Overview of the FTC’s 2003 Proposed Reforms to U.S. Patent Law David W. Hill

2 FTC’s Study Conducted hearings in 2002 to study how the patent system affects innovation and competition Issued lengthy report in October, 2003 entitled “To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy” Several recommendations to modify existing patent law, judicial application thereof, and PTO procedure

3 FTC’s Overall Conclusions Overall, U.S. patent system helps promotes innovation Concerned with the possibility of “poor quality or questionable patents,” i.e., a patent that “is likely invalid or claims claims that are likely overly broad” Focused most of its proposed reforms on patent validity

4 Areas of Proposed Reform Substantive law regarding patent validity – Evidentiary standard, obviousness Procedural aspects of examining validity in PTO – Post-grant review, publication of applications Substantive law regarding enforcing patents – Limited prior-user defense, willfulness

5 Evidentiary Standard for Invalidity Modify 35 U.S.C. § 282 so that all grounds of invalidity are to be proven by a “preponderance of the evidence” – Via judicial interpretation, courts have applied a “clear and convincing” evidentiary standard for at least the last 70 years – Major change in the law

6 Motivation to Modify or Combine Relax judicial standards for finding a motivation to combine or modify prior-art references for an obviousness analysis under § 103(a). – Give more credence to the inherent knowledge and problem-solving ability of a PHOSITA – Relax judicial requirement of express or implicit teaching to modify or combine references – Could make determinations more prone to the vagaries of a battle-of-experts

7 Commercial Success Toughen judicial application of commercial success as a secondary consideration of nonobviousness – Evaluate on a case-by-case basis relevance of commercial success to obviousness inquiry – Patentee bears ultimate burden to prove nexus – Current Federal Circuit law appears to address these concerns

8 Post-Grant Review Agrees with PTO that a PTO Post-grant review proceeding should be created – PTO would consider at least novelty, obviousness, written description, enablement, and utility – PTO would not consider enforceability – Administrative-law judge would preside – Limited discovery and cross-examination – Threshold showing of unpatentability

9 Post-grant Review (con’t) – PTO’s conclusions “carry the force of law” – Settlement agreements filed with PTO – Limit repetitive reviews Differs from current reexamination and reissue proceedings – Does not require a “new” question of patentability – Broader grounds of validity subject to review – Availability of discovery and cross-examination

10 Aspects Not Fully Developed Interplay with district-court litigation – Scope, if any, of issue preclusion and judicial estoppel for claim constructions made in PTO proceeding – Claim preclusion for invalidity grounds not raised – Stay of district-court actions Applicability to preexisting patents Appellate review Specifics of limitations on requesting review (time and number)

11 Other Reforms to PTO Procedure Give Examiners power to request a Statement of Relevance for references submitted in an IDS – PTO abolished requirement for English language references in Nov Increase use and effectiveness of Examiner inquiries Extend publication requirement to all patent applications

12 Limited Prior-user Defense Enact prior-user defense for claims in continuation applications that are broader than the claims in original application – Third party reduces to practice, uses, or makes substantial preparation to use, product or process before the first publication in a continuation application of a claim covering the product or process; and – The parent application did not have a “properly described claim” to that product or process

13 Willful Infringement By statute, limit willful infringement to two grounds: – Patentee gave actual written notice and infringer continued to infringe thereafter; or – Infringer deliberately copied the invention knowing it was patented Major change to theoretical basis of what can be willful infringement, may only be a minor change in practical application of willfulness

14 Thank You Contact Information David W. Hill Finnegan Henderson Farabow Garrett & Dunner, LLP Two Freedom Square Freedom Drive Reston, VA Office: Fax: