In brief

  • The ‘America Invents Act’ (HR 1249), which contains the most significant US patent law reform as of the last 20 years, is expected to be signed into law by President Obama by 1 October 2011. 
  • The full commercial impact for Australian businesses with US interests won’t be completely understood until 18 months after enactment (probably about April 2013), although with the proposed ‘first to file’ system, changes to prior art rules and other changes, it seems that global patent filing strategy should be simpler.
  • More immediate changes include a 15%  surcharge on US Patent Office fees within 10 days of enactment. 
  • Further, certain applicants primarily employed by, or who assign their application to, an institution of higher education may qualify as a ‘micro entity’ with entitlement to as much as a 75% Patent Office fee reduction for certain fees.

Background

For the last six years, the US legislature has been deliberating over US patent law reform. Last week a significant milestone was reached with the passing of the ‘Leahy –Smith America Invents Act’ in the Senate. It is expected that President Obama will sign the Act into law by 1 October 2011, once it has undergone any reconciliation with the Congress.

The Act will address seven areas of law reform, and it is expected that the key areas of concern for Australian business will be in relation to (i) US Patent & Trade Mark Office (USPTO) fees and funding, (ii) Substantive patent law, and (iii) Post–grant USPTO proceedings. Other areas of marginally lesser relevance include (iv) USPTO practice & operations, and (v) Litigation.

Reforms relevant to Australian business

Some changes of apparent relevance to Australian businesses are briefly mentioned below:

USPTO fees and funding

  • A 15% surcharge on almost all fees, including patent renewal fees will become effective 10 days after enactment. Given this, it may be useful to consider early US patent filing, including early US National phase or Convention filing for those applications having a US filing due date this calendar year. 
  • A 75% reduction in most fees will apply to patent applicants that fall into the new category of ‘micro entities’. This category is likely to be available to certain applicants primarily employed by, or who assign their application to, an institution of higher education. 

Substantive patent law

  • A change from a first to invent system to the first inventor to file system. Most Australian businesses will be aware that this change would bring the US patent system into line with most other countries, including Australia. Therefore it is expected that this should generally simplify patent filing strategy for Australian business.
  • A first to file system will mean abolition of interference and prior art provisions relating to an invention previously made in the US by another inventor who had not abandoned, suppressed, or concealed it, and ‘Derivation proceedings’ will apply to entitlement disputes.
  • A grace period remains in respect of the applicant’s own ‘disclosures’ within 1 year before the ‘effective filing date’ (first priority date) of a U.S. application. This is extended to cases claiming foreign priorities and provisional applications.

Post–grant USPTO proceedings

  • Replacement of inter partes reexamination with three new proceedings (supplemental examination, post-grant review, and inter partes review) should expand the opportunities for Australian business to attack US patents before the USPTO, where currently, opportunities to do so are limited.

USPTO practice & operations

  • The current limited opportunities for Australian business to intervene in patent examination proceedings will be expanded. Specifically, third party submissions would be encouraged at any time before issuance, including patents and printed publication prior art, and statements by the patent owner before a US federal court, or the USPTO taking a position on the scope of any claim of a particular patent.
  • Assignee filing of applications (ie filing in the name of PCT applicants) would be permitted, provided that an inventor’s oath or declaration is provided before patent grant. This is another change that would bring US patent law into line with most other countries, thereby simplifying the administrative aspects of patent filing for Australian business.

Litigation

  • Failure to disclose best mode in a patent specification would not be a basis for invalidation of a patent, although a best mode requirement remains necessary for all applications. So the changes here are possibly less relevant for Australian businesses that file US patents and more relevant for those who are at risk of infringement of a US patent.
  • Failure to obtain the advice of counsel with respect to any allegedly infringed patent, or failure to present such advice, may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement of the patent. This could reduce the burden on Australian business, although it would remain unwise to undertake commercial activities in the US without advice on infringement from US counsel.

Special interest provisions

  • Bar to issuance of a patent with a claim directed to or encompassing a human organism. This exclusion from patent protection brings the US into alignment with many other countries, so no significant impact for Australian business here.
  • A pro bono program is to be implemented to assist financially under-resourced independent inventors and small businesses.

Timing

Significantly, apart from the 15% fee surcharge mentioned above, many of the changes in the Act, including the ‘first to file’ and related prior art provisions will not come into force until 18 months after enactment. This period is required for the USPTO to make the appropriate rule changes. Given this timing, there is now a unique opportunity for Australian businesses to explore the risks and opportunities that will arise for them under this legislation. We will continue to keep you updated with our analysis and commentary as the relevant rule making comes into effect.