Venable's IP News & Comment
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Venable’s IP News & Comment AUGUST 2007 Members of Venable’s 80-plus Technology Division are pleased to present this edition of IP News & Comment, covering topics generating the greatest interest in the areas of patents, trademarks, copyrights, and IP litigation. We welcome your comments and look forward to being of service. Patent Law Reform (Update) ................................................................................................................................... 1 USPTO Proposes New Rules of Ex Parte Practice Before the Board of Appeals and Interferences....................... 3 OMB Approves USPTO's New Rules Restricting Continuation Applications and Patent Claims.......................... 4 A One-Two Punch Hits Biotech .............................................................................................................................. 5 Is Fact Checking FairUse? ....................................................................................................................................... 6 A Preview of Michael Gollin's New Book............................................................................................................... 7 Venable’s Baltimore Office Adds Five Biotech and Business Attorneys From Saul Ewing................................... 9 Venable Expands into Delaware ............................................................................................................................ 10 Patent Law Reform (Update) By Catherine Bennett, Partner, Venable LLP HOUSE On Wednesday, July 18th, the House Judiciary Committee reported HR 1908, the Patent Law Reform Act of 2007. The bill approved was a substitute measure offered by IP Subcommittee Chair, Howard Berman (D-CA), to which 7 amendments were adopted. The bill approved has evolved substantially since first introduced with a companion Senate (S.1045) measure last April. For example, the Berman substitute’s post grant opposition procedures no longer contain the so-called “second window” for challenging patent validity. Instead, the bill expands upon the existing patent reexamination procedures available for the first year after patent issues. The second window has been one of the more controversial points of contention between PhRMA/BIO companies and the “high tech” community. Berman’s amendment also made clarifications to the “first-to-file” provisions, largely in response to concerns expressed by the university community. Universities were concerned about academic publications about an invention might jeopardize patent rights under a first to file system. He also delayed the effective date of the change until major trading partners (EU and Japan) adopted comparable “grace period” protections, independently or in the context of patent harmonization talks. Apparently, this change was requested by the Administration so as to not lose leverage in patent harmonization negotiations. Another core provision to which changes were made related to the apportionment of damages. This was another key point of difference between the high tech community and the universities and drug makers. The earlier bill’s requirement for an apportionment of damages that reflects the economic value attributable to the patented product’s contribution over prior art was modified. Such a calculation would not be required where the parties have competing products. The bill also recognizes that the value of a combination of two elements of prior art might exceed their separate value and establishes circumstances where the entire market value calculation might apply. A committee amendment affirmed the discretion of judges to decide the apportionment analysis. VENABLE’S IP NEWS & COMMENT AUGUST 2007 2 Other modifications included in the approved bill: • Inequitable conduct – requires that this defense be pled with “particularity” and separates proof of intent from proof of materiality. An amendment to eliminate the defense was rejected. • Best mode – maintains the requirement that the patent application disclose the “best mode” for carrying out the invention, but eliminates the failure of the applicant to fulfill the best mode requirement as a defense against patent infringement. • Studies – requires studies on the impact of the first to file and damage apportionment provisions every seven years. • Venue – further tightens the venue provisions to require patent actions to be brought where either party resides or where the defendant has committed acts of infringement and has a regular place of business. • Tax planning methods – makes tax planning methods (a plan, strategy, technique or scheme that is designed to reduce, minimize, or defer tax liability) unpatentable. While Chairman Conyers (D-MI) announced at the close of the mark-up his intention to move the bill to the House floor before the August recess, this is not likely to happen. In addition, Chairman Conyers did not rule out further changes in the legislation, most likely in the form of an additional manager’s amendment, when the bill moves to floor. SENATE The Senate Judiciary Committee reported its patent laws reform measure on July 19, 2007 by a vote of 13-5. During Committee consideration, Chairman Leahy (D-VT) set forth another substitute bill and manager’s amendment to which five additional amendments were adopted. As reported by the committee, the Leahy substitute also made changes in the post-grant review process. For both the first and second window, the bill raises the standard to grant such a review to a “substantial new question of patentability as to at least one claim”. It also requires pleading with particularity and prohibits filing a post-grant review petition if the party has already filed an action on validity in district court. With respect to the second window, the bill provides for the presumption of validity of the patent. It also requires that the post-grant petition for review be filed within 12 months of notice of infringement. Finally and curiously, it limits the second window to patents filed after November 29, 1999. As noted above, the House jettisoned the second window in its post-grant opposition provisions. Among the amendments approved were proposals to prohibit the diversion of patent fees, to permit PTO to accept late filing filings in certain circumstances and to limit damages with respect to check imaging and other financial archiving methods. The latter two were constituent driven changes. During the mark-up, Senator Kyl offered amendments to strike the post-grant opposition provisions and modify the damage apportionment language. The first lost by a vote of 7-11 and the second was defeated 7-10. The Committee also defeated amendments by Senator Specter to give the Federal Circuit more discretion regarding interlocutory appeals and to scale back the best mode requirements. Senator Specter also offered an amendment to require, in an inequitable conduct defense, clear and convincing evidence of misconduct and proof that the patent would not have been granted “but for” the misconduct. Chairman Leahy succeeded in striking the materiality portion of the amendment. In approving the legislation, it was made clear that additional modifications to the legislation would likely be made before it was considered on the Senate floor. Staff has indicated that the bill is unlikely to reach the Senate floor before the Fall. In the interim, it is assumed that key stakeholders will continue to try to find more common ground. While the high tech community has indicated that they support the Senate bill in current form, they know that BIO/PhRMA companies do not support it and would try to kill the legislation on the Senate floor unless there are additional modifications. In an environment in which any controversial bill requires 60 votes, it would not be that VALUE ADDED, VALUES DRIVEN.® VENABLE’S IP NEWS & COMMENT AUGUST 2007 3 difficult to defeat. Recognizing this, Majority Leader Reid is unlikely to give the bill floor time until greater consensus is achieved. One staffer observed that it was highly doubtful this bill would go to the Senate floor and be opened for amendment. The more likely scenario is that it will be negotiated out in an Unanimous Consent Agreement off the floor. As has been the case during most of the deliberative process, the key issues in contention are post-grant opposition and the apportionment of damages. Lesser tier issues include the inequitable conduct defense and best mode. After the considerable amount of work that has gone into the patent law reform process, it is difficult to believe that the legislation will not go forward. At the same time, given the differing business models and billions of dollars at stake on both sides of the current fight, that could very well happen. USPTO Proposes New Rules of Ex Parte Practice Before the Board of Appeals and Interferences By Joan Ellis, Ph.D., Partner, Venable LLP On July 30, 2007, the United States Patent and Trademark Office (USPTO) published proposed rule changes for ex parte practice before the Board of Appeals and Interferences (the Board) in the Federal Register. Although presented as proposed rule changes, the changes have already been reviewed and approved by the Office of Management and Budget (OMB). The USPTO characterizes the proposed rules as being merely procedural (involving changes to interpretive rules or rules of agency procedure under 5 U.S.C. § 553(b)(A)) and therefore, requiring no public comment. Nevertheless, written comments will be permitted on certain issues until September