Earlier this month, President Obama signed the “Leahy-Smith America Invents Act,” completing the first overhaul of United States patent law in more than a decade, and ending years of struggle in Congress.  These reforms are intended to fix shortcomings of the existing patent system, but also to bring the US into closer harmony with established worldwide standards.  The US has long maintained its position as one of the last hold outs to patent reforms that have been implemented in nearly every other country in the world.

The reforms promise to impact significantly on innovators doing business in North America, with the impact expected to be felt more at the chief technology officer and lead counsel level than at the chief executive officer or board level.  While important changes in philosophy and procedure will be required, the fundamentals of intellectual property strategy will not shift significantly.

While the biggest changes will not come into force until 2012 or 2013, some – including a broad 15% fee increase – are set to have immediate, or even retroactive, effect.

Among the most significant of the reforms is a shift from the traditional “first-inventor-to-invent” system to the now globally accepted “first-inventor-to-file” system.  There are also new post-grant procedures for challenging the validity of issued patents within the patent office rather than the courts.

From “first-inventor-to-invent” to “first-inventor-to-file”

The United States has for many years been the only significant economy to retain the traditional “first-inventor-to-invent” system, whereby the first person to conceive an invention was entitled to patent protection for it.  Under the traditional system the first inventor retained entitlement to the invention even if another inventor beat them to the patent office.  By contrast, under the “first-inventor-to-file” system, rights to an invention belong (with limited exceptions) to the first inventor to file an application with the patent office, regardless of which inventor first had the idea.

Although the “first-inventor-to-file” system will not take effect until March 2013, innovators must begin now to prepare new strategies for protecting their inventions in the US  Systems for early identification and development of patentable ideas will be critical for those who wish to stay ahead of competitors’ filing activities and ensure that valuable technologies – and markets – are protected.  These are strategies that practitioners in Canada and the rest of the world are already accustomed to.

Post-grant review

New procedures for challenging recently issued patents are structured so as to offer incentives for bringing challenges promptly.  One new post-grant option broadens the grounds upon which challenges may be brought, provided that such challenges are brought within nine months of the patent issue date.  After nine months, the older, narrower grounds remain available.

The new post-grant procedures are meant to reduce abuse of the legal process by litigants in court.  In exchange for shifting validity challenges to the patent office, the new legislation promises a final determination within 12 to 18 months.  Estoppel issues have not been addressed though.

Expanded defence of prior commercial use

Defences to patent infringement based on prior commercial use have been expanded to cover infringements in all types of cases.  Such defences were previously limited to cases involving business methods.  For example, where an infringer can demonstrate commercial use of a claimed invention more than one year before the patent filing date, that use may be allowed to continue without penalty.

Other reforms

Other reforms include both technical patent issues, such as revision of the definition of “prior art”, and litigation controls, such as restrictions on joinder of defendants in infringement suits to limit the number of suits filed by non-practicing entities.

“Fast Track” in waiting?

Another significant aspect of the new law is an overhaul in the way the patent office will collect fees.  Previously, the patent office had little, if any, fee-setting authority.  But under the new laws, the patent office has wide ranging authority to set fees at a level sufficient to cover its costs.  It is anticipated that the new fee structure will ameliorate the enormous backlog of unexamined applications pending in the patent office.  With more control over funding, the patent office is also set to implement a new “Fast Track” examination process, although no start date for this initiative has been announced.