Upcoming Changes in Patent Law May Significantly Impact the Biotech Industry

Inventor Declarations and Assignments

According to Janet Gongola, the USPTO's Patent Reform Coordinator, the new provisions of the AIA concerning the Inventor's Oath or Declaration were designed to “simplify and streamline the process of filing” the oath or declaration. Most fundamentally, under the new law, an inventor is no longer the only possible applicant of a patent application. As in the past, an inventor can be the applicant, and can file and prosecute a patent application in the USPTO in her own name. She can also assign her invention to another person or company, and sign an inventor's declaration allowing the assignee to file and prosecute the application in her name.

In the past it was rather difficult for the assignee to proceed before the USPTO without the inventor's declaration. Under the new provisions, however, the USPTO will treat as the official applicant any person or company to whom an inventor has assigned or is under an obligation to assign the invention, or who can otherwise show a “sufficient proprietary interest in the matter” (35 U.S.C. 118). Thus, if an inventor refuses to proceed with an application, for example, by refusing to sign a declaration or even an assignment, anyone who falls within the new definition of an “applicant” can proceed with filing and prosecuting a patent application even without the inventor's cooperation. He can simply file a substitute statement in place of the missing inventor's declaration. However, the USPTO still recommends gathering and maintaining evidence of the failed attempt to obtain the inventor's signature for possible use in future litigation. In addition, this substitute statement must indicate sufficient facts to prove that the person or company has the requisite ownership or proprietary interest in the invention. If the inventor did sign an assignment, then the applicant/assignee can even file a copy of the assignment itself in place of the missing declaration, as long as it contains the language now required for declarations.

The new declaration language requires that the inventor swear or declare that she made or authorized the filing of the application and that she believes herself to be an original inventor of the subject matter claimed in the application. The inventor need no longer swear that she was the first inventor, given our transition away from the current first-to-invent system, neither must she swear she has reviewed and understood the contents of the application. In addition, the inventor no longer needs to indicate her citizenship or acknowledge her duty to disclose to the USPTO all earlier patents and references that she knows of that may be relevant to the patentability of her invention.

The timing of filing the declaration, substitute statement, or properly worded assignment has also changed. Rather than being required before examination begins, these documents may now be filed as late as in response to a Notice of Allowability of the application, as long as the inventors were properly identified in an Application Data Sheet (ADS) upon filing of the application.

The new statutes under the AIA are likely to impact the biotechnology industry in particular because of the nature of the institutions and companies that conduct research in this field. For example, a large proportion of biotech studies take place in hospitals and universities, as well as in biotech start-ups and mid-sized companies. Employment in these types of organizations is often more transient than in larger companies, and inventors may well leave such employers long before a patent application is allowed by the USPTO, and sometimes even before an application is filed. Inventors who work in these settings may also be more likely to believe that their inventions belong to them and can be taken with them when they leave. Even if there is no bad intent, it may be difficult to locate inventors after they have left. Thus, the redefinition of “applicant” and other aspects of the new statutes and USPTO rules should make it easier for properly prepared owners to prosecute their patent applications.

The key for employers is to get properly worded assignments signed by all possible inventors as soon as an invention is disclosed. In addition, employment agreements should be carefully written to include an obligation to assign any inventions made by any employees during their employment to the employer. By taking these simple steps, employers in the biotech industry can benefit from the new AIA rules relating to inventor declarations and assignments.

Pre-Issuance Submissions and Supplemental Examination

Under the new regime, third party challengers may submit to the USPTO “printed publications” of potential relevance to the examination of a patent application (such as patents or articles, but not physical specimens or evidence of earlier sales of a product). These new rules went into effect on September 16, 2012 and apply to all patent applications filed before, on, or after that date. These new “pre-issuance submissions,” says Gongola, “aim to improve quality of patent examination by placing the most relevant art into the file at the earliest point in the process.”

The pre-issuance submissions must be presented to the USPTO before the earlier of (A) the date a Notice of Allowance is given or mailed, or (B) the later of (i) 6 months after the date on which the application is first published by the Office, or (ii) the date of first rejection of any claim by the examiner. This strict, and somewhat confusing filing period was designed to prevent others from harassing a patent applicant during the prosecution of an application. Thus, anyone who intends to file such a submission should file as early as possible once they become aware of someone else's application, e.g., when the application is published.

The pre-issuance submission must include a concise description of the relevance of each cited document and copies of any documents that are not US patents and published US patent applications. While the submission must be signed, it can be signed by a patent attorney, and thus the name of the real party-in-interest behind the submission can be withheld. The USPTO will notify the applicant of any compliant submissions and will notify the third party submitter of noncompliant submissions. Under this procedure, Gongola explains, “the patent examiner will be positioned to make quick and efficient patentability determinations about the submission.”

In another new procedure called “supplemental examination,” the AIA provides patent owners the “opportunity to cleanse any inequitable conduct that may have been committed before the PTO,” according to Gongola. In other words, if during prosecution, the applicant came across a prior art reference that might potentially have been pertinent to the file, but elected not to submit it to the examiner, she would now have an opportunity, even after her patent has issued, to do so. Under this new procedure, the patent owner must submit a list of the relevant information, along with a “separate, detailed explanation of the relevance and manner of applying each item of information to each claim of the patent for which supplemental examination is requested” (37 CFR 1.610). The filing fee for such a request for supplemental examination is $5,140. If the new information raises a “substantial new question of patentability,” it triggers an ex parte re-examination, which would entail further review and a reexamination fee of $16,120. In practice, the patent owner must pay both of these significant fees along with the initial request, and the USPTO refunds the re-examination fee to the patent owner if no re-examination is ordered. Initially small- and micro-entity discounts will not apply to these fees, although the USPTO's proposed fee structure under Section 10 of the AIA allows for such reductions in the future.

Pre-issuance submissions and supplemental examination are also likely to affect the biotechnology industry. For example, much of the so-called “prior art” that may be most relevant in biotech patent applications comes in the form of journal articles. While USPTO examiners have access to many journals, their access is not unlimited; furthermore, the relevant literature may be so voluminous that it often becomes an impossible task for examiners in the biological arts to perform a careful review of all relevant references in addition to all relevant issued patents and published applications. Thus, more than in many other industries, the pre-issuance submission might make sense as a low-cost way for a biotech company to make sure that a competitor will have to deal with the most relevant prior art during the prosecution of its application.

However, potential submitters of prior art must keep in mind that their participation during a pre-issuance submission is strictly limited to their initial filing papers, and thus the patent applicant can take steps to amend the claims and/or argue against the submitted reference(s) and perhaps obtain an even stronger patent. As a result, we would recommend use of the pre-issuance submission only if the company making the submission has limited funds—e.g., for future litigation or re-examination—and has found prior art that it believes is anticipatory at least with respect to the potential submitter's own product or methods, so that there is a good likelihood that the patent applicant will be forced to amend her claims to such an extent that they would no longer cover the submitter's activities.

With respect to supplemental examination, the cost may well prove prohibitive to many biotech patent owners such as hospitals, universities, and start-ups. However, if there is clear evidence that a patent owner misled the USPTO in obtaining her patent or intentionally withheld a reference during examination, this new procedure may have some use in spite of the cost. For example, a potential investor or buyer of a start-up company may come to know of a possible problem with one or more of the patents involved in the deal. In those situations, the potential investor or buyer may require that the patent owner request a supplemental examination before making the investment or purchase. In another scenario, a patent owner may learn that her patent attorney made a misrepresentation or accidentally or intentionally withheld a key reference during the prosecution of an important patent. The new procedure would be useful to remove any taint of such events from the patent. Of course, there are other possible scenarios in which the new procedure could be useful, but the cost seems to indicate that the USPTO does not want to encourage its use.

New Post-Grant “Trials”

The AIA also establishes several new trial-like proceedings before an administrative law judge of the newly established Patent Trial and Appeals Board (PTAB). As Administrative Patent Judge Sally Medley of the PTAB explained during a recent seminar, these new administrative trials are “aimed at streamlining issues for decision” and designed to provide patent challengers with a cheaper, more efficient alternative to district court litigation.

On September 16, two such proceedings of note came into effect: post-grant review and inter partes review. According to the PTO, the goal for both trials is to reach a final written decision within one year of instituting the proceeding. Post-grant review will apply to first-to-file patents and will be available to patent challengers within nine months of issuance, much like an opposition proceeding for a European patent. To obtain such a review, a patent challenger will have to show that it is “more likely than not” that at least one of the issued claims is unpatentable. These challenges can encompass prior art that anticipates or renders the patent obvious under 35 USC 102 and 103; arguments that the patent is indefinite, not enabled, or lacks adequate written description under 35 USC 112; and assertions that the claimed subject matter is not statutory subject matter under 35 USC 101.

Inter partes review, like its pre-AIA cousin inter partes re-examination, applies to all patents, both under the current first-to-invent system and the forthcoming first-to-file regime. It can only be instituted after the nine-month, post-grant review period expires, and the threshold for initiating such a review is a “reasonable likelihood” that the challenger will prevail on at least one claim—a lower burden than post-grant review, as Judge Medley explains. Inter partes arguments are limited to prior art anticipation and obviousness under 35 USC 102 and 103 based on patents and/or printed publications.

In both administrative trials, the patentee has the opportunity both to respond to arguments presented by the challenger and to amend her claims to avoid rejection. The proceedings will involve limited written discovery, pursuant to the USPTO's rulings and the parties' agreements amongst themselves, including depositions of witnesses, when appropriate. And in both cases, there is risk both to the challenger and the patentee. The challenger cannot later raise a claim before the USPTO or a district court that it previously raised or “reasonably could have raised” in a post-grant or inter partes review. Similarly, the patentee is precluded from taking any actions inconsistent with an adverse judgment in one of the administrative trials.

These new proceedings are less likely to have an impact on biotechnology companies than the other new provisions discussed above. The nine-month window in post-grant review may prove unattractive to the biotech industry because, in many cases, the true value of a biotech or medical device patent will not be known within nine months of the patent issue date, or even for years after the patent issues. This is especially true for patents that involve medical therapies or devices that require FDA approval. That fact, combined with the estoppel issues–legal principles that prevent one party from alleging or denying a fact because of their own previous actions or words to the contrary–is likely to limit the usefulness of the post-grant review in the biotech industry. It is also unclear how significantly the new inter partes review will differ from the previous inter partes re-examination, or whether the new procedure will prove any better or worse for biotech companies.

So as we move into the next stage of the AIA, expect these important changes to shift the landscape of obtaining, enforcing, and challenging patents in the biotech industry.