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    Client Advisory - Obama Signs U.S. Patent Reform into Law

    Publications

    The United States Senate recently approved House Resolution 1249, known as the America Invents Act, which was subsequently signed into law by President Barack Obama today. This Act provides many significant changes to U.S. patent law including transition to a first-inventor-to-file system and the institution of post-grant review allowing a patent to be challenged on any grounds related to patentability within nine months of patent grant. Most of the Act's provisions will take effect one year from its signing (September 16, 2012), but there are some exceptions. Importantly, the first-inventor-to-file provisions will apply only to patent applications with an "effective filing date" that is 18 months from the date that the Act becomes law (March 16, 2013). Other provisions, such as the elimination of the best-mode requirement challenge to patent validity, will take effect immediately. In addition, fee changes such as a 15% surcharge on certain patent fees, will take effect 10 days after enactment (October 1, 2011). The effective date for each act section is summarized below in Charts 1 and 2.

    A summary of the notable sections of the Act is as follows:

    First Inventor to File - Transitions the United States Patent Office (USPTO) from a first-to-invent system to a first-inventor-to-file system for determining priority of invention similar to first-to-file systems prevalent in the rest of the world.

    • First inventor to file is entitled to patent.
    • Prior art is established as of the filing date of the patent application – date of conception of the invention is no longer relevant to prior art. Public use or sale of the invention in a foreign country is now prior art. 
    • Provides a one-year grace period for inventor(s) to file an application even after certain disclosures of the claimed invention. Disclosure by the inventor(s) during the grace period prevents any subsequent third party disclosure from being considered prior art.

    Post-Grant Review Proceedings – Provides new, and modifies existing, post patent grant review proceedings.

    • Establishes a new post-grant review before a Patent Trial and Appeal Board to review validity of issued patents issued on applications filed under the first-inventor-to-file system. A petition to institute post-grant review must be filed within 9 months of grant but it can be based on any patentability issue. The threshold showing is "more likely than not" that at least one claim is unpatentable. 
      • A third party petitioner may challenge any claim of a patent on any ground of invalidity, not just prior art.
      • Petitioner cannot later bring another proceeding in the USPTO or the Courts based on any ground that was raised, or reasonably could have been raised, in the post-grant review. 
    • Establishes an inter partes review which replaces existing "optional inter partes reexamination" before the Patent Trial and Appeal Board to review the validity of any claim of a patent. The threshold showing is "reasonable likelihood" that the petitioner will prevail based on published prior art. 
      • A third party petitioner may challenge any claim of a patent only on the grounds of obviousness and/or anticipation based upon prior art consisting of patents or printed publications. 
      • "Inter partes review" petition may not be filed until after the later of either nine (9) months after issuance of the patent OR if a "post-grant review" is instituted, the date of the termination of such "post grant review."
    • Establishes "Transitional Program For Covered Business Method Patents" which provides review of certain covered business-method patents and will operate similarly to the new post-grant review process. Importantly, however, review under the transitional program will not be limited to the nine-month window after patent issuance and can be used against any business method patent, whenever issued. Defines "covered business method patent" as "a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions."
    • Establishes "Supplemental Examination Process" which permits a patent owner to request the USPTO to consider, reconsider and correct information believed to be relevant to a patent. The USPTO must order re-examination if a substantial new question of patentability is raised by at least one item of information in the request.

    Defense to Infringement Based on Prior Commercial Use - Expands the defense to an allegation of infringement based on prior commercial use from being limited to business method patents to any subject matter consisting of a process, machine, manufacture or composition of matter used in a manufacturing or other commercial process if (1) the person commercially used the subject matter in the United States, either in connection with an internal commercial use or an actual arm's length sale or other arm's length commercial transfer of a useful end result of such commercial use and (2) the commercial use occurred at least one year before the earlier of either the effective filing date of the claimed invention or the date on which the claimed invention was disclosed to the public in a manner that qualified as an exception from prior art. Patents owned by institutes of higher education are exempt from this section.

    Preissuance Submissions by Third Parties - Establishes procedures for third parties to submit for consideration and inclusion in the record of a patent application, any reference such as a patent, published patent application, or other printed publication during examination of the application, including a statement of the relevance of the reference.

    • Current practice limits time period to two (2) months following publication of application. 
    • New practice extends time period to the earlier of: the date a notice of allowance is given, OR the later of six (6) months after publication OR the date of the first rejection.

    Fees - Reduces certain fees for qualified small entities and a new class of entities, called "micro entities," including the fee for prioritized examination of utility and plant applications. 

    • Creates a new class of entities, called "micro entities." A micro entity is an applicant that qualifies as a small entity, has not been named as an inventor on more than four previously filed patent applications, does not have a gross income exceeding a certain limit and has not transferred ownership interest in the application to another entity exceeding the income limit. Institutes of higher education are included in the definition of "micro entities," but this definition is subject to further regulations to be prescribed.
    • A 15% surcharge is added to all USPTO fees.

    Patent Marking - Permits virtual markings (i.e., markings that direct the public to a freely accessible website where a patented article is associated with a patent number) to provide public notice that an article is patented. 

    • Restricts the availability of false-marking damages to the federal government and those persons who have suffered a competitive injury as a result of false patent marking. 
    • Exempts from false-marking liability any complaints that are based on a patent that covered the product but has expired.

    Other notable provisions include:

    • Best Mode Requirement - Eliminates the best-mode-requirement challenge to the validity of a patent. 
    • Advice of Counsel - Bars use of an accused infringer's "failure to obtain advice of counsel" to prove willful infringement. 
    • Joinder of Parties – Bars joining unrelated parties in a single action for patent infringement unless there are common facts and the parties were involved together in the same acts that caused the alleged infringement. The fact that separate parties are accused of infringing the same patent is not a basis for joinder.
    • Limitation on Issuance of Patents - Prohibits issuing a patent on a claim "directed to or encompassing a human organism." 
    • Inventor's Oath or Declaration - Allows the assignee of an invention (from the inventor) to file a patent application.

    In summary, by switching to a first-inventor-to-file system and instituting a procedure for post-grant review in which an issued patent can be challenged on any basis related to patentability within nine months of issuance, along with the other provisions, U.S. patent law has undergone the most significant overhaul since 1952. Although a few of the changes take effect immediately, most will be effective in one year, or 18 months for the first-inventor-to-file system.

    Chart One: America Invents Act Sections and Effective Dates

    ACT SECTION       

     ACT TITLE

    EFFECTIVE DATE  

     3

     First inventor to file

    March 16, 2013 

     4

     Inventor’s oath or declaration

    September 16, 2012 

     5

     Defense to infringement based on prior commercial use

    September 16, 2011

     6 

     Post-grant review proceedings

    September 16, 2012* 

     7

     Patent Trial and Appeal Board

    September 16, 2012

     8

     Preissuance submissions by third parties

    September 16, 2012

     9 

     Venue

    September 16, 2011 

     10 

     Fee setting authority 

    September 16, 2011

     11

     Fees for patent services 

    September 16, 2011** 

     12

     Supplemental examination  

    September 16, 2012

     13

     Funding Agreements  

    September 16, 2011 

     14

     Tax strategies deemed within the prior art  

    September 16, 2011

     15

     Best mode requirement  

    September 16, 2011 

     16  

     Marking 

    September 16, 2011 

     17

     Advice of counsel  

    September 16, 2012 

     18

     Transitional program for covered business method patents 

    September 16, 2012  

     19

     Jurisdiction and procedural matters 

    September 16, 2011  

     20 

     Technical amendments   

    September 16, 2012 

     21

     Travel expenses and payment of administrative judges 

    September 16, 2012

     22

     Patent and Trademark Office funding  

    October 1, 2011  

     23  

     Satellite offices

    September 16, 2012 

     24

     Designation of Detroit satellite offices 

    September 16, 2012  

     25

     Priority examination for important technologies 

    September 16, 2012  

     26

     Study of implementation 

    September 16, 2012  

     27

     Study of genetic testing   

    September 16, 2012

     28

     Patent Ombudsman Program for small business concerns  

    September 16, 2012  

     29

     Establishment of methods for studying the diversity of Applicants  

    September 16, 2012          

     30

     Sense of Congress 

    September 16, 2012

     31 

     USPTO study of international patent protections for small businesses

    September 16, 2012

     32  

     Pro bono program 

    September 16, 2011 

     33

     Limitation of issuance of patents

    September 16, 2011 

     34

     Study of patent litigation

    September 16, 2012  

     35

     Effective Date 

    September 16, 2012  

     36

     Budgetary effects 

    September 16, 2012

     37 

     Calculation of 60-day period for application of patent term extension            

    September 16, 2012

    * The portion of Section 6 which applies to “any appeal of a reexamination before the Board of Patent and Appeals and Interferences or the Patent Trial and Appeal Board that is pending on, or brought on or after, the date of the enactment of this Act” is effective September 16, 2011.

    ** There are multiple changes in fee structures which have different effective dates. For example, a $400 fee for not filing electronically is effective November 16, 2011. Please check with your attorney for fee structure details.

    Chart Two: America Invents Act Effective Dates and Sections

     EFFECTIVE DATE  

     ACT SECTION         

    ACT TITLE

     September 16, 2011

     5 

     Defense to infringement based on prior commercial use

     September 16, 2011

     9

     Venue

     September 16, 2011

     10

     Fee setting authority

     September 16, 2011** 

     11

     Fees for patent services

     September 16, 2011

     13

     Funding Agreements

     September 16, 2011

     14

     Tax strategies deemed within the prior art

     September 16, 2011 

     15

     Best mode requirement

     September 16, 2011

     16

     Marking

     September 16, 2011

     19

     Jurisdiction and procedural matters

     September 16, 2011 

     32

     Pro bono program

     September 16, 2011

     33

     Limitation of issuance of patents

     October 1, 2011

     22

     Patent and Trademark Office funding

     September 16, 2012

     4

     Inventor’s oath or declaration

     September 16, 2012*                  

     6

     Post-grant review proceedings

     September 16, 2012

     7

     Patent Trial and Appeal Board

     September 16, 2012

     8

     Preissuance submissions by third parties

     September 16, 2012 

     12

     Supplemental examination

     September 16, 2012

     17

     Advice of counsel

     September 16, 2012

     18

     Transitional program for covered business method patents

     September 16, 2012

     20

     Technical amendments

     September 16, 2012  

     21

     Travel expenses and payment of administrative judges

     September 16, 2012

     23

     Satellite offices

     September 16, 2012

     24

     Designation of Detroit satellite offices

     September 16, 2012

     25

     Priority examination for important technologies

     September 16, 2012 

     26

     Study of implementation

     September 16, 2012

     27

     Study of genetic testing 

     September 16, 2012

     28 

     Patent Ombudsman Program for small business concerns

     September 16, 2012

     29

     Establishment of methods for studying the diversity of Applicants

     September 16, 2012 

     30

     Sense of Congress

     September 16, 2012

     31

     USPTO study of international patent protections for small businesses

     September 16, 2012

     34

     Study of patent litigation

     September 16, 2012

     35

     Effective Date

     September 16, 2012 

     36

     Budgetary effects

     September 16, 2012

     37

     Calculation of 60-day period for application of patent term extension

     March 16, 2013

     3

     First inventor to file

    *The portion of Section 6 which applies to “any appeal of a reexamination before the Board of Patent and Appeals and Interferences or the Patent Trial and Appeal Board that is pending on, or brought on or after, the date of the enactment of this Act” is effective September 16, 2011.

    ** There are multiple changes in fee structures which have different effective dates. For example, a $400 fee for not filing electronically is effective November 16, 2011. Please check with your attorney for fee structure details.

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