H.R. 1249 Manager's Amendment Attempts Sync With Senate But First Inventor Issues Remain

Access practice tools, as well as industry leading news, customizable alerts, dockets, and primary content, including a comprehensive collection of case law, dockets, and regulations. Leverage...

The primary sponsor of the U.S. House of Representatives' bill on patent reform, H.R. 1249, published April 12 proposed changes that will bring the bill closer to its counterpart in the Senate, S. 23.

Judiciary Committee Chairman Lamar S. Smith (R-Texas) floated a draft of a manager's amendment, scheduled to be discussed in an April 14 markup session, that expands an inventor's options during the one-year grace period before patent application filing, curtails options to use the prior user rights defense, and adopts the heightened threshold for inter partes review in S. 23.

FITF and the Grace Period.

Both bills propose a change from the current first-to-invent to a first-inventor-to-file system. Rather than a strict requirement to file the application before any disclosure, however, the bills provide for a one-year grace period, allowing the inventor to publish details of the invention before filing.

However, noted patent expert Harold C. Wegner of Foley & Lardner, Washington, D.C., spearheaded a discussion of the grace period provision as written, which would have barred patentability if the inventor engaged in commercial use.

Smith apparently agreed with Wegner, as the manager's amendment would allow any “disclosure to the public” to qualify as acceptable inventor activity during the grace period.

FITF and Prior User Rights.

The House bill--and not the Senate bill--would allow prior user rights to an earlier inventor who failed to be the first inventor to file. H.R. 1249 as originally written amended 35 U.S.C. §273, by removing its current limitation to infringement of business method patents.

Section 273(b) allows an infringement defense for prior users, “if such person had, acting in good faith, actually reduced the subject matter to practice at least 1 year before the effective filing date of such patent, and commercially used the subject matter before the effective filing date of such patent.”

The manager's amendment changes that language to require that both the reduction to practice and the commercial use be at least one year before the effective filing date.

More significantly, the amendment further bars use of the defense if “the claimed invention … was disclosed to the public” before the effective filing date minus one year.

Inter Partes Review.

Both bills describe a modified inter partes review--no longer called “reexamination”--but the House bill intended to make the procedure easier to use.

The manager's amendment would synchronize the two bills by raising the threshold for the PTO to accept a petition for inter partes review from “a substantial new question of patentability exists” to “a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.”

H.R. 1249 would also add a new Section 320, expanding the likelihood of a stay of court proceeding--as well as proceedings before the International Trade Commission--for any patent in post-grant or inter partes review. The manager's amendment deletes that provision. The same stay provision would have applied to the new “first window” post-grant review procedure. That was also deleted in the manager's amendment.

However, the two bills would be farther apart as to the question of how long an alleged infringer would have to initiate inter partes review after litigation begins. S. 23 allows six months. H.R. 1249 allows nine months. The manager's amendment increased it to one year.

Fee-Setting, False Marking, Other Changes.

The manager's amendment also makes the following changes:

• It would limit the fee-setting authority granted to the PTO in both bills to a four-year period from the date of enactment.

• The amendment increases the time span of the “transitional program” limiting the effectiveness of business method patents from four years to ten years. However, the amendment deletes one provision on the subject, added in H.R. 1249 from what is proposed in S. 23, requiring a litigation venue choice favoring the alleged infringer.

• Limitations on the ability to file false patent marking complaints would be further expanded to include the provisions similar to those put forth in H.R. 1056, sponsored by Rep. Darrell Issa (R-Calif.), allowing delayed removal or alternate marking of expired patents (81 PTCJ 633, 3/18/11).

• The amendment would authorize a study by the Comptroller General of the United States of the “consequences of litigation by non-practicing entities,” more derogatorily labeled “patent trolls” by some in the patent community.

• Another study, on the effectiveness of “virtual marking” of patented products and services on a website, would be conducted by the PTO over three years after enactment.

• The amendment adds considerable detail on limitations to joinder of parties in litigation and stays of litigation, in a new Section 298 of the Patent Act.

By Tony Dutra

Manager's amendment at http://pub.bna.com/ptcj/HR1249MgrAmendApr12.pdf

H.R. 1249 at http://pub.bna.com/ptcj/HRonPRMay30.pdf

S. 23 at http://pub.bna.com/ptcj/S23aspassedMar8.pdf

Request Intellectual Property on Bloomberg Law