In what will likely be a helpful decision for patent applicants, the United States Court of Appeals for the Federal Circuit has clarified the test for what references may be considered by the United States Patent & Trademark Office (USPTO) when rejecting a patent claim under 35 U.S.C.  § 103. The court’s ruling in In re Klein (Fed. Cir. 2011) is a significant development following the U.S. Supreme Court’s confusing KSR Int’l Co. v. Teleflex Inc. decision. The ruling should assist both patent applicants and examiners in determining what may be considered analogous and non-analogous prior art.

The patent applicant, Arnold Klein, filed a United States patent application titled “Convenience Nectar Mixing and Storage Devices” that concerns a mixing device for use in preparation of sugar-water nectar for bird feeders. The USPTO rejected the claims under § 103, citing five different patent references. Klein appealed to the Board of Patent Appeals and Interferences (BPAI), which affirmed the rejections. Klein appealed the BPAI decision to the Federal Circuit.

The court began its analysis by noting that a reference qualifies as prior art for an obviousness determination under § 103 only when it is analogous to the claimed invention. There are two tests for determining what is and what is not analogous. A reference is analogous when the art is from the same field of endeavor, regardless of the problem addressed. If the reference is not from the same field, it may still be analogous if reasonably pertinent to the particular problem with which the inventor is involved. A reference may be reasonably pertinent if “it is one which logically would have commended itself to an inventor’s attention in considering his problem.”

Klein argued that none of the references cited by the USPTO were pertinent, because they sought to solve a different problem than the one his invention was intended to solve. Klein’s argument was that the invention was designed for mixing a container’s contents, and three of the five cited references related to separating contents.  Klein further argued that none of these references instead related to mixing contents that were liquid in form. The court concluded that someone else would not have been motivated to consider any of these references when making Klein’s invention, since they solved different problems than the one Klein intended to solve. Since the references were for a different purpose, someone else would “have had less motivation or occasion to consider” them. Regarding the other two references, Klein successfully argued that someone would not have been motivated to consider them since neither showed a movable divider or the ability to prepare different ratios, which were key elements of the claims.

The ruling helps patent applicants because it provides significant support for arguments that different problems to be solved result in a reference falling outside of what is reasonably pertinent to the claimed invention, and therefore, outside of analogous art. Patent examiners often cite references from a wide array of fields for different elements within the same claim to find a basis for a § 103 rejection. A non-analogous reference cannot be considered in the obviousness analysis, providing applicants more ammunition in overcoming such rejections.  Examiners may also be far less willing to make tenuous § 103 rejections going forward.

One potential limiting issue is the court’s language that “[i]f a reference disclosure has the same purpose as the claimed invention, the reference relates to the same problem, and that fact supports use of that reference in an obviousness rejection.” Both Klein and the USPTO argued for different purposes of the invention, but the court adopted Klein’s much narrower scope, because the USPTO attempted to assert its broader purpose for the first time on appeal.  Klein’s narrow scope of the purpose of the invention supported his arguments of non-obviousness, but it remains unclear whether the USPTO’s broader purpose would have mattered to the Court’s analysis.

In a much-anticipated ruling, the United States Supreme Court has affirmed a lower court decision that the presumption of patent validity may be overcome only by clear and convincing evidence. In Microsoft Corp. v. i4i Limited Partnership, the justices agreed that there is no justification for altering the statutory intent and precedent by lowering the evidentiary standard when determining whether or not a patent is invalid.

The case centers on a challenge to the presumption of patent validity under 35 U.S.C. § 282, which requires that a United States patent be presumed valid. The issue was raised by Microsoft after it was found liable for willful patent infringement in litigation brought by i4i. At trial, Microsoft failed in its attempt to invalidate the patents asserted by arguing, in part, that i4i never presented evidence of a potential “on-sale” bar under 35 U.S.C. § 102(b) to the United States Patent & Trademark Office (USPTO). This evidence was found insufficient to rebut the presumption of validity under § 282, and Microsoft appealed to determine whether the evidentiary standard for overcoming the presumption of validity under 35 U.S.C. § 282 was too high. The Federal Circuit upheld the standard and trial court’s judgment, and the Supreme Court agreed to hear the issue on appeal from Microsoft.

The Court’s analysis of the issue revolved around whether the intent of the 1952 U.S. patent statute, and the Court’s common law jurisprudence, offered any basis for lowering the evidentiary standard. Microsoft argued that a revised, lower standard of a preponderance of the evidence was more appropriate, but the Court disagreed, giving substantial deference to the specific language § 282 and its common law meaning. The Court stated that “[w]here Congress has prescribed the governing standard of proof, its choice generally controls” and that by stating that a patent is presumed valid, Congress used a term with a settled common-law meaning.  The Court concluded by saying that “[w]hile § 282 includes no express articulation of the standard of proof, where Congress uses a common-law term in a statute, the Court assumes the ‘term . . . comes with a common law meaning.’”  Therefore, the general rule affirmed by the Court is that a party seeking to establish patent invalidity must do so with clear and convincing evidence.

One key issue left unclear relates to Microsoft’s assertion that a preponderance standard must apply where evidence was not before the USPTO during the examination process. The Court agreed that where the USPTO did not have all material facts before it, its decision “may lose significant force,” quoting much-cited language from its KSR Int’l Co. v. Teleflex Inc., decision that “the rationale underlying the presumption—that the PTO, in its expertise, has approved the claim—seems much diminished” in such situations.

The Court found a way of out deciding whether the standard could be lowered in such circumstances on a procedural shortcoming. At trial, Microsoft failed to request a jury instruction to consider that it has heard evidence that the USPTO had no opportunity to evaluate, to consider whether the evidence is materially new, and if so, to evaluate that when determining whether an invalidity defense has been proved by clear and convincing evidence. The Court refused to consider whether this would impact the standard. Even though it further noted that “nothing in §282’s text suggests that Congress meant to establish a standard of proof that would rise and fall with the facts of each case,” it leaves it open for future potential challenges to the general evidentiary standard to succeed when material evidence was not presented to the USPTO.

The ruling also comes on the heels of at least two other recent Supreme Court opinions involving patents. The Court decided in favor of Roche in a dispute with Stanford University regarding patent ownership issues, and changed the standard for determining infringement by inducement under 35 U.S.C. § 271(b). The Microsoft v. i4i ruling therefore continues a significant trend of Supreme Court involvement in the world of intellectual property and in determining the scope of patent rights.

In a major technology transfer ruling, the United States Supreme Court has held that a 1980 law does not automatically vest title to federally-funded inventions in federal contractors or authorize contractors to unilaterally take title to such inventions, and means that inventors may still have ownership rights to patents covering inventions resulting from federally-funded research. The decision in Stanford v. Roche also touched on issues involving competing contractual assignment clauses for inventive rights and on tensions between university and private industry over who owns patents where both were involved in creating the underlying invention.

Stanford initially sued for infringing on patents for measuring HIV virus concentration in blood using a polymerase chain reaction technique, known as PCR.  The patented method was developed by a university researcher who entered into an employment agreement with Stanford promising to assign rights to any inventions. The Stanford researcher also worked at Cetus Corp., a small biotech company whose technology was later acquired by Roche, to learn more about PCR. He signed a further agreement assigning his right, title and interest in any inventions made as a consequence of access to Cetus. The researcher developed the particular method while at Cetus, and conducted further testing upon returning to Stanford. The university then filed for and obtained patents covering the measurement procedure.

The Supreme Court’s analysis of the case centered around The University and Small Business Patent Procedures Act of 1980, otherwise known as the Bayh-Dole Act, a law enacted to clarify ownership rights to inventions stemming from research where federal funding was obtained.  At the appellate level, the Federal Circuit agreed with Roche and found that rights had indeed been assigned to Cetus, and thus to Roche. It also found that federal law under the Bayh-Dole Act did not automatically void an inventor’s rights in federally funded inventions.

The Court began its analysis by noting that as a general rule, under US patent law, a patent may be issued only to an applying inventor.  The Court further noted that principles of contract law provide that an inventor’s interest “assignable in law by an instrument in writing,” thereby extending patent ownership rights to an inventor’s assignee. In resolving the issue over whether the Bayh-Dole Act changes these longstanding principles US patent law, the Court stated that nowhere in the Act is title expressly vested in contractors or anyone else, and nowhere in the Act are inventors expressly deprived of their interest in federally funded inventions. Instead, the Act provides that contractors may “elect to retain title to any subject invention,” noting that the agency that granted the federal funds receives from the contractor “a nonexclusive, nontransferrable, irrevocable, paid-up license to practice . . . [the] subject invention.”

Therefore, nothing in the 1980 law changes longstanding patent law principles regarding the importance of inventorship. The Court’s treatment of the issue is particularly interesting given the looming possibility of patent reform in the United States. Current versions of the America Invents Act of 2011 in the U.S. Senate (S. 23) and in the House of Representatives (H.R. 1249) would both significantly change U.S. patent law to a first-to-file patent ownership system. The Stanford v. Roche decision may therefore indicate a potential constitutional issue with any movement away from the first-to-invent system in the United States. 

Despite the attention given to the Bayh-Dole Act and the potential ramification for patent reform, the question of who owned the patents in question ultimately turned on the competing contractual clauses involved in the case.  The Court’s deference to the contractual provisions shows that the parties’ contractual intentions ultimately control in determining who wins ownership of the patents, and suggests an even further polarization of the issue of university vs. researcher ownership of intellectual property assets even further. In this case, the Court awarded ownership to Roche – but suggests that a mere change in Stanford’s agreement may have won the case, since it contained only a “promise” to assign. Because the Cetus agreement included more specific assignment language, rights under the Cetus agreement vested earlier than Stanford’s even though it occurred later in time.

The United Kingdom’s Intellectual Property Office has introduced its peer-to-patent initiative in a pilot program that will last until the end of 2011. Announced by the UK’s Minister of Intellectual Property in a press release on June 1, 2011, the program is an effort to tap into “crowd sourcing” to provide patent examiners with additional prior art resources during the patent application process. The peer-to-patent initiative allows third parties to participate in the review of patent applications by offering their own observations and prior art.

The program provides a web-based portal through which registered users can review published patent applications and participate as a community in considering patentability. The UK’s pilot is initially being restricted to a limited number of patent applications, all from the fields of computing and electronic data processing. Each application selected to be included in the program will remain open for comment for a period of three months.

Participation in the program is a multi-step process. It begins by finding or searching for patent applications to be considered, and reviewing and discussing patent claims and information about them. Third parties seeking to add their own observations need to research published resources relevant to the claims, and identify and explain any prior art . The community is able to annotate, evaluate and rank submitted prior art. Participants then have the opportunity to create a “top ten” list of prior art references generated for each application and forward it to the Intellectual Property Office for consideration in the examination of the application.

The Intellectual Property Office has created a blog to provide information on the program and a tutorial to support its use by those interested in participating in online review of patent applications. In doing so it likely hopes to ride the wave of momentum developing around community-based attempts to improve the patenting process.  The UK pilot program is not the first of its kind – its implementation follows other governmental efforts at implementing peer-to-patent programs have been made in the United States, Australia, and Japan. Interestingly, the private sector has also recently become much more involved in attempts to participate in the patent process – Article One Partners, for example, recently launched what it calls its Litigation Avoidance Program.

As third party patent review efforts gain steam, it will be interesting to see to what extent they become active components of the patent application process from a governmental perspective, and whether or not public or private sector initiatives prove better at improving patent quality. One issue with governmental initiatives like the UK’s new peer-to-patent system is that it may simply prove too onerous given the amount of work that must be done by those wishing to participate. National laws will also need to be harmonized – for example, US patent law does not currently permit third party participation in the patent application process. However, such peer-to-patent systems have powerful potential to improve the quality of patent claims, as a patent applicant can track the review process and alter the claims accordingly before official examination begins.

The United States Supreme Court has released yet another opinion involving patent law, continuing a recent trend which has seen numerous opinions altering the patent jurisprudence landscape. In Global-Tech Appliances, Inc. v. SEB S.A. (2011), 8 out of 9 justices held that liability under 35 U.S.C. §271(b) requires a specific standard of knowledge that induced acts constitute patent infringement. The opinion changes the level of the knowledge require by the statute by invoking a criminal law doctrine for the first time in a civil case involving patents – and in doing so, perhaps signals a much wider application of the theory into other civil cases, something not usually seen coming from the Court’s forays into patents.

The case emerged from a Federal Circuit appeal involving patent litigation that asserted a theory of infringement based on actively inducing others to sell or offer to sell products in violation of the patent holder’s rights. Known as inducement of infringement, the theory is codified in §271(b), which states simply that “[w]hoever actively induces infringement of a patent shall be liable as an infringer” – language which had been construed by the Federal Circuit to require a standard of “deliberate indifference” that infringement might occur.

The Supreme Court held that inducement of infringement indeed requires knowledge on the part of the accused inducer that a third party’s conduct constitutes patent infringement. The Court noted that although §271(b) is silent as to whether knowledge is required, it imported the knowledge component from the concept of contributory patent infringement that has long been required in §271(c) – reasoning that “the two provisions have a common origin and create the same difficult interpretive choice,” particularly given that inducement of infringement was not always considered a separate theory, but instead was formerly treated as evidence of contributory infringement.

The main issue, however, was whether the Federal Circuit’s “deliberate indifference” standard should be the law. Borrowing from criminal jurisprudence, the Court then held, for the first time, that liability for patent infringement under the inducement theory of §271(b) requires “willful blindness.” In an attempt to further define what this means, the Court noted that “the defendant must subjectively believe that there is a high probability that a fact exists. Second, the defendant must take deliberate actions to avoid learning of that fact. These requirements give willful blindness an appropriately limited scope that surpasses recklessness and negligence.”

The lone dissenting voice came from Justice Kennedy, who noted that this was the first time the Court held that “willful blindness” is a substitute for actual knowledge where a statutory requirement of knowledge exists. Justice Kennedy went further, questioning whether such an extension was even appropriate at all, let alone in a civil case involve patents – and without any briefing or comment on the issue whatsoever.

The case is therefore notable for two reasons. First, it changes the level of knowledge required to prove, and be liable for, inducement of infringement. Second, and perhaps more importantly, it adopts a doctrine from criminal law to further define what the Court found to be a statutory knowledge requirement. In doing so, the opinion notes ominously that “[g]iven the doctrine’s long history and wide acceptance in the Federal Judiciary, there is no reason why the doctrine should not apply in civil lawsuits” – and although qualified by “for induced patent infringement under §271(b)” – the implication is evident that it could be imported for other civil lawsuits as well.

The United States Court of Appeals for the Federal Circuit has held that an accused infringer must now establish that a patent applicant committed inequitable conduct by clear and convincing evidence.  The en banc ruling in Therasense, Inc. v. Becton, Dickinson and Company (Fed. Cir. 2011) is a significant departure from existing jurisprudence on the issue, and is sure to have a far-reaching impact on the conduct of patent litigation and the enforceability of many United States patents.

The patent at issue in this case, U.S. Patent No. 5,820,551, is for a disposable blood glucose test strip for diabetes management. The trial court found the patent unenforceable due to inequitable conduct because the patent applicant’s lawyer failed to disclose briefing made to the European Patent Office during prosecution of related patent applications. A three-judge panel of the Federal Circuit had previously upheld that trial court’s judgment.

Inequitable conduct as a challenge to a patent’s enforceability involves two different elements – whether there was intent to deceive the United States Patent & Trademark Office (USPTO), and whether the deception was material to patentability. While the standards for both elements have evolved over time, it has generally been that only a showing of negligence in some form was required for intent, and for materiality, a substantial likelihood that a reasonable examiner would consider a prior art reference important in deciding whether to allow the application to issue as a patent.

These rather low standards have made inequitable conduct a common defense in patent litigation. Not surprisingly, this has had many consequences for patents, for the conduct of litigation, and for the attorneys involved. The Federal Circuit noted that the frequent use of the defense has a tendency to expand the scope of discovery and negatively impact the participation of the prosecuting attorney in the litigation as well as his or her professional reputation. A finding of inequitable conduct can also infect other related patents and applications in the same technical family.

The Federal Circuit’s new standard is that the accused infringer must prove both elements by clear and convincing evidence. To establish intent, one must show that the applicant knew of a potential prior art reference, knew that it was material, and deliberately decided not to disclose it. Notably, the Federal Circuit departed from a “sliding scale” approach that blurred the line between intent and material by specifically noting that each element is separate requirement for establishing inequitable conduct. It specifically advised, for example, that a trial court may not infer intent solely from materiality and must instead weigh the evidence of intent to deceive independently.

As for materiality, the new standard requires a “but-for” test that a prior art reference is material if the USPTO would not have allowed a claim had it been aware of the undisclosed prior art reference. This requires the trial court to evaluate whether the USPTO would have allowed the claim if it had been aware of the undisclosed prior art reference, giving claims their broadest reasonable construction.

The Federal Circuit also carved out an exception in cases of serious misconduct as it relates to materiality. Where the patent application has engaged in affirmative acts of egregious misconduct, the “but for” aspect of the materiality test does not apply, and the misconduct itself satisfies the materiality requirement.

While many will view the Federal Circuit’s new inequitable conduct test as a welcome change in the law and attempt to introduce clarity, it is likely not the last time a court will try to address the issue. The decision in Therasense was also notable for its split among the judges – six sided with the majority, but the remaining five chose to either dissent (four judges) or concur (one judge). Such a split indicates that we may well see the United States Supreme Court decide to take up the issue again in the future.

The United States Patent and Trademark Office (“USPTO”) has expanded existing pilot programs to provide patent applicants the ability to request an interview with a patent examiner prior to a first office action on the merits. The expanded program now includes all utility applications in all technology areas and filing dates, and will run through May 16, 2012. Importantly, no additional fees are required for participation in the expanded program.

The USPTO had first implemented its Enhanced First Action Interview Pilot Program in late 2009, which itself was a successor to a similar 2008 program. Originally, the program was limited to applications in certain art units covering inventions in specific classes of technology.

According to the USPTO’s statistics in its press release announcing the program expansion, Applicants requesting an interview before a first office action issues have a much better chance of obtaining a quick notice of allowance for their patent applications. The USPTO says that 34 percent of applications in the existing pilot programs were allowed on the first action on the merits, compared to around 11 percent on average generally.

Patent applicants must satisfy several requirements to have a request granted for an interview prior to a first office action, such as:

 - The application must be a non-reissue, non-provisional utility application or an international application that has entered the national stage;

- The application must contain three or fewer independent claims and twenty or fewer total claims, and must not contain any multiple dependent claims;

- The claims must be directed to a single invention;

- The request for a first action interview must be filed electronically using the USPTO’s EFS-Web electronic filing system;

- The request must be filed at least one day before a first office action on the merits appears in the USPTO’s Patent Application Information Retrieval (PAIR) system; and

- The interview request must include a statement that the applicant agrees not to file a request for a refund of the search fee and any excess claim fees paid in the application.

Applicants that request participation in the expanded program but who do not comply with the requirements above will still have an opportunity to correct defects in their requests. The USPTO will notify applicants of any problems by issuing a Notice of Non-Compliant First Action Interview Request, and applicants will then have to file a proper request and make appropriate corrections within one month. No extensions of time for this will be available.

Once a request is granted, the examiner will conduct a prior art search and provide the applicant with a condensed pre-interview communication. Within 30 days of receipt, the applicant will need to schedule an interview and submit proposed amendments and/or arguments.  At the interview, the prior art, any rejections, and the proposed amendments and arguments will be discussed.  If no agreement is reached between the applicant and the examiner, a First Action Interview Office action that includes an interview summary will follow.

This past week saw two new bills focusing on IP issues introduced by the United States Senate on the same day. While each deals with a different issue, they are both aimed at the same fundamental goal – to strengthen US law enforcement ability to deal with intellectual property infringement. This time, trademark and copyright protection take center stage, and they follow other attempts in 2011 to legislate on issues involving intellectual property.

The first of these, introduced as S. 968, is known as the “Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act” – or the “Protect IP Act” in short form. The legislation is a revision of an earlier attempt to limit the illegal sale of counterfeit goods by cracking down on websites around the world.

The revised legislation, like the original one, confers significant powers to combat the online sale of counterfeit goods. Most of the original provisions remain, but notable among the additions is a limited private right of action that allows copyright holders to pursue injunctions against payment processors and ad networks to eliminate financial viability of a rogue website. The Protect IP Act also appears to respond to previous concerns by critics worried about an overreach of US authority by introducing a narrower definition of what a rogue website site is, and requiring those bringing an action —whether it’s the US Attorney General or a copyright owner —to first proceed against the owner or registrant of a domain name used before bringing an action against the domain name itself.

Nonetheless, Internet censorship worries remain. The revised legislation, as with the original, provides US authorities with the ability to institute an action against “nondomestic domain names,” meaning that law enforcement capability extends to websites not based in the United States – renewing concerns of too much US control over policing the Internet.  These concerns have recently drawn increased attention in the wake of the disclosure of sensitive diplomatic cables by Wikileaks and the vigorous efforts to choke off its ability to get information out to the global community.

The issue centers on the Internet Corporation for Assigned Names and Numbers (ICANN), its relationship with the United States, and its role in managing the global system of Internet protocol addresses and top-level domains. ICANN was originally created to oversee a number of Internet-related tasks previously performed directly on behalf of the US government. Several countries, in conjunction with the United Nations, have recently called for an international body representing the global community that would keep the web access open, free, and with sufficient privacy.

The second piece of legislation, introduced as S. 978, seeks to amend existing criminal penalties for criminal copyright infringement. Current US law makes unauthorized uploads and downloads of copyrighted content a felony. The new legislation specifically targets the illegal streaming of copyrighted content, extending felony status to such conduct. While it does not bring with it the same controversial issues as S. 968, these provisions do represent an attempt to address the constantly-changing nature of technology, such as the emergence of “cloud” computing, and its utility in assisting infringement of copyrights.

Attempts to legislate in the arena of intellectual property are therefore significantly increasing as 2011 progresses. Both bills come on the heels of at least two other major attempts to introduce legislation centered around intellectual property issues – one a controversial attempt to exert further control over the Internet, known as Cybersecurity and Internet Freedom Act, and a renewed attempt to reform US patent law. With the addition of S. 968 and S. 978, there is no doubt that intellectual property issues are firmly in focus for the US legislature.

The United States Patent & Trademark Office (“USPTO”) recently announced several spending reductions in the wake of its budget appropriation for 2011. On April 15, the United States government finally resolved its Fiscal Year 2011 budget crisis, and in the process significantly reduced the spending ability of the USPTO. In response, the agency has been forced to cut back and postpone several initiatives it had planned for the year.

Among the most significant reductions to be made are the postponement of its proposed “fast-track” patent examination process. The USPTO previously announced the upcoming implementation of a three track framework for examination of patent applications. The first of those provided for expedited examination of patent applications for those willing to pay higher examination fees. This first track was due to be implemented May 4, 2011. It has now been indefinitely postponed.

Also postponed indefintely is a plan to open one or more satellite offices in different locations around the United States. The USPTO had already announced plans to open one such office in Detroit and had hinted at plans to open other regional offices. These satellite offices had been part of a plan to hire more patent examiners and leverage additional resources and technical expertise in various locations around the country.

The budget problems have also forced an examiner hiring and overtime freeze, which may mean its aggressive patent backlog and pendency reduction goals may be significantly slowed. USPTO Director David Kappos, since taking over at the agency in August 2009, has implemented numerous initiatives to significantly reduce both the huge existing patent application backlog and reduce the total pendency of a patent application from filing to issuance. The USPTO’s data visualization dashboard shows that current patent application backlog stands at 708,912, and traditional pendency is currently at an average of 33.9 months. While the USPTO no doubt intends to maintain these goals, it remains to be seen whether it can continue reducing backlog and pendency while keeping patent quality high in light of the hiring and overtime restrictions it has had to make.

It also remains to be seen what impact the USPTO’s budgetary cuts have on patent reform legislation currently working its way through the United States Congress. The version of the American Invents Act of 2011 recently passed by the United States Senate allows the USPTO to keep all fees it takes in from users of the patent system, and also provides the USPTO the ability to set fees at appropriate levels. These provisions, however, would be directly contradictory with the current budgetary scheme, which is based on a fee diversion framework that sets the annual budget for the agency as a portion of the fees collected. Therefore, any patent reform legislation containing this language would require resolution of the fees issue with the government’s budget, which would seem an extremely difficult political issue given the 2011 budget crisis.

In a major development, the United States Senate revised key provisions of its version of what is now known as the America Invents Act of 2011, paving the way for a vote that would send the proposed law to the House of Representatives for further consideration. The proposed law represents yet another attempt to reform patent laws in the United States, and this week’s revisions may finally mean that long-debated changes to the country’s patent system are coming soon.

Proposals to revise patent laws in the United States are nothing new. But the 2011 version may finally make it to the President’s desk for signature, as members of the Senate Judiciary Committee have now removed key and controversial provisions regarding damages available in patent litigation cases and selection of forum for patent litigants and added provisions regarding fee diversion from the United States Patent & Trademark Office (“USPTO”).

This week’s revisions strike in their entirety provisions regarding damages available in patent litigation. Originally introduced in response to media attention given to damages awarded in patent cases, the proposed law would have allowed judges more discretion in deciding the importance of patent claims that would limit that possibility of large damages. In notes regarding the changes, the Senate commented that the proposed revisions did not make any change to the applicable legal standard and instead sought to formalize the judge’s gatekeeper role in overseeing application of patent claims to a potentially-infringing product.

Similarly, provisions regarding forum selection have also been stricken in their entirety. The provisions would have limited the ability of patent litigants to select an appropriate court to adjudicate their cases. The Senate’s comments here also noted that the stricken provisions provided no meaningful change to existing venue law, and instead sought to codify recent court decisions and provide useful clarity.

Other changes in this week’s revisions include finally ending fee diversion from the USPTO that has long plagued its budget and created a huge patent application backlog. The revisions also add a requirement that the USPTO open three new satellite offices, and include approval of 50% reductions in filing fees for small entities that seek accelerated patent application examination. The latter is in conjunction with the USPTO’s recent announcement that it would implement a “three-track” system of examining patent applications in which applicants can pursue expedited examination of applications by paying hefty initial filing fees.

Despite the changes discussed above, other very significant provisions of the proposed law remain intact. One of the most important provisions in the proposed law would move the United States to a first-to-file patent system instead of the current first-to-invent system. The move would harmonize United States patent law with that of almost all other countries in the world.

The full U.S. Senate may vote on the proposed law as early as this week. If passed, the proposed law moves to the House of Representatives, and from there, to the President for signature. There is no currently-pending House version of the proposed patent reform, but it is expected that the House version would be very similar to that of the Senate.