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
• Summary: 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.
• Next 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 proposals.
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:
• Robert A. Armitage, senior vice president and general counsel at Eli Lilly and Co., Indianapolis;
• Eliot 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 Association;
• Carl 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 organizations;
• Kevin H. Rhodes, president and chief intellectual property counsel for 3M Innovative Properties Co., St. Paul, Minn., representing the Intellectual Property Owners Association;
• Richard A. Brandon, associate general counsel at the University of Michigan in Ann Arbor, Mich., speaking on behalf of the Association of American Universities; and
• Timothy Molino, director of government relations for the Business Software Alliance, Washington, D.C.
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 to date.
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 community.”
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 Internet.
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 countries.
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 died.
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 proceeding.
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 raised.
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.
By Tony Dutra
Armitage is a member of this journal's advisory board.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)