America Invents!

Dr. Rajendra Prasad
25 September 2011

Introduction

On Friday 16 September 2011, President Barrack Obama ratified a bill that was passed earlier by the House of Representatives and the Senate that is now a law in America. In the signing ceremony that took place in the historical Thomas Jefferson High School for Science and Technology in Alexandria, Va., President called it a jump-start for the economy and a boon for jobs representing a major overhaul of the country's patent system since 1952.

The new law formally known as 'Leahy-Smith America Invents Act (HR 1492'¹ named after the senators, Patrick Leahy and Lamar Smith who authored the bill, contains numerous provisions that, although not significantly altering current patent law, provide positive steps towards creating a more progressive body of patent law. Among other things, America Invents Act will harmonize America's patent system in line with patent regimes of rest of the world, under whose pressures the amendments have ostensibly been brought forward. The new Act, however, also makes provisions to liquidate the mounting back-log of 700,000 patent applications that have not been opened yet. "Somewhere in that stack of applications could be the next technological breakthrough" quipped the President in his inaugural speech at the signing ceremony. The new legislation found broad support from industry and technology heavyweights - including Microsoft, Apple, Google, Facebook etc. whose representatives and the CEOs graced the signing of the bill.

Key Provisions

1. First inventor to file

By far the most sweeping change in the new Act is the transition from a "first to invent" system to a modified "first to file" system, which is set to take effect eighteen months after enactment. It seems that the United States is the last industrial country to adopt a 'first to file' system (Canada did so on October 1, 1989. According to the new system, the first inventor to submit an application for an invention to the patent office would have the right to claim that invention. Under the former 'first to invent' system there was an uncertain, expensive, and time consuming process (known as Interference Proceedings) to determine which competing application owned by different applicants was entitled to a patent. The 'first to file' system eliminates this process and replaces it with public notice of an inventor's priority filing date and other relevant details which can be easily verified.

In the modified 'first inventor to file' system, the critical inquiry now becomes 'when was the application filed' rather than 'when was the invention conceived?' Essentially, the new system is anticipated to result into a race among applicants to the Patent Office, since the filing date alone determines the actual winner. This move substantially harmonizes the United States patent system with the patent laws of the rest of the world.

2. Filing by other than inventor

By making departure from the earlier provision and the practice, the new law also provides that the filing of an application by a party other than the inventor who is able to demonstrate entitlement to ownership of an invention (e.g. by employment contract, assignment, or other form of transfer) is now possible as in other countries. With an acceptable proof, a person to whom the inventor has assigned or agreed to assign the invention may now file an application as the agent of the inventor, and the patent can be granted to the applicant and not constitutionally to the inventor only as before. This provision also brings the US law in conformity with those of other countries where the assignee files the application rather than the inventor.

3. Grace period vis-a-vis priority date

The new law provides a one-year grace period for an inventor's public disclosure prior to the first filing, so that an inventor's own disclosures in the grace period will not be prior art that will prevent a patent from issuing. Further, while prior disclosure or public use in the context of grace period was relevant to patentability, if the activity occurred within the US territory under the previous law, but the same is now on the global basis under the new law. A new term, "effective filing date," is introduced, meaning the date on which the inventor filed an application for the invention in the U.S. or elsewhere. The date of first disclosure - a date prior to the effective filing date - may determine both entitlement to apply for patents and applicability of prior art under the new law. The grace period under the new law and the one-year international priority period permitted under U.S. law or treaty are additive.

4. Best mode requirement

An inventor is required not only to describe the invention and to teach how to make and use it, but also to describe how to practice the invention in the best way; this is an essential requirement known as 'best mode requirement' in various patent laws. As in the existing US law, this requirement is unchanged in the new law but the 'best mode' violation or non-fulfillment of this requirement would not be the basis for invalidating the patent. Further, the lack of 'best mode' would neither be the basis for challenging a patent or a defense to patent infringement.

5. Micro-entities

A new category of inventors / applicants as 'micro entity' has been introduced to permit an even greater reduction in fees (i.e., 75% of applicable fees) than "small entities" presumably with a view to spur filings from individual inventors and small businesses for which the costs of procuring patent protection are particularly prohibitive. As defined, micro entities must meet additional requirements to those for small entity status viz., i) not being named as the inventor on more than four applications, ii) not having a gross income exceeding three times the reported median household income and iii) not having assigned or agreed to assign the invention to an entity having a gross income exceeding three times the reported median household income. Alternatively, inventors employed by and under agreement to assign inventive rights to institutions of higher education qualify as micro entities.

Some observers believe that this definition is quite complicated and may result into allegations that the status was improperly claimed; a similar provision in Canadian law is reported to have proved problematic and subsequently required legislative amendment.

6. Improving patent quality

A number of provisions have now been created in the new law directed at improving the patent quality and weeding out or getting rid of patents of questionable quality much more quickly at the prosecution stage through 'third party oppositions' and through 'expedited or supplemental examination' with the benefit of the better technical expertise of the USPTO (as opposed to non-specialist courts) at considerably less expense than through litigation.

Authorization for prioritized examination

Under the new law, USPTO can offer expedited examination for applicants who are able to pay a premium. Large entities, for example, can pay $4,800 and then expect to receive a first action from the USPTO Patent Examiner within 12 months of filing.

Supplemental examination

Further, in addition to existing examination procedures, there will be new opportunities for patent owners to have corrections made in their patents through supplemental examination if new information comes to light. A patent owner will continue also to have the same opportunities as before to seek re-examination or re-issue of a patent.

Challenging US patents at the USPTO

The new law has now introduced an expanded system for challenging US patents at the USPTO, including a post-grant opposition procedure that can be initiated within a nine-month period following grant, which is expected to reduce litigation and litigation-related expenses. The former somewhat problematic procedure of 'Inter Partes Re-examination' which involved re-examination where both the patent owner and the challenging third party would make written submissions on the basis of patents and other printed publications only is still available but after the expiry of the period for post-grant opposition. Both the procedures are with a time-bound outcome and at higher threshold, i.e. at least one challenged claim is more likely unpatentable on the basis of the evidence submitted.

7. Enhancement of USPTO fees

To tackle the unprecedented backlog of patent applications and to raise the quality of its operations by hiring and training examiners, USPTO has been making an unsuccessful plea to build its own internal reserve for this purpose out of the cash surplus generated by the fee charged by USPTO that ends up in Government exchequer. Towards meeting this objective, the new law allows USPTO to charge a 'temporary' 15% surcharge on all fee upfront that would become effective on 26 September, 2011.

8. Miscellaneous provisions

Creation of four satellite offices. The first USPTO regional office is to be in Detroit.

Establishment of a "Patent Ombudsman Program" for small business concerns.

Establishment of studies related to various patent issues.

Ban on applications for protection of certain tax-related strategies.

Ban on patenting of claims directed to or encompassing human organism..

Elimination of the requirement for an oath or declaration in support of a US patent application to be signed by the/each inventor; this provision is expected to remove difficulties arising due non-availability of inventors or simply being uncooperative.

Conclusion

It is evident that the reforms under the America Invents Act are aimed at for promoting greater efficiencies and opportunities which will enhance innovation and job creation in the US. Obviously, many of the reforms will simplify access to the US patent system for the applicants, particularly the foreign applicants.

This brief overview provided herein highlights keys changes to the US patent system brought about by the new Act, but it also includes many other important changes.

References

Leahy-Smith America Invents Act (HR 1492)