The United States Senate recently approved House Resolution 1249, known as the America Invents Act, which was subsequently signed into law by President Barack Obama today. This Act provides many significant changes to U.S. patent law including transition to a first-inventor-to-file system and the institution of post-grant review allowing a patent to be challenged on any grounds related to patentability within nine months of patent grant. Most of the Act's provisions will take effect one year from its signing (September 16, 2012), but there are some exceptions. Importantly, the first-inventor-to-file provisions will apply only to patent applications with an "effective filing date" that is 18 months from the date that the Act becomes law (March 16, 2013). Other provisions, such as the elimination of the best-mode requirement challenge to patent validity, will take effect immediately. In addition, fee changes such as a 15% surcharge on certain patent fees, will take effect 10 days after enactment (October 1, 2011). The effective date for each act section is summarized below in Charts 1 and 2.

A summary of the notable sections of the Act is as follows:

First Inventor to File - Transitions the United States Patent Office (USPTO) from a first-to-invent system to a first-inventor-to-file system for determining priority of invention similar to first-to-file systems prevalent in the rest of the world.

  • First inventor to file is entitled to patent. 
  • Prior art is established as of the filing date of the patent application – date of conception of the invention is no longer relevant to prior art. Public use or sale of the invention in a foreign country is now prior art. 
  • Provides a one-year grace period for inventor(s) to file an application even after certain disclosures of the claimed invention. Disclosure by the inventor(s) during the grace period prevents any subsequent third party disclosure from being considered prior art.

Post-Grant Review Proceedings – Provides new, and modifies existing, post patent grant review proceedings.

  • Establishes a new post-grant review before a Patent Trial and Appeal Board to review validity of issued patents issued on applications filed under the first-inventor-to-file system. A petition to institute post-grant review must be filed within 9 months of grant but it can be based on any patentability issue. The threshold showing is "more likely than not" that at least one claim is unpatentable.
    • A third party petitioner may challenge any claim of a patent on any ground of invalidity, not just prior art. 
    • Petitioner cannot later bring another proceeding in the USPTO or the Courts based on any ground that was raised, or reasonably could have been raised, in the post-grant review.
  • Establishes an inter partes review which replaces existing "optional inter partes reexamination" before the Patent Trial and Appeal Board to review the validity of any claim of a patent. The threshold showing is "reasonable likelihood" that the petitioner will prevail based on published prior art.
    • A third party petitioner may challenge any claim of a patent only on the grounds of obviousness and/or anticipation based upon prior art consisting of patents or printed publications. 
    • "Inter partes review" petition may not be filed until after the later of either nine (9) months after issuance of the patent OR if a "post-grant review" is instituted, the date of the termination of such "post grant review."
  • Establishes "Transitional Program For Covered Business Method Patents" which provides review of certain covered business-method patents and will operate similarly to the new post-grant review process. Importantly, however, review under the transitional program will not be limited to the nine-month window after patent issuance and can be used against any business method patent, whenever issued. Defines "covered business method patent" as "a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions."
  • Establishes "Supplemental Examination Process" which permits a patent owner to request the USPTO to consider, reconsider and correct information believed to be relevant to a patent. The USPTO must order re-examination if a substantial new question of patentability is raised by at least one item of information in the request.

Defense to Infringement Based on Prior Commercial Use - Expands the defense to an allegation of infringement based on prior commercial use from being limited to business method patents to any subject matter consisting of a process, machine, manufacture or composition of matter used in a manufacturing or other commercial process if (1) the person commercially used the subject matter in the United States, either in connection with an internal commercial use or an actual arm's length sale or other arm's length commercial transfer of a useful end result of such commercial use and (2) the commercial use occurred at least one year before the earlier of either the effective filing date of the claimed invention or the date on which the claimed invention was disclosed to the public in a manner that qualified as an exception from prior art. Patents owned by institutes of higher education are exempt from this section.

Preissuance Submissions by Third Parties - Establishes procedures for third parties to submit for consideration and inclusion in the record of a patent application, any reference such as a patent, published patent application, or other printed publication during examination of the application, including a statement of the relevance of the reference.

  • Current practice limits time period to two (2) months following publication of application. 
  • New practice extends time period to the earlier of: the date a notice of allowance is given, OR the later of six (6) months after publication OR the date of the first rejection.

Fees - Reduces certain fees for qualified small entities and a new class of entities, called "micro entities," including the fee for prioritized examination of utility and plant applications.

  • Creates a new class of entities, called "micro entities." A micro entity is an applicant that qualifies as a small entity, has not been named as an inventor on more than four previously filed patent applications, does not have a gross income exceeding a certain limit and has not transferred ownership interest in the application to another entity exceeding the income limit. Institutes of higher education are included in the definition of "micro entities," but this definition is subject to further regulations to be prescribed.
  • A 15% surcharge is added to all USPTO fees.

Patent Marking - Permits virtual markings (i.e., markings that direct the public to a freely accessible website where a patented article is associated with a patent number) to provide public notice that an article is patented.

  • Restricts the availability of false-marking damages to the federal government and those persons who have suffered a competitive injury as a result of false patent marking. 
  • Exempts from false-marking liability any complaints that are based on a patent that covered the product but has expired.

Other notable provisions include:

  • Best Mode Requirement - Eliminates the best-mode-requirement challenge to the validity of a patent. 
  • Advice of Counsel - Bars use of an accused infringer's "failure to obtain advice of counsel" to prove willful infringement. 
  • Joinder of Parties – Bars joining unrelated parties in a single action for patent infringement unless there are common facts and the parties were involved together in the same acts that caused the alleged infringement. The fact that separate parties are accused of infringing the same patent is not a basis for joinder.
  • Limitation on Issuance of Patents - Prohibits issuing a patent on a claim "directed to or encompassing a human organism." 
  • Inventor's Oath or Declaration - Allows the assignee of an invention (from the inventor) to file a patent application.

In summary, by switching to a first-inventor-to-file system and instituting a procedure for post-grant review in which an issued patent can be challenged on any basis related to patentability within nine months of issuance, along with the other provisions, U.S. patent law has undergone the most significant overhaul since 1952. Although a few of the changes take effect immediately, most will be effective in one year, or 18 months for the first-inventor-to-file system.

Chart One: America Invents Act Sections and Effective Dates

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Chart Two: America Invents Act Effective Dates and Sections

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