On September 8, 2011, the Senate passed H.R. 1249, better known as the “Leahy-Smith America Invents Act,” which significantly amends the patent laws of the United States.  The bill is expected to be signed into law by the President. The following is a brief summary of the most significant changes made in the law.  Some of these changes take effect immediately while others take effect in 12 or 18 months.  The effective date of these changes is shown where appropriate. 

First to File

Considered the most significant change, the United States is moving from a first-to-invent to a first-to-file system.  Applicants will no longer be able to rely upon an earlier date of conception when prior art has an earlier date than the effective filing date of the patent application if that prior art is not their own disclosure.  This is expected to have its biggest impact on small companies and academic institutions that may have waited longer before filing new applications.  Under the new system, an inventor who waits to file an application may risk losing his or her patent rights to an inventor who invented later but filed first. 

Effective Date: 18 months after the date of enactment and applicable to any application with an effective filing date on or after that date.

Changes to Definitions of Prior Art

The new law also modifies what constitutes anticipatory prior art.  Under the new law, a person shall be entitled to a patent unless the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.  The change to include what is “otherwise available to the public” allegedly expands the type of prior art that can be used to prevent a patent from issuing or that can be used to invalidate a patent in a civil action.  Time will ultimately tell whether this change has such an effect. 

Grace Period

Because of the change to first-to-file, what has been known as the “Grace Period” will be substantially altered.  Under the new law, an applicant will only be able to “swear behind” a disclosure when the disclosure is made one year or less before the effective filing date of a claimed invention and the disclosure was made by the inventor themselves or the disclosure is made by another who obtained the subject matter disclosed directly or indirectly from the inventor.  “Indirectly from the inventor” is not defined by the law and future cases will help define the boundaries of the grace period. In contrast, before passage of the new law, one could “swear behind” a disclosure regardless of who authored the disclosure. 

The law still contains provisions where the disclosure of the claimed invention in a patent or patent application made less than a year before the applicant’s application is not prior art if the disclosure in a patent application is owned by the same entity or subject to an obligation of assignment to the same person.  Essentially, the grace period now only applies to the inventor’s own work.

Interferences v. Derivation Proceedings

Under the new law, interference practice will no longer be a viable option because priority for an invention will be based solely upon the effective filing date of the application rather than the date of conception.  Foreseeing instances where an invention may be derived by one party from another, the new law puts forward relief for an inventor who believes that his or her invention has been misappropriated by a third-party.  Under 35 U.S.C. § 291 and/or 35 U.S.C. § 135, an applicant or patentee may have relief by civil action against another patent owner if the claimed invention was derived from the inventor seeking relief.  If the contest is between two applications, the proceeding is before the Patent Trial and Appeal Board, formerly known as the Board of Patent Appeals and Interferences. 

Effective Date:  Derivation proceedings will begin 18 months after enactment and are applicable to any application with an effective filing date on or after that date.  Please note there are deadlines for filing the derivation proceeding based upon publication of the other application or issuance of the patent.

Filing on Behalf of an Employee by Assignee

Under the new law, a company can file an application on behalf of an employee where the inventor is under an obligation to assign the invention to the company and the inventor has refused to sign the oath or declaration that is filed with a patent application.  This change should streamline the process of submitting applications where a company has to deal with an uncooperative inventor.

Effective Date:  One year after the date of enactment.

Prior User Defense

One of the more controversial changes to the law expands the defense to infringement that is based upon prior use of the claimed invention.  The prior use must be more than one year before the effective filing date of the patent.  Before the amendments, the prior user defense was targeted to “business methods.”  Under the new changes, the prior user defense also applies to premarketing regulatory review of certain drugs and devices and for nonprofit laboratory (e.g. academic or hospital lab) use, but the nonprofit laboratory must be for a noncommercial use.  The prior user defense cannot be asserted if the invention was derived from the inventor alleging infringement. 

Effective Date:  This defense applies to any patent issued on or after the date of enactment of the law.

Inter partes Review and Post-Grant Review

Under the new law, third parties will now be able to request a Post-Grant Review (i.e., an opposition) against an issued patent.  Additionally, the law has modified inter partes reexaminations, which are referred to as “Inter partes review” in the new law.  No inter partes review can be granted until the later of nine months after a patent issues or after a post-grant review has terminated.

Inter partes Review (Inter partes Reexamination)

The basis for an inter partes review must seek invalidity solely upon grounds under 35 U.S.C. § 102 (novelty) and 35 U.S.C. § 103 (obviousness) and the grounds must be based only on printed publications or patents.  Upon submission to the USPTO, the USPTO will only start an inter partes review where there is a “reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged.”  This standard is a modification from the previous standard which was whether the petition raised a substantial new question of patentability.  The change in the standard will likely lead to fewer inter partes reviews being instituted than under the previous standard.  Additionally, the determination by the director whether to institute an inter partes review is final and nonappealable.  The law also puts constraints on inter partes reviews when there is a concurrent civil action in district court.  For example, an inter partes review may not be instituted if, before the date on which the petition for such a review is filed, the petitioner or real party in interest filed a civil action challenging the validity of a claim of the patent.  This does not, however, include a counterclaim challenging the validity of the same claim.  The changes to the law will limit the tool of reexamination for the purposes of delaying an infringement suit in district court.

Effective Date:  One year after enactment and applicable to all patents issued before, on or after enactment.

Post-Grant Review (Oppositions)

Under the new law, the United States will join Europe as another jurisdiction where a third party can file a petition for a post-grant review of an issued patent.  The deadline to file a post-grant review is nine months after a patent issues.  The standard for the USPTO instituting a post-grant review is that the unrebutted information presented in the petition demonstrates that it is more likely than not that at least one of the claims challenged is unpatentable.  The USPTO also may institute a post-grant review if the petition “raises a novel or unsettled legal question that is important to other patents or patent applications.”  Similarly to inter partes reviews, the determination of whether to institute a post-grant review is final and nonappealable.  A post-grant review cannot be instituted if the petitioner has already filed a civil action challenging the validity of the patent.

Similar to oppositions before the European Patent Office, during a post-grant review, the patentee is allowed to file one motion to amend the patent by canceling any challenged patent claim or for each challenged claim, propose a reasonable number of substitute claims, so long as the amendment does not enlarge the scope of the claims of the patent or introduce new matter.  Subsequent motions may be entered upon joint request between the petitioner and the patent owner or for good cause.

Effective Date:  One year after enactment and applicable to some business method patents and then to all patents filed under the first-to-file provisions (i.e. patents with an effective filing date 18 months after enactment of the law).

Estoppel Effect of Inter partes Review and Post-Grant Review

The new law still has serious estoppel issues that will likely cause many parties to think twice before petitioning for inter partes reviews and/or post-grant reviews.  For both inter partes reviews and post-grant reviews, the law states that the petitioner cannot assert in a civil action “that the claim is invalid on any ground that the petitioner raised or reasonably could have raised” during that inter partes or post-grant review.  Accordingly, the risks and benefits of petitioning for an inter partes or post-grant review must be strongly considered before proceeding down either of these paths.

Third-Party Submissions to Improve Patent Quality

Before passage of this law, the USPTO created pilot programs where the public can submit information to the patent office to aid the examiners.  The new law more or less codifies these pilot programs.  Significantly, these submissions become part of the official file and, therefore, inventors and companies will likely have to respond to such submissions so that any third-party allegations are not left unrebutted.

For an Issued Patent

Any person, identified or anonymous, at any time may cite to the USPTO in writing prior art consisting of patents or printed publications which that person believes to have a bearing on the patentability of any claim of a particular patent; or statements of the patent owner filed in a proceeding before a federal court or the USPTO in which the patent owner took a position on the scope of any claim of a particular patent.  If the person citing prior art or written statements explains in writing the pertinence and manner of applying the prior art or written statements to at least one claim of the patent, the citation of the prior art or written statements and the explanation thereof shall become a part of the official file of the patent. 

Effective Date:  Effective one year after the enactment of the law and shall apply to any patent application filed before, on or after that effective date.

For Patent Applications

Any third party may submit for consideration and inclusion in the record of a patent application a patent, published patent application, or other printed publication of potential relevance to the examination of the application, if such submission is made in writing before the earlier of (a) the date a notice of allowance; or (b) the later of  (i) six months after the date on which the application for patent is first published or (ii) the date of the first rejection of any claim by the examiner during the examination of the application for patent.  Any submission must set forth a concise description of the asserted relevance of each submitted document.

Effective Date:  One year after the enactment of the law, this will apply to any patent application filed before, on or after that effective date.

Best Mode Requirement

The patent law also changes the grounds for invalidating a patent, by amending 35 U.S.C. § 282 to recite “that the failure to disclose the best mode shall not be a basis on which any claim of a patent may be canceled or held invalid or otherwise unenforceable.”  35 U.S.C. § 112 still requires a patentee to disclose the best mode so it is unclear what penalty would be imposed if the best mode is not disclosed.

Effective Date:  Immediately

False Marking

The new law significantly curtails the ability of private parties to bring false marking suits.  The amendments to the law limit standing in false marking cases to the United States or a person who has suffered a competitive injury as a result of a violation.  Additionally, marking a product with an expired patent will no longer be a violation of the statute. 

Many of the current false marking cases are based upon products marked with expired patents or the cases are brought by entities who likely have not suffered a competitive injury.  The proliferation of false marking cases will be severely curtailed due to these limits and many, if not all, of the pending false marking cases will be quickly dismissed.

Effective Date:  Immediately

In addition to these changes there are other changes made by the law.  The laws includes provisions that:

  • change the venue for appeals from actions taken by the Office
  • grant USPTO fee setting authority, including an imminent 15 percent increase in certain fees
  • clarify the time period for submitting an application for patent term extension
  • declare tax avoidance patents anticipated or obvious, and, therefore, invalid as a matter of law
  • create prioritized examination
  • institute a ban on patenting human organisms
  • revise ex parte reexamination proceedings, and more. 

The USPTO will be promulgating many rules to effectuate these changes.