INVENTIVE STEP

Section 103 of the Patent Act concerns the obviousness requirement for patentability.  The America Invents Act made several changes to this section.  The current version of section 103 reads as follows:

 (a) A patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102 of this title, if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. Patentability shall not be negatived by the manner in which the invention was made.

(b)

(1) Notwithstanding subsection (a), and upon timely election by the applicant for patent to proceed under this subsection, a biotechnological process using or resulting in a composition of matter that is novel under section 102 and nonobvious under subsection (a) of this section shall be considered nonobvious if—

(A) claims to the process and the composition of matter are contained in either the same application for patent or in separate applications having the same effective filing date; and

(B) the composition of matter, and the process at the time it was invented, were owned by the same person or subject to an obligation of assignment to the same person.

(2) A patent issued on a process under paragraph (1)—

(A) shall also contain the claims to the composition of matter used in or made by that process, or

(B) shall, if such composition of matter is claimed in another patent, be set to expire on the same date as such other patent, notwithstanding section 154.

(3) For purposes of paragraph (1), the term “biotechnological process” means—

(A) a process of genetically altering or otherwise inducing a single- or multi-celled organism to—

(i) express an exogenous nucleotide sequence,

(ii) inhibit, eliminate, augment, or alter expression of an endogenous nucleotide sequence, or

(iii) express a specific physiological characteristic not naturally associated with said organism;

(B) cell fusion procedures yielding a cell line that expresses a specific protein, such as a monoclonal antibody; and

(C) a method of using a product produced by a process defined by subparagraph (A) or (B), or a combination of subparagraphs (A) and (B).

(c)

(1) Subject matter developed by another person, which qualifies as prior art only under one or more of subsections (e), (f), and (g) of section 102 of this title, shall not preclude patentability under this section where the subject matter and the claimed invention were, at the time the claimed invention was made, owned by the same person or subject to an obligation of assignment to the same person.

(2) For purposes of this subsection, subject matter developed by another person and a claimed invention shall be deemed to have been owned by the same person or subject to an obligation of assignment to the same person if—

(A) the claimed invention was made by or on behalf of parties to a joint research agreement that was in effect on or before the date the claimed invention was made;

(B) the claimed invention was made as a result of activities undertaken within the scope of the joint research agreement; and

(C) the application for patent for the claimed invention discloses or is amended to disclose the names of the parties to the joint research agreement.

(3) For purposes of paragraph (2), the term “joint research agreement” means a written contract, grant, or cooperative agreement entered into by two or more persons or entities for the performance of experimental, developmental, or research work in the field of the claimed invention.

Section 103 is amended by the America Invents Act to delete subsections (b) and (c).  New section 103 reads as follows:

A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the invention was made.

The main differences between new section 103 and current section 103(a) is the timing of the determination of obviousness.  Under current law, obviousness is determined by what one of ordinary skill in the art understood at the time of the invention.  New section 103 shifts the timing of this determination to “before the effective filing date of the claimed invention.”  This makes sense because the law also changes the US from a first-to-invent to a first-to-file regime.  Obviousness will now be determined at the time of filing rather than the time of invention.

Why strike subsections (b) and (c) from section 103?

Section 103(b) concerns non-obviousness of biotechnological inventions, specifically to biotechnological processes using novel and non-obvious compositions of matter.  This subsection provides a way to narrow the prior art available against the process claims if an applicant includes such claims in an application containing claims to the patentable compositions of matter.  This subsection is deleted by the America Invents Act.

Section 103(c)

Section 103(c) removes certain prior art that may be used against claims for obviousness purposes.  Subject matter that would qualify as prior art under section 102(e), (f), or (g) may not be used to reject claims for obviousness if the prior art and the application or patent were assigned to the same entity, subject to an application of assignment to the same entity, or the subject of a joint research agreement.  The determination of common ownership, obligation, or agreement is determined at the time of the invention.

Prior art under section 102(e) is patents or published applications that were filed before the invention date of the claimed subject matter, but that issue or publish after the filing date.  Subsection (f) concerns situations where the inventor himself did not invent the subject matter sought to be patented.  Subsection (g) concerns interferences or situations with near simultaneous invention.  Under current section 103(c), provided the prior art and claim at issue meet the ownership or research requirement, these may not be used for obviousness purposes.

Don’t worry, Congress didn’t take away this safe harbor provision.  Instead, it was greatly expanded.  Under new section 102(b)(2)(C), a patent or published application may not be used as prior art against a claimed invention if ”the subject matter disclosed and the claimed invention, not later than the effective filing date of the claimed invention, were owned by the same person or subject to an obligation of assignment to the same person.”  Subsections (c) and (d) make clear that Congress intends this provision to apply not only to commonly owned patents and applications, but also to those that are the subject of a joint research agreement.  Thus, patents and published applications that are commonly owned, subject to a common assignment obligation, or the subject of a joint research agreement are not available as prior art period:  neither for obviousness nor novelty purposes.

Given the many provisions of the Act that expand the definition of prior art, it is nice to see one that reduces it.  This provision would seem to benefit larger entities that have multiple patents and applications, without really providing much benefit to smaller organizations or individuals.

Re-Patenting

In an issue previously addressed by IPWatchdog, there may be the opportunity to re-patent certain inventions that do not have 102(a)(1) prior art.  In order to re-patent the subsequently filed identical application would need to be re-filed prior to the publication or patent issuing so that the publication/patent of the first filed application will not be prior art under 102(a). 

For certain inventions such as pharmaceuticals where millions of dollars are at stake, it is virtually certain that re-patenting will be attempted.  This could permit patent extensions of 18 months or more on certain inventions.  This, and certain other ambiguities in the poorly worded Act, will require interpretation by the Federal Circuit or clarification by Congress.  It may be years before these provisions are clarified.

These provisions go into effect for applications filed 18 months after the effective date of the Act or March 16, 2013.

One of the major changes to US patent law in the America Invents Act is the change to § 102.  The new subsection (a) reads as follows:

(a) A person shall be entitled to a patent unless:

(1)  the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention; or

(2)  the claimed invention was described in a patent issued under section 151, or in an application for patent published or deemed published under section 122(b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention.

This new subsection greatly expands the prior art available for use against a patent or application.  First, subsection (1) eliminates the grace period (subject to subsection (b)’s limited exceptions).  A patent is not availabe if the invention was patented, described in a publication, in public use, on sale, or otherwise available to the public before the effective filing date of the application.  No longer is there a distinction between activities conducted “in this country” or “in this or a foreign country.”  Any public disclosure anywhere will negate the ability to obtain a patent.

Subsection (2) switches the US to a “first-to-file” regime by noting that a patent is not available if an earlier-filed application that “names another inventor” describes the claimed invention.  Does this mean a completely different inventive entity or merely a single change in inventorship?  If the later-filed application adds or eliminates one of the inventors from the earlier-filed application, is that a “different inventor”?

Under current US law, US patents and published applications are prior art as of their US effective filing date, regardless of foreign priority claim.  Subsection (2) precludes a patent if the earlier application was “effectively filed” before the later-filed application.  This would suggest that they will now be prior art as of their earliest priority date even if filed outside the US.

Subsection (b) provides some exceptions to subsection (a) for activities of the inventor.

(b) EXCEPTIONS

(1)  DISCLOSURES MADE 1 YEAR OR LESS BEFORE THE EFFECTIVE FILING DATE OF THE CLAIMED INVENTION- A disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if–

(A)  the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or

(B)  the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.

(2)  DISCLOSURES APPEARING IN APPLICATIONS AND PATENTS- A disclosure shall not be prior art to a claimed invention under subsection (a)(2) if–

(A)  the subject matter disclosed was obtained directly or indirectly from the inventor or a joint inventor;

(B)  the subject matter disclosed had, before such subject matter was effectively filed under subsection (a)(2), been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or

(C)  the subject matter disclosed and the claimed invention, not later than the effective filing date of the claimed invention, were owned by the same person or subject to an obligation of assignment to the same person.

Subsection (b)(1)(A) provides an exception for a “disclosure” made by the inventor or one who obtained the subject matter disclosed directly or indirectly from the inventor within one year prior to the application’s filing date.  Subsection (B) even insulates subsequent “disclosures” made by third parties during that year, provided that the inventor made an initial disclosure of the invention.

This subsection seems to encourage inventors to disclose their inventions early so as to insulate themselves from later disclosures by third parties.  Inventors should publish their inventions early.  Provided a patent application is filed within one year of this disclosure, he should be insulated from third party disclosures occurring within that year.

This does not mean that inventors should simply put every new idea they have up on a website as a “disclosure” to insulate them from third party disclosures for a year.  The disclosure by the inventor will probably need to be an enabling disclosure that provides sufficient details to enable one of ordinary skill in the art to make and use the invention.  If an inventor makes a non-enabling disclosure of an idea and a third party then makes an enabling disclosure or files a patent application that includes an enabling disclosure of the invention, the inventor will probably be precluded from obtaining a patent on the original idea.  Ideas cannot be patented, only inventions can.

Subsection (b)(2) is an exception to the first-to-file provisions:  if a disclosure in a patent or patent application was obtained directly or indirectly from the inventor; if the inventor had disclosed the invention within a year of filing his application; or if the claimed invention and the disclosure were owned by the same entity or subject to an assignment obligation to the same entity, as of the effective filing date, an earlier filed application will not necessarily preclude a patent on a later-filed application by the inventor.

Notably, there is no grace period for public use or commercial activities such as sales or offers for sale.

Section 102(c) defines common ownership under a joint research agreement.  Under current law, § 103(c) excludes prior art for obviousness purposes that is commonly owned or subject to a joint research agreement.  New § 102(c) expands this to exclude such prior art disclosures within a year of the application’s filing date for novelty purposes as well.

These provisions go into effect for applications filed 18 months after the effective date of the Act or March 16, 2013.

Patent Docs provides additional details, including a description of “derivation” under the Act.

One of the provisions of the America Invents Act was a newly expanded defense for prior use of an invention.  This defense applies to any patent issued on or after the Act’s effective date, September 16, 2011.

The previous version of the Patent Act contained a prior user defense, but the defense was limited to infringement of claims to business methods.  Now, the AIA has expanded the defense to all patents.

The New Statute (§ 273)

The defense applies to good faith commercial uses and arm’s length sales and commercial transfers that occurred at least one year before the earlier of (1) the effective filing date of the patent application, or (2) the inventor’s public disclosure that is an exception to prior art under the AIA’s limited grace period.  The party asserting the defense must prove the facts to establish the defense by clear and convincing evidence.

What is commercial use for purposes of the defense?  The statute does not specifically define commercial use so we won’t know exactly until the defense is tested in the courts.  The statute does provide several specific instances that would qualify as commercial use.  First, subject matter for which regulatory approval is required prior to commercial use would qualify during that period.  For example, FDA filings for drugs and medical devices would qualify as commercial uses even though not yet technically in the marketplace.

Second, use by a nonprofit research laboratory or other nonprofit entity, such as a university or hospital if the public is the intended beneficiary of the use would qualify as a commercial use.  The defense only applies to continued an noncommercial use by and in the laboratory or other nonprofit entity.  Thus, a university or hospital could not transfer the product or process to another entity that would commercially exploit the subject matter outside of the nonprofit entity.

The statute does restrict this defense to the first entity who is entitled to it.  This means the defense may not be transferred, assigned, or licensed to another entity, except as part of the good faith transfer of the entire entity or business line of the entity.  In such a case, the acquiring party may not expand use of the subject matter entitled to the defense beyond its original site.

The defense is limited to the specific claims that cover the subject matter to which it applies and not generally to the entire patent, except that changes may be made to quantity or volume, and improvements may be made to the subject matter provided that they are not specifically covered by other claims of the patent.

If the commercial activity that qualifies for the defense is abandoned, those activities that would otherwise qualify for the defense prior to the abandonment may no longer be relied upon for the defense.

Unless development of the subject matter of the patent utilized federal funding, the defense does not apply to patents that were made by, owned by, or subject to an obligation of assignment to a university or other entity of high education.

Finally, a patent may not be invalidated based on this defense and the unreasonable assertion of the defense would subject the entity raising the defense to a finding that the case was exceptional and an award of attorney’s fees to the patent owner.

Analysis

I previously covered the issues surrounding this defense, but they deserve to be reiterated here.  This defense is contrary to the purpose of the patent laws of “promoting the progress of science and the useful arts.”  The patent system promotes this progress by encouraging public disclosure of new inventions.  In exchange, the government grants the disclosing party a limited monopoly over the disclosed subject matter.  Once the patent expires, that knowledge and subject matter becomes a part of the public domain.

This defense rewards entities that keep innovations secret.  There is no longer a risk to keeping developments secret because you can always assert the prior use defense.  To be sure, trade secrets have their place, but the owner of a trade secret holds the technology in secret with the risk that it could be patented by someone else.  An expanded prior user rights defense would provide an incentive to keep new inventions secret.  Why bother with the patent system when you can simply practice your technology in secret and be shielded from liability for infringement of other parties’ patents?

I was wrong in my previous assertion that there would be a fight over this issue.  The statute does require a report on the issue, but it seems unlikely to go away.  This is another example of Congress whittling away the power of patents and the incentive to disclose new inventions to the public.