Maryland Intellectual Property Law Blog : Maryland Intellectual Property Lawyer & Attorney : Brian Wm. Higgins : Serving Baltimore, Columbia, Frederick

          So why are we unable to continue the tradition of groundbreaking inventions of the kind that made our country great, asks Gibby. Today, the numbers of patents issued to Americans has plunged. Today, Americans on a per capita basis are granted fewer than half the number of patents issued a hundred and fifty years ago. Gibby’s figures are mirrored locally, in Maryland, where innovation activity slipped year over year. Globally, countries like China are expected to surpass the U.S. in the number of patent applications filed, according to Senator Patrick Leahy during debate last year over the America Invents Act (AIA). What caused the innovation decline in this country? Where have all the American inventors gone?

          The answers lie, as they often do, in lessons from the past. Gibby’s historical journey takes us back to the enactment of the very first patent act in 1790, and into the office where Thomas Jefferson personally examined every patent submission, an overwhelming task that led Jefferson and others to craft a new law in 1793, one which eliminated substantive examination of patent submissions. The patent law amendments of 1863 reinstated examination, which continues today at the U.S. Patent Office in Alexandria, Virginia. Gibby reveals how the changing patent landscape profoundly impacted industries as well as individuals.

          One significant difference between great inventions of the past and those being conceived today, Gibby says, is where they were conceived: the vast majority of inventors during the 19th century were ordinary individuals working alone, often on farms or in shops. A century later, researchers flocked to the safety of corporations. In the past, it cost a few dollars to submit a patent application. Today, high legal fees prevent many individuals from seeking patent protection for their ideas. Moreover, Gibby says today’s patent laws give lip service to helping the little guy, as those in power do not want thousands of individuals getting patents, which would result in courtrooms filled with litigants looking to make money and bring industries to a screeching halt—just as the Wright’s airplane stabilization invention did to the fledgling aircraft industry, Gibby notes. Existing patent laws make obtaining patents harder due to the “obviousness” test, and the Supreme Court makes it easier for courts to invalidate existing patents. It is all but certain, Gibby argues, that America’s most popular inventions of the past would be deemed obvious under today’s onerous rules. 

          “And so large corporations—those with enough money to fight the battle—manage to get patents while other do not. . . . Congress and the courts have stifled innovation among the very class of inventors that we want to be inventing,” writes Gibby. “Today we award patents to only the wealthiest of corporations with the financial means to battle with the patent office.” And that is why the little guy in America stopped filing patent applications.

          Where will innovation activity in this country be a year from now, or a decade later? That depends, Gibby says, on whether we make certain patent reforms to help individual inventors. Gibby advocates for a return of the model requirement, or something similar to it. Inventors of the past had to supply scale models of their inventions to the Patent Office, effectively demonstrating what they had conceived and the metes and bounds of their inventions. The model requirement was abandoned by the Patent Office in 1880. Today, inventors can patent a concept without ever making their invention. If every person seeking a patent had to make a model of their invention, there would be fewer patent applications and better quality patents being issued.

          Gibby also advocates for a 10 year patent term, rather than the current 20 years (which is based on the date of filing one’s patent application); requiring patent applications to be examined in less than six months; elimination of the “obviousness” test for patentability, abandonment of the judicial doctrine of equivalence; and limitations on the number of continuation patent applications an inventor can file from an original patent application. With sweeping patent reforms being enacted under the AIA just last year, and most of the AIA’s provisions not even implemented yet, no one knows whether Gibby’s proposals will be considered any time soon. If American innovation continues to slip behind other countries, however, it will not take long for others besides Gibby to stand up and say more needs to be done.

          (1) any right to relief is asserted against the parties jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences relating to the making, using, importing into the United States, offering for sale, or selling of the same accused product or process; and

          (2) questions of fact common to all defendants or counterclaim defendants will arise in the action.

          For purposes of this new provision, accused infringers may not be joined based solely on allegations that they each have infringed the patent or patents in suit. Defendants may waive this provision, which is effective in any civil action commenced on or after the date of enactment of the AIA.

          According to the new law, 35 U.S.C. 273 (Defense to Infringement Based on Prior Commercial Use), the prior user defense may be raised by a defendant who reduced the subject matter of the patent to practice and commercially used the subject matter at least one year before the effective filing date of the patent or the date that the patentee publicly disclosed the invention and invoked the § 102(b) grace period, whichever is earlier.

          The law defines a commercial use as either in connection with an internal commercial use or an actual arm’s length sale or other arm’s length commercial transfer of a useful end result of such commercial use.

          To prevail, the defendant would have to produce clear and convincing evidence of his or her activities that demonstrate the invention was reduced to practice and was commercially used, which is a relatively high burden and would likely require corroborating evidence, particularly in the case of non-documented evidence of human activities.

          Subject matter for which commercial marketing or use is subject to a premarketing
regulatory review period (e.g., pharmaceuticals) during which the safety or efficacy of the subject matter is established, including during any patent term extension period, shall be deemed to be commercially used for purposes of the new law during such regulatory
review period.

          A use of subject matter by a nonprofit research laboratory or other nonprofit entity,
such as a university or hospital, for which the public is the intended beneficiary, shall be deemed to be a commercial use for purposes of the new law, except that a prior user defense may be asserted only for continued and noncommercial use by and in the laboratory or other nonprofit entity.

         The prior user defense cannot be asserted if the subject matter was derived from the patent holder or persons in privity with the patent holder.  Prior user rights may not be assigned, licensed, or transferred to another, except as part of an acquisition of an entire business enterprise (e.g., an asset acquisition, merger, etc.).

          Congress stated that the change to the existing law was a “narrow expansion of prior user rights [that] balances the interests of patent holders, including universities, against the legitimate concerns of businesses that want to avoid infringement suits relating to processes that they developed and used prior to another party acquiring related patents.” Notably, the use of the term "processes" in describing the new law appears to relates back to the old law that was limited to method patents.

          The AIA also abolishes the 1-year statutory bar under 35 U.S.C. 102(b), making any prior disclosure of an invention, with few exeptions, eligible as prior art. The new law excludes the inventor’s own disclosure of his invention and any subsequent disclosures of the inventor's own invention as prior art.  While that may seem to encourage early disclosure by the inventor, any public disclosure of an invention could affect an inventor's ability to obtain protection outside the U.S., since many other countries still require absolute novelty and do not grant a grace period for public disclosure, even by the inventor. 

          Under the AIA, it is not entirely clear whether the on-sale bar is included in the one year grace period. A colloquy on the floor of the U.S. House of Representatives during debate over the AIA indicates that Congress intended that the grace period also include "on sale" activity.

          The AIA expands the prior art common ownership exception under 35 U.S.C. 103(c).  Under the current law, a prior published patent application would not be eligible prior art to show a claimed invention is obvious "where the subject matter [of the published application] 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."  The new law, however, would remove any published patent application or patent as prior art if "the subject matter disclosed [in the published application or patent] 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."  Under those circumstances, the earlier published application, if co-owned, will not be prior art under both an anticipation and obviousness inquiry.

          The AIA also prohibits the patenting of any tax preparation invention by deeming those inventions indistinguishable from the prior art. This provision is already effective and applies to all pending U.S. patent applications. The provision excludes, however, computer programs or systems for preparing tax. As such, it may be possible to formulate a tax preparation invention as a computer program or system to avoid the statutory prohibition.

Reducing Litigation Through Implementation of Post-Grant Review Proceedings

          Nearly 30 years ago, Congress created the administrative ‘‘reexamination’’ process. It was intended to be used by the Patent Office to review the validity of already-issued patents upon the request of either the patent holder or a third party challenger.  It was expected that reexamination would serve as an effective and efficient alternative to often costly and protracted district court litigation.  But the initial reexamination statute had several limitations that later proved to make it a less viable alternative to litigation for evaluating patent validity than Congress intended, and changes to the system did little to put a dent in patent enforcement litigation.  Indeed, the reexamination process became another litigation strategy used by accused infringers, often used as a delay tactic. 

          The AIA amends existing reexamination procedures and establishes a new post-grant review procedure. The new procedures are expected to change the standard for instituting reexaminations and reviews, time limits, burdens of proof, and how discovery is taken.  Whether the new post-grant review procedure will in fact reduce patent litigation will be measured over time. But what is clear is that the filing or institution of a post-grant review proceeding does not limit a patent owner’s ability to commence litigation to enforce his or her patent rights.

          To qualify for the procedure, the application must have no more than 30 total claims and 4 independent claims.  

          Only the first 10,000 patent applications (per fiscal year) that pay the fee and meet the requirements will be accepted into the system. 

          According to the Patent Office, unlike the prior accelerated examination system (which continues to exist as well), a prior art search and an examination support document (ESD) are not required to be submitted with the application.  Those two elements of the prior accelerated examination system were disliked by many patent practitioners because of the belief the search and ESD could create estoppels and provide fodder for inequitable conduct arguments by third parties during litigation.