setting a trial date, an exchange of infringement and invalidity contentions, and even a joint claim construction statement (though the last was filed in March, 2011, after the mandamus petition had already been briefed). E.D. Texas had already considered the same patent in a prior suit, but five years earlier. Nonetheless, this could not overcome a “compelling showing of transfer” based on the conventional factors of the convenience of witnesses and location of evidence. In re Vistaprint, 628 F3d 1342 (Fed. Cir., 2010) Distinguished by In re Verizon Court construed patent-in-suit in a prior case Another co-pending action on the same patent No party located in transferee venue, some witnesses there Convenience not necessarily favored over considerations of judicial economy In re Wyeth 406 Fed. Appx. 475 (Fed. Cir. 2010) Denied writ Action was pending for 17 months before transfer was sought Cited Vistaprint for notion that convenience factors do not necessarily outweigh judicial economy concerns Key Considerations Promptness of motion to transfer Clear weight of convenience factors Importance of substantive engagement with patents by the Court But can the plaintiffs afford to wait for this to happen? Mandamus is extraordinary remedy, for which clear right to relief must be shown under abuse of discretion standard Implications of AIA for Existing Case Law Plaintiffs' workaround defeats the evident purpose of the joinder statute Effort to end phenomenon of massive multidefendant suits whose only common thread is the asserted patent(s), abuse of permissive joinder Treating "judicial economy" as established by a common patent seems contrary to premise of section 299 Possible Arguments Statute’s premise that a common patent-in-suit is not a sufficient basis for joinder arguably implies that a common patent alone does not satisfy Rule 20’s requisite of a common issue of law or fact Thus, a Markman hearing in one case should not be treated as presumptively relevant to the issues in another case Even if statute's purpose is understood as “avoiding confusion,” that still implies a presumption that the issues from one defendant to the next are distinct At a minimum, the joinder statute suggests that a common patent cannot alone (under the rubric of "judicial economy") outweigh all else on a transfer motion Possible Arguments If the case is further along substantively, consider making a substantive, specific argument as to why claim construction is likely to present different issues in the case sought to be transferred. This might be difficult to assess when one has first been sued The more extensive the docket in the anchor case, the stronger the "judicial economy" factor is likely to be But the advanced docket also means there will be more material from which to argue that your case will be different, that claim construction will have to be conducted anew, and therefore that the real efficiencies are smaller than they appear The Federal Circuit finds substantive patent issues irresistible, which may help Statistics may also help on the "judicial economy" and "convenience" arguments, e.g., on docket congestion, time to trial, time to summary judgment, etc. Perkins Coie is gathering some of this data and plans to present it and to use it where appropriate in motions Questions or Ideas? Brian Coleman BColeman@PerkinsCoie.com (650) 838-4441 Jordan Becker Ken Halpern JBecker@PerkinsCoie.com KHalpern@PerkinsCoie.com (650) 838-4365 (650) 838-4308