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America Invents Act proving to be good for trials and entrepreneurs

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Mark Nikolsky is a registered patent attorney at McCarter & English.
Mark Nikolsky is a registered patent attorney at McCarter & English. - ()

To hear Mark Nikolsky tell it, it sounds a bit like a John Grisham novel.

In fall 2012, on the eve of a costly trial in federal court over a patent dispute, Nikolsky used a provision of a then-days-old law called the America Invents Act to control the proceeding before it got out of hand.

The Newark-based patent attorney with McCarter & English filed a petition to argue the patent in question attempted to patent abstract concepts. Doing so sent the issue to a new streamlined procedure at the U.S. Patent and Trademark Office.

And when the patent office found Nikolsky and his client had a likelihood of prevailing, the case was settled — and a patent trial, which usually lasts three to five years and costs millions of dollars, was completed in a third of the time at a fraction of the cost.

Roughly two years after it was passed, the America Invents Act is working as intended — reducing the time and expense of patent disputes. Nikolsky is seeing this firsthand in several cases, including one in which he represented a Jersey City-based technology company.

The law is also proving to be of great benefit to entrepreneurial startups.

Dennis Bone, director of the Feliciano Center for Entrepreneurship at Montclair State University, sees this type of patent reform as a key to a growing technology community. He sees long and costly patent procedures as having a tremendous capability of stopping a new, innovative company or idea cold in its tracks.

“Usually a patent is at the heart of some innovative technology or new idea,” he said. “If an entrepreneur has to traverse this landscape, and it's long, arduous and expensive, it could throw a wet blanket over their idea, innovation or invention.”

By minimizing these obstacles, Bone sees a better possibility for growth in the technology industry. And for New Jersey's burgeoning tech community, that's no small idea.

“Reforming that process, from a time and a resource point of view — it's still a huge challenge, but not nearly as big as it was before,” he said “That will basically be a shot in the arm for the whole innovation economy.”

Nikolsky agrees. Giving more companies the ability to fight these patent claims can provide them with a fighting chance. A firm that is being challenged for infringement can effectively turn the tables, he said, by challenging the validity of the opposing party's patent.

“Not only are you defending against the claim, you're showing, 'Hey, I'm putting you on the defensive now because I'm challenging an intellectual property asset of yours,' ” Nikolsky said.

And, as a result of the AIA, these proceedings are more streamlined and much less costly.

“The goal of these proceedings is a determination made by the patent office within 12 to 18 months, so that's a very short time span,” Nikolsky said. “If you're at the beginning of litigation, or you haven't even gotten to the litigation stage yet, and you want to have a quick determination of validity, this is an optimal procedure for that.”

The decisions on these proceedings are handed down by the Patent Trial and Appeal Board, a panel of administrators and patent judges that often have science or engineering backgrounds.

“You're in front of an audience that is technically geared for this stuff and has a technical background,” Nikolsky said. “Where if you're in district court, you might not have a judge that has a technical background.”

And maybe it's most important because it appears to be working.

In its first month, September 2012, slightly more than 20 AIA petitions were filed. After a steady trend of increasing cases, that number had climbed to more than 180 filings in June 2014 according to the U.S. Patent & Trademark Office, or USPTO.

In total, 1,741 petitions have been filed since September 2012, according to the USPTO.

There are some time considerations if a company is looking to utilize the new, streamlined process: If you are sued in a federal district court, the company must file within one year of the complaint, otherwise it will be barred.

Nikolsky notes, however, these claims can be filed on the offensive, as opposed to the defensive.

“If you're Company B and you say, 'Hey, I want to get into the space of what Company A is doing because I think their patent is invalid,' you can proactively file one of these claims to challenge the validity,” he said.

For Nikolsky, the point is to act early.

“If you are a company that is getting wind of a potential claim of patent infringement, it doesn't even have to be a complaint that's filed in district court, it could be a cease and desist letter, it could be a 'try to scare you off' letter,” he said. “You might say, 'Forget it — you want to mess with us, then we're going to go ahead and file (with) the patent office and say this thing is invalid.'

“It's the sword and the shield. More often, these proceedings are used as a shield,” Nikolsky said. “But you could use them as a sword — and, in fact, some companies have done that.”

E-mail to: andrews@njbiz.com
On Twitter: @andrewsnjbiz

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