Patent Reform and the Pharmaceutical Industry: From First-To-File To Post-Grant Review And Beyond

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PTSM: Pharmaceutical Technology Sourcing and Management

PTSM: Pharmaceutical Technology Sourcing and Management-12-07-2011, Volume 7, Issue 12

The author discusses the major changes in US patent laws as a result of the recently signed patent-reform law and the implications for pharmaceutical companies.

In September 2011, President Barack Obama signed into law the America Invents Act (Public Law 112–29), which represented a major overhaul of the US patent system. Patent reform will affect all stages of the patent process, from prefiling activities to post-grant challenges to patent litigation, and many of these changes will have a particular impact on the pharmaceutical industry. At the front-end of the patent process, the changes to 35 USC 102 shift the “prior art” paradigm from a “first-to-invent” system toward a “first-to-file” system. At the other end, the new post-grant review procedures will enable a competitor to challenge a granted patent on any basis, while the new inter partes review procedures will apply to previously granted patents that currently are not subject to inter partes reexamination. Additionally, the new supplemental examination procedures will offer patent owners a way to inoculate their own patents against certain inequitable conduct charges. The new law made several immediate changes related to patent litigation, of which the newly expanded prior-use defense may be particularly relevant to the pharmaceutical industry. It is important for pharmaceutical companies to be aware of these changes so that they can evaluate their publication, patenting, and competitive intelligence programs in view of the new laws and continue to leverage their intellectual property to maximize value and retain their competitive edge.


The US patent system has been unique in the world by granting patents to the “first inventor” rather than the first person to file a patent application. For example, current 35 USC 102 (a) provides that certain disclosures qualify as prior art only if they were made “before the invention thereof by the applicant,” and current 35 USC 102 (g) provides that a patent may not be granted if someone else made the invention first as established during an “interference” proceeding. In other countries, any publication made before the application filing date usually qualifies as prior art (although some countries have a grace period for an inventor’s own disclosures), and no investigation is made into relative dates of invention.

Patent reform will bring the US closer in line with other countries, by deleting the first-to-invent terms of the statute and placing more emphasis on an application’s filing date. The new law will not create a true first-to-file system, however. There still will be a one-year grace period after an inventor’s own public disclosure, but such a disclosure may put foreign patent rights at risk. Nevertheless, under the new US system, an inventor disclosure could shield an application filed within the grace period from an independent third-party disclosure made after the inventor’s disclosure but before the inventor’s filing date. The new law also includes provisions that protect inventors from third-party disclosures and patent applications that are based on information obtained from the inventor, by excluding such inventor-based events from the definition of prior art. On the other hand, the new law eliminates the ability to “swear behind” an independent, third-party disclosure by proving an earlier date of invention.

The new law expands the realm of prior art by eliminating provisions that required certain events to occur in the US in order to qualify as prior art. Thus, a public use or sale anywhere in the world will qualify as invalidating prior art, whereas the parallel provision in the current law is limited to US activities. Similarly, published US patent applications will qualify as prior art as of their earliest filing dates, regardless of whether that date is based on a foreign or US application. On the other hand, the new law eliminates the risk embodied in current 35 USC 102 (g)(2) that an inventor will not be able to obtain a patent because some one else invented the subject matter earlier, but never disclosed it.

The ability to cite patent applications based on their filing dates creates a cache of “secret” prior art because most patent applications are not published until 18 months after their earliest filing date. The US uses such secret prior art much more expansively than foreign countries. In most countries, patent applications that were filed but not published before the filing date of the application at issue can be cited as of their filing date only if they fully describe the invention at issue. That is, they can be cited if they destroy novelty, but cannot be cited if they only impact inventive step or obviousness. In contrast, in the US, such applications are citable for any reason, including being cited in combination with other references to establish obviousness. The new law extends the reach of unpublished US patent applications back to their foreign filing dates, whereas under current law an unpublished US patent application is only citable as of its earliest US filing date. Pharmaceutical companies may be able to mitigate the effects of this expanded cache of secret prior art by obtaining evidence that weighs against obviousness, such as experimental data reflecting any unexpected results associated with their inventions.

The first-to-file changes take effect on Mar. 16, 2013, and will apply to applications with an effective filing date on or after that date. However, because they impact the scope of the one-year grace period and the ability to swear behind third party publications, any disclosures made after Mar. 16, 2012 could have a greater impact than they would have had without patent reform. With this in mind, pharmaceutical companies should review their publication and patenting policies now, to ensure that they have strict prepublication review policies, maintain good records on all disclosures, and streamline their patenting processes to reflect the importance of securing an early application filing date.

Post-grant review and inter partes review


Patent reform changes the way third parties can challenge granted patents within the US Patent and Trademark Office (“Patent Office”) by creating new post-grant review proceedings and by replacing the current inter partes reexamination proceedings with inter partes review proceedings. The two new types of proceedings will be complementary in that post-grant review and will be available only within a nine-month window after a patent’s issue date while inter partes review will be available only after that nine-month window has closed, or after any post-grant review proceeding has terminated.

The availability of post-grant review could be significant for the pharmaceutical industry because it will permit third parties to challenge a patent on any ground, including written description, enablement, and patent-eligibility, which currently only can be raised in a court proceeding. In order to institute post-grant review, the petitioner will have to show that it is “more likely than not” that one of the challenged claims is “unpatentable,” or that the petition raises a novel or unsettled question of law. Unlike court proceedings where a patent is entitled to a presumption of validity and the challenger must prove otherwise by clear and convincing evidence, the petitioner in a post-grant review proceeding will have to make its case by only a preponderance of the evidence. Except for certain business-method patents, post-grant review will be available only against patents granted from applications with an effective filing date on or after Mar. 16, 2013.Thus, it could be several years before the first post-grant review proceedings are underway.

The new inter partes review proceedings will be similar to current inter partes reexamination in many respects. For example, like inter partes reexamination, inter partes review will be limited to prior art issues raised by patents or printed publications. Patent reform immediately changed the standard for instituting inter partes reexamination from raising a “substantial new question of patentability” to showing that there is “a reasonable likelihood that the requestor would prevail” with respect to at least one of the challenged claims. (Note the subtle difference between the post-grant review standard, which may be a slightly higher threshold). This change will be carried forward for inter partes review and should, in theory, make it harder to institute these proceedings, and consequently increase the certainty associated with obtaining a granted patent.

Importantly, once inter partes review is available on Sept. 16, 2012, it will be available against patents granted previously, including patents based on applications filed before Nov. 29, 1999, which currently are not subject to inter partes reexamination. Competitors who would like to invalidate such patents in a Patent Office proceeding may want to evaluate the potential risks and rewards of pursuing inter partes review, and patent holders may want to consider whether they have any valuable patents that may be particularly vulnerable to such a challenge.

Other differences between the current and new proceedings strike a balance between the interests of patent owners and the interests of competitors. For example, both post-grant review and inter partes review will be conducted by the (newly named) Patent Office Trial and Appeal Board, and are statutorily mandated to be completed within one year. They both have estoppel provisions that prevent a petitioner from raising in litigation an issue that was or reasonably could have been raised in the Patent Office proceeding and other provisions that restrict the relative timing and conduct of litigation.

These new proceedings will offer competitors several different ways to challenge patents with a promise of prompt resolution of patentability questions. As patent holders, pharmaceutical companies should be prepared to defend their important patents in these new proceedings. As competitors, pharmaceutical companies may want to monitor competitor applications and prepare to promptly challenge questionable patents under appropriate circumstances. Parties on both sides of the patent table will need to have their arguments and evidence prepared in advance and be ready to hit the ground running to obtain a favorable decision in the statutorily mandated short timeframe.

Supplemental examination
Supplemental examination is a new type of proceeding within the Patent Office that only patent owners will be able to use. Supplemental examination will be similar to current ex parte reexamination proceedings, but can be based on any “information” that raises a “substantial new question of patentability,” not just prior art. The “information” itself need not be new. Rather, supplemental examination can be pursued to obtain reconsideration of “information” already of record in the patent. If supplemental examination is obtained before the patent is involved in litigation or before it is the subject of an abbreviated new drug application (ANDA) Paragraph IV certification letter, the patent cannot be held unenforceable based on information that was considered, reconsidered, or corrected during supplemental examination although the Patent Office can pursue any questions of material fraud that arise during supplemental examination.

Although supplemental examination will not be available until Sept. 16, 2012, once it is available it can be pursued with respect to patents granted previously. Pharmaceutical companies with patents listed in the Orange Book (i.e., FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, which identifies drug products approved on the basis of safety and effectiveness by FDA under the Federal Food, Drug, and Cosmetic Act) and/or preparing to enforce their patents may want to consider whether pursuing supplemental examination is advisable to inoculate the patents from any foreseeable inequitable conduct charges. On the other hand, patent owners should keep in mind that claim amendments made during supplemental examination can give rise to intervening rights around any amended or new claims.

Prior commercial use
Pharmaceutical companies may be particularly interested in the expanded prior commercial use defense that is available against any patent granted on or after Sept. 16, 2011. The previous defense was available only against method claims, but the new defense applies both to a process and to “a machine, manufacture, or composition of matter used in manufacturing or other commercial processes.” Thus, for example, the expanded defense conceivably could encompass reagents or intermediates used in commercial processes. Directly relevant to the pharmaceutical industry, the statute expressly defines commercial use as including premarketing regulatory review. This means that pharmaceutical companies may be able to invoke this defense based on activities undertaken to conduct safety and efficacy studies before they have a commercial product on the market. On the other hand, the revised law provides that the defense cannot be used against certain university-owned inventions.

In order to invoke this defense, a pharmaceutical company will have to be able to show by clear and convincing evidence that it was commercially using the subject matter at issue in the US at least one year before the earliest filing date of the application claiming the invention or, in some circumstances, one year before the grace period of the application. The defense is personal, nontransferable, does not invalidate the patent, and generally is limited in scope to the prior commercial use. The expansion of this defense gives pharmaceutical companies further reasons to maintain good records of their internal processes as the availability of this defense could prove very valuable in a patent-infringement litigation.

Other litigation-related changes
The new law made immediate changes in other litigation-related areas as well. False-marking cases brought by citizens on behalf of the US government were retroactively eliminated. Now, only the US government and parties suffering a commercial injury can bring a false marking claim. Additionally, marking a product with an expired patent number no longer amounts to false marking. So-called “patent troll” cases that named numerous defendants also should be less common, now that there are stricter requirements for joining defendants in an infringement suit. The new law also eliminated a “best mode” violation as a basis for invalidating a patent. Although disclosing the best mode remains a requirement for patentability, the Patent Office has indicated that examiners will not focus on best-mode issues.

Adapting to the reformed US patent system
The pharmaceutical industry is well-situated to adapt to the changes that patent reform will bring. Pharmaceutical companies already are patent-savvy, and most are familiar with the first-to-file patent systems of other countries. While the US system will be unique in some respects, most pharmaceutical companies already have publication controls and patenting procedures in place that may only need to be tweaked in view of the new US laws. Careful invention recordkeeping will remain important to establish that your public disclosure is prior art against a competitor, and not obtained from a competitor’s inventor, and to defeat a claim that your patent application was derived from someone else. Pharmaceutical companies also may want to revisit their competitive intelligence programs to ensure that they are positioned to take advantage of the new procedures for challenging competitor patents. Pharmaceutical companies already retain good records of internal manufacturing processes for regulatory purposes, and now may be able to leverage those records to establish a prior commercial use defense against a charge of patent infringement. Thus, while patent reform will affect all aspects of the US patent system, pharmaceutical companies who prepare for the changes now should be able to use them to their advantage to maximize the value of their intellectual property.

Courtenay C. Brinckerhoff ( is a partner of Foley & Lardner LLP, vice-chair of the firm's chemical, biotechnology and pharmaceutical practice, and editor of