Triangle organizations pivot to deal with patent law changes

Universities, research companies rethink strategies to protect their inventions

dranii@newsobserver.comFebruary 2, 2013 

Patent attorney Mitch Bigel

UNKNOWN — Myers Bigel Sibley and Sajovec

  • America Invents Act The America Invents Act was signed into law on Sept. 16, 2011, but key provisions don’t take effect until March 16. They include: •  A first-inventor-to-file system: Currently, U.S. patents are awarded to the first person responsible for an innovation. But as of March 16, whichever inventor files a patent application first will be awarded the patent. This will align U.S. patent law with the system in effect in the rest of the world. One caveat: The new law isn’t a license to steal inventions. If you can prove that someone stole your concept, that person isn’t entitled to a patent even if he or she filed first. •  Prior art: To obtain a patent, an invention must be a significant advance over the state of the art, which lawyers call prior art. As of March 16, the scope of what constitutes prior art will expand. Some attorneys say this will make obtaining a patent more difficult.

New provisions in U.S. patent law are pushing organizations intent on protecting their intellectual property to rethink the best way to achieve their goal.

Here in the Triangle, where universities and companies pursue cutting-edge research-and-development work in a variety of fields, there are already changes afoot.

Some examples:

• N.C. State University is looking at initiating more patent applications itself, rather than relying on companies that license inventions from the school to shoulder all the costs of obtaining a patent.

• LED lighting company Cree and business software firm SAS are accelerating some patent applications so that they’re filed before the new law goes into effect on March 16.

• Novan Therapeutics, a Durham drug-development startup, is becoming “more tight-lipped” about its inventions until it files for patent protection.

Attorneys at Raleigh patent law firm Myers Bigel Sibley & Sajovec are advising their clients to file patent applications for inventions “in the pipeline” before March 16 in order to take advantage of provisions in the existing law and to avoid potential issues that the new law brings with it.

“If at all possible, you want to get it filed before that date,” said partner Mitch Bigel.

Patents are an important driver of the local economy because of the Triangle’s abundance of information technology, biopharmaceutical and medical device companies that thrive on innovation. A new report issued Fridayby the Brookings Institution ranks both the Raleigh-Cary and Durham-Chapel Hill metropolitan statistical areas among the nation’s 15 most productive for obtaining patents on a per-capita basis.

The America Invents Act was signed into law on Sept. 16, 2011, with different parts of the law being phased in at different times. The provisions that take effect March 16 include switching from a system that awards patents on a first-to-invent basis to granting patents under a first-inventor-to-file system.

Under the law today, if two people file a patent application around the same time, the patent is awarded to the person who can show he or she invented it first. But after March 16, the person who files the patent first is entitled to the patent, regardless of who came up with the concept first.

Although that sounds like a huge change, lawyers say it’s actually not as big as it seems because it aligns U.S. patent law with the rest of the world. So anyone who wanted patent protection in other countries needed to be mindful of the first-to-invent requirement.

“The multinationals have sort of always operated on a first-to-file system, and even a small startup that is going to want to file patents abroad (has needed) to act as if they were on a first-to-file system,” Bigel said. Still, he added, the new law “makes it that much more critical to get a good patent application on file as quickly as you can.”

Moreover, there are other provisions that go into effect next month that have more far-reaching implications.

A significant advance

To obtain a patent, an invention must be a significant advance over what lawyers call prior art, which can include not only products available in the marketplace but publications that describe a technology, whether they be technical articles or newspaper stories. When the new law takes effect March 16, it will expand what constitutes prior art.

One example: Currently only products sold in the U.S. are deemed prior art, but next month products sold anywhere in the world will qualify.

Another example: The day before inventors file their patent application, an article is published about similar technology. Under current law, inventors are still entitled to a patent if they can prove that the date of their invention preceded the technology outlined in the publication. Under the new first-to-file system, however, “that opportunity is gone,” Bigel said.

As a result of such changes, he said, “it’s just going to make it harder for Americans to get patents.”

The new system puts a premium on filing for a patent before disclosing the invention to others out of fear that they might try to race to the patent office.

“We’re even more tight-lipped, especially when talking to people in the industry, than we otherwise would” be, said Tim O’Sullivan, vice president of business development at Novan.

To be sure, “first to file doesn’t mean first to steal,” Bigel said. “If you file before me and I can prove ... that you stole the idea from me, the patent office isn’t going to give you the patent.”

But under that scenario, the burden of proof falls on the true inventor.

Changes at universities

Obtaining a patent isn’t cheap. It can cost anywhere from $5,000 to $70,000, based on the sophistication of the technology and the complexities of the filing, said Judy Curry, associate general counsel at N.C. State.

Some universities, including N.C. State, avoid that expense as much as they can by licensing their inventions to a company that’s willing to shoulder the costs. That strategy will become outmoded by the new law, however, because it will become more crucial than ever to file for a patent application as soon as possible, Curry said.

As a result, Curry anticipates N.C. State will modify its modus operandi by filing as many abbreviated patent applications, known as provisional applications, as it can afford.

Provisional applications, which can be filed for a few thousand dollars, function as placeholders that establish the filing date. Once a provisional application is filed, the patent seeker has an additional 12 months to convert it to a full-blown application, known as a utility application.

N.C. State would then use that year to, hopefully, line up a licensee willing to carry the application forward. But even though the utility application could be filed up to a year later, the official filing date would be the date the provisional application was filed.

It will also be more important than ever for the university’s scientists to keep the Office of Technology Transfer up to date on their latest inventions so that provisional application can be filed sooner rather than later.

Under the new law, “they’re not going to have the opportunity, if somebody else files first, to go back and prove that they in fact were the inventor except under certain limited circumstances,” Curry said.

‘File as quickly as possible’

Universities such as N.C. State aren’t the only ones that envision filing more provisional patent applications.

“We will be filing provisional applications perhaps more frequently than we otherwise would in order to comply with the first-to-file requirement,” said Tim Wilson, senior intellectual property counsel at Cary-based SAS.

SAS also is likely to file a half-dozen provisional applications prior to March 16 in order to ensure that the current rules on prior art apply. Wilson said he is especially concerned by the uncertainty of how the courts will interpret the new law.

“For awhile, we are going to be somewhat flying blind ... as to what qualifies and what doesn’t qualify as prior art,” Wilson said.

Cree, which has about 1,800 patents worldwide, also expects to accelerate some patent filings before March 16. And, longer-term, Julio Garceran, Cree’s chief intellectual property counsel, said that even though the company has prided itself on being quick to file patent applications in the past, it will move even faster under the new law.

“We are in an exciting space in the LED (industry), and innovations are happening all the time,” Garceran said. “You don’t want someone to kind of sneak in front of you. You want to file as quickly as possible without sacrificing quality.”

Ranii: 919-829-4877

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