On September 16, 2011, President Obama signed into law historic patent reform legislation.
The America Invents Act marks the first comprehensive reform to the United States Patent system in nearly 60 years. The Act makes some significant changes to the patent law and will impact the way patents are obtained, enforced and defended against in the United States.
The America Invents Act includes provisions for:
- Changing from the existing first-to-invent patent system to a first-to-file system; Third-party submissions of prior art for pending applications;
- Creation of new post-grant review procedures for third-party patent challenges in the United States Patent and Trademark Office (USPTO);
- Elimination of the best mode defense in patent litigation;
- Creation of a new Supplemental Examination Process;
- USPTO fee setting authority;
- Limited standing in false patent marking cases;
- Unpatentability of tax strategies and human organisms;
- USPTO authority to establish satellite offices;
- USPTO authority to prioritize examination of inventions of national importance.
The America Invents Act includes several significant changes to United States patent law.
The most significant change is the transition of the United States Patent Office to a so-called first-to-file system. The shift confers patent rights on the first person to file an application, as opposed to the first person to invent. As a result, the United States patent system will be closer aligned to the patent regimes of much of the rest of the world, including Canada.
Under the new system, all references and other art having a date prior to the effective filing date of an application would constitute prior art, unless such art is dated after a public disclosure made directly or indirectly by an inventor. Consequently, it will no longer be possible to eliminate a reference by a showing of an earlier conception date.
A limited one-year grace period would be retained for filing an application after a public disclosure by the inventor or by another who obtained the disclosed information from the inventor.
The first-to-file provisions should take effect 18 months from the enactment of the America Invents Act, applying to all patents and applications with an effective filing date more than 18 months after the enactment of the Act.
Further, the new Act will replace present interference proceedings with a new derivation proceeding. Both address circumstances in which the same subject matter is claimed in two co-pending applications by separate inventors. Interference proceedings generally resulted in patent rights being awarded to the inventor who conceived the invention first. However, in derivation proceedings, patent rights would be awarded to the first inventor to file regardless of who invented first, unless it is established that the inventor named in an earlier filed application derived the claimed subject matter from the inventor of a later filed application.
Preissuance Submissions by Third Parties
With respect to pending applications, the Act would enable third parties to submit patents and publications to the USPTO that are believed relevant to pending applications before the earlier of the date of a notice of allowance; or the later of six months after the publication of the patent application, or the date of the first rejection of the patent application. The America Invents Act would further permit third parties to make statements concerning the relevance of the patents and publications that they submit.
With respect to issued patents, the Act creates two different provisions for third parties challenging the validity of patents before the United States Patent and Trademark Office: Post-Grant Review and Inter Partes Review.
Post-grant review will allow a patent to be challenged on any grounds by a petition filed by a third party within nine months of the grant or re-issuance of a patent. This can include subject matter eligibility under section 101, anticipation under section 102, obviousness under section 103 and enablement and written description under section 112.
Post-grant review may only be initiated against patents with an effective filing date greater than 18 months after the enactment of the Act.
Inter partes review would allow a patent to be challenged on the basis of prior art consisting of patents or printed publications only. A petition must be filed by a third party at least nine months after the grant or re-issuance of a patent, or following the conclusion of a post-grant review, whichever occurred later.
Inter partes review would be applicable to patents in force one year from the enactment of the Act.
Both inter partes review and post-grant review would be heard by the newly renamed Patent Trial and Appeal Board (PTAB). The burden of proof for the petitioner would be a preponderance of the evidence for both types of proceedings. Additionally, estoppel provisions bar the petitioner from raising, in any subsequent USPTO proceeding, district court action, or ITC proceeding, any ground of invalidity that actually was raised or reasonably could have been raised during the review proceeding. A written decision by the PTAB may be appealed by any party to the United States Court of Appeals for the Federal Circuit.
The America Invents Act also provides for a new supplemental examination procedure for the consideration of issues that were not properly considered during initial examination by the USPTO to “consider, or correct information believed to be relevant to the patent”. If a substantial new question of patentabilty was raised, re-examination would be ordered. While the America Invents Act does not specifically address inequitable conduct, the Act provides that a patent shall not be held unenforceable on the basis of “conduct relating to information that had not been considered, was inadequately considered, or was incorrect in a prior examination” if the information was considered during the supplemental examination of the patent.
Defense to Infringement Based on Earlier Prior Commercial Use
The America Invents Act expands the prior use defense to apply to more than just business method patents. The Act allows a prior-use defense to be asserted against any type of patent so long as it is used in connection with manufacturing or some other commercial process. The prior user must establish that it used the subject matter of an asserted patent at least one year before the earliest of the effective filing date of the patent or the patentees first public disclosure. The burden of establishing the defense is by clear and convincing evidence.
Fee Related Matters Effective
10 days from its enactment, on September 26, 2011, a 15-percent surcharge will be added to patent-related fees, including patent maintenance fees. As well, the USPTO is given fee setting authority to set the level of most patent fees. Fees collected by the USPTO in excess of its appropriations for that year will be deposited into a Patent and Trademark Fee Reserve Fund (which will be separate from the Patent and Trademark Appropriation Account). Also included in the fee setting authority is the creation of a new micro entity status for certain applicants which would provide a 75-percent reduction in fees.
There are other important provisions contained in the America Invents Act. The Act would enable an entity to file an application on behalf of an inventor who assigned, or is under an obligation to assign, the invention rights to the entity, without requiring the inventor's execution of the application. Provisions are also included which would make it easier for an entity to file a substitute inventor's oath when the inventor cannot be reached or is non-cooperative.
While an inventor would still be required to set forth the best mode for accomplishing the invention, failure to disclose the best mode will no longer be grounds for invalidating a patent. The duty to determine whether the best mode requirements had been met would lie solely with the USPTO during examination.
The America Invents Act further provides for:
- An expedited review for applications for patents describing inventions deemed key to national priorities, such as clean energy technology;
- The creation of a transitional post-grant review procedure for business-method patents; The exclusion of tax strategy patents claiming “any strategy for reducing, avoiding, or deferring tax liability”, from patent-eligible subject matter;
- Preventing patents from being granted on a claim directed to or encompassing a human organism; and
- Limiting standing in false marking cases to persons who have suffered competitive injury as a result of a false patent marking.
The Act also allows for the establishment of additional USPTO satellite offices.
The America Invents Act brings significant changes to the United States patent system. Users of United States patent system are well advised to be aware of such changes impacting the way patents are obtained, enforced and defended against in the United States.