Published on Friday, 16 September 2011 09:06
On September 8, 2011, the United States Senate approved the Leahy-Smith America Invents Act (AIA). President Obama has signed the AIA into law on September 16, 2011. The USPTO has announced that it will need some time to implement the far reaching rule changes introduced by the enactment of the AIA legislation.
First Inventor to File
The significant changes to the U.S. patent system which will now be enacted include - among others - a conversion to a first-to-file patent system as compared to the present first-to-invent principle of establishing a right to an invention in the United States. Importantly, however, the AIA legislation also includes an exception to the first-to-file principle in the form of a grace period allowing an inventor - or others, who have obtained information from the inventor - to make disclosures regarding the invention in advance of filing a patent application, provided that the application is filed within one year after the first disclosure. Consequently, this exemption from the general principle of being first-to-file a patent application is likely to create what could easily amount to a hybrid between the existing first-to-invent system and a new first-to-file system. Already now, the AIA legislation has been criticized by some parties for not making it clear which actions may constitute a “disclosure” which is able to preserve a later right to patent the disclosed invention.
Prior Commercial Use Defense to Infringement
Furthermore, the legislation will provide broader means for alleged infringers of patent rights to raise the defense - in a patent infringement case - that a patent is invalid because the patented invention was in commercial use prior to the filing of a patent application. This form of argument has been available since 1999 to alleged infringers of business method patents - provided that certain conditions were met. For patents issued on or after the date of enactment of the AIA legislation, the prior use defense can be applied more broadly, again subject to certain exceptions. Accordingly, a prior use defense may be applied in the future to patent infringement claims covering subject matter “consisting of a process, or consisting of a machine, manufacture, or composition of matter used in a manufacturing or other commercial process.”
Inter Partes Review Procedure
While the AIA legislation leaves the existing ex parte reexamination procedure in place, the inter partes reexamination procedure will be changed no later than one year after the enactment of the AIA legislation to a “inter partes review” procedure – which is to be adjudicated by a newly re-named Patent Trial and Appeal Board within the USPTO. An important rule change taking effect upon the enactment of the AIA legislation is a change of the threshold for instituting an inter partes reexamination. The new legislation introduces a threshold which requires “that there is a reasonable likelihood that the requester would prevail with respect to at least one of the claims challenged in the request.”
Irrespective of the fact that the AIA legislation leaves in place the existing ex parte reexamination procedure, the Federal Circuit will serve in the future as the only appeal route from ex parte reexamination decisions.
The AIA legislation also introduces a new procedure allowing third parties to provide to the USPTO information which is believed by the third party to be relevant for assessing the patentability of the claims of a pending patent application - e.g. a patent application prosecuted by a competor.
Post-Grant Review Proceedings
The AIA legislation also introduces an enhanced post-grant review procedure to be conducted at the USPTO and through which a petitioner, who is not the patentee, can request a cancellation - on the ground of invalidity - of one or more claims of a patent having been granted or reissued up to nine months prior to the filing of a petition for cancellation. The USPTO can authorize a post-grant review if the information presented to it by the petitioner – provided that the information “if not rebutted, would demonstrate that it is more likely than not that at least one of the claims challenged in the petition is unpatentable.” Under the AIA legislation, this threshold can be satisfied not only by using invalidity arguments based on settled law, but also by a petition that raises “a novel or unsettled legal question that is important to other patents or patent applications.” Some commentators have noted that use of this kind of language may amount to an invitation for third parties to address “novel or unsettled” legal questions through the USPTO, an issue which raises a number of issues relating to the role which the Courts of Law and the PTO, respectively, will play in resolving such “novel or unsettled” legal questions.
Best Mode and Invalidity
The AIA legislation does not alter the requirement that a patent application must “set forth the best mode contemplated by the inventor of carrying out” the invention. However, third parties filing suit under the provisions of the new legislation may no longer rely - in a defense to infringement - on the argument that a patent does not disclose the best mode of exercising the claimed invention. Accordingly, the AIA legislation eliminates from the grounds for asserting invalidity the failure to make a disclosure of the “best mode” for exercising an invention.
Other Provisions
The AIA legislation also includes changes to the false marking statute. This change will apply to pending cases pending from the date of enactment. Also, patentees may in the future use virtual marking (e.g. through a website).
As a consequence of the new AIA legislation, all USPTO fees will increase by 15% - effective 10 days after the enactment of the AIA. A prioritized “Track I” examination will be available in the future at the cost of $4,800.
The legislation also includes a change that will apply in certain instances to the method of calculating the due date for a patent term extension application based on FDA approval.
In addition to the above-cited changes to the existing legislation, several aspects of the AIA legislation is not going change existing patent law, but may such aspects will never-the-less have far reaching consequences. For example, an AIA mandated study by the Government Accountability Office on the economic impact of patent litigation by non-practicing entities, and will almost certainly influence future patent legislation. Also, the hurdles faced by small businesses in the United States when protecting their patents outside the United States will also receive attention through a PTO study mandated by the AIA legislation.
In summary, the newly adopted AIA legislation brings significant changes to the way in which patents and patent applications in the United States are filed, prosecuted and challenged. We are advising our US based Clients to carefully review their IP strategies in view of the provisions of the newly adopted AIA legislation. We assist our US associates in advising our US based Clients on how best to gain a better position for maximizing the value of their IP rights.