1. © 2011 Baker & Hostetler LLP BRAVE NEW WORLD OF PATENTS plus Case Law Updates & IP Trends ASQ Quality Peter J. Gluck, (PGluck@bakerlaw.com) authored by Kenneth J. Sheehan September 13, 2011

2. Baker Hostetler Baker & Hostetler, LLP (Costa Mesa Office) ORANGE COUNTY’S FINEST: –TAX and Estate Planning; –Related litigation; –Intellectual Property Procurement & –Enforcement –600 Anton Boulevard, Suite 900, Costa Mesa California 92626-7221

3. Baker Hostetler First To File is major change in patents need to update process Quality and Patents both require proper documentation - process is key. Old Paradigm in Patent Disclosures - “ save it for later” NO LONGER APPLIES Which steps can your Company take to address this set of issues? Is Technology important to your future success, if so, attention is required.

4. Baker Hostetler America Invents Act Senate bill S.23 (passed March 8, 2011 in 95-5 vote) Key provisions –First-inventor-to-file system Expands prior art to include foreign uses Limits one year grace period for filing –Creates pre-issuance submission procedure for third parties Third party can submit prior art within the earlier of –6 months from publication –Before first office action –Notice of allowance

5. Baker Hostetler America Invents Act –S.23 key provisions (Cont’d) –Transitional post-grant review of covered business method patents Can only be used by parties sued on a business method patent –Limits false marking claims to: Claims by U.S. Government Claims by competitors

6. Baker Hostetler America Invents Act Senate bill S.23 (cont’d) Key provisions –Creates post grant review procedure Can be filed within 9-months of grant Can include any basis for invalidity Can be terminated by settlement –Eliminates best mode defense (requirement remains)

7. Baker Hostetler America Invents Act –S.23 key provisions (Cont’d) –Modifies inter partes reexaminations Changes standard for grant to "a reasonable likelihood that the petitioner will prevail with regard to at least one claim“ Cannot file if litigation filed more than 6-months earlier Prosecuted before Administrative Judge Can be settled –Creates supplemental examination proceeding –Similar to reissue –Allows patent owner to correct inequitable conduct

8. Baker Hostetler America Invents Act House bill H.1249 (Passed in modified form now with Executive Brand to ratify/expected 2012) Introduced March 30, 2011 Differences from S.23 –12-month post grant review period instead of 9-month –Standard for post grant review “a novel legal question that is important to other patents or patent applications” –Gives court more discretion regarding staying litigation where post grant or inter partes review ongoing

9. Baker Hostetler Design Patents Egyptian Goddess, Inc. v. Swisa, Inc. 2008 Federal Circuit En Banc decision –Only test for infringement is ordinary observer Ordinary observer taking into account prior art –Point of novelty test abolished

10. Baker Hostetler Design Patents International Seaway Trading Corp. v. Walgreens Corp. –2009 Federal Circuit decision –Only test for invalidity is also ordinary observer test

11. Baker Hostetler Business Methods In re Bilski 2008 Federal Circuit En Banc decision Patent application claimed method of hedging risk in commodities trading Did not satisfy “machine or transformation test” –Non-transformative process that encompasses purely mental process performed without the aid of a computer or any other device –Does not transform article into different state or thing

12. Baker Hostetler Business Methods In re Bilski (cont’d) A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of: –(a) initiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumer; –(b) identifying market participants for said commodity having a counter-risk position to said consumers; and (c) initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions

13. Baker Hostetler Opinions and Willful Infringement In re Seagate 2007 Federal Circuit En Banc decision Seagate sought Writ of Mandamus on issue of waiver of attorney client privilege No waiver of privilege for litigation counsel communications But wait, there’s more…

14. Baker Hostetler Opinions and Willful Infringement In re Seagate (cont’d) Affirmative duty of care test eliminated Willfulness requires clear and convincing evidence of “objective recklessness” –infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent, and –this objectively-defined risk was either known or so obvious that it should have been known to the accused infringer

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