Impact of PPH from a Global Perspective Moderator: Neil Henderson, BLG LLP Panel: Leonora Hoicka, IBM Corporation Aki Ryuka, RYUKA IP Law Firm, Japan IPIC AGM October 17, 2014 Life in the Fast Lane

2014 © Intellectual Property Institute of Canada IBM’s experience of PPH – the Patent Prosecution Highway Leonora Hoicka Associate General Counsel, IP Law IBM Corporation

2014 © Intellectual Property Institute of Canada 3 Outline PPH – The History PPH – The Basics IBM PPH usage IBM PPH experiences Observations Useful Links Source:If applicable, describe source origin

2014 © Intellectual Property Institute of Canada PPH - The History 2010 UK IPO –sponsored study (by London Economics) Patent backlogs a big problem – 4 million unprocessed patents worldwide and growing! An extra year of pendency expected by 2015 Each year of delay costs £7.6 (13.6 CAD) Billion in Europe, US & Japan alone 1 million patents processed by two or more offices over a four year period A reduction in the duplication of examination of 25% would prevent the predicted growth in backlogs Source: UKIPO

2014 © Intellectual Property Institute of Canada PPH - The History First PPH agreement between JPO and USPTO in 2006 Initially 18 month pilot; full implementation between the 2 offices started in January 2008 Expanding network now comprises 33 offices, and is continually growing, particularly with new bilateral pilots between ‘existing’ offices ‘Global’ PPH pilot launched on 6 January 2014 IP5 PPH pilot launched on 6 January 2014

2014 © Intellectual Property Institute of Canada 6 The current PPH network Source:JPO

2014 © Intellectual Property Institute of Canada Different Types of PPH ‘Standard’ PPH – bilateral agreements between individual offices. Complex (and differing) eligibility requirements. Tend to include a limitation on country of priority filing, which typically must be in same country as the Office of First Filing.  PCT PPH – using positive PCT work product (WO with claims at filing or IPER with art. 19 amendments) rather than ‘national’ work products.  PPH Mottainai – simplified eligibility requirements - removes restrictions based on priority or order of filing. Uses positive work product of Office of Earlier Examination (OEE). Global PPH – not really global: no EPO, Germany or China! Effectively a plurilateral Mottainai/PCT. IP5 PPH – 3 yr pilot program. EPO, US, Korea, Japan and China only. Similar eligibility reqts to the Global PPH pilot. 7

2014 © Intellectual Property Institute of Canada PPH – The Basics 8 Source:JPO

2014 © Intellectual Property Institute of Canada PPH – Mottainai Model 9 Source:JPO PPH Portal

2014 © Intellectual Property Institute of Canada What do you have to do? Amend the claims so they are in line with those found allowable elsewhere. Request PPH by filing a request form and claim correspondence table – even if the set of claims is identical. Optional but recommended: Amend the statement of invention/consistory clause in line with any claim amendments. Make any other amendments likely required to comply with national requirements. In many cases (where OAs are available via Dossier Access System) (DAS) or Patentscope, the applicant does not need to submit a copy of OAs on earlier case, nor translate them, but may have to provide a list of the documents to be retrieved. 10

2014 © Intellectual Property Institute of Canada IBM’s experience with PPH Started using PPH in JP & US in 2006 Over 600 petitions filed to enter PPH to date Primary routes: JP -> US US -> JP PCT PPH Pilots tried in CN and UK Considered, but no pilot implemented in CA and IL

2014 © Intellectual Property Institute of Canada IBM experience on PPH in China The Patent Prosecution Highway (PPH) pilot program between SIPO and USPTO commenced on December 1, As a pilot, IBM filed 14 PPH requests in Nov and 4 PPH requests in Mar Issues we found with SIPO PPH program: Qualifying cases According to our outside counsel, the overall pass rate of PPH requests is below 70% (generally 63% up to November 2013, with 67% pass rate from Jan. to Sept One reason - narrow scope and timing of voluntary claim amendments permitted under SIPO practice SIPO guidance permits PPH request based on divisional or continuation of US application BUT unclear whether request can rely on multiple counterparts from OFF/OEE (parent + divisionals and/or continuations).

2014 © Intellectual Property Institute of Canada IBM experience on PPH in China Issues we found with SIPO PPH program (con.): Preparation of case for PPH Significant overhead (internal workload or outside counsel expense) identifying suitable cases meeting SIPO’s stringent requirements on format of PPH requests Conforming claims to OFF allowed claims Preferable to use cases where no amendment required, limiting eligible pool. Reduction in office actions According to SIPO, the average OA numbers for each PPH case is 1.34 and the grant rate is 98.89% (near 100%) IBM’s average OA numbers outside PPH is 2.9 Outside counsel’s additional charge for the PPH request, reduces any cost saving from approx. 1 fewer OA/case.

2014 © Intellectual Property Institute of Canada IBM experience on PPH in UK Small (ongoing) pilot 23 US UK PPH requests filed within last 18 months, 16 already granted 1 st OAs received in as little as 8 business days from filing PPH request Most received < 1 month, until 2Q 2014 – slowdown? Grants obtained generally took between 2.5 and 8 months from acceptance of PPH request by UKIPO. Oldest as yet ungranted had PPH request filed November 2013 (anomaly? 1 st OA in Aug 2014). Additional work to request PPH not overly burdensome. Can use PPH in UK based on two or more corresponding US patents (e.g. divisionals), though the work involved (e.g. claim correspondence table) does increase. 14

2014 © Intellectual Property Institute of Canada Claim correspondence table UK application claim Corresponding USPTO claim Comments 1 to 21 Any differences amount merely to minor format differences and claim dependency differences. Format: For example, the UK system claims comprise “means for” doing something. Further the US system claims comprise a processor “for executing program instructions”. Claim Dependency: The claim dependency differences occur where a dependent claim in the US case refers back to the independent claim only but a dependent claim in the UK case often refers back to the independent claim and any intervening claims. 15

2014 © Intellectual Property Institute of Canada Some Alternatives Canada If speed is the goal -> special prosecution Disadvantage: 1.Fee (no PPH fee before CIPO) 2.Justification If the goal is expense reduction / consistency -> defer examination until US counterpart issues. UK Fast track Clearly inventive subject matter based on international WO

2014 © Intellectual Property Institute of Canada Some Alternatives Israel Section 17(c) of the Israel Patent Law is a clause under which the applicant is able to rely on a corresponding patent that has issued from an approved examination authority, to obtain a patent in Israel by conforming the claims to those that issued, without substantial examination in Israel for Novelty, Unity of Invention, Enablement, Inventive Step and Adequate Disclosure.

2014 © Intellectual Property Institute of Canada Some Alternatives Israel (cont.) The assumption is that, by and large, the examining countries have very similar standards and by relying on Section 17c where possible, the IPO can best utilize the resources needed for substantial examination to those cases where applications are only filed in Israel, or where an accelerated examination has been authorized. The list of countries whose examination procedure is currently acceptable for invoking section 17c, includes: Australia, Austria, the United States Patent Office (USPTO), Germany, Denmark, the UK, the Russian Federation, Japan, the European Patent Office (EPO), Norway, Canada and Sweden. clarifies-section-17c-of-the-israel-patent-law/

2014 © Intellectual Property Institute of Canada IBM experience of PPH in Japan Number of PPH requests Number of OA (Average) Grant RateTime to 1st OA or Allowance *5 US JP PPH * %54 days PCT PPH * %46 days Mottainai PPH (EP Grant) * %35 days Regular (Non-PPH) * %937 days 19 *1 PPH requested in *2 PPH requested in *3 PPH requested in 2012 *4 Number of Non PPH cases with grant date or abandon date in 2010 *5 For PPH case: Period from PPH request date For Non PPH case: Period from exam request date

2014 © Intellectual Property Institute of Canada IBM experience of PPH Trends in Japan and US RouteGrant Rate % Grant Rate % JP US PPH JP US non PPH US JP PPH US JP non PPH

2014 © Intellectual Property Institute of Canada IBM experience of PPH Trends – US to JP Route Period: Period: Number of Office Actions in JPO PPH Non PPH Period to receive 1 st OA in JPO / days PPH*4953 Non PPH** * Period from petition for US JP PPH with JPO to 1st JP office action or 1st action allowance **Period from request for examination with JPO to 1st JP office action or 1st action allowance

2014 © Intellectual Property Institute of Canada IBM experience of PPH Trends – JP to US Route PPH – average 4.2 months from grant of PPH petition (average 27.3 months from filing) Non-PPH – average 31.4 months from filing Shorter average prosecution – 7.7 months (PPH) versus 14.0 months (non-PPH) Period: Period: PPH Non-PPH Number of Office Actions in US PTO

2014 © Intellectual Property Institute of Canada Observations Positive Can use PPH to accelerate without having to give a reason. Useful advantage e.g. in USA, UK, CA, etc. Can significantly speed up examination and grant. Per JPO PPH Portal stats, a reduction of 0.4 to 0.9 official actions in PPH cases. (Note: No data published on any OA reduction in EPO.) Examiner “flexibility” in handling prosecution in some offices Backlog reduction in some offices Many improvements have been made in recent years, and hopefully these will continue Long term influence on harmonization? 23

2014 © Intellectual Property Institute of Canada Observations Not so positive Lack of formal harmonization Where translation of OAs required for PPH request, non-standard common parts unduly increase translation overhead Rigid adherence to PPH request format and requirement to file claim concordance (even when claims identical) Substantive differences reduce candidate pool E.g., Uncertainty over software-implemented inventions has resulted in refusals If PPH request improper, OSF may give limited/no opportunity to correct. Questionable benefit at the EPO over and above the PACE program - IBM has not yet tried this route. Wonder whether IP5 PPH means that one can now PPH at the EPO a case where the EPO was the ISA/IPEA. We may well test this soon! 24

2014 © Intellectual Property Institute of Canada Additional Strategic Considerations Use of PCT work product for OEE Consider which ISA – what deference generally shown BUT EPO won’t search business methods Plus EPO may produce narrower claims than other offices Smaller file histories May be advantageous re US file wrapper estoppel BUT characterizations and statements acceptable in foreign prosecution may be problematic as part of the US record

2014 © Intellectual Property Institute of Canada Useful Links Patent Prosecution Highway Portal Site (hosted by the JPO) has a wealth of information on PPH, (though not always 100% correct and up to date): EPO’s information on the IP5 PPH pilot can be found here (not particularly easy to find!): journal/information-epo/archive/ html CIPO on PPH: internetopic.nsf/eng/h_wr02160.html UK fast track for patents: 26

2014 © Intellectual Property Institute of Canada 27

2014 © Intellectual Property Institute of Canada Using PPH or Early Examination to Obtain Valid US Patents This information is provided for general informational purposes only, and is not intended as legal advice. Because every case is unique, readers should not take any action, or refrain from acting based on this information without first consulting their own attorneys. The law is constantly developing, and this information may not be updated with each and every development. The mere presentation of this information does not create an attorney-client relationship with RYUKA IP Law Firm. RYUKA IP Law Firm specifically and wholly disclaims liability for this information. Aki Ryuka Japanese Patent Attorney Attorney at Law, California, U.S.A.

2014 © Intellectual Property Institute of Canada Recently, many US patents are found invalid by Inter Partes Review What is the problem?

2014 © Intellectual Property Institute of Canada Problem: Examiners search prior art in only one language USPTO cannot find Japanese / Korean prior art well. JPO cannot find Korean / Chinese prior art well. After a patent is issued, new prior art is often found by other patent offices having different languages.

2014 © Intellectual Property Institute of Canada Later examined patents tend to be valid more often (ex. JP v. US) Examined in Japan (JP) first → References in JP are discovered → US claims are amended, considering references in JP → Valid US patent → Later references in the US were not considered in JP → Invalid JP patent Same for vice versa, if examined in the US first. Order of the Examination is Important

2014 © Intellectual Property Institute of Canada JP,KR,TW,EP Accelerate examination ↓ US Respond to OA considering the references cited in JP,KR,TW,EP To obtain valid US patents:

2014 © Intellectual Property Institute of Canada Accelerations are easy and effective in JP/KR/TW/EP even without PPH Typical Attorney FeesOffice Fees Typical Periods to the First OA JPUS$450 if any prior art is available $ 0$ 02 months KRUS$300US$200 + $660 for foreign applicants for search 3 months + 1 m for foreign applicants for search TWTWUS$100$ 0 if with any exam. result 6 to 9 months EP (PACE)US$200$ 0$ 03 months

2014 © Intellectual Property Institute of Canada JP,KR,TW,EP Accelerate the exams. ↓ US Respond to OA considering the references cited in JP,KR,TW,EP To obtain valid US patents:

2014 © Intellectual Property Institute of Canada JP,TW,KR Defer the CA or DE request for examination ↓ Other countries Examined ↓ JP,TW,KR Respond to the OA CA or DE considering the references cited in other countries On the other hand: To obtain valid patent in JP, TW, KR, CA or DE

2014 © Intellectual Property Institute of Canada Examination can be deferred: Up toFrom CN3 yearsPriority date JP, TW3 years Local or PCT filing date KR, CA5 years DE7 years

2014 © Intellectual Property Institute of Canada JP, TW, KR Defer the CA or DE request for examination ↓ Other countries Examined ↓ JP, TW, KR Respond to the OA CA or DE considering the references cited in other countries To obtain a valid patent in JP, TW, KR, CA or DE

2014 © Intellectual Property Institute of Canada We have covered: - Order of the exams. is important, and - It is adjustable. Then, how to decide the order? 38

2014 © Intellectual Property Institute of Canada How to decide the order of examination? Valid JP Patent or Valid US Patent ? We need to consider: - importance of the patent in each country - importance of pendency - whether leaving a continuation/divisional - flexibilities for amending issued patents

2014 © Intellectual Property Institute of Canada Patented claims can be easily limited in Japan * for 20 claims, provided 1US$ = JPY110 for a large entity w/o claim excess fees (as of February 2014) ProcedureNew Features to Claims PeriodAttorney & Office Fees (US$) * JPCorrection Trial ○○ 3 months ○ 2K to 4K (office: 1.5K) KRCorrection Trial × Difficult ∵ new objects ○ 6 to 12 months ○ 1K to 2K (office: 0.5K) USEx Parte Re-Exam. ○ Same as examination × >2 years × 20K to 80K (office: 12K)

2014 © Intellectual Property Institute of Canada Having JP applications examined first ↓ Possibly invalid, but broad JP patent ↓ Wider base for limitation ↓ Limit JP patents after knowing infringing products ↓ Valid patents in other countries

2014 © Intellectual Property Institute of Canada Having US (continuation) application examined at the end Accelerate JP examination first (w/o PPH) ｜ - Broad patent for future limitation ｜ - Allowance enables PPH ↓ Accelerate the examinations outside U.S. ｜ - References are discovered ↓ US (continuation) application examined - Valid USP: Validity is most important

2014 © Intellectual Property Institute of Canada USAllowed ↓ Other countriesAccelerate exam., if not yet. ｜ (with or without PPH) ↓ USDelay the payment (up to 3 months) ↓ Other countries OAs are issued (in 1 to 3 months) ↓ USFile IDS (& RCE/Continuation) If US application is allowed earlier?

2014 © Intellectual Property Institute of Canada If allowed in the US, prosecutions in more countries can be accelerated by PPH 44 Statistics in Jul Dec 2013 From: portal/statistics.htm Issue Fee

2014 © Intellectual Property Institute of Canada Is it impossible at all to obtain valid patents in multiple countries?

2014 © Intellectual Property Institute of Canada JP, KR Defer the examination ↓ US OA is issued ↓ JP, KR Accelerate the examination ↓ US Delay the response (up to 6 months) ↓ JP, KR OAs are issued (in 2 to 3 months) ↓ All PTOs Respond to all OAs considering all references For valid US, JP, and KR patents ⇒ Synchronize Prosecution

2014 © Intellectual Property Institute of Canada - Strong patents that are difficult to invalidate - Time and money being saved, because multiple responses are made by a single analysis - Improved consistencies of responses and claims Effects of Synchronized Prosecution

2014 © Intellectual Property Institute of Canada Closer prior art references might be found in later OAs Synchronized Prosecution ↓ Patent is issued in country A ↓ More relevant citations found in country B. ↓ Patent in A can be still invalid.

2014 © Intellectual Property Institute of Canada US OA is issued ↓ JP, KR Accelerate the examination with ↓the least preliminary amendment US Delay the response (up to 6 months) ↓ JP, KR OAs with more relevant references ↓ All Respond to all office actions considering all references Improving the quality of the first OA by preliminary amendment

2014 © Intellectual Property Institute of Canada For obtaining broad JP and valid US patents: First, accelerate the JP examination Second, accelerate non US/JP examinations Have the US (continuation) examined later For obtaining valid US and JP patents. Synchronize prosecution, by utilizing: Deferral of the examination in Japan Acceleration of the examination in Japan/PPH We would appreciate your comments. CONCLUSION

2014 © Intellectual Property Institute of Canada Thank you! Moderator:Neil Henderson, BLG LLP Panel: Leonora Hoicka, IBM Corporation Aki Ryuka, RYUKA IP Law Firm, Japan 51

2014 © Intellectual Property Institute of Canada Appendix Various Data 52

2014 © Intellectual Property Institute of Canada Use of PPH (as of December 2013) 53 Source: JPO PPH Portal Office of Second Filing/Later Examination Office of First Filing / Earlier Exam JPOUSPTOKIPODPMAEPO JPO USPTO KIPO DPMA EPO Upper number = Traditional PPH Lower number = PCT PPH

2014 © Intellectual Property Institute of Canada PPH Data 54

2014 © Intellectual Property Institute of Canada PPH Data 55

2014 © Intellectual Property Institute of Canada CIPO PPH Statistics 56 Source:CIPO

2014 © Intellectual Property Institute of Canada CIPO PPH Statistics 57 Source:CIPO