INVENTIVE STEP

The patent reform saga continues . . . As previously reported, Senate leaders were indeed working on back room deals for patent reform.  The Senate Judiciary Committee (read: Sen. Leahy) today released a “Manager’s Amendment” to the Patent Reform bill that the Committee reported out last April.  The bill has yet to make it to the Senate floor.

According to the accompanying press release, the Manager’s Amendment made several changes to the reported bill.  I haven’t read the amended bill, but here’s what the press release says.

1. First window post-grant review – the time period for challenging an issued patent was shortened from 12 months to 9 months after the patent issues, and the threshold for filing a request for such a review was raised to “more likely than not” that at least one claim is unpatentable.  This is a significant improvement from “an interesting question” as was previously in the bill.
2. Inter partes review – would replace the current reexamination procedure (at least the inter partes procedure) with the threshold for challenging a patent being a “reasonable likelihood” that the challenger can invalidate at least one claim of a patent.  The press release also claims that there are additional safeguards to prevent harassment of patent owners.  Further, the changes  add an estoppel provision that was not previously in the bill to prevent challengers from raising issues in subsequent proceedings that they “reasonably could have raised” during the IPR proceeding.
3. Willful infringement – the bill codifies existing law on willfulness and makes it significantly harder to plead and prove willful infringement.  Willfulness must be pled with specificity, mere knowledge of the patent is not enough, pre-suit notifications of a patent must be specific, willfulness is not appropriate in close cases on infringement or validity, damages and willfulness may be tried separately from liability for infringement, and the lack of an opinion of counsel is not a sufficient basis for a finding of willfulness.
4. Interlocutory appeals – the Federal Circuit lobby (read:  Chief Judge Michel) was successful in getting this provision removed from the bill.  The bill no longer contains a requirement for interlocutory appeals after a claim construction order.
5. PTO funding – the Director is granted fee setting authority and the PTO is directed to reduce fees for Small Entities by 50% and for “Micro-Entities” by 75%.
6. Supplemental Examinations – this procedure would presumably replace ex parte reexamination.  A patent owner may provide potentially material prior art to the PTO.  If the PTO determines the information provided has no effect on patentability, no charge of inequitable conduct can be brought based on the information submitted.  The information must be brought to the PTO and the reexamination must be completed prior to litigation.  I have no idea what the purpose or meaning of this provision is.

Additionally, the press release noted that the bill retained a number of other changes to the current patent system.

1. Transition US to first-to-file system.
2. “[A]llowing third parties to comment on pending patent applications and explain to the PTO why certain prior art is relevant and by establishing a new, first-window post-grant review proceeding to weed out a patent that should not have issued during the first year after the patent is granted.”  This sentence does not make sense.  Does the bill permit commenting on pending applications or permit post-grant review, or both?  This is unclear.
3. Permit administrative challenges to patents under an opposition-type proceeding instead of a reexamination-type proceeding that the PTO can complete in 12 months.  Ha!
4. Includes the compromise reached on damages to require district judges to act as gate-keepers for evidence and jury instructions on the issue.

The amended bill would also repeal the Baldwin Rule which requires Federal Circuit judges to reside within 50 miles of Washington, DC.  Finally, Congress is apparently rethinking the false marking suits, as the amended bill would halt all false marking litigation where the plaintiff is not directly harmed by the false marking.

This press release would lead one to believe that Sen. Leahy believes he can bring the bill to the Senate floor in the near future.  What is much less certain is what might happen to the bill in the House.  The House seemed less than thrilled with the Senate bill during its hearings last year.

Thanks to Hal Wegner for bringing the amendment to my attention.