The current U.S. Patent Statute was enacted in 1952. While there have been changes to the patent law over the years, none have been as significant or as sweeping in scope as the changes that are likely to become law through the Leahy-Smith America Invents Act (H.R. 1249) now being voted on in Congress. The House has already approved the legislation, and the Senate is expected to pass it shortly. Once approved, the bill is expected to be signed into law immediately by President Obama. The new law will place U.S. patent law in harmony with foreign patent law, change the manner in which patents are prosecuted and litigated in the U.S., and invite constitutional challenges to the validity of certain parts of the law. Here is a preview of the major changes to come:

The Race To The USPTO Is On - We Are Moving To A First-Inventor-To-File System Unlike most other countries, the current U.S. patent system gives priority to the first inventor who invents an invention, even when that inventor is not the first to file a patent application in the U.S. Patent and Trademark Office (USPTO).  The new law will replace this system with a first-inventor-to-file system (i.e., priority goes to the first inventor to apply for a patent), thereby further encouraging the early filing of patent applications.  The effect will be to do away with the interference proceeding which determines who invented first, and instead provide for a "derivation proceeding" to determine whether an invention was derived or stolen from another inventor.  An inventor will no longer be able to overcome a prior art reference based on prior invention.  Certain aspects of the current one-year grace period for filing will be eliminated or modified.

We recommend that our clients consult with us regarding changes to their patent prosecution programs to promote earlier filing of patent applications.

Companies Can Now Apply for Patents; Applicants Can Request Prioritized Examination

The new law will allow assignees of the inventors (such as employers) to apply for patents in their corporate name. 

Also, the new law authorizes the USPTO to offer prioritized examination of patent applications upon payment of a special fee.

Patent Owners Can Preempt Enforceability Issues Due To Prosecution Flaws

The new law establishes a supplemental examination procedure enabling a patent owner to request the USPTO to "consider, reconsider, or correct information believed to be relevant to the patent".  However, the new law obligates the USPTO to order reexamination if supplemental examination raises a substantial new question of patentability, and to refer evidence of any fraud on the USPTO to the Attorney General.

There Are New Mechanisms For Challenging A Patent

Current law and USPTO procedures allow a third party to challenge the validity of an issued patent through a reexamination proceeding, which can be ex-parte (without the third party requestor) or inter partes (with continued third party involvement).  While ex-parte proceedings will remain available, a new third party patent opposition proceeding, to be known as a post-grant review, and a new inter partes review proceeding (replacing inter partes reexamination) will become available under the new law.  A post-grant review may be brought on numerous invalidity grounds under the patent statute; inter partes review may be based only on patent and printed publication prior art.  Both post-grant and inter partes review must generally be commenced within nine months of patent issuance; neither procedure is available if a related civil action has been filed.

Also, the new law will extend the period during which a third party may advise the USPTO of prior art or other relevant information in a pending patent application.

Litigation Defenses And Procedures Are Affected

While a patent application must still set forth the best mode of the invention, under the new law, an accused infringer cannot assert a failure to disclose the best mode as a defense.  Also, the new law codifies current case law by expressly prohibiting a patent owner from asserting willful or induced infringement based on failure of the alleged infringer to obtain a favorable opinion from their attorneys.

One section of the new law seeks to limit lawsuits brought by patent owners against numerous unrelated alleged infringers by limiting the manner in which such parties can be joined in a single lawsuit.

Business Method and Tax Strategy Patents Are Called Out

Given the high level of interest by companies and the U.S. Supreme Court in business method patents, it is not surprising that the new bill contains several provisions relevant to such patents.  Patents covering tax strategies (for reducing, avoiding or deferring tax liability) will no longer be available going forward.  The validity of business method patents covering financial products will become subject to a provision that permits a special, transitional USPTO review of such patents involved in litigation.  Also, the current prior use defense applicable only to infringement of business method patents will now be allowed as a defense to many other types of patents.

False Patent Marking Qui Tam Lawsuits Are History?

False patent marking lawsuits, both those currently pending and new, are essentially abolished under the new law, which will now require a plaintiff to show actual competitive injury (currently, a plaintiff can proceed merely by showing false marking).  In other cases, remedies are being limited.  This is sure to be challenged on constitutional grounds.

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It remains to be seen whether H.R. 1249, the product of six years of consideration and debate in Congress, will actually improve patent quality, bolster economic development, sustain American innovation and protect American jobs.  What is indisputable is that the new law makes the most significant changes to the patent system in more than half a century.  Patent reform will have a significant impact on the way patents are prosecuted, licensed and litigated.  We will keep you posted on further developments.