ACS Position Statement

Statement on U.S. Patent Reform

ACS Statement on U.S. Patent Reform

ACS Position

Since 1790, United States patent law has helped create a positive environment for innovators and entrepreneurs ensuring that there are appropriate incentives for developing and marketing discoveries and inventions. Today, advances in fields such as bio-, nano-, and information technologies require changes in patent law. Experience under our current patent laws, as interpreted by the courts, also suggests areas for further refinement. In addition, changes in the global economic environment have made it apparent that further adjustments to our patent laws are necessary. Failure to reform our patent system could hinder our nation’s ability to compete in the global arena.

Patents grant patent holders the right to exclude others from making, using, and selling a patented invention in exchange for early and complete disclosure of the invention to the public. These protections have enriched our nation by providing financial incentives to patent holders to make the inventions available to the public and to those who can improve upon the patented discoveries. This system simultaneously promotes science and the transfer of information and technology to the marketplace. However, some areas of existing law have become a hindrance rather than a help. In addition, it is time to permanently end patent fee diversion from the U.S. Patent and Trademark Office (PTO). ACS believes patent reform would have a direct, positive effect on the ability of our domestic scientific, technological, business, and educational communities to compete and thrive in the international arena.

1. First Inventor to File

ACS is inclined to accept changing from a first-to-invent to a first-to-file system, but other countries’ laws must include a grace period for inventors who publish, present, sell, or attempt to sell their invention for up to one year prior to filing a patent application. ACS also supports legislation to strengthen administrative proceedings to ensure recognition of proper inventorship.

Current U.S. law provides that patents be awarded on a “first-to-invent” basis. When there is a dispute regarding who, in fact, was first to invent, the PTO conducts an “interference” proceeding. These administrative proceedings are lengthy, costly, and usually favor the first inventor to file. The law also permits granting patents to inventors who publish, present, or attempt to sell their invention for up to a year before the filing date.

Most of the rest of the world awards patents on a “first-to-file” basis. In fact, in most cases, inventor rights to receive a patent are extinguished if they publish, present, or attempt to sell their invention at any time before applying for a patent. This renders interference proceedings unnecessary.

While the small-inventor community has long felt disadvantaged by the “race to the Patent Office,” i.e., the first-to-file system, this opposition has been easing because interference proceedings are so costly and the first inventor to file almost always prevails. Advocates of the first-to-file system believe that such a standard in the U.S. would benefit science and lead to more comprehensively documented patent applications.

ACS accepts switching to a first-to-file standard as long as there is a quid pro quo in the rest of the world, most likely the retention or initiation of the grace period. ACS supports improved administrative proceedings to determine true inventorship. Such changes would encourage scientific progress while protecting the rights of small inventors.

2. PTO Fees

ACS supports legislation requiring the PTO to retain all the fees it collects. Such legislation would help ensure continued support for its activities, enable faster patent processing, and permit a revolving fund for the PTO to retain and manage unexpended fees.

This is an area where there has been unanimity among patent professionals and the inventor community. In the early 1990s, the PTO was put on a user-funded basis and authorized to charge the fees necessary to support the Office. Subsequently, until recently, the White House and/or Congress designated a portion of those funds each year for other government purposes. In the last few years, as part of the annual budget process, the PTO has been permitted to keep all of its fees. Many are concerned, however, that this recent trend could again be reversed, i.e., that the White House or Congress could again use the PTO fees for unrelated programs.

Reinstituting the diversion of PTO fees to other governmental programs would diminish the PTO’s ability to maintain the quality of issued patents and could delay the granting of patents. Therefore, ACS supports legislation requiring that the PTO be permitted to keep all the funds collected and supports establishment of a revolving fund to retain and manage collected fees until they are expended.

3. Post-grant Review

ACS believes a prior comprehensive study of the possible impact on the patent system, including a study of the use of separate opposition courts and the effect of opposition proceedings on the patent systems of other countries, should be a prerequisite to the creation of any post-grant review proceeding.

The U.S. has no specific system for post-grant review of patents. However, the law does provide for re-examination of an issued patent if new references are found that may affect it. The patent owner, an affected party, or the Commissioner of Patents may initiate such a re-examination. They may be either inter partes or ex parte.

Most of the rest of the world provides for post-grant review (often called “opposition proceedings”) in which affected parties can protest issuance of a patent. Such proceedings are public and fully involve both parties. There are differences in proceedings around the world—primarily the length of time to file and whether there is one or two periods for filing. Some countries also have pre-grant review (see submission of prior art, below). Some countries have specialized, expert courts to decide on oppositions.

ACS opposes any post-grant review that would unnecessarily lengthen the time before a new patent could emerge from a cloud of uncertainty about its validity and be effectively marketed. If post-grant review is enacted, ACS strongly recommends only one review period be utilized. Moreover, the role of inter-partes reexamination proceedings in providing cost-effective means for evaluating the validity of patents should be evaluated.

4. Submission of Prior Art during Examination of an Application

ACS supports requiring the PTO to examine prior art submitted by someone other than the applicant during examination of published applications, provided that the prior art is submitted within a limited time after publication.

Related to the issue of post-grant review is review of prior art submitted during examination of an application, that is whether a non-applicant but an otherwise affected party could file relevant prior art during examination of the initial application. Currently, the PTO may review such submitted prior art at the discretion of the individual examiner. Use of submitted prior art has become a more significant concern subsequent to 1999 changes in the law. At that time, patent applications began to be published well before issue of the resulting patent. Accordingly, affected parties could determine the substance of an application early in the examination process.

ACS supports submission of prior art during examination of an application. Careful consideration of the submitted prior art in the examiner-applicant dialog is more likely to lead to better supported and valid patents, and inclusion of prior art in the normal examination process might reduce the likelihood, or length and cost, of subsequent patent litigation.

5. Inequitable Conduct

ACS supports the narrowing, but not the elimination, of a mechanism for a finding of inequitable conduct.

A finding of inequitable conduct by a patent holder may invalidate a patent. Accordingly, defendants in patent infringement litigation very often assert inequitable conduct as a defense against patent holders. However, the standard of evidence required to support such a finding is very high, and inequitable conduct is rarely found. As a result, considerable time and money are spent litigating with little result.

ACS supports retaining the defense of inequitable conduct because sanctions should be available for egregious cases. ACS does not support elimination of the grounds because it would lead to the public’s loss of confidence in the value of what then may seem to be a corruptible system.

6. Best Mode

ACS opposes elimination of the best mode requirement because a primary benefit of a patent system (i.e., to publicize advances in innovation) may be diluted by removing the obligation to teach the most effective mode of practice of the invention being protected.

Under current law, patent applications must include a discussion of the best mode of practicing the invention. This provision is unique to the United States. A patent holder’s failure to include the best mode is considered tantamount to committing inequitable conduct (discussed above) such that the entire patent is invalidated.

ACS believes the best mode requirement furthers science and leads to better-documented applications because it encourages applicants to ensure they meet all requirements of the patent laws as well as not being exposed to the liability of a finding of a best mode violation.

7. PTO Process Regulations (Continuation Practice, Claims Limitation, Markush Groups)

ACS opposes permitting the PTO to issue procedural rules that have the effect of limiting a patent applicant’s right to seek patent coverage for all inventions disclosed in a patent application.

The PTO has had a significant backlog in patent applications and it keeps increasing. As a result, it takes longer and longer for applications to be examined and ultimately issued. The PTO has responded, in part, by issuing rules limiting the number of continuation applications that can be filed in any one original application and the number of claims that will be examined in an application. The PTO has also proposed rules limiting the flexibility to make claims in the alternative (Markush claims), which are especially useful in chemical patents.

Patent professionals outside the PTO are unanimous in opposing these moves. The issued rules on continuation practice and claims limitations have been tied up in court by a preliminary injunction. The trial judge’s initial opinion on the preliminary injunction suggests the PTO will lose in court.

It should be noted that the PTO’s own analyses show that the best way to reduce the backlog and improve timeliness (called pendency) is to increase the number of examiners, provide better training, and reduce turnover. To its credit, the PTO is taking some steps in these directions. The ACS supports and encourages such actions, but opposes the implementation of artificial constraints that place form over substance.

8. Narrowing Grounds for Injunction

ACS opposes any further narrowing of grounds for issuing injunctions because recent court decisions have already narrowed these grounds sufficiently.

Traditionally, a patent owner could automatically obtain an injunction if a defendant was found to have infringed upon a patent. As a result, patent owners could bargain for significant royalties in any subsequent license.

The chemical enterprise, particularly the pharmaceutical industry, relies heavily on single patents, or a few related patents on a particular invention. Automatic injunction is an important remedy vital to protecting the technologies and advancements resulting from years of research and development. The chemical enterprise is unlike the electronics-computer-software industry, where any single product is the sum of multiple patents on a series of separate components of a product and where an injunction on the entire product that is rooted only in infringement by a particular component is disfavored by the industry.

Recent Federal Circuit cases have had the effect of narrowing the availability of automatic injunctive relief. ACS opposes any further narrowing the grounds for injunctive relief; doing so would discourage scientific research and development in this country.

9. Required Searches

ACS opposes requiring patent applicants to perform and file a search of prior art and to provide a patentability report with a patent application.

Under current law, patent applicants must inform the PTO of any information they are aware of that was created prior to the applicant’s filing an application and that is “material” to the application. However, applicants need not proactively conduct a search or evaluate the affect the submitted information has on patentability of the invention. As a result, the burden of search and evaluation falls on the PTO’s examiner.

In order to remove this burden from the examiner and to remedy the situation, a requirement that the applicant submit a search and evaluation of prior art has been proposed. The biggest problem with this requirement is the up-front cost on patent applicants. Recent estimates from the Congressional Budget Office tally the cost of each search report at $5,000 to $15,000, an amount “equal to the total amount spent by many applicants to have an application for a minimally complex invention prepared [AIPLA letter to the Senate, November 30, 2007].” Furthermore, examiners would still have to ascertain the quality and comprehensiveness of the searches, i.e., arguably still conduct their own search.

ACS believes that requiring patent applicants to perform and file a search of prior art and to provide a patentability report with a patent application would place unreasonable burdens on patent applicants and would not result in better patents.

10. Permit Assignee Filing

ACS supports allowing assignee filing of patent applications when inventors have an existing obligation of assignment.

The U.S. maintains the procedure that an application is filed in the name of the inventor, even though many inventors have an obligation of assignment of their invention, typically as a condition of employment. In many situations, the employer/assignee makes all patenting and commercialization decisions and pays all the costs, and the assignee and inventor(s) names both appear on the face of the patent.

Most of the rest of the world permits assignee filing when there is an existing obligation of assignment: the patent application is filed in the name of the assignee/employer and the individual inventors are also named on the application and any issued patents.

ACS supports legislation to allow assignee filing of patent applications when inventors have an existing obligation of assignment. Individual inventors could still file applications in their own names if they have no existing requirement of assignment. The names of the inventors would still appear on assignee filed documents.