Major Patent Reform is Enacted

On September 16, 2011, President Obama signed into law the most extensive reform of our patent system since 1952. As enacted, the “America Invents Act” significantly alters America’s patent system in terms of substantive patent law and the administrative proceedings of the Patent Office. This executive summary addresses several of the key changes.

• First Inventor to File The Act changes the way we determine which inventor is awarded a patent when multiple applications claim the same invention. U.S. law traditionally awarded the patent to the inventor that made the invention first. The Act changes that “first to invent” system to a “first inventor to file” system that awards the patent to the inventor who filed an application first, independent of the order of invention. The Act therefore eliminates complicated Patent Office interference proceedings traditionally used to identify the first inventor. It also institutes “derivation proceedings” to safeguard inventors against others that may misappropriate and file claims for the true inventors’ work. Because it awards the patent to the first filer, the “first inventor to file” system provides additional incentive to initiate patent applications early.
• Post-Grant Proceedings The Act establishes several forms of post-grant Patent Office proceedings.
  • Post Grant Review Post Grant Review can be requested within 9 months of a patent’s issuance to assert invalidity. It allows the requester to assert any ground of invalidity.
  • Inter Partes Review Inter Partes Review can be requested after the 9-month period. It allows the requester to assert invalidity based on prior patents and printed publications only.
  • Supplementary Examination Supplementary Examination of an issued patent can be requested by a patent owner. In this new procedure, the Patent Office will consider or correct information relevant to the patent if it raises a substantial new question of patentability. By submitting such information in a Supplementary Examination, the patent owner is protected from a later charge of inequitable conduct in connection with that information. Specifically, a patent will not be held unenforceable on the basis of conduct relating to the submitted information.

Post Grant Review and Inter Partes Review provide alternatives to challenging patent validity in costly patent litigation and in a forum where the challenger’s burden of proof is lower. They also provide an additional incentive to monitor patent activities of competitors and develop strategies for proactive risk management. For more details regarding these (as well as a few other) administrative review processes, please click here.

• False Marking The Act addresses the recent sharp rise in suits seeking statutory damages for falsely marking products with patents. Traditionally such suits could be brought by anyone. Under the Act, however, only the federal government can sue for the statutory penalty. But a person who has suffered a competitive injury as a result of false marking may file suit for compensatory damages. These changes apply to all false marking cases pending on the date of the Act’s enactment.
• Patent Office Funding The Act addresses the chronic under-funding of the Patent Office by giving it more leeway to set its own fees and by reserving the fees it receives for support of the Patent Office. Congress retains some control over the funds, however.
• Micro Entities The Act creates a special fee structure for applicants that qualify as a “micro entity.” Fees are reduced by 75% for this new category of applicants that qualify as a small entity and meet other criteria including the number of applications previously filed and limitations as to their gross income.

The Act reforms other aspects of our patent system’s law and procedures. For more details, the full text of the Act (H.R. 1249) is provided here.