The USPTO uncertainty principle

Effects of changes in U.S. patent regime may take years to be fully understood, adjudicated

Lloyd Dunlap
SAN FRANCISCO—In July 2012, the U.S. Patent and TrademarkOffice (USPTO) published proposed guidelines for implementing the"First-Inventor-to-File Provisions" of the Leahy-Smith America Invents Actwhich became effective as of March 16, formally switching from its longstandingfirst-to-invent scheme to the more universally accepted first-to-file system.Uncertainty follows the changeover, as inventors and patent holders grapplewith issues including new guidelines for prior art, a dearth of legal precedentunder the first-to-file system and a potential rush to finalize patentapplications under the first-to-invent regime, which expired March 15.
 
 
Dr. Otis Littlefield, a Morrison & Foerster partner inSan Francisco specializing in patent prosecution, has closely followed thechanges to how inventors will be required to establish and defend intellectualproperty rights. Littlefield—who holds a Ph.D. in molecular biology andcellular biology—notes some of the pitfalls that might await patent applicantsunder the new system.
 
 
First, he observes, interpretation of the new regime will bein flux, perhaps for years. But when the dust settles, "It will be harder toget U.S. patents on inventions under the new first-to-file system," he says.
 
 
Much of the difficulty arises out of the expansion of therange of disclosures that can be considered "prior art." 
 
"'Prior art' now includes virtually anything 'otherwisepublicly disclosed,' a catchall term that could make it harder to patentinnovations or inventions," Littlefield notes.
He cites, as an example, sales in the United States astraditionally having been deemed "prior art," whereas sales in the rest of theworld were not. Now they are, so the patent office—or later, the courts—willhave to make a determination on a much more broad and difficult finding.
 
 
Also, "disclosures to the public" are now considered priorart, and this will include scientific conferences and meetings. In this regard,private entities may well have superior resources to be made aware of bothsales anywhere in the world and public disclosures since scientists, engineersand technical marketing personnel travel peripatetically and attend meetingsand conferences of all shapes and sizes around the world.
 
Furthermore, "under the first-to-invent system, theapplicant didn't have to prove that he was the first unless there were two setsof inventors," Littlefield notes. "This was very rare—maybe a 10th of a percentof all files, but it does happen. An interference proceeding then establishedwho was first."
 
Under first-to-file there, will be no such process unless aplaintiff alleges that a patent was stolen, which "will be very, very rare,"Littlefield expects.
 
 
As a final fillip, patents on inventions subject to thefirst-to-file system can be challenged in the first nine months after issuancein a new post-grant review proceeding, which will allow anyone to challenge thevalidity on any ground that would be available in ligation before a federalcourt at a much lower cost.
 
"The new post-grant review is expected to be a reasonablyeffective means of challenging issued patents. This is due in part to the lowerstandard to invalidate and to the expected technical expertise of theadministrative patent judges who will oversee the new post-grant reviewproceedings," Littlefield states.
 
 
The nine-month post-grant review period provides alower-cost method of challenging new patents and also features a lower standardto invalidate than available in federal court litigation.
 
 
"To put it in perspective," Littlefield adds, "post-grantreview may invalidate a patent based on 51 percent of the evidence, whilefederal court litigation requires 'clear and convincing evidence'—say 75 to 85percent." Overall, the potentially strengthened capacity on the part ofcompanies attacking patent claims to find grounds to invalidate the patents islikely to make evaluation of patent portfolios more difficult, Littlefieldbelieves, which is not likely to be received as good news in corporateboardrooms or on Wall Street.
 
 
Littlefield primarily represents companies in the biotech,pharma, medical device and agritech fields. In addition to patent prosecution,due diligence, interference and reexamination matters, he advises on the roleof patents in corporate transactions including M&A, licensing, R&D, commercialization,manufacturing agreements and joint ventures.

Lloyd Dunlap

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