Source: https://hallingblog.com/tag/first-to-file/
Timestamp: 2016-12-09 19:18:18
Document Index: 739558161

Matched Legal Cases: ['§ 102', '§ 102', '§ 102', '§ 102', '§ 102', '§ 102', '§ 112', '§ 102', '§ 102', '§ 102', '§ 102', '§ 102', '§ 102', '§ 102']

first-to-file « State of Innovation
Rate this:	September 4, 2012 Posted by dbhalling |
-Philosophy, News, Patents	| AIA, America Invents Act, Constitutionality of America Invents Act, first-to-file, first-to-invent |
Leave a comment HOW THE AMERICA INVENTS ACT CHANGES PATENT LAW
This is a guest post by David Boundy directed to fellow patent attorneys.
The bill tilts the playing field in favor of multinational corporations and market incumbents. The bill shifts from today’s emphasis on disclosure and disruptive innovation to favor trade secret and market incumbency, in the following ways.
The § 102(a) grace period is totally repealed. Every inventor will be in a race against all other possible disclosures—no inventor will have the time to perfect and test an invention before filing. All companies will be forced to file before an invention is fully understood or tested. That will be expensive for your clients and trouble for you as an attorney, and reduce patent quality.
Inventors, entrepreneurs, and startups use the grace period of § 102(a) to meet with investors, do the trial-and-error of R&D, and test their inventions. Under today’s law, the implied obligations of confidentiality in conversations with investors and early-stage partners give sufficient protection to permit these ordinary business activities. The bill repeals all these protections, and replaces them with a flimsy grace period that creates unacceptable risk of loss of patent rights, that no business can rely on—though adds strong protections for large companies that can raise all their financing, and do all their manufacturing and testing in-house. Inventors won’t be able to talk to investors without a patent, and won’t be able to file an application without an investor.
The bill states that an inventor can recover patent rights if he can prove that all other disclosures originated with the inventor—but the bill neglects to create a procedural forum for showing derivation in cases where the leak is not embodied in a patent application, or where the leak neglects to attribute the original inventor. As a practical business matter, the bill leaves no commercially-feasible grace period, an integral part of U.S. patent law since 1839.—you will have to file every application as soon as possible, often long before the invention is ready.
Today’s law gives Americans several advantages over foreign inventors (under the “Hilmer rule”). The bill removes these advantages, and instead places American inventors at a disadvantage to foreign inventors. Consider this fact pattern:
A German inventor files a patent application in Europe, and later in the U.S. under a bilateral treaty
Shortly after the German’s first filing, an American files a patent application in the U.S. on a similar (not identically the same) invention, and then under the same treaty in Europe
Under the proposed legislation, the German’s patent application will be prior art that blocks the American in the U.S. If we switch them around, so that the American files first, then the American does not block the German in Europe. The bill does not “harmonize” the law, and the difference disfavors Americans.
The bill provides that all disclosures within and by a single company do not create bars. This is great for multinational companies, with large in-house staffs, but totally useless for a startup or small company that has to partner with outsiders. Startups use and need the options and protections of current law, but the new bill cuts them away.
A single offer for sale or public demonstration one day before filing a patent application will irretrievably destroy patent rights, if the poorly-drafted language is interpreted literally.
The § 102(b) grace period is cut back—it no longer protects against activities by third parties, but only the inventor’s own activities.
A new “post grant review” procedure allows a competitor, at a time of his own choosing, to start a half‑million dollar proceeding against a patent holder that has threatened no one. Existing, more modest versions of this procedure have already put companies out of business.
As a patent attorney, you will no longer have time to do a good job preparing a patent application, you’ll be “forced to file” prematurely. This will expose you to risks and destroy your weekends. Poor initial applications will drive up post-filing prosecution costs. The stricter and earlier filing deadlines will place you at a blocking point for many of your clients’ business activities, harming your client relationships. Where good patent attorneys are allies in creating value for businesses today, the bill will move you to being a cost—at a much lower billing rate.
The bill destroys commercial certainty and corrupts the incentives in the system:
Various statutory requirements that an applicant act “without deceptive intention” are repealed—in the future, applicants will have incentive to act with deceptive intent.
Key terms of art are redefined—you’ve spent a career learning the meaning of “on sale” and “public use,” but the legislative history fundamentally redefines these terms. It will take decades for courts to establish new precedent to provide any meaningful commercial certainty.
The Metallizing Engineering “secret commercial use” bar is repealed—a company will be able to use an invention as a trade secret, and then spring a patent on the public years later. That favors market incumbents, but makes innovation harder for everyone else.
The “best mode” requirement is reduced to a sham: a patentee will be permitted to disclose only a fictitious embodiment, while holding the best as a trade secret.
The bill gives companies the right to patent and repatent inventions for years, to keep them locked up, neither using them nor permitting them to be used, for far longer than 20 years.
Several aspects of the “first-inventor-to-file” provision—the ones that give patents to second inventors, and to companies that kept inventions in secret for years before filing patent applications—violate constitutional limits on Congress’ authority—years more litigation and commercial uncertainty.
The Act allows Wall Street banks to attack “business method” patents that they are infringing. This doesn’t extend to any other industry, only business methods—another Wall Street giveaway.
The bill is out of committee—further amendments are unlikely. It is literally impossible to alter the bill to meet the needs of startups through an amendment strategy at this late date. The multinationals and their congressional allies smell victory. They see no reason to allow any weakening of their preferred bill through amendments favoring small businesses. The only option at this point is to vote it down.
An entrepreneur with nothing but an idea typically has to present his idea to dozens of venture capitalists and potential manufacturing or marketing partners, without formal confidentiality agreements, to get a company started. (VC’s never sign confidentiality agreements for first meetings.) This works under today’s law, because of the implied obligation of confidentiality and the protection of § 102(a), but under the bill, these conversations will create commercially-unacceptable risks to the investor and partner. U.S. inventors will be under the same “Catch-22” as European inventors—unable to talk to potential investors until a patent application is filed, but unable to file a patent application without an investor. Startups will die before being born.
Companies that need a long “invention incubation” period—trial and error, conceive, test and discard, until finding the “magic combination” of techniques—use the § 102(a) grace period to do their R&D in confidence, and file patent applications only when it’s clear which inventions are valuable, and how they work. Under the bill, a company will have to file a continuous stream of patent applications, many directed to inventions that are dumped under current law. This will increase patent costs remarkably.
The proponents’ arguments do not survive scrutiny
Proponents suggest that the bill does away with complex and costly interferences. That’s true, but irrelevant. Under 100 applications per year end up in interferences. In contrast, the change to today’s “§ 102(a)” grace period affects commercial decisions and raises costs for hundreds of thousands of inventions per year, during the time before filing, by giving inventors and patent attorneys time to get it right the first time. Because the Patent Office has no insight into the pre-filing process of invention, it simply hasn’t taken into account the realities of invention incubation and the costs of its proposal. Further, the proposed replacement, “derivation proceedings,” are the most costly disputes in patent law in those jurisdictions where they exist.
Second, proponents argue that provisional applications will be a cheap way to preserve rights. But that isn’t true under the new law. Under current law, a cheap provisional is useful to show conception and diligence. But under Patent Reform, a provisional application only provides legal benefit if prepared with full § 112 ¶ 1 care and completeness. For a typical startup invention, the cost in attorney fees and inventor time for a provisional application is $10,000 or more—a formidable barrier to an entrepreneur’s first conversation with an investor.
Third, proponents argue, “The bill locks in rights if you publish a disclosure of the invention.” But all companies rely on secrecy for their future plans. No company publishes its most sensitive and advanced technology years before introduction. This argument ignores business reality.
Rate this:	April 26, 2011 Posted by dbhalling |
Patents	| David Boundy, economic growth, first-to-file, first-to-invent, patent policy, patent reform, Patent Reform; America Invents Act, software patents |
3 Comments Manzullo on American Invents Act
The America Invents Act is bad for the US economy and I will be posting principled statements explaining its flaws. Rep. Don Manzullo has shown the courage to be an independent thinker and not to blindly follow the lead (money) from large corporations that want a system that makes it easier for them to steal other people’s technology.
U.S. Rep. Don Manzullo (R-IL) released the following statement expressing his concerns with patent reform legislation that was introduced today in the U.S. House of Representatives.
“I am deeply concerned that ‘The America Invents Act,’ which was introduced today as H.R. 1249, will stall American innovation and send more of our jobs overseas. This legislation reflects an approach to patent reform that stalled previously, in 2007, in the face of massive opposition from American innovators.
“Like its Senate counterpart (S. 23), the House bill includes an unfortunate provision that would shift America’s current patent system – where the first person to conceive of an invention is granted a patent – to a ‘first to file’ system that would turn our system into a foot race to the Patent Office.
“The U.S. has always awarded a patent to the first inventor to come up with an idea, even if somebody else beat them to the Patent Office. The Constitution, in fact, mandates that inventors have exclusive right to their discoveries. This is a system that produced game-changing inventions from people like Samuel Morse, Alexander Graham Bell and Dr. Ray Damadian. Despite that track record, some people are now insisting that the U.S. should ‘harmonize’ with the rest of the world. With all due respect to our friends and allies abroad, I would not trade America’s record of innovation for that of any of those first-to-file countries.
“The bill would also devastate small inventors by effectively eliminating the one-year ‘grace period’ that U.S. inventors currently have. This grace period is critical to small inventors, who can use that year to develop their invention, seek investors and raise funds to begin the expensive patent application process.
“The House bill also fails to provide appropriate safeguards, like those included in S.23, for the controversial new administrative post-grant review process it proposes. Current law already provides two separate administrative tracks to challenge a patent within the PTO, and this bill proposes to add a third ‘post-grant review’ process. Any additional layers of administrative review must be accompanied by safeguards that will diminish the potential for abuse, particularly by infringers with deep pockets and other third parties.
“Moreover, the bill also establishes a transitional review proceeding at the PTO that would affect certain financial service business method patents. Subjecting patent holders who have proven the validity of their patents, both administratively within the PTO and at trial, to a new type of retroactive challenge seems like unnecessary harassment.
“Many of America’s inventors and innovators are alarmed over these fundamental changes to our patent system, and we must hear them out and address their concerns. I urge the House Judiciary Committee to listen to stakeholders of all sizes and perspectives and to find a truly consensus approach to modernizing our patent system. I look forward to working with my colleagues on and off the Committee to craft legislation that will support and encourage all of our American innovators.”
Rate this:	April 1, 2011 Posted by dbhalling |
-Law, Patents	| America Inventions Act, economic growth, first-to-file, first-to-invent, innovation economics, innovation policy, Rep. Don Manzullo (R-IL); Patent reform |
2 Comments David Boundy's Excellent Analysis of the First to File Issues
David Boundy, a well known well respected patent attorney, provided the following analysis of the first to file issues in a comment on the blog Patently O.
The problem here is that the Big Company proponents of the bill and the small company folks are talking past each other, and both are right on different pieces.
The section of the bill titled “first to file” has two completely distinct effects — (1) changing the § 102(g) tie-breaker rule, for deciding between two near-simultaneous patent applications directed to the same invention, and (2) weakening the §§ 102(a)-(f) grace period, the deadline for filing a patent application.
The proponents are correct that first-to-file vs first-to-invent as a tie-breaker between two near-simultaneous patent applications for the same invention yields no significant difference in the outcome, but first-to-file (if the bill changed only the § 102(g) tie-breaker rule) is almost certain to yield significant cost-savings and efficiencies.
The answer is — so what. The § 102(g) tie-breaker rule affects just over one hundred patent applications per year.
The small business folks are concerned about the other part of the same section, the §§ 102(a)-(f) grace period, the deadline for filing a patent application. The grace period is a make-or-break issue for small companies and startups, that need the extra time to seek investors, test their inventions, and the like. The grace period rule is a far larger issue — it affects hundreds of thousands of inventions per year, largely by taking away the time to investigate, think, and make careful efficient economic decisions, and decide not to file patent applications to inventions that turn out to be duds. Those applications are not filed today, but will be filed under Patent Reform, costing small companies about $1 billion per year. And they will bog the PTO under 50,000 to 100,000 more applications, most of which are written in haste, and most of the incremental applications directed to inventions that would have dropped out of the system with more time to think.
The weak grace period of S.23 creates an impossible catch-22 for small companies. Under patent reform, entrepreneurs won’t be able to discuss their ideas with potential investors or other strategic partners until after a patent application is filed because of the risk of losing all patent rights. On the other hand, many entrepreneurs don’t have the money available to file patent applications until after they have funding in hand. This circular dependency will make it impossible to proceed. Current law gives small companies a way out of this deadlock: they take advantage of the grace period to discuss their ideas with investors and partners while they work to get their company running, and file patent applications once investors come on board. But the changes in S.23 create commercially-unacceptable risks for companies that must seek outside investors and partners unless the inventor can find the many thousands of dollars to file a patent application first. That change in the grace period is just fine for multinationals like Kodak, IBM, GE, the big Pharma’s, etc. but for small companies and startups, it’s simply unworkable.
(Note well, all patent attorneys not working in-house—-a weak grace period will send your malpractice premiums through the roof.)
Two economists at McGill University (one of Canada’s two premier universities) studied the economic effects on Canadian inventors and companies when Canada made the same switch in 1989. They found that Canada’s shift to essentially the same weak grace period as in S.23 created no significant benefit, but selectively disadvantaged small companies and domestic-focused companies, and favored large multinational companies. The McGill authors specifically noted that the adverse effects on the U.S. would be larger than they were in Canada, because of the U.S.’s larger fraction of small companies, and larger reliance on our domestic markets.
The data are pretty clear on both sides. The change in § 102(g) tie-breaker rule makes sense, and change to the § 102(a)-(f) grace period rule will be destructive to the U.S. economy. The latter effect is far larger.
Call your representatives, and call your clients and ask them to call your representatives. All that is required for the triumph of evil is for good men to do nothing
The two key papers, analyzing empirical data from Canada and Europe, are
Lo & Sutthiphisal, “Does it Matter Who Has the Right to Patent: First-to-Invent or First-to-File? Lessons from Canada,” April 2009, NBER Working Paper No. w14926, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1394833
Boundy & Marquardt, Patent Reform’s Weakened Grace Period: Its Effects On Startups, Small Companies, University Spin-Offs And Medical Innovators, “Medical Innovation & Business Journal, vol. 2 no. 2 (Summer 2010) http://journals.lww.com/medinnovbusiness/Citation/2010/06010/Patent_Reform_s_Weakened_Grace_Period__Its_Effects.6.aspx
Rate this:	March 9, 2011 Posted by dbhalling |
Patents	| America Invents Act, David Boundy, first-to-file, first-to-invent, patent reform |
3 Comments David Boundy’s Excellent Analysis of the First to File Issues
3 Comments Senator Feinstein: First-Inventor-to-File a Ruse
According to Broadbandbreakfast.com, Senator Feinstein nailed it!
“I think this is really a battle between the small inventors beginning in the garage, like those who developed the Apple computer that was nowhere, and who, through the first-to-invent system, were able to create one of the greatest companies in the world,” Feinstein said. “America’s great strength is the cutting-edge of innovation. The first-to-invent system has served us well. If it is not broke, don’t fix it. I don’t really believe it is broke.”
Feinstein discussed the importance of the first-to-invent standard in the United States at length, as well as the importance of the associated “grace period” to independent inventors.
She said that the changes sought in the current legislation would make it much harder for inventors to prove that they were the first to come up with an idea.
“Another problem with the bill’s first to file system is the difficulty of proving that someone copied your invention,” she said.
“Currently, you as a first inventor can prove that you were first by presenting evidence that is in your control–your own records contemporaneously documenting the development of your invention,” she continued. “But to prove that somebody else’s patent application came from you under the bill, was “derived” from you, you would have to submit documents showing this copying. Only if there was a direct relationship between the two parties will the first inventor have such documents.
If there was only an indirect relationship, or an intermediary–for example, the first inventor described his invention at an angel investor presentation where he didn’t know the identities of many in attendance–the documents that would show “derivation”–copying–are not going to be in the first inventor’s possession; they would be in the second party’s possession. You would have to find out who they talked to, e-mailed with, et cetera to trace it back to your original disclosure. But the bill doesn’t provide for any discovery in these “derivation proceedings,” so the first inventor can’t prove their claim”
Feinstein also dismissed the arguments for a change in the system, noting that there are only 50 proceedings a year at the United States Patent and Trademark Office that dispute who created a new invention first.
That is a minuscule number considering that there are about 480,000 patent applications a year.
Rate this:	March 4, 2011 Posted by dbhalling |
Patents	| first inventor to file, first-to-file, first-to-invent, Invent America Act, patent reform, S.23, senator feinstein |
1 Comment Patent Reform: "First Inventor to File" Misleading
Rate this:	March 1, 2011 Posted by dbhalling |
Patents	| first-to-file, first-to-invent, patent reform 2011 |
5 Comments Patent Reform: “First Inventor to File” Misleading
5 Comments « Previous Entries About This blog is devoted to intellectual property innovation, patent law and innovation. The moderator, editor, and main author is Dale B. Halling. Mr. Halling is patent attorney and entrepreneur. As a patent attorney, Mr. Halling, has represented numerous Fortune 500 companies including, McDonnell Douglas, Boeing, Motorola, Ameritech, SBC, MCI, Cypress, and numerous technology start-ups. He has helped his clients obtain patents worldwide. Mr. Halling has a BS in Electrical Engineering from Kansas State University, an MS in Physics from the University of Texas at Dallas and a JD from St. Louis University. Mr. Halling is the author of the book “The Decline and Fall of the American Entrepreneur: How Little Known Laws are Killing Innovation.”