Algae Biomass Summit 2014: Patent Strategies for Algae Companies in an Era of Patent Reform Peter A. Jackman, Esq. October 2, 2014

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1 Algae Biomass Summit 2014: Patent Strategies for Algae Companies in an Era of Patent Reform Peter A. Jackman, Esq. October 2, Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

2 Why is Intellectual Property Important? United States IP > $5 trillion in value Biotech business model relies heavily on patent protection Often the most crucial asset in a sector that is research-intensive, high risk, and with relatively low imitation costs Patents are valuable assets Increase revenue by creating barriers to entry to a market Create strategic alliances and business advantages Your competitors are focused on it! Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

3 The America Invents Act (AIA) Enacted on September 16, 2011 with incremental portions thereafter The first comprehensive reform to U.S. patent law in 60 years Changed from a first-to-invent system into a first-inventor-to-file ( FITF ) system on March 16, 2013 Provided for prioritized examination of applications Introduced new ways to challenge competitor patents and applications Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

4 It s a New World Getting a Patent Old World File $$ U.S. 1 year 2 years 3 years 4 years 5 years Standard Prosecution Typical Final Disposition in 3-5 years in U.S. Foreign New World U.S. PCT National Phase $ $$$ 30 months Avg. Final Disposition in 6.3 months $$ Track 1 Foreign PPH $$$ (no PPH fee) Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

5 The Race to the Patent Office FITF System Optimize Your Patent Filing Strategies Quickly capture inventions in-house Timely review invention disclosures Decide whether to file a patent application Employ an efficient patent drafting process with counsel Use of provisional application filings 5

6 Rapid (and Smart) Portfolio Building Manage and Reallocate Resources Patent protection is expensive Prioritize your budget Think beyond current commercial products and processes Do you have new products in the pipeline? Consider competitor IP portfolio Prune existing IP assets to cover new development efforts Consider licensing unused patents 6

7 Prioritized Examination Track One 7

8 Prioritized Examination Program: Track One Statistics Total Requests Prioritized Examination (aka Track One) Statistics Report Date: March 18, 2014 Pending Granted Dismissed Total FY FY FY FY Examination Status First Action on the Merits mailed Final Dispositions mailed Number Allowances of total Final Dispositions Number of Track One applications Pendency Information Pendency to FAOM from Grant of Request (mos.) Pendency to Final Disposition from Grant of Request (mos.)

9 Patent Prosecution Highway (PPH) Under the PPH program, Applicants receiving a ruling from an Office of First Filing (OFF) that at least one claim is patentable may request that the Office of Second Filing (OSF) fast track the examination. All claims in the OSF application must sufficiently correspond to the allowable claims in the OFF application. Eligible countries: Australia, Austria, Canada, China, Colombia, Czech Republic, Denmark, European Patent Office, Finland, Germany, Hungary, Iceland, Israel, Japan, Mexico, Nicaragua, Nordic Patent Institute, Norway, Philippines, Portugal, Russia, Singapore, South Korea, Spain, Sweden, Taiwan and United Kingdom 9

10 PPH Benefits Accelerated Examination Examination within 2-3 months from grant of the PPH request provided the application has completed all its pre-exam processing and is ready for examination. Greater Efficiency More than 90% of PPH cases are allowed vs. less than 50% allowance rate for non-pph cases. Decreased Costs of Prosecution PPH cases have fewer actions per disposal vs. non-pph cases saving both applicants and Offices time and expense. Reduced Pendency PPH enables applications filed in multiple jurisdictions to be fast tracked based on another Office's work product. No Petition Fee in USPTO 10

11 Global Initiatives to Accelerate Examination of Cleantech Patent Applications To promote the development and commercialization of clean technologies, patent offices around the world have adopted programs to expedite the examination of patent applications pertaining to clean technologies. Countries with fast track green programs include: Australia (2009) Brazil (2012) Canada (2011) China (2012) Israel (2009) Japan (2009) South Korea (2009) United Kingdom (2009) 11

12 It s a New World- Enforcing a Patent Old World Median ~ 2.5 years File $$$$ 1 year 2 years 3 years District Court Litigation Inter Partes Reexamination $$ Average ~ months from filing to certification New World CBM IPR PGR 1 year deadline from petition to final disposition $$$ PTAB + 6 months for exceptional cases Third Party Submissions Protests Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

13 Challenging Competitor Patents Post-AIA Challenge overly broad patents that encroach your technology Consider as possible alternatives to District Court litigation Potentially less expensive and quicker resolution Downsides can be estoppels and upfront cost 13

14 Challenging Competitor Patents Post-AIA Inter Partes Review (IPR) Adjudicated by Patent Trial and Appeal Board Patents and printed publications Limited discovery (documents and depositions of declarants) Post Grant Review (PGR) Only FITF patents Challenge validity of patent on any ground Ex Parte Reexam Patents and printed publications 14

15 Post-Grant Review Scope: includes 101 (utility), 102 (novelty), 103 (obviousness) and 112 (written description / enablement) Filing Deadline: Third party must file within 9 months of grant of patent Threshold Showing: Petition, if not rebutted, would demonstrate more likely than not that at least one claim is unpatentable (lower standard than IPR) Effective date: FITF patents filed after March 16, 2013 Barred if civil action for invalidity filed by challenger Estoppels: another PGR, ITC, District Court No stay if infringement suit filed within 3 months of grant

16 Inter-Partes Review Replaces inter partes reexamination, but ex parte reexam remains Can be filed on any patent Scope: limited to grounds under 102/ 103 and patents or printed publications Filing Deadline: Must be filed within 12 months of being served with a complaint Threshold: reasonable likelihood petitioner will prevail in invalidating at least one claim IPR cannot be filed if petitioner already filed civil action challenging validity of patent 16

17 Inter Partes Review Timeline Petition PO Preliminary Response Decision/ Institution PO Res. /Motion to Amend Petitioner Reply/ Opposit. PO Reply Oral Hearing Final Written Decision 3 mo 3 mo 3 mo 3 mo 1 mo 2mo 3 mo Trial Phase 1 year Director may extend 1 year period by no more than 6 months, absent joinder of proceedings

18 Claim Cancellation Statistics The Board has issued Final Written Decisions after the completion of the trial process in 114 proceedings 102 IPRs and 12 CBMs. In the 102 IPRs, the Board has cancelled 72.5% of all claims for which trial was instituted, and cancelled 65.0% of all claims that were initially challenged by the petitioner. The Board has cancelled all challenged claims in 66 IPRs, some challenged claims in 20 IPRs, and zero challenged claims in 16 IPRs. The Board has cancelled all claims for which it instituted trial in 71 IPRs, some instituted claims in 15 IPRs, and zero instituted claims in 16 IPRs. 18

19 Why IPRs are So Popular with Petitioners? Compared to District Court proceedings, lower standard and burden of proof: IPR: reasonable likelihood/preponderance of evidence District court: clear and convincing The PTAB has a better understanding of technical and legal arguments Faster resolution of the proceeding: IPR and PGR: months Litigation: 40 months (D NJ) Reduced costs compared to district court litigation The PTAB may reach a different decision from the district court based on similar evidence Promotes settlement 19

20 New Strategies for Decision Makers Articulate an IP strategy with Patent Counsel Know what differentiates your innovation Patentability Search (others are smart) What features are valuable (sought by customers, unique to product) File early if you are going to file Accelerate key patent applications if budget permits Consider all options when threatened including patent defenses at USPTO Limited windows within which to initiate post-grant review and third-party submissions Places increased emphasis on regular and proactive monitoring of competitor patents 20

21 New Patent Portfolio Options Under the AIA 21

22 Questions? Contact Information Peter A. Jackman, Esq. Sterne, Kessler, Goldstein & Fox PLLC 1100 New York Ave., NW Washington, DC

23 Patent Office Litigation Sterne Kessler published a two-volume set with 1,200 pages focused on the new contested proceedings under the America Invents Act in October, This book examines how the proceedings interact with other aspects of patent procurement and enforcement, while delivering practical analysis and advice. aw-products/treatises/patent-office- Litigation/p/