Patent Reform Act - Compromise Continues in 2010

March.16.2010

Compromise continues in the senate with the "Manager's Amendment" to the Patent Reform Act. The new bipartisan compromise contains a number of significant amendments to the version of the bill introduced by the Senate Judiciary Committee in April of last year. Senator Patrick Leahy (D-VT), chairman of the Judiciary Committee, released a statement saying, "this compromise may not be everything that everyone wants, but it makes important reforms to an outdated patent system." Senator Orrin Hatch (R-UT) agreed, "this bill doesn't include all the changes I originally sought, but I believe we must come together to reform our patent system."

The new amendment makes changes to the proposed first-to-file system, first-window post-grant review, inter partes review, willfulness and adds supplemental examinations.

First-to-file

The first-to-file system remains a feature of the bill, but the compromise changes the period from which an applicant can claim inventorship of an invention filed by another. The applicant must petition within one year of the first publication of a claim to the invention, rather than the first publication of an application containing such invention.

First-Window Post-Grant Review

The amendment raises the threshold for instituting a proceeding. Challengers must show it is more likely than not that at least one claim is unpatentable. The window for review has also been shortened from twelve months to nine months following issuance.

Inter Partes Review

The amendment raises the threshold for instituting an inter partes review. Challengers must show a "reasonable likelihood" of prevailing on the claim that a patent is invalid.

Willfulness

Willfulness must be plead with particularity, consistent with rule 9(b) of the Federal Rules of Civil Procedure. Knowledge of a patent alone is insufficient to establish willful infringement. Pre-suit notification of infringement is also inconclusive unless notification identifies with particularity the asserted patent, the product or process accused, and explains with particularity how the product or process infringes. On a "close case" of patent infringement, validity or enforceability, the court may not increase damages;  the "close case" assessment is made by the court on a motion by either party. Further, either party may request that damages and willful infringement be tried after the issues of infringement, validity and enforceability.

Supplemental Examination

This new process allows patent holders to supplement a patent with additional prior art. The new prior art must be submitted to the USPTO prior to any litigation, and if accepted, may not be used as a basis for inequitable conduct.

Other notable changes to the bill include a reduction in fees for small entities and for the new "micro-entities" class; limitation of false marking claims to those who have suffered a competitive injury; and removal of the provision on claim construction interlocutory appeals. At the same time, the agreement retains several improvements of the Committee-reported bill, including the gatekeeper compromise on damages and venue provision requiring transfer of cases to a "clearly more convenient" venue.