The major change in the AIA is the change from the “first-person-to-invent” system to the “first inventor-to-file” system.  This feature in particular will harmonize the U.S. patent system with other countries patent systems. As a result, the “grace period” for prior references currently available under 35 U.S.C. 102(b) will be eliminated.  This change does allow for an exception. If the disclosure is made one year or less before the effective filing date and disclosure originated from the inventor or joint inventor, then the disclosure is not prior art.

      The AIA also made changes to post-grant review procedures.  The post-grant review changes allow a third party to petition to cancel a patent claim within nine months after the issuance of the patent or broadening reissue patent. While Ex Parte reexamination will continue with the same threshold, Inter Partes reexamination will be abolished one year after the enactment of the AIA, September 16, 2012.  Supplemental examination will allow a patent owner to request that the Patent Office reconsider or correct information relevant to the patent.

      The AIA also has a change in fee structure.  Inventors and small businesses that qualify as “micro” businesses will receive a 75% reduction in fees.  To qualify as a micro entity, an applicant must meet certain household income tests and not have been named as an inventor on more than four previously filed patent applications. Micro entities may also include institutions of higher education and applicants who work for those institutions.  The change in fee structure will also allow for expedited examinations.  Applicants can speed examination by paying an extra $4,800, provided that the filed application does not have more than four independent claims and 30 total claims. The Patent Office will only initially accept 10,000 priority examination requests a year.

     AIA also sought to mitigate the number of false marking claims.  According to the Act only the federal government can bring a lawsuit for false marking.  In addition, only entities actually harmed by another’s false marking may bring suit for recovery.

     America Invents Act also includes revisions to important legal concepts, such as “prior art,” “commercial use,” “best mode”, which will impact interpretations in the provisions of 35 U.S.C. 102.   As a practice note, many of these changes are immediate, such as the prioritized examination and false marking provision, while others do not go into effect until March of 2013, such as the first to file provision.  Depending on the issue, patent attorneys/agents will need to be knowledgeable in both sets of the code for the foreseeable transition period.

For further details see:

http://www.uspto.gov/aia_implementation/index.jsp

 In this holding Privacash, Inc., appealed the decision from the Western District of Wisconsin.  The district court entered a summary judgment stating cards sold by the American Express Company and its affiliates did not infringe the patent held by Privacash.  The prior court’s holding was based on the rationale that the accused cards were not “bearer instruments” as required by the asserted claim in Privacash’s patent. Federal Circuit affirmed this holding using financial definition to construe the meaning of a bearer instrument in the claim of Privacash’s patent.

 The primary objective of the Privacash patent was to create an anonymous and untraceable means for transacting purchases over the internet.  To support its holding, the Federal Circuit consulted financial reference material that defines the scope of bearer instruments.  The patent’s use of the term “bearer instrument” is consistent with the usual meaning given to “bearer bonds” or “bearer securities”.

 Proof of ownership for a “bearer security” is “possession of the security certificate.” Oxford University Press, A Diction-ary of Finance and Banking 42 (Jonathan Law ed., 4th ed. 2008). That feature “enables such bonds to be transferred from one person to another without registration” and allows owners to “preserve their anonymity.” Id. In the case of “bearer bonds” or “coupon bonds,” possession denotes ownership, “so whoever presents the coupon is entitled to the interest.” John Downes & Jordan Elliot Goodman, Dictionary of Finance and Investment Terms 58, 149 (7th ed. 2006).  

In sum, a physical transfer of the bearer instrument also transfers full ownership, with no need to register any other form of documentation.  American Express successfully argued in both courts that its gift cards are traceable because its gift cards can be reported lost or stolen by the purchaser and subsequently deactivated. These elements of the American Express cards are not consistent with scope of a bearer instrument.  Accordingly, the Federal Circuit affirmed that the cards did not infringe Privacash patent.

In this holding the Supreme Court established the level of requisite knowledge needed to substantiate induced patent infringement under 35 U.S.C. § 271(b).  The Court’s holding made three major points. First, induced patent infringement under 35 U.S.C. § 271(b) requires knowledge that the induced acts constitute patent infringement.  Second, deliberate indifference to a known risk that a patent exist does not satisfy the knowledge required by 35 U.S.C. § 271(b).  Finally, factual support affirming the doctrine of willful blindness can substantiate the knowledge required by 35 U.S.C. § 271(b).

The Court granted certiorari based on an  appeal from the Federal Court of Appeals for the Federal Circuit, which affirmed the prior District Court ruling which held for infringement under 35 U.S.C. § 271(b).

Court proceedings in this case initially began when SEB sued Sunbeam Products, Inc. for patent infringement.  In the factual history, SEB obtained a U.S. patent for its deep fryer.  It subsequently began to market the fryer commercially.  In response, Sunbeam requested Pentalpha Enterprises, Ltd., a wholly owned subsidiary of Global-Tech, to supply Sunbeam with deep fryers.  Pentalpha based its design on a foreign version of SEB’s version and subsequently copied all but the cosmetic features.  Pentalpha’s counsel issued an opinion letter that the fryer did not infringe any patents found.  However, the counsel was not informed of Pentalpha’s direct copying of the SEB patent.  Sunbeam then began to sell Pentalpha-made fryers at a cheaper price than the SEB patent.  SEB subsequently sued Sunbeam for patent infringement to which Sunbeam then notified Pentalpha.   Sunbeam later settled its dispute with SEB; while, Pentalpha continued to sell to other companies.  A suit subsequently followed in District Court where SEB asserted that Penthalpha and Global Tech infringed their SEBs patent under 35 U.S.C. § 271(b).

The primary basis of Penthalpha’s appeals was that there was not sufficient evidence to substantiate the direct knowledge requirement under 271(b). In making its holding, the Supreme Court established the requisite standard of knowledge to induce infringement under 271(b).  In addition, the Court established an alternate action which would also provide the ‘knowledge’ required under 271 (b). 

 In order to establish the knowledge standard for 271(b), the Court used prior case law which held that actual knowledge was required for 271(c).  The Court rationalized that since 271 (b) and (c) have a common origin “and create the same difficult interpretive choice”, the same level of knowledge is required for 271(b).  After the Court established this standard, the Court rationalized why it affirmed the Federal Circuits holding even though there was not actual knowledge.   In order to address this second issue, the Court established that the criminal law doctrine of willful blindness could be used in a civil proceeding.

The Doctrine of Willful blindness first requires 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.  The Court recognized that the Federal Circuit’s application of these criteria to the facts would not directly support a finding of willful blindness. However the Court said that  the evidence when viewed in the light most favorable to the verdict for SEB was sufficient under the correct standard.

http://www.supremecourt.gov/opinions/10pdf/10-6.pdf

In the prior district court case, Gary Odom asserted that his patent was infringed by Microsoft software.  Odom owned a U.S. patent, involving a method for manipulating groups of “tools” in “toolbars” found in computer software applications.   In its holding, the United States District Court for the District of Oregon ruled in favor of Microsoft Corporation declaring the patent invalid due to obviousness.  After a de novo review of the prior district court case, the Federal Circuit evaluated the asserted claims of the patent in suit and found the claims to be obvious to a person of ordinary skill in the art at the time of filing.  This conclusion affirmed the prior district court ruling.

During the proceedings, Odom argued that the district court erred twice in its obviousness analysis. Asserting, the previous court first erred by looking at separate pieces of the claimed invention rather than the invention as a whole, and second by impermissibly applying hindsight in determining obviousness. The district court held that user manipulatable toolbars, dividers, tool groups and the functionality of dragging dividers around to show more or fewer tools in a tool group were all known features that Odom combined to achieve predictable results.  The prior court substantiated its holding based on KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 427 (2007).  In situations where “the content of the prior art, the scope of the patent claim, and the level of ordinary skill in the art are not in material dispute, and the obviousness of the claim is apparent in light of these factors, summary judgment is appropriate.”Id. The prior district court felt this was the case, and summary judgment was appropriate.  The Federal Circuit affirmed.

http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1160.pdf