America Invents Act Summary
The House and the Senate have passed new patent legislation, The America Invents Act, that produces substantial changes in the U.S. patent laws. President Obama is expected to sign the bill on September 16, 2011. Some of the most important changes include:
- Fees. The new statute imposes an almost immediate 15% increase in most patent fees. This increase will take place 10 days after the President signs the Act into law. If he signs the legislation on September 16, 2011 the 15% fee increase will take effect on Monday September 26, 2011. Fees paid on Friday, September 23 will avoid this fee increase.
- Micro-Entity Status. The new Act has a special fee arrangement for individual inventors. Effective 60 days after enactment, a "micro entity status" will be established. This status is specifically directed to individuals with less than three times the national median income and who is named on less than four patents not assigned to an employer. Qualifying applicants will enjoy a 75% discount on USPTO fees compared to the 50% discount provided for small entities.
- Adoption of a first-inventor-to-file system, replacing the current first-to-invent system. The change to a “first-to-file” standard will align the United States with other countries in determining priority of inventorship. This change takes effect with applications filed 18 months after enactment. Under "first-to-file," the first inventor to file a patent application will be awarded the patent rather than the first inventor to make the invention. A new derivation procedure replaces interference proceedings and is provided to help resolve issues of derivation. The Act has also changed the definition of what constitutes prior art.
- Expanded Definition of Prior Art. The new Act recognizes the realities of virtually instantaneous, worldwide communications and a global market. Section 102 prior art now addresses offers, sales and public uses in the context of anywhere in the world, rather than just actions in the United States, subject to certain exceptions.
- Best Mode. Best mode has always been a requirement in patent disclosures. The new act, however, deletes this issue as an invalidity defense in litigation. The best mode must still be disclosed, but it is up to the examiner to investigate and enforce this requirement.
- Submission of Prior Art. The public can now participate anonymously in the examination process. After a small fee, anonymous third parties will be allowed to submit prior art and comments in the examination of a pending application. The art must be submitted no later than six months after publication or before the date of first rejection if no notice of allowance has been issued.
- Prioritized Examination. A speedy examination process is available with an additional $4,800 fee beyond the filing, search and examination fees in the standard case. The additional fee funds the postponed "fast track" examination process. Small entities receive a 50% reduction in the prioritized examination fee.
After The Patent Issues
- Post-Grant Review. A new, expedited, "post-grant review" procedure within nine months of the patent’s issue is established to take effect one year from enactment. The review must be completed within one year or 18 months for special cases. Any person other than the patent owner may request post-grant review before a newly named Patent Trial and Appeal Board. The patent may be challenged on any ground of patentability but estops the Requestor from later validity defenses that were or which could have been raised. The review can also be terminated by settlement between the Requestor and the Owner.
- Inter Partes Review. Following the later of the conclusion of a post-grant review or nine months after patent issuance, a patent can be challenged in an inter partes proceeding before the Patent Trial and Appeal Board on the basis of prior art patents or printed publications. Becoming effective one year after enactment, this "inter partes review" is similar to the present inter partes reexamination, but the review will be conducted by the Patent Trial and Appeal Board rather than patent examiners in the USPTO Central Reexam Unit. There is a slightly higher standard for granting the inter partes review petition, and the review must be completed within one year or 18 months, if good cause is shown. (Inter partes reexam currently takes three to four years or more despite a “special dispatch” provision in the statute.) If the review proceeds to a written decision, the Requestor is barred from later presenting a validity defense that was or which could have been raised in the Inter Partes Review. The review can also be settled by settlement between the Requestor and the Owner.
- Supplemental Examination. A new, supplemental examination procedure like ex parte reexamination will allow a patent owner to request the USPTO to consider, reconsider, or correct information relevant to the patent at any time after issue. This process will allow patent owners to resolve any possible allegations of inequitable conduct that may have arisen from the original prosecution. This provision takes effect one year after enactment and applies to any patent issued before, on, or after that effective date.
Litigation and Damages
- False Marking. Patent marking cases have been a burden on businesses. Effective immediately, only the U.S. government may collect a penalty for "false marking" of a patent number on a product. A competitor in a pending or new suit for false marking may only collect compensatory damages from "competitive injury." The use of an expired patent number on a product is also expressly deemed not to be a violation of the revised False Marking Statute.
- New Method of Marking Allowed. The new Act also provides a technological way to mark products “virtually” with the pertinent patent numbers for purposes of constructive notice and damages for infringement. The product must bear the company’s website along with the word "patent" or "pat." The website is then used to post information about the patent(s) covering the product on the website. Owners can use this method to update their patent markings for purposes of constructive notice and an early start on damages for patent infringement without having to change product labels of inventory.
- Opinions of Counsel. Whether to get an opinion has had to be weighed against the risks and later presumptions in court of not getting one. Effective one year after enactment, the failure of an accused infringer to obtain an opinion of counselor or produce such opinion during litigation cannot be used to prove willful infringement or inducement of infringement.
- Expanded Prior User Rights. Internal or proprietary methods for your business now protect a company even better. Current law restricts the "prior user defense" to business methods adopted prior to the date of a patent application. This old restriction is removed by this amendment and is effective for patents issued on or after the date of enactment. The defense of a commercial use must have occurred at least one year prior to the effective filing date of the claimed invention or the date it was disclosed to the public. This defense is not applicable if the patent was developed under a federal government funding agreement or by a nonprofit institution of higher education that did not receive private funding in support of that development.
- Deceptive Intent Is Removed. A company’s intent has always been hard and expensive to identify. The new Act removes all seven occurrences of "without deceptive intention" from the patent statutes. These are for: Inventorship changes (Secs. 116 and 256); reissue (Sec. 251); filing a disclaimer (Sec. 253); suing on a patent containing an invalid claim (Sec. 288); and foreign filing without a license (Secs. 184, 185). This should reduce the cost of litigation over such issues.
- New Rule To Prevent Aggregated Defendant Cases. The new law will forbid the tactic of naming unrelated companies in a single infringement lawsuit on the same patent(s) to gain the advantages of scale from one procedure with numerous defendants. Co-defendants will now have to be accused of joint infringement or have some common factual basis to the claims against them other than allegations of infringing the same patent. This change will likely discourage mass infringement suits that have characterized the business model of non-practicing patent owners who rely on such economies of scale.
- Inequitable Conduct Can Be Purged By Reissue or Reexam. Patent. Patent owners now have a chance to “cure” potential allegations of inequitable conduct due to uncited prior art. With two limited exceptions, the new changes provide that "A patent shall not be held unenforceable on the basis of conduct relating to information that has not been considered, was inadequately considered, or was incorrect in a prior examination of a patent if the information was considered...during a supplemental examination of a patent." New 35 U.S.C. § 257(c)(1). This is a welcome change for patent owners as it provides a tool to test previously undisclosed prior art without risking the costs of an expensive infringement suit.
Notice: This article is a first impression of The America Invents Act presently expected to be enacted on September 16, 2011 and should not be construed as particular legal advice relative to any changes in patent law. Contact your RABG attorney as to your particular questions or issues.