On September 16, 2011, President Obama signed the Leahy-Smith America Invents Act (the Act) into law. The Act provides the most substantial change to the patent laws of the United States since the Patent Act of 1952. Most significantly, it transforms the US patent system from a “first-toinvent” to a “first-to-file” regime. In addition, the Act provides several new review processes by which the validity of issued patents may be challenged. The Act also expands the prior commercial use defense, tightens existing restrictions on joining several defendants in the same lawsuit and virtually eliminates false marking suits.
Establishment of a First-To-File Regime
Under the new regime, a patent generally will be granted to the first person to file a patent application (instead of the first person to invent the subject matter). The new system, which will apply to patents with priority claims after March 2013, brings the United States into closer alignment with the patent laws in effect throughout the rest of the world. However, the Act does not create a pure first-to-file system because there are at least a few exceptions to the general rule. First, if an inventor discloses an invention in the specification of a patent or published patent application, that disclosure serves to establish the inventor’s entitlement to priority. No one else, even someone who independently invents the same subject matter, will ever be entitled to a patent on the invention. Second, if an inventor discloses an invention publicly, but not in a patent or patent application, that disclosure serves to establish the inventor’s entitlement to priority, but only if the inventor files for a patent within one year of making the disclosure. And also, if the named inventor on a patent has derived the invention from an earlier inventor, the earlier inventor may initiate derivation proceedings within a year of issue of the earlier-filed patent. Derivation proceedings take the place of the interferences that were available under the old law.
Review Proceedings in the Patent Office for Issued Patents
In addition to the derivation proceedings discussed above, the new law also establishes other review procedures that may be initiated after patents are issued. For a patent with an effective filing date of September 16, 2012 or later, anyone may challenge the validity of the patent (on any grounds) by petitioning for “postgrant review” within nine months of issuance. To successfully initiate a post-grant review, the petition must either (i) present a prima facie case that at least one claim in the patent is unpatentable or (ii) raise a novel or unsettled legal question that is important to other patents or patent applications. If the Patent Office grants the petition and initiates a post-grant review, unpatentability need only be demonstrated by a preponderance of the evidence. Although the post-grant review process will likely be much cheaper and faster than litigation, a drawback to the petitioner is being precluded in future actions from raising any of the grounds raised in the post-grant review – or even grounds that “reasonably could have been raised.”
POST-GRANT REVIEW FOR BUSINESS METHOD PATENTS
Beginning in September 2012, the Act also creates a related, but not identical, post-grant procedure for review of “business method patents.” In one respect, the rules for this procedure are more restrictive than those associated with regular post-grant review: Only someone who has been sued for or “charged with” infringement may petition for post-grant review of a business method patent. But in other respects, the rules are less stringent than those applying to non-business method post-grant review. For example, there is no time limit within which the petition must be filed, and any patent, regardless of when filed or issued, may be challenged. And unlike the regular post-grant review process, estoppel only applies to issues actually raised and only applies in future Patent Office and International Trade Commission proceedings (not in civil actions). Note that a business method patent is narrowly defined for purposes of post-grant review as a patent for a method or corresponding apparatus for data processing or other operations used in financial products or services.
INTER PARTES REVIEW
The new regime replaces inter partes reexamination with a new inter partes review process (beginning in September 2012 and applying to any patent, regardless of when filed or issued). Once this provision takes effect, a petition for inter partes review may be filed any time beginning nine months after the challenged patent issues or upon completion of any pending post-grant review (whichever is later). To succeed in initiating an inter partes review, the petitioner must show a reasonable likelihood that it will prevail on at least one claim. If the Patent Office grants the petition, unpatentability need only be shown by a preponderance of the evidence. Note, however, that only patents and printed publications are available as prior art in inter partes review. And as with post-grant review, the petitioner must keep in mind that it is precluded from raising in future proceedings any grounds raised or any grounds that “reasonably could have been raised” in the review.
Another review proceeding established by the Act is supplemental examination, which will be available as of September 2012 and will apply to any patent, regardless of when filed or issued. In a supplemental examination, a patentee may request examination on any issue of patentability. This process may avoid subsequent inequitable conduct allegations if filed before any attempt is made to enforce the patent and before any accusation of inequitable conduct is made in a lawsuit. At the conclusion of the supplemental examination, the Patent Office may order reexamination if it determines that the information presented by the patentee presents a substantial new question of patentability.
Expansion of the Prior Commercial Use Defense
The Act expands the prior commercial use defense that previously was available only for method claims. The new defense applies to any type of claim, as long as the accused infringer commercially used the subject matter at least a year before the earlier of (i) the effective filing date of the patent or (ii) the date on which the inventor established a claim to priority through public disclosure. The defense is personal and may only be raised by the person who performed the acts in question (or by an entity that controls, is controlled by or is under common control with that person). The defense may be assigned, but only to a person or entity who acquires (for reasons other than avoiding liability for infringement) the entire business to which the accusation of infringement relates. It is important to keep in mind that if the court finds this defense has been raised without a reasonable basis, the case automatically becomes “exceptional,” and accordingly, attorneys’ fees may be awarded to the plaintiff.
Strict Rules for Joinder of Multiple Defendants in a Single Case
The Act also creates a substantial procedural change that could cause difficulties for plaintiffs attempting to sue unrelated entities in a single proceeding: Effective immediately for cases filed after September 16, 2011, joinder of multiple defendants in the same lawsuit will no longer be permitted unless the infringement allegations are based on the same product or process. Simply being accused of infringing the same patent is not a sufficient basis for joinder of multiple defendants in the same case. This new rule may result in multiple cases alleging infringement of the same patents being filed in the same jurisdiction. Such cases could then be consolidated for discovery and claim construction, but not for trial. But in many instances, due to venue considerations, a plaintiff may not be able to simply break what previously would have been a single multi-defendant case into multiple cases.
Other changes under the Act include the following:
- Effective immediately for cases filed after September 16, 2011, failure to disclose the best mode of practicing the invention is no longer a reason to find a patent invalid or unenforceable (although disclosure of the best mode is still technically required).
- The range of persons who may bring false marking suits has been narrowed; the US government can still sue for false marking, as can a competitor who can prove actual injury (effective immediately, even for pending cases).
- Virtual marking is permissible by marking items with the word “patent” or “pat.” followed by a URL address that associates the items with particular patent numbers (effective immediately, even for pending cases).
- Filing of a patent application by a person other than the inventor is permissible if (i) that person has sufficient proprietary interest in the matter or (ii) if the inventor is obligated to assign the invention to that person (applies to any patent application filed on or after September 16, 2012).