An Introduction to Patent Regulations

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As discussed in our prior piece on Patent Law, the United States patent system is built on a “carefully crafted bargain” between inventors and the public.[1] Issuance of a patent allows the owner of that patent to prevent others from making, using, selling, or importing the invention during the term of the patent without a license.[2] Properly assessing whether a patent should issue, and whether a patent should continue to exist, is crucial when maintaining the balance between inventors and the public. In this piece, we take a closer look at the governing bodies in the United States responsible for deciding whether a patent should issue and whether a patent should continue to be valid.

Should a Patent Issue?

The U.S. Patent and Trademark Office (PTO)

The PTO is an agency within the United States Department of Commerce.[3] The role of the PTO is to grant patents and register trademarks.[4] Regarding its patent-related duties, the PTO examines patent applications and issues patents for inventions that satisfy the statutory requirements of patentability. The PTO also records and disseminates patent-related information. For example, it maintains searchable public databases on issued patents and published applications, makes available the file histories of those patents, and records patent assignment information. The PTO helps promulgate rules governing patents (Title 37 of the Code of Federal Regulations). It also maintains and publishes a guide for both patent examiners and practitioners called the Manual of Patent Examining Procedure (MPEP), which explains the PTO’s interpretation of its rules and procedures, as well as case law the PTO must follow.

Patent prosecution. The process of a practitioner filing, and the PTO examining, a patent application is called “patent prosecution.” From the PTO’s perspective, this process begins with the filing of a patent application, a filing fee,[5] and an oath or declaration by the inventor.[6] Once a filing date is given, there is a back-and-forth exchange between the applicant and the PTO patent examiner in which the examiner identifies perceived defects in the application and the applicant responds.  While this process can be expedited, on average, it takes about two years until the examiner either issues a final rejection or allows the application to issue as a patent.[7]

What happens in that back-and-forth with the PTO?

After the filing date is determined and any other formalities are satisfied, the patent examiner considers whether the application claims a single invention or multiple inventions. If the claims recite more than one invention, the examiner may issue a “restriction requirement” directing the applicant to elect only one of the claimed inventions for prosecution.[8] The non-elected claims may be the subject of a separate “divisional application.”[9]

Following any restriction requirement, the first substantive examination from the PTO is called the “first office action.” Through the office action, the patent examiner identifies which claims (if any) are allowable and issues one or more rejections explaining why any other claims were not found to be patentable.[10] For example, the examiner may reject certain claims on the grounds that they are not new and nonobvious in light of the prior art, that they fail to enable one of ordinary skill in the art to make and use the invention, or that they fail to particularly point out and distinctly claim the invention.

The applicant responds to each rejection, frequently by explaining why the examiner is mistaken, and often by simultaneously amending the claims to highlight features that may have been unclear in the original submission or necessary to distinguish the invention from any prior art identified by the examiner.[11] Depending on the applicant’s response, the examiner may (1) allow the pending claims, (2) issue a new rejection, or (3) make the prior rejection “final.”[12] Despite its name, a “final” rejection is not truly final. Upon receiving a final office action, the applicant still has several options, including reopening prosecution with a Request for Continued Examination (RCE)[13] or appealing the final rejection to the Patent Trial and Appeal Board (PTAB), an adjudicative body within the PTO that we discuss in more detail below.[14]

Should a Patent Continue to Exist?

Post-grant proceedings. In addition to hearing appeals of examiners’ rejections, the PTAB adjudicates patentability challenges to issued patents in post-grant proceedings, including administrative trials under the America Invents Act (AIA): Inter Partes Review (IPR), Post-Grant Review (PGR), and Covered Business Method (CBM) Review.

The most popular of the AIA post-grant proceedings is IPR. Most commonly, IPR proceedings are used by parties accused of patent infringement in district court as part of a defensive strategy to challenge the validity of asserted claims. In an IPR, the PTAB reviews the patentability of challenged claims under sections 102 (anticipation) and 103 (obviousness) of the Patent Act, but only on the basis of prior art consisting of patents and printed publications.[15] Any person other than the patent owner may file a petition to initiate an IPR,[16] and a party may file an IPR petition either (1) nine months after the patent issues or (2) after a related post-grant review proceeding concludes.[17] After the IPR petition is filed, the patent owner is permitted to file a preliminary response that sets forth reasons why the IPR should not be instituted.[18] The PTAB may institute an IPR if it determines that there is a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition.[19] If the PTAB institutes IPR proceedings, it must issue a Final Written Decision (FWD) regarding the patentability of the challenged claims within 12 months of the date of institution, which may be appealed to the United States Court of Appeals for the Federal Circuit.[20]

Post-Grant Review (PGR) is an administrative proceeding that allows a third party to challenge the validity of issued patents under any ground of invalidity (except best mode) within nine months after a patent is granted or reissued.[21] Like in the IPR context, a patent owner is allowed to file a preliminary response to the PGR petition explaining why the PGR should not be instituted. The PTAB may institute a PGR if it determines that (1) it is more likely than not that one claim challenged is unpatentable or (2) the petition raises a novel or unsettled legal question.[22] If the PTAB institutes PGR proceedings, it is required by statute to issue a FWD within 12 months of the date of institution, which may be appealed to the United States Court of Appeals for the Federal Circuit.[23]

Covered Business Method (CBM) Review is a proceeding at the PTAB to review the patentability of one or more claims in a patent covering non-technological financial products or services. The transitional CBM Review program took effect on September 16, 2012, and will sunset on September 16, 2020.

Federal Courts & the International Trade Commission

Apart from the administrative challenges available in post-grant proceedings, the most common place to challenge an existing patent is in a lawsuit in federal district court. Since patents are creatures of federal law, all cases “arising under” patent law are exclusively controlled by federal law as opposed to state law.

It is also possible to file a patent suit in the International Trade Commission (ITC), which has the power to regulate products being imported into the United States from other countries. While governed by federal laws, ITC actions begin as administrative proceedings in the Executive branch, as opposed to the Judiciary, so the procedures and remedies are somewhat different. Take a look at our prior piece discussing the specifics of bringing a patent infringement suit in the International Trade Commission to learn more about ITC actions.

Regardless of where a patent suit is brought, it may subsequently be appealed to the United States Court of Appeals for the Federal Circuit.[24] There are two general flavors of patent disputes adjudicated in federal court: patent infringement actions and declaratory judgment actions.

In a patent infringement action, a patent owner (or entity who holds a sufficient interest in a patent) files a lawsuit seeking to enforce its patent rights against another for allegedly making, using, or selling the patented technology without permission. The accused infringer may raise a number of defenses to the patent infringement claims, the most common of which are non-infringement (i.e., the accused product or process is not the same as the patented invention) and invalidity (i.e., the asserted patent does not satisfy the requirements of patentability). An invalidity defense (sometimes accompanied with a counterclaim of patent invalidity) directly challenges whether the patent should continue to exist.

A declaratory judgment action functions in reverse and permits a party facing the threat of a patent infringement suit to sue the patent holder to “clear the air.” They may do so by seeking a determination that the patent at issue is invalid, not infringed, or unenforceable.[25] Prevailing on an invalidity defense or a declaratory judgment action means that the patent will be declared invalid and cease to exist.

[1] Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 150-51 (1989).

[2] 35 U.S.C. § 271(a).

[3] Id. at § 1(a).

[4] Id. at § 2(a).

[5] 37 C.F.R. § 1.16.

[6] Id. at §§ 1.63, 1.76.

[7] U.S. Pat. & Trademark Office, FY 2019 Performance & Accountability Report 2 (2019), https://www.uspto.gov/sites/default/files/documents/USPTOFY19PAR.pdf.

[8] 35 U.S.C. § 121; 37 C.F.R. §§ 1.141-1.146.

[9] 35 U.S.C. § 121.

[10] 37 C.F.R. § 1.104; MPEP § 2260.

[11] 37 C.F.R. § 1.111; MPEP § 2266.

[12] 37 C.F.R. § 1.113; MPEP § 2271.

[13] 37 C.F.R. § 1.114; MPEP § 706.07(h) see also 35 U.S.C. § 132(b).

[14] 37 C.F.R. § 1.191; see also 35 U.S.C. § 134.

[15] 35 U.S.C. § 311(b).

[16] Id. at § 311(a).

[17] Id. at § 311(c).

[18] 37 C.F.R. § 42.107(a).

[19] 35 U.S.C. § 314(a).

[20] Id. at §§ 316(a)(11), 319.

[21] Id. at § 321.

[22] Id. at § 324(a)-(b).

[23] Id. at § 326(a)(11), 329.

[24] 28 U.S.C. § 1338(a); Vaden v. Discover Bank, 556 U.S. 49, 60 n.10 (2009) (noting that Section 1338(a) confers on district courts “exclusive original jurisdiction of any civil action arising under any Act of Congress relating to patents.”).  Note, however, that state courts may decide patent issues in non-patent cases.  See, e.g., Forrester Environmental Servs., Inc. v. Wheelabrator Tech., Inc., 715 F.3d 1329 (Fed. Cir. 2013) (declining federal jurisdiction over state defamation action based on defendant’s statements that plaintiff was a patent infringer).

[25] See 28 U.S.C. § 2201(a).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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