The conversion from the longstanding first-to-invent system to a first-inventor-to-file system for granting patent rights may be the most significant change in legal practice to be imposed by the Leahy-Smith America Invents Act (AIA). But the AIA's full effect on patent litigation will not completely manifest itself for many months—if not years—after the AIA is fully implemented on March 16, 2013.
However, since enactment of the AIA began on September 16, 2011, several provisions are already affecting litigation and several that become effective on the next implementation date, September 16, 2012, will also have consequences. Below, we detail the AIA provisions most likely to affect litigation, and offer strategies to address these potential situations.
Provisions Already in Effect
35 USC § 299: Restrictions on Joinder
To the relief of many potential defendants, the AIA includes a key provision restricting joinder in a single patent infringement lawsuit.
Under 35 USC § 299, with certain exceptions, a patent owner cannot combine accused infringers into a single suit as defendants or counterclaim defendants, or have their suits consolidated for trial solely on the basis of allegations that each defendant has infringed the same patent or patents. Parties may be joined as defendants in an infringement suit only if they are jointly or separately liable with respect to specific acts, events or questions common to all defendants.
Impact on litigation: This provision makes it more difficult for non-practicing entities (NPEs) to enforce patent rights against multiple alleged infringers in a single lawsuit. Previously, paying only a single filing fee, an NPE could compel a large group of defendants to pay significant settlements rather than undertake the costly and difficult coordination of a complex multi-party legal defense. Such cases were problematic, perceived by some policymakers as providing financial benefits to NPEs without advancing innovation or otherwise providing economic or social value.
However, NPEs or other plaintiffs will still have the option of requesting a Section 337 investigation at the U.S. International Trade Commission (ITC), which has no restriction on naming multiple defendants.
Litigation strategies: Counsel will be able to pursue several strategies if their company is named in a large group of unrelated defendants:
- File a motion for misjoinder, if no act, event or question of fact is common to all defendants.
- Request a stay of proceedings in light of co-pending litigation against another defendant.
- File a request for multi-district litigation under 28 U.S.C. § 1407, to transfer related cases to a common jurisdiction for consolidation or coordination of pre-trial proceedings, including claim construction.
- Agree to consolidation for pretrial proceedings only.
- Sign joint defense agreements with other defendants to share legal strategies and defense information.
35 USC § 292: False Patent Marking
In 2009, in Forest Group Inc. v. Bon Tool Co., 590 F3d 1295 (Fed. Cir. 2009), the U.S. Court of Appeals for the Federal Circuit held that any person could file a false marking suit and force defendants to pay up to $500 per instance of false marking, with damages to be evenly split between the plaintiff and the U.S. government. In the wake of this decision, hundreds of plaintiffs emerged with false marking claims.
The AIA eliminates recovery of damages for a product marked with an expired patent unless the plaintiff can prove a competitive injury. As a result, within days of the AIA’s enactment, many pending false marking cases were dismissed.
Impact on litigation: With Section 292 of the AIA, false marking will again become an infrequent claim, as a plaintiff must now prove that a product marked with an expired patent has caused competitive injury.
Litigation strategies: In the event that a company is sued for false marking, counsel may be able to move to dismiss on the basis of lack of competitive injury. For companies seeking to file a false marking claim, they will need to show proof of competitive injury.
35 U.S.C. § 282(3): Best Mode Defense
The AIA eliminates the longstanding option for alleged patent infringers to argue that a patent owner failed to disclose the “best mode” of practice when prosecuting their patent. As a result, a plaintiff can move to dismiss any best mode affirmative defenses. Companies accused of infringement may attempt to transform the best mode defense into a separate 35 U.S.C. § 112 defense of invalidity on the basis of indefiniteness, lack of enablement or inadequate written description in the patent in dispute.
Provisions Implemented on September 16, 2012
35 U.S.C. §§ 311-19: Inter Partes Review, Not Inter Partes Reexamination
Under the AIA, post-grant proceedings are available to any petitioner for up to nine months after grant of a patent. With the exception of business method patents and some software patents, after the nine-month period has elapsed, a petitioner seeking to invalidate a patent through a USPTO proceeding must petition for inter partes review. Such petitions are permitted nine months after the grant date of a patent or reissued patent, or after the date of termination of a post-grant review.
To pursue an inter partes review, however, the petitioner must show a “reasonable likelihood” that at least one of the claims in the patent in dispute is unpatentable. Filing fees begin at $27,200 and grow significantly if the review includes more than 20 claims. The inter partes review cannot be anonymous, and it must challenge specific claims.
Additionally, estoppel applies to the party that requests an inter partes review. Any issue raised or that reasonably could have been raised during post-grant review cannot be subsequently raised by the requester at the USPTO, in court or in an investigation at the ITC. Furthermore, the requester cannot afterwards request an ex parte reexamination.
Impact on litigation: To avoid the estoppel rules and high fees for inter partes reviews, some companies may prefer to pursue ex parte reexaminations, which are still an option under the AIA. We may therefore see a surge of requests for inter partes reexaminations before the September deadline.
Litigation strategies: Defendants in a current patent infringement case should consider filing for an inter partes reexamination before September 16, 2012, as this proceeding may be more favorable for some defendants than the inter partes review. After September 16, defendants should consider filing for an ex parte reexamination as an alternative to an inter partes review.
35 U.S.C. Chapter 32, §§ 321-29:
Transitional Post-Grant Review Period for Business Method Patents
Business method patents have long been subject to legal debates, most notably in the financial sector and in Bilski v. Kappos. The AIA is expected to have a dramatic impact on cases because of the special provisions aimed at financial business method patent disputes.
The AIA gives a defendant accused of business method patent infringement the option of requesting a post-grant review of prior art as much as a year after the infringement suit is filed. Unlike other post-grant review petitioners, a petitioner under this transitional program is not required to show a degree of certainty that their position will prevail. Also important, prior art can include not only patents and printed publications, but also non-published knowledge or use prior to the invention. Furthermore, this transitional post-grant review imposes less estoppel than for other types of patents; during trial or an ITC investigation, petitioners are only barred from raising issues that were previously raised during the post-grant review; they are free to introduce issues that could have been raised—but were not—during post-grant review. Petitioners can file an interlocutory appeal if the district court denies a request to stay the litigation.
This option will only be available for business method patents until September 16, 2020, eight years after this section of the AIA becomes effective on September 16, 2012. Once this eight-year window closes, it will not be reopened except by an act of Congress.
Impact on litigation: Defendants in business method patent suits are likely to file for a post-grant review with a motion to stay the litigation.
Litigation strategies: If a company is a defendant in a business method patent suit, counsel should give serious consideration to using this provision to speed up resolution of any validity issues. Defendants should also consider petitioning for other reexamination proceedings as well before the enactment date of September 16, 2012.
35 U.S.C. § 257 Supplemental Examination
At any time, a patent owner may file a request for supplemental examination with the USPTO to reexamine the patent to determine whether any “substantial new question of patentability” exists. Within three months of receiving such a request, the USPTO must respond, and reexamination procedures will follow thereafter.
Supplemental examination enables a patent owner to “cure” published patents by reexamining the issued patent in light of additional and potentially invalidating information.
Impact on litigation: With a fee in excess of $20,000, supplemental examination will likely be used only for important patents. For example, a plaintiff might file for supplemental examination during litigation if the defendant has presented evidence in support of an inequitable conduct defense, and will have the opportunity to supplement or amend their published patent.
Litigation strategies: A patentee plaintiff may respond to an inequitable conduct defense by filing a supplemental examination to "cure" its patent. The defendant should consider filing a reexamination or inter partes review to publicize its side of the story before the USPTO issues a ruling.
35 U.S.C. § 102: Provisions to be Implemented on March 16, 2013
The AIA’s conversion to a first-inventor-to-file system, is manifested in Section 102 provisions concerning prior art. In general, for applications filed on or after March 16, 2013, the patent filing date and the invention date are one and the same. Any information published or otherwise disclosed anywhere in the world before the filing date is considered to be prior art.
Impact on litigation: Section 102’s impact on litigation will remain unclear until it is fully effective.