Patent reform is plowing ahead and medtech companies are learning more details about the dramatic changes coming to the patent process. The America Invents Act (AIA) became the first major legislative overhaul of the U.S. patent system in 60 years when President Obama signed the AIA into law on Sept. 16 last year. In late January and early February, the U.S. Patent and Trademark Office (USPTO) issued 10 notices of proposed rulemaking with details on how the USPTO plans to implement the sweeping changes mandated by the AIA. The USPTO currently is accepting public comments from interested stakeholders regarding the 10 notices of proposed rulemaking. After considering the comments received from the public, the USPTO plans to issue final rules at the end of July.
Five Takeaways forMedtech Companies
While the AIA introduces numerous changes to the current patent system, five significant provisions will impact medtech patent strategy: switching to a “first-inventor-to-file” system; introducing post-grant patent review; permitting supplemental examination; allowing third-party prior art submissions; and offering prioritized examination. Medtech companies should continue to monitor the USPTO rulemakings regarding implementation of the AIA to build a strategic patent portfolio amid patent reform.
1. Change to first-inventor-to-file. In a major departure from the current patent system, the AIA replaced the “first-to-invent” system with a first-inventor-to-file system, a change that will affect medtech companies’ invention disclosure and patent application filing practices. The first-inventor-to-file change is effective 18 months after the AIA’s enactment (i.e., March 16, 2013). Under the new standard, a patent will be granted to inventors who first filed a patent application with the USPTO, whereas the current system grants patents to the first inventor, regardless of which inventor filed a patent application first. The United States was the last country to have a first-to-invent system. The switch to the first-inventor-to-file is, thus, intended to harmonize the U.S. patent system with the patent systems of other countries, which in turn will simplify the patent process and reduce confusion over foreign filing practices.
In conjunction with the transition to the first-inventor-to-file standard, the AIA also broadened the scope of prior art to include publicly available information as of the effective filing date of the claimed invention, without regard to the actual date of the invention. Due to this change, applicants no longer will be able to disqualify prior art available at the time of filing of the application by demonstrating that the actual date of invention precedes the application filing date, and therefore is earlier than the date of the prior art.
The first-inventor-to-file system will have profound ramifications for medtech companies’ patent filing strategies. The new system encourages inventors and medtech companies to file patent applications quickly with the USPTO—almost at the proof-of-concept or invention-formation stage. To keep up with this race to the patent office, inventors and companies will need to streamline and accelerate their invention disclosure collection and review processes.
To adapt to the first-inventor-to-file system, medtech companies should also file follow-on provisional patent applications to secure priority claims as the products and technology develop. Additionally, provisional patent applications and Patent Cooperation Treaty (PCT) international applications can be utilized to help delay costs while still maintaining protection in numerous countries.
Most importantly, every company should file applications that cover not only the company’s core technology, but also potential future innovations and alternative embodiments to prevent opportunities for competitors to design around their patents. Although patent applications should be filed quickly, they should also maintain breadth and detail; elaborating on unexpected results of the invention will help provide support to overcome obviousness rejections during prosecution in the USPTO.
Under the new first-inventor-to-file system, the mantra will be “file early, file often.”
2. Introduction of post-grant review. A second core change under the AIA is the introduction of a nine-month post-grant review period after a patent issues. This post-grant review provision is effective as of Sept. 16, 2012, one year from enactment of the AIA, but applies only to patents issued from “first-inventor-to-file” applications filed after March 16, 2013.
The new post-grant review process allows companies to challenge patents on any grounds of invalidity during a nine-month window from the issue date of a patent, with an aim of shifting the patent challenging arena from the courts to the USPTO. On Feb. 10, the USPTO published a set of proposed rules to implement the post-grant opposition process. The USPTO suggested a post-grant opposition petition filing fee of $35,800 to review up to 20 patent claims; a fee of $89,500 to review 51 to 60 patent claims, and an additional $35,800 to review incremental groups of ten patent claims.
With attorney fees for preparing a post-grant review petition likely exceeding the USPTO fees, post-grant review will not be a viable option for many small medtech companies. However, large medtech companies with a sufficient patent budget to monitor competitor patents and file and conduct oppositions may use post-grant review as a weapon in the battle for market share with competitors.
Under the AIA, the U.S. will have numerous different procedures for post-grant proceedings of issued patents including: post-grant review, derivation proceedings, inter partes review, ex parte re-examination and supplemental examination. Companies can use one or more of the interrelated post-grant proceedings as strategic tools to challenge the validity of important U.S. patents. While the new post-grant opposition procedures resemble European Patent Office (EPO) opposition practices, there are significant substantive and procedural differences. Thus, post-grant review promises to usher in a new era of patent challenges.
3. Supplemental Examination to correct errors. Another new proceeding introduced by the AIA is Supplemental Examination, which will take effect on Sept. 16, 2012. Supplemental Examination provides an opportunity for the patent owner to request the USPTO to consider, reconsider, or correct information believed to be relevant to the issued patent that the USPTO did not consider before granting the patent. The aim of the new Supplemental Examination provision is to permit the patent owner to address potential challenges to the enforceability of the patent, and in particular, potential allegations of inequitable conduct, with the USPTO rather than through costly patent litigation in the courts.
To request Supplemental Examination, the patent owner is required to submit adetailed explanation of potential issues that may render the patent unenforceabletogether with any relevant information. If the USPTO finds that the submitted information raises a substantial new question of patentability, the USPTO will institute re-examination of the patent. The result of Supplemental Examination is that the patent cannot be held unenforceable based on the conduct related to the submitted information, even though this information was not before the USPTO during the initial examination. According to the USPTO proposed rulemaking issued on Jan. 25, the filing fee for a Supplemental Examination request is $5,180 for the initial request and $16,120 for the re-examination fee. If no re-examination is ordered, the USPTO will refund the re-examination fee.
While Supplemental Examination isexpensive, companies can use this proceeding to address issues regarding enforceability of a patent that are discovered through due diligence during financing rounds or after acquisition of a patent portfolio.
4. Third-party prior art submissions. A fourth core change under the AIA is the opportunity for third parties to submit prior art for consideration during patent prosecution. Effective beginning Sept. 16 this year, one year from the enactment of the AIA, this provision will retroactively apply to still-pending patent applications. On Jan. 5 the USPTO proposed a new 37 CFR §1.290 to implement this provision.
Current patent rules provide a very limited opportunity for third parties to submit relevant prior art in the patent applications of competitors. The proposed rules of Jan. 5 expand that opportunity by broadening when and what information can be submitted to the USPTO by third parties. The provision requires that references be submitted to the USPTO Patent Examiner along with statements of relevance of the references, which are currently not permitted. This development will make submissions more effective and easier for the USPTO Patent Examiner to consider. Submissions may be kept confidential, and must be made prior to the mailing of a Notice of Allowance, a first Office Action rejecting a claim, or six months from the date of publication.
Third-party prior art submission is useful because it may assist USPTO Patent Examiners in determining which patent applications are worthy of grant. Thus, third-party participation is intended to result in higher-quality patents. To help achieve this, medtech companies should monitor competitors’ patent applications to ensure that all relevant prior art is submitted to the USPTO during prosecution.
5. Implementation of prioritized examination. Recognizing that the patent examination backlog of almost 700,000 patent applications is drastically lengthening patent prosecution timelines, the USPTO reinstated its Track One initiative for prioritized examination immediately after the enactment of the AIA. Prioritized examination strives to provide a “final disposition” within 12 months of prioritized status being granted to a patent application. The additional USPTO fee to request a prioritized examination is $4,800 for a large entity ($2,400 for small entities, which includes individuals, businesses with less than 500 employees, and nonprofit organizations such as universities), plus the standard USPTO filing fee for a utility patent application. In addition to the increase in initial filing fees, the faster pace of examination means that the costs associated with prosecution of the patent application will be accelerated and incurred over a shorter period of time. Nevertheless, medtech companies looking to quickly obtain an issued patent to sue an infringer or attract venture capital investment should consider taking advantage of prioritized examination.
* * *
Medtech firms must continue to monitor the USPTO rulemakings regarding AIA implementation to build a strategic patent portfolio amid patent reform. The changes are coming fast and furious with the USPTO switching to a first-inventor-to-file system, introducing post-grant patent review, permitting supplemental examination, allowing third-party prior art submissions, and offering prioritized examination. Patent reform introduces new options for patent strategies, and companies must be poised to navigate this new patent system to increase their competitive edge in the medtech industry.
David J. Dykeman is co-chair of the Intellectual Property Department in the Boston, Mass., office of the international law firm Greenberg Traurig LLP. A registered patent attorney with more than 15 years of experience in patents, intellectual property and licensing, David’s practice focuses on securing strategic worldwide intellectual property protection and related business strategy for high-tech clients, with particular expertise in medical devices, life sciences, biotechnology and healthcare. David can be reached at (617) 310-6009 or email@example.com. Roman Fayerberg is a registered patent attorney also located in Greenberg Traurig’s Boston office. Roman’s practice focuses on preparation and prosecution of patent applications and counseling clients on patent issues relating to medical devices, biomaterials, and nanotechnology. His patent practice builds on seven years of experience he gained as a research and development engineer at C.R. Bard and Boston Scientific Corp. Roman can be reached at (617) 310-5206 or firstname.lastname@example.org.