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    Edwards Wildman Client Advisory - New First-Inventor-To-File Patent System Takes Effect in the United States on March 16, 2013

    Publications

    On February 14, 2013, the USPTO issued Final Rules and Examination Guidelines to assist in implementation of the First-Inventor-To-File changes of the AIA. These Rules and Guidelines are consistent with the changes discussed in this Advisory.

    On March 16, 2013, the new first-inventor-to-file patent system under the America Invents Act (“AIA”) takes effect in the United States. Some have suggested that the change from a first-to-invent to a first-inventor-to-file system will cause a mad rush to file new applications in the USPTO before March 16th. This may be true, particularly for many individual inventors and smaller US-based companies, but for many larger clients the transition to a first-inventor-to-file system will be less dramatic. Most of the world, including US companies with overseas markets, has been living under a first-to-file system for many years, and the change in the US to a first-inventor-to-file system is largely a matter of bringing the US into harmony with the rest of the world. In short, the AIA already has changed many things in the US patent system, and March 16, 2013, while a significant date in US patent law history, will pass quietly for many.

    Significant provisions of the AIA already in effect include:

    1. allowing third parties to cite art to the USPTO pre-issuance;
    2. permitting assignees to file applications;
    3. establishing micro-entities;
    4. permitting post-issuance challenges to, and modifications of, a patent through Inter Partes Review, Covered Business Method review, and Supplemental Examination;
    5. altering venue and joinder rules for many cases; and
    6. eliminating the failure to comply with the best mode requirement as a defense for new patent infringement suits.

    What Patent Applications Will be Subject to the First-Inventor-to-File System?

    The first-inventor-to-file system will substantially expand the scope of available prior art on March 16th to include prior public use or sale anywhere in the world and US patents and applications as of their international priority date. However, these changes should not apply to any patent application claiming priority to an application filed before March 16, 2013 so long as each and every claim presented at any time is fully supported by the pre-March 16th application(s). AIA § 3(n)(1). Therefore, many post-March 16th continuation, continuation-in-part, divisional, and other applications claiming PCT or foreign priority to an application filed before March 16, 2013 will be examined under the old first-to-invent system.

    Potential Impact on Amendment and Interference Practice

    As discussed above, Section 3(n)(1) of the AIA states that if any claim in a post-March 16th application is not supported by its pre-March 16th priority document, then the first-to-invent system is not applicable. For example, adding or amending even one claim may change an application from a first-to-invent to a first-inventor-to-file application if there is insufficient support in the priority document for the new or amended claim. Canceling such a claim does not change this result.

    Section 3(n)(2) of the AIA uses a similar, but opposite, mechanism to determine whether an application is subject to interference proceedings. It appears that if a patent application is filed March 16th or later claiming priority to an earlier first-to-invent application, an interference may be initiated, even though the application may at some point include a claim that triggers the first-inventor-to-file system per the rule above.

    Impact of First-Inventor-to-File System

    So what will the first-inventor-to-file system do? Subject to the limited grace period exceptions, the critical date for determining who has a right to a patent will be the effective date of application filing, not the earlier date of invention. An inventor or assignee will no longer be allowed to rely on work carried out in secret to establish an earlier date of invention or to swear behind prior art to obtain a patent. This should not shock anyone; it has been the rule for most of the rest of the world for many years.

    The AIA will also retain a variant on the traditional one-year grace period under the new first-inventor-to-file system. For example, an applicant will still be entitled to file an application within one year after publishing the invention and gain the benefit of the earlier publication date as against intervening prior art, including another applicant having an earlier application filing date for the same invention

    The new system also provides other limitations on a first-to-file applicant’s enforceable patent rights, including the new prior user defense and the new derivation defense designed to protect against “theft” of an idea from the true inventor.

    Finally, under post-AIA Section 102(a)(2)’s newly expanded definition of prior art, prior art will consist of patents, printed publications, US or PCT patent applications designating the US, and public use or sale of the invention anywhere in the world prior to the effective filing date of the patent application.

    One-Year Grace Period

    Post-AIA Section 102(b) retains a part of the one-year grace period that existed under the old first-to-invent system. As noted, if a public disclosure is made by the inventor (or someone who obtained the information from the inventor) and the inventor files a patent application within one year, this disclosure is not prior art against that inventor. However, such a disclosure is prior art against anyone else (even someone who files first). Thus, a second-to-file applicant may still obtain a patent as long as the applicant publicly disclosed the invention before the first-to-file applicant’s effective filing date and filed the application within one year of the public disclosure. This is different from the grace period available in most countries that have one, where the person who first discloses the invention may obtain a patent only if that person is also the first-to-file applicant.

    Notably, the one-year grace period is both broader and narrower than the pre-AIA. The grace period is broader in that it is no longer necessary to file a US or PCT application designating the US in order to invoke the grace period. Instead, applicants can avail themselves of the grace period by filing in any Paris Convention contracting state within one year of the disclosure. The grace period is narrower in that the benefit of the grace period is circumscribed by the content of the shielding disclosure instead of the broad scope of inventive activities.

    In view of the importance of the shielding disclosure in establishing and defining the scope of the grace period, applicants may benefit from maintaining thorough records of when and how inventions are publicly disclosed. Such records will be critical if it is necessary to invoke the grace period under new Section 102(b). Inventors should be made aware of the importance of good record keeping including the date of a disclosure, the audience, the nature of the disclosure (e.g., written, oral), the content of the disclosure, and copies of any materials. Organizations may wish to implement systems for centralized collection and archiving of such information.

    Prior User Defense

    The AIA includes a new prior user defense that allows continued use of an otherwise infringing process, or product used in a manufacturing or other commercial process, which might have been banned under the old patent statute. The new prior user defense will only apply to an internal commercial use, an actual arm’s length sale, or an actual arm’s length commercial transfer of a useful end result of such commercial use that occurred at least one year before the earlier of (i) the effective filing date of the patent application or (ii) the date of a qualified prior public disclosure. This is similar to the on-sale or public use defense under the old first-to-invent system, but it does not invalidate the patent; it is only a personal defense that conveys a right to use. The new prior user defense will be limited to those who had used the invention commercially, and it will not apply if the prior use was abandoned. The new prior user defense will be further limited in scope to the location and breadth of the actual prior use, it will not be effective against patents held by institutions of higher learning, and it will not entitle the prior user to any license rights under the patent

    Derivation Proceedings

    Another substantive change taking effect on March 16th will be the establishment of the new derivation proceeding. AIA § 3(i). The new derivation proceeding applies only to patents issued under the first-inventor-to-file system. A derivation action (whether in the USPTO or the courts) will allow a second-to-file applicant to prove that the first-to-file applicant derived the invention from the second-to-file applicant. This is not a priority contest (as interference procedures were), but rather a limited proceeding requiring proof that the invention claimed by the second filer was actually derived without authority from the first filer. Given the rarity of such proceedings raised under the old Section 102(f), we anticipate only occasional invocation of the new derivation defense.

    Post Grant Review

    Although the Post Grant Review procedure has technically been in effect since September 16, 2012, it only applies to patents issued under the first-inventor-to-file system taking effect on March 16, 2013. The Post Grant Review procedure will allow a third party to challenge the validity of a patent in an administrative trial proceeding based on any invalidity ground other than inequitable conduct and failure to disclose best mode. A petition requesting Post Grant Review must be filed within nine months after patent issuance, and we anticipate that the first Post Grant Review petitions will be filed no earlier than 2014 or 2015.

    We do expect Inter Partes Review proceedings to heat up now that the nine month “dead zone” prohibition has been fixed under the recently passed AIA technical corrections legislation. [Jan. 14, 2013 H.R. 6621]

    Conclusion

    The below table sets out the effective dates of all of the sections of the AIA. While March 16, 2013 will see a substantive change to a first-inventor-to-file system, the old first-to-invent system will remain in effect for all applications with an earlier effective filing date. We will be living with a dual patent system for many years, and the first patents to issue from the first-inventor-to-file system are not anticipated until the end of 2013 or early 2014. While some believe there will be a rush to the USPTO before March 16th to get patents filed under the first-to-invent system, the fact that many technology companies already live under an absolute first-to-file system in other parts of the world and that continuations and divisional applications can still claim priority to an earlier first-to-invent application may keep the numbers down.

    Chart One: America Invents Act Sections and Effective Dates

    ACT SECTION

    ACT TITLE

    EFFECTIVE DATE

    NOTES

    3

    First inventor to file

    March 16, 2013

    Includes establishment of the new derivation proceeding

    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

    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

    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

    There are multiple changes in fee structures which have different effective dates. For example, a $400 fee for not filing electronically is effective November 15, 2011. Please check with your attorney for fee structure details.

    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

    Chart Two: America Invents Act Effective Dates and Sections

     EFFECTIVE DATE  

    ACT SECTION         

    ACT TITLE

    NOTES

    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

    There are multiple changes in fee structures which have different effective dates. For example, a $400 fee for not filing electronically
    is effective November 15, 2011. Please check with your attorney for fee structure details.

    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

    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

    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

    Includes establishment of the new derivation proceeding

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