First Patent System Overhaul in Nearly 60 Years, Awaits Obama’s Signature

On Thursday, September 8, 2011, Congress sent patent system overhaul legislation to the President for his signature.  Today’s patent examination system was created first, in 1836.  The last time major changes were made to the patent system, it was 1952, nearly 60 years ago.  Herein, we’ll summarize the America Invents Act, explaining the good, the bad, and the ugly.  If you have questions or concerns about how this new law may affect you, individually, please feel free to telephone our office for a consultation.

Goals

Stated America Invests Act goals include inspiring innovation; stimulating the economy; creating jobs; increasing the quality of patents; streamlining the patent process; decreasing costly legal battles; and funding the Patent Trademark Office, to speed processing.

Summary

·         New First-to-File Patent System 

This legislation transforms the United States into a first-to-file patent system; it’s currently a first-to-invent system.  Both systems are used to determine which inventor has the right to have a patent issued for his invention; in other words, the systems are used to determine when enforceable legal rights attach.  When this Act is signed into law by the President, the United States will join many other countries that also use the first-to-file patent system. The United States has stood alone.

·         In a first-to-file patent system, the inventor who actually files a patent application earns “first place,” and the right to have a patent issued to protect his or her innovation.  The date of the filing is the date of the invention.

·         In the current “first-to-invent” system, personal records and documentation are used to determine who gets “first place” and the right to the patent for that particular innovation.  The date of the original innovation conception is considered to be the date of the invention, so long as the innovator diligently reduced the invention to practice.

·         New “Derivation” Proceeding

The Act also creates a “derivation” proceeding, applying to the first-inventor-to-file patent applications and patents.  Derivation proceedings protect against the theft and the subsequent patent filings of inventions by making an exception to the “first-to-invent” system if an individual or company got the subject matter of a patent from the inventor, without authorization, within one year before the patent filing. 

·         Inter Partes Review and Post-Grant Review 

In partes review replaces “optional inter partes reexamination,” allowing third parties to challenge a patent before the Patent Trial and Appeal Board after the time allowance for post-grant reviews has lapsed.  Review by the Board will be granted upon the showing of a likelihood that the petitioner will prevail on at least one of the challenges. 

Post-grant review before the Patent Trial and Appeal Board is established in the Act, permitting review of the validity of patents within the first 9 months of issuance.  Any patentability issue, other than best mode, may be challenged. 

The Good, the Bad, and the Ugly 

Whether the America Invents Act is good, bad, or ugly depends on who you are.  If you’re a big company, you’ll love it as the first to file system and other provisions, such as the fee structure and allowable patent validity challenges, seem to give preference to big companies at the expense of individual innovators, universities, and small companies.  This is what happened in Canada when their patent system made a similar transition.

·         Higher Quality Patents, a Better Economy, and More Jobs?

And, while proponents of the Act tout that higher quality patents will result, aiding our troubled economy and flailing job market, opponents predict a rush of low quality, immature…”get it filed now”…patents, because inventors’, perhaps, not quite finished innovations, are protected in the first to file system.

·         Increased Patent Trademark Office Effectiveness

A rush to file patent applications will likely cause a back log of patent applications, causing further delays in the approval process.  While increased priority fees, which are significant, could be used to increase the productivity of the Patent Trademark Office, general revenue in excess of the office’s annual budget funds other governmental programs (i.e. “fee diversion”.)

There are concerns that big companies will be able to afford the additional $4,800 priority fee ($2,400 for small companies and individuals) and 15% surcharges of fees, and individuals, universities, and small companies won’t; so, their applications will be at the bottom of the stack for an extended period of time. 

·         Reduce Litigation

The Patent Trademark Office issues patents; patents evidence an enforceable legal right; however, you, as the patent holder, are solely responsible for enforcing your patents.  Under current law, patent holders could group alleged patent infringers together in a class action lawsuit, saving attorney fees, time, and effort.

Under the new Act, there will be no class actions unless the alleged patent infringers worked jointly to infringe the patent; it will no longer be enough that they both infringed the same patent. 

In anticipation of the new legislation, a rush of litigation has resulted, just in the last week as patent holders seek to enforce their rights without further obstacles of the law.  When the Act is signed into law and becomes effective, alleged infringers will be harder to sue and patent holders will have to spend more money, time, and effort enforcing their rights.

When the New Act Becomes Law

It is anticipated that President Obama will sign the America Invents Act into law; the date is yet unknown, but will likely be soon.  Many of the provisions are not effective for one year from the signing date, but some are sooner.  If you have questions or concerns about how this new law may affect you, individually, please feel free to telephone our office for a consultation at 605-335-4950.