The Pace of Progress: The Changing Patent Landscape

By Lillian Clementi,
a partner in LinguaLegal,
Arlington, Virginia, U.S.A.

lillian at lingualegal com

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The U.S. patent system is broken, says a growing chorus of critics, and the past year has seen significant attempts to fix it in all three branches of the U.S. government. Although it is impossible to predict exactly how these efforts will play out, current trends toward reform could have profound effects on patent practice—and patent translators.

A variety of factors have combined to produce this general commotion. Senator Patrick Leahy, who became chairman of the Senate Judiciary Committee after the November 2006 election, lists patent reform as a top priority, making it more likely—though by no means certain—that this year’s legislation could succeed where its predecessors have failed. Representative Howard Berman, now chairman of the House Judiciary Subcommittee responsible for intellectual property, also supports reform as a way to “improve patent quality, deter abusive practices by unscrupulous patent holders, and provide meaningful, low-cost alternatives to litigation.” On April 18, bipartisan legislators in both the House and Senate introduced the Patent Reform Act of 2007, which proposes a number of sweeping changes.

Meanwhile, the Supreme Court has displayed an unusual interest in patent law over the past two terms, issuing a series of high-profile decisions likely to affect both patent attorneys and their translation providers. Finally, the U.S. Patent and Trademark Office (USPTO), staggering under a growing backlog of applications and widespread complaints of poor patent quality, has announced a pilot program that will throw open the examination process to a Wikipedia-style community of reviewers.

Congress: Lower Costs, More Predictability
Critics of the current system charge that the bar for patentability is set too low, arguing that many patents granted by the USPTO are invalid, and that poor patent quality has fueled runaway litigation. They also complain that patent litigation is too costly and unpredictable, largely because the current system contains a number of subjective and discovery-intensive features such as the first-to-invent rule.1 If enacted, the Patent Reform Act of 2007 would address these concerns through a number of significant changes, two of which are particularly worth noting.

First to file
Under the new legislation, the U.S. would replace its first-to-invent system, the only one of its kind in the world, with a first-to-file paradigm. Although this represents sweeping change for the system as a whole, its effect on translators working in patent prosecution would probably be minimal, says Charles Van Horn, a partner and head of Patent Prosecution at Finnegan, Henderson, Farabow, Garrett & Dunner, the world’s largest intellectual property-only law firm. Veteran patent translator Nicholas Hartmann agrees. “Most of the material I deal with has been filed in Europe and is already nailed to a foreign priority date,” he notes.

Even for translators working in patent litigation, the adoption of a first-to-file system may not have much impact—a counterintuitive idea, since one reason for the change is to reduce the scope and cost of discovery by eliminating disputes over which party was first to invent. “The first impression is that a first-to-file system would reduce the need to translate [inventor’s] notebooks,” says Anthony Hartmann, a patent litigator with Finnegan Henderson. “However, the scope of discovery would likely still embrace notebooks,” since they would be essential for litigating other issues, and both parties would still need to know what was being produced.

Post-Grant Review
The Patent Reform Act of 2007 also creates a post-grant review proceeding that would allow anyone to challenge a patent’s validity within 12 months of issue. Proponents argue that post-grant review would help weed out weak patents, raising patent quality and offering a faster, less expensive alternative to litigation—and quite possibly reducing business for patent litigators and the translators who work with them. Critics counter that the change would undermine the statutory presumption of patent validity without addressing more important problems in the examination process. The overall impact for translators is not clear, though reexamination proceedings offer a basis for comparison. “Most foreign reexamination clients come with their documents already translated into English,” notes Anthony Hartmann, “but if time pressure is an issue, a client could have the law firm handle translation.”

Clash of the Titans
Critics are already warning of unintended consequences, but it remains to be seen whether the Patent Reform Act will ever become law. With billions of dollars at stake, the information technology (IT) and pharmaceutical industries have already begun to square off on opposite sides of the debate. Having invested years of research and development in a small number of highly profitable blockbusters, pharmaceutical companies want the strongest possible patent protection, while the IT industry seeks greater freedom to challenge patents and more protection against paying large damages, especially for unintended violations.

The Supreme Court: Higher Costs, Less Predictability?
To complicate the picture further, legislative efforts toward change may be countered by the judicial branch. Even as patent reform advocates in Congress work for more predictability and lower costs, recent Supreme Court decisions may have exactly the opposite effect.

For most of the past 25 years, the Court of Appeals for the Federal Circuit was the final arbiter for patent matters, but over the past two terms, the U.S. Supreme Court has displayed an unusual interest in intellectual property. In 2006, the justices decided or agreed to hear no fewer than seven patent cases, making it the busiest year for patent law since the mid-1900s; and the high court’s interest in patents continued in the first half of 2007. Two cases in particular are worth noting.

Goodbye, Automatic Injunction
The Supreme Court’s ruling in eBay Inc. v. MercExchange, handed down in May of 2006, could have a significant impact for both attorneys and translators. Prior to this decision, a plaintiff that prevailed at trial could virtually count on getting a permanent injunction forcing the defendant to stop making and selling the infringing product. Under eBay, however, the plaintiff must now show that it meets a traditional four-factor test to obtain injunctive relief.2

Translators who work in patent litigation are accustomed to regular peaks and troughs in demand over the life of a case: demand is high during discovery, usually peaks again during depositions and shortly before trial, and then disappears unless there is an appeal. However, a session at an American Bar Association (ABA) conference in April featured a mock argument, complete with a district court judge and four attorneys, showing how the four-factor test prescribed by eBay could be argued during a post-verdict hearing. While the long-term impact of eBay is not yet clear, the ABA panelists saw potential for a whole new round of discovery, expert testimony, and even depositions after trial. This in turn could create a new area of demand for translation and interpreting in cases involving foreign-language documents. At the very least, the eBay decision adds a whole new variable to patent litigation, and the net effect for patent holders seems likely to be higher costs and more unpredictability, at least in the short term.

So Long, TSM
In KSR International Co. v. Teleflex Inc., issued in May of this year, the Supreme Court added another dollop of unpredictability by rejecting a test for obviousness that had been used by the Federal Circuit for most of its 25-year history. Under the teaching-suggestion-motivation (TSM) test, a patent could only be rejected as obvious if a challenger showed that the prior art contained a teaching, suggestion, or motivation that would have prompted a person skilled in the art to combine existing products. In KSR, however, the Supreme Court found the TSM test to be too rigid and narrow and adopted a new, more flexible standard for obviousness.3

Observers quoted in Legal Times4 said that the case-by-case approach endorsed by the high court could “increase litigation and the cost of obtaining a patent in the first place,” since examiners would now have a freer hand to reject applications as obvious, and that the more flexible standard could “impair the value of previously issued U.S. patents, since it is easier to challenge them in litigation, and to ask the patent office to reconsider the decision to issue.” It is still too early to say exactly how KSR will affect translators and their attorney clients, but once again higher costs and more unpredictability seem likely.

The USPTO: Wikipedia-style Review
In yet another move toward reform, the USPTO has announced plans for the Peer to Patent project, an experimental effort to improve patent quality by creating a global community of Wikipedia-style reviewers to help patent examiners focus their search for relevant prior art. At press time, the pilot was slated to launch in mid-June and run for 12 to 18 months.

A number of companies—including such heavy hitters as Microsoft, Intel, Hewlett-Packard, Oracle and IBM—have already volunteered to have some 250 patent applications reviewed by the Peer to Patent community. According to Rahan Uddin, project manager for Peer to Patent, anyone with expertise in the area of the invention can comment on the applications and upload relevant prior art to an online forum. These postings can then be reviewed by other visitors, who can rate them for relevance and reliability and post their own comments and information. Ultimately, the top 10 items for each application will be forwarded to the examiner at the USPTO, who will make the final decision on patentability.

Peer to Patent proponents say that it will improve patent quality by giving examiners a manageable amount of relevant information that they cannot easily find under the present regime. Skeptics counter that the review process will depend largely on volunteers. Though reviewers will be eligible for prizes and other incentives, they will receive no monetary compensation: their real reward, says Uddin, will be opportunities to network, exchange ideas with their peers, and win notice for their own expertise.

But How Will They Talk to Each Other?
With the review process open to anyone in the world, The ATA Chronicle naturally wondered what provision had been made for translation, and contacted Beth Noveck, a New York Law School professor and one of the chief architects of the project, to find out. “The software is configured to handle multiple character sets,” she said. “However, we do not have any technical capacity at present to handle translation. We are going to rely on the community of users to assist with translation during the pilot stage.”

In short, foreign-language material will be translated by bilingual volunteers who may or may not have translation credentials or expertise.

This raises a number of questions. How will reviewers judge the quality of translations posted to the forum? Will they evaluate the quality of translated material before the examiner considers it? Will the USPTO have translated material vetted by its in-house translators before the examiner uses it to decide on patentability? Have the developers made any effort to guard against malicious or deliberately distorted translations?

“These are excellent questions, and this is the first time anyone has raised them,” Noveck replied. Although the developers considered using translation software, they decided to keep the pilot simple and address translation later. Noveck adds that she expects to explore both human and machine translation options as the project scales up, and that she hopes to involve the translation community as the project develops.

The Right Part of the Haystack
Noveck seems realistic about the limitations of the system. “We’ll get some poor input, but the goal is to get material that’s good enough to identify the right area of prior art,” she says. “Even gisting or summary of foreign material would be useful” if it steers the examiner’s search toward the most relevant part of a huge universe of information.

Now What?
As with Congress and the Supreme Court, it is difficult to know exactly how the USPTO’s reform effort will play out, but it seems certain that over the next year or two there will be no shortage of entertainment for anyone interested in patents. Stay tuned.

Notes
1. Most countries award patents using the first-to-file principle, i.e., the first person who files a patent application on a given innovation is entitled to the patent, even if someone else invented it first, but got to the patent office later. The U.S. currently has a first-to-invent system, which awards the patent to the earlier inventor even if she filed her application later.

2. “According to well-established principles of equity, a plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief. A plaintiff must demonstrate: 1) that it has suffered an irreparable injury; 2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; 3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and 4) that the public interest would not be disserved by a permanent injunction.” eBay Inc. v. MercExchange L.L.C., 126 S. Ct. 1837, 1839 (2006). For the full opinion, visit www.supremecourtus.gov/opinions/05pdf/05-130.pdf.

3. For the full text of KSR Int’l Co. v. Teleflex Inc., visit www.supremecourtus.gov/opinions/06pdf/04-1350.pdf.

4. For the full text of the Legal Times article, visit www.law.com/jsp/dc/PubArticleDC.jsp?id=1177936771033.

For More Information
If you would like to follow developments in patent law for yourself, the sources below are a good start.

American Bar Association (ABA)
www.abanet.org
Anyone interested in law can join the ABA as an associate member. Membership benefits include a subscription to the ABA Journal, discounts on conference registrations, and an optional subscription to an electronic newsletter. ABA also has a Section of Intellectual Property Law (ABA-IPL). ABA-IPL has its own newsletter and conferences targeted to patent, trademark, and copyright issues. Conference fees are discounted for IPL Section members. For the 2007-2008 membership year, ABA’s annual associate dues are $175, and membership in ABA-IPL is $75. Both ABA membership and attendance at ABA conferences are eligible for credit under ATA’s Continuing Education program.

Law.com
www.law.com
Visit http://store.law.com/registration/register.asp?subscribeto=nw to sign up for law.com’s Daily Legal Newswire, a free digest of news and feature stories from the legal press delivered every day to subscribers via e-mail. News items range from noteworthy appellate and Supreme Court decisions to trends in the legal market to high-profile trials and scandals, and coverage includes significant developments in intellectual property (IP) law. A newswire service targeted specifically to IP law is also available for a fee ($129 a year as of May 2007).

Newspapers
The New York Times (www.nytimes.com), The Washington Post (www.washingtonpost.com), and The Wall Street Journal (http://online.wsj.com/public/us) occasionally provide excellent in-depth coverage of patent issues.

Blogs
There are a number of law blogs (or “blawgs”) that focus specifically on IP and patents. Many are hosted by law firms, and a little Internet surfing will turn up IP blogs with a variety of perspectives. One interesting site is www.patentlyo.com. You can also visit The Wall Street Journal’s law blog at http://blogs.wsj.com/law and use the search function to narrow the field to IP topics.

U.S. Patent and Trademark Office
www.uspto.gov

Lillian Clementi is a partner in LinguaLegal, a translation consultancy based in Arlington, Virginia. She has worked in patent litigation for 10 years. Contact: lillian[at]lingualegal.com.

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