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April 19, 2007

Patent Reform Act of 2007

A unified, bipartisan Patent Reform Act of 2007 emerged from both the House & Senate yesterday. Much of it is an improvement, but a bit of it is an abortion of sensibility.

The act moves to first-to-file, joining the rest of the world, leaving behind the odious first-to-invent charade. Interferences are to be tossed into the dustbin of history. Robert Lindefjeld at Jones Day said the move would save "tons of hassle and money."

§ 102 is amended to absolute novelty: prior art to the effective filing date. This is a joyous improvement in recognizing true invention. But it retains the one-year grace period for an inventor to file.

§ 103 remains a horrid cesspool of ambiguity: "obvious... to a person skilled in the art."

§ 103 should read:

A patent for a claimed invention may not be obtained though the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person of ordinary skill in the art to which the claimed invention pertains, and as evidenced by one or a combination of prior art references specifically oriented to the nature of the claimed invention so as to anticipate every limitation of the claimed invention. Patentability shall not be negated by the manner in which the invention was made.

This amended statute objectifies what otherwise has become through case law an outrageous exercise in what should be impermissible hindsight. The upcoming Supreme Court decision in KSR v. Teleflex is not how laws should be enacted. Let the courts draw the line of what can be assumed of one with ordinary skill in the art as contrasted to the specialized combination of limitations that should not be considered obvious unless prior art references aiming at the same problem area covered the same ground.

Particularly with a post-grant review process looming, clearer delineation of obviousness is required to avoid the unbounded caprice that characterizes current interpretation of § 103.

Section 6 creates a post-grant review process. The whole concept is a disgrace. The presumption of patent validity is shot: "The presumption of validity shall not apply in a challenge." This should incur the wrath of anyone interested in the integrity of the patent system. Patent holders should not be subject to additional expense for granted patents. This measure puts a serious stink on patents their entire life until challenged. It is a slap in the face to the patent office, and, to the degree that agency management supports it, a blatant admission of incompetent management. The resources are there for better prior art search, but examiners need time, particularly on those applications, which are fairly identifiable, of potential economic significance. Clearer statutory guidance on obviousness would help. Most significantly, with the proposed statute as is, venture capital firms will be less likely to shower start-ups with seed money for patented technologies, retarding, not promoting, "the progress of .. [the] useful arts" that the Constitution prescribes.

Computer technology companies, constantly hammered for infringement, support the weakening of patent protection. Business Software Alliance (BSA), comprising IBM, Microsoft, Cisco, Intel, Hewlett-Packard, and the like, praised the bill, particularly post-grant review. BSA honcho Robert Holleyman ominously intoned: "Unfortunately, opportunistic enforcement of patent rights and patent quality issues have become impediments to innovation and continued economic prosperity." Ronald Riley, president of the Professional Inventors Alliance, fingered these companies as "patent pirates that pillage others' property." Pharmaceutical manufacturers, such as Pfizer, Eli Lilly, Bristol-Myers Squibb, AstraZeneca, GlaxoSmithKline, and Merck, represented by the industry lobbying group the Pharmaceutical Research and Manufacturers of America (PhRMA), are repulsed by post-grant review.

Dennis Crouch had a good round-up on the Patent Reform Act of 2007 in Patently-O.

Posted by Patent Hawk at April 19, 2007 8:45 PM | The Patent System

Comments

Remarks from Hal Wegner, posted in his newsletter Sun 2007-04-22 11:07 -
(1) Patent Reform Bill, Chances of Success: Despite the pomp and circumstance surrounding the introduction of the patent reform bill last week (as below), the bill is dead on arrival. While extensive hearings and proposals will surely be forthcoming as Congress considers the proposal, there is essential zero point zero chance of enactment for the overall package in its present form.
Proponents must recognize that the reason to make the proposal is as a starting point for negotiating a refined bill.
(2) KSR-based Post-Grant Review: The upcoming decision in KSR may be traced to a grant of certiorari fueled by an era of anti-patent hostility in the press that (correctly) points to "simple" inventions that should never have been patented. The genesis for the grant of certiorari in MedImmune, too, shares this common origin that goes back to the Lear recognition nearly forty (40) full years ago that there is no effective, inexpensive and prompt method to invalidate clearly "obvious" patents.
Whereas Germany, the United Kingdom and Japan each has a judicial or administrative proceeding for review of patents after grant that is cheap, effective, reliable and prompt, the United States lacks a parallel mechanism.
The "cancellation" proceeding of Sec. 6 of the patent reform proposal does focus on this cardinal area of concern, but has at least two major areas where improvement is needed:
(a) A More Precisely Defined "Second Window": The legislation does permit bringing a cancellation proceeding at any time during the life of the patent without an infringement challenge by the patent owner, but only if "petitioner establishes a substantial reason to believe that the continued existence of the challenged claim … is likely to cause the petitioner significant economic harm[.]" 35 USC § 322(2)(a) [which should read 35 USC 322(b)(1)].
Definition of "a substantial reason" and "significant economic harm" is left entirely to the PTO Director: "The Director shall… set[ ] forth the standards for showings of substantial reason to believe and significant economic harm under section 322(2)[.]" 35 USC § 236(a)(2).
(b) Independence from the PTO: It is imperative that the authority for dealing with "cancellation" or any other post-grant review be under the authority of a body other than the PTO. Hence, it has previously been proposed to transform the Court of Federal Claims into the Court of Federal Claims and Patent Appeals, a new "CCPA", where the cancellation proceedings could be handled by Special Masters with the same route of review as for cases now handled by Special Masters with other subject matter jurisdiction.
(3) Overruling Lear and Avoiding MedImmune Confusion: Any legislation that creates a solid, "second window" for challenging patent validity could and should include at the same time a provision to statutorily overrule Lear and reintroduce the concept of "licensee estoppels" as a standard part of license agreements: The policy objectives of Lear are better fulfilled by a second window cancellation proceeding than through the uncertainties of licensee-based patent validity challenges.
Regards,
Hal

Posted by: Hal Wegner at April 22, 2007 12:34 PM