VentureLab-Foley AIA overview 12-05-2011

Leahy-Smith
America Invents Act
December 5, 2011

©2011 Foley & Lardner LLP • Attorney Advertising • Prior results do not guarantee a similar outcome • Models used are not clients
but may be representative of clients • 321 N. Clark Street, Suite 2800, Chicago, IL 60654 • 312.832.4500

Effective Dates
Day of Enactment 10 Days 12 Months 18 Months
60 Days
Sept 16, 2011 Sept 26, 2011 Oct 1, 2011 Sept 16, 2012 Mar 16, 2013
Nov 15, 2011
Reexamination transition Inter Inventor’s oath/declaration
Partes threshold Track 1 Reserve fund First-to-File
Electronic
Expedited filing Priority examination for
Tax strategies are deemed examination
within the prior art
incentive important technologies Derivation
proceedings
Best mode 15% transition
surcharge
Third party submission Repeal of
Human organism prohibition of prior art for patent Statutory
Invention
applications Registration
Virtual Marking

False Marking
Supplemental
examination
Venue change from DDC to EDVA
for suits brought under 35 U.S.C.
§§ 32, 145, 146, 154 (b)(4)(A),
and 293 Inter partes review

OED Statute of Limitations
Post-grant review
Fee Setting Authority

Establishment of micro- Transitional post-
entity grant review program
for covered business
New Prior Art Use Defense method patents

Inter Partes Transition Threshold
 What
• Eliminates inter partes reexamination proceedings as of September
16, 2012 and begins era of inter partes reviews
• Changes standard of review from substantial new question (SNQ) of
patentability to a reasonable likelihood that the requestor will prevail
with respect to at least one of the claims challenged in the request
 Applies to
• All Requests for inter partes reexamination filed between September
16, 2011 and September 16, 2012
 Effect
• Raises the old threshold for declaration of an inter partes
reexamination (~95% of all current requests granted)

Best Mode Eliminated
 What
• Best mode eliminated as basis for patent invalidity or
unenforceability
 Applies to
• All proceedings commenced on or after Sept. 16, 2011
 Effects
• Reduces cost of litigation because expansive discovery on inventor’s
best mode will not be conducted
• Disclosure of best mode still required but minimal impact on patent
prosecution because PTO rarely issues a best mode rejection

False Marking
 What
• Only US government may sue for penalty
• Must suffer commercial injury to have standing to bring civil action
and can be compensated only for injury
• A once legitimate marking of a patent now expired is no longer a
violation
 Applies to
• Any case pending on, or commenced on or after, Sept. 16, 2011
 Effects
• Reduce false marking suits

Micro-Entity Status
 What
• Micro-entities get a 75% discount on fees
 Applies to
• Small entities that are not named as an inventor on more than 4 US
applications; and whose gross income (or assignee’s) < 3 times
median household income reported by the Bureau of Census (<
$150,000 based on 2009 census); or,
• Public and nonprofit institutions of Higher Education
 Effects
• Significant reduction of fees for independent inventors and
universities
• Definition effective immediately, but will apply only when USPTO
exercises its new fee-setting authority

Strategies for University Spinouts?
 Not clear how the USPTO will define micro-entity

 Only for USPTO fees, not attorney fees

 Won’t apply to applications licensed to small or
large entity

New Prior Use Defense
 What
• Defense eliminating infringement liability relating to a process or thing used
in manufacturing or commercial process
• If a defendant commercially used subject matter covered by plaintiff’s patent
more than a year before
(i) effective filing date of patent application; or
(ii) date invention was disclosed by inventor or another who obtained
from inventor
 Applies to
• Patents issuing after September 16, 2011
• Defense is personal; not assignable
• May be used against any patent granted on or after date of enactment
• “Commercially used” includes pre-marketing regulatory review activities and
use by non-profit entities such as university or hospital

Track 1 Expedited Examination
 What
• “Final disposition” of application in 12 months
 Applies to
• Utility and plant applications that are new, continuations, or divisional (not a
national stage or reissue) filed on or after September 16, 2011
• Total filing fees of $6,480 ($3,360)
• Application must be “in condition for examination”
• No more than 4 independent claims or 30 dependent claims, and no
multiple dependent claims
• Track 1 status terminated by any request for extension of time or RCE
 Effects
• Cost-effective acceleration of new applications
• Likely to increase pendency of “normal examination” route

Electronic Filing Incentive
 What
• $400 fee reduction
 Applies to
• All applications filed on or after November 15, 2011 via the USPTO's
Electronic Filing System
 Effects
• Should encourage wider use of the USPTO's Electronic Filing System

Priority Exam for Important Tech
 What
• Free prioritization of applications that are important to the national
economy or national competitiveness
 Applies to
 Applications filed on or after September 16, 2012 presenting for
examination claims directed to products, processes, or technologies
that are important to the national economy or national
competitiveness
 Unclear what “important” will mean; USPTO rule-making this year will
define
 Effects
 Preferential treatment of applications deemed to be “important”
 Potential to increase pendency of “normal examination”

3rd Party Prior Art Submissions
 What
• Opportunity to anonymously make of record patent or other printed
publications in third-party applications that have a bearing on the
patentability of any claim
• Must be provided before the Notice of Allowance or the later of (i) six months
after publication of the application and (ii) the first rejection of any claims
• Must be accompanied by a “concise description of the asserted relevance of
each submitted document”
 Applies to
• Any application pending on or after September 16, 2012
 Effects
• Will third parties monitor cases and submit prior art?
• Filings become part of official record
• Filings may be used by PTO to determine meaning of claim

Supplemental Examination
 What
• Request to have relevant information considered, reconsidering, or corrected by
USPTO in connection with an issued application
• Similar to ex parte reexamination, but can be based on any “information” that raises a
substantial new question of patentability, not just prior art
• Ex parte re-exam ordered if patentee raises a substantial new question of patentability
 Applies to
• Only patent owners
• Any patent pending on or after September 16, 2012
 Effects
• May inoculate against certain inequitable conduct charges
• A patent shall not be held unenforceable on the basis of conduct relating to
information that had not been considered, was inadequately considered, or was
incorrect in a prior examination of the patent if the information was considered,
reconsidered, or corrected during a supplemental examination of the patent.
• Will supplemental examination be a better option than RCE / IDS when references
received after Final OA?

Post-Grant Review
 What
• 3rd party may raise any questions of patentability including written description,
enablement, and patent-eligibility
• Petitioner must establish
• “it is more likely than not that at least 1 of the claims challenged … is unpatentable”;
OR,
• “the petition raises a novel or unsettled legal question that is important to other
patens or patent applications”
• Timing
• Must file within 9 months of patent grant
 Applies to
• All business method patents pending on September 16, 2012
• All patents on March 16, 2013 that are governed by “new” version of 35 U.S.C. §102
with priority dates after March 16, 2013
 Effects
• If granted, a final determination will be made within 1 year (plus 6 month extension for
good cause)
• Monitor competitor applications
• Understand vulnerabilities of client patents and have fall-back positions

Inter Partes Review
 What
• Replacement for inter partes reexamination
• Petitioner may raise anticipation or obviousness based on patents and printed
publications
• Petitioner must establish “a reasonable likelihood that the petitioner would prevail
with respect to at least 1 of the claims challenged”
• Total number of reviews granted in the first four years may be limited by USPTO to the
number of inter partes reexaminations filed this year
 Applies to
• Any patent pending on or issued after September 16, 2012 (retroactive)
• Petition may be filed only after the later of 9 months after patent grant date or after
termination of post-review grant proceeding
• Must file within 1 year after served complaint alleging infringement
 Effect
• Alternative to litigating validity; handled by the Board in the first instance
• Ability to settle and dismiss before a final decision is reached
• Estoppel that petitioner may not assert in district court litigation or ITC proceeding that
a claim is invalid on a ground petitioner raised or reasonably could have raised during
a review that resulted in a final decision may chill adoption

Both Post Grant and Inter Partes Review

 Petitioner must identify real parties in interest
 Petitioner burden of proof: preponderance of evidence
 Patentee can cancel or propose substitute claims, but cannot enlarge scope or
introduce new matter
 USPTO must issue final determination in review within a year (extendable by six
months) after review instituted
 Estoppel: Petitioner may not assert in district court litigation or ITC proceeding
that a claim is invalid on ground petitioner raised or reasonably could have
raised during review resulting in a final decision
 If review is terminated (e.g., via joint request after settlement), no estoppel
 Review barred if petitioner (or real party in interest) previously brought civil action
challenging validity of a relevant claim
 If petitioner files suit after submitting a petition, civil action is stayed until patent
owner takes certain action in court:
• Patentee asks court to lift stay or moves to dismiss civil action

Covered Business Method Patents
 What
• Provides defendants in infringement actions (or those charged with infringement) with
a special post-grant review process to challenge the validity (on any grounds) of the
patent from Sept. 16, 2012 to Sept. 16, 2020
 Applies to
• All existing and future “Covered Business Method Patents,” i.e., “a method or
corresponding apparatus for performing data processing or other operations used in
the practice, administration or management of a financial product or service, except
that the term does not include patents for technological inventions.”
• Any action during the effective period
• But not to counter-claims for invalidity or to patents that have previously been
challenged the patent in a declaratory judgment action
 Effect
• Lower standard of proof (preponderance of the evidence) may enhance invalidity
chances
• Estoppel only for “raised” arguments

Strategic Considerations

 Specifically include post-grant reviews in “stand
still” agreements with potential licensees
 Limit use of business method patents in claim
charts and letters to potential licensees
 Continue to use “technological” elements in claims

First-Inventor-to-File
 What
• Invention date no longer available to establish inventive priority
• Eliminates general 1-year grace periods
• Eliminates interferences in favor of “derivation” proceedings
• 1-year grace period for inventor’s own disclosure and disclosures obtained from
inventor
• Eliminates ability to “swear behind” 3rd party prior art with proof of prior invention
• Remove 3rd party disclosures within 1-year grace period with proof of prior public
disclosure of “the subject matter disclosed” by inventor or another who obtained the
subject matter disclosed directly or indirectly from the inventor
 Applies to
• Any application with effective filing date on of after 18 months after enactment
• Does not apply to continuations/divisionals with no new matter
 Effects
• Changes to 35 U.S.C. §102
• Prior art = any available before effective filing date

35 USC 102 – Prior Art
 35 USC 102(a)(1):
A person shall be entitled to a patent UNLESS
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
 No longer limited to public use/sale in U.S.
 No longer based on date of invention

35 USC 102- New Grace Period

Exceptions to 102(a)(1) are in 102(b)(1):
Disclosures made 1 year or less before the effective filing date
are not prior art if—
(A) disclosure was made by inventor or “another who obtained
the subject matter disclosed directly or indirectly from
inventor”
(B) the subject matter disclosed had, before such disclosure,
been publicly disclosed by inventor or another ….

35 USC 102 – New Grace Period
Questions on “disclosure”:

Is an inventor’s public use or sale a “disclosure” that falls under
the grace period?

How closely does the “subject matter disclosed” have to
correspond to the “claimed invention” for the grace period to
apply?

How can you establish that another obtained the subject
matter “indirectly” from an inventor?

35 USC 102-First to File Exceptions
Exceptions to 102(a)(2) are in 102(b)(2):
Disclosures appearing in a patent or patent application are not
prior art if—
(A) the subject matter disclosed was obtained directly or
indirectly from inventor;
(B) the subject matter disclosed already had been publicly
disclosed by inventor or by another who obtained the subject
matter disclosed directly or indirectly from inventor;
(C) the subject matter disclosed and the claimed invention,
not later than the effective filing date of the claimed
invention, were owned by/subject to an obligation of
assignment to the same person.

Effective Date of New 35 USC 102
(n) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as otherwise provided in this section,
the amendments made by this section shall take effect
upon the expiration of the 18-month period beginning on the
date of the enactment of this Act, and shall apply to any
application for patent, and to any patent issuing thereon, that
contains or contained at any time—
(A) a claim to a claimed invention that has an effective
filing date as defined in section 100(i) of title 35, United
States Code, that is on or after the effective date described
in this paragraph; or
(B) a specific reference under section 120, 121, or 365(c)
of title 35, United States Code, to any patent or application that
contains or contained at any time such a claim

Adapting to the New 35 USC § 102
 18 month effective date 
 6 months to roll out new policies/procedures and prepare…
 Disclosures made in 6 months can have a defeating effect on applications filed
under the new § 102

Client Actions
 Controls on pre-filing disclosures
 Record-keeping for all disclosures
 Increased importance of early filing date
 Extreme care must be taken with CIP applications!
 Avoid “poison pill” claims
 Should inventors intentionally make a public disclosure prior to filing a patent
application?
 Are lab notebooks a thing of the past?

Derivation Proceedings
 What
• USPTO proceeding or civil action to determine whether inventor named in an
earlier-filed application derived claimed subject matter from inventor of a
later-filed application
• Must file petition within one year of first publication of a relevant claim (i.e.,
same or substantially same as claim in earlier application)
 Applies to
• Applications filed on or after March 16, 2013
 Effect
• Logical consequence of first-inventor-to-file
• Significant narrowing of issues currently resolved through
interference proceedings

USPTO Derivation Proceedings

 Filed by Applicant of later-filed application against earlier
filed application
 Inventor of earlier application derived the claimed invention
from inventor named in the petitioner’s application
 Made under oath, supported by substantial evidence
 Must be filed “within the 1-year period beginning on the date
of the first publication of a claim to an invention that is the
same or substantially the same as the earlier application’s
claim to the invention” (Same problematic language as PTE
deadline?)
 Director’s decision to institute proceedings is not appealable

Civil Action Derivation Proceedings

 Filed by owner of later-filed patent against owner of earlier
filed patent
 Must be filed “before the end of the 1-year period beginning
on the date of the issuance of the first patent.”
 Court also can adjudge validity of both patents
 Governed by second paragraph of 35 USC 146

Implementing Regulations

 USPTO wants input NOW!

Thank You!
John D. Lanza
(p) 617-342-4084
(f) 617-342-4001
jlanza@foley.com

©2011 Foley & Lardner LLP • Attorney Advertising • Prior results do not guarantee a similar outcome • Models used are not clients
but may be representative of clients • 321 N. Clark Street, Suite 2800, Chicago, IL 60654 • 312.832.4500

VentureLab-Foley AIA overview 12-05-2011

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