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My Comments on the Proposed Examination Guidelines Post-AIA: Why I Think the PTO is Wrong in its Interpretation of the New Section 102

As you may know, there are some significant changes being made to U.S. patent law. As part of those changes, the Patent and Trademark Office must provide guidance to the examiners on how to apply the new law. One change is in the grace period for third party disclosures made between the filing date of an application and an inventor’s disclosure made up to one year earlier.

I read the guidelines and disagree with the Office’s position. Thankfully, under the Administrative Procedure Act, there is a comment period during which members of the public can submit their views. While several people have submitted comments critical of the guidelines, mine are focused on issues of statutory construction and I also provide an alternative interpretation.

You can review previously submitted comments at the USPTO website. I also have a PDF version of these comments available for download.

The following are my comments on the Examination Guidelines for Implementing the First Inventor to File Provisions of the Leahy-Smith America Invents Act that are being submitted the the USPTO today, October 26, 2012:

Dear Sir:

I am a registered Patent Attorney (Reg. No. 56,668) and have been practicing exclusively in intellectual property for the past eight years. My practice is almost exclusive to patents, including prosecution, counseling, due diligence, and licensing. I am, however, writing only as an interested member of the public and not as an employee of my law firm. The views expressed in these comments are my own views that I hold at this time and should not be attributed to any client or other practitioner in my firm.

I am grateful to the Office for extending the time to present comments on these Examination Guidelines and am pleased to have the opportunity to have these comments considered. Having reviewed many of the already submitted and well reasoned comments, I shall limit mine to the provision where I do not feel my views have been adequately expressed by others. In particular, these comments are directed towards the portion of the Examination Guidelines related to the Office’s interpretation of the “grace period” established in 35 U.S.C. 102 as amended by the AIA.

It is my view that, at least in part, the Examination Guidelines are based on a faulty interpretation of the statutory text, and that a proper interpretation of the statute would yield a very  different application of the “Grace Period.”

I.  The Office’s Interpretation of the “Grace Period” Established by 35 U.S.C. 102 as amended by the AIA and Expressed int the Examination Guidlines

The portion of the Examination Guidelines describing the Office’s interpretation reads as follows:

The exception in 35 U.S.C. 102(b)(1)(B) applies if the ‘‘‘subject matter’ disclosed [in the prior art disclosure] had, before such [prior art] disclosure, been publicly disclosed by the inventor or a joint inventor * * *.’’ 41 Thus, the exception in 35 U.S.C. 102(b)(1)(B) requires that the subject matter in the prior disclosure being relied upon under 35 U.S.C. 102(a) be the same ‘‘subject matter’’ as the subject matter publicly disclosed by the inventor before such prior art disclosure for the exception in 35 U.S.C. 102(b)(1)(B) to apply. Even if the only differences between the subject matter in the prior art disclosure that is relied upon under 35 U.S.C. 102(a) and the subject matter publicly disclosed by the inventor before such prior art disclosure are mere insubstantial changes, or only trivial or obvious variations, the exception under 35 U.S.C. 102(b)(1)(B) does not apply.1

The relevant portion of 35 U.S.C. 102 as amended by the AIA reads:

(b)    Exceptions-
1.    DISCLOSURES MADE 1 YEAR OR LESS BEFORE THE EFFECTIVE FILING DATE OF THE CLAIMED INVENTION- A disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if—
A.    the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or
B.    the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.2

The interpretation advanced by the Office in these Guidelines would result in the anticipation of a claimed invention by a disclosure made by a third party, subsequent to a disclosure by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor, so long as the intervening disclosure includes de minimis departures from the inventor’s disclosure.3 Additionally, because minor variations between the prior disclosure by an inventor and a later third party disclosure would render the Grace Period exception inapplicable, it is difficult to foresee a situation where an obviousness rejection of claims could be traversed by application of the exception provided in the statute.

To reach this interpretation, the statutory term “subject matter disclosed [by another]”4 used in 102(b)(1)(B) must be taken to mean that this third party disclosure is, for all intents and purposes, identical to that “disclosed by the inventor….”

II.  An Alternative Interpretation

An alternative interpretation to that advanced in the Examination Guidelines would be one in which the statutory term “subject matter disclosed” is provided a meaning that is different from one that requires identity with the inventor’s prior disclosure. Such a statutory interpretation could, for example, be that the “subject matter disclosed” means “the nature or gist of the disclosure.”5 Such an interpretation takes a broader view of the statutory term “subject matter disclosed,” and is more consistent with the AIA than the interpretation expressed by the Examination Guidelines.

Under this interpretation, any intervening reference that anticipates or renders obvious a claimed invention would not qualify as prior art, even if the disclosure cited includes obvious variations of the claimed invention.

III.  Reasons for Adopting a Broader View of the Term “Subject Matter Disclosed”

There are several reasons why a broader view of the term “subject matter disclosed” is appropriate, many of which have been addressed adequately by other commentors. In addition to those, there are two that I wish to address in these comments. First, the principals of statutory construction suggest that the statute is more amenable to a broader view than the interpretation expressed in the Examination Guidelines. Secondly, there are several situations in which the interpretation expressed in the Examination Guidelines would result in perverse results.6

    A. Statutory Construction of Section 102

        1.  Plain Meaning

The interpretation expressed in the Examination Guidelines is one that would have “subject matter disclosed” mean that the third party disclosure is identical to that “disclosed by the inventor….” However, such a meaning could have been made very clear by use of other language and is inconsistent with the plain and common meaning of “subject matter.”

I note that other commentors have taken an opposing view. For example, one commentor has said in supporting the Office’s position:

In 102(b)(1)(A) the statute says that “the subject matter disclosed” by the inventor cannot be used against the inventor. In 102(b)(1)(A) the statute says that “the subject matter disclosed” by the inventor cannot be used against the inventor if disclosed by a third party who obtained “the subject matter disclosed” from the inventor, either directly or indirectly. Therefore, it is eminently reasonable for the USPTO to say that for subsequent disclosures after a disclosure of the inventor to be excluded as prior art they must be the same as the disclosure of the inventor with even trivial differences enough to prevent application of the exclusion.7

This argument, however, is circular. In essence, the argument is that “subject matter disclosed” means “subject matter disclosed” and since the drafter of the legislation used the same words they must mean the same thing. However, these instances of “subject matter” relate to different disclosures: namely the initial inventor’s disclosure and the intervening third party disclosure. This argument also fails to address the underlying question: what does “subject matter disclosed” mean. I will concede that once properly interpreted, the interpretation should be consistent throughout the statute. However, the crux is whether “subject matter disclosed” is properly interpreted to mean an identity between disclosures, or if a boarder view is appropriate.

“Subject matter” is not used to describe the exact expression of a concept or idea. Rather, the “subject matter” of a disclosure is the idea or concepts described. An analogy to another area of intellectual property law is the idea/expression dichotomy of copyright. In that context, the subject matter of a work would be the non-copyrightable idea, not the expression thereof. Similarly, the subject matter of a disclosure would be the ideas, concepts, limitations, and elements described by the disclosure, and not the language in which the author of the disclosure chose to express them. Another area where the term “subject matter” is used consistently with my proposed broader view is in current 35 U.S.C. 103(c) where the term is clearly used with a meaning broader than that adopted by the Office in the Examination Guidelines.8

Accordingly, the plain meaning of “subject matter disclosed” is more amenable to a broad view than to the view expressed in the Examination Guidelines.

        2.  Each Statutory Provision Should be Interpreted to Have Effect

Application of the interpretation expressed in the Examination Guidelines would render the Grace Period created by section 102(b)(1)(B) without any practical effect. If the only third party disclosures that can be obviated by showing prior publication by the inventor are those in which there are not even mere insubstantial changes, or only trivial or obvious variations between the cited art and the prior disclosure, 102(b)(1)(B) has no purpose or effect.

The odds that an independently developed, third party disclosure would not include, at the very least, “insubstantial changes” are infinitesimal. Any such disclosure would almost certainly have been made by one “who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor” and thus be eliminated as prior art under section 102(b)(1)(A). Accordingly no third party disclosures would be excluded as prior art by section 102(b)(1)(B), and the interpretation expressed in the Examination Guidelines would effectively read this subsection out of the statute.

    B.  The Interpretation of “Subject Matter Disclosed” Expressed in the Examination Guidelines Would Lead to Perverse Results

Apart from the already discussed result that section 102(b)(1)(B) would be read out of the statute, there are other peculiar results from application of the interpretation expressed in the Examination Guidelines.

For example, the Office’s interpretation produces the odd result that a reference that is less like the inventor’s prior disclosure has a greater preclusive effect on patentability than a reference that is identical to (even if developed independently from) the disclosure of the inventor. This is because an identical disclosure that would otherwise anticipate a claimed invention would not qualify as prior art, while a variated disclosure that renders the claimed invention obvious would be prior art. In effect, there would be no Grace Period except in regards to intervening publications that are verbatim reproductions of the inventor’s disclosure.

IV. Conclusion

The Examination Guidelines rely on a faulty interpretation of the term “subject matter disclosed.” A proper interpretation of the statute leads to a broader view of “subject matter” and is consistent with the rest of the statute. This broader view also avoids peculiar results that are contrary to what would be expected such as the effective elimination of section 102(b)(1)(B) from the statute. Such results are contrary to the structure and language of the statute and should be avoided by adopting an interpretation that is in harmony with the plain meaning of the statute and does not deprive section 102(b)(1)(B) of meaning.

With this broader (and more appropriate) view of “subject matter disclosed” in mind, the Examination Guidelines should be revised. In particular, I believe the statute compels the result that intervening references that would otherwise anticipate or, by themselves or in combination with others, render a claimed invention obvious are not prior art under 35 U.S.C. 102 as amended by the AIA.

Again, I wish to thank the Office for the opportunity to provide these comments. I also want commend the Office on the preparation and publication of several comprehensive rule packets for implementation of the AIA in a relatively short period of time.

Regards,

Sean P. Connolly

 

Endnotes:

1 Request for Comments, 77 Fed. Reg. at 43767, col. 2.

2 35 U.S.C. 102, as amended by the America Invents Act, Public Law 112-29 sec. 3.

3 For purposes of brevity, I will refer to initial disclosures by an inventor, joint inventor, or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor, as an “inventor’s disclosure.”

4 The restriction “by another” is inferred from Section 102 because disclosures by an inventor or derived from the inventive entity are not prior art under section 102(b)(1)(A).

5 This is not to say that disclosing “nature or gist” of an invention would be sufficient to antedate a reference. It may well be necessary to show satisfaction of the enablement and other requirements within the prior disclosure by the inventor in order to obviate an intervening reference, but that is not a question that need to be addressed here. Rather, any interpretation of “subject matter of the disclosure” that allows for reasonable variation from the intervening disclosure could be suitable for purposes of these comments.

6 While I often take a dim view of the effectiveness of using legislative history to interpret a statute, such arguments have been reasonably made by other commentors and I shall refrain from making such arguments here.

7 Comments of Eugene R. Quinn, Jr., Submitted October 3, 2012, at 4. Available at http://www.uspto.gov/patents/law/comments/e-quinn_20121003.pdf

8 “Subject matter developed by another person, which qualifies as prior art only under one or more of subsections (e), (f), and (g) of section 102 of this title, shall not preclude patentability under this section where the subject matter and the claimed invention were, at the time the claimed invention was made, owned by the same person or subject to an obligation of assignment to the same person.” 35 U.S.C. 103(c)(1). An interpretation of “subject matter” that means identity between disclosures would be nonsensical in the context of section 103 which deals with obviousness.

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Patent Litigation Rates: What They Tell Us and What They Don’t

Over the course of the last week, I’ve come across two blog posts, via my twitter feed, that show opposite views on patent litigation. The first takes the position that patent troll litigation is rampant and stifling innovation, especially for startups. The title, “Numbers Don’t Lie: Patent Trolls are a Plague” sums up the author’s position nicely. However, the piece doesn’t paint a very comprehensive picture.

The numbers referred to are those based on a survey by Colleen Chien of Santa Clara University – School of Law. Prof. Chien notes that 40% of respondents stated that troll activities had had a significant impact on the startup’s operations. However, the fact that patents are asserted against emerging businesses more often than others shouldn’t come as a surprise. After all, if a company is arguably infringing a patent as part of its core business, it would be expected that the issue would come up earlier in the company life cycle. These numbers could be skewed relative to the economy as a whole.

The second article takes another tack as you can see from the equally suggestive title, “The ‘Patent Litigation Explosion’ Canard.” As you can guess, the author, Prof. Adam Mossoff, disagrees with the idea that there is a “Patent Litigation Explosion” going on. This piece discusses patent litigation rates (measured as a percentage of issued patents litigated). From 1790 to 1860 the rate averages 1.65%. From 2000-2009, it was 1.5%.

I’m inclined to think the litigation rates over time to be a better indicator of the growth of patent litigation than a survey of startups. To be honest, I was skeptical of the litigation rates, not that they are inaccurate, but they may not be very meaningful if the number of patents issued relative to GDP has gone up. My assumption was that the number of patents issued per billion dollars of GDP would have grown and that the a constant litigation rate would actually mean an overall increase in patent litigation relative to GDP. That assumption was wrong.

First I looked to the USPTO data regarding patents issued. Here is a chart for patents issued each year from 1963 to 2011.

The “ups” and “downs” unsurprisingly correlate to the general state of the economy as fewer patents issue during and after economic downturns. However, I was interested in the number of patents issued per billion dollars in GDP. I used real GDP data (GDP adjusted for inflation) and the number of utility patents issued for each year from 1963 to 2011. So, I simply divided the number of patents issued in a given year by the inflation adjusted GDP that year. The following chart shows what I found:

While there is a lot of variation, the overall trend appears relatively flat. The average number of patents issued per billion dollars of GDP from 1963 to 2011 was 13.00, and a significant portion of the last decade was below that. Accordingly, the litigation rates referenced by Prof. Mossoff are informative and it appears that there has not been a significant increase in patent litigation, relative to GDP.

Of course, this is only part of the story. Calculating litigation rates as a function of the number of patents issued in a particular year doesn’t necessarily correlate to the number of patents in force (i.e. issued and with all relevant maintenance fees paid that have not yet expired) for that year, but it is, perhaps, a leading indicator of the number of patents that will be in-force in years to come. Such a calculation, however, is easier to make and is likely a reasonable starting point.

Another issue is that these numbers doesn’t tell us the economic impact of patent litigation. While the number of cases relative to GDP is steady, the average price tag (damages, attorney’s fees, etc) associated with a patent litigation may have grown relative to GDP, or there may have been a significant increase in licenses entered before a complaint is filed. However, I haven’t seen any data to show that either of those things has happened.

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The Power of Narrow Claims

I was meeting with a client last week and going over a proposed claim amendment. He felt that one of the independent claims would be too narrow. So, I asked him, “would it still cover your product?” After some discussion we were both comfortable that it would. Then I asked him, “does it still cover the way your competitors would most likely try to do this?” again, we both felt it did. Finally I asked him, “as an inventor, if you saw this claim and it belonged to a competitor, how would you design around it?” We spent a quite a bit of time talking through alternatives. We focused on the feasibility of each relative to his claimed product. All of the various alternative either wouldn’t work as well or would cost significantly more than his claimed invention.

The lesson here was that while broad claims can be great when you want to accuse someone of infringement, you will have to defend the patentability of those broad claims if the issue goes to court. Typically, this defense will be against prior art you don’t know exists before the lawsuit. Conversely, drafting narrow claims can lead to an issued patent, but the questions above are important to ask to make sure you don’t cede so much ground that your competitors can easily design around your claims.

These narrow claims are also helpful in those cases where a competitor can design around them. While their competing product may not infringe your claim, that competing product will, hopefully, be at a competitive disadvantage due to performance or cost.

One example for this concept is the rubber-band effect for scrolling on Apple iOS devices that was patented and litigated in the Samsung case. Those claims are very detailed and correspondingly narrow. They have pushed many phone manufactures to not include the feature or provide a modified version of it. However, exact copying of the way Apple implemented the concept was still protected by the claims.

Don’t only try for the broadest claim you can. Sometimes, in the long run, narrow claims can be very powerful. Their value isn’t just in the damages an infringer may pay, but also in the competitive disadvantage non-infringing product will have.

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Lecture Q&As at Peter Kiewit Institute

A few weeks ago I had the privilege to give a lecture to students at the Peter Kiewit Institute in Omaha about intellectual property. The lecture was one of a series over this semester for students in a business leadership seminar. Unfortunately an hour long lecture doesn’t give much time for questions and a lot of material had to be squeezed into a short talk. Thankfully, the coordinator arranged to send me the students’ questions in writing after the lecture so I could write responses that could be shared with the class. He also graciously has allowed me to post some of these questions and my answers here.

The intent of the lecture was to provide a brief background in intellectual property for engineering students who will be business leaders. I provided a brief discussion on utility patents, design patents, and trade dress. I then walked through the application of these topics to some of the claims in the Apple v. Samsung case. Here are the lecture slides.

These are some of the questions and my answers:

Why did you start chemical engineering and later switch to law?

I really enjoyed engineering school, but after a co-op, I felt like I’d be pigeonholed. I wanted to see a variety of technologies and work with a lot of different companies. The more I learned about patent law, the more I felt it fit with what I wanted to do.

Sean, what interested you about the IP process to make you want to work with it as a career?

As far as the process goes, I really enjoy working with inventors and founders of startups. They have a lot of passion and energy so it’s hard to not have fun working with them.

What is the coolest invention you’ve seen as an attorney?

I don’t normally talk about client matters, but I’ve seen some really cool and pioneering inventions. Maybe it’s my background in engineering, but actually I am really drawn to the simple, elegant solutions to existing problems.

What is the first step in acquiring a patent, trademark, or copyright?

As obvious as it may sound, the first step is to come up with the idea. Trademark rights begin just by using the mark. Copyright attaches the moment the work is made. Patent’s, however, must be applied for, and with recent changes in the law, that should be done as soon as possible.

How long does the process to patent or trademark something generally last?

Trademarks typically issue within a year or so of filing an application. Patents have an average pendency or three years or so.

How would one go about searching to see if an idea that they have for a trademark is already in use and registered?

If you are good with boolean searching, the USPTO has a decent interface. Google also has a patent search system in beta. However, these searches can be rather difficult. My firm does them and so do many others.

How are copyrights different in the process of obtaining them different from patents?

Copyright attaches to a work as soon as it is created and fixed (i.e. written down). However, damages for infringement of a copyright only accrue once you register the work with the Copyright Office.

What are your thoughts on Apple vs. Samsung?

It is a complex case with lots of issues. Some of the points I found most interesting I wrote about on my blog. In all, I wasn’t terribly surprised with the outcome.

What do you learn, if anything, from high profile cases, like Apple vs. Samsung?

I don’t litigate infringement cases, but they teach me a lot. Litigation often highlights those things that a lawyer did in getting a patent that no one would have faulted them for at the time, but become problems later. Seeing how disputes work themselves out is very helpful in refining the way I draft agreements and patents.

Is it right that the billion dollar lawsuit in Apple vs. Samsung, was decided by a jury or should it have been resolved by a more technical group of people?

Jury pools are picked from random lists, but those pools are pretty big and the parties do go through a process to decide who will be on the jury. Both parties likely spent a lot of money on jury consultants for that process. In the end, the foreman was an engineer who has several patents of his own.

Does your firm end up working more on the creation side of this or on the enforcing/defending side?

We mostly work on patent prosecution, which is the process of getting patents through the USPTO. However, we also help clients deal with competitors who may be infringing and do a lot of work licensing technology. We don’t do litigation, but we do work with other firms that do.

What type of client does Adventip normally associate with? i.e. personal, business, patent litigation.

We cover the range from individuals, to fortune 100 companies.

Why would an individual get an unregistered TM rather than get it registered?

It’s really a business decision. Registration costs money, so if the mark isn’t particularly important to the business or will only be used regionally, it might make sense to save that cost.

Can patents be renewed or can a company re-apply for the same patent that just expired?

No. It used to be possible to prolong the life of patents by delaying when they issued. That was because the term used to be 17 years from the issue date. In the mid ‘90s the term changed to 20 years from the filing date of the earliest domestic priority application (excluding provisional applications).

How does copyright/patented property deal with very similar “knock-off” brand with almost identical logos/designs?

Logos are dealt with under trademark law. The standard isn’t that the infringing mark be the same, just that it is “confusingly similar.”

Are patents easier or harder to get in other countries?

It depends on the country and the technology area. For example, most people agree that it is harder to patent anything in Japan. India is easier, except for pharmaceuticals which are treated differently. Europe is hostile to software patents. However, most major countries have joined WIPO (World Intellectual Property Organization) and signed the TRIPS Treaty (Trade Related Aspects of Intellectual Property Rights) that set certain standards for patentability and term.

Is it difficult to prove “Independent Development?”

It depends on the case. It can be proven in a trade secret case, but independent development is not a defense to patent infringement.

What is considered the “geographical area” covered in an unregistered trademark?

It depends on the facts of the particular case such as where you advertise, where you customers come from, where you ship to, etc.

Given the increasing rate of “progress” in society, are the long durations of intellectual ownership too long? IP law is intended to enable innovation, not artificially slow it down.

I don’t think the term of patents are really the issue. If an area of technology progresses quickly, many patented inventions will be obsolete before the patent term lapses. Under the current system, a patent owner has to pay maintenance fees 4, 8, and 12 years after a patent issues and each one gets progressively larger. A large number of patents expire when these fees are not paid.