On February 3, the Senate Judiciary Committee approved and reported the Patent Reform Act of 2011, recommending modifications that would impact the first-to-invent system, courts’ damages procedures and third party participation in U.S. Patent and Trademark Office (USPTO) proceedings. PATENT REFORM ACT OF 2011, S. 23, 112th Congress (2011).

First to File

The proposal shifts the U.S. patent system closer to a first-to-file system. The bill eliminates statutory references to “date of invention” from the Act. It defines an “effective filing date” of an application to be its actual filing date or its earliest priority date. Availability of prior art is relative to this effective filing date. An exception is made for disclosures made by an inventor; applicants would still enjoy a one-year grace period for their own disclosures or those that are derived from a prior inventor disclosure. However, swearing behind a reference would no longer be permissible, and interferences proceedings would be eliminated. However, the bill does provide for a new derivation proceeding, which permits an inventor to prove that an invention claimed in another application with an earlier effective filing date was derived from his activities.

Damages/Enhance Damages

The bill proposes new procedures for establishing damages. Courts would be required to choose and implement methodologies and factors to be used for calculating damages. Courts would also have to consider motions attacking the evidentiary sufficiency and basis for damages contentions. The bill also would require bifurcation of infringement and invalidity from damages and willfulness upon request (both proceedings would still be before the same jury). Bifurcation would not be permitted to affect other matters, including the timing of discovery.

Third-Party Challenges

The reform proposal would create three avenues for third parties’ attacking patentability at the PTO: preissuance submissions, post-grant review and inter partes review. Before issuance, a third party would be allowed to submit references together with a statement of relevance. Up to nine months after issuance, a third party would be permitted to request review of any issued claim on any ground. After nine months, however, a third party would be limited to inter partes review of anticipation and obviousness based on prior art patents and printed publications only. The post-issuance avenues of review are available only if requested within six months after the requestor is served a complaint asserting the patent.

False Marking

The bill could limit false marking claims to cases filed by the government or a competitor that can prove injury.

Practice Note: Patent reform legislation has been proposed several times in the last decade to no avail. Although it is too early to tell whether this bill will be any different, it must still be monitored, and Congress should be lobbied to the extent that client’s interests are at stake. The bill has been proposed for an up/down vote on the Senate floor in March.