There was much excitement when the U.S. Senate overwhelmingly passed (95–5) the America Invents Act (formerly titled the Patent Reform Act of 2011) (S.23 or AIA), on March 8, 2011. The America Invents Act This legislation represents a major patent reform initiative that has been under congressional debate for at least six years and is quite possibly the most significant patent reform since the 1952 Patent Act. This legislation rewrites, among many other things, who is entitled to a patent when two or more entities seek protection for the same invention, when prior art is available for novelty and nonobviousness determinations, and what is available to a third party who wants to oppose a patent.

First-to-File: When two or more entities seek patents for the same invention, current law awards the patent to the entity that can prove it was the first to invent. Under the AIA, the patent would be awarded to the first-to-file a patent application. Proponents argue that this is more efficient because it eliminates costly and time consuming procedures called interferences and aligns U.S. law with other industrialized countries. Opponents argue that this favors large companies over small companies and independent inventors who do not have the resources to win a race to the patent office. To somewhat address these concerns, the AIA allows for a derivation claim (either in court or the Patent Office) when the first-filer “derived” their claimed invention from the other. Even with these derivation claims, however, the AIA appears to favor large companies who are active in patenting innovations.

Importantly, the AIA does not include any provision for prior user rights. Current law has limited prior user rights in that a prior user who is sued for infringement may be able to invalidate that patent by claiming prior invention. That option is eliminated in a first-to-file system leaving a prior user potentially liable for infringement. This is particularly a concern for business methods and software because many companies have considered their business method and software innovations either unpatentable or better protected as a trade secret. Without prior user rights, a company can be liable for patent infringement for continuing to use an innovation that they have been using for years as a trade secret. This lack of prior user rights could be very problematic for industries such as the financial industry and the software industry. The AIA temporarily adds a limited proceeding to challenge business method patents within the patent office but this will be of little help if all of the accused company's prior use was secret.

Novelty/Nonobviousness: In order to obtain a patent, an invention must be novel and nonobvious. The AIA rewrites Sections 102 (novelty) and 103 (nonobviousness) of the Patent Act. Current Section 102(a) denies a patent when prior art shows the invention was known to others prior to the patent applicant's invention date. The AIA moves up the focus to the patent applicant's filing date and whether prior art existed before that date. This expands the scope of potential prior art and may make it more difficult to obtain a patent. Current Section 102(b) bars a patent when there is prior art of the inventor or others disclosed more than a year before the patent applicant's filing date. This creates a grace period for pre-filing disclosures but prevents the patent applicant from waiting more than a year to file a patent application. The AIA only applies this grace period to pre-filing disclosures of the inventor or pre-filing disclosures derived from the inventor. Thus, the grace period no longer applies to independent disclosures by others. This also expands the scope of potential prior art and may make it more difficult to obtain a patent. The AIA also rewrites Section 103 (nonobviousness) to deny a patent when the invention is obviousness as of the patent applicant's filing date rather than “at the time the invention was made” per the current Section 103. This yet again expands the scope of potential prior art and may make it more difficult to obtain a patent.

Third Party Participation: When the public is aware of prior art that may prevent the issuance of a patent, current law has a very narrow window of two months after publication of the application to submit the prior art to the Patent Office. In some cases, a patent application is not published and thus there is not an opportunity for the public to submit prior art. The AIA permits the public to submit prior art to the Patent Office at any time. This change has little opposition. The AIA also creates a post grant review and an inter partes review for third parties to oppose issued patents. These proceedings would replace the current reexamination system within the patent office which is limited to addressing patentability issues raised by prior patents or printed publications. The post grant review permits a third party to raise any issue of patentability at the patent office within nine months of the issuance of the patent. The inter partes review permits a third party to raise prior patent or printed publication issues after nine months of the issuance of the patent. Opponents believe that these changes do not go far enough to provide a viable alternative to litigation that is fair to both parties.

Initial excitement upon passage by the U.S. Senate appears to be waning as anticipated quick action in the U.S. House of representatives appears unlikely. Initial hearings by the House Judiciary Committee Subcommittee on Intellectual Property, Competition, and the Internet raised questions about the lack of prior user rights and the decreasing nature of the post grant proceedings. Other questions were directed to the lack of change to damage provisions which some commentators believe to be the biggest concern of current patent law and the inclusion of the proceeding to challenge business method patents. Note that the Senate removed changes to damage provisions as a compromise to obtain passage of the AIA. It now appears there may still be a long battle before we see patent reform.