BIG Patent Law Reform

Get ready. The most sweeping patent law reform in decades is about to become law, courtesy of the Leahy-Amith America Invents Act (“AIA”). The bill is currently being sent to President Obama’s desk for signature, and he has indicated that he will sign it.

Commentators are all over the map on where the chips will fall. Some say that the reform will create thousands of new jobs. Others insist that it will harm small business. Reasoning for the reform is found throughout senator Leahy’s website here. What is certain is that only those who adapt will be able to navigate the new legal landscape.

Here are some of the biggest changes:

Move to a “first to file” system. Under the new law, an inventor may create an invention first, but if someone else beats him to filing a patent application for it, he may lose his right to patent it. Thus, “first to file” obtains the rights. Significantly, there is an exception resulting in a one-year grace period to file for a patent if the inventor first makes certain disclosures of the invention. Unfortunately, there is some ambiguity as to what may constitute a sufficient disclosure.

Given this new and added risk of technology poaching by others, it appears that companies have two main options, in order of preference, when evaluating their research and development: (a) file an early provisional patent application; or (b) first, make early, clear, and well documented public disclosures of the invention, second, calendar the one-year deadline for filing, and third, reevaluate for filing at a later date (in advance of the deadline, of course). It appears that a company can also use disclosures strategically for either offensive or defensive purposes. Importantly, this move to a “first to file” system kicks in just eighteen (18) months after the law is enacted.

Wider availability of the “prior commercial use defense” to patent infringement. Perhaps protecting some of those who lose the race to the patent office, the new law allows a person accused of infringing a patent a defense if he made commercial use of the patented technology at least one year before the patent owner’s application filing date or earlier public disclosure by the patent owner (whichever is earlier).

Change of post-grant USPTO patent review. Currently, there are various mechanisms to dispute the validity of a granted patent. One of these is called inter partes reexamination. Per the AIA, this will be replaced by something called “inter partes review.” Higher standards will be required to be met in order to investigate and invalidate a patent through this new procedure. Review will take place before a newly established USPTO body, the patent trial and appeal board. The AIA also introduces new mechanisms to dispute the validity of patents right after they issue.

Creation of new fee categories. The AIA provides significant USPTO fee reductions (75%!) for “micro-entities” (including universities). Micro-entities must have fewer than 500 employees and fewer than four (4) previously filed patent applications, among other requirements. The AIA also allows a company to pay a fee ($2,400.00 for small companies, $4,800.00 for large) for expedited examination of a patent application.

These are just a handful of the sweeping changes; I’m sure more details and discussion will emerge. In the meantime, a USPTO summary on a recent version may be found here. Don’t get left behind—successful companies will formulate their intellectual property strategies in light of this huge reform.