The Leahy-Smith America Invents Act was signed into law by President Barack Obama on September 16, 2011 following passage with overwhelming bipartisan support in Congress. The Act is the culmination of several years’ worth of failed attempts at patent reform. This article provides an overview of several key features of the Act, some of which have already taken effect and some of which will be phased in over the next eighteen months.
The Act changes the United States patent system from a first-to-invent system to a first-inventor-to-file system. Previously, the first person to conceive an invention was entitled to the patent for that invention, regardless of who filed the application first. Under the new law, the first inventor to file an application receives the patent, even if someone else invented it first. This provision goes into effect March 16, 2013.
The Act does away with interferences, as they will no longer be needed in light of the change from first-to-invent to first-inventor-to-file. Previously, if two inventors filed applications for the same invention, the United States Patent and Trademark Office (“USPTO”) would decide who was entitled to the patent in an interference proceeding. After March 16, 2013, the first inventor to file the application is always entitled to the patent, unless the earlier filer derived the claimed invention from the later filer without authorization. A determination that the later filer is entitled to a patent over the earlier filer is made in a derivation proceeding.
Declarations/Filing by Assignee
The Act eliminates the need for a separate declaration accompanying an application where the inventor is under an obligation to assign the application and includes the statements normally required in a declaration in the assignment document. The Act also provides for the person to whom the inventor assigned the invention to make an application for patent on behalf of and as an agent for the inventor. A patent granted from such an application will indicate the assignee rather than the inventor. This provision goes into effect September 16, 2012.
Prior Commercial Use
The Act broadens the defense to infringement based on prior commercial use. Previously, someone who practiced a business method at least one year prior to the filing of a patent application for that method was not liable for infringement of a patent resulting from that application. The Act allows this defense to be used for any process, machine, manufacture, or composition of matter, rather than just business methods. The definition of commercial use, for this purpose, includes premarketing regulatory review and nonprofit laboratory use, including at universities or hospitals. This provision applies to any patent issued on or after September 16, 2011.
Post-Grant Review and Supplemental Examination
The Act provides for post-grant review proceedings, whereby any person may claim that at least one claim of an issued patent is invalid. A post-grant review must by initiated within nine months after the grant of a patent or issuance of a reissue of a patent. After a decision on a post-grant review, the petitioner is barred from asserting in a civil action that a claim is invalid on any ground that was raised or could have been raised during the post-grant review. The provisions relating to post-grant review will go into effect September 16, 2012 and will apply to all patents, including those issued prior to that date.
The Act directs the USPTO to implement a transitional post-grant review proceeding for review of the validity of business method patents relating to financial products or services. The proceeding will be similar to post-grant review, and will go into effect September 16, 2012 and expire September 16, 2020.
The Act allows a patent owner to request a supplemental examination to consider, reconsider, or correct information in an issued patent. Within three months of such a request, the USPTO must issue a decision about whether the information presented raises a substantial new question of patentability. If so, the patent will undergo reexamination. After a supplemental examination, the patent cannot be held unenforceable on the basis of inequitable conduct during the prosecution of the patent relating to the information considered during the supplemental examination. This provision goes into effect September 16, 2012.
Preissuance Submissions by Third Parties
The Act allows for preissuance submissions by third parties. As of September 16, 2012, any third party may submit any patent, patent publication, or other printed publication for inclusion and consideration in any patent application. The submission must be made before the earlier of: (1) a notice of allowance is issued or (2) the later of: six months after the application is first published or the date of the first rejection of any claim by the examiner. The submission must include a concise description of the relevance of each submitted document and a fee.
The Act provides the USPTO with the authority to set its own fees. This provision took effect September 16, 2011. The Act also allows the USPTO to reduce its fees for micro entities. Previously, large entities were charged the normal fees and entities qualifying as small entities received a 50% discount on certain fees. Under the new law, entities qualifying as micro entities receive a 50% discount off small entity fees, which is 75% off normal fees. A micro entity is defined as an applicant that: (1) qualifies as a small entity; (2) has not been named as an inventor on more than four previously filed US applications; (3) did not have a gross income exceeding three times the median household income during the previous calendar year; and (4) has not assigned or licensed the inventor to an entity with a gross income exceeding three times the median household income for the previous calendar year. This provision went into effect September 16, 2011.
Additionally, the Act provides for a fee of $400 for every application not filed by electronic means. This provision will take effect November 15, 2011.
The Act imposes a 15% surcharge on all fees charged by the USPTO effective September 26, 2011 and lasting until the first time the USPTO sets a particular fee pursuant to its new fee setting authority.
The Act establishes a Patent and Trademark Fee Reserve Fund in the Treasury, wherein fees collected by the USPTO in excess of the amount appropriated to the Office for that year are collected. These fees may be used only for obligations and expenditures by the USPTO. This provision took effect October 1, 2011.
The Act provides for prioritized examination, whereby an applicant can elect to have his or her application examined more quickly for a fee of $4,800. Applications for which prioritized examination are elected cannot have more than 4 independent claims and 30 total claims, and the USPTO cannot grant prioritized examination to more than 10,000 applications per fiscal year. This provision went into effect September 26, 2011.
The Act provides for priority examination of products, processes, or technologies that are important to the national economy or national competitiveness without payment of the priority examination fee.
Tax Strategies Considered Prior Art
The Act prevents any strategy for reducing, avoiding, or deferring tax liability from being used to differentiate a claimed invention from the prior art. In other words, such tax strategies are considered prior art, regardless of whether they were known or unknown at the time the patent application was filed. This provision went into effect September 16, 2011, and applies to pending and future patent applications and patents issued on or after that date.
No Invalidity for Lack of Best Mode
The Act prevents issued patents from being held invalid or otherwise unenforceable for failing to disclose the best mode of the invention. This provision applies to proceedings commenced on or after September 16, 2011. The Act does not remove the best mode requirement from the requirements for patentability.
The Act modifies the marking requirement in several ways. First, the new law allows for virtual marking, whereby proper marking of a patented article includes not only fixing the word “patent” or abbreviation “pat.” together with the patent number on the article or its packaging, if necessary, but also fixing the word “patent” or abbreviation “pat.” together with an address of a posting on the Internet that associates the article with the number of the patent. The Act also limits who can bring a false marking action against a patent owner to the United States and persons who have suffered a competitive injury as a result of the false marking. Finally, the Act states that marking a product with an expired patent does not constitute false marking. These provisions went into effect September 16, 2011.
Federal Court Jurisdiction
The Act clarifies that federal courts have jurisdiction in patent and copyright cases, and that states do not have jurisdiction. The Act also clarifies that all patent appeals are heard by the Court of Appeals for the Federal Circuit. Additionally, the Act adds a new statute regarding the removal of patent cases to federal court. These provisions apply to any civil action commenced on or after September 16, 2011.
Multiple Defendants Only if Related
The Act allows for multiple defendants to be joined in a single patent action only if the action arises out of the same transaction, occurrence, or series of transactions or occurrences and there are questions of fact common to all defendants or counterclaim defendants. This is a change from the previous rule, which allowed multiple, unrelated defendants to be joined in the same action on the basis that they are accused of infringing the same patent, even if the alleged infringements were totally unrelated. This provision applies to any civil action commenced on or after September 16, 2011.
The Act repeals the option of statutory invention registration, effective March 16, 2013.
The Act specifies that failure of an infringer to obtain an infringement opinion cannot be used as proof of willful infringement.
The Act allows for the establishment of satellite offices throughout the United States. The first satellite office will be located in Detroit, Michigan.
The Act provides for studies by the USPTO regarding several issues, including the implementation of the Act, genetic testing, small business concerns, the diversity of applicants, and international patent protection for small businesses.
The Act directs the USPTO to work with and support pro bono programs for assisting independent inventors and small businesses.
The Act prohibits the issuance of a patent directed to or encompassing a human organism. This provision applies to any application for patent pending on or filed on or after September 16, 2011, but does not affect the validity of any patent issued prior to September 16, 2011.