Thought leadership from our experts

US Patent law, practice and procedure in transition

Kevin J Culligan, Maynard Cooper & Gale, US , Goodwin, US

Sea changes and the rapid pace of change in US patent law and the procedures for resolving disputes about the validity and infringement of patents make this an interesting time to practice patent law in the United States.

Until recently, alleged infringers' defenses and challenges to the validity of the patents asserted against them almost always were decided by judges and juries in the US federal trial courts. Although the US Patent and Trademark Office ("USPTO") offered parties a procedure that allowed any entity, including alleged infringers, to seek reexamination of patents owned by others on the basis of prior art in the form of patents and printed publications, relatively few accused infringers took advantage of that process. The enactment of the America Invents Act ("AIA") in 2011, however, marked a fundamental change in the way that patent validity can be tested in the US by establishing new proceedings in the USPTO to review the patentability of inventions described and claimed in issued patents: inter partes review ("IPR"); post-grant review ("PGR"); and the transitional program for review of covered business method patents ("CBM"). The impetus for those new proceedings lay in the decade-old dissatisfaction with the USPTO's issuance of thousands, perhaps tens of thousands, of weak patents purporting to cover business methods and software-implemented computer systems. Those new proceedings also reflect and accommodate the desire of many members of Congress, federal judges, patent bar associations and lobbying organizations representing the interests of electronic, pharmaceutical and financial services industries to move the US to a bifurcated system for resolving patent disputes modeled on the practice in Europe, in which challenges to the validity of patents are decided in administrative proceedings, leaving infringement to be determined in trial courts.

Resolving challenges to the validity of patents in the USPTO is favored by many policy makers because they believe it substantially reduces costs associated with enforcing patents. Many US policy makers believe that opposition proceedings conducted in the European Patent Office ("EPO"), which does not permit discovery and in which validity is determined on the basis of written submissions and attorney argument, are usually correctly decided, and that costly US-style discovery is not necessary to fairly and correctly resolve validity challenges. The new patent review proceedings allow only very limited discovery and permit appeal only to the US Court of Appeals for the Federal Circuit, an appellate court in which discovery is not permitted and new evidence may not be presented. The federal trial courts play no role in the new review proceedings and the party that petitions for review ("petitioner") is not permitted to re-litigate in federal trial court the same issues that it raised in the USPTO review. The new USPTO proceedings are designed to allow the prompt resolution of challenges to patent validity without the high costs associated with the broad discovery permitted in US trial courts.

The new PGR and CBM patent review proceedings ordinarily allow an alleged infringer to assert any ground of invalidity, i.e., they are not limited as the previous reexamination proceedings were to assertions of invalidity based on prior art. Petitioners also may assert, for example, that the patent claims are invalid because they fail to claim patentable subject matter, or because they are not enabled or properly described in the written patent specification.

The AIA also changed US patent law so that patents are awarded to the "first-to-file" a patent application rather than the person who was "first-to-invent". Accordingly, a patent applicant will no longer be able to rely on his date of conception and reduction to practice of the invention to gain priority over the filing date of a competing application or the publication date of a prior art reference. Proponents of that change point to the relatively few proceedings, called "interferences", that were initiated each year between competing applications in the USPTO as evidence that the change to first-to-file will adversely affect very few inventors. The change to a first-to-file system, however, is important because it furthers the goal of US policymakers to promote uniformity in international patent law and procedures for resolving disputes about the validity and infringement of patents. The US promotes uniformity because it complements the ultimate goal of US policy -- the strong enforcement of IP rights worldwide. Awarding patents to the "first-to-invent" put the US out of step with the rest of the world and weakened the hand of US negotiators seeking greater uniformity of international patent laws and procedures. The adoption of "first-to-file" eliminated that inconsistency and the need for costly discovery relating to conception and reduction to practice.

Many US Federal Circuit and European judges have participated in programs sponsored by the Federal Circuit Bar Association designed in part to educate US parties and practitioners about the efficacy, efficiency and low cost of patent enforcement in Europe. It is not a coincidence that many recent decisions of the Federal Circuit expressly question the merits of US-style discovery in patent cases. The Court of Appeals for the Federal Circuit, for example, justified its landmark 2011 decision that made it virtually impossible to assert that a patent is unenforceable due to inequitable conduct on the part of the patent owner by explaining that the previously-existing "low standards for intent and materiality have inadvertently led to many unintended consequences, among them, increased adjudication cost and complexity."

The US Supreme Court, which has shown an increased interest in patent cases over the past several years, often reverses the Federal Circuit's most far-reaching rulings, generally rejecting the Federal Circuit's attempts to establish bright-line rules and instead giving the trial courts greater discretion to manage and decide individual patent cases. Although the Supreme Court has not yet ruled on issues that relate to most of the recent changes in US patent law and procedure, its decisions over the next few years are likely to affect the rate of transition and clarify the degree to which US patent law and procedure have moved permanently in the direction of Europe.