Trump’s proposed budget would give PTO $3.6 billion for FY 2018

Several weeks ago, President Donald J. Trump released his proposed FY 2018 budget under the title A New Foundation for American Greatness. A review of the budget and supporting Commerce Department Appendix suggests the United States Patent and Trademark Office (USPTO) has received everything it requested, and will not suffer fee diversion during the next fiscal year if the President’s FY 2018 budget passes Congress.

The President’s Message on FY 2018 Budget

“This Budget’s defining ambition is to unleash the dreams of the American people,” President Trump wrote in the Budget Message of the President accompanying the release of the FY 2018 budget. “This requires laying a new foundation for American Greatness.”

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Invention details need not be public to be prior art under AIA

The United States Court of Appeals for the Federal Circuit recently issued a major decision interpreting provisions of the America Invents Act (AIA), specifically the AIA on-sale bar provisions. In Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., the Federal Circuit panel of Judges Dyk, Mayer and O’Malley determined: “after the AIA, if the existence of the sale is public, the details of the invention need not be publicly disclosed in the terms of sale” for the sale to be invalidating. In so reaching this ruling, the Federal Circuit has largely done away with the belief that the AIA created some kind of “safe harbor” for sales that did not disclose the details of the claimed invention.

After first determining that a sale had occurred, the Federal Circuit turned to the language of the statute and the legislative history of the AIA. “We next address whether the AIA changed the meaning of the on-sale bar under 35 U.S.C. § 102 so that there was no qualifying sale as to the ‘219 patent,” Judge Dyke wrote.

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SCOTUS takes IPR constitutionality challenge in Oil States

To the surprise of many, the United States Supreme Court has granted certiorari in Oil States vs. Greene’s Energy Group, et al. From a substantive standpoint, this dispute is between the parties to an inter partes review (IPR) proceeding conducted by the Patent Trial and Appeal Board (PTAB). By taking this case, the Supreme Court will address the constitutionality of having an Article I tribunal extinguish patent rights under the post grant proceedings created by the America Invents Act (AIA).

The Supreme Court granted certiorari only on the first question presented: “Whether inter partes review – an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents – violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.”

The grant of certiorari in this case is particularly noteworthy given that the United States was asked by the Supreme Court for its views and opined in its brief that the petition should be denied.

The argument that inter partes review is unconstitutional can be traced back all the way to 1898 when the Supreme Court issued its decision in McCormick Harvesting Mach. Co. v. Aultman & Co., 169 U.S. 606 (1898). In that case, the Supreme Court held that once a patent is granted, it “is not subject to be revoked or canceled by the president, or any other officer of the Government” because “[i]t has become the property of the patentee, and as such is entitled to the same legal protection as other property.”

The phrasing of the question taken by the Supreme Court could be quite telling. Over the last several years, 8 of the 9 Supreme Court Justices have signed on to an opinion that has recognized that a patent confers either an exclusive or valuable property right. Thus, it would hardly seem a stretch to suggest that the Court, or at least the required four Justices necessary to take a case, have some reason to suspect that the extinguishing of a exclusive, valuable property through a non-Article III forum without a jury violates the Constitution.

While many will undoubtedly have varied opinions as to the importance of this decision by the Court to take this case, the truth is that any decision by the Supreme Court in Oil States simply cannot make things any worse for patent owners. The PTO already considers patents to be a public right, and post grant challenges, particularly inter partes review and covered business method review, are killing patent claims at exceptionally high rates.

This case will be argued during the October 2017 term, with a decision by the end of June 2018. In the coming months there will be much more analysis as the party briefs and amici are filed. Stay tuned.

For instant industry reaction please see: Industry Reaction to SCOTUS Granting Cert. in Oil States.

Supreme Court reverses 25 years of Federal Circuit patent venue law

On May 22, 2017, the United States Supreme Court issued its much-anticipated decision in TC Heartland LLC v. Kraft Food Group Brands LLC. In a unanimous decision of the Court delivered by Justice Thomas (minus Justice Gorsuch who did not participate in consideration of the case), the Supreme Court reversed the Federal Circuit and ruled that 28 U.S.C. 1400(b) is the only applicable venue statute in patent infringement cases, and that 28 U.S.C. 1391(c) did not modify or amend 1400(b) or the Court’s 1957 ruling in Fourco Glass Co. v. Transmirra Products Corp.

Pursuant to § 1400(b), a “patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” Under § 1391(c), a corporation is deemed to be a resident of “any judicial district in which such defendant is subject to the court’s personal jurisdiction….”

In Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), the Supreme Court held that § 1400(b) is not to be supplemented by § 1391(c) and that “§ 1400(b) is the sole and exclusive provision controlling venue in patent infringement actions….” While that might seem to have ended the inquiry on its face, the Federal Circuit in 1990 decided VE Holding Corp. v. Johnson Gas Appliance Co., 917 F. 2d 1574 (1990), which announced its view that the Judicial Improvements and Access to Justice Act of 1988 made 1391(c) applicable to patent infringement actions.

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Modern patent practice is all about prior art

The patent process can be expensive, so the last thing you want to do is spend a lot of money preparing and filing an application when there is “knock-out” prior art easily found that will prevent a patent, or at least make any patent that is obtained extremely narrow. For this reason, many choose to begin the patent process with a patent search. Proceeding without a search is particularly problematic today given the likelihood that any valuable patent will be challenged in a post grant proceeding at the Patent Trial and Appeal Board. Getting rights you have confidence in has to be the name of the game.

Challenging patents in post grant proceeding also requires a competent, thorough search too, for many obvious reasons and at least one not-so-obvious reason. When a challenger seeks to take out claims to a patent, the current rules are significantly slanted in favor of the challenger and against the patent owner. The challenger does not really need to take out all the claims to a patent in post grant. Instead, you may opt to find the best prior art available and focus on a limited number of truly vulnerable claims (of which there are typically several to choose). Put all your attention on those vulnerable claims, get those claims declared invalid, and then circle back with a reexamination request where the burden will then be shifted to the patent applicant.

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