Last week, a package of bills was introduced in the Senate as the Protecting America’s Competitive Edge (PACE) Act. One of the bills, S.2198 – the PACE-Education Act, contains a “Sense of the Senate” section relating to patent reform. While the section is short on details and similar to prior “sense of Congress” sections we’ve seen from the Senate…it is somewhat interesting for several reasons, not the least of which is the absence of Senator Hatch as a co-sponsor of the bill.

A .pdf of the bill is now available from Promote the Progress here.

Section 321 deals with patent reform (view the text of this section in this prior PTP post).

I am updating the PTP Patent Reform Library to include the PACE-Education Act as well.

A reader from Japan recently arrived at Promote the Progress through the following Google search:

patent reform it v bio troll

Sums up patent reform efforts in the United States nicely, don’t you think? IT v. BIO, and trolls. Yep, that’s about it.

The division between the software/high-technology industries and biotech/pharma has been huge to date…probably the explanation for the stalling of the Patent Act of 2005 (H.R. 2795) in the House. And now the Senate is toying
with the idea of treating industries differently under the patent law.

And the trolls….well, we’ll wait to see what the supreme court has to say about that.

So there you have it…patent reform in a perfect 6 term search string.

The Senate is issuing more smoke signals on patent reform, and they’re beginning to get interesting.

Yesterday, the Protecting America’s Competitive Edge (PACE) Act, a package of three bills, was introduced with the support of about 30 Senators. The Act is a comprehensive set of measures aimed at various policy areas with the goal of “securing America’s continued economic prosperity in the twenty-first century.”

The PACE Through Education and Research Act, S.2198 – part of the PACE package, includes another “sense of the Senate” section relating to patent reform. In December of last year, the National Innovation Act of 2005 (S.2109) was introduced with a similar “sense of the Congress” section.

We haven’t seen any specific details on patent reform from the Senate yet. S.2109 and S.2198 are nothing more than smoke signals — they’re short on details and calculated to send signals of support.

For several reasons, though, the signals are beginning to get interesting. First, the PACE Act specifically calls for a 20% increase in funding for the Patent and Trademark Office. Second, it lends support to two of the major reform proposals – first-to-file and post grant review (similar to S.2109). Third, it calls for a statutory-backed research exemption to patent infringement. Finally, and perhaps most interesting, it suggests that “specific industries with specialized patent needs” should be treated differently by the patent laws.

Will the Senate attempt to draw a line between big pharma/biotech and software/high technology?

The text of the patent reform section of the PACE Act appears below. I have the full text of the bill if anyone is interested. I’ll post a .pdf soon.

S. 2198 —

SEC. 321. PATENT REFORM.

It is the sense of the Senate that–
(1) the United States Patent and Trademark Office should be
provided with sufficient resources to make intellectual
property protection more timely, predictable, and effective;

(2) the resources described under paragraph (1) should
include a 20 percent increase in overall funding to hire and
train additional examiners and implement more capable
electronic processing; and

(3) Congress should implement comprehensive patent reform
that–
(A) establishes a first-inventor-to-file system;
(B) institutes an open review process following the grant
of a patent;
(C) encourages research uses of patented inventions by
shielding researchers from infringement liability; and
(D) reduces barriers to innovation in specific industries
with specialized patent needs.

Quick – how many inventions are disclosed in your portfolio of patent applications currently pending before the United States Patent and Trademark Office? How many of those inventions have actually been claimed? Do you have claims on file of proper scope to cover your current commercial products? Your next generation products? Your competitor’s products?

If you can’t even come close to answering those questions, don’t worry…yet. You’re not alone. It’s common practice to disclose multiple inventions in a patent application and then use legitimate continuation practice to seek protection on those inventions in subsequent applications that claim priority to the original application. It’s also common to use continuation practice to seek claims of varying scope. These uses of continuation applications are especially common in the biotechnology, pharmaceutical and medical device industries where inventions are typically complex, commercial viability is difficult to predict, and product development lifecycles are frequently long.

But the USPTO’s proposed rule limiting continuation practice could put an end to these strategies.

Now you can worry.

To make matters worse, the proposed rule would apply to applications filed on or after the effective date of the rule, if adopted. What does that mean? In essence, beginning on the effective date of the rule, any application that is a third or subsequent application in a chain must be accompanied by a petition providing justification for its existence. Oh, and another thing…the standard for the justification you must provide…it’s perfectly undefined.

Now you can really worry.

If adopted as proposed, the new rule would force all companies that make use of legitimate continuation practice to review their entire portfolio of pending applications and determine which continuations should be filed before the effective date of the rule. This would result in great expense and administrative burden and would likely translate into a massive surge in filings during the weeks, days, and months before the effective date of the rule. If a company elects to avoid the time and expense of reviewing the portfolio and filing continuations, it will risk losing the ability to seek protection because the burden that must be satisfied under the proposed “justify your existence” petition is not known.

So, for corporate counsel, the proposed rule creates a largely unpredictable expense and a tremendous fear of the unknown.

Now you can really, really worry.

What should you do?

First, understand the proposed rule and its potential effect on your patent application filing strategy. Biotech, pharma, and medical device companies should pay particular heed. You can view and/or download the Federal Register Notice of the proposed rule here.

Second…contact your intellectual property trade association of choice and get involved with its coordinated effort on the issue.

Third, consider filing comments on the proposed rule. Written comments can be sent by e-mail to AB93Comments@uspto.gov and must be received on or before May 3, 2006.

Fourth, cross your fingers. This is, after all, administrative rule-making.

A .pdf of my retrospective article on patent law and policy in 2005 is now availble on the Dunlap, Codding & Rogers firm web site. You can
view and/or download a copy of the article here.

I’m still not going to give away the punchline on the blog. I will, however, give a few more hints about my top story of the year. It has nothing to do with infringement that occurs partially in Canada, the patentability of drugs in India, the fate of software patents in Europe, or Ireland’s new-found status as an intellectual property tax haven. Previous hints at the top story revealed that it has nothing to do with patent reform and is only partially connected with the United States.

Curious? Read the article…and send comments my way.

Over the weekend, the Promote the Progress blog turned two. I started the blog on January 21, 2004, just days after Nipper and Sorocco started blogging (each of them reminds me frequently that I was the last to get started, even though they best me only by a matter of days…).

Anniversary posts seem to be obligatory in blogging. I’m not sure why. Maybe bloggers see it as an opportunity to remind the naysayers of the progress and growing significance of blogs. Or maybe it’s just a source of easy content. Either way, I follow the trend.

Last year, I used the anniversary as an opportunity to consider the question “Why do I blog?” My one year anniversary post was a brief answer to this question, which, by the way, is the one I receive the most. The answer to that difficult question is the same today as it was a year ago — passion. Read that post and you’ll understand.

But, over the course of this second year, something has changed. Pursuing my passions through the blog has produced opportunity, connections, and even friendships. I’ve met some tremendous people through the blog and new relationships seem to start every day. So the blog gives me a vehicle to pursue my passion, and produces tangible and meaningful results.

Maybe this year I’ll start answering the “Why?” question with a question of my own – “Why would I stop?”

Earlier this month, the PTO released a proposed rule presenting major changes to continuation and continued examination practice. In Changes to Practice for Continuing Applications, Requests for Continued Examination Practice, and Applications Containing Patentably Indistinct Claims (Fed. Reg. 71: 48-61 (January 3, 2006)), the Office proposes to require justification for filing of second and subsequent continuations (and Requests for Continued Examination – RCE’s). In essence, the proposed rule limits the ability of an applicant to file third and subsequent applications in a chain.

If the proposed rule is adopted in current form, an applicant must submit a petition, and a fee, that includes a showing to the satisfaction of the Director that the amendment, argument, or evidence to be pursued in the continuation or RCE could not have been submitted prior to the close of prosecution in the application. The proposed rule does not give criteria or examples of showings that would satisfy the burden. It does, however, specifically indicate that a refusal to enter an amendment submitted after prosecution is closed will not qualify.

For RCE’s, new section 1.114(f) is the crux of the proposed rule change:

“An applicant may not file more than a single request for continued examination under this section in any application, and may not file any request for continued examination under this section in any continuing application…unless the request for continued examination also includes a petition accompanied by the fee set forth in 1.17(f) and a showing to the satisfaction of the Director that the amendment, argument, or evidence could not have been submitted prior to the close of prosecution in the application.”

The same burden is placed on applicants for continuation applications by changes made to section 1.78.

It’s difficult to fully assess the effect the proposed rule will have on continuation and RCE practice without knowing the extent of the burden that must be satisfied for third and subsequent filings in a chain. The preamble indicates that one of the purposes behind the proposed rule is to “allow the Office to focus its patent examining resources on new applications instead of multiple continued examination filings that contain amendments or evidence that could have been submitted earlier.” Based on that, it seems safe to assume that the required “showing” will carry a relatively high burden.

It is, however, relatively easy to see some of the effects the proposed rule might produce in other areas. First, if the rule is adopted, it’s probably safe to assume that appeals would increase. The PTO anticipated this effect and addressed it in the preamble with a discussion of recent changes made to bolster the appeal process (“..the appeal process offers a more effective resolution than seeking further examination before the examiner.”). Second, at least initially, a flood of petitions would likely be filed until the extent of the burden is truly known.

Finally, given that the proposed rule would be applicable for all continuation applications and RCE’s filed on or after the effective date of the final rule, an enourmous bolus of continuation applications would likely be filed in the months, weeks, and days before the effective date of the rule. This surge in application filings would likely rival or even exceed the surge of June 7, 1995 when applicants raced to the Office to avoid the new patent term measured from the filing date instead of the issue date. Undoubtedly, the surge would significantly increase the backlog of applications currently present in the Office.

Comments on the proposed rule must be received by May 3, 2006. You can view and/or download a .pdf of the proposed rule here.

A “year in review” and “biggest story of the year” article of mine has been published on American Lawyer Media’s Law.com. You can read Patent Law and Policy in 2005: Plenty of Drama, but How Much Change? here (registration required).

So what is my biggest story of the year? For now, you’ll have to read the article to find out. But, I’ll drop a couple of hints. First, it has nothing to do with patent reform. Second, it is only partially connected to the United States.

If you have any comments on the article, feel free to send me an e-mail.

On January 3rd, the PTO proposed two rules that, independently and certainly together, would dramatically alter the patent prosecution process in the United States. In Changes to Practice for the Examination of Claims in Patent Applications (Fed. Reg. 71: 61-69 (January 3, 2006)), the Office proposes to limit its initial examination of claims in a patent application to those claims deemed as “representative” by the applicant. An applicant can submit an “Examination Support Document” if an initial examination of more than ten (10) claims is desired, but the requirements for this applicant-supplied document are so onerous – and indeed dangerous – that the proposed rule effectively creates a ten claim limit for all initial examinations.

Under the proposed rule, an applicant would be required to identify those claims in the application that it deems as “representative” of the invention. The “representative” claims will be all of the independent claims and only the dependent claims that are expressly designated by the Applicant for initial examination. An applicant is free to designate as many claims as he/she wants as “representative,” but if more than ten claims are designated as such, “…the Office will require the applicant to share the burden of examining the application by submitting an examination support document covering all of the representative claims.”

As proposed, the Examination Support Document is an onerous and dangerous document to prepare. Requirements include:

- a statement that a preexamination search of US patent documents, foreign patent documents, and non-patent literature was conducted by the applicant
- an Information Disclosure Statement;
- an identification of all the limitations of the independent claims and designated dependent claims that are disclosed by the references cited;
- a detailed explanation of how each of the independent claims and designated dependent claims are patentable over the references cited;
- a concise statement of the utility of the invention as defined in each of the independent claims;
- a showing of where each limitation of the independent claims and the designated dependent claims finds support in the specification, including a showing of such support in each priority application in which support exists.

These requirements include several clear dangers. The effect of some are relatively easy to identify (or at least wonder about with a level of certainty) – prior art admissions on a claim limitation level, the statement of patentability vis-a-vis the prior art, and the requirement for a showing of priority support (or lack thereof) certainly stand out. Perhaps most troubling, though, is an uncertain danger — is there any lasting legal effect of designating (or not designating) a claim as representative? Do non-designated claims somehow become second-class in patent litigation? The answer would not be clear, of course, until the issue is thoroughly tested in the courts.

Considering the burden of preparing the Examination Support Document and the dangers involved with doing so, it’s likely that appliants would bend over backwards to avoid tripping this trap. As a result, the proposed rule effectively places a ten claim limit on initial examinations of all patent applications. You have to wonder if this is the goal sought by the Office.

You can view and/or download a .pdf of the proposed rule here.

Last month, Senator Ensign and 15 co-sponsors introduced the National Innovation Act of 2005 (S. 2109) in the Senate. The bill touches on patent reform but is not the Senate’s patent reform bill that many observers are anticipating. Rather, the bill presents a comprehensive set of initiatives in education, tax, defense and other policy areas aimed at promoting innovation in the United States.

It is, however, an interesting patent reform resource. As introduced, the National Innovation Act of 2005 includes a “Sense of Congress” section on patent reform. This section specifically lists PTO funding reform and establishement of a post grant review system as things the “federal government should do.” To date, twenty-two Senators have signed onto this “Sense of Congress” section.

Make no mistake about it – this bill is not a serious vehicle for patent reform legislation in the Senate. In essence, the “Sense of Congress” section is nothing more than a resolution-style expression of a prevailing belief that reform of the patent system is an important issue. Notably, based on the broad nature of the bill, it has been referred to the Committee on Finance, not Senator Hatch’s Subcommittee on Intellectual Property. Also, Senator Hatch is not currently a co-sponsor of the bill (the bill currently has 22 co-sponsors).

At least now we know that reform of PTO funding and establishment of a post grant review system has the support of 22 Senators. No word yet on whether they support the “second window” or any of the other controversial details underlying these and other patent reform issues.

I have updated the PTP Patent Reform Library to include links to .pdf copies of the bill as introduced as well as the comments made on the floor upon introduction.