The U.S. Senate voted today to pass the America Invents Act, a patent reform bill intended to encourage innovation, job creation and economic growth. Passed by the U.S. House of Representatives in June, the bill is expected to be signed into law by President Obama.

The America Invents Act ushers in significant changes to the U.S. patent system, including the following:

  • First Inventor-to-File. The patent reform bill overhauls U.S. patent laws to conform with the “first inventor-to-file” system used elsewhere in the world. This important change requires defining what will be considered prior art under the new laws, as well as identifying when the new laws take effect, and which set of laws (i.e., current laws versus new laws) will apply to pending patent applications. Read more.
  • Post-Issuance Proceedings and Submissions. The procedures available to patent owners to correct issued patents and to third parties for challenging issued patents at the U.S. Patent and Trademark Office (USPTO) are altered. These changes include a new supplemental examination procedure for patent owners seeking to have the USPTO consider, reconsider, or correct information believed to be relevant to an issued patent; a new post-grant review procedure for third parties wishing to challenge an issued patent on any ground; and revisions to existing reexamination procedures. Parties can also have more information added to a patent’s file history, and third parties may now submit information during the examination of a pending patent application. Read more.
  • False Marking. Legal standing in false marking cases are limited to persons who have suffered “competitive injury” as a result of a false patent marking. Further, virtual marking of a product as described below with matter relating to a patent that covered that product but has expired will not be a violation.
  • Virtual Marking. The patent marking process is simplified by allowing patent owners to update and revise a listing of applicable patents to an article without changing the patent marking designation on the article.
  • Advice of Counsel. The reform bill codifies principles related to willful infringement of patents that were set forth by the United States Court of Appeals for the Federal Circuit in In re Seagate, LLC, 497 F.3d 1360 (Fed. Cir. 2007). Specifically, the failure of an infringer to obtain the advice of counsel or present the advice of counsel if he or she has sought such advice may not be used to prove that the accused infringer willfully infringed a patent. Read more.
  • USPTO Funding. A reserve fund has been created that provides a sequestered account for USPTO revenue in excess of the appropriated funds that would be available exclusively for the USPTO. It is unclear whether this funding provision will change the status quo or otherwise end the practice known as “fee diversion.” Read more.
  • Fee Setting Authority. The director of the USPTO is authorized to set or adjust fees for processing activities, services, and materials related to patents and trademarks. Small entities retain a reduced fee (50 percent), and the newly created “micro entities” receive a 75 percent reduction in those fees.  Read more.
  • Royalties for Nonprofit Organizations. The amount of licensing royalties that nonprofit organizations (typically universities) may keep from their patented inventions is increased so that nonprofits can retain up to 85 percent of their licensing royalties under certain scenarios. Read more.
  • Other Changes. The new law also includes numerous other changes affecting many areas of patent law. Read more.

Although most of the changes in law prescribed by the patent reform bill will not become effective immediately, patent applicants should now consider what changes to their application filing strategies are needed to adjust to a first inventor-to-file system. Also, patent holders and challengers will soon have available to them new procedures for correcting and challenging issued patents and should begin considering how these new procedures can be used to their advantage. Related Practices Intellectual Property and Technology Related Attorneys Tate Tischner Shelley Jones Edwin Merkel Jeffrey Townes Wendell Harris, Ph.D. Michael Goldman