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September 16, 2011

America Invents Act and Its Near-Term Implications

On September 16, 2011 President Obama signed into law the America Invents Act.  Commentary on the impact of the Act varies wildly—from assertions that the act will have little to no positive impact to claims the Act will make a more efficient patent system, create jobs, and help harmonize international patent law—though most will agree that the number of changes are relatively extensive. While these changes vary in likely import, we have summarized a selected group of the changes, including their impact at the U.S. Patent and Trademark Office (USPTO) and on pending and future litigation:

Change of the U.S. patent system to a modified "first-inventor-to-file" system.  U.S. law previously focused largely on "who invented first."  Our new system focuses more on who filed their patent application first, moving closer to traditional "first-to-file" patent systems, with some notable differences. While more traditional first-to-file patent systems are effectively determined by who wins the race to file a patent application at the patent office, the new U.S. system will also include provisions that allow an inventor to publicly disclose his or her invention to save that inventor's place in line for subject matter disclosed in the publication and later filed patent application—even if another inventor files a patent application first and so long as the inventor files a patent application within one year of the disclosure.  In other words, prior publication by an inventor may preserve for one year that inventor's priority for filing a patent application.  There has also been a redefinition (expansion) of prior art to include anything "otherwise available to the public" anywhere in the world.  Generally, these changes relating to priority and prior art apply to "new" applications filed 18 months after the September 16 enactment of the Act into law.

More post-grant proceedings at the new, "Patent Trial and Appeal Board."  Among other things, these changes include a post-grant review procedure similar to the opposition procedure in the European Patent Office.  The post-grant review is able to be filed during a nine-month window following issuance of a patent.  There are also revisions to the inter partes reexamination procedure, including a name change—now a "review" rather than a "reexamination." Both post-grant and inter partes reviews are to be carried out in front of a new Patent Trial and Appeal Board, although inter partes review is limited to patents and publications while post grant review is not so limited. Various changes to the post-grant review process are effective one year after enactment, although with the exception of certain business method patents, the new post-grant review procedure will only be available for patents granting on applications filed after March 16, 2013.

Expanded fee setting authority by the USPTO, with increased fees including a 15% surcharge. While one of the most controversial issues, fee diversion, is not corrected by this legislation, the USPTO has gained the ability to set and adjust its fees. Until the USPTO asserts this authority, a temporary 15% surcharge to all Patent Office fees will go into effect 10 days after enactment (once the USPTO subsequently modifies a fee, the surcharge is no longer in effect).  Fees collected each year in excess of USPTO-appropriated funds will be placed in a special Treasury fund entitled the "Patent and Trademark Fee Reserve Fund" that is available to the USPTO "to the extent and in the amounts provided in appropriations Acts.

Prior commercial use defense (prior user rights).  While previously limited as a defense against business method patents, prior user rights have been expanded as a defense against patent infringement without regard to the subject matter of a patent being enforced.  Among other things, the expanded defense generally requires commercial use in the U.S. at least one year prior to the patent's effective filing date or at least one year prior to a public disclosure by the inventor (as described above, any patent application based on the public disclosure would need to have been filed within one year of such disclosure).  There is also a university exemption, which prevents use of the defense if the patent was owned at time of invention by a university.  These changes are effective as of enactment. 

False marking claim curtailment.  A rash of false marking law suits have been filed, particularly for marking products with expired patents, following the Federal Circuit's holding in Forest Group, Inc. v. Bon Tool Co. (Fed. Cir. 2009) that a false marker could be fined $500 per article marked.  While previously any member of the public was able to bring such a claim, the new provisions require a plaintiff to have suffered commercial harm and eliminate finding false marking based on an expired patent that covered the marked product prior to expiration.  These changes are effective upon enactment and allow dismissal of currently pending cases and appeals based upon the new law.

Priority examination.  Patent applicants can now obtain more expeditious examination of their applications by paying a surcharge—expected to be around $5,000.  While previously applicants were required to fill out relatively involved "Accelerated Examination Support Documents" in support of a petition for accelerated examination, the new "Track One" examination only requires the fee.  These changes are effective 10 days after enactment.

What do these changes really mean for businesses and inventors?  For the immediate future, fee provisions, priority examination, changes to false marking, and preparation for the first-inventor-to-file changes may have the broadest impact.  With regard to the long term, although there will be new, strategic options available, it probably makes sense to take a measured approach and defer drastic changes to the patent strategy until we all have a more refined understanding of the full meaning of these law changes—there will certainly be learning involved as these changes are implemented at the Patent Office and as the laws are interpreted in the courts.  And, while the end result of these changes remains to be seen, we remain confident that, with an informed approach, our businesses and inventors will still achieve effective patent strategies.

The material contained in this communication is informational, general in nature and does not constitute legal advice. The material contained in this communication should not be relied upon or used without consulting a lawyer to consider your specific circumstances. This communication was published on the date specified and may not include any changes in the topics, laws, rules or regulations covered. Receipt of this communication does not establish an attorney-client relationship. In some jurisdictions, this communication may be considered attorney advertising.

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