1 April 2013AmericasKenley Hoover

Considerations for biopharma under a first-inventor-to-file regime

Until the interpretation of the rules becomes clearer, companies are best advised to keep their eyes on the ball, says Kenley Hoover.

The implementation of the first-inventor-to-file (FITF) provisions of the Leahy-Smith America Invents Act (AIA) on March 16, 2013, marked the completion of the most radical and sweeping reform to the US patent system in more than 60 years. Changes under the new law have significant implications for the biotechnology industry, which relies heavily on patent rights as crucial value drivers for attracting funding, partnering and protecting its discoveries.

As such, biotechnology innovators must modify their patent strategies to adapt to the new law or risk losing potentially crucial patent rights. This article provides practical suggestions for operational modifi cations in adapting to a FITF system.

Heightened significance of confidentiality

The AIA substantially expands the scope of the prior art that can be considered for novelty and non-obviousness and eliminates the ability of applicants to rely on their evidence of an earlier date of invention to ‘swear behind’ a third-party publication. The heightened risk of losing patent rights resulting from public disclosure under the AIA should cause companies to reevaluate their policies and procedures for safeguarding confidential information.

The FITF system increases the need for companies to maintain the confidentiality of proprietary information and requires thorough recordkeeping that includes the date, content, and nature of all public and non-public disclosures by company employees, collaborators and third parties.

Companies should upgrade internal record-keeping procedures and capabilities for tracking deadlines for initiating actions and capturing the information necessary to satisfy the evidentiary burdens associated with, for example, the predating disclosure of an inventor’s work to the respondent in a derivation proceeding.

To meet these stringent requirements, hypothetical biotechnology company AIACorp, has adopted a policy that strictly prohibits employees from communicating proprietary information to third parties not under a confi dential disclosure agreement (CDA).

Further, AIACorp has implemented a policy requiring that the content of all communications be pre-approved by IP counsel and limiting the scope of all related communications to that which has been pre-approved. AIACorp’s policies also require that a patent application is filed—and preferably published—prior to communication of the corresponding information to a third party.

Additionally, AIACorp has initiated a training programme to instruct its employees on the scope of confidential subject matter and the importance of their vigilance in preserving the confidentiality of AIACorp’s proprietary information, including the importance of marking certain AIACorp communications as confidential.

The impact of the changes under the new law upon existing and future contractual relationships (ownership and assignment) also warrants review of all company agreements.

It is particularly important for employment contracts to include binding assignment obligations by employees in order for the company to take advantage of AIA provisions permitting patent owners to file and prosecute patent applications without an oath/declaration on record and to file a substitute statement that fulfils the requirements of an oath/declaration in instances of an uncooperative inventor.

Similarly, in view of the new rules, it is advisable to amend agreements relating to the transfer of proprietary technology, such as CDAs, material transfer agreements, and joint research agreements (JRAs), to include a provision that prohibits the recipient from filing a patent application based on any confidential information received under the agreement.

It is likewise desirable to include provisions that bind the other party to share in advance information corresponding to all planned public disclosures and to require pre-approval of any distribution of proprietary information to a third party.

Further, it is advisable to consider gating the disclosure of confidential information in negotiations involving the potential transfer of proprietary technology to only that required to be revealed on a need-to-know basis.

Where necessary, JRAs should be amended to strengthen an entitlement claim to the common ownership exception of 35 USC §102(c), by clearly indicating the parties to and effective date of the JRA, reinforcing that the agreement is indeed a JRA, broadly defining the scope of the JRA and requiring that notice of the JRA and its parties is provided in corresponding applications.

A race to file

The FITF system provides clear and distinct advantages for those who file patent applications as early as possible to obtain both the earliest effective filing date and the earliest effective prior art date for a later filed US patent or application. Accordingly, applicants should consider retooling their procedures and protocols for identifying, evaluating and prioritising IP and preparing and filing applications as quickly and as completely as possible.


Understanding this need, our hypothetical AIACorp formed an IP review committee that includes IP counsel and has decision-making authority. This review committee regularly meets to discuss IP-related matters and to determine whether to pursue patent protection in connection with each invention discussed during the meeting.

The combination of the urgency for filing applications quickly with the uncertainty associated with how the new law will be applied by the US Patent and Trademark Office (USPTO) and the courts brings additional challenges to a biotech industry searching for guidance in the wake of recent case law raising questions relating to patent subject matter eligibility and written description requirements for biotechnology-based inventions.

In an effort to reduce patent application filing time, AIACorp worked with IP counsel and revised its Invention Disclosure Form to require inventors to more extensively detail information relating to: (a) features that distinguish the invention from the closest prior art; (b) potential modifications of the invention and their expected impact; and (c) potential commercial uses of the invention.

AIACorp also introduced training to ensure that employees can readily identify IP having potential commercial and strategic value to AIACorp, and understand the process and objectives associated with completing the revised Inventor Disclosure Form, and the importance of working closely with IP counsel to facilitate the rapid filing of a comprehensive application.

Patent prosecution strategies

In response to the challenges presented by the incentive to file applications that satisfy the disclosure requirements for patentability quickly, companies should consider with IP counsel implementing a strategy of filing provisional applications. By using this strategy, each filing has the objective of establishing an early effective filing date and acts as a defensive publication by providing an early effective prior art date.

At AIACorp, for example, the company has a prosecution strategy that relies on the filing of multiple rolling provisional applications over the course of a year, and the use of the intervening application filings to build upon the scope and strength of the previously filed provisional application disclosure to add improvements to further distinguish the invention from the prior art, and to strengthen the descriptive support necessary for satisfying the disclosure requirements for patentability.

Under the new rules, any application filed on or after March 16, 2013 that claims priority to an earlier filed application and that presents, or has at any time presented, even a single claim having an effective date of March 16, 2013 or later, is examined under a FITF standard.

It is important that IP counsel prosecuting an application filed on or after March 16, 2013 and claiming priority to an earlier application, exercise caution when considering the scope of each claim to be prosecuted and pursue claims that mitigate the risk of losing the first-toinvent status of the application (and its progeny) because the claims are found by the USPTO not to be sufficiently supported in the application.

To minimise the risk of losing first-to-invent status for an application family, AIACorp, for example, prosecutes multiple applications in the family concomitantly, being careful to ensure that all the pending claims in at least one application have particularly strong support with one application having narrow scope and strong support in the application as filed. Additionally, AIACorp has modified its docketing system to clearly delimit between applications prosecuted under the different regimes and their disclosures.

In conclusion, the FITF patent system places a premium on maintaining confidentiality, speed and efficiency in filing patent applications, and in exercising vigilance and diligence while juggling the uncertainties and nuances of the new patent system. The implementation of the strategies discussed above will help biotech companies when navigating the juxtaposition between the new and the old system that is likely to exist for the next several years.

Moreover, given the sweeping and radical reform brought about by the AIA and the uncertainties associated with how the rules will be interpreted, companies are best advised to monitor developments in this area and adapt their strategies with the advice of IP counsel to address these developments as they occur.

The author thanks his colleague John M. Covert for his contributions to this article.

Kenley K. Hoover, PhD, is a director in the biotechnology/chemical group at Washington, DC-based IP law firm Sterne, Kessler, Goldstein & Fox PLLC. He can be contacted at:

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