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May 25, 2011

With Some Changes, Patent Reform Bill Cruising Toward House Passage

House amended details for two issues to bring it in line with the passed Senate bill.

With Some Changes, Patent Reform Bill Cruising Toward House Passage

With the America Invents Act enjoying majorities on both sides of the capitol, many believe that the time for patent reform has arrived. [© Fineas - Fotolia.com]

  • The long-discussed patent reform bill is expected to pass the full House of Representatives as soon as next month. It would more than likely set the stage for the enactment of a patent reform measure later this year.

    “They’re looking at the middle of June to bring it to the floor, together with a further manager’s amendment, then bring it to a House vote the week of the 13th or 20th,” John B. Pegram, senior principal in the New York office of the law firm Fish & Richardson, told GEN. Spokespeople for Speaker Rep. John Boehner (R-OH) did not return messages from GEN about the timing for House action on the bill.

    Patent reform has so far enjoyed large majorities from both sides of the Capitol. The Senate version of the America Invents Act, as the measure has been christened, passed by 95–5 at the beginning of March after years of debate. House Judiciary Committee Chairman Rep. Lamar Smith (R-TX) then introduced his version on March 30.

    The House bill (HR 1249) differs from the Senate bill (S. 23) on two important factors, inter partes review and prior user rights, however, made many doubt that it would make it through a vote. Subsequently Smith introduced a manager’s amendment addressing these differences and other concerns, which was passed 32–3 on April 14.

    Pegram believes the measure will sail through the House as its Senate counterpart did back in March. “Everybody seems to see this as a subject that looks good for helping create jobs. I think the chances for passage of the bill now are greater than they’ve ever been.”

    Another lawyer following the patent reform bill agreed: “I’m not sure if there will be some more amendments or not. The House will pass something, and on the big issues such as first-to-file, processes for improving quality and addressing opposition, as well as supplemental examinations, the House and Senate bills will not be that far apart,” Leigh J. Martinson, partner in the Boston office of the law firm McDermott Will & Emery, told GEN.

    Besides the changes to bring prior use rights and inter partes re-examination closer to those in the Senate bill, the manager’s amendment also limited the joinder of defendants in a single infringement case to parties engaged in related infringement and excludes joinder simply because the same patent was infringed. It also upped the duration of the PTO’s authority to set fees from four years to six years.

  • Reversal of Inter Partes Review Standards

    In terms of allowing third parties to challenge patents after they have been granted, the House adopted the new Senate standard, which raises the bar for such reviews to be considered. It would prevent the USPTO director from allowing an inter partes review unless he or she determined that there’s a “reasonable likelihood that the petitioner would prevail with respect to at least [one] of the claims challenged in the petition.”

    The amended bill also added language requiring the USPTO to consider a patent owner’s response to a petition for inter partes review before deciding whether to initiate that review.

    That language came from Rep. Robert Goodlatte (R-VA), as did another amendment sealing inter partes exams from public disclosure at the request of any party by treating it as “business confidential information that shall be kept separate from the file of the involved patents and shall be made available only to the Government agencies on written request or to any person on a showing of good cause.”

  • Tweaks to Prior User Rights

    For prior user rights, the manager’s amendment requires at least one year’s commercial use before the effective filing date of a patent being challenged in order for IP to be eligible for an assertion of prior user rights.

    The House previously expanded the prior user defense to all patents including those covering pharmaceutical and biotech IP unless they were created through federal funds or funded solely by universities. The Senate, on the other hand, maintains current law, which keeps prior user rights limited only to “business methods.”

    “While some universities continue to oppose the expansion of prior user rights, our associations believe that the commercialization modification of the manager’s amendment, along with the limitation of prior user rights to domestically manufactured products, is sufficiently responsive to our concerns,” John C. Vaughn, evp of the Association of American Universities, noted.

  • One Difference from Senate Bill Remains

    The House will also try to incorporate another amendment to the original that is intended to correct what the Generic Pharmaceutical Association (GPhA) termed a “fatal flaw” in the original House bill. GPhA also voiced its opposition to this part of the passed Senate bill.

    It allows patent owners to request supplemental examination prior to litigation, during which time the owners could submit what they deem relevant information to the patent office for consideration. Patentees that survive the scrutiny would be found exempt from inequitable conduct.

    The amendment to the House bill, which passed the Judiciary Committee by 29–9 and was introduced by Goodlatte, bars the USPTO director or his successors from commencing supplemental examinations of patents in which fraud “was practiced or attempted.” The amendment also requires termination of supplemental exams in which fraud is discovered after they have begun. “We need to make very clear that any new proceeding we set forth incentivizes good faith submissions and punishes intentional misconduct and fraud,” Goodlatte asserted.

    Current patent law already protects misuse of a patent, however: Courts have the authority to not enforce a patent whose patentee has been found to have engaged in inequitable conduct. By its own admission the USPTO is swamped just handling the current volume of applications, so its ability to handle the additional burden of enforcing the provision is debatable at best.

    “The PTO isn’t well equipped to make these sorts of determinations,” Robert H. Underwood, Ph.D., a partner in McDermott Will & Emery’s Boston office, pointed out to GEN. “They’re not a judicial agency. They don’t have subpoena power so they can’t compel people to come forward with evidence to get all of the information necessary to determine if there is or is not fraud present.”

    For these reasons the odds of the Goodlatte language surviving in its present form are also debatable at best. BIO objected to the amendment, arguing it would end up “creating disincentives for patent owners to use the new procedure by having the [PTO] act as a quasi-investigative body.”

    Besides this most recent amendment stirring debate over inequitable conduct, most of the changes in the manager’s amendment are expected to find their way into the final America Invents Act this summer. The amended House bill has yet to be posted publicly but is expected to be by next week, along with a report by the House Judiciary Committee.

    Underwood pointed out, “When it comes to patent reform, the biotech industry is in favor of any type of changes that improve patent quality, that improve business certainties based on the IP landscape. It wants to know: that the patents I have are valid and enforceable, and I don’t have to worry about very weak patents being asserted against me, or about having to get a bunch of licenses because I don’t want to litigate.”


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