Re: European Commission Study on Patent Cost Reduction

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November 9, 2001 Marc Jobert Lex Fori 105, avenue de Versailles, 75781 Paris Cedex 16, France Re: European Commission Study on Patent Cost Reduction Dear Mr. Jobert, You are most welcome for the copy of the papers presented at our symposia on patent cost reduction. We are pleased that you find them useful for your research.

The AIPLA is now in a position to respond to the questionnaire that you sent to us on October 10, 2001. As you will observe, we have answered all but the last question (which we felt that we did not understand well enough to attempt an answer). We hope that our reply will be of assistance to you in completing your report to the European Commission on the subject of the patent costs in the United States.

We look forward to seeing a copy of the finished report and would be happy to answer any further questions you might have. Sincerely, Michael Kirk Executive Director Attachment 1 AIPLA ANSWERS TO QUESTIONNAIRE ON PATENT COST REDUCTION IN THE UNITED STATES 1. What do you suggest to reduce the cost of patents in the U.S, at any stage of the application and life of the patent?

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States should take the following steps to reduce patent costs: adopt first-to-file; eliminate cbest mode d; overturn FESTO (adopt an objective determination standard of whether the patent applicant evinced a clear and unmistakable surrender of otherwise patentable subject matter); and develop a more rational restriction or unity of invention practice. 2. First to File vs. First to Invent a) Would the adoption of FTF substantially reduce the cost of patents in the U.S.? Answer. Adoption of FTF would reduce the costs; whether or not it would csubstantially d reduce patent costs is in the eyes of the beholder . b) Are you in favor of FTF? Answer. AIPLA favors FTF. c) What do you think of the arguments put forth by the partisans of FTI: -FTF would only benefit large multinationals Answer. This is a false argument. FTF would benefit all inventing entities seeking patents by- -eliminating the need for costly record-keeping, -eliminating the uncertainty of the chidden prior art d that an undisclosed prior invention represents, 2 -making determinations of priority fairer (and affordable) for csmall inventors d (inventors of limited means), and -promoting US competitiveness by incenting all inventors to file promptly thereby promoting their chances vis-à-vis their foreign competition -FTF would not substantially reduce the costs of patents. Interference procedures are extremely rare and the cost of keeping detailed records of the invention would be the same in both systems. Answer. Interferences are rare, but the costs can be disastrous for small inventors when they do get involved. It simply is not true that the record keeping burdens would not be significantly reduced in a FTF system (adequacy of proof of invention, corroboration, etc.). In addition, FTF would simplify PTO practice (elimination of 131 affidavits, etc.). -FTF would result in premature filings followed by additional filings, thus increasing the cost for small inventors. Answer. While some inventors might be inclined to file more applications, it is not believed that the number would be much greater than today, considering the advantages that being first to file (even in a FTI system) give an applicant. Moreover, the use of cprovisional applications d in the United States by all types of inventors has mitigated any problems already. 3. Administrative costs a) Apart from reducing the actual PTO fees, do you see any other ways of reducing the direct and indirect costs of filing a patent? Any suggestions concerning the administrative process or basic principles of patent law? Answer. See the answer to question 1 above. 3 b) Would it possible, for example, to avoid the division of patent applications? (The same invention may require one patent in Europe, where unity of invention is stronger, vis-à-vis several patents in the US.) Answer. It would be possible to avoid the division of patent applications by allowing applicants to pay additional fees to have the claims of related inventions examined in the originally-filed application and to issue in one patent. 4. Interference a) How could the interference procedure be simplified to reduce its cost? Answer. While it might be possible to cstreamline d interference procedures to some degree, the inherent complexities of the FTI system limit the extent to which such simplification could be accomplished without jeopardizing fundamental fairness to applicants. b) Are 2 avenues of judicial review of an adverse board decision necessary? Answer. The two avenues of judicial review presently available are generally thought to be helpful to applicants. A civil action under 35 USC 146 allows the parties to augment their factual records in addition to correcting what they perceive to be a mistake in the interpretation of the law. An appeal under 35 USC 141 accomplishes only the latter. 5. Litigation a) How could patent litigation be simplified? What do think, for example of allowing an interlocutory appeal from Markman rulings or providing an absolute right to bifurcate accusations that infringement was willful and to stay discovery relating to the advice of counsel defense to such accusations until after there has been a trial on the other issues? Answer. A right to interlocutory appeal of Markman rulings or a bifurcation of a willfulness claim would interfere with a trial court 9s ability to 4 manage a case. The reversal rate of claim construction rulings has lessened of late, perhaps due to trial courts gaining experience and to the CAFC showing greater deference. Also, creating a Markman exception would be difficult as a practical matter and would considerably slow patent litigation by injecting an appeal in the middle of every case. Mandating bifurcation of willfulness would be inefficient, unnecessarily impose on a court 9s trial management authority, and considerably lengthen cases. b) Are ADR mechanisms useful? Do they have an important impact on patent litigation? Answer. ADR is useful. It has had a positive impact on patent litigation, but perhaps not an cimportant d impact. Despite federal and local court rules requiring use of ADR, the predilections of particular judges and lawyers lead to the underuse of ADR. Resort to mediation is often sought too late in litigation and the benefits of arbitration seem under-appreciated by lawyers. In addition, litigants are often reluctant to use ADR in cases that have the greatest potential consequences. More ADR education appears to be needed. c) Discovery is often presented as an important cost factor in patent litigation. Could discovery be replaced by the findings of a court appointed expert? Answer. No, fact discovery is not amenable to replacement by an expert of any type. d) Would a new statute that prevents courts from continuing to narrow claims in view of patent specifications be a useful reform? This question is not understood. 6. Other comments? No.

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