The Intellectual Property Review: USA
Forms of intellectual property protection
A robust system for protecting intellectual property rights is available in the United States. The forms of intellectual property protection available include patent, copyright, trademark and trade secret. Each of these forms of intellectual property has its own strengths and weaknesses, and generally the selection of the type of protection is based on the subject matter at hand and the nature of the protection desired.
i Utility patents
Utility patents are generally considered the strongest level of intellectual property protection in the US. They grant the owner the right to exclude infringers from making, using, offering for sale or selling within the US, or importing into the US, the patented invention. To be eligible for a utility patent, the invention must be new, useful and not obvious, and be patentable subject matter. The originally first-to-invent system transitioned to a first-inventor-to-file regime for applications filed on or after 16 March 2013.
The term of a new utility patent is 20 years from filing of the application. Should Patent Office delays cause the examination process to exceed three years, a mechanism called patent term adjustment is used to restore the lost patent term. A patent term extension is also available to restore some of the time lost while awaiting marketing authorisation for one patent covering a pharmaceutical product that was subject to review by the US Food and Drug Administration (FDA). Utility patent applications may be filed directly with the Patent Office, or an applicant may designate the US for an international application filed pursuant to the Patent Cooperation Treaty.
The US does not offer utility model protection (or any equivalent protection) as found in many other countries. The US does, however, allow applicants to file for provisional patent protection to establish a priority date. If one is filed with the Patent Office, it does not undergo substantive patent examination. The applicant has up to one year to file a full utility application that references the provisional application and if that due date is not met, the provisional application is abandoned.
Copyrights are available to protect literary and artistic works, and original works by authors or artists in a tangible format. Both published and unpublished works are eligible for copyright protection upon creation. While copyright registration is not necessary to create copyright protection, registration is necessary to enforce those rights and claim statutory damages for infringement. Copyrights are subject to certain fair-use defences that allow one to use the copyrighted material without being subject to infringement (e.g., news reporting, teaching, research). Copyrights are also subject to First Amendment protection (i.e., constitutionally protected free speech). The term of a copyright is generally the author's lifetime plus 70 years.
Works published outside the US may also be eligible for copyright protection within the US through a treaty (e.g., the Berne Convention) depending upon the country in which the work was first published.
iii Design patents
Design patents are also available in the US and cover the ornamental appearance or aesthetic design of tangible articles. A design by itself is not sufficient to be covered by a design patent; the design must be embodied in the tangible article to be claimed. Design patents cover everything from vehicle tire treads to cell phones. The design also must be new and not obvious.
Design patents filed before 13 May 2015 have a term of 14 years from grant, whereas those filed on or after that date have a 15-year term pursuant to the US' implementation of the Hague Agreement for industrial designs. Also as of 13 May 2015, applicants may file international design applications with the Patent Office and may designate the US for design protection based on international applications.
iv Plant patents
Plant patent protection is available for new plants that have been asexually propagated (even if they are capable of sexual reproduction). It specifically excludes tuber-propagated plants and those found in an uncultivated state. Plant patent protection provides the right to exclude others from using, selling, offering for sale or importing the asexually propagated plants or parts from the plants in the US for a term of 20 years from filing of the application.
Federal trademark registration is available for products or services used in interstate commerce in the US. Various state laws also protect trademarks in the US. While federal trademark registration is not required to use a trademark, there are several advantages to federal registration, including the exclusive right to use the trademark nationwide, the ability to use the symbol ® within the US and the ability to bring trademark infringement actions in the federal courts. There is a formal trademark application and examination process, including publication for opposition. Additionally, intent to use applications may also be filed. Trademark applicants may file with the Patent Office or through the Madrid Protocol.
vi Trade secrets
Before 2016, trade secret protection was largely governed by individual state law, with the vast majority of states having implemented some form of the Uniform Trade Secrets Act (UTSA). The Defend Trade Secrets Act enacted in 2016 allows trade secret owners to sue in federal court for misappropriation, supplementing state law causes of action, and also includes a civil seizure mechanism. There is also a criminal statute relating to economic espionage and theft of trade secrets that has become more commonly utilised.
vii Regulatory exclusivities
In the pharmaceutical and biotechnology fields, intellectual property protection is augmented by various types of regulatory exclusivity from the FDA. In the case of pharmaceutical drugs, the FDA grants exclusivity for new chemical entities (five years), new drug products (three years), certain changes to drug products (three years), orphan drugs (seven years), paediatric exclusivity (six months) and exclusivity for the first generic applicant or applicants to challenge patents asserted to cover the drug (six months). In the case of biologic drugs, the FDA grants 12 years of data exclusivity against approval of a generic, or 'biosimilar', application, but there is no corresponding exclusivity for the first biosimilar applicant to challenge a patent covering the biologic drug. In the case of new antibiotic drugs that target certain drug-resistant micro-organisms, the FDA is authorised to add five years to applicable exclusivities under the Generating Antibiotic Incentives Now (GAIN) Act. GAIN exclusivity allows for up to a decade of marketing exclusivity for certain antibiotic drugs that are eligible for new chemical entity exclusivity.
The Leahy-Smith America Invents Act (AIA), enacted on 16 September 2011, made comprehensive reforms to the US patent laws, including converting the US to a first-inventor-to-file system and establishing the inter partes review (IPR) and post-grant review (PGR) programmes discussed below. The transitional covered business method (CBM) programme expired on 16 September 2020. Since the AIA's enactment, the Patent Office and courts have been busy interpreting its provisions and developing approaches for handling the large number of post-grant challenges that have been filed.
In 2020, the coronavirus relief bill (the Consolidated Appropriations Act) also included IP-related bills, including the Trademark Modernization Act, the Copyright Alternative in Small-Claims Enforcement Act and the Protecting Lawful Streaming Act. Trademark registration expungement and re-examination proceedings introduced by the Trademark Modernization Act came into effect on 27 December 2021.
ii Court opinions
United States v. Arthrex, Inc (decided 21 June 2021) (Supreme Court)
The Supreme Court held that the unreviewable authority exercised by Patent Trial and Appeal Board (PTAB) administrative patent judges (APJs) during IPR proceedings pursuant to the AIA violated the Constitution's Appointments Clause. In doing so, it relied on the distinction between 'principal' and 'inferior' officers outlined in Edmond v. United States,2 and concluded that IPRs involved inadequate supervision of inferior officers (the APJs) by a principal officer, namely the Patent Office Director. To remedy the constitutional violation, the Court severed the portion of Section 6(c) of Title 35 of the United States Code that prevented the Director from reviewing IPR final decisions, and it allowed the Director to issue decisions on the PTAB's behalf based upon such reviews. The Court declined the patentee's request to hold the entire IPR regime unconstitutional. Following Arthrex, the Director may review an IPR decision by rehearing sua sponte or pursuant to a party's request.3
Minerva Surgical, Inc v. Hologic, Inc (decided 29 June 2021) (Supreme Court)
The assignor estoppel doctrine, grounded in fairness principles, prevents a patent's assignor from challenging its validity in litigation. In Minerva, the Supreme Court upheld the doctrine but limited its application to situations where the assignor's invalidity claim 'contradicts explicit or implicit representations [the assignor] made in assigning the patent'. The Court held that assignor estoppel does not apply where there is no contradiction between the assignor's representations made in assigning the patent rights and its invalidity defence; for example, where a patent application is assigned and the claims that issue from it are 'materially broader' than the assigned claims. It also gave other examples where assignor estoppel would not apply, such as when an employee prospectively assigns an employer patent rights to future inventions not yet made, and where legal developments following the assignment render the assignor's original warranty irrelevant (e.g., a change in the law renders the previously valid patent invalid).
Unicolors, Inc v. H&M Hennes & Mauritz, LP (decided 24 February 2022) (Supreme Court)
At issue in Unicolors was the safe harbour provision in Section 411(b) of the Copyright Act, under which a copyright registration certificate is valid even if it contains inaccurate information, unless the copyright holder provided inaccurate information during the registration process 'with knowledge that it was inaccurate'. In this case, the alleged impropriety during registration was the inclusion of certain additional fabric designs on the copyright registration form (beyond the one at issue in Unicolors' infringement suit against H&M), which had a different initial publication date from that of the relevant work. The Ninth Circuit Court of Appeals held that the multiple works included on the single form could not properly be registered together, and the applicant's knowledge of the fact of their differing publication dates satisfied the Section 411(b)(1)(A) knowledge requirement. Under the Ninth Circuit's interpretation, the statute only excused good-faith mistakes of fact, not of law. The Supreme Court held that '[l]ack of knowledge of either fact or law can excuse an inaccuracy in a copyright registration' and it vacated the Ninth Circuit's contrary holding. In doing so, it noted that wilful blindness and circumstantial evidence can support findings of actual knowledge.
Patent applications may be filed for utility, design and plant patent protection.
For utility patents, patentable subject matter includes machines, manufactures (i.e., articles of manufacture), compositions of matter, methods and improvements to any of these four. Some notable exceptions to this broad rule are laws and products of nature, and abstract ideas. Over the past decade, the Supreme Court has considered patentable subject matter on several occasions, finding that exceptions include some business methods,4 medical diagnostic methods5 and isolated DNA.6 The Patent Office has also issued guidance for examining subject matter eligibility in light of the courts' decisions.7 In July 2019, the Federal Circuit indicated in an en banc decision that additional guidance on this issue could be warranted;8 however, the Supreme Court has so far refused to reconsider its subject matter eligibility jurisprudence.9
Enforcement of rights
i Possible venues for enforcement
There are two possible venues for enforcement of patents. First, infringement actions may be brought before the courts of the 94 federal districts that are spread throughout the US and Puerto Rico. Second, to prevent importation of infringing goods, an investigation can be commenced by, and at the discretion of, the International Trade Commission (ITC), an administrative agency that sits in Washington, DC.
ii Requirements for jurisdiction and venue
An infringement suit may be brought only in a federal district where the defendant resides or where the defendant has committed acts of infringement and has a regular and established place of business. Domestic businesses are considered to reside in their state of incorporation.10 Foreign defendants may be sued in any federal district so long as personal jurisdiction can be found in the US. The ITC, on the other hand, does not depend on personal jurisdiction over the accused infringer but has in rem jurisdiction over the accused infringing goods.
iii Obtaining relevant evidence of infringement and discovery
The US rules allow for significant amounts of pre-trial discovery under a broad concept of relevance. Discovery is available from the opposing party through a variety of vehicles, including mandatory disclosures, requests for documents and things, interrogatories, depositions of witnesses and expert reports. Discovery is also available from non-parties by a subpoena for documents or deposition. In ITC investigations, discovery is also available; however, it is produced more quickly because of the compressed time frame of such investigations.
iv Trial decision-maker
Patent infringement actions may be tried before either a federal judge or a jury. Jury trials may occur where there is a claim for monetary damages, and not where only equitable relief is sought. There are no specialised district court federal judges and thus many judges have little experience with patent matters. In contrast, ITC investigations are typically decided by an administrative law judge who specialises in patent cases.
v Structure of the trial
A patent infringement trial may occur in two phases. The first phase determines infringement, validity and unenforceability, and the second phase, if needed, addresses damages. Evidence is presented through fact and expert witnesses. The Federal Rules of Evidence determine what information can be admitted for consideration by the judge or jury.
At trial, the patentee must prove infringement by meeting the preponderance standard (i.e., more likely than not). For an accused infringer to prevail on invalidity or unenforceability, it must meet the more rigorous, clear and convincing standard because of the statutory presumption of patent validity.
Disputes regarding patent claim interpretation are typically decided by the judge prior to trial in a process called a Markman hearing. This hearing may, but usually does not, include testimony from fact or expert witnesses. Although the outcome of claim construction may be determinative, the Federal Circuit has consistently refused to review claim construction issues as an interlocutory matter.
Infringement may be direct or indirect. For direct infringement, all the claim elements must be present in the accused product or method. For indirect infringement, evidence must show that there is direct infringement and that the indirect infringer is either inducing or contributing to that infringement.
Should a product not literally contain every element, the missing element may be shown by the doctrine of equivalents. This cannot include equivalents that are described in the specification and not claimed or that were distinguished during patent prosecution.
The most common defences to patent infringement are non-infringement, patent invalidity and inequitable conduct. Accused infringers may also assert more esoteric defences, such as unclean hands, laches11 and equitable estoppel. All these defences can be brought either as affirmative defences or as counterclaims.
The non-infringement defence can include the lack of infringement or the existence of an express or implied licence. Accused infringers may also raise patent exhaustion12 or permissible repair, although those defences are less common.
Prior art and inventor's grace period
Prior art is defined in Section 102 of the Patent Act, which was modified by the AIA for patents subject to that Act's first-inventor-to-file provisions. Generally speaking, the US provides a one-year grace period in which to file an application following the inventor's own disclosure. Whereas pre-AIA a patentee could disqualify as prior art certain disclosures by others by proving an earlier invention date, disqualification under the AIA requires showing that the disclosure was made by someone who obtained the subject matter from the inventor or that the inventor had previously disclosed the invention. The AIA also expanded prior art to include public uses and sales in foreign countries, and it added a catch-all reference to inventions 'otherwise available to the public'.
Invalidity defences include anticipation, obviousness and lack of enablement or written description, indefiniteness, subject matter ineligibility and statutory or non-statutory double patenting.
Accused infringers can also assert inequitable conduct to render a patent unenforceable. The standard for inequitable conduct requires clear and convincing evidence that the patent applicant misrepresented or omitted material information during prosecution of the patent with the intent to deceive the Patent Office. Information is material only if the Patent Office would not have allowed a claim had it been aware of the undisclosed prior art or correct information.
Prior commercial use
The prior commercial use defence, which was expanded by the AIA, may apply where the accused infringer shows that it commercially used the invention in the US at least one year before the patent's effective filing date or a disclosure of the invention as described in Section 102(b). The defence may only be asserted by the person engaged in the commercial use, one controlled by or under common control with that person, or one to whom it is transferred as part of the transfer of the entire enterprise or line of business to which it relates. Further limitations include that the defence cannot be asserted against university inventions or if the subject matter was derived from the patentee.
viii Time to first-level decision
For the federal district courts, the time to trial for patent infringement actions – previously a median time of about two to two and a half years – has recently been longer in a number of cases because of the effects of the coronavirus pandemic. For a jury trial, the jury deliberates immediately after closing arguments and renders its verdict very promptly thereafter. For a trial before a judge, typically there are post-trial briefs that will delay the district court's ruling by several months after trial is completed. Because of Section 337 and the ITC's rules, ITC investigations are significantly faster, with the time from filing a complaint to a final determination usually taking about a year to a year and a half.
Remedies for patent infringement include damages and injunctive relief. The patentee is entitled to actual damages, which may include lost profits and can be no less than a reasonable royalty for the infringement. A court also has discretion to award enhanced (up to treble) damages for egregious infringement, for example if the conduct was wilful. In 2016, the Supreme Court lessened the standard for enhanced damages,13 and since then the rates of enhanced damages awards have increased. Even so, enhanced damages still are not typical in patent cases. Additionally, a prevailing party may be awarded attorney fees in an exceptional case, but this type of relief is also discretionary and not frequently granted.
A patentee may also request a preliminary injunction pending trial or, after trial, a permanent injunction against future infringement. Injunctions are not automatic in patent cases and require the court to consider the relative harms to the patentee and the infringer as well as any public interest.
For ITC cases, the principal remedy available is an exclusion order prohibiting importation. The exclusion order may be limited to the articles named in the investigation or, if determined to be appropriate, encompass all infringing articles regardless of source.
x Appellate review
The Court of Appeals for the Federal Circuit reviews all trial-level patent decisions as well as appeals from the ITC and Patent Office. Typically no new evidence is allowed. Three judges hear oral argument and issue an opinion, usually within six months.
The losing party can petition for a panel rehearing or for the entire Federal Circuit court to hear the case. Such petitions are almost never granted. The losing party may also petition the Supreme Court through a writ of certiorari, but those are granted even less frequently than en banc petitions and generally are only granted to decide a very significant legal issue.
xi Alternatives to litigation
Mediation and arbitration are available to resolve patent disputes if both parties agree to the procedure. These procedures may be less costly than litigation.
The Patent Office also has independent procedures for reviewing patent applications and issued patents, including the following.
Third parties may file patents, published applications or other printed publications, along with a concise statement of their relevance (limited to factual descriptions, not unpatentability arguments), for consideration by the examiner and inclusion in the prosecution record. The submitter must be identified, but the real party in interest need not be disclosed. Pre-issuance submissions must be made before a notice of allowance. Additionally, they must be made before the first rejection or six months from publication, whichever is later.
A patent owner may request supplemental examination to have the Patent Office consider, reconsider or correct relevant information. If such a request is found to raise a substantial new question of patentability, the matter proceeds to ex parte re-examination. Supplemental examination can insulate a patent from being held unenforceable for inequitable conduct, but only if it was requested before inequitable conduct is alleged with particularity. Also, such insulation will not occur in an infringement suit filed before the Patent Office proceedings conclude. Thus, a patent owner seeking to avail itself of supplemental examination procedures should consider doing so well in advance of potential litigation.
For patents subject to the AIA (generally, those with an effective filing date on or after 16 March 2013), a third party may file a PGR petition asking the PTAB to consider challenges based on any statutory requirement for patentability other than best mode. PGR petitions must be filed within nine months of the date of grant. The Patent Office may institute PGR if it finds that it is more likely than not that at least one challenged claim is unpatentable or if the petition raises a novel or unsettled legal question that is important. The determination of whether to institute PGR is not appealable to a court.14
If PGR is instituted, the petitioner must prove unpatentability by a preponderance of the evidence. The PTAB's final written decision can give rise to estoppel before the Patent Office and in civil actions and ITC proceedings.15 The PTAB's final written decision may be appealed to the Federal Circuit. Whereas constitutional standing is not required to petition for PGR or IPR, the Federal Circuit has held that it is required to appeal from post-grant proceedings.16
Inter partes review
A third party may also file an IPR petition asking the PTAB to consider anticipation or obviousness challenges based on patents or printed publications. For patents subject to the AIA, IPR petitions may be filed the later of nine months after the patent issues or termination of a PGR. For pre-AIA patents not eligible for PGR, IPR petitions may be filed following grant. If the party seeking IPR has been sued for infringement, it must file the petition within one year of being served with the infringement complaint. The Patent Office may institute IPR if it finds there is a reasonable likelihood that the petitioner will prevail in showing that at least one challenged claim is unpatentable. The determination of whether to institute IPR is not appealable to a court.17
If IPR is instituted, the petitioner must prove unpatentability by a preponderance of the evidence. As with PGR, the PTAB's final written decision can give rise to estoppel, including in civil actions, and is appealable to the Federal Circuit.18
In IPR proceedings, the PTAB now applies the same claim construction standard as courts, instead of its previous 'broadest reasonable interpretation' standard. The PTAB's claim construction decision is likely to precede the district court's Markman ruling in concurrent litigation, and thus may potentially influence the court's claim construction decision.
In both IPRs and PGRs, a patent owner may hedge against potential unpatentability by submitting a reasonable number of substitute (amended) claims. The petitioner bears the burden of showing that any proposed substitute claims are unpatentable.19 The Patent Office continues to run a pilot programme whereby a patent owner may request the PTAB's preliminary guidance and revise its motion to amend.20 Although the grant rate for motions to amend was reported to have increased following the Federal Circuit's Aqua Products decision, most such motions are still denied.
Since taking effect, over 12,600 IPR petitions have been filed. During the Patent Office's fiscal year 2021, approximately 19 per cent of PTAB trials (including IPRs, PGRs and CBMs) settled before the PTAB decided whether to institute review.21 During that time, of the petitions that reached an institution decision, about 59 per cent were instituted and the rest were denied. The institution rate has declined from 87 per cent in the Patent Office's fiscal year 2013 when IPRs began. In 2021, the PTAB issued 395 written decisions in cases proceeding to trial, with the majority (approximately 59 per cent) finding all claims unpatentable.
The AIA replaced interference practice under the previous first-to-invent system with derivation proceedings, in which a patent applicant may challenge an earlier-filed application on the basis that its named inventor derived the claimed invention from an inventor on the petitioner's application, and the earlier application was filed without authorisation. Derivation petitions must be filed within one year of the first publication of an allegedly derived claim. The effective date for the AIA's derivation provision is 16 March 2013. Earlier applications are still eligible for interference proceedings.
Trends and outlook
Over the past several years, the most significant change to US intellectual property law has been the implementation of IPR proceedings to challenge issued patents, and the frequent occurrence of IPR proceedings occurring concurrently with traditional district court litigation. Additionally, there have been continued battles over subject matter eligibility, the net effect of which is that more defendants are seeking dismissal of cases early in the litigation and fewer patent actions have been filed. Furthermore, the Supreme Court's 2017 TC Heartland decision had a significant impact on where certain plaintiffs file patent cases, resulting in the frequent filing of motions to transfer actions. The net results are that fewer suits are filed or maintained in the Eastern District of Texas while more actions are filed in or transferred to places such as the District of Delaware and district courts in California.
1 Erin J D Austin and Dominick A Conde are partners at Venable LLP.
2 Edmond v. United States (decided 19 May 1997) (Supreme Court).
3 'Arthrex Q&As', www.uspto.gov/patents/patent-trial-and-appeal-board/procedures/arthrex-qas (last visited 30 January 2022).
4 Alice Corp Pty Ltd v. CLS Bank Intl (decided 19 June 2014) (Supreme Court) and Bilski v. Kappos (decided 28 June 2010) (Supreme Court).
5 Mayo Collaborative Servs v. Prometheus Labs (decided 20 March 2012) (Supreme Court).
6 The Association for Molecular Pathology v. Myriad Genetics, Inc (decided 13 June 2013) (Supreme Court).
7 See 'October 2019 Update: Subject Matter Eligibility', www.uspto.gov/sites/default/files/documents/peg_oct_2019_update.pdf (last visited 22 February 2021); 2019 'Revised Patent Subject Matter Eligibility Guidance', www.govinfo.gov/content/pkg/FR-2019-01-07/pdf/2018-28282.pdf (last visited 22 February 2021); 'Recent Subject Matter Eligibility Decision: Vanda Pharmaceuticals Inc v. West-Ward Pharmaceuticals', www.uspto.gov/sites/default/files/documents/memo-vanda-20180607.PDF (last visited 21 February 2021).
8 Athena Diagnostics, Inc v. Mayo Collaborative Servs, LLC (decided 3 July 2019) (Federal Circuit) (en banc).
9 A petition for writ of certiorari presenting patent eligibility questions is pending, with the Supreme Court having requested the US government's views. American Axle & Manufacturing, Inc v. Neapco Holdings LLC, No. 20-891.
10 TC Heartland LLC v. Kraft Foods Group Brands LLC (decided 22 May 2017) (Supreme Court).
11 Laches cannot bar damages claims for patent or copyright infringement during the respective statutory look-back limitations periods. SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC (decided 21 March 2017) (Supreme Court); Petrella v. Metro-Goldwyn-Mayer, Inc (decided 19 May 2014) (Supreme Court).
12 See Impression Products, Inc v. Lexmark International, Inc (decided 30 May 2017) (Supreme Court).
13 Halo Electronics, Inc v. Pulse Electronics, Inc (decided 13 June 2016) (Supreme Court).
14 35 USC Section 324(e).
15 See 35 UCC Section 325(e).
16 e.g., Phigenix, Inc v. Immunogen, Inc (decided 9 January 2017) (Federal Circuit).
17 35 USC Section 314(d).
18 See 35 UCC Section 315(e).
19 In Re: Aqua Products, Inc (decided 4 October 2017) (Federal Circuit) (en banc).
20 See www.govinfo.gov/content/pkg/FR-2021-09-16/pdf/2021-20037.pdf (last visited 30 January 2022); www.govinfo.gov/content/pkg/FR-2019-03-15/pdf/2019-04897.pdf (last visited 30 January 2022).
21 See www.uspto.gov/sites/default/files/documents/ptab_aia_fy2021__roundup.pdf (last visited 30 January 2022) (statistics for 1 October 2020 to 30 September 2021); www.uspto.gov/sites/default/files/documents/trial_statistics_20200930.pdf (last visited 30 January 2022) (statistics for 16 September 2012 to 30 September 2020). Of the 13,548 trials included in this report, 12,607 were IPRs, 602 were CBMs and 339 were PGRs.