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18 September 2015Patents

America Invents Act: what has changed three years on

The America Invents Act (AIA) has turned the US Patent and Trademark Office (USPTO) into one of the busiest patent dockets in the country and bred a new type of ‘patent troll’, lawyers have told WIPR following the act’s three-year anniversary.

This Wednesday, September 16, marked three years since some of the AIA’s central provisions entered into force, having been signed into law a year earlier.

Speaking to WIPR, lawyers said the implementation of new review proceedings, including inter partes reviews (IPRs) and covered business method (CBM) reviews, has had the biggest effect on the patent industry.

IPRs and CBMs are trial proceedings carried out at the specially created Patent Trial and Appeal Board (PTAB) to review the patentability of one or more patent claims.

Jeff Whittle, partner at law firm Hogan Lovells, said the reviews, along with the 2014 Alice v CLS Bank decision by the US Supreme Court—which stemmed from a CBM—have seen patents come under “continuous attack”, particularly in the financial and software industries.

“It has caused a loss of investment by many in these areas, as investors are shying away from risks and costs associated with these challenges,” he added.

“The office had to hire and train several hundred patent judges to account for this huge volume of new challenges, and the USPTO now has become what is arguably the second-busiest patent docket in the country next to the US District Court for the Eastern District of Texas.”

Michael Oblon, partner at law firm Perkins Coie, said the overall landscape of patent litigation has changed as a result of the AIA.

He added that the IPR proceedings have in effect “weeded out” patent claims that are broad and anticipated.

But Oblon said that as the PTAB has been cancelling some asserted claims, “the vast majority of the time” there are questions over whether the process has gone too far in invalidating patents.

He added: “A flood of PTAB decisions are now starting to be heard by the US Court of Appeals for the Federal Circuit and so we’ll know in the next year whether the appellate court agrees that so many claims of issued patents should be cancelled.”

Whittle said that a new type of “abusive challenge” has also emerged.

“Hedge fund managers and licensing entities threaten to or actually take patents into USPTO challenge procedures to impact publicly traded stock prices or to receive large settlement sums in what some call the new patent troll.”

Hedge fund manager Kyle Bass, through his organisation the Coalition for Affordable Drugs, has challenged a string of patents in the pharmaceutical industry.

Oblon noted that “for the sake of efficiency and harmony with other countries”, the AIA changed the US patent system from first-to-invent to first-to-file.

“There has been little discussion about whether this provision changed patentees’ behaviour—and if so, how.

“Over time, we’ll see whether this penalises smaller companies, especially start-ups, that relied on the first-to-invent system and cannot afford to file applications early,” he added.

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