The Senate passed patent reform legislation yesterday which is the most sweeping change to patent practice in over 60 years. The bill passed only after lawmakers dropped the thorniest issue: whether to narrow damages paid for infringing on a patent. By dropping the damages provisions, the legislation essentially leaves the matter of where to set damages up to the courts. If the House legislation resembles the Senate legislation it will change the way a number of different organization handle innovation.
UNIVERSITY TECH TRANSFER:
The proposed legislation grants the U.S. Patent & Trademark Office (“USPTO”) authority to set it own fees.Trade groups like the Association of University Technology Managers (AUTM) will lobby the USPTO to establish “academic” filing fees that might even be aligned with the proposed “micro-entity” fees for individual inventors. From a workflow standpoint, Universities will continue to file provisional patent applications to delay higher patent prosecution expenses while they seek licensees for their technology. The post-grant patent opposition system may introduce a new and potentially expensive line-item in the patent prosecution budget if a response is required. However, post-grant oppositions are likely to be a rare occurrence.
INDIVIDUAL INVENTORS:
With fee-setting authority the USPTO will likely offer “micro-entity” fees for individual inventors. Perhaps a provisional patent application fee will be $60 instead of $110 for a current “small entity” or $220 for a current “large entity.” The first-to-file provision (as opposed to first-to-invent) will be meaningful to patent holders will limited financial resources. When first-to-invent rights are invoked, the federal court litigation and/or proceeding before the Board of Patent Appeals and Interference easily can run over $600,000. It is far less expensive and efficient to simply check who filed their application first.
NON PRACTICING ENTITIES:
Otherwise known as “patent trolls,” patent attorneys that acquire unused patents and sue companies for patent infringement are probably relieved that the damages limitations were removed from the Senate bill prior to passage. Although some patent litigation may involve tax strategy patents (which would be eliminated under the Senate bill), the U.S. Supreme Court’s Decision in Biski effectively rendered those type of patents highly questionable and difficult to assert.
SMALL COMPANIES:
Small companies will likely start monitoring their competition more aggressively through their patent attorneys to take advantage of post-grant patent opposition claims. For example, if a competitor’s patent application issues with dubious and economically disruptive patent claims, then the company may seek to oppose it’s issue rather than get sued in district court for infringement later on. Additionally, the company may also file prior art with the patent examiner that is evaluating their competition’s patent application during patent prosecution (prior to issuance).
LARGE COMPANIES:
Fortune 500 companies will be pleased that the first-to-file system will remove a substantial amount of litigation involving who was first to invent. Large companies typically have well-established patent filing workflows so they will continue to rapidly file patent applications on newly developed technology. One technique used by our firm with larger entities is to file a series of provisional patent applications as the technology continues to develop. At the one-year anniversary date of the first provisional patent application, a non-provisional patent application is filed claiming priority to all the provisional applications that were filed. As noted above, large companies will closely monitor their competition and become more involved in prior art submissions both during the patent prosecution stage as well as during the post-grant patent opposition phase. Large companies will certainly lobby the House to reintroduce damages limitations. The USPTO’s fee setting authority will likely raise the filing fees substantially for larger entities (500 or more employees).
PATENT FIRMS:
Patent firms and patent owners alike tend to support patent reform. By switching to a first-to-file system a substantial amount of uncertainty is removed from patent valuation. Patent litigators may take a financial hit by losing the first-to-invent discovery process in favor of the far more simple (read “inexpensive”) first-to-file determination. With expanded ex parte prior art submissions during patent prosecution look for new patent monitoring services of competitors’ filings. Patent attorneys will also be going “back to school” to develop skills in the post-grant opposition proceedings. Overall, patent reform goes a long way to reducing uncertainties in the value of a patent and thus will likely foster innovation.
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