A presentation at the Duke Patent Law InstituteMay 13-17, 2013Kenneth D. SibleySenior Lecturing Fellow, Duke Law SchoolPartner, Myers Bigel Sibley & Sajovec, PA

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US vs. foreign company. National vs. international company. Large vs. small company. Established vs. start-up company. For-profit commercial vs. non-profit research entity. Predictable vs. unpredictable of R&D process. Expected commercial lifespan. Light vs. heavy regulatory burden. Dependency on markets outside US. What changes the behavior of one company, might

not change the behavior of another.

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An overview of AIA changes to novelty and non-obviousness.

A look at how patent procurement decisions made in a corporate setting.

How has the AIA changed approaches to patent prosecution.◦ Changes that have been made.◦ Changes that are expected.◦ Changes that ought to be made.

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Old §102(g) repealed. Has received the most attention in the

general press. Significantly greater harmonization of US

practice with EPO, Japan, etc. Note the AIA’s “pull back” provision, for

§102(g), for patent families containing both claims with pre-AIA priority and claims with post-AIA priority.

Important change to prior art, as well as competing applicants.

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For US patents and published applications based on foreign priority applications.◦ Old 35 USC §104 repealed; new 35 USC § 102(d) added.◦ Foreign priority claims now given same status as US

priority claims.◦ Important distinction—but searchable and locatable.

Foreign “public use” or “on sale” now available as prior art.◦ Compare old §102(b) with new §102(a)(1).◦ Has attracted some public comment.◦ But, how much of an expansion is this, for practical

purposes, in the Internet age?

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Note logarithmic scale.Source: Internet Systems Consortium

Source: International Telecommunications Union

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Now reasonably settled law. MPEP 2128 (8th Ed. 2001, Rev. Aug. 2012)(Electronic

publications as “printed publication” prior art)(pre-AIA).

A “document electronically posted on the Internet” may also qualify as “otherwise available to the public.” AIA Examination Guidelines.◦ Citing: Voter Verified v. Premier Election Solutions Fed. Cir.

2012), In re Lister (Fed. Cir. 2009), and SRI Int’l v. Internet Sec. Sys. (Fed. Cir. 2008).

Internet Archive “WayBack” Machine◦ http://archive.org/

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Old §102(g) repealed (but note “pull back”). Further, AIA places heavy emphasis on public

use and accessible to public as compared to pre-AIA “known or used by others” and “public use or on sale” (Old §102(a) and §102(b)).

These changes apply to foreign prior art as well. Question: Do the AIA changes apply equally to

both:(a) third party prior art, and (b) acts of the patentee/applicant?

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Third party trade secret use of process seems no bar, under old §102(g) bar or after AIA.◦ Example: Gore v. Garlock, 721 F.2d 1540 (Fed. Cir. 1983).

Different fact patterns get complicated in practice.◦ Compare Thomson v. Quixote 166 F.3d 1172 (Fed. Cir.

1999) with Finnigan Corp. v. ITC, 180 F.3d 1354 (Fed. Cir. 1999).

Primarily an issue during litigation. Effect on prosecution? This type of prior art was

generally difficult to locate before the AIA; difficulty in locating not changed by the AIA.

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Examples: Secret commercial use, non-informing commercial use, secret sale.

Not difficult for applicant to locate. Substantial suggestions in legislative history

that these too removed from prior art by AIA. How will this sort out? Not yet clear. Expansion of “prior user” rights (§273) may

have more practical impact on applicant behavior and decisions.

Duty of disclosure requirements?

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EXAMPLE: Baxter International v. CobeLaboratories, 88 F.3d 1054 (Fed. Cir. 1996).

NIH researcher obtained plans for centrifuge from NIH colleague Ito. Built centrifuge and used it in his lab.

Baxter sued Cobe for infringement; Cobe raised NIH lab use as defense; District Court granted Cobesummary judgment.

Fed. Cir. affirmed. ◦ Public use a question of law. ◦ Decided under a “totality of circumstances” test.◦ NIH laboratory use a “public use” against Baxter.

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Baxter contained a vigorous dissent by Judge Newman.◦ “This new category of internal laboratory use is

immune to the most painstaking documentary search. The court thus produces a perpetual cloud on any issued patent….”

Noted that Cullis (Baxter) and Ito (NIH) had engaged in a §102(g) interference in which Ito prevailed. Yet Cullis was issued this separate patent.

Objected to lack of rigor in these summary judgment proceedings as compared to a formal interference proceeding.

Suggested §102(e) had previously been the only form of “secret prior art.”

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Safe harbors from potential §102(e), §102(f) and §102(g) prior art for §103 purposes.◦ 1984 Amendments for internal prior art shifted from §103(c)(1) to §102(b)(2)(C).

◦ 2004 CREATE Act expansion to Joint Research Agreements shifted from § 103(c)(2) to §100(h) and §102(c).

AIA expanded scope to exclude these categories for novelty purposes as well as non-obviousness.◦ Not applicable to New §102(a)(1) prior art.

AIA changed time when co-ownership required, or when JRA must be in place, from time when invention made to time when effectively filed.◦ Greater opportunity for remedial action. Some room for interpretation on when JRA must be in place.

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Against one who “obtained.”◦ New §102(b)(1)(A) and §102(b)(2)(A)◦ Counterpart in old §102(f).

For first to publicly disclose.◦ New §102(b)(1)(B) and §102(b)(2)(B).◦ Integrates 1 year grace period with first-to-file.

No counterpart in pre-AIA law; no counterpart anywhere else in world.◦ Recall extensive case law development and legislative

action required to harmonize §102 and §103 following the 1952 act.

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Old Rule 131 “swear behind” practice phased out by AIA.◦ But note “pull back” transitional cases.◦ Practical effect on practice?

New Rule 130 practice. 37 CFR §1.130 (Rev. May 2013). Sections:◦ (a) Affidavit or declaration of attribution.◦ (b) Affidavit or declaration of prior public disclosure. ◦ (c) When this section is not available. ◦ (d) Applications and patents to which this section is

applicable (full rule in Appendix). Significant impact on prosecution.

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Disclosures “by the inventor or joint inventor.”◦ Declarations and affidavits in the manner of In re

Katz continues. In re Katz, 687 F.2d 450, 215 USPQ 14 (CCPA 1982).

Patent disclosures by another alleged to have “obtained … directly or indirectly from the inventor or a joint inventor”◦ Good chance examiner will decline and encourage

applicant to pursue a derivation proceeding. 37 CFR §1.130 (c).

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Non-patent disclosures by another “who obtained … directly or indirectly from the inventor or a joint inventor” (§1.130(a)); and

Patent or non-patent disclosures by another after “publicly disclosed” by an inventor (§1.130(b)).

◦ Evidentiary standards to be worked out on case by case basis.

◦ Responsibilities of affiant/declarant likely to receive substantial weight.

◦ Affiants/declarants likely to take these responsibilities very seriously. “…these statements were made with the knowledge that willful false

statements and the like so made are punishable by fine or imprisonment, or both, under section 1001 of Title 18 of the United States Code…”

◦ Excellent documentary evidence to support the affiant/declarant will be extremely important.

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Establishing “the subject matter disclosed.”◦ Significant comment on USPTO’s proposed guidelines.

Feb. 14, 2013 Final Rule: Broader statements, different wording, or different form of disclosure may be permitted.

But IDENTITY of subject matter appears required (78 Fed. Reg. 11059, 11065-11067).◦ There are no shields for disclosures that add an element,

change an element, or narrow an element. Significant impact on prosecution practice.◦ Encourage early filings.◦ Encourage completeness of early filings.

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Role of patent committee.◦ See G. Weiboldt article for case study.

Possible committee membership and attendees:◦ R&D;◦ Legal;◦ Business development/marketing;◦ Manufacturing/operations;◦ Information specialist/technical librarian; ◦ Paralegal; etc.

Presence and support of senior management. Subcommittees.◦ Invention disclosure peer review-quality & content.

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More pressure on owner to file applications early.◦ Barring other considerations (e.g., 35 USC §112).

More pressure on owner for early applications to be as thorough and complete as possible.

More pressure on employee/inventors to submit their internal invention disclosures early, and make them thorough and complete.◦ Implementation of procedures to reject incomplete

disclosures.◦ Senior management support.◦ Revise employee reward/recognition systems to

emphasize quality filing rather than issuance.

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Record keeping/laboratory notebooks.◦ At least as important as pre-AIA.◦ Opportunity to change emphasis on content, and

perhaps form? Definitely! But too early to implement.

Greater emphasis on prior art searching?◦ Should aid early, thorough patent filings.◦ But, not seeing substantial changes yet.◦ Perhaps when implications of Post Grant Review

more apparent.

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Greater incentive to maintain confidentiality after filing through to publication.◦ Greater opportunity to update/refine an early filing

without problem of intervening disclosures.◦ Bring confidentiality, trade secret, non-disclosure

agreement procedures current (if need be).◦ If cannot keep confidential, then more pressure to make

first filing thorough and complete.

Special handling for transitional cases?◦ Will require attention over the next several years, at

least.

AIA creates much more for the patent committee to do!◦ A trap? There are other areas that require vigilance!

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Potential DILUTION of patent rights.◦ Example: Research agreements that may influence

ownership, licensing or enforcement.

Potential CONTAMINATION of intellectual property.◦ Example: Third party inventions or trade secrets

inadvertently coming in.

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Example: Lucent v. Gateway, 543 F.3d 710, 88 USPQ2d 1481 (Fed. Cir. 2008).

Lucent prevails before jury on RE 390,080 (and another patent); wins significant damages.

But, a 1988 Joint Development Agreement (JDA) specified that “New Work” would be jointly owned with Fraunhofer.

On JMOL District Court determined that claims 2 and 4 were “New Work,” that Lucent lacked standing to sue without Fraunhofer, and dismissed.

Lucent appealed.

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Fed. Cir. construed “means plus function” elements of claim 4 and found that claim was only entitled to a priority date after JDA entered.

Affirmed district court, explaining:◦ “Lucent’s predecessor, AT&T, had the ability to file

patent applications at its own discretion, and hadthe option to file separate applications oninventions constituting New Work and inventionsconstituting Existing Technology, or to include bothinventions in a single application.”

See also Ethicon Inc. v. US Surgical, 135 F.3d 1456 (Fed. Cir. 1998).

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Example: University of Colorado v. American Cyanamid, 342 F.3d 1298 (Fed. Cir. 2003).

Cyanamid employee E sponsored research of CU doctors into improving iron absorption of prenatal vitamin supplement.

CU doctors deliver manuscripts to E describing reformulation.

E fills out invention disclosure form describing reformulation, naming self as inventor.

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Cyanamid filed patent application containing significant portions of manuscript and issues US Patent No. 4,431,634, naming E.

Cyanamid enforces patent six times. CU Doctors notice patent and bring suit. Cyanamid ceases enforcing patent. CU doctors (not E) found to be inventors and

awarded $23M for unjust enrichment under Colorado law.

Federal Circuit finds Colorado law not preempted by patent statute and affirmed.

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X-IT Products v. Walter Kidde, (E.D. Va. June 25, 2002).◦ MBA students’ idea for home fire escape product.◦ Settled for approximately $17M USD.

Volumetrics Medical Imaging v. Philips, (M.D.N.C. 2003).◦ 3D ultrasound trade secret information.◦ Settled for approximately $180M USD.

Duke v. Elan (filed M.D.N.C. June 2004).◦ Patent filing on use of zonisamide for treating obesity.◦ Settled.

Themes: Confusion over inventorship law; lack of awareness of state law remedies; possible lack of monitoring/oversight.

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Economic Espionage Act of 1996 (EEA).◦ Section 1831: Theft of trade secret for benefit of foreign

power.◦ Section 1832: Theft of trade secret related to interstate

commerce (no “benefit of foreign power” requirement). Foreign and Economic Espionage Penalty

Enhancement Act of 2012.◦ Enhances §1831 penalties.

Theft of Trade Secrets Clarification Act of 2012.◦ Expands §1832 coverage of products and services used in

interstate commerce.◦ Overrides result in US v. Aleynikov (2d. Cir. 2012).

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Example: United States v. Martin, 228 F.3d 1 (1st

Cir. 2000).

CEO of California Corp. received trade secret information from email “pen-pal” chemist at a Maine Corp.

Chemist testified against CEO in plea bargain. Extensive email correspondence in evidence. CEO convicted of conspiracy to steal trade secrets

(EEA).◦ “Conspiracy to” obviates need to prove accused actually

received trade secret, or show that it actually existed. CEO also convicted of wire fraud, mail fraud, and

conspiracy to transport stolen property in interstate commerce.

All counts affirmed on appeal.

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(a) Affidavit or declaration of attribution. Whenany claim of an application or a patent underreexamination is rejected, the applicant or patentowner may submit an appropriate affidavit ordeclaration to disqualify a disclosure as prior artby establishing that the disclosure was made bythe inventor or a joint inventor, or the subjectmatter disclosed was obtained directly orindirectly from the inventor or a joint inventor.

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(b) Affidavit or declaration of prior public disclosure. When any claimof an application or a patent under reexamination is rejected, theapplicant or patent owner may submit an appropriate affidavit ordeclaration to disqualify a disclosure as prior art by establishing thatthe subject matter disclosed had, before such disclosure was madeor before such subject matter was effectively filed, been publiclydisclosed by the inventor or a joint inventor or another who obtainedthe subject matter disclosed directly or indirectly from the inventoror a joint inventor. An affidavit or declaration under this paragraphmust identify the subject matter publicly disclosed and provide thedate such subject matter was publicly disclosed by the inventor or ajoint inventor or another who obtained the subject matter discloseddirectly or indirectly from the inventor or a joint inventor.

(1) If the subject matter publicly disclosed on that date was in aprinted publication, the affidavit or declaration must beaccompanied by a copy of the printed publication.

(2) If the subject matter publicly disclosed on that date was not in aprinted publication, the affidavit or declaration must describe thesubject matter with sufficient detail and particularity to determinewhat subject matter had been publicly disclosed on that date by theinventor or a joint inventor or another who obtained the subjectmatter disclosed directly or indirectly from the inventor or a jointinventor.

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(c) When this section is not available. The provisions of this section are notavailable if the rejection is based upon a disclosure made more than one yearbefore the effective filing date of the claimed invention. The provisions of thissection may not be available if the rejection is based upon a U.S. patent or U.S.patent application publication of a patented or pending application naminganother inventor, the patent or pending application claims an invention that is thesame or substantially the same as the applicant's or patent owner's claimedinvention, and the affidavit or declaration contends that an inventor named in theU.S. patent or U.S. patent application publication derived the claimed inventionfrom the inventor or a joint inventor named in the application or patent, in whichcase an applicant or a patent owner may file a petition for a derivation proceedingpursuant to § 42.401 et seq. of this title.

(d) Applications and patents to which this section is applicable. The provisions ofthis section apply to any application for patent, and to any patent issuing thereon,that contains, or contained at any time: (1) A claim to a claimed invention that hasan effective filing date as defined in 35 U.S.C. 100(i) that is on or after March 16,2013; or (2) A specific reference under 35 U.S.C. 120, 121, or 365(c) to any patentor application that contains, or contained at any time, a claim to a claimedinvention that has an effective filing date as defined in 35 U.S.C. 100(i) that is onor after March 16, 2013.

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H. Kanare, Writing the Laboratory Notebook (American Chemical Society1985).

D. Spero, Patent Protection or Piracy—A CEO Views Japan, HarvardBusiness Review, 58-67 (September/October 1990).

W. Coggins, Prior Art in the Field of Business Method Patents—When isan Electronic Document a Printed Publication for Prior Art Purposes(AIPLA Fall 2002) Posted at:◦ (http://www.uspto.gov/patents/resources/methods/aiplafall02paper.jsp)

G. Wieboldt, How much Value is your Company Losing? ImplementingEffective Intellectual Property Management, 1 International In-HouseCounsel Journal, 431 (2008).

Economic Espionage and Trade Secrets, United States Attorney’sBulletin, Vol. 57 (Nov. 2009).

C. Doyle, Stealing Trade Secrets and Economic Espionage: An Overviewof 18 U.S.C. 1831 and 1832, Congressional Research Service (Jan. 28,2013).

Changes to Implement and Examination Guidelines for Implementingthe First Inventor to File Provisions of the Leahy-Smith America InventsAct; Final Rule, 78 Fed. Reg. 11024 (Feb. 14, 2013) (“Feb. 14, 2013 AIAChanges” and including “AIA Examination Guidelines”).

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