Tensions Rise Between USPTO and Court of Appeals

Patent Office is in Defiance of CAFC Mandate on Inequitable Conduct, says former Chief IP Executive

A former head of IP at a Fortune 100 company has told IP CloseUp that the United States Patent and Trademark Office (USPTO) is undermining the authority of the highest patent court, the Court of Appeals for the Federal Circuit (CAFC), over a new standard requiring that the burden of proof for inequitable conduct be on the patent holder, not the infringer.

“The patent system is a game of haves and have-nots and, unfortunately, the vast majority of Americans do not own patents and see doing so as stifling competition. In fact, the system, if working properly as it has in the past, stimulates competition,” he told IP CloseUp.

“Tensions are rising between the CAFC and Patent Czar Kappos.  After the significant changes to the standards for raising inequitable conduct that resulted from the En Banc CAFC decision in the Therasense case in May 2011, the PTO proposed new changes to 37 CFR 1.56 that specifically included the Therasense standards in July 2011 and received written comments through September but held no hearings.  Upon passage of AIA last September, the PTO now trumpets Supplemental Examination to deal with such issues and has not made any changes to 37 CFR 1.56.

Making Sense of Therasense

“However, Therasense specifically holds that it is the accused infringer’s burden to prove inequitable conduct, not that of the patent owner.  The PTO’s actions in defiance of the CAFC mandate is perfectly consistent with the intended purposes of AIA, which is to take away as much as possible from the Courts, and push dealing with patents back into the PTO where applicants will languish under a Czar-run bureaucratic system.

“I predict that it will become more difficult to get patent infringement cases heard by juries and that good patents will be bottled up in the PTO for years.

“After years of defeat, the supporters of AIA figured out the perfectly ambiguous methodologies for killing patents they don’t want to have to pay to practice.  They bought and paid for the ‘perfect storm’ to weaken the patent system.  And as for job creation, if you believe that one, I have a bridge near you that I could sell you.

The former Chief IP Exec (CIPO) also told IP CloseUp that patent holders should be wary of the latest efforts of those trying to weaken the patent system by sliding a “technical amendment” by Congress that would undo the compromises reached in the passage of AIA. “The proposed change in the estoppel provisions will open the door to serial post grant reviews and make it even more difficult to get a granted patent cleanly out of the grips of the USPTO.

“This could adversely affect a patentee in a post grant review or inter partes re-exam by eliminating the estoppel feature of AIA as it was signed in Sept. 2011,” he added.

*     *     *

Mayo v. Prometheus Further Weakens the Patent System

The same former CIPO, who is also a patent attorney and former USPTO examiner, strongly disagrees with Mayo v. Prometheusa recent Supreme Court decision also with far-reaching implications.

This decision,” he told IP CloseUp, “sets the patent system on a course to find more areas determined to be part of the ‘laws of nature’ and therefore unpatentable. It sets a very bad precedent.  In my opinion determining the correct levels in the blood cells for administering more or less of a drug is not a ‘law of nature.’  It took a lot of research to determine what those levels are and should be entitled to patent protection for the limited duration of a patent.  Does this decision put most medical diagnostic companies out of business? It might.

“This decision could have an enormous impact on not only medical diagnostic tests that have been patentable in the past, but on all forms of inventions that relate to tests for determining characteristics found in nature.  For example, in physics, say I discover a new way of determining how to split certain atoms in a particular way to get a particular result.  Can it be argued that since atoms and their constituent components exist in nature, that such a discovery should not be patentable?

Added Tension

“So we now have the Supreme Court in battle with the CAFC over the last 10 years over the scope of patent law and added to that tension we now have the AIA, which has Commissioner Kappos battling with the CAFC about who really decides patent validity and infringement issues. The PTO will soon be turned into another forum like the ITC. 

“I believe over the next few years, it may become much more difficult to get a patent infringement case to a jury if Post Grant Reviews are pursued by accused infringers.  If the PTO finds a patent valid and infringed, will the Administrative Law Judges have the authority to grant damages in their decisions?

“I am not aware of the AIA granting such authority. The ITC is limited to granting exclusion orders to keep infringing products out of the U.S., but has no authority to grant damage awards.  Currently, only the Federal District Courts have that authority.

“The next step for the anti-patent forces would be to further amend AIA to allow the PTO to grant damages.  There is also talk of NPE’s being excluded from bringing patent cases before the ITC.

“The anti-patent proponents are wreaking havoc,” he concludes, “and are likely to continue to weaken an already beaten-down U.S. Patent System.”

Illustration source: judicialnominations.org; commnexus.org 

About Bruce Berman

IP trend spotter, consultant and author.

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