After failing in four Congresses over nearly a decade, a patent reform bill was passed and signed into law on September 16, 2011. The America Invents Act (AIA) is the most comprehensive revision to patent law since the Patent Act of 1952. That Act was primarily a codification of prior laws, arguably making the AIA the most significant change to American patent law in over 200 years.
The AIA is complex and multifaceted. Its provisions become effective in stages over 18 months. Once fully implemented it will significantly change who is issued a patent when there is more than one inventor claiming the invention; it will offer greater opportunities to administratively challenge patents; and it should improve funding and staffing of the Patent Office, thereby reducing the time between patent application and issuance. The AIA does not change the definition of patentable subject matter or the fundamental prerequisites of novelty, utility, and nonobviousness for issuing a patent. However, it implements numerous changes affecting the cost, procedures, and ability to challenge patents – both before and after they are issued. A few of the more significant revisions are discussed here.
First-inventor-to-file. Paradoxically, the most fundamental and controversial change actually affects very few inventors. The United States is the last nation using a “first to invent” patent system. In other countries, patents are issued to the first applicant disclosing the claimed invention. In contrast, a U.S. patent issues to the first inventor – i.e., the first to conceive of, and reduce to practice, the new invention – when multiple applicants claimed essentially the same invention. The AIA will establish a middle position between “first to file” and “first to invent” systems. Beginning in April 2013, when the same invention is claimed by more than one applicant, only the “first inventor to file” will receive the patent.
Although priority of invention challenges are statistically rare, the abandonment of the first to invent system was philosophically contentious. On one hand, first-to-invent arguably protected the small business and the garage inventor that lacked the finances and sophistication to mount a race to the patent office. On the other hand, invention priority challenges were criticized as being costly, time-consuming, and inefficient. The change to first-inventor-to-file eliminates interference proceedings, narrows the challenges that may be asserted by defendants in infringement cases, and brings the U.S. closer to full compliance with international practice and treaty obligations.
A new “derivation proceeding” replaces the no longer applicable interference proceeding in order to consider challenges by competing inventors. This change allows a first inventor to challenge the issuance of a patent to the first filer, where the invention in the first-filed application was derived from the first inventor. The procedures for the derivation provision remain to be developed by the Patent Office.
Grace period. Public disclosure of an invention prior to filing a patent application has always been risky. In most countries, patent protection is not available if the invention has been published, sold, or disclosed before the patent application is filed. In the U.S., a one year grace period may allow an inventor to secure a patent even in the event of disclosure of the invention to the public. However, after April 2013 under the AIA, the one-year grace period applies only if the applicant is the originating source of the disclosed information. Any other disclosure by a third party prior to the patent application will prevent the issuance of a patent. This change brings the U.S. closer to international patent law harmonization, but continues to provide some protection for the unsophisticated inventor who prematurely disclosed details of an otherwise patentable innovation.
Third-party challenges and Patent Office reviews. The opportunity for third party challenges asserted through the patent office is significantly expanded under the AIA. Beginning in September 2012, any party can submit prior art for consideration by the patent examiner prior to the issuance of a first rejection. For patents with an effective filing date after April 2013, any party can challenge a patent within nine months after issuance, in a new post-grant review proceeding. Additionally, the AIA revises and expands the current inter-partes reexamination proceeding with an inter-partes review before a new tribunal, the Patent Trial and Appeal Board, beginning in September 2012. Unlike the current reexamination procedure, the new review will not be restricted to issues not previously considered by the patent office. However, the new standard for accepting a reexamination petition is stricter under the new Act – a reasonable likelihood that the petitioner will prevail with respect to at least one of the challenged patent claims. The AIA requires that the patent office decide post-grant reviews and inter-partes reviews within one year of accepting the petition for review.
False marking. False marking lawsuits are severely restricted under the AIA. The 1952 Patent Act allowed qui tam actions to be filed by any citizen against those who place patent numbers on products not covered by valid patents, with civil penalties divided equally between the federal government and the private plaintiff. Henceforth, only the Attorney General can sue for civil penalties. Damage claims for false marking can be asserted by private parties only when they can demonstrate competitive injury as a result of the false marking. The provision is effective immediately, even as to currently pending cases.
Restrictions on specific subject matter. The AIA essentially ends the practice of patenting tax strategies, by declaring all tax strategies to be within the prior art. Although tax-related software may be patentable, the tax strategies themselves will not be patentable. In addition, any patent claim that “encompasses a human being” is prohibited.
Dis-joinder. The use of shotgun patent litigation – joining numerous unrelated defendants in a single lawsuit based solely on a claim of infringement of a single patent – has been a frequently criticized practice allowed under the prior law. The AIA strips courts of the power to join multiple defendants in a single lawsuit based solely on the fact that the defendants are all alleged to infringe the same patent. The provision was effective on the date of enactment. The joinder of multiple defendants remains possible under the AIA, but only if the claim arises “out of the same transaction, occurrence, or series of transactions or occurrences” of infringement and is based on common questions of fact.
Changes directed to infringement litigation. A few provisions specifically add or remove defenses to infringement that are available under current law. Under the AIA, an alleged infringer can assert prior user rights by demonstrating that it had commercially used an invention for at least one year prior to the effective filing date of the patent application or of the disclosure date of the invention. Another provision eliminates a defense based on the failure to disclose best mode. Although the disclosure of the best mode remains a requirement for patentability, the failure to so disclose cannot be asserted as a defense in an infringement trial.
Agency and procedural changes. Certain patent fees are increased by 15%, in order to better fund the patent office and reduce current delays in processing patent applications. Small business entities may be entitled to a 50% reduction in certain patent fees, and “micro-entities” can obtain a 75% reduction in certain fees – at least once the Patent Office writes final regulations defining the qualifying entities. An optional substantial additional filing fee permits an application to receive prioritized examination.
The AIA authorizes the establishment of new patent field offices. A Patent Trials and Appeals Board is created to conduct and review certain Patent Office determinations. Review of reexamination proceedings will proceed exclusively to the Court of Appeals for the Federal Circuit.
The AIA will undoubtedly undergo significant rulemaking and interpretation as it is applied by the Patent Office and the courts. If you would like further information on the statute, or would like to discuss intellectual property management, risk assessment, or commercialization, please contact a member of our Intellectual Property, Internet and Technology practice group.