Patent reform is throwing a learning curve at intellectual property attorneys here and nationwide.
The Leahy-Smith America Invents Act recently made its way through Congress and was expected to be signed into law as the Business Journal went to press. It holds the potential to bring significant changes to Orange County’s business landscape, especially the technology, medical device and drug companies that count intellectual property as a fundamental asset.
It’s an overhaul to longstanding U.S. patent policy, including a change in the decades-old standard of giving precedence on a “first to invent” basis. The new policy will instead favor “first to file.”
The U.S. Patent and Trademark Office has traditionally awarded patents to applicants who prove they were first to come up with an invention. Under the new policy, the inventor who files first will get the patent.
The change won’t take effect for another 18 months, but firms specializing in intellectual property are getting ready.
“Any time there is a big change, it does affect us in terms of getting up to speed,” said Bruce Itchkawitz, a patent attorney at Irvine-based Knobbe Martens Olson & Bear LLP. “It’s not only about the rules, but also thinking through how they impact our clients.”
Strategy
Along with filing patent applications and pushing them through the patent office, “the third prong of what we do is to deal with our clients to explain things and strategize in terms of how to develop a patent portfolio,” Itchkawitz said.
Educating clients and encouraging them to take timely action to patent their inventions are more important with the new law.
“Filing date was always critical,” said Jan Weir, intellectual property lawyer at New-port-based Stradling Yocca Carlson & Rauth. “Now (it) be-comes a great deal more important.”
The reform shuffles the landscape of the challenges that patent attorneys could face. Some defenses and grounds for argument against a patent may disappear; others will sprout up.
Weir said the removal of a basis of argument known as the “best-mode requirement” is likely to reduce challenges to attorneys filing for patents on behalf of clients.
The best-mode requirement means that a patent must disclose the best method of arriving at the invention. Petitioners can challenge a patent if they believe the best mode is left out of the disclosure.
Best Mode
The best-mode requirement remains in the new law, but a violation is no longer grounds for rejecting a patent application.
The best-mode defense is one of the areas that have typically brought big legal fees.
“Eventually the fees associated with that will disappear,” said Steve Jensen, a partner at Knobbe Martens.
The new provisions might put pressure on small companies and individuals.
“Smaller startup companies have limited resources,” said Itchkawitz of Knobbe Martens. “There are a lot of startups in Orange County. Their intellectual properties portfolio—sometimes that’s all they have.”
On the other hand, large companies with a team of patent lawyers, either in-house or outside, “can fire off patent applications on a daily basis,” Weir said.
Smaller companies and individual inventors might find a stop-gap in a method known as disclosure, which gives an inventor a grace period on the “first to file” policy. A disclosure will only hold up if an application is filed within 12 months.
Uncertainty
The regulatory standards for disclosure have not yet been formulated, however, and uncertainty about their final form poses a challenge to lawyers.
Another substantial provision of the act is called the post-grant reconsideration process, which can lead to cancellation or modifications of an already-granted patent.
“The post-grant review is a new way to challenge patents and add to the uncertainty,” Jensen of Knobbe Martens said.
Although similar to the current review system, the new law allows third parties to challenge a patent based on nearly any grounds within nine months of its issuance.
Prior standards for re-examinations have been effective on challenging the validity of patents. According to data from the patent office, more than 90% of the re-examination requests since the late 1990s have been granted, and fewer than 25% of proceedings have survived without changes or cancellations.
The post-grant provision of the new law is expected to be even tougher for patent holders, many of whom will have to defend against a broader range of challenges.
“This is part of strategizing beyond getting the patent,” Itchkawitz said. “It’s also about defending our patents and responding to the challenges from others.”
Litigation
Even with re-examinations and challenges, “at the end of the day, there is always going to be a litigation option,” according to Jeffrey Thomas, a partner in the Irvine office of Gibson, Dunn & Crutcher LLP.
There could be a reduction in the number of cases going to court when it comes to grants of patents, Thomas said, since the new law takes away a key argument under the first-to-file standard.
“But it only takes away one,” Thomas said. “It doesn’t take away the more common grounds for challenging the validity of patents.”
