Summary:Attitudes toward PTO's implementation of America Invents Act
seem to be improving, but concerns about final post-issuance procedure rules
lingered during testimony presented at a House hearing. The likelihood of a
'technical amendment' seemed dimmed.
Next Steps:Final rules will be published this summer and take effect
for most procedures Sept. 16.
By Tony Dutra
Attitudes toward the PTO's implementation of America Invents Act seem to be
improving, but concerns about final post-issuance procedure rules lingered
during testimony presented at a House hearing. The likelihood of a “technical
amendment” seemed dimmed.
Steps: Final rules will be published this summer and take effect for
most procedures Sept. 16.
Testifying at a May 16 House Judiciary Committee hearing, representatives of
the patent community reaffirmed their concerns about patent fees and procedures
for implementing the America Invents Act
However, the witnesses generally lauded the PTO and its director, David J.
Kappos, for transparency in the justifications for various rules and in
fee-setting philosophy, blunting much of the criticism of specific
A significant source of debate for both the legislators and the witnesses was
the AIA's program allowing challenges to “covered business method” patents.
Critics and proponents continued to disagree over which patents qualify as CBMs,
and which are exempted as “technological inventions”--a category that the PTO is
charged with defining.
The possibility of a further technical amendment to the patent reform
legislation preoccupied several members of the panel.
“While the America Invents Act is a noteworthy achievement, it's a complex
statute that the Patent and Trademark Office labors to implement,” Committee
Chairman Rep. Lamar S. Smith (R-Texas), the House's primary sponsor of patent
reform, said in opening
the session. “Today's hearing allows us to receive updates from PTO Director
Kappos and representatives of a broad cross-section of patent owners and users
affected by the law.”
Smith was effusive in praising Kappos during his introduction. “Without
Director Kappos' steady hand, expertise, and support, we would not have enacted
the America Invents Act,” Smith said.
Kappos was the sole witness on the first panel. His testimony addressed the
AIA provisions that the agency has implemented to date, most notably “Track One”
prioritized examination. He also gave details about the feedback to notices of
proposed rule making by the PTO since the bill was enacted, citing “hundreds of
comments” received from the patent community and that are currently being
reviewed by the office.
“We have received excellent input on rules ranging from post-grant opposition
to inter partes review to oath and declaration,” Kappos said in his written
testimony, “enabling us to make many substantive improvements to our proposed
rules provisions across the board, and produce rules that will best meet the
needs of America's innovation community.”
The panel following Kappos represented various patent community interests:
A. Armitage, senior vice president and general counsel at Eli Lilly and Co.,
D. Williams of Baker Botts, New York, speaking on behalf of the Financial
Services Roundtable, the American Bankers Association, the American Insurance
Association, the Independent Community Bankers of America, the National
Association of Federal Credit Unions, and the Credit Union National
B. Horton, chief intellectual property counsel for General Electric,
representing the Coalition for 21st Century Patent Reform, a diverse group of
nearly 50 global corporations with strong research and development
H. Rhodes, president and chief intellectual property counsel for 3M Innovative
Properties Co., St. Paul, Minn., representing the Intellectual Property Owners
A. Brandon, associate general counsel at the University of Michigan in Ann
Arbor, Mich., speaking on behalf of the Association of American Universities;
Molino, director of government relations for the Business Software Alliance,
In general, the panel expressed the concerns of patent owners; only Williams
stressed provisions that favor patent challengers. The potential for reviving
the patent reform debate between pharmaceutical interests on the one
side--represented by Armitage and Horton--and financial services on the
other--represented by Williams--seemed likely, but the witnesses were cordial
throughout the session.
The witnesses praised Kappos and the PTO for the AIA implementation efforts
Williams thanked Kappos and his team “for the commendable job they have done
in the initial rounds of rule-making,” and Armitage applauded “the candor,
transparency and completeness of USPTO communications with the user
While the witnesses voiced concerns about the PTO's proposed rules for
post-grant review and inter partes review, the few committee members who chose
to ask questions ignored those new procedures.
Representatives of the Intellectual Property Owners Association and the
American Intellectual Property Law Association told BNA after the session that
they were disappointed that there was effectively no discussion of the PTO's
planned implementation of the AIA's patent review procedures--a topic that drew
criticism from the IP groups a month earlier.
Instead, Williams focused his testimony on Section 18 of the AIA, which
allows a challenge to a covered business method patents, and the committee
definitely seemed more interested in that provision.
The key issue to Williams was the PTO's ability to reject a CBM challenge
because the patent challenged fits the definition of a “technological
innovation.” Williams wanted the PTO to further clarify that the patent owner
should have the burden of sowing that the exception applies and that the
challenger need not be threatened with litigation before having the ability to
file a petition.
However, Rep. John Conyers Jr. (D-Mich.), ranking minority member on the
committee, called the provision--which was introduced late in the patent reform
debate by Sen. Charles E. Schumer (D-N.Y.)--“special interest legislation.”
Conyers questioned the constitutionality of the provision.
Rep. Maxine M. Waters (D-Calif.) failed in her attempt to delete the
provision from the bill just before the House vote, and she clearly wanted the
provision to be limited now as well. She questioned the “basic unfairness” of
retroactively invalidating patents.
The May 16 hearing came three months after a similar hearing held by the
Judiciary Committee's Subcommittee on Intellectual Property, Competition and the
The clear impetus of the February meeting was to gauge whether a “technical
amendment” to the AIA is necessary to address another concern--the fact that the
AIA's version of prior user rights differs from similar statutes in other
At the end of the February hearing, though, it appeared that those interested
in changes to the AIA's prior user rights provision would be willing to wait
until the PTO's 2015 report to Congress on the implementation of the AIA. Kappos
agreed at the time that the 2015 report could include an analysis of the
economic impact of prior user rights under the AIA.
However, the potential for a technical amendment this year has apparently not
Rep. F. James Sensenbrenner Jr. (R-Wis.), instead of directing his remarks to
Kappos after the director's testimony, turned to the leadership of the
committee--Smith and Conyers--and said, “Don't play 'I've got a secret' with the
changes you're proposing.”
Apparently assuming a technical amendment was in the works, Sensenbrenner
added, “Keep it technical and only keep it technical.”
Smith seemed perturbed by the challenge from his colleague. “Let me assure
you there is no technical bill and everyone will be made aware of it when there
is,” he said.
However, after the second panel gave their introductory testimony, Smith
asked Armitage whether any “technical fixes” were necessary.
Armitage contended that the bill's drafters actually erred in recording what
the interested parties had agreed to in one part of the post-grant review
The AIA's new Section 325(d) of the Patent Act estops a PGR challenger from
further litigation “with respect to that claim on any ground that the petitioner
raised or reasonably could have raised during that post-grant review.” Armitage
asserted that everyone had agreed that it should have been limited to grounds
In another discussion initiated by Rep. Michael Quigley (D-Ill.), it seemed
clear that some of the committee, including Smith, were surprised that the AIA
does not allow the PTO to give discounts on post-grant challenges to small
entities and the micro-entities.
Williams mentioned adding that change as part of any technical amendment in
response to Smith's questioning.
After the hearing was adjourned, an aide to the committee told BNA that the
chances that the House would act quickly on a technical amendment were slim, but
that the Senate seemed to be moving in that direction.
Testimony at http://judiciary.house.gov/hearings/Hearings%202012/hear_05162012.html
Armitage is a member of this journal's advisory board.