Wednesday Whiskers

Miracles do happen, it seems. Despite several hurdles and a legislative calendar that was drowning in debt-related issues, the long-awaited US patent reform legislation passed the Senate vote on Monday. The Leahy-Smith America Invents Act (AIA) was passed unamended by the US Senate with a 89-9 vote (see previous AmeriKat and IPKat posts here). Once signed into law by President Obama, the bill will introduce several changes to the US patent system including harmonizing its first-to-invent system to a first-to-file system and ending fee diversion. AIA has been criticized by many as being overly burdensome to small independent inventors, will increase the number of provisional applications being made to the USPTO and would allow the Appropriations Committee to unduly control the fees generated by the USPTO. USPTO Director David Kappos heralded the passage of the bill, claiming that it will "...drive down the backlog of patent applications, and expedite the issuance of high quality patents - all without adding a dime to the deficit." Director Kappos proceeded to then walk on water.... Joking aside, the AmeriKat is excited about this new act and will be back on Sunday to report on the fall-out and commentary surrounding its passage.



The Rolls Building is nearing its opening day. For those IP litigators, like this Kat, the new £300 million Rolls Building will soon become a home-away-from-home as the Patents Court moves from the resplendent Royal Courts of Justice to its new home. You needn't spend long in the RCJ chambers and filing offices to hear comments about the new building - a mixture of views mostly punctuated by comments of how small the court rooms are, how some are being dragged across to Fetter Lane kicking and screaming and how no one will know where anything is [cue wandering judges and barristers looking for their lost court rooms, Merpel remarks cattily]. Then there is the elevator problem - only 3 public lifts (i.e. fitting only one clerk with the first set of disclosure bundles for your standard Chancery case - promises of e-filing be damned). The AmeriKat is more worried that, as with many new buildings, the air conditioning system will be out of control and set on a level that only pacing barristers can endure. There are rumors floating around about who will be the first IP case to grace the Rolls Building, but no concrete word until the doors first open this fall. The IPKat says that whoever gets there first should give the rest of us tips about managing the new building - flaws, free wi-fi, and all!


8+3 =11 big problems for HathiTurst, a partnership of research libraries and universities, including the University of Michigan . On Monday, the 11 strong contingent of authors' groups and individual authors including the Authors Guild filed a copyright infringement suit in the Southern District of New York against the libraries and universities claiming that their initiative to digitize millions of books without authorization constituted copyright infringement and posting the books online. The claim also objects to the partnership self-designating works as "orphan works" and thus self-permitting the digitization and use of those works. So far 9.5 million books and journals have already been digitized with around 30% of those works being in the public domain. The twist in the story is that the executive director of the partnership, John Wilkin, stated that the digitized works were provided by Google. IPKat readers will remember that last March, Judge Denny Chin rejected the proposed settlement in the Google Books litigation (more here) in a similar dispute. A hearing is schedule for tomorrow in the Google Books case.


On Tuesday, IPR2, better known as the EU-China Project for the Protection of Intellectual Property Rights, between the European Commission, EPO, OHIM and the Ambassador of the People's Republic of China to the EU formally came to a close. The closing ceremony of IPR2 comes at the end of a four-year 16 million Euro joint project. Under IPR2 European and Chinese officials, judges, legislators, experts and academics implemented technical assistance and training activities across China. The parties have agreed to continue their cooperation [what else would you expect?, says Merpel] Would you like to see the what 4 years and 16 million Euros can get you? Well you can't, at least not yet... But while the database is being built, there is a collection of a hodge-podge of documents from the project here.

Many of the IPKat's beloved readers will be in or journeying to Baveno, Italy for this year's annual MARQUES conference (Kat Jeremy is currently stalking the Italian venue.) Today's MARQUES conference agenda, for those Kats and readers who are not so lucky to travel to Italy this week, is premised on "Reality Checks" - reality check on costs, reality check on trends and reality checks on function. The last check is a topic being discussed after lunch entitled "Reality Function" and is promoted as an "update on legal analysis on the trade mark function." For those attendees whose brain activity does not decrescendo following a hearty pasta and foccacia lunch, please let the Kat know what panel suggest is "the trade mark function" in European trade mark law.

Letter from AmeriKat: America Invents Act Remix

The AmeriKat taking what would
be the first of many Kleenexes this
week (picture by prettyinprint reporduced
here under CC licence)

Summer - a time meant for lounging on Scottish wool blankets nibbling on sandwiches flanked by the grounds of a National Trust property. Or for traipsing down some tree-lined avenue with branded bags of summer sales goodies swinging from one's arm. Or for skipping out of work into the summer night to drink Pimms with friends. It is not meant, submits the AmeriKat, to be inundated with torrential rain (cue view outside) or to be suffering from a summer cold (cue view inside). The AmeriKat is currently, and embarrassingly for a Kat, barking like a dog (shudder) as she is battling a bout of bronchitis that has seen her boringly bedridden for the past 48 hours. Those who know her know its a feat to get her to rest and keeping to form, she has kept her mind active by reading the latest US IP reports and listening to hours of Senate and House debates on patent reform on C-SPAN. Exciting times...

Race to Obama - America Invents Act clears House hurdle

The oracle that is USPTO Director David Kappos predicted earlier this spring that he was "off-the-charts optimistic" that the House would pass similar patent reform legislation to the Senate's earlier success of S.23. Sure enough, on 23 June 2011, the House of Representatives passed HR 1249 - the Leahy-Smith America Invents Act (AIA) -with a bipartisan vote of 407 to 117. The bills are substantially similar, but with some important differences (see below). Given there are differences, the two bills will now have to be negotiated and reconciled in a House and Senate conference committee before it goes to the Senate vote and finds it way before President Obama for signing into law.

Both patent reform bills introduce, for the first time in 60 years, a considerable overhaul of US patent law. The biggest change to US patent law is the transition from a first-to-invent system towards a first-inventor-to file (FITF) system whereby each patent application would be allocated an “effective filing date” (the FITF provisions in HR. 1249 and S.23 are substantively identical). Like in the EU, the application’s novelty and obviousness is then judged on the prior art available before the effective filing date of the patent, but with a one year grace period still remaining in effect in respect of the inventor’s own disclosures (see controversy re grace periods and the AIA here and as debated in the House here).

But, as previously reported by this Kat and others, the introduction of FITF was not without vocal opposition in both Houses. Democratic Senator Dianne Feinstein's proposed Amendment No. 133 to S.23, which sought to remove the "first-to-file" provision given its arguable burden on a small independent inventors, went on to be voted down 87-13 by the Senate. During the House debates of the same provision in HR 1249, Constitutional arguments were bounded about claiming that "first-to-file" violated the Constitution as it rewards the winner of the race to the USPTO's doors rather the actual "inventor". Arguments against this opposition were that the availability of applications such as pre-issue disclosure, post-grant review and inter-partes review would rebalance any alleged burden that the first-to-file paradigm could create (even if these same measures are argued to increase the USPTO's patent backlog). (picture, above left - former Attorney-General Michael Mukasey)

Constitutionally, the proponents stated the FITF is consistent with the Constitutional requirement that patents be awarded to the inventor; a mere $110 filing fee for a provisional application, it is argued, allows any inventor, large or small, an inexpensive way to obtain an early priority date with a year to submit a formal patent application. Under the current system, however, an interference proceeding (where two inventors file their patents nearly simultaneously) could cost an inventor upwards to $500,000 - it was argued that such high legal costs act as a chilling mechanism on access to the patent system to inventors. Further, it was argued that FITF helps to ensure that US patent laws accomplish the goals in the Copyright Clause of the Constitution, i.e., by promoting the Progress of Science and Useful Arts (see former Attorney-General Mukasey's legal analysis and reasonsing here). Proponents of FITF also submitted that the patent filing system run by the Founding Fathers' generation in the 1790s, a first-inventor-to-register system, was similar to FITF and further argued the US courts did not even care about who was the "first to invent" until 1870 when the much criticized and expensive interference proceedings were introduced.

USPTO Director David Kappos previously stated that the US is already effectively running a first-to-file system because in 2007 there were only 7 interference applications of which only one was decided on priority of the invention. However, Representative Lamar Smith (R-TX) (picture, right), who introduced HR. 1249, stated that the first-to-invent system was

"outdated and dragged down by frivolous lawsuits and uncertainty regarding patent ownership."

Well...which is it? Will the introduction not result any any noticeable difference, a la Kappos, or will result in a more efficient, less contentious patent ownership procedure, a la Smith? Or is this FITF rhetoric irrelevant and the real reason for it's introduction is just to, dare she say the word... harmonize the US position with its international trading partners? (click here for Matt the Kat's post about Director Kappos's views on the matter)

Harmonization of US patent law was exactly what spirited Rep. Rohrabacher (R-CA) during the House debate into calling the legislation a "travesty", adding to the PTO backlog and "break[ing] the back of small inventors...and empower[ing] multinational and foreign corporations" (see his fiery speech at minute 37 including a citation to a Hoover Institution report damning the AIA). Representative Rohrabacher, writing about the AIA in Politico in March stated:

" We're told [the first-to-file system] is necessary to harmonize with Japanese and European patent law. But these systems were established by elitists and economic shoguns interested in corporate power, not individual rights . If patent law is to be harmonized - their system should be raised to our high standards, not ours eroded to conform to their weaker ones."

Ahhh....this fondly reminds the AmeriKat of this Lewis Black skit (warning: his name is Black, but his language gets a bit blue). But despite the fiery opposition, in which Rohrabacher was not alone, both Houses passed substantively identical first-to-file provisions. First-to-file is here to stay, it seems.

There are several other tweaks to language and addition of some provisions in HR 1249 but one of the bigger changes is that of the funding of the USPTO. S.23 included an amendment which ended the annoying fee diversion whereby the excess fees collected by the USPTO (excess in that it is more than what the USPTO was apportioned in funding by Congress) go back to the federal government where the monies can be invested for things other than the USPTO. Frustratingly, this amendment did not make it in tact to HR 1249 and instead the House "decided to water down [the] language" according to Senator Tom Coburn, the introducer of the fee diversion amendment in the Senate. Now, the excess funds, instead of being controlled by USPTO would, under section 22 of HR 1249, be controlled by the Appropriations Committee. Yikes...kiss that money good-bye! (picture, above, left - Senator Coburn)

For the non-US readers, the Appropriations Committee basically controls the purse of the US government. He who controls the pursue, has the power. And he who hath the power, well...does not necessarily always do what is best. Senator Coburn has more damning things to say about the Appropriations Committee (click here for his press release urging the Senate to oppose Congress's version). Director Kappos, as an unelected member of the executive branch of the government, more coolly stated that

"We are encouraged by the statements of so many Members of Congress calling for the USPTO to have full access to its fees when fee collections exceed Congress' annual appropriation for USPTO. Full funding of the USPTO is necessary for the USPTO to successfully implement the legislation and to more effectively perform its core mission."

The Wall Street Journal reports that despite the further compromise that the bill needs before President Obama sees it, the White House has already signalled its approval of HR 1249. So will there even be a fight on fee-diversion and other controversial provisions like expanded prior-user rights, or will the Senate just adopt the House version? Anyone want to put some money (or milk) on the Senate just voting through HR 1249's text as is?

Letter from AmeriKat: Return of the AmeriKat

For anyone who knows the AmeriKat personally and professionally, they will know that during the past seven weeks the AmeriKat has faced a flurry of deadlines, deliberations, duplicitous documents and a dosing of sleep deprivation. Her absence from her beloved letters was not one of choice, but one of necessity as every two days she was hit with another deadline. (picture, left - the AmeriKat up late in front of one of her many outstanding deadlines) The deadlines were increasing in frequency, but as the old saying goes “absence makes the heart grow fonder”, especially when the absence is not voluntary. When the AmeriKat was writing this post, she was curled up on her bed, watching her clock until she had to leave to catch a flight for yet another deadline. However, now with the passing of the last seven weeks, she has returned to first give you a brief glimpse of the first of the latest US IP tails. She will be back later throughout the week with more detailed posts on some of the most important news in US IP law.

Patent Reform Act 2011 Gets Senate’s Thumbs-Up

Two weeks ago the US Senate passed by overwhelming majority (95-5) the America Invents Act (“AIA”) (a.k.a. the Patent Reform Act 2011). Mr. IP himself, Senator Patrick Leahy (D-Vermont) introduced the Patent Reform Act 2011 to the Senate Judiciary Committee this past January. The AmeriKat has set out below the main provisions that the original draft bill contained before the Senate and what the AIA now contains below (a comparison of the two can be found here):

First -to-File: The biggest change introduced by the AIA would be the transition in the US from a first-to-invent system towards a first-to-file system where each patent application would be allocated an “effective filing date”. Similar to that in the EU, the application’s novelty and obviousness is then judged on the prior art available before the effective filing date of the patent, but with a one year grace period still remaining in effect in respect of the inventor’s own disclosures. Democratic Senator Dianne Feinstein had proposed an amendment (Amendment No. 133) that would have removed these provisions arguing that their effect would be especially burdensome to small independent inventors (click here to watch her introduction of the amendment.) However, the Senate voted down the amendment by 87-13 with proponents of the first-to-file provision arguing that the availability of applications such as pre-issue disclosure, post-grant review and inter-partes review would rebalance any alleged burden that the first-to-file paradigm could create. Opponents to the first-to-file system also believe that this introduction will worsen the huge backlog of patents faced by the USPTO (see post here) and result in the system being clogged up with thousands of unmeritorious inventions.

Damages: The review of the assessment of patent damages that was taken up by Microsoft in their initial appeals in the i4i case last year (see AmeriKat posts here) evidenced only a sliver of general unrest with the assessment of US patent damages. The original draft of the Patent Reform Act 2011 introduced proposed amendments that would provide for specific procedures on how judges in patent cases manage the damages assessment. These included mechanisms for the court to consider the evidentiary merit of each parties’ case on damages and then the judge introducing a methodology that would be used in assessing the damages awards. Close the AmeriKat’s heart at the moment was the old text also requiring a judge to split the damages portion of a trial at a parties request and only rejecting that request in the absence of a good cause, such as “the absence of “issues of significant damages or infringement and validity”. All of these draft provisions did not make it past the Senate's approval perhaps signaling a reluctance to delve into the problematic pool of patent damages which may have held the entire bill’s passage hostage.

Enhanced Damages: In the current US Patent Act, there is not specific reference that the increase of patent damages should only be reserved to cases of willful infringement. Section 284 of the current statute, instead, states that “the court may increase the damages up to three times the amount found or assessed.” The Federal Circuit’s interpretation has limited this section to cases to willful infringement and where the defendant’s actions were objectively reckless. The draft text of the Patent Reform Act had basically codified this precedent, but again, like with general damages, this did not make it to the final text.

USPTO Proceedings: The AIA also introduces under Sec 135 a “derivation proceeding” that arises when an original inventor claims that a patent applicant derived their invention from the original. Third parties will also be allowed to submit any prior art documentation with accompanying relevant reasons for the submission to the USPTO prior to the examination proceedings. A post-grant review proceeding would also be created and which allow any party within 9 months of the patent’s issue to present a validity challenge to one or more of the patent claims. Replacing the inter partes reexamination would be the inter partes review which would limit reviews to issues of novelty and obviousness arising from prior art patents and printed publications. The effect of the post-grant review has been considered by some as not ensuring the quality of the granted patents, but as potentially increasing the expense a patent-holder could face during the adversarial proceedings.

Besides deleting more interesting parts of the bill, the Senate did add Section 18 which deals with provisional measures for the establishment of post-grant review proceedings for the review of the validity of business-method patents. False marking lawsuits would be eliminated under the proposed 146 (k) except for ones filed by the US government or by a competitor who can prove competitive injury as a result of false marking. Also, reduced fees for small entities were also introduced.

The American Innovators for Patent Reform (AIPR), a trade association which promotes innovation by strengthening the US patent system, has opposed the AIA. Alexander Poltorak, the founder and President of AIPR and AIPR stated that the AIA, in particular the first-to-file provision would be viewed as a “defeat by many inventors”, however the removal of the damages provisions (which were referred to as the “most damaging provisions” – no pun intended) were heralded as a success. David Kappos, the USPTO's Director, has said that the US is already operating a pseudo-first-to-file system because in 2007 there have only been 7 interference applications (where two inventors file their patents nearly simultaneously) of which only one was decided on priority of the invention and "the truth is that only .01% of all patent applications could be affected" by the change.

The next stage of the bills life will be in the House (watch the life of a bill, courtesy of Schoolhouse Rock). If passed by Congress , the AIA could well be on its way of becoming the first substantial change to patent law in the U.S. in almost 60 years, but a bill’s life in Congress can be a rocky ride and can usually, as has been seen in IP legislation, die a quite death.

So what do non-US readers think? Is the introduction of the first-to-file system the end of civilization as we know it, or if the AIA is passed by Congress is Director Kappos correct and US inventors will not notice any difference at all?