America Invents Act: Changes to U.S. Patent System Presentation by Dr. Edwin S. Flores Partner at Chalker Flores, LLP © 2013 Chalker Flores, LLP—All Rights Reserved

Patents U.S. Constitution – Article 1, Section 8: “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;” 35 U.S.C. § 101: Who even invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvements thereof… Not patentable subject matter: Mere ideas, concepts, mathematical formulas, laws of nature (scientific or theoretical principles), literary and artistic works, etc.

What is the Leahy-Smith America Invents Act (“AIA”)? Signed into U.S. law on September 16, 2011 Presents greatest change to our patent statute since 1952 Changes seen across the board in matters concerning pre-filing, prosecution, post- grant/ “inter partes” procedures, and litigation Aims to reduce costs, level economic playing field for small and large businesses, and create economic growth

Why did we need patent reform? Attempts to align U.S. patent process with international standards and procedures Creates new post-grant procedures to correct defectively issued patents/mitigate potential for bad filings without resorting to litigation Reforms litigation provisions to reduce frivolous suits

Five Major Areas of Change to U.S. Patent System: Shift to the new “First-Inventor-to-File” system and other pre-filing concerns Changes to application filing process, new filing programs Changes to Prosecution/examination Creation of new post-issuance/“inter partes” proceedings Amendments to post-grant litigation procedures

“First-Inventor-to-File” System, and Other Pre-Filing Concerns Section 1 First-Inventor-to-File Shifts from old “First-to-Invent” to new “First-Inventor-to-File” Effective on March 16, 2013 Shifts focus to the effective filing date of the claimed invention Eliminates interferences

“First-Inventor-to-File” System, and Other Pre-Filing Concerns Section 1 (cont.) New definitions of novelty/prior art under § 102(a): § 102(a). Conditions for patentability. Novelty; prior art— 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.

“First-Inventor-to-File” System, and Other Pre-Filing Concerns Section 1 (cont.) New one-year disclosure grace period for inventor’s own disclosures, including all publically available disclosures (e.g., inventor’s own publications) Expanded in for matters involving foreign priorities and provisional applications § 102(b)(1). Conditions for patentability; Exceptions— 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— 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

“First-Inventor-to-File” System, and Other Pre-Filing Concerns Section 1 (cont.) Other prior art exceptions under (b)(2): § 102(b)(2). Conditions for patentability; Exceptions— 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.

“First-Inventor-to-File” System, and Other Pre-Filing Concerns Section 1 (cont.) Expanded definition of prior art Effective as of March 16, 2013 In re Hilmer Rule eliminated “Effectively filed” will include foreign priority dates; not just U.S. filing dates Prior art now includes: Foreign public use or on sale activities Disclosures “otherwise available to the public,” including anywhere in U.S. and abroad Priority date will become effective date for purposes of novelty-defeating art and obviousness

“First-Inventor-to-File” System, and Other Pre-Filing Concerns Section 1 (cont.) New non-obvious subject matter definition: § 103. Conditions for patentability; non-obvious subject matter.— 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.

Changes to Application Process, New Filing Programs Section 2 New Filing Fees Effective September 26, 2011 USPTO director has fee-setting authority, subject to review by Public Advisory Committee and Congress Increases many fees by as much as 15% on patents and trademarks Fee schedule available at www.uspto.gov/about/offices/cfo/finance/fees.jsp Electronic Filing Incentive Effective November 15, 2011 Essentially a penalty by adding an additional $400 ($200 for small entities) for each original patent not filed electronically

Changes to Application Process, New Filing Programs Section 2 (cont.) New “Micro Entity” Status Available as of September 26, 2011 Directed towards individual and small company applicants: Applicants who: (1) qualify as a small entity under 35 U.S.C. § 41(h)(1); (2) have not been named as inventor on more than four previous U.S. applications; (3) gross annual income of at or less than 3x U.S. median household income (4) have not assigned, granted, or conveyed (or under obligation to do so) license or other ownership interest in application to entity that had gross income in excess of 3x the U.S. median household income 35 U.S.C. § 123(d). Institutions of Higher Education.—For purposes of this section, a micro entity shall include an applicant who certifies that: (1) the applicant’s employer, from which the applicant obtains the majority of the applicant’s income, is an institution of higher education as defined by [20 U.S.C. § 1001(a)]; or (2) the applicant has assigned, granted, conveyed, or is under an obligation by contract or law, to assign, grant, or convey, a license or other ownership interest in the particular applications to such an institution of higher education. NOTE: “Institute of Higher Education” under 20 U.S.C. § 1001(a) does not include independent research institutes Entitles qualifying applicants to 75% discount on USPTO fees

Changes to Application Process, New Filing Programs Section 2 (cont.) Pro Bono Programs Successfully launched pilot program in Minnesota in June 2010 Five new regional programs launched in 2012 in Denver, California, Texas, Washington D.C. metro area, and New York City metro area Potentially ten new programs opening in 2013 Eligibility and acceptance determined by initial screening process based upon factors, such as: (1) applicant’s knowledge of patent system, (2) potential patentability of invention, and (3) income qualifications Creation of new satellite USPTO Offices Opening in Detroit, Dallas-Fort Worth, Denver, and Silicon Valley

Prosecution/Pre-issuance Matters Section 3 Third-Party Pre-issuance Submissions Effective September 12, 2012 Allows any member of public to file to submit patents, published patent applications, or other printed publications of potential relevance to patent application Must include concise state of relevance of each item, along with copy of item submitted 35 U.S.C. § 122(e)—Submissions must be made by: (1) later of (i) six months after date of publication, or (ii) date of first Office Action on merits rejecting any claims, or (2) before date of notice of allowance, if earlier

Prosecution/Pre-issuance Matters Section 3 (cont.) Prioritized Examination Available for utility and plant patent applications Accords special prosecution status to select applications before the USPTO Provides a final determination of patentability within 12 months after receiving prioritized status USPTO limits requests for prioritized examination limited to 10,000/year, subject to adjustments Inclusion of Oath and Declaration Effective as of September 26, 2012 Inventor must include oath or declaration that states: (1) individual is an original inventor of the claimed invention; and (2) application was made or authorized to be made by declarant, and No longer required to state that (1) individual is first inventor of claimed invention (2) application is made without deceptive intent (3) provide individual’s country of citizenship 35 U.S.C. § 115—Authorizes individual under obligation of assignment to include required statements in the assignment in lieu of separately filing oath or declaration

Post-Grant/“Inter Partes” Review Section 4 Supplemental Examination Effective as of September 16, 2012 Used to “consider, reconsider, or correct information believed to be relevant to patent Patent owner (excludes third-parties) may submit any information relevant to patent and grounds for patentability Has the ability to immunize patent against allegations of inequitable conduct, so long as supplemental examination and ex parte reexamination are completed before any suit is filed Within three months of request, USPTO will make determination by issuing certificate indicating whether a “substantial new question of patentability” (SNQ) SNQ = showing that a reasonable examiner would consider the item of information important in determining the patentability of the claims If SNQ raised by one or more items of information in request, then reexamination will be ordered Reexamination conducted pursuant to ex parte reexamination procedures

Post-Grant/“Inter Partes” Review Section 4 (cont.) Post-Grant Review Effective as of September 16, 2012 Must be done within nine months of grant or issuance of reissue of patent Allows any person, including third-parties, to petition for review upon any invalidity theory under § 282(b)(2) and (3) Challenger must overcome presumption of patentability by demonstrating that it is “more likely than not that at least one of the claims is unpatentable” If successfully challenged, patent owner will have one opportunity to amend (may seek consent of petitioner for additional amendments)

Post-Grant/“Inter Partes” Review Section 4 (cont.) New “Inter Partes” Review Effective as of September 16, 2012; replaces old inter partes patent reexamination Reviews patentability of one or more claims upon grounds permitted by §§ 102, 103 Third-party petition may not be filed until later of: (1) termination of post-grant review, or (2) within nine months of issuance Petition granted if USPTO determines that there is a “reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition” Replaces previous “substantial question of patentability” standard

Post-Grant/“Inter Partes” Review Section 4 (cont.) Derivation Proceeding Effective March 16, 2013 Used to determine whether: (i) an inventor named in an earlier application derived the claimed invention from an inventor named in the petitioner’s application, and (ii) the earlier application claiming such invention was filed without authorization Petition must be filed within one year of date of first publication of claim to invention that is the same or substantially the same as the earlier application’s claim to the invention Transitional Program for Business Method Patent Review Effective September 16, 2012 Subject to sunset for new TPCBM petitions on September 16, 2012 Limited to “covered business method patents” Petition for TPCBM proceeding may not be filed unless person or real party in interest has been sued for or charged with infringement of patent

Amendments to Post-Grant Litigation Matters Section 5 Misjoinder of defendants Joinder of multiple parties in a single patent infringement lawsuit only if: (1) cause of action arises out of same transaction, occurrence, or series of transactions or occurrences, and (2) there is exists questions of fact common to all defendants or counterclaim defendants No longer sufficient to have merely infringed the same patent False Marking Claims Removes qui tam (i.e., whistleblower) provision of false marking statute Limits standing and damages to only those parties that suffer a competitive injury as a result of the alleged false marking Damages only permitted from the time alleged infringer was put on notice of another’s patent, including making product or service with corresponding patent number

Amendments to Post-Grant Litigation Matters Section 5 (cont.) New “Prior Commercial Use” Defense Applies to patents issued on or after September 16, 2011 Exempts certain subject matter from a finding of patent infringement if claimed subject matter is: “a process, or consisting of a machine, manufacture, or composition of matter used in a manufacturing or other commercial process” Asserting party must establish, by clear and convincing evidence, that P.C.U. occurred at least one year before the earlier of: (1) effective filing date, or (2) inventor’s disclosure that establishes a prior art grace period Repeal of “Best Mode” Defense AIA removes previously-recognized defense to infringement for failure to disclose the “best mode” to practice the claimed invention Now, examiner may simply reject application that fails to disclose “best mode” during prosecution of application

QUESTIONS, COMMENTS? For more information… Contact Dr. Edwin S. Flores at (214) 866-0001 or eflores@chalkerflores.com or, Visit the USPTO’s website at http://www.uspto.gov/aia_implementation/index.jsp