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Welcome To The New Patent Era

Client Advisory

October 24, 2011

On September 16, 2011, President Obama signed into law the Leahy-Smith America Invents Act (AIA). This 37-section act addresses patent office operation and requires studies on various patent related matters from the United States Patent and Trademark Office (USPTO), but it is noted for the changes it makes to various aspects of U.S. patent law. 

The most striking change to U.S. patent law is the shift from a First-to-Invent system to a First-to-File system. Unlike the rest of the world, the U.S.’s First-to-Invent system allowed a party who first conceived of an invention, but who was late in filing a patent application, the ability to prove priority through an interference proceeding in the patent office. The First-to-File system, in contrast, disregards conception and only gives deference to the party who first filed an application in the USPTO. This move to the First-to-File system will harmonize U.S. patent laws with foreign patent laws, but will only do so when the First-to-File system takes effect on March 16, 2013, 18 months after enactment. 

The provisions of the AIA do not uniformly go into effect in March or on any one particular date. Rather, the effective dates vary with some already being in effect as of the date of enactment. This advisory will focus on the more important sections of the AIA that change U.S. patent law as organized by effective dates.

Date of Enactment - September 16, 2011

As of the date of enactment provisions for venue, fees for small and micro entities, and markings are in full effect.

Venue

Claimants must now bring certain civil actions in the U.S. District Court for the Eastern District of Virginia rather than the U.S. District Court for the District of Columbia. Such actions include but are not limited to actions initiated due to dissatisfaction of decisions on patent rejections or interferences as decided by the Board of Patent Appeals and Interferences, or determinations of patent term made by the Director.

Fees for Small Entities and Micro Entities

The AIA continues to permit the payment of reduced patent fees by 50% for small entities but now permits the payment of even further reduced fees by a new class of applicants called micro entities.[1] Though provisions for micro entities are now in force, micro entities fees will not be available until the USPTO adjusts the fees. The patent office could take at least one year to eighteen months before they adjust the patent fees for micro entities. An applicant who qualifies as a micro entity will be able to pay patent fees that are reduced by 75%.
 
Tax Strategies Deemed Within the Prior Art
 
Any patent application pending or filed after September 16, 2011 that discloses an invention directed to avoiding, reducing or deferring tax liability cannot be patented. However, inventions that are used to prepare a tax filing, especially one that organizes data, may be considered for patent protection.
 
Best Mode Requirement
 
U.S. patent laws require an applicant to disclose the preferred approach in carrying out an invention. Such a disclosure is called the best mode. Before this month, an applicant’s failure to disclose the best mode provided reason to cancel or invalidate an issued patent.  Now under the AIA, patents can no longer be canceled or invalidated for omitting the best mode. The AIA does not, however, make best mode obsolete as patent examiners are still required to evaluate patent applications for compliance with best mode during patent prosecution.
 
Virtual Marking
 
Patentees may now mark their patented invention by fixing “patent” or “pat.” along with an internet address that identifies a patent number for the patented article.
 
False Marking
 

As discussed by the author last year, a plethora of false marking cases were filed as a result of the decision in Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009). Prior to the enactment of the AIA, the false marking statute permitted anyone to bring a false marking action on behalf of the U.S. government. Now only the U.S. government and those who have suffered a competitive injury due to the false marking may initiate an action for recovery of damages. 

10 Days After Enactment - September 26, 2011

As of September 26, 2011, the USPTO increased certain patent fees and provided a new avenue for obtaining special status for examination.

Fees for Patent Services

The USPTO now applys a 15% surcharge to certain patent fees such as but not limited to filing, maintenance and search fees.

Prioritized Examination

The first 10,000 applicants per fiscal year wishing to speed up examination may now pay to do so with respect to the prosecution of non-provisional utility or plant applications.  To be considered for this type of examination, the applicant must pay a prioritized examination fee of $4,800 ($2,400 for small entities) in addition to normally required application fees, publication fees, and fees for exceeding application size or claim limits. In order to qualify for prioritized examination, applicants must ensure their application does not have more than 4 independent claims, no more than 30 total claims and no multiple dependent claims. With this provision, the USPTO’s stated goal is to reach a final  disposition[2] within 12 months of granting prioritized status to applications.     

60 Days After Enactment – November 15, 2011

E-Filing Incentive

Applicants may file patent applications in the USPTO electronically or by paper. To encourage e-filings and thus discourage paper filings, the USPTO is permitted to charge an additional fee of $400 ($200 for small entities) [3] for those applicants who paper file a utility non-provisional patent application.  Our clients will not have to pay this fee as our firm only files electronically in the patent office.

One Year After Enactment - September 16, 2012

Starting September 16, 2012, the AIA will provide a number of new ways to review issued patents including Post Grant Review, Inter Partes Review, Transitional Post-Grant Review and Supplemental Examination.         

Post Grant Review

A party other than the patent owner may petition for a Post Grant Review of those patents or reissue patents that were filed under the First-to-File system and issued after March 16, 2013. Here a party petitioning for Post Grant Review is requesting the cancelation of at least one claim for validity reasons. A party must make this request within nine (9) months from patent grant or issuance of a reissue patent and must support their request using patents, printed publications, or other factual evidence. Patent owners may submit a preliminary response opposing Post Grant Review. If the petitioning party demonstrates that it is more likely than not that at least one challenged claim is unpatentable then the patent office will initiate the Post Grant Review. Note however, that Post Grant Reviews are unavailable to parties who initiate a civil action challenging the validity of a patent claim before petitioning for a Post Grant Review.

Inter Partes Review

Under Inter Partes Review, a party other than the patent owner may request the cancelation of at least one claim in a patent regardless of the patent issuance date. The petitioner may only file a request after nine (9) months from patent grant or reissue of patent or after the termination of any post grant review of the patent. The request may only raise novelty and obviousness issues supported by patents or printed publications. As with Post Grant Review, patent owners may also file a preliminary response opposing the Inter Partes Review. The patent office will initiate an Inter Partes Review proceeding if there is a reasonable likelihood that the petitioner would prevail on at least one challenged claim.  Inter Partes Review must be initiated before any other actions, as it is unavailable to petitioners who first initiate a civil action challenging the validity of a patent claim.

Supplemental Examination

A patent owner of a patent issued at any time may request the review of their patent claims in order to consider, reconsider, or correct information believed to be relevant to the patent. As with Post Grant Review, patents, printed publications and other information must be used to make the request for a Supplemental Examination. The patent office will grant a Supplemental Examination only if the petitioner can demonstrate a substantial new question of patentability.

Transitional Program for Covered Business Method Patents

For business method patents issued at any time, a Transitional Program permits a party to request the cancelation of at least one claim for validity reasons. The request must be supported using prior art as specified in the AIA including prior use by an alleged infringer. This post grant proceeding is only available for petitioners who have been sued for infringement of an issued business method patent or have been charged with infringement under the patent.

September 16, 2012 is also the date by which provisions for submission of prior art and changes to declarations submissions will take effect.

Preissuance Submissions by Third Parties

In recognition of the need to prosecute patents using the latest information in any field of art, the AIA encourages third parties to disclose to the patent examiner any patent, published patent application, or other printed publication that is relevant to a pending application.  The submission must be a concise written description made before the earlier of the issuance of the notice of allowance or after either 1) 6-months from publication or 2) the date of the first rejection.

Inventor’s Oath or Declaration

Starting September 16, 2012, those able to show proprietary interest in an invention will be able to file a patent application on the inventor’s behalf.  This provision will be useful for assignee’s desiring to preserve their rights when faced with uncooperative inventors/assignors.

18 Months After Enactment - March 16, 2013

First-to-File

As described above, after March 16, 2013, the patent office will only give priority to the first applicant to file an application in the patent office. Applicants will be encouraged to file early and fast.  Any improvements to inventions should be made in subsequent filings without delay.

Conditions for Patentability; Novelty and Non-obvious Subject Matter

To make the move to the First-to-File system, the U.S. will change laws on novelty, 35 U.S.C §102, and obviousness, 35 U.S.C. §103. The amended novelty law will no longer distinguish between disclosures made within and outside the U.S. Thus, a disclosure of an invention made anywhere in the world will defeat novelty. Nevertheless, a grace period will still be available under §102 if, one year or less before the application filing, the inventor disclosed the invention or the disclosure was made by another party after the invention was publicly disclosed by the inventor. Also, under the new § 103, obviousness will be found if the differences between the claimed invention and the prior art would have been obvious to one of skill in the art “before the effective filing date” rather than “at the time the invention was made” as previously defined under the statute.

Derivation Proceeding

Despite the move to the First-to-File system, inventors who first conceived of an invention will not lose patent rights even if a rogue applicant usurps the invention from the first inventor.  Under a derivation proceeding, a petitioner may show that the claims in an earlier filed application were derived from the invention of the petitioning party. A derivation proceeding must be initiated within 1- year from the publication of a claim of the earlier application.  The petitioning party must make the derivation petition under oath and must supply substantial evidence to prove derivation.

Defense to Infringement Based on Prior Commercial Use

A defense to patent infringement of any technology will be available if the invention was commercially used in the U.S. at least one year before either the effective filing date of the claimed invention or, as listed in the exceptions under the novelty statute, the date the claimed invention was disclosed to the public. The commercial use defense will also apply when use is by a non-profit entity and the public is the intended beneficiary of the use or when use is for safety or efficacy.  This defense is not available if a university or technology transfer organization owns the patent.

Patent Trial and Appeal Board

Starting September 16, 2012, the Patent Trial and Appeal Board (PTAB) will replace the Board of Patent Appeals and Interferences (BPAI).  The PTAB will be a three-member panel set up to review adverse patent examiner decisions, review appeals of reexaminations, conduct derivation proceedings and conduct Inter Partes Review and Post Grant Review proceedings.

Conclusion

The changes to U.S. patent laws may seem onerous to patent holders and applicants but these changes are designed to improve the U.S. patent system. For instance, the increase in patent fees will help the USPTO hire new examiners and attack the backlog of unexamined applications in the patent office. During prosecution, third party submissions will permit a party to provide patent examiners with relevant information on an invention and thus increase the likelihood that prosecution is being performed judiciously. Post grant proceedings, likewise, will ensure that issued patents were worthy of being granted. Finally, though the move to the First-to-File system will require inventors to file fast, the provisions for derivation will protect inventors from rogue parties while the grace period for inventor disclosure will protect inventors from their own acts for a short period of time.


Questions regarding this advisory should be addressed to Libby Babu Varghese (212-238-8727, varghese@clm.com or Keith D. Nowak (212-238-8610, nowak@clm.com).


 

Endnotes


[1] Generally, a micro entity is an applicant that 1) qualifies as a small entity, 2) has not been named on four previously filed patent applications (other than applications filed in another country, provisional application or PCT applications where basic national fees has not been paid), 3) did not have a gross income exceeding three times the median household income for the previous calendar year and 4) has not transferred or will not transfer ownership in the application to an entity with a gross income exceeding three times the median household income for the previous calendar year.
 
[2] A final disposition includes 1) mailing of a notice of allowance, 2) mailing of a final Office action, 3) filing of a notice of appeal, 4) declaration of an interference by the Board of Patent Appeals and Interferences (BPAI), 5) filing of a request for continued examination, or 6) abandonment of the application.
 
[3] The USPTO has not yet set the micro entity fee for paper filing.



Carter Ledyard & Milburn LLP uses Client Advisories to inform clients and other interested parties of noteworthy issues, decisions and legislation which may affect them or their businesses. A Client Advisory does not constitute legal advice or an opinion. This document was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. © 2017 Carter Ledyard & Milburn LLP.
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