Representing the most fundamental change to United States patent law in decades, the Leahy-Smith America Invents Act became law on Sept. 16 after it was signed by President Obama. The Act is intended to improve patent quality, decrease the patent backlog at the United States Patent and Trademark Office (USPTO), and further harmonize U.S. patent law with international patent law.

While many proposals to reform the patent system were not included, such as limitations on the calculation of damages for infringement, restrictions on forum shopping, and fee diversion from USPTO, the America Invents Act still represents the most significant change to U.S. patent law in decades.

The Senate approved the House bill without amendment, so the final text of the new law can be found in HR 1249. HR 1249 is 150 pages long and includes a wide variety of different provisions. While this Alert provides an overview of many of the key changes described in the Leahy-Smith America Invents Act, the Act includes changes beyond those described here. The key changes can be organized in terms of when they are scheduled to take effect. Many provisions will go into effect immediately, others will go into effect either one year or 18 months after enactment. The most dramatic changes are being delayed for 18 months to allow applicants the time to understand and develop strategies to accommodate the new rules. The USPTO has the authority to control the implementation of the Act in many cases, and is seeking public input on the Act at its patent reform implementation website.

Changes effective after 18 months:

  • “First to File” rather than “First to Invent” will be the basis upon which competing inventions are granted. All applications with a priority date falling on or after the 18-month deadline will be governed by this new rule. For these applications, public disclosure one day prior to filing will be prior art. An exception is made for disclosures made within one year of filing if the subject matter had been publicly disclosed by the inventor or another who obtained the subject matter from the inventor. This is the most significant change in the new Act.
  • Post-grant review for all patents during a nine-month window after grant upon showing it is more likely than not that at least one challenged claim is unpatentable on any invalidity grounds. This allows a challenge to be made on the basis of written description or patentable subject matter issues, which was not possible by re-examination.

The following changes will be in effect after one year, often with retroactivity:

  • Ex parte re-examination and inter partes review procedures are revised.
  • Transitional post-grant review for Business Method patents. Patent filing by assignee allowed.
  • Pre-issuance submissions of relevant art by third parties before various deadlines; a concise explanation of the asserted relevance is required.

The following changes are effective immediately:

  • Tax strategy patents are banned.
  • A lawsuit for false marking can only be brought by the United States or one who has suffered competitive injury - effectively ending patent mismarking nuisance suits.
  • The USPTO is provided the authority to set fees to recover costs, and is instructed to create rules governing lower fees (75 percent less) for micro entities.
  • Patents to a human organism are explicitly banned.
  • Best Mode is no longer a defense for invalidating a patent.
  • Unrelated companies cannot be easily joined as defendants in an infringement lawsuit.
  • A 15 percent surcharge will be added to all patent-related fees (after 10 days).

While the effect of some parts of the act are immediately apparent, other portions of the Act may require significant effort by the USPTO and the courts before they are clear. In the short term, this may have the unfortunate effect of increasing the USPTO backlog and uncertainty regarding patent rights.

However, in the longer term, it is hoped that the increased fees and simplification of prior art questions will increase the ability of the USPTO to rapidly evaluate patent applications, and that the opportunity for pre-issuance third party prior art submissions and post-grant review procedures will lead to increased patent quality. The law invites a more active role by patent applicants in the patent system. The new Act will require creative, new and well-thought-out strategies as it evolves.