Judiciary HomepageAIPLA strongly endorses the enactment of the Patent Application Publication Act of 1995 (H.R. 1733) and the Patent Reexamination Reform Act of 1995 (H.R. 1732), but has hesitations regarding H.R. 632 which mandates recovery of reasonable costs and fees in successful suits against the United States for patent infringement.
AIPLA has long favored 18-month publication of patent applications as a cost effective means of giving U.S. inventors prompt access -- in English -- to a technological database equivalent to that which inventors in our major trading partners enjoy. It will allow PTO to more effectively find relevant prior art, allow U.S. inventors to avoid duplicative research, and optimize investment decisions by U.S. industry in pursuing technological development. Together with a patent term of 20 years, early publication responds fully to the problems caused by patents which issue after long pendency to the surprise of industries built on what was thought to be public domain technology. Through the combination of provisional rights, extensions for unusual delays caused by the PTO, and full patent rights after grant, H.R. 1733 provides a comprehensive answer to concerns voiced about loss of patent term. AIPLA endorses applicants receiving a first examination prior to publication upon request, but believes that all applicants should have this opportunity. AIPLA supports a provision precluding any claim for priority that if accepted would result in publishing applications later than 18 months from their earliest effective filing date. Finally, AIPLA believes that provisional rights should only be available on the basis of actual notice that reasonably identifies the acts that give rise to such rights.
AIPLA believes that existing reexamination procedures have not performed as effectively as envisioned and that H.R. 1732 strikes a better balance between third party participation and the avoidance of harassment of patentees. H.R. 1732 achieves the following desirable reforms:
ù a party failing to sustain its burden of proving a patent invalid in litigation is barred from requesting reexamination
ù an order for reexamination and the first action on the merits will generally be consolidated
ù a third party request or electing to appeal to the Court of Appeals for the Federal Circuit waives the right to assert invalidity of the patent in any forum on grounds which were or could have been raised in the reexamination proceeding
ù the outcome in a reexamination proceeding cannot be challenged by filing a civil action in a District Court
While AIPLA would prefer that a third party's participation be limited to a comment after the first Office action and at the conclusion of the reexamination proceeding, we find the provision allowing the third party to make a comment after each response by the patent owner to be acceptable since we understand the PTO will make every effort to conclude the proceedings as promptly as initial examination proceedings.
While AIPLA is still reviewing H.R. 632, we are concerned about its limitation to certain individuals, non-profit organizations and entities with less than 500 employees having a net worth of up to $7 million. Litigation costs in the millions of dollars can as effectively deny access to federal courts by a large corporation as costs of a few thousand dollars can to an individual inventor.
Mr. Chairman:
I appreciate the opportunity to appear before the Subcommittee today on behalf of the American Intellectual Property Law Association (AIPLA) to present the position of the AIPLA on H.R. 1733 the Patent Application Publication Act of 1995; H.R. 1732, the Patent Reexamination Reform Act of 1995; and H.R. 632, a bill to amend Section 1498 (a) of title 28, United States Code, to mandate recovery of patent owner's reasonable costs and fees in successful suits against the United States for patent infringement.
The American Intellectual Property Law Association is a 9,400 member national bar association whose membership primarily consists of lawyers in private and corporate practice, in government service, and in the academic community. AIPLA represents a wide and diverse spectrum of individuals, companies and institutions involved directly or indirectly in the practice of patent, trademark, copyright, unfair competition law, as well as other fields of law affecting intellectual property.
The AIPLA strongly endorses the enactment of H.R. 1733 and H.R. 1732. We commend you, Mr. Chairman, for introducing these bills and for your continued efforts to improve the operation of the intellectual property laws of the United States. In this regard, we particularly commend you on your untiring efforts to improve and streamline the operation of the United States patent system as demonstrated by your development and introduction of H.R. 1659 to transform the Patent and Trademark Office into a government corporation. We pledge to work diligently with you and your staff to pursue this transformation and look forward to hearings on H.R. 1659 at an early date.
Patent Application Publication Act of 1995
H.R. 1733 would provide for the publication of each
pending application promptly after the expiration of 18
months from its earliest effective filing date, with the
exception of applications subject to secrecy orders pursuant
to section 181 of title 35. The Commissioner would be
authorized to determine what information concerning
published patent applications would be made available. To
ensure that applications were promptly published 18 months
from their earliest effective filing date, the Commissioner
would also be authorized to consider the timely failure of
an applicant to claim the benefit of the filing date of an
earlier filed application as a waiver of such benefit.
H.R.1733 would authorize independent inventors to request that their patent application not be published until three months after the Commissioner makes a notification under section 132 of title 35. Applications claiming the benefit of an earlier filing date would not be eligible to benefit from such a request. In addition, an applicant would be required to certify that the invention disclosed in the application was not or would not be the subject of an application filed in a foreign country.
A patentee would enjoy provisional rights in the form of a reasonable royalty from anyone who with actual notice or knowledge of the published patent application made, used, offered for sale, sold, or imported the patented invention into the United States, during the period from publication of the application until grant of a patent. The right to obtain a reasonable royalty based upon the international publication of an international application designating the United States would begin when the Office received a copy of the internationally published application. The right to obtain this royalty would be conditioned on the invention claimed in the patent being identical to the invention claimed in the published patent application.
Finally, a published application would have patent defeating, prior art effect as of its earliest effective U.S. filing date. The same status would be accorded to a published international application that satisfied the requirements of paragraphs 1, 2 and 4 of section 371 (c) of title 35.
The cost of such early publication would be recovered by adjusting the filing, issue and maintenance fees, by charging a separate publication fee, or by some combination of such fees.
H.R. 1733 would also amend section 154(b) of title 35 which authorizes the Commissioner to extend the term of patents in certain circumstances. It would add to the three existing possibilities for an extension to compensate for delays in the patent issuance process a fourth category for unusual administrative delays by the Office in issuing a patent. It would extend the period for all four categories of extension from five to ten years, but would count only once any period of delay that overlapped with one or more other reasons for delay. H.R. 1733 would also consolidate and make applicable to all four categories of delay the requirements currently applicable only to delay attributable to successful appellate review. Thus, no patent would be extended that had issued before the expiration of three years from the earliest filing date to which the application was entitled and the period of any extension would be reduced by a period equal to the time during which the applicant failed to engage in reasonable efforts to conclude the processing for reexamination of the application.
H.R. 1733 would also make a technical correction to section l l9(e) of title 35 to ensure that co-pendency between a provisional and complete application would not be lost in those situations where the final day for filing a complete application falls on a Saturday, Sunday or federal holiday within the District of Columbia. This would be accomplished by extending the pendency of the provisional application to the next succeeding secular or business day.
The AIPLA has long favored 18-month publication of all applications for patents, except for applications that are the subject of secrecy orders. The publication of pending patent applications is a cost effective means of ensuring that United States inventors will have prompt access -- in the English language -- to a comprehensive technological database similar to that which foreign inventors in our major trading partners already receive from their regional and national patent offices. Early publication will allow U.S. inventors to avoid duplicative research and optimize investment decisions in pursuing technological development.
In addition, early publication will assist the Patent and Trademark Office in their examination of patent applications by more effectively placing relevant prior art before examiners. Potential interferences can be identified and provoked by applicants at an early date, avoiding situations where later filed applications issue before earlier filed applications for the same invention. Inventors and companies will be able to receive more complete and accurate patentability assessments in non-infringement opinions since potentially adverse patent rights can be more readily identified and monitored.
A major benefit of 18 month publication is that it, together with a patent term of 20 years from the earliest effective filing date, will eliminate the adverse consequences of an application which languishes in secrecy for years in the Patent and Trademark Office before issuing as a patent -- to the surprise of an industry built on what had been thought to be public domain technology. Not only will U.S. companies know at a relatively early stage what technology may be the subject of a patent, but they also know when the term of the patent covering that technology will end.
Together with the new basis for extension of patent term, the provisional rights provided under H.R. 1733 provide a complete answer to the concerns which have been voiced regarding the potential loss of patent term under the Uruguay Round Agreements Act. Not only will patent applicants now receive up to ten years added term for any cumulative delay caused by a secrecy order, an interference, a successful appeal of an examiner's rejection, or an unusual delay otherwise caused by the Office, but the applicant will also have the right to receive a reasonable royalty for the use of his or her invention beginning 18 months from their earliest effective filing date and even earlier should earlier publication be requested. In the vast majority of cases, patentees will be guaranteed the opportunity of at least 18 1/2 years of rights and, should they file a provisional application and request early publication of their complete application, this period could exceed 19 1/2 years. In reviewing the submission from the Department of Commerce and in discussions with Subcommittee staff, we understand that it is intended that the six year limitation on damages in section 286 of title 35 will not apply to the ability of a patentee to recover royalties under this provision. If this is indeed the case, then in situations where the issuance of a patent was delayed due to an interference, successful appeal, or unusual delay by the Patent and Trademark Office, the combined period of a right to a reasonable royalty plus full patent rights could, in rare cases, be as great as 29 1/2 years. While we trust that every effort will be made by the Office to ensure that all patents will be issued promptly so as to avoid such protracted periods of rights, we believe that this should remove completely any concerns raised by inventors fearful of not receiving an adequate period of patent rights.
The AIPLA also endorses the concept of allowing applicants to receive a first examination by the Patent and Trademark Office prior to publication. This will permit those domestic inventors whose patent applications contain trade secrets to make informed decisions about whether to continue the patenting process before the mandatory publication of their applications occurs. We would suggest, however, that applicants requesting such treatment be guaranteed the right by statute to an accelerated examination by the Office to ensure that publication could occur promptly at 18 months with no exceptions.
We also generally support the eligibility requirements contained in H.R. 1733 for receiving accelerated or guaranteed examination. Applicants whose commercialization has revealed their trade secrets, whose publication of their inventions has destroyed any trade secret opportunity, or whose foreign filing will result in publication of their patent applications in any event should not be able to benefit from this provision. However, we believe that the ability to request such accelerated examination should be accorded all applicants since the desire to protect trade secrets contained in applications that will not mature into a patent will affect all applicants and especially many small business applicants. Finally, we would recommend that the Commissioner, in establishing regulations to implement this procedure, provide that the request for such treatment be made upon or shortly after filing and that any fee established be reduced by 50% for any independent inventor, non-profit organization, and any small business concern as defined under section 3 of the Small Business Act.
As we noted, H.R. 1733 authorizes the Commissioner to establish a date by which priority must be claimed to ensure that all applications can be published at 18 months. AIPLA supports such a prohibition on late claims for the benefit of prior-filed applications. In fact, we would go even further. The provision should preclude any claim for priority that, if accepted, would result in publication of an application for patent later than 18 months from the earliest effective filing date of the application. Such a requirement would both encourage careful consideration of priority claims at the time of the filing of a patent application and would ensure that the public has the benefit of reliable and timely notice of potential patent rights. Again, from our perspective, one of the chief benefits of a system of publication of pending applications is the certainty that it brings to the patenting process. Inventors and the public at large should be able to make early, complete and accurate assessments of patentability and patent rights.
We do have a few technical suggestions to offer with respect to H.R. 1733. The first of these concerns the question of provisional rights for the use of an invention between the time of publication and the time of patent grant. In addition to requiring actual notice to the user of an invention claimed in a published application as a condition for entitlement to provisional rights, H.R. 1733 also allows such rights to arise when it can be shown that the user had knowledge of the published application. We believe that provisional rights should only be available where the person using the published application is given actual notice by the patent applicant in a manner that reasonably identifies the acts that give rise to liability for royalties. We do not believe it would be appropriate to permit provisional rights to be made available simply on the basis that the person using the invention knew of the published application.
Conditioning the availability of provisional rights on the basis of knowledge would lead to unnecessary litigation to determine whether a person actually possessed such knowledge, especially with the widespread availability of patent and other data bases. Moreover, we believe that it is entirely reasonable to place on the patent applicant the burden of giving actual notice to a third party that he or she is using a claimed feature of the published application if the patent applicant wishes to enjoy provisional rights.
In addition, we note that the right to obtain provisional rights in H.R. 1733 is only available if the invention claimed in the patent is "identical" to the invention claimed in the published application. We are concerned that this may too narrowly proscribe the provisional rights and make them unavailable in situations where minor changes exist between the claims in the published application and the subsequent patent. Liability should attach if a claim in the granted patent is "substantially identical" in scope with a claim in the published application. The same standard of claim identity that is required between an original patent grant and a reissued patent or reexamined patent to defeat a claim for intervening rights should be used to establish provisional rights between a published application and a subsequently issued patent.
Finally, we noted that H.R. 1733 would condition the patent defeating, prior art effect of published international applications to those that satisfied the requirements of paragraphs 1, 2, and 4 of section 371(c) of title 35. This would require that patent examiners, inventors, and the public wait for as much as one year after the publication of an international application designating the United States before they could determine with confidence its status as a prior art reference. In contrast, a published application filed under regular national filing provisions would be immediately regarded as prior art effective as of its original U.S. filing date. We do not believe that efficient, cost-effective patent examination could take place if patent examiners are unable to promptly know the status of published international applications. Therefore, we would support treating published international applications designating the United States in exactly the same manner as published national applications.
Our other suggestions regarding early publication of patent applications do not concern the language of H.R. 1733, but rather its implementation by the Patent and Trademark Office. The Patent and Trademark Office published a request for comments on the 18-month publication of patent applications on December 12, 1994 (59 Fed. Reg., No. 237 at page 6396). A hearing was held on February 15, 1995 at which the views of this Association were expressed. We commend the Office for this outreach to the user community. We would add, however, that while we understand that the goal of the Office is to be in a position to publish an O.G.-like publication containing patent application notices and to include a paper copy of the application in the examiner's search file and in the Public Search Room by January 1, 1996, we strongly urge that the Office proceed as rapidly as possible to include each published application in the Automated Patent System, both full text and image. It is important both to the quality of the examination process and to the ability of the user community to benefit from published applications that these steps be taken as soon as possible.
Patent Reexamination Reform Act of 1995
H.R. 1732 would expand both the scope of the
reexamination process and the ability of the public to
participate in that process. In addition to allowing
requests for reexamination to be based upon patents and
printed publications, H.R. 1732 would allow requests for
reexamination to also raise issues of compliance with
section 112 of title 35, except for the best mode
requirement. Where the Commissioner makes a determination to
order reexamination of a patent, H.R. 1732 would allow the
order to be accompanied by the initial Office action on the
merits of the reexamination. Even if a separate
reexamination order is issued, however, the patentee, unlike
existing law, would not be permitted to file a statement on
the order.
Where a reexamination proceeding is initiated upon the request of a third party, documents filed by either the patent owner or third party would be served on the other party. Where the patent owner responds to any Office action on the merits, a third party request or would be given one opportunity to file written comments on each response by the patent owner. Either the patent owner or a third party request or could appeal the final decision of an examiner in a reexamination to the Board of Patent Appeals and Interferences, and each could be a party in an appeal taken by the other to the Board. Similarly, either the patent owner or third party request or could appeal a final decision of the Board of Patent Appeals and Interferences to the Court of Appeals for the Federal Circuit (CAFC) and, again, each could be a party in an appeal taken by the other. In appeals to the CAFC, however, a third party who participates as a party or who files an appeal would be estopped from later asserting, in any forum, the invalidity of any claim determined to be patentable by the CAFC on any ground which the third party request or raised or could have raised during the reexamination proceeding.
Finally, H.R. 1732 would prohibit reexamination proceedings in certain circumstances. First, once an order for reexamination has been issued, neither the patent owner nor a third party request or could file a subsequent request for reexamination until a reexamination certificate was published under section 307 of title 35, unless authorized by the Commissioner. In addition, once a final decision was entered in a civil action under section 1338 of title 28 holding that a third party request or had not sustained its burden of proving the invalidity of any patent claim in suit, the third party request or could not thereafter request reexamination on the basis of issues which were or could have been raised in such civil action.
The reexamination system contained in sections 301-307 of title 35 was developed in the late 1970's and was enacted into law in December of 1980, becoming effective on July 1, 1981. Its purpose was to provide an avenue for patent owners and third parties to bring to the attention of the Patent and Trademark Office pertinent patents and printed materials which an examiner might not have uncovered during the course of patent examination. It was believed that reexamination would provide an efficient, effective, and relatively inexpensive technique for the Office to consider whether an issued patent was valid, whether its claims should be narrowed, or whether it should not have been issued at all. It was perceived that the reexamination process would thus benefit patent owners, the public, and lessen the burdens on the federal court system.
During the debate on the establishment of the patent reexamination system in the United States, attention was focused on achieving the right balance between permitting third parties to come forward with evidence and participate in proceedings and providing patent owners with a means to evaluate the validity of issued patents quickly and inexpensively without undue harassment. With the benefit of nearly 15 years experience with reexamination, the AIPLA has concluded that the procedure is not performing as effectively as was envisioned and that a better balance needs to be struck between third party participation in the reexamination process and the interests of patentees in ensuring that the reexamination process remains reasonably prompt and inexpensive with no undue harassment. AIPLA believes that H.R. 1732 strikes a much better balance between these competing goals than does existing law and endorses its enactment.
When the AIPLA testified on an earlier reexamination proposal, it identified a number of desirable reforms in the existing reexamination law and practice. These included:
1) that a party to a suit under section 1338 of title 28 that had not sustained its burden of proving a patent in the suit invalid be barred from requesting reexamination of the patent once a judgment had been entered in Federal Court.
2) that the order for reexamination and the first action on the merits be consolidated and that the patent owner not be permitted to file a statement in response to the order for reexamination.
3) that a third party request or be permitted to file comments twice in a reexamination proceeding -- once following the first action on the merits and once at the conclusion of the reexamination proceeding.
4) that a third party request or electing to appeal to the Board of Patent Appeals and Interferences and to the Court of Appeals for the Federal Circuit be required to waive his or her right to assert invalidity of the patent in question in any other forum on grounds which were raised or could have been raised in the reexamination proceeding.
5) that neither the patent owner nor third party be given the right to challenge the outcome in a reexamination proceeding by filing a civil action in district court under section 145 of the title 35.
We are pleased that H.R 1733 essentially adopts these recommendations. Although the consolidation of the order for reexamination and the first action on the merits is permissive, rather than mandatory as we had suggested, we note that the opportunity for the patent owner to file a statement with respect to the order for reexamination and the opportunity of a third party request or to file a response to such statement have been eliminated. Since we understand that in the vast majority of cases the reexamination order and the first action on the merits would be consolidated, we find this approach acceptable.
We also note that rather than limiting a third party requestor's participation to a comment after the patent owner's response to the first office action and a comment at the conclusion of the reexamination proceeding, H.R. 1732 would allow a third party request or to file a written comment on any response made by a patent owner to an Office action on the merits. We had thought that limiting a third party request or to two opportunities to comment would be sufficient, particularly in view of memories of the lengthy, complex, and costly procedures experienced with the so-called "no fault reissue" practice utilized by the Office in the late 1970's and early 1980's. However, since we understand that the Office will make every effort to conclude patent reexamination proceedings as promptly as initial examination proceedings, we also find this provision acceptable.
We would particularly like to commend you, Mr.
Chairman, and your staff and officials at the Patent and
Trademark Office who have listened to our concerns and
accommodated them in this most recent draft of H.R. 1732.
Recovery of Patent Owner's Reasonable Costs and Fees
The remedy for unauthorized manufacture or use of a
patented invention by or for the government is a suit in the
Court of Federal Claims under section 1498(a) of title 28
for reasonable and entire compensation. H.R. 632 would amend
section 1498(a) by mandating that reasonable and entire
compensation include the owner's reasonable costs, including
reasonable fees for expert witnesses and attorneys, if the
owner is an independent inventor, non-profit organization or
an entity with less than 500 employees. The amendment would
apply to any action under section 1498 that was pending or
brought on or after January 1, 1995.
The Equal Access to Justice Act (EAJA), 28 U.S.C. 2412, permits an award of costs against the government when the claimant prevails, although such an award is not required. Thus, H.R. 632 would expand the government's liabilities for attorneys' fees beyond the EAJA.
While we recognize that section 2412(d) of the EAJA permits the award of attorney's fees to certain individuals, non-profit organizations and entities with less than 500 employees and having a net worth of $7 million when the government litigation position is not substantially justified, we are concerned about the extension of that concept which H.R. 632 would make. For example, litigation costs running in the tens of millions of dollars could just as effectively deny access to the federal courts by a large corporation as could costs of a few thousand dollars to an individual inventor. Indeed, a more far ranging review of the practices of government agencies in awarding contracts requiring the use of patented and proprietary technology to low bidders, with little or no consideration of the rights involved, might be a more appropriate topic for review in these changed geopolitical times. In any event, the AIPLA has not yet been able to develop a detailed position regarding H.R. 632.
That concludes my prepared testimony, Mr. Chairman. I would be happy to answer any questions which you or other members of the Subcommittee might have and, of course, we pledge to work with you and the Subcommittee, with the Patent and Trademark Office, with other bar associations, and with all users of the patent system to see that these desirable amendments to our domestic patent law are enacted at the earliest possible time. We are eager to see the provisions of H.R. 1732 and H.R. 1733 become law by January 1, 1996. We believe that the earliest possible effective date is in the interests of domestic inventors, large and small, and represents an important statement by the United States that is prepared to make positive changes to its patent system, changes that will make the world's best patent system even better.