IP ALERT—Senate Endorses The Long-Awaited Patent Reform
September 9, 2011
Executive Summary
On September 8, 2011, the U.S. Senate voted (89-9) in favor of passage of "The America Invents Act," which makes a number of long-debated revisions to the U.S. patent system. The Act was signed by President Obama on September 16, 2011.
This new legislation alters the U.S. patent system in a number of different ways with varied degrees of anticipated impact on patent value, patent acquisition cost, patent administration, and at least indirectly, patent enforcement.
Of particular significance, The America Invents Act alters the rule for determining who is entitled to a patent as between two or more applicants for the same invention, provides a number of alternate routes for challenging patentability, both pre-and post-issuance, and limits who may have standing to bring false marking claims.
Although many of these reform provisions do not take effect immediately upon the President's signature, it is important for all constituents with a stake in intellectual property assets to adjust patent strategies to account for these legislative changes.
The Legislative Changes
A Shift To A "First-Inventor-to-File" System
Historically, the U.S. has operated under a first-to-invent system of determining priority of invention (i.e., who is entitled to a patent on the invention), relying on the premise that the inventor who can demonstrate earlier conception and diligence in reducing his/her invention to practice will be deemed the "first" inventor. With passage of The America Invents Act, the U.S. now joins the remainder of the world in determining priority of invention by the earliest date the patent application was filed with a patent office.
In light of this change to a first-inventor-to-file system, it will no longer be necessary to engage in costly and time-intensive interference proceedings to determine the inventor who is entitled to a patent. Interferences will be replaced by so-called "derivation proceedings," which will be used to determine whether an earlier filer had improperly copied, or derived, his or her invention from a later filer.
While there has been much debate over the effects of the Act's shift to a first-to-file system, such a provision will not go into effect for 18 months. Inventors/companies with ideas in the pipeline and attorneys counseling them should use this window of time to assess the potential impact of the rule change and modify filing strategies accordingly.
Scaling Back Of An Applicant's "Grace Period"
Currently, a patent applicant enjoys a one-year grace period under which a prior disclosure of an invention (by that applicant or any other entity) up to one year prior to the applicant's filing date does not count as prior art (negating the novelty of the invention and the applicant's right to a patent) provided the applicant was able to show a conception date prior to the disclosure and diligence in either reducing the invention to practice or filing a patent application for the invention.
The America Invents Act changes this rule by replacing this absolute grace period with a "personal grace period." Now, an applicant's own prior disclosures (or disclosures derived from the applicant) within one year prior to the filing date are exempt as invalidating prior art. However, other disclosures of that invention by third parties will constitute invalidating prior art. This alteration to the grace period takes effect eighteen months after the date of enactment and applies to all patents with effective filing dates on or after that date.
Challenging Patents
The America Invents Act provides for a number of different mechanisms for challenging patents both post-and pre-issuance.
Post-Issuance Challenges. Through The America Invents Act, Congress is working to make the Patent and Trademark Office a more viable venue for challenging patents, which it hopes will result in faster, lower-cost and more rational decisions on patent validity. In furthering this goal, the Act replaces the current inter-partes reexamination procedure with two similar but unique provisions for challenging the patentability of an issued patent: (1) inter-partes review, and (2) post-grant review.
Inter-partes review parallels current inter-partes reexamination practice but removes the threshold requirement that an alleged basis of unpatentability be "new." This procedure will be available beginning one year after enactment and will apply to any patent issued before, on or after such a date. The new standard for declaring inter-partes review (i.e., "a reasonable likelihood that the requester would prevail" instead of the previous "substantial new question of patentability") however, will take effect immediately upon enactment.
Post-grant review will be available to challenge an issued patent only within a 9-month window after issuance, but it expands the available legal theories upon which a challenge to patentability may be brought. In contrast, current reexamination proceedings may only challenge an issued patent based upon prior art patents and printed publications. The post-grant review provisions also mandate the PTO to resolve the challenge entirely within a year of request (with a six month extension available). This procedure will be available beginning one year after enactment but will apply only to patents with an effective filing date or priority claim date that is on or after a date 18-months post-enactment.
The Act directs the PTO Director to promulgate regulations governing the procedural requirements for these new review routes before the newly created Patent Trial and Appeal Board, within one year of the enactment date. These new procedures, for example, will guide the PTO on how to accomplish the post-grant review process in one year. Thus, a practitioner should begin familiarizing him/herself with any proposed regulations governing these post-grant review procedures as soon as such proposals become available. Further, the one year window post-enactment should be utilized to strategically plan one's inter-partes review or post-grant review options.
Pre-Issuance Challenges. In addition to provisions for post-grant challenges, the Act also allows for any third party to submit any patent application, patent, published patent application or any other relevant printed publication for consideration by the examiner during examination of a patent application. Such a submission, however, must be made in writing and be submitted before the earlier of: (1) the date a notice of allowance is given or mailed, or (2) the later of (i) six months after the application is published or (ii) the date of the first rejection. This provision expands the time frame for submission but is largely similar to that regulating existing third party protest/submission opportunities, which are of limited use.
Changes To False Marking Law
The America Invents Act amends the false marking statute in two ways. First, it grants only the U.S. government standing to sue for per-article fines. Second, it permits only those who have suffered competitive injury as a result of false marking standing to sue for compensatory damages. These changes could limit the growing number of false marking suits by narrowing the universe of parties eligible to bring such claims. This legislation would apply to all false marking cases pending on or after the date of enactment.
What This Means to You
Patent reform will change many aspects of patent prosecution and litigation and could significantly impact the value of individual patents. Companies and organizations should reevaluate their patent strategies and consider the impact of patent reform on both 1) managing and protecting their own intellectual property, and 2) monitoring and challenging third party patents. Both of these aspects have important strategic and budgetary implications that will be discussed in more detail during our Webinar next week.
Wolf Greenfield Webinar
Wolf Greenfield presented a webinar on the passage of this legislation on Thursday, September 15, 2011. If you were unable to attend the webinar, a podcast will be available through our website shortly.
View as PDF