On September 16, 2011, President Barack Obama signed into law the Leahy-Smith America Invents Act, which represents the most comprehensive overhaul to the United States patent system since 1836.  The new legislation seeks to encourage innovation, create new jobs in the United States, and provide the necessary resources to the United States Patent and Trademark Office (USPTO) to operate efficiently and strengthen the quality of issued patents.  The scope of the America Invents Act goes beyond this publication, but some of the important features and the respective timing of these features provided for in the new legislation are highlighted below.

I. FIRST-TO-FILE SYSTEM AND ITS EFFECTS

One of the most publicized changes made by the America Invents Act is the move from the current first-to-invent system to a first-inventor-to-file system, which is similar to the filing systems in most foreign jurisdictions.  Contrary to many foreign jurisdictions, however, the U.S. will maintain a one-year grace period, but only for public disclosures made by the inventor or by someone who obtained the subject matter from the inventor.  The provisions of the first-inventor-to-file will not take effect until 18 months after enactment, and will apply to patent applications and patents issued from applications filed on or after that date. 

As a result of the enactment of the first-inventor-to-file system, interference proceedings will eventually be replaced by derivation proceedings (although the current interference proceeding will remain available for certain legacy patents and applications).  Derivation proceedings can be initiated by an inventor who believes that a published application or patent covers an invention that has been derived from their own work.  A newly-formed Patent Trial and Appeal Board (which will replace the existing Board of Patent Appeals and Interferences) will determine if an inventor named in the earlier published application or patent derived the claimed invention from an inventor in a later-filed application.

The first-inventor-to-file system will also modify several of the prior art sections of Title 35.  Section 102, for example, is amended such that prior art will be measured against the application filing date instead of the date of invention.  Under current law, a prior public use or sale constitutes prior art only if it took place in the U.S.  However, under the first-inventor-to-file system, a prior public use or sale regardless of location will now be prior art.  In addition, the prior art status of a U.S. patent or patent application claiming foreign priority will now be determined from the foreign priority date of the document, rather than the U.S. filing date, as is the case under current law.

Section 103 is also amended such that obviousness determinations will now be analyzed as of the effective filing date of the application and not relative to the time the invention was made (i.e., Section 103 will conform with the new Section 102).

II. CHALLENGES RAISED BY THIRD PARTIES

Under the America Invents Act, third parties will have more opportunities to participate during the examination of a patent application and after the issuance of a patent.  These opportunities will take effect one year from the date of enactment and will apply to any patent application filed before, on, or after that date. 

During examination, new 35 U.S.C. §122 will allow a third party to submit relevant prior art along with an explanation of its relevance to a pending patent application. 

The America Invents Act also provides for two new post-issuance proceedings.  First, upon the date of enactment, the standard for granting a request for inter partes reexamination will change from the current standard, i.e., requiring only that a requestor set forth a substantial new question of patentability, to a stricter standard, i.e., requiring that the requestor show a reasonable likelihood of prevailing with respect to the invalidity of at least one claim.  Under the new legislation, the change in the standard for requesting an inter partes reexamination will not apply to any request for inter partes reexamination filed prior to the date of enactment, and is the first step in a transition to a revised inter partes reexamination process (“Inter Partes Review”) that goes into effect one year after the date of enactment.  The standard for granting a petition for ex parte reexamination, however, will still only require a showing of a substantial new question of patentability. 

The new legislation also provides for a Post-grant Review proceeding, which must be filed within nine months of a patent’s date of issuance.  The Post-grant Review proceeding may be based upon several grounds, including anticipation and obviousness.  Unlike the current inter partes reexamination process, however, the new Post-grant Review proceeding may also consider any failure to satisfy the enablement and written description requirements of 35 U.S.C. § 112 (note: changes to the best mode requirement are discussed below).  In this new proceeding, a petitioner will be required to show that it is “more likely than not” that at least one claim is unpatentable.  Post-grant Review proceedings will take effect one year after enactment and apply to patents filed 18 months after enactment.

In the case of both Post-grant Review and Inter Partes Review proceedings, the petitioner will be estopped from raising invalidity arguments in subsequent USPTO or litigation proceedings that were raised or reasonably could have been raised prior to the litigation.

III. LITIGATION-RELATED PROVISIONS

Under current law, a patent application must disclose, among other things, the best mode contemplated by the inventor of carrying out an invention.  Section 282 provides for the defense of patent invalidity if the applicant fails to meet the best mode standard.  While under the new legislation, the inventor must still comply with the best mode requirement, the America Invents Act amends Section 282 so that failure to disclose the best mode is no longer a basis for an invalidity or unenforceability defense in litigation.

The new legislation further aims to restrict false marking claims, whereby only the U.S. government will be permitted to sue for the $500-per-article fine (which previously was split between the government and a party bringing a false marking claim).  Those raising a false marking claim will only be able to recover damages in relation to the actual damages they suffered as a result of false marking.

The new law also will permit a patent owner to “virtually mark” their products by labeling the articles with the word “patent” or “pat.” and a publicly available internet address that associates the patented article with a patent number.  The new “virtual marking” provisions apply to any case that is pending on, or commenced on or after, the date of enactment.

Prior user rights will no longer be limited to business method patents, but are expanded to cover all types of patents.  This expansion of prior user rights will apply to any patent issued on or after the date of enactment.

Under the America Invents Act, failure by an accused infringer to obtain the advice of counsel with respect to any allegedly infringed patent, or the failure of the infringer to present such advice to the court or jury, may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement.

The new legislation also restricts the requirements for joinder of defendants in an infringement action.  Generally speaking, accused infringers making different products but which infringe the same patent(s) will no longer be appropriate co-defendants in a single case.  This provision will apply to any civil action commenced on or after the date of enactment.

IV. OTHER MISCELLANEOUS PROVISIONS

The America Invents Act allows the USPTO to set its own fees necessary for recovering the costs of doing business.  Within 10 days of enactment, a 15% increase will go into effect for all general statutory patent fees.

Also within 10 days of enactment, a fast track or prioritized examination will be available to patent applicants for a fee of $4,800 which will enable applicants to receive a final determination of patentability within one year of their application filing date.

Upon the date of enactment,  the new legislation establishes a new class of inventor entitled a “micro-entity” which is defined as an applicant (1) who qualifies as a small entity, (2) has not been named as an inventor on more than four previously filed U.S. patent applications, (3) has a gross income less than three times the median household income, and (4) has not assigned (or is not obligated to assign) any license or ownership interest in the application to an entity that had a gross income greater than three times the median household income.  The new legislation further establishes a “micro-entity” fee that allows for a 75% reduction of most USPTO fees.

In addition, upon the date of enactment, tax strategies and human organisms will effectively be rendered unpatentable.  These provisions will apply to both pending and subsequently filed applications, but not to previously issued patents.  Thus, future tax strategies are deemed to be within the prior art, except with a limited exception in some instances for tax software.

For more information, please contact any member of Taft's Intellectual Property Practice Group.