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FEEHER Y HANK: In the pharmaceutical industry theres a real incentive - - PDF document
FEEHER Y HANK: In the pharmaceutical industry theres a real incentive - - PDF document
MODERATOR: The proposed legislative move from a first-to-invent system to first-to-file would bring U.S. patent law into line with Europe and Japan. Coupled with proposed patent office rule changes, how would this affect your practice? DELMASTER:
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MODERATOR: The proposed legislative move from a first-to-invent system to first-to-file would bring U.S. patent law
into line with Europe and Japan. Coupled with proposed patent office rule changes, how would this affect your practice?
DELMASTER: In the United States a lot of people think this is a catastrophe,that it’s just not fair.It certainly is going to be an issue
in a patent attorney’s first contact with a new inventor or a sizeable company where inventions get generated on a fairly regular basis. There’s going to be a lot of consideration given to getting things done quickly and efficiently,getting patent applications on file in a hurry.
FEEHERY HANK:Y
- u’ve got real strategic changes caused by the proposed new rules in terms of how you’re filing your
application, what’s in your claim, what your claims are going to look like, which claims are going to be representative.And now you’re saying,“And we need to be in the patent office as soon as possible because one day late means you could lose your rights.”
RUDNICK: This dovetails with the proposed patent office rule change granting only one continuation application as a matter
- f right. In accordance with these two proposed changes, early in the process you would be identifying strategically what you want
to claim and what the boundaries are, what you think your invention is and how many patent applications should be involved — and you would no longer have the option to sit and think about it before filing or to make significant decisions after filing.
DELMASTER:The question about whether or not first-to-file is fair has already been settled in the rest of the world.They don’t care. MODERATOR: Isn’t the inventor supposed to get the patent? RUDNICK: Our constitutional charge is literally for Congress to make laws to promote the progress of science by grant-
ing inventors the exclusive right, for a limited time, to their discoveries. Historically, Congress has defined “inventors” as those who are first to invent.We recognize that giving you that right will allow your competitors to look at what you did, based
- n a full disclosure in your patent, so they can design around you and come up with an even better idea. Nothing in the
Constitution prevents Congress from changing the definition of inventor to “first to file.”
DELMASTER: Is it possible that the real inventor of an invention can be disenfranchised under the first-to-file rule?
- Absolutely. Is it fair under the broadest concept of fairness? Probably not. But it’s the way the world operates, and it’s about to
be the way the United States operates, too.
RUDNICK: In Japan, in certain technology segments, the minute
somebody comes up with an idea they scribble a 2-page description and file it as a patent application. But Japanese examiners only examine those patents for which applicants later file,after some thought,a request for examination.In the U.S.every filed patent application is intended to be examined. So if we’re going to have a flurry of very short applica- tions, with less than 10 representative claims under new patent office rules, this could result in a much heavier burden for the patent office.
DELMASTER: Maybe, maybe not. If we talk about the practi-
calities of the first-to-file system, we do have the provisional patent application, which doesn’t burden the patent office because it does- n’t get examined. But it does give you a bookmark date in the patent
- ffice as to when you invented what’s in the provisional application.
Once first-to-file is the law, I will counsel clients that if the invention they bring to me is fully realized right now, then let’s write it, illus- trate it and file a provisional application as quickly as we possibly can.
FEEHERY HANK:Y
- u may see patent attorneys saying,“We have a full-blown applica-
tion here.We have all of our claims.We know as much as we can up to this point, but we’re filing it as a provisional because it gets us another year to know the lay of the land.”
DELMASTER: If it’s going to be done effectively, the closer a patent lawyer can
work with a technology manager or the internal legal counsel managing intellectual property, the better it’s going to work.
FEEHERY HANK: Right. It’s a day-to-day type of thing. DELMASTER: W
e would all agree, I’m sure, that industry’s aim usually is to keep the patent attorney — if there’s no in-house patent counsel — out of it until it’s absolute- ly necessary for them to be in it.That’s not going to be a very good strategy in the future.
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FEEHERY HANK: A lot of what we see with our clients now is,“Well, we keep good records.” Good records are nice
to have in pulling together a good patent application, but under a first-to-file system those records are not going to be what you fall back on.What you’re going to fall back on is what’s filed with the patent office.There will be some people who say that first-to-file is unfair:“I invented it first. I just didn’t get to the patent office that week.” Under this proposal, it's the first to file. And it would become one of the few bright-line rules that we’d see.
RUDNICK: On the defense side, the use of what we commonly refer to as “submarine patents” may disappear.That is when
someone files a broad patent application and continuation after continuation — for many years in some instances.Y
- u wait for
a technology segment to mature, then you refine your claims — in what I refer to as “predatory claim drafting.”All of a sudden you have a patent that lets you go after everybody in the industry.
MODERATOR: As Robert mentioned, the patent office has proposed a limit to the number of claims to be examined. FEEHERY HANK: Y
- u will be limited to no more than 10 claims as representative.Y
- u would not initially be able to
separately argue the patentability of any nonrepresentative claim in that application. If you designated more than 10 claims, you would be required to file an Examination Support Document.This would be very expensive because it goes through each prior art–reference point by point, claim by claim, element by element, saying what is new and what is different and why you should get a patent over it — essentially doing what the patent examiner is currently supposed to do.
RUDNICK: In the past if you came up with one new product and, say, there were five or six features that you were think-
ing of patenting in that new product, you might file one or two patent applications and group claims for the features together to save the time and expense of filing multiple patents.Later you could use continuation applications to separate out the grouped claims and features as necessary. I have significant concerns about filing this Examination Support Document that Maryellen referred to because you are taking a position with regard to prior art and pending claims. Each statement you make can be used against you later.
DELMASTER:Y
- u’re vulnerable against the future opponent in litigation; that is, to having that opponent pick apart what you
have written in this Examination Support Document and then go so far as to allege that you misrepresented something to the patent office and got the patent by nefarious means.And we all know where that goes.
MODERATOR:That goes to invalidate a patent.Any other issues raised
by the proposed patent office rules?
FEEHERY HANK: The patent office is saying that they do not want
cumulative documents, which is a very big thing because if you believe that the document is cumulative and you do not disclose it to the patent office, it’s likely that the first thing that will come up in later litigation is,“Y
- u did-
n’t disclose this document to the patent office.” And you’re going to be arguing,“It was cumulative.”Anything that’s slightly different about the doc- ument could be used against you.
RUDNICK: I have a feeling there will be a lot more patent applications
being filed in particular technology areas.So although it may take a shorter time to actually examine up to 10 claims of a given patent application, examiners in these areas would face an increase in the total number of applications so that any intended reduction in the workload because of the 10-claim limit would be lost.
FEEHER Y HANK: In the pharmaceutical industry there’s a real incentive to get a patent as soon as
you can on something that would cover the product so that you can be listed in the FDA “Orange Book”— the idea being that at least then you know if someone is filing a generic-drug application and you have the ability to do what you can to stop it.Under the proposed rules it may be more difficult to say,“Y es, we’ll take these claims and we’ll file a continuation application to fight it out for broader claims. ”
DELMASTER: This is not streamlining for industry or for small inventors but, rather, for
the patent office. It puts the onus on everyone else to do the job better before it gets to the patent office.
FEEHERY HANK: Y
- ur initial strategy just has to be ironclad.
DELMASTER: Many people in industry and some attorneys complain that there are
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a lot of bad patents out there, patents that should not have issued. If you streamline patent practice and make life a little easier for the patent examiner, the theory goes, the examiners can do a little better job of examining patents.
MODERATOR: Sponsors of the various congressional reform-proposals say their goal is to streamline patent litigation. DELMASTER: This isn’t going to streamline litigation in any way, shape or form. Let’s just call a spade a spade.These pro-
posed changes are, and are intended to be, protectionist for patent-infringement defendants.They have gotten both the House and Senate judiciary committees to come up with these proposals, all of which they think will address ways to make patent lit- igation somewhat less onerous in the doing, and also in the result. Less onerous in the doing, I don’t see it. I think patent liti- gation will remain very difficult and pretty pricey.
MODERATOR: Who wins, the inventor or the alleged infringer? DELMASTER: As I said,this is protectionist legislation by the defendants,those who see themselves as victimized by the per-
ceived monster that patent litigation has become over time — and in some sense that perception is correct.This will make it more difficult to do all the things you usually do to enforce a patent, particularly in egregious cases.There is willful infringement out
- there. It happens.And this will make it tougher to raise initially, tougher to prove, tougher to realize the appropriate damages.
MODERATOR: Proposed changes also include calculating damages based on the value an invention adds to a product,
rather than on the value of the entire product.
DELMASTER: That immediately reduces the impact on alleged infringers. It remains to be seen, however, whether this
concept of value added by the invention will be viable in litigation.
FEEHERY HANK: This in some ways presumes that there’s a value to the underlying product or the underlying service that
is not attributable to the claimed invention. Can we really assume that? Not in every instance. If this goes into effect, that will be a whole other avenue of discovery, and even more argument, in litigation.
DELMASTER: This becomes an entire new question to be
subject to discovery, testimony, proof and everything.
FEEHERY HANK: Right. MODERATOR: Will this make it harder to settle cases? RUDNICK:Y
es, in all respects.
DELMASTER:The damages valuation issue will now be on the table. FEEHERY HANK: It’s just one more battle of the experts. RUDNICK: A sizeable portion of patents are directed to process- or
method inventions for creating something at lower cost or more efficiently. And you have the argument,“W ell,damages should be based on the whole value of the product because you can manufacture it more efficiently. ”
DELMASTER: It’s the whole point of the process. RUDNICK: Right. And, “I’m not going to take a piece of the
savings because I’m entitled to so much more as a patentee.”
MODERATOR: Let’s move on to the legislative effort to eliminate forum
shopping by restricting venue. Is this a good idea?
DELMASTER: As one who’s currently defending a case in the famous
Eastern District of T exas, yeah, it’s a great idea. My question is,“Why do patent infringers get this special legislative treatment that other people don’t get?”
FEEHERY HANK: I think most patent attorneys who litigate have
been in front of judges who have no technical background and juries that certainly have no technical background. That’s a big challenge. Maybe it
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would be beneficial to have courts at the trial level that have more expertise in patent law and technology.
RUDNICK: If you look at the results in these rocket docket–districts over the last few years, they really have tended to favor
the plaintiffs, so that’s additional leverage against an alleged infringer during settlement discussions. If you remove that maybe it will make it fairer with regard to the defendants.
MODERATOR: A proposed post-grant opposition procedure in the patent office — rather than in court — is meant to
cut the cost of third-party challenges to patents. How would this affect your practice?
FEEHERY HANK: It certainly will affect determination of the scope of claims, particularly in industries where big cor-
porations are really watching the patent office.There’s lots of opportunity for someone with a lot of money, a big corporation, to test the waters by filing a post-grant opposition. In the most recent proposals, the repercussion of the post-grant opposition is one of estoppel. If you bring something up in post-grant opposition as a third party and you are unsuccessful, you don’t get to reassert it if later you’re sued on the patent.
DELMASTER: This is a product of the general impression that there are a lot of shaky patents granted by the patent office. It’s
hardly complimentary to the patent office.That being said, it is, in form, a mini-litigation with only one topic, and that is the validity
- f the patent as issued. It’s going to give potential defendants a chance to challenge what might initially look like a shaky patent.
FEEHERY HANK: Which brings up two things — the patent office is used to doing reexaminations, but they don’t do
litigations; the second thing is, where does the money come from to do this?
RUDNICK: Y
- u’ve got to budget for the likely, or unlikely, event that there is going to be an opposition to your patent
- filing. Because if you don’t get a patent, or if the patent is restricted in scope, the value of your company — whether you want
to go public, whether you want to be taken over, whether you want to sell this patent or whether you want to market it — is going to be reduced.And in certain technology segments you will also have to consider,“How much money do I want to spend keeping an eye on what patents issue from the patent office, and do I want to put some money aside to file my own
- ppositions against these patents?” So now you’ve created a whole new business or industry in filing oppositions.
MODERATOR: Are post-grant challenges most likely in certain practice areas? DELMASTER: I would think in really cutting-edge technologies, like biotech and genetic inventions, there will be very
careful, but considerable, use of post-grant opposition.
FEEHERY HANK: We’re definitely going to see it in the pharmaceutical area. RUDNICK: It also can be used strategically in settlement talks. If you are at the receiving end of a cease and desist letter,
- ne of the weapons you now have in your pocket is,“Listen, I have a substantial argument that I could raise in opposition, and
if the patent is found invalid you could lose all the licensing money that you are now receiving from the patent.”
FEEHERY HANK: If you’re the small guy and you think you have some leg to stand on in the post-grant opposition,
you also need to think about,“Well, am I tipping my hand? Am I getting on the radar screen of the large company that other- wise would not necessarily come after me?”
DELMASTER: This is not necessarily a great thing for everybody. Let’s say you are a small company in an emerging tech-
- nology. If the big guys are threatened, they could line up and beat you to death.The first big guy drags you into a post-grant
- pposition, makes you drain resources to fight it. If you get beat, you’re dead. If you survive, the next guy comes after you.
MODERATOR: The takeaway message for your clients? FEEHERY HANK: If any of these changes go through — and I think we all agree at least some of them will — clients
are going to need to have their patent attorneys involved more regularly and at an earlier stage.
RUDNICK: One benefit, besides getting good patent protection, is that you will likely know the value of the IP in your
portfolio every step of the way because the patent attorney was involved since the beginning of the project. It’s not saying, at some point farther down the road,“Okay, I need to value this innovation in a nearly completed product design.Where do we stand? What do you think we have? Where is the value? Now let me call my patent attorney and start filing patents.”
DELMASTER: The patent office’s rules decisions and the actions in Congress will probably not be simultaneous. I think our
clients are going to get advisory letters from all of us, as these things take effect, to advise them that there are significant changes, that some of them are touted as being very beneficial, and may be; however, there are going to be upsides and pitfalls across the board.
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Joseph “Jay” DelMaster is a partner at Drinker Biddle & Reath LLP in its Washington, D.C. office. Jay focuses his practice on intellec- tual property litigation, most often patent infringement cases. He has tried and won sev- eral cases in U.S. district courts and has success- fully argued appeals before the U.S. Court of Appeals for the Federal Circuit in Washington, D.C.Negotiating settlements between parties in dispute is a major part of Jay's litigation practice. As a practitioner before the U.S. Patent and Trademark Office, Jay also assists clients in
- btaining patents and provides counseling on
intellectual property portfolio building and
- management. He is the author of several articles
about patent law and litigation. He can be reached at joseph.delmaster@dbr.com. Maryellen Feehery Hank is a partner with Reed Smith LLP in Philadelphia, where her practice focuses on intellectual property.
- Ms. Hank has handled numerous intellectual
property portfolios which include pharmaceu- ticals, dermatological products, catalysts, spe- cialty chemicals, consumer products, animal repellents, health care services and chemical process equipment. She has litigated patent validity and infringement issues, trade secret and nondisclosure issues, and trademark and trade dress issues. She also counsels companies in their intellectual property strategy decisions and policies, particularly in connection with addressing intellectual property assets in public and private offerings. She may be reached at mhank@reedsmith.com. Robert Rudnick is a director at Gibbons in Newark. He spent time in various in-house roles at AT&T and subsequent spin-off com- panies Lucent Technologies and Avaya before joining Gibbons. He counsels clients in a wide variety of intellectual property matters includ- ing patent procurement and portfolio devel-
- pment strategies, generating value from
patent portfolios, patent and technology licensing, corporate mergers and acquisitions, validity and infringement/noninfringement evaluations and patent prosecution, especially in the medical device and telecommunication
- technologies. Robert is an electrical engineer
and spent several years with the David Sarnoff Research Center before earning his J.D. He can be reached at RRudnick@gibbonslaw.com. Drinker Biddle & Reath LLP is a full service national law firm headquartered since 1849 in Philadelphia, Pennsylvania, serving clients from twelve offices, on both coasts and the Midwest. Its Intellectual Property Group, comprising 85 lawyers, is among the firm's strongest practices, providing the complete array of IP services. Drinker Biddle represents a broad spectrum of public and private, commer- cial, financial, healthcare and educational enter- prises,governmental authorities,and individuals throughout the United States and abroad, han- dling complex and sophisticated business trans- actions and litigating many of the most impor- tant legal challenges that its clients face. T
- learn more, visit www.drinkerbiddle.com
Reed Smith LLP is one of the world’s 15 largest law firms, with more than 1300 lawyers in 20 offices throughout the United States, Europe and the Middle East. Founded in 1877, the firm represents leading international businesses from Fortune 100 corporations to mid-market and emerging enterprises. Its attorneys provide litiga- tion services in multi-jurisdictional matters and
- ther high stake disputes,deliver regulatory coun-