01 June 2007

US Patents: US Patent Reform

In the latest issue of her excellent monthly "Intellections", Toni Tease has analysed two identical patent reform bills that were introduced simultaneously into the House of Representatives and Senate on 18 April 2007. Toni had previously forwarded me the draft legislation in a .pdf file but as US legislation is drafted in a particularly arcane way I did not grasp the full significance of the proposed changes until I read Toni's article. The bills apparently have the support of both political parties and were introduced by the chairman of an IP sub-committee in their lower house (why don't we have something like an IP committee in the House of Commons, Mountford?) and by the chair of the Judiciary Committee in the upper house.

The bill will bring US patent law closer to ours in Europe in the following respects:

1. First to File rather than First to Invent
Unlike most countries US law gives the first person to invent priority rather than the first to file. I understand that that disputes over who was the first to invent are resolved in a very interesting administrative proceeding called an "interference". Prof. Kingston of Dublin University Business School once commended those hearings as a model for dispute resolution in Europe in his report "Enforcing Small Firms Patent Rights". Proving priority is one reason why research teams here are encouraged to document their work in detailed notebooks and why IP.com Inc offers an electronic recordal system. Toni writes:
"We have become so accustomed in this country to assuming that the first person to invent something owns the patent rights to that invention that a first-inventor-to-file system would require a significant change in our thinking. In layman's terms, it would mean that someone who invented something first might lose out to someone who invented something second but filed first. What this means as a practical matter is that inventors would need to be more diligent than ever in filing patent applications for their inventions as expeditiously as possible."
Well quite so, though I have to say that I had noticed that US inventors were particularly backward in coming forward under their present system.

2. Third Party Submissions
S.9 of the bills would provide:
"Any person may submit for consideration and inclusion in the record of a patent application, any patent , published patent application or other publication of potential relevance to the examination of the application, if such submission is made in writing before the earlier of--
`(A) the date a notice of allowance under section 151 is mailed in the application for patent; or
`(B) either--
`(i) 6 months after the date on which the application for patent is published under section 122, or
`(ii) the date of the first rejection under section 132 of any claim by the examiner during the examination of the application for patent ,
whichever occurs later."

That looks to me very much like third party observations on patentability under s.21 of our Act or for that matter art 115 of the European Patent Convention. Our legislation provides expressly that the third party should not become party to any proceedings. It is not clear whether that would be the case in the USA but, since costs do not usually follow the event there it probably doesn't matter.

3. Other Provisions
Other interesting provisions include a post grant review which looks to me a bit like an opposition under art 99 EPC and justice for prior users. Apparently only prior users of business method patents have a defence to patent infringement in the USA and then only if the prior user reduced the invention to practice at least a year before the patent application was filed. Very juicy for lawyers is a proposal to "apportion damages so that they reflect the economic value properly attributed to the patent's specific contribution over the prior art." Toni writes:
"How this will be interpreted and applied by courts is not yet known, but the bill directs courts to identify all factors relevant to the determination of a reasonably royalty" and "consider only those factors in making the determination."

I suppose that is not too different from the approach we use in inquiries but isn't there a constitutional right to a jury trial in the US? All good stuff for the legal profession and forensic accountants.

Toni, incidentally, has been asked to serve on a task force of the IP law committee of the American Bar Association. They will be making recommendations to Congress on the patentability of business methods and software. Very topical indeed in view of the Board of Patent Appeals and Patent Interferences decision in Ex parte Bilski The end product will be a white paper that is presented to Congress on behalf of the ABA. That task force has half a dozen members of which, she notes, she is the only woman.

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