The America Invents Act: Policy Rationales Arti K. Rai Duke Patent Law Institute May 13, 2013
Background Work began in 2005 15 hearings before House Judiciary Committee, or Subcommittee on Courts, the Internet, and Intellectual Property 8 hearings before Senate Judiciary Committee
Outline of Presentation Policy Rationales patent quality remedies harmonization PTO sustainability Main provisions addressing policy rationales What comes next
Policy Rationale: Patent Quality 2003 FTC report recommendations Change to nonobviousness standard (TSM test made it hard for PTO to reject bad patents ) More robust post-grant challenges at PTO Change in presumption of validity (preponderance of the evidence) 2004 NAS study recommendations Change to nonobviousness standard/tsm Focus on more robust post-grant challenges Post-grant review available when patent asserted
Policy Rationale, Quality, cont d BESSEN & MEURER, PATENT FAILURE (2008) For publicly traded firms in late 1990s, patents had significant private value only in chemistry, pharma (based on renewal data, event studies on stock prices, market value regressions) B&M attribute problem in ICT to poor notice, overly broad scope
Policy Rationale: Remedies Large settlements in shadow of injunctions (PAEs beginning to emerge, e.g. NTP v. RIM) CAFC: low threshold for injunctive relief (virtually automatic if patent valid, infringed) Large damage awards Patent thickets and stacking royalties, particular w/r/t standards (Lemley & Shapiro 2007) Concerns about unduly low trigger for willful infringement
Policy Rationale : Harmonization Rest of world has moved to first-to-file 2004 NAS study recommends change from first-to-invent Discrimination against foreign art (non-written art, Hilmer doctrine)
Policy Rationale: PTO Sustainability Fee diversion ($750-800 million of fee collections withheld in 1990s) PTO has very limited fee-setting authority
Parallel Supreme Court, CAFC Action Defusion of tension on remedies Ebay v. MercExchange (2006) ( ordinary four-factor test for injunctive relief applies in patent cases) In re Seagate (Fed. Cir. 2007) (willful infringement requires an least objectively reckless behavior; no affirmative obligation to obtain opinion of counsel letter) Some movement on quality KSR v. Teleflex (2007) (stating that TSM test only a useful clue ) Medimmune v. Genentech (2007) (expanding standing to challenge patent validity)
America Invents Act of 2011 Quality addressed through new administrative proceedings IPR, PGR (compromise no second window when patent asserted), CBM (allows challenge when patent asserted) Little on remedies Harmonization First-inventor-to file (retain grace period) Elimination of discrimination against foreign art Sustainability: fee-setting authority and (some) protection against fee diversion (revolving fund)
Some (big) open questions Does old doctrine that prohibited trade secret use for more than a year before applying for patent (Metallizing Engineering) still apply? Grace period: how much does the public disclosure have to correspond to a later disclosure to knock it out? PTO has taken positions on these questions will CAFC agree?
What s Next PAE issue still not resolved (despite joinder reform) approx 50% of litigation in 2012 (Chien (2013)); approx 62% software patents PAE s imposed cost of $29 billion (Bessen & Meurer 2012) SHIELD Act (fee-shifting) Expand CBM to all enterprises or products? (S. 866) Changes in estoppel? More work on software patent scope, notice (PTO software roundtable, 2013) FTC very involved in patents and standard-setting