the new patent law: what should management do now?

February 1, 2012NOT LEGAL ADVICE

(C) 2012 Ted Sabety All Rights Reserved

“The New Patent Law: What Should Management Do Now ?"

Ted Sabety (Moderator)



• Fundamentally Changed the U.S. Patent Statute.

• Enacted September 16, 2011• Effective Dates are Staged• These changes have business strategic

implications for technology companies.

“American Invents Act”



Focus on Four Aspects• First to File Wins the Race

• Trade Secret Dynamic Changes

• Some Inventions Ineligible

• More Third Party Involvement in Prosecution Process



First Inventor to File• The First Inventor to File a Patent

Application on an Invention gets the Patent over the earlier inventor who files later.

• Getting a Filing Date becomes even more critical.

• Effective March 16, 2013.



First to File Moves Up Prior Art• Any public use, sale or disclosure of the

Invention before the filing date is prior art. • Or described in a competing patent

application filed before the filing date.• Expands prior art to anything around the

world, not just the US.



What’s Left of the One Year Grace Period?

• Exception: Inventor has a one year grace period for “disclosures” either “made by the inventor” or “another who obtained the subject matter ... from the inventor....”

• OPEN LEGAL QUESTION: does “disclosures” include “public use” or “sale” ?– “Textualist” Supreme Court might say “no.”– House Report doesn’t say. (See pg. 40-43).– Orrin Hatch cryptically said yes.



Trade Secrets in Balance with Patents

• Always a strategic tension between maintaining a trade secret and filing for a patent:– Disclosure to the public with the risk of either

no patent issuing or patent invalidity vs:– Risk of reverse engineering or independent

invention.



Prior User Defense• “Prior User” refers to a trade secret user who

decided not to file a patent.• The “Prior User” cannot be liable if a first filer

obtains a patent over the same invention.• Caveats:

– Use must be over 1 year prior to the later filing date.– On going, bona fide use in the United States.– Personal to the entity practicing.– Doesn’t apply to University or Federally funded

inventions.



Lack of “Best Mode” will not Invalidate

• The “best mode” is typically the valuable trade secret: the “secret sauce.”

• The patent disclosure must include a description of the “best mode” of practicing the invention.

• Now, there is no basis to bring an invalidity claim for failure to disclose the “best mode.”



Some Inventions Ineligible:• Tax preparation or tax strategy patents• Patents encompassing a human organism• Limitations on “business method” patents.

– Precludes financial transaction inventions– It may also preclude other computer related

inventions.



Third Party Involvement• Third party submission of prior art during

prosecution is now permitted and the art will be considered.

• Post Grant Review proceedings:– Post Grant Review (estoppel applies)– Inter Partes Review (estoppel applies)– Ex Parte Reexam

• Supplemental Examination– Permits attorney to repair prosecution problems.



Strategic Concerns• How will IP management practices change?• How will product announcement, beta-testing or product

roll-out timing change ?• Are there things small companies should be doing that

are different from large companies ?• How much more should companies expand their

involvement in their competitor’s patent prosecution processes?

• Can we expect new kinds of contractual terms in licenses?

• How will this affect risk allocation in acquisitions?• What new things should small companies be doing to

maintain their IP attractiveness to larger companies?



Our Panel

• Manny W. SchecterChief Patent CounselIBM Corporation

• Peter C. Schechter PartnerEdwards Wildman Palmer LLP

• Ted Sabety (moderator)PrincipalSabety +associates, PLLC



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