Why Life Sciences Needs To Reassess Their U.S. Patent Strategies

By Jeffery Duncan, Elevance Renewable Sciences Inc.

Disputes over patent rights have long been commonplace in the life sciences sector, where research and intellectual property are the key drivers of revenue. But with the America Invents Act (AIA) signed into law by President Obama on September 16, 2011, life sciences companies now need to reassess and adapt their U.S. patent strategies. The rules are dramatically changing, particularly with regard to the AIA’s provisions concerning novelty and prior art.

Most significantly, the AIA’s new Section 102 represents a radical departure from the United States’ unique first-to-invent patent system in adopting a first-inventor-to-file approach similar to that found elsewhere in the world. Rather than granting patent rights to the first proven creator of an invention, the AIA grants patent rights to the first inventor to file a valid patent application. Companies will no longer need to expend considerable time and resources to support first-to-invent claims but will need to focus on creating the most efficient patent application process.

This change is effected by the amended Section 102 under the AIA, which explains the new definition of prior art. Section 102(a) defines the two categories of prior art — prior disclosures and prior-filed patent applications; Section 102(b) provides exceptions to the two categories defined in (a); Section 102(c) provides the status of “common ownership” for the products of joint research agreements; and Section 102(d) defines when a patent or published application is effective as prior art.

Since the new provisions of Section 102 do not take effect for applications filed before March 16, 2013, companies have time to file applications under the current scheme before the AIA takes effect. Nevertheless, forward-looking organizations should begin now to prepare for the new system.

What To Know About The Prefiling Disclosure
Three major changes emerge in the new Section 102(a)(1), which defines prior art as anything that was “patented, described in a printed publication, or in public use, on sale, or otherwise available to the public” before the current applicant submitted a patent filing. Again, the prior in prior disclosure refers to a public disclosure prior to the effective filing date of the application, not to the date of invention — thus, the first-to-file system.

In a second major change from current law, the new Section 102(a)(1) adds “or otherwise available to the public” as a catch-all description. Naturally, no one knows exactly what that means right now. The intent was to leave the AIA sufficiently flexible to cover future information-dissemination technologies.

In a third major change, the geography of certain types of prior art has been significantly broadened. Under the current law, although items published or patented anywhere in the world counted as prior art, activities, such as those that would place the invention “on-sale” or “in public use” counted as prior art only if they occurred in the U.S. Under the AIA, any disclosure of the invention occurring anywhere in the world will be considered prior art unless it qualifies as an exception.

Exceptions To Prefiling Disclosure
The new Section 102(b)(1) allows two exceptions to the first category of prior art. First, a disclosure made within one year before a patent application is filed will not be prior art if “the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.” This one-year “personal grace period” means that, if the inventor waits more than a year after a public disclosure before filing the patent application, his own disclosure will be prior art against him.

Most critical, this exception does not apply to disclosures by anyone who did not gain the information from the applicant, regardless of whether the invention occurred before the public disclosure. To be clear, there will be no more “swearing behind” third-party references by showing an earlier invention date.

For the second exception, if the inventor(s) or someone who obtained the invention from the inventor(s) makes a public disclosure within a year of filing and an unrelated party makes a subsequent disclosure, the disclosure by the unrelated party will not be considered prior art. The key consideration is that the first public disclosure must have occurred one year or less before the effective filing date. Since the disclosure by the inventor is required to be public, a discreet “on sale” activity by the inventor might not qualify to invoke this exception.

Prior Patent Applications
The second category of prior art is defined by Section 102(a)(2), namely, prior-filed patent applications. A published or issued patent application constitutes prior art if it was effectively filed before the effective filing date of a second application and names another inventor. Even if both applications name one or more of the same inventors, the prior application is prior art to the second application unless the first and the second applications name exactly all of the same inventors.

Exceptions To Prior Patent Applications
This category of prior-filed applications has three exceptions. In the first, or “derivation” exception, a prior application will not constitute prior art against a second application if the relevant subject matter disclosed in the first application was obtained from the inventor(s) or someone who obtained the subject matter from the inventor. If the two applications claim the same subject matter, the conflict will be resolved in a newly created “derivation proceeding,” the details of which are beyond the scope of this article.

Under the second exception, if the prior application was filed after a public disclosure by the inventor(s) of the second application, the prior application will not constitute prior art as long as the inventor effectively filed the second application within a year of making the public disclosure. If the second patent applicant made a public disclosure more than a year before the first application, that disclosure would by itself constitute prior art to both applications.

Third, if the prior and subsequent applications were owned by or subject to an obligation of ownership to the same person, then the prior application is not prior art. Thus, if a co-worker files an application before the second effective filing date for the claimed invention, the subject matter disclosed in the prior application will not be prior art against the second application as long as both applications are owned, or subject to an obligation to assign, by the time the second application is filed. However, if the prior application was published or issued before the effective filing date of the second application, the published or issued application would still be prior art.

Again, the critical date in these exceptions is the effective patent filing date of the claimed invention, not the date on which the invention was conceived. Unless the patent applicant can show (1) prior public disclosure by the inventors, (2) derivation from the inventors, or (3) common ownership, novelty will be based solely on the date on which the application is filed.

In view of these major changes, companies should incorporate the following four actions into their patenting strategy. First, because no one can know whether proving prior invention will be important in the future and because that first-to-invent priority disappears on March 16, 2013, companies should do all they can to file their patent applications before that date. Due haste is especially important for companies in the life sciences sector, where it is common for competing companies to be working on similar research projects and racing to bring them to market.

Second, life sciences companies should anticipate the fast-paced filing process under the AIA. Forward-looking companies are working now to streamline their invention disclosure and application filing processes, since a delay as short as one day could cost a patent under the AIA. Companies should prepare a foolproof tracking and recording system for all prefiling disclosures by the inventor and anyone in contact with the inventor, as these disclosures may affect the patentability and revenue potential of the invention. All details should be reliably preserved and accessible for possible use during patent prosecution or litigation years later.

Third, because common ownership of a prior-filed application will keep it from being prior art against a subsequent one, it is more important than ever for companies to create legal agreements requiring all employees and contractors to assign rights to all inventions. If a company works with another entity to jointly research and develop products, as is increasingly common in the life sciences, it is critical to memorialize that cooperation in a joint research agreement. Under the new Section 102(c) of the AIA, if a written joint research agreement is prepared at least by the time a second application is filed, a prior application will be treated as co-owned, and not prior art to the second.

The America Invents Act spells big changes in U.S. patent law. Those life science companies that depend on protecting their research and their intellectual property for the success of their business, should study it and adapt their patenting strategies accordingly — or risk losing valuable patent rights.

About The Author
Jeffery Duncan is a former shareholder on and chair of the Biotechnology & Pharmaceuticals Practice Group at Brinks Hofer Gilson & Lione, one of the largest IP law firms in the United States. He is now vice president, intellectual property, at Elevance Renewable Sciences Inc., and a patent law instructor at The John Marshall Law School in Chicago.