aia newsletter

Intellectual Property LawNEWSLETTERno.1

September 2012

Summary of the Final Rules relating to Post-Grant Review ProceedingsPage 2

Summary of the Supplemental Examination ProvisionsPage 3

Business Method Patents and the America Invents ActPage 4

Summary of the Final Rules relating toOath/Declaration going into effect on September 16, 2012Page 6

The USPTO is flipping the switch on certain

provisions of the America Invents Act

on September 16, 2012.

Are you ready?

The USPTO recently issued a new set of rules to implement the provisions of the AIA that created the post-grant review,

inter partes review, and transitional covered business method patent review to be conducted before the Patent Trial and Appeal Board (formerly the Board of Patent Appeals and Interferences). The new rules will go into effect on September 16, 2012, and will provide a guide for Board trial practice for inter partes review, post-grant review, and transitional covered business method patent review proceedings.

The new rules for post-grant review will apply to patents issuing from applications subject to the first-inventor-to-file provisions of the AIA. While the grounds for instituting inter partes review are limited to those raised under 35 U.S.C. §§ 102 and 103, and only on the basis of prior art patents or printed publications, a post-grant review may be sought under any ground that could be raised under 35 U.S.C. § 282(b)(2) or (3), including §§ 101, 102, 103, and 112 (with the exception of the best mode requirement). As with other Board proceedings, post-grant reviews will be heard by at least three members of the Board.

A petition to institute a post-grant review may be filed by anyone who can establish standing. This means, at a minimum, the petitioner or real-party-in-interest must certify that she is not estopped from challenging the claim(s) of a patent or otherwise barred from requesting a post-grant review (e.g., when the petitioner has already filed a civil action challenging the validity of the claim(s) of the same patent). Importantly, a petition for review must be filed no later than nine months after the date of the patent grant or of the issuance of a reissue patent. The petition will not be granted unless (1) the

information in the petition demonstrates that it is more likely than not (i.e., more than 50% chance) that at least one of the challenged claims is unpatentable, or (2) the petition raises a novel or unsettled legal question important to other patents or patent applications. The review may proceed on all or some of the challenged claims and on all or some of the grounds of unpatentability asserted for each claim. Although the AIA authorizes the Director to limit the number of post-grant review petitions, the rules currently do not limit the number of petitions that may be filed.

The patentee may amend the challenged claims by consulting with the Board and filing a motion, but amendments are limited to those responsive to the ground of unpatentability involved in the proceeding. The patentee may not amend the claims more than once unless the patentee can demonstrate good cause or the patentee and the petitioner file a joint request to amend the claims for purposes of materially advancing a settlement. Discovery of evidence directly related to a party’s factual assertions may also be permitted upon demonstration of good cause, which requires a showing of a specific factual reason to justify the discovery. Discovery is also permitted in inter partes reviews and derivation proceedings, but will be governed by an interests-of-justice standard, which is slightly higher than the good cause standard of post-grant review.

Finally, the rules require that a final determination of a post-grant review must be issued within one-year of institution, with up to a six-month extension for good cause. The Board may adjust this one-year timeframe when the review involves a joinder, but the USPTO has stated that any time extension is anticipated to be rare. A final decision of the Board in a post-grant review is appealable only to the U.S. Court of Appeals for the Federal Circuit.

by Yuichi WatanabeOsha Liang LLP

Summary of Final Rulesrelating to Post-Grant Review Proceedings

Intellectual Property Law ADVOCATES OF INNOVATION

The Leahy-Smith America Invents Act (“AIA”) includes new provisions for supplemental examination of an

issued patent that take effect on September 16, 2012. These provisions may assist a patent owner in addressing certain challenges to the enforceability of the patent during litigation. According to the new supplemental examination provisions, a patent owner may request supplemental examination of a patent by the USPTO to consider, reconsider, or correct information believed to be relevant to the patent. The request for supplemental examination may include up to twelve items of information, and may include, for example, patents, printed publications, issues of patentability under 35 U.S.C. 101 and 112 and transcripts of audio or video recordings. The cost for processing and treating a request for supplemental examination is $5,140, and there are additional fees for processing non-patent documents over 20 pages in length.

Within three months of receipt of a properly filed request for supplemental examination, the USPTO will determine if the information presented in the request raises a substantial new question of patentability and issue a supplemental examination certificate stating the USPTO findings. If the information presented in the request raises a substantial new question of patentability, the USPTO will order an ex parte reexamination of the patent. The cost for conducting an ex parte reexamination ordered as a result of a supplemental examination is $16,120. The resulting ex parte reexamination will be conducted according to ex parte reexamination procedures, except that the patent owner does not have the right to file a statement under 35 U.S.C. 304 (allowing a patent owner to file a statement regarding the USPTO finding, including any amendment to the patent and new claim(s) for consideration in reexamination).

Generally, as a result of concluding the supplemental examination process, a patent will not be held unenforceable on the basis of conduct relating to information that was not considered, inadequately considered, or was incorrect. However, this does not apply in cases where (1) an allegation is pled with particularity in a civil action or set forth with particularity in a notice received by the patent owner under section 505(j)(2)(B)(iv)(II) of the Federal Food, Drug, and Cosmetic Act before the date of a supplemental examination request regarding information forming the basis of the allegation; (2) any defense raised in an action brought under section 337(a) of the Tariff Act of 1930 is based on the information provided in the request for supplemental examination, unless the supplemental examination and any following ex parte reexamination are concluded before the date on which the action is brought; and (3) enforceability of the patent is questioned under 35 U.S.C. 282. Additionally, if the USPTO becomes aware of a material fraud during supplemental examination or any following reexamination, the USPTO will refer the matter to the U.S. Attorney General, in addition to any other actions the USPTO is authorized to take, including the cancellation of any claims found to be invalid. Sanctions based on criminal or antitrust laws, the first section of the Clayton Act, and section 5 of the Federal Trade Commission Act are also not precluded by the supplemental examination proceedings.

by Laura WitbeckOsha Liang LLP

Supplemental Examination Provisions


According to the new supplemental examination provisions, a patent owner may request supplemental examination of a patent by the USPTO to consider,

reconsider, or correct information believed to be relevant to the patent.


by Annemarie VicereOsha Liang LLP

Business Methods & the AIA

Part 1: Introduction: Current State of Business Method Patents

With the exception of tax related inventions, the America Invents Act, or AIA, has expressly not changed whether business methods are patentable. As an initial matter, under current United States patent law and the AIA, business methods are patentable. The patentability of business methods is supported by the Supreme Court in the decision In re Bilski. By way of background, the claims in the Bilski patent were directed to a method for commodities buyers and sellers in the energy market to hedge against price changes. In Bilski, the Federal Circuit Court of Appeals determined that the Bilski claims are not directed to statutory subject matter because the claims are directed to a process and are not (1) tied to a particular machine or apparatus; or (2) transform a particular article into a different state or thing (i.e., the machine or transformation test). While the Supreme Court ultimately upheld the opinion of the Federal Circuit, the Supreme Court further held that the machine or transformation test is not the only test for determining whether claims are directed to statutory subject matter. Rather, whether claims are directed to statutory subject matter is based on several factors.

Turning to the AIA, the AIA changes the patentability of business method patents only with respect to tax strategies. The AIA further adds a transitional post grant review process for business method patents. The following parts describe the patentability of tax strategies and the transitional post grant review under the AIA.

Part 2: AIA and Patentability of Tax StrategiesUnder the AIA, tax strategies are deemed to be a part of the

prior art. Specifically, the AIA has added a presumption that any strategy for reducing, avoiding, or deferring tax liability, whether known or unknown at the time of the invention or application for patent, shall be deemed insufficient to differentiate a claimed invention from the prior art. The

AIA defines a tax liability as any liability for a tax under any Federal, State, or local law, or the law of any foreign jurisdiction, including any statute, rule, regulation, or ordinance that levies, imposes, or assesses such tax liability.

The AIA does not affect the portion of an invention that is solely related to preparing a tax or information return or other tax filing or solely related to financial management, provided that it is severable from any tax strategy or does not limit the use of any tax strategy by any taxpayer or tax advisor. In other words, when a tax strategy in a claim is severable from the rest of the claim, an Examiner may merely state that the tax strategy portion is known, but must find prior art for the remaining elements of a claim in order to assert that the claim as a whole lacks novelty or non-obviousness.

Part 3: AIA and Transitional Post Grant Review

Section 1: IntroductionThe AIA institutes a transitional post grant review for

covered business method patents. In the transitional post grant review, a petitioner may request cancelation on or more claims of a patent. Whether to institute a post grant review of a covered business method patent will be determined by the director and will be final and unappealable.

Section 2: What are covered Business Method PatentsThe AIA defines a covered business method patent as

patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of financial product or service. The covered business method patent does not apply to patents for technological inventions.

The use of the terms, “technological invention,” is ambiguous. Under the final rules, the USPTO defines a technological invention on a case-by-case basis based on the following factors: (1) whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art, and (2) solves a technical problem using a technical solution.

Continued on Page 5

Section 3: What are the relevant timeframesTransitional Post Grant review may be requested starting

on September 16, 2012. The transitional post grant review ends on September 16, 2020. In other words, the USPTO will not accept additional petitions for a transitional post grant review of a covered business method patent after September 16, 2020. A petition for a transitional post grant review may be filed at any time during this time period, except during the period in which in which a petition for a post-grant review of the patent would satisfy the requirements of 35 U.S.C. § 321(c).

Section 4: Who can file a petitionTo file a petition, the person, the person’s real party in

interest or privy must have been sued for infringement of the patent or has been charged with infringement under that patent. As defined by the USPTO, charged with infringement means that the petitioner would have standing to bring a declaratory judgment action in the federal court. The petition must demonstrate that the petitioner has grounds for standing.

Section 5: Under what basis may the validity of a patent be challenged

A petitioner can challenge the validity of a patent as being directed to non-statutory subject matter (35 U.S.C. § 101), lacking written description or enablement (35 U.S.C. § 112), lacking novelty (35 U.S.C. § 102), and/or being obvious (35 U.S.C. § 103).

The AIA adds special rules as to what constitutes prior art for business method patents having all claims (and whose parents have all claims) with an effective filing date prior to March 16, 2012. Specifically, for such business methods, when the petitioner challenges the validity based on prior versions of 35 U.S.C. § 102 and 35 U.S.C. § 103, the petitioner can only support the ground using (1) prior art described by 35 U.S.C. § 102(a) of the prior version of the title; or (2) prior art that is discloses the invention more than 1 year before the date of the application for patent in the US; and would be described by section 102(a) of the prior version of the title if the disclosure had been made by another before the invention thereof by applicant for patents.

Prior art under (1) is art that shows the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the

invention thereof by the applicant for patent. What constitutes prior art under (2) is more ambiguous. However, from the language used, it appears that (2) covers prior art by the applicant or describing the invention more than one year before the filing date. Other prior art may also be included depending on how the AIA is interpreted.

During the transitional post grant review, claims of an unexpired patent are given the its broadest reasonable construction in light of the specification.

Section 6: What are the court effects of filing a petitionWith respect to stays of a civil proceeding, a party in a

civil proceeding can request a stay based on the transitional proceeding and the court can decide whether to grant the stay. The AIA provides various bases by which a court may grant the stay. These bases include (1) simplification of issues or streamlining of trial; (2) whether discovery is complete; (3) unduly prejudicial to non-moving party or present a clear tactical advantage for the moving party; (4) reduction of burden of litigation.

Once a final decision is issued in the transitional post grant review, the petitioner cannot assert that the claim is invalid in a civil action or International Trade Commission action. In other words, once a final decision is made, the petitioner is estopped from asserting a claim based on any ground raised or reasonably could have been raised in the covered business method review.

Part 4: ConclusionUltimately, for the vast majority of business method

patents, the AIA does not change the patentability of such patents. However, for a tax related invention, inventors should review the invention to determine whether the invention has a tax strategy component. If the invention has a tax strategy component, the tax strategy component should be reviewed to determine whether it is severable from the rest of the invention. If not, the inventor should consider relying on alternative forms of protection, such as copyright (in the case of software products) or trade secret.

Those being accused of infringement should consider filing a petition under the transitional post-grant review. The decision of filing such a petition should be weighed against the probability that a petitioner will have a more favorable outcome in a judicial proceeding.

Continued from Page 4


Oaths/Declarations filed after September 16, 2012, will have different substantive and timing requirements

based on the USPTO Final Rules. New forms for the oath/declaration are already available on the USPTO website for use after September 16, 2012. However, we note that the changes should not greatly alter existing filing procedures for the reasons set forth below and that the differences between the forms will not render ineffective the oath/declaration that was previously available.

The substantive differences between the old form and new form involve removal of statements that are no longer required based on implementation of the AIA. Accordingly, while we recommend transitioning to using the new form in due course, it is still permissible to file an oath/declaration in the old form after September 16, 2012. Thus, for example, in any case in which formal papers were generated using the old form, regardless of whether those documents were generated or signed by the inventors prior to September 16, 2012, the signed oath/declaration that is ultimately obtained can be submitted and will be effective after September 16, 2012.

Regarding the timing for submission of a signed oath/ declaration, after September 16, 2012, the signed oath/ declaration must be filed together with a new application (same as before) or, for the same $130 fee as before, submission may be delayed until the application is otherwise in condition for allowance. Thus, the filing procedure for any application being filed without “missing parts” will remain the same. Also, while a longer delay will be allowed in applications filed with the “missing part” of an oath/declaration, we recommend

continuing to obtain signatures from inventor(s) as soon as possible after filing. Even though the rules will permit the delay of such documents until the application is otherwise in condition for allowance, such a long delay in obtaining the documents will likely cause them to become more difficult to obtain, which will likely increase cost.

After September 16, 2012, substitute statements are permitted in cases where an oath/declaration cannot be obtained. However, that does not mean that a substitute statement can always be used. Also, the substitute statement in no way changes the requirement to obtain an oath/declaration in normal situations where one can be obtained. An oath/declaration must still be signed by the inventors in every case in which doing so is possible. The permissible bases for filing a substitute statement in lieu of an oath/declaration are (1) if the inventor is deceased, (2) if the inventor is under a legal incapacity, (3) if the inventor has refused to execute the oath/declaration, or (4) if the inventor cannot be found or reached after diligent effort.

After September 16, 2012, Assignees (and those showing an obligation of assignment or other proprietary interest) may be listed as the Applicant on applications filed. However, that does not relieve the requirement to supply the names of the inventors at the time of filing an application. In such cases, the Assignee is merely the party making the application and, in the event that the filing of an oath/declaration is being deferred, the inventors must be listed on an appropriate Application Data Sheet (ADS). Further, the statements required by the oath/declaration can be made in an assignment, thereby allowing a single document to act as both an assignment and oath/declaration. The declaration for reissue applications filed after September 16, 2012, in the name of an Assignee Applicant is also changing.


by Tom SchererOsha Liang LLP

Summary of Final Rulesrelating to Oath/Declaration

Intellectual Property Law

ContributorsPartnerTom [email protected]

Patent AttorneyAnnemarie [email protected]

Patent AttorneyYuichi [email protected]

Patent AttorneyLaura [email protected]

Upcoming Events

AIPPI 43rd World Intellectual Property CongressSeoul, Korea — October 20 - 23, 2012John Osha, assistant reporter general of AIPPI and managing partner of Osha Liang LLP, will be the responsible reporter for the Q229 working question regarding the use of prosecution history in post-grant patent proceedings. For more information, visit www.aippi.org.

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Intellectual Property Law

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