Patent Law

US patent system moves to first-to-file

Today, H.R. 1249, the America Invents Act, passed the US House of Representatives. The US Senate had passed a similar bill (S. 23) in March.

The pair of bills have some differences between them that needs to be resolved, but together they present a broad change to the way the US patent system works.

Currently, the US remains one of the few countries in the world where patents are awarded based on whoever first invents a claimed invention. This is called “first-to-invent” and has created an environment where there is a lack of incentive for inventors to file patents. Encouraging inventors to file patents and disclose their invention to the public in return for a time-limited monopoly is a policy objective of patent law, since the advancement of science relies on building upon what is already known. As Isaac Newton once said, “If I have seen further it is only by standing on the shoulders of giants”.

With the new reforms, the US moves to a “first-to-file” system in which a patent is awarded to the inventor who files for a patent first.  This provides an incentive for inventors to file patents as soon as they make an invention in order to prevent any subsequent person who independently makes the same invention from acquiring patent rights.

Canada already uses the “first-to-file” system, and has been using such a system since 1989.

The drive to determine what is patentable

Last week, the U.S. Supreme Court agreed to hear an appeal of Mayo Collaborative Services v. Prometheus Laboratories, Inc., on the issue of whether or not methods of medical diagnosis are patentable in the US.

Closer to home, tomorrow is the appeal hearing for Amazon v. Canada, Federal Court File A-435-10, in which Amazon seeks to have the Court of Appeal confirm that methods of doing business (such as a method of doing “1-click” shopping online in this case) are patentable in Canada. We should see a decision from the Court within a year.

These are exciting times for the patent bar as well as for scientists worldwide, as these decisions can affect many companies’ R&D directions in the coming years.

Patents claiming a method of doing business – Appeal to be heard in June

As posted earlier, the Federal Court in Amazon v. Canada, 2010 FC 1011 held that a method of doing business (a “business method”) can be patentable subject matter. The Department of Justice on behalf of the Canadian Intellectual Property Office is appealing this decision to the Federal Court of Appeal, in court file A-435-10.

The Court of Appeal has now confirmed that the appeal hearing will be heard in Toronto (not Ottawa as previously reported) on June 21, 2011 at 9:30am. A decision should be rendered before the end of 2011. Depending on the appeal decision, we may see the Supreme Court grant leave to tackle this issue in 2012.

The evidentiary standard for challenging US patent validity

Yesterday, the US Supreme Court wrapped up oral arguments for Microsoft Corporation v. i4i Limited Partnership, in which i4i sued Microsoft for patent infringement. This case has attracted worldwide attention, not only because the infringing product (MS Word) is widely used, but also because the Supreme Court’s ruling will determine the evidentiary standard to which the validity of all US patents will be determined in the future.

Under 35 U.S.C. § 282, an issued patent is presumed to be valid (in other words, it’s assumed to be novel and non-obvious).  Since the 1980s, the Court of Appeal has held that this presumption of validity may only be rebutted with evidence meeting a “clear and convincing” standard.

Microsoft, having lost at the trial level and at the Court of Appeal, argues that the “clear and convincing” standard is too high and that the correct standard should be the lower “preponderance of evidence” standard.  Microsoft argues that the requirement for “clear and convincing” evidence was a requirement made solely by the Court of Appeal and was not the intent of Congress.

i4i, as the patent holder in this case, argues that maintaining the “clear and convincing” standard is necessary for protecting American innovation and inventors, and that Congress had implicitly endorsed the “clear and convincing” standard forwarded by the Court of Appeal by not enacting a law saying otherwise.

As an added twist, the specific evidence that Microsoft now seeks to introduce in order to argue that i4i’s patent is invalid was not previously considered by the US Patent Office during the prosecution of the patent application.  Thus, the Supreme Court may end up treating evidence previously considered by the US Patent Office differently than evidence not previously seen by the US Patent Office.

Despite the rhetoric about protecting American innovation, I think a certain amount of deference is due if the evidence introduced was already considered by the Patent Office during prosecution.  In my view, the higher “clear and convincing” standard should apply to evidence previously considered during prosecution, while the lower “preponderance of evidence” standard should apply for evidence not previously considered by the Patent Office.

A decision is expected from the US Supreme Court before the end of June 2011. Chief Justice Roberts recused himself, so the case will be decided by the remaining eight justices.  If the Supreme Court splits 4-4 then the “clear and convincing” evidentiary standard stands.

Prior art and being the first to file a patent application

If you’ve heard of patents before you’ve probably heard of the term prior art.  A prior art is generally a public document that demonstrates the state of the art at a particular time.

Since patents are only awarded to an inventor for an invention that’s new and inventive over the current state of the art, when you file a patent application you want to know if there’s any prior art that can make your patent application not new or not inventive.  In Canada, any prior art from a third party that publicly disclosed your invention before you filed your patent application will take away your patent rights because it will make your patent application not new or not inventive.

So what should you do?  Before drafting your patent application, a search for prior art should be done to assess the current state of the art.  Knowing what kind of prior art is out there means that your patent application can be drafted so that it remains new and inventive over the prior art and increases its chances of being allowed as a patent.

Who is paying your maintenance fees?

In Canada, an applicant applying for a patent must pay maintenance fees to the government, even when no patent has yet been granted. The first maintenance fee is due 2 years after the patent application is filed, and continues for the life of the patent and/or patent application.

However, just because maintenance fees are due to the government does not mean that anyone can pay them. In Unicorp v. Canada, 2011 FCA 55, a law firm tried to pay the maintenance fee for an patent, but as it was not the appointed agent for patent in question, the payments were refunded and were not applied to the patent. The patent was subsequently deemed to be irrevocably abandoned due to a failure to pay the required maintenance fee. The Federal Court of Appeal affirmed that the patent was irrevocably abandoned due to a failure to pay fees.

It’s thus important to remember that while remembering to pay maintenance fees are important, it is just as important to ensure that the person or entity paying the maintenance fee is the appointed agent, or is otherwise an authorized correspondent to the patent or patent application in question. In patent law, having money and paying it to the government isn’t enough; who pays the money is just as important.

Kik’s defence to RIM’s infringement lawsuit

Late last year, RIM sued Kik Interactive Inc., the maker of the popular cross-platform instant messaging client Kik Messenger, alleging breach of confidentiality, trademark infringement, and patent infringement.  At the same time, RIM also removed Kik Messenger from BlackBerry App World.

It’s been a long time coming, as we were expecting Kik’s statement of defence to be filed with the court at the end of December. Finally, on Monday Feb 7, 2011 (well after the 30 day deadline for Canadian defendants), Kik filed their defence and counterclaim after the Court granted them an extension of time.

I had a look at Kik’s Statement of Defence and Counterclaim today (available here, 7MB PDF).

Kik denies that it was developing a cross-platform instant messaging client in secret or had access to RIM’s BBM confidential documents, denies that it’s infringing on RIM’s trademarks or patents, and found prior art (EP093213, JP10013881, Outlook 2000, and a whole list of documents in Schedules A & B) which Kik alleges makes RIM’s asserted patents invalid.

Kik theorizes that as a result of the “overnight success of Kik Messenger”, “senior executives at RIM caused RIM to embark on a campaign to destroy or seriously harm Kik, including unilaterally terminating the various agreements between Kik and RIM, suspending and then removing Kik Messenger from BlackBerry App World and commencing this lawsuit, including a meritless patent infringement claim which RIM knew had no realistic chance of success.”

Kik portrays the suit as a classic case of Goliath picking on the poor small startup: “RIM employed a ‘bully’ like strategy, while Kik attempted to appease RIM…”.

Interestingly, in the statement of defence Kik asserted that Ted, the CEO of Kik, did not have access to the BlackBerry Messenger (BBM) source code while he worked at RIM’s BBM team as a Project Coordinator.  Kik also denies that Ted had access to RIM’s development plans, market research, and other internal reports related to BBM while working as part of RIM’s BBM team, as RIM had alleged in its statement of claim.  It’ll be very interesting to see exactly what documents Ted had access to or potentially had access to while working as part of RIM’s BBM team, and whether any of them led to his decision to develop a cross-platform instant messaging client in late 2009.

As with most lawsuits, the truth will come out during discovery and at trial, and will probably fall somewhere in between the allegations made in RIM’s statement of claim and Kik’s statement of defence.

The meaning of “sold in Canada” – statutory interpretation

Statutory interpretation – figuring out what a piece of legislation (a law) means – is a complex issue.  As the following case shows, even a simple word like “sold” may have different meanings even within the same piece of legislation.

Yesterday, the Supreme Court of Canada released Celgene Corp. v. Canada, 2011 SCC 1 and clarified the law on the scope of the Patented Medicine Prices Review Board’s price‑regulating and remedial authority. At issue is the meaning of the phrase “sold in any market in Canada”.

Celgene owns a Canadian patent on the drug Thalomid and distributes it in Canada under the Special Access Programme (“SAP”).  Under ordinary commercial law definitions as used in other patent cases relating to infringement (such as Dole Refrigerating and Domco Industries), Thalomid would be considered “sold” in the US: the medicine is packed in the US and shipped Free on Board (“FOB”) to the requesting doctor in Canada, the invoice was prepared in the US and mailed to Canada, payment is in U.S. dollars and is mailed to Celgene in the US, no Canadian taxes are paid, and the drug is never redistributed in Canada.

However, the Patented Medicine Prices Review Board concluded that Celgene’s Thalomid sales to Canadians pursuant to SAP were “sold in any market in Canada” and fell within both its authority for price investigation and its related remedial powers.

In siding with the Board and rejecting the technical commercial law definition advanced by Celgene, the Supreme Court recognized that the mandate of the Board includes balancing the monopoly power held by the patentee of a medicine with the interests of the purchasers of those medicines.  In order to comply with that mandate, sales “in any market in Canada” were interpreted to include sales of medicines that are regulated by the public laws of Canada, that will be delivered in Canada, to be dispensed in Canada, and where, in particular, the cost of the medicine will be borne by Canadians — patients or taxpayers, as the case may be.  In this case, Celgene’s Thalomid SAP sales met that criteria and thus falls within the Board’s authority.

As this case shows, defining the meaning of a word in a piece of legislation is a complex issue – even a simple word like “sold” may have different meanings even within the same piece of legislation.  If you are reading a piece of legislation concerning an issue that is important to your business, be sure to consult a lawyer for advice.

Why patents are such a hassle to obtain – the public policy for patents

Many first-time inventors are surprised at the costs and time involved in obtaining a patent.  “Why is a patent so expensive to obtain and takes so many years to issue?”, they ask.

Because all patents applications must be carefully prepared by a qualified professional and must then go through a rigorous examination process. 

At its core, patents are a bargain between an inventor and society (in this case the people of Canada).

In return for a 20 year legal monopoly on his invention, the inventor agrees to teach society a new and non-obvious invention, one that the world has never before seen or contemplated. No mere idea, the inventor also teaches society how to make and use his invention in the best way the inventor knows how.

The patent application is the vehicle through which the inventor teaches his invention to society. This is one of the reasons why patents are published publicly, and are even available on Google.  Once a patent’s monopoly term expires, anyone in the society can take advantage of the invention.

This bargain is also why a patent application must be examined by the Canadian Intellectual Property Office (CIPO) before the patent application can be approved as an issued patent. Among other things, CIPO searches the state of the art to ensure that the invention as taught is truly new and non-obvious – thus ensuring the integrity of the bargain.  This examination process is rigorous and patent applications typically require amendments before the CIPO is satisfied that the invention is new and non-obvious.

And that’s why a patent can cost thousands of dollars and take a few years to issue.

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