Publications
BioInsights, September 2011 – Issue 12: Patent Reform Act Will Affect the Life Science Industry
Special Patent Reform Edition
Last week, the US Senate passed the Leahy-Smith America Invents Act (H.R. 1249), legislation that marks the biggest change to U.S. patent law since at least 1952. The measure now heads to the White House for President Obama’s signature, and he is expected to sign it September 16, 2011. Once signed by the President, the new law will impact all aspects of the patent procurement and enforcement process for virtually every industry, including biotech and life science companies. Some of the key provisions that could affect the life science industry include the following:
1. New First to File System
Prior to the America Invents Act, US law provided that the first person to invent an invention would be awarded a patent. With passage of the Act, the US joins the rest of the world with a “First to File” system. Under this new system, whoever first files a patent application on an invention will be entitled to a patent over another inventor who later files an application on the same invention, regardless of who invented the invention first. As such, the scope of prior art will expand to include any publication (including patents and published patent applications), available to the public before the filing date of the application. However, a one-year grace period is being maintained to file an application after a disclosure of the invention by the inventor or another (such as an employer) who obtained the invention from the inventor.
Adopting the first to file system means that inventors will no longer need to maintain detailed notebooks to prove invention dates, conception, or reduction to practice. However, it also means that they will not be able to swear behind references to avoid certain invalidity challenges. Interference proceedings will be replaced with derivation proceedings at the USPTO for first inventor to file applications and patents. The first inventor to file system will take effect 18 months from the date of enactment.
Under the Act, the new focus will be a patent applicant’s “effective filing date” and whether prior art existed before that date. To best take advantage of these provisions and minimize the impact of prior art, patent applications should be prepared and filed as quickly as possible. Life science companies should review and revise internal procedures to ensure that research experiments are completed quickly. Patent applications on promising materials such as therapeutic compounds or biological materials should be filed right away instead of waiting for a more comprehensive family of materials to be identified at a later date. Although the Act includes a one-year grace period for disclosures made by the inventor or his employer, care should be taken to file a patent application before public disclosure of the invention to avoid issues associated with potential derivation proceedings.
2. Elimination of the Best Mode Requirement for Patent Applications
The Act essentially eliminates the best mode requirement for patent disclosures by amending the list of invalidity defenses to exclude best mode. Thus, failure to disclose best mode will no longer be a basis for holding a patent or any of its claims invalid or unenforceable. However, the best mode requirement remains in disclosure requirements, and thus theoretically could be used by a patent examiner to reject an application. Since best mode is retained in the disclosure requirements and could form the basis for a rejection during prosecution, applicants should continue to disclose the best mode for practicing their inventions.
3. Filing by Other than Inventor
The new law also includes provisions that would make it easier for a corporation to file a substitute inventor’s oath when the inventor cannot be reached or is non-cooperative, or file an application on behalf of an inventor who assigned, or is under an obligation to assign, the invention rights to the entity, without seeking the inventor’s signature on the application. For life science companies or educational institutions, these provisions could be useful in advancing the applications with minimal delay after employees leave or when they cannot be found to sign the application or an assignment. The law provides that the company must show “sufficient proprietary interest” and “proof of the pertinent facts” that it may act in lieu of the inventor. To take advantage of these provisions, companies should maintain up-to-date employment, consulting, and other service agreements clearly showing the company’s interests in the subject applications.
4. False Marking
To address the thousands of false marking lawsuits brought by third parties, the Act amends the false marking rules to prohibit anyone other than the United States government from suing for an applicable penalty, and allows only a person who has suffered a competitive injury to file a civil action under the false marking statute for recovery of damages adequate to compensate for the injury. Additionally, patented articles may be marked using “virtual marking,” in which the article contains “Patent” or “pat.”, along with an Internet address that associates the patented article with the patent number. These new marking provision may make it easier for life science companies to comply with the marking requirements.
5. Patent Term Extensions
The Act also amends the Patent Term Extension rules so that the date of receipt of FDA permission for commercial marketing or use of a product, which is based on the submission of an application for patent term extension will be considered the next business day if transmitted after 4:30 PM Eastern time or on a non-business day. This provision retroactively lengthens the deadline for applying for a patent term extension, and could be useful to life science companies when applying for such extensions.
6. No Patents Directed to or Encompassing a Human Organism
Section 33 of the Act states “Notwithstanding any other provision of law, no patent may issue on a claim directed to or encompassing a human organism.” This Section was included in the bill apparently to preserve the sanctity of life. However, the language of this provision is ambiguous and does not have clear limits or well defined terms. Clearly, the statute would block the patenting of an invention that claims “a human organism” per se. However, it is not clear when a patent claim is “directed to . . . a human organism.” We expect that for the next several years, Congress will implement a number of “technical amendments” that fix problematic language in the bill.
7. Expanded Pre- and Post-Grant Review Procedures
The Act expands the rights of third parties to challenge patents or patent applications and establishes post-grant review procedures to permit early and economical challenges to questionable patents. Under the Act, third parties will be permitted to submit a wider range of publications or statements for consideration by the USPTO during or after the examination process. The Act also provides for a 9-month period during which a third party may challenge the validity of a patent. The Act also allows a third party, after the 9 month post-grant window referenced above lapses, to challenge a patent using revised “inter partes” review proceedings, albeit on a more limited basis. These new pre- and post-grant procedures could be useful for life science companies in challenging patents and patent applications from competitors. We expect that with these new procedures, life science companies will more closely monitor the patent activities of their competitors.