On September 16, 2011, President Obama signed the Leahy-Smith America Invents Act, resulting in the most pervasive changes to U.S. patent law since 1952. The new law impacts how patents will be obtained, challenged, defended and litigated. The United States Patent and Trademark Office (USPTO) will eventually issue conforming regulations for the new patent law. Thus, the full impact on patent prosecution remains to be seen. However, the impact on patent litigation is more apparent, and a courthouse rush by those wanting to file under the old patent law was reported before the President signed the Act into law. Some of the major changes the Act makes to U.S. patent law follow.

First Inventor to File is Now the Inventor

The Act changes the law to transform the United States from a first-to-invent to a first-tofile system. Starting March 16, 2013, the focus will no longer be on who was the first inventor, but rather which inventor has the earliest effective filing date. An “effective filing date” is the actual date of filing of the patent application or the filing date of the earliest patent application to which priority can be claimed by the patent application. Under the Act, all U.S. patent publications and U.S. patents having an effective filing date before the effective filing date of a patent application are prior art to the patent application. Other materials in the public domain prior to the effective filing date of a patent application are also considered prior art to the patent application.

However, there is an exception for prior art of the inventor who filed the patent application. That is, the inventor’s own materials, or materials from another person that obtained information directly or indirectly from the inventor, disclosed less than one year prior to the effective filing date, are not prior art to the inventor’s patent application. Thus, in addition to the effective filing date, a patent application can also have an inventor’s disclosure date when prior art from the inventor was disclosed earlier than the effective filing date. The new law will also implement derivation proceedings to replace the current system of interference proceedings. An applicant for a patent can initiate a derivation proceeding by petitioning that an inventor named in another earlier-filed patent application derived the claimed invention from an inventor of the applicant’s patent application.

Defense to a Process Patent Infringement Based on Prior Commercial Use

For process patents issued subsequent to September 16, 2011, the Act provides a defense to infringement claims based on prior use. This prior use defense is available for those who can show use of the process in the United States more than one year before the earlier of the effective filing date and the inventor’s disclosure date under the exception described above. Discouraging the use of prior use as a boilerplate defense, the Act provides that a defendant’s failure to demonstrate a reasonable basis for asserting such a defense along with a finding of infringement can result in the awarding of attorneys’ fees to the plaintiff (or patent owner).

Post-Grant Review at the USPTO

The Act requires the implementation of a post-grant review proceeding starting September 16, 2012. With the exception of business method patents, such a proceeding is only available for a patent based on an application filed on or after March 16, 2013. An entity that is not the owner of a patent can petition for a post-grant review of an issued patent within nine months following the grant date of the patent. The patent can be challenged on many different grounds, including but not limited to indefiniteness and lack of disclosure. A petition for post-grant review will be granted if the USPTO decides it is more likely than not that at least one of the challenged claims is unpatentable based on the unrebutted grounds of the petition or if the USPTO decides that an important or unsettled legal question important to the patent system has been raised by the petition.

The Act also specifies that a party cannot file a lawsuit against the patent and then file a petition for post-grant review. If a party files a petition for post-grant review and then later files a lawsuit, such as a declaratory judgment action, the lawsuit will be automatically stayed until the patent owner files a motion or if the same party files a motion to dismiss the lawsuit. Under the Act, the grounds of a petition for a post-grant review, or grounds that could reasonably have been raised, cannot be raised as grounds for an invalidity defense to the patent in an infringement litigation.

Inter Partes Review at the USPTO

The Act replaces inter partes reexamination with inter partes review effective September 16, 2012. An entity can petition for an inter partes review of an issued patent after the later of nine months after the grant date of the patent or the conclusion of a post-grant review. A petition for inter partes review, unlike post-grant review, can only challenge a patent on the grounds of novelty and obviousness. A defendant to an infringement action has one year from the date of receipt of the complaint to file a petition for inter partes review. A petition for inter partes review will be granted if the USPTO decides that there is a reasonable likelihood that the petitioner would prevail with respect to at least one claim challenged.

New Fee-setting Authority of USPTO

The new law enables the USPTO to set fees to “recover costs.” The USPTO raised fees by 15% across the board on September 26, 2011 using its new fee-setting authority.

Marking

Effective immediately, patent owners can mark their products with the word “patent” or the abbreviation “pat.”, along with an Internet address, accessible to the public without charge, that associates the patented product with the patent number. Also, the Act now limits false marking claims. Except for the U.S. government, only a party having suffered a competitive injury because of a false marking is entitled to file a lawsuit based on false marking. Thus, most of the current false marking suits, which were filed as Qui Tam (“whistleblower”) actions, should be dismissed as a result of the new law.

Joinder of Parties in Patent Infringement Litigation

For all new patent infringement lawsuits filed after September 16, 2011, the Act specifies joinder of parties from separate action only if (1) any right to relief asserted against the parties is asserted jointly or severally, or arises from the same transaction relating to the making or selling of the accused product; and (2) questions of fact common to all defendants will arise in the action. This part of the new law is intended to preclude the naming of numerous unrelated entities in a patent infringement litigation.

Conclusion

The Act makes a number of other changes to U.S. patent law. Contact Roetzel’s IP team for more detailed information on how obtaining, challenging and litigating patents will change.