A Summary of the America Invents Act

On September 16, 2011, President Obama signed into law the “America Invents Act”which makes sweeping changes to the U. S. patent system. Congress’s primary goals were to further enhance opportunities for innovation and entrepreneurial investment, to better harmonize U. S. patent laws with those of other countries, and to streamline patent office procedures. Over the next 18 months, the U. S. patent laws will change so that by the spring of 2013, there will be new issues and new proceedings for patent practitioners, inventors and businesses to consider. The most important of these new issues and procedures are:

Moving to a “first-to-file” system: The United States has always had a “first-to-invent” system, meaning that deciding whether an invention was new or not obvious involved determining the state of the art at the time the invention was conceived, not at the time the application was filed. Most other patent systems around the world consider the state of the art when the application was filed. The America Invents Act changes the U. S. system to likewise require that applications be examined against prior art dated before an application’s filing date (with some exceptions for inventor disclosures). The date of invention will no longer be relevant in determining what is prior art against future applications.

Assignee prosecution opportunities: Traditionally, a patent application is filed on behalf of an inventor, and the resulting patent is issued in the inventor’s name. Inventors can assign (e.g. sell or transfer) their patent rights to a third party such as a business or another person, for example the inventor’s employer. Traditionally these third parties (assignees) could move the application through the Patent Office with certain authorizations from the inventor. The new law still requires the original inventor be identified. However, if the inventor is required to assign the invention to a third party, the assignment can authorize the third party to take control the application as it moves through the Patent Office. The resulting patent would issue in the third party’s name.

Personal infringement defense based on prior use.The act provides a broader “prior use” defense, for use in cases in which a business is using a process or machine as part of a process, and has been doing so for more than one year prior to the effective filing date of a patent that would cover the process or machine. The defense is personal to the user, and can only be transferred with the business to which the process or machine relates. The defense addresses situations in which private first-users have been accused of infringement of another’s later-filed patent, where the non-public first use cannot be used to invalidate the patent.

Post-grant review of patents.: Perhaps the most anticipated aspect of the new act creates proceedings in the Patent Office to challenge issued patents. Two separate proceedings are created by the new law: An “inter partes” review and a “post-grant” review. The “inter partes” review permits allegations of invalidity over prior art. The “post-grant” review permits allegations of invalidity on any ground in the statute, and must be filed within nine months of the patent’s issuance. The Patent Office will be creating rules to govern these procedures in the coming months.

Supplemental examination: The act provides a procedure for supplemental examination of a patent by the owner. The supplemental examination is not a re-examination. However, if the Patent Office discovers a substantial new question of patentability during a supplemental examination, a re-examination will be ordered using the current re-examination procedure. A supplemental examination can be used to “cure” what might be inequitable conduct in the original prosecution, if the previously unconsidered or incorrect information was considered or corrected in the supplemental examination.

Filing fees: In addition to the existing large entity and small entity patent fees, the act creates a “micro entity” fee structure, which will most commonly be used by independent inventors. A “micro entity” is any small entity that has filed no more than four applications, and has an income that is less than certain specified limits. Micro entities are charged significantly lower fees that are only 25% of the large entity fee (i.e. $250 for filing, examination and search fees).

Other provisions remove the ability to invalidate a claim or patent based on failing to disclose the best mode of carrying out the invention, permit “virtual” marking of a patent number, limit suits based on claims of false patent marking, and codify the principle that failure to obtain, or choosing not to disclose, advice of counsel cannot be used to prove willful infringement.

Most of these provisions will take effect within the next 18 months, although some will take effect immediately. Regardless, it is not too early to consider how these sweeping changes to the U. S. patent system will affect your innovation strategies and business practices. If you have questions regarding how best to protect your ideas under the new patent laws, contact our experienced patent attorneys at Woodard, Emhardt, Moriarty, McNett & Henry LLP.