Report On Newly Enacted America Invents Act (AIA)

Introduction

Many, if not most of you are probably aware of the newly enacted America Invents Act (AIA).  The AIA is major patent legislation that includes significant changes to American patent law.  It was signed into law on September 16, 2011.  This report provides a summary of the most important provisions that are included in the AIA.  It also provides suggestions and the potential impact on patent practice in the United States.

The most significant change is from first to invent to first to file.  This provision becomes effective on all patent applications filed after March 15, 2013.  Because of the ambiguities inherent an any new legislation and in particular with the AIA, it is advisable if possible to file patent applications before March 15, 2013, the effective date of the first to file provision.  Just as with any new legislation, there are areas of the AIA that are ambiguous and untested.  Many important areas of the AIA will need to be clarified and tested by the Federal Courts and ultimately by the Court of Appeals for the Federal Circuit (CAFC).  Moreover, it may become more difficult to obtain a US patent under the AIA.  This is because the scope of available prior art is expanded and the one year grace period is narrowed.

You can see the actual AIA in PDF format or learn more about the AIA implementation at the USPTO website.[1] The USPTO has now written rules for most of the new provisions. Here is a comprehensive timeline for when the provisions of the AIA go into effect.[2]

First-To-File Replaces First-To-Invent System

The most well known and possibly most controversial provision of the AIA is the replacement of the first to invent with the first to file (“FTF”) system.  Under the FTF system, if two individuals invent the same thing, the first to file a regular or provisional patent application will be entitled to the patent and the other will get nothing, even if he or she invented it first and can prove it. While this harmonizes US patent law with the rest of the world, it will create a race to the USPTO and will likely benefit large companies who can afford to file a lot of provisional or regular patent applications. As a result of this change, interferences (proceedings in the USPTO to determine who was first to invent) will be abolished.

When the FTF provisions take effect, if two applicants apply for respective patents on the same invention, the first applicant’s patent application can be used to reject the later applicant’s claims, even if the later applicant can prove they invented it first. The law does include an exception for applications filed by a company.  If a company files an application, it cannot be rejected on any earlier application filed by the company so long as the earlier application was not published as of the filing date of the current application.

The AIA eliminates Rule 131 affidavits or declarations, which patent applicants used to “swear behind” a cited patent with an effective date earlier than the applicant’s filing date.

The AIA creates “derivation proceedings” to determine if one person “derived” or copied the invention from another.   This is similar to the previous interference proceeding under the first to invent system.

The one-year grace period has been eliminated so that any publication, public use, or offer of sale of an invention before an application’s actual filing date will serve as a bar to the application.  An exception to the bar exists if the actual inventor-applicant created the publication and it was made up to one year before the filing date, it will not bar the application.  Nevertheless,  it is still inadvisable for an inventor to publish before filing since they will lose their foreign filing rights and another person may see the publication and file their own application on it before the true inventor files, thus requiring an expensive and risky derivation proceeding.

It is still important for inventors to document the steps taken during the development of their invention(s).  Dates of conception and signed and dated documents evidencing witnessing and understanding of the invention by a trusted friend or family member should be prepared. This evidence can be helpful should a derivation proceeding be necessary.

Although we recommend filing a Non-provisional patent application, often Provisional Patent Applications(PPA) can be filed sooner to preserve a filing date.  However, the PPA must support fully the requirements of how to make and use the invention and the best mode of making the invention as required by the Patent Statute 35 USC Section 112.

Expanded Definition of Prior Art

The AIA expands the scope of prior art that can be used to reject the claims of an application or invalidate a patent in new section 102(a).  In addition to making applications of another inventor prior art as of their filing date, the AIA also adds the following categories of prior art:

  1. the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention; or
  2. the claimed invention was described in a patent issued  under section 151, or in an application for patent published or deemed published under section 122(b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention.

The catch-all phrase “otherwise available to the public” seems to include Internet materials, but case law will likely be necessary to determine of whether such information is indexed and accessible and therefore available.

Also, the geographic scope limitations on prior art of the previous statute have been removed in the AIA. This opens up vast expanses internationally of prior art for searching for enforcement and defense of infringement in litigation.

Exceptions to Prior Art

‘(A) the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or

‘‘(B) the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.

 The Narrowed Grace Period

A grace period has been retained in the AIA.  However the only way for an inventor to obtain a grace period against third parties is to disclose the invention publicly.  Under Section 102(b)(1)(B), the AIA protects inventors from their own disclosures that occur less than one year before their filing date.  But to obtain protection against third parties, the inventor must publicly disclose his or her invention less than one year before the inventor’s filing date and before any third party disclosure(s).  The disclosure by the inventor however, destroys the requisite absolute novelty requirement to file in any non-US country.  Therefore, again the safest approach is to file a solid Provisional Patent Application or if a Non-provisional Patent Application.

Unpatentable Subject Matter

Tax Avoidance Strategies:  Under the AIA any strategy for reducing, avoiding or deferring tax liability, shall be insufficient to differentiate claims from prior art.

Human Organisms: The AIA also states that no patent may issue on any human organism.

Third Party Submission of Prior Art During Prosecution of Patent Application

Any member of the public may submit prior art (patents or other printed publications) for the patent examiner to consider if the submission is made in writing Any 3rd party can submit in the record of a published patent application prior art if the submission is made in writing before the earlier of -

  1. Notice of Allowance or;

The later of:

  1. 6 months after publication; or
  2. the date of first rejection

Note that if expedited prosecution is elected, prosecution may be completed prior to the third party prior art triggering deadlines.  Prioritization of examination, may be requested by applicant, for examination of “products, processes, or technologies that are important to the national economy or national competitiveness”.

Inter-Parties Review Of Patents

The existing ex parte reexamination procedure is left intact but the inter parties reexamination procedure has been renamed inter-parties review. The standard for review is now a higher standard and is limited to patents and other publications, and must be initiated after nine months after grant or after termination of post-grant review proceedings.

Supplemental Examination

The AIA has established a new procedure, called Supplemental Examination, by which a patent owner may request reexamination of the patent in order to have the USPTO consider, reconsider, or correct any information believed to be relevant to the patent. In addition to prior art, the information submitted can include an allegation of inequitable conduct, which the patent holder may correct. The USPTO Director has 3 months to conduct a supplemental examination and conclude examination by issuing a certificate indicating whether the information presented raises a substantial new question of patentability.

Transitional Provision For Business Method Patents

In addition to the above Post grant review procedure, the AIA provides a transitional eight-year transitional period whereby anyone can have the USPTO review the validity of any business method patent based on prior art. This provision does not apply to technological inventions.  Only a person who is sued or charged with infringement of a covered business method patent may petition for a covered business method review of the patent. A covered business method review may be requested except during the period in which a petition for post-grant review could be filed, e.g., 9 months after the issuance of a patent that is subject to the first inventor-to-file provisions.  The transitional review program is available for non-first-to-file patents, even within the first none months of the grant of such patents.  A covered business method review is statutorily required to be complete within one year of institution, except that the time may be extended up to six months for good cause.

Post-Grant Review Of Patents

A new post-grant review (PGR) procedure allows anyone to challenge a patent on any invalidity ground for nine months after the patent issues.  This is similar to opposition proceedings in other countries.   The standard is high.  The challenge must initially show that it is likely that at least one claim of the patent is unpatentable or a novel and unsettled legal question is involved.

It can be filed by anyone who is not the owner of the patent.  The petition must be filed not later than 9 months after the grant of patent.  The petition shall include a request to  cancel as unpatentable 1 or more claims on any ground that could be raised under paragraphs 2 or 3 of §282(b) relating to invalidity of the patent or any claim. This includes novelty, obviousness, or indefiniteness.  §282, paragraph (3) is amended to remove best mode as an invalidity defense, even though it appears to still be required under §112, ¶ 1.

The new post-grant review procedure is much broader in scope than reexaminations.

Litigation

No Failure To Disclose Best Mode as a Defense to Infringement

Best mode remains a requirement for patentability under 35 USC § 112 but it is no longer a requirement for priority claims under sections 119(e)(1) and 120. The legislative history makes clear that Congress intended the best mode to be  a requirement, so the question remains open what remedy will be available if  alleged infringer discovers the asserted patent does not include the best mode.

Multiple Defendants

Under the AIA, a patent holder may sue multiple defendants in one suit only if the defendants have committed “related acts of infringement.”

Court Venue Change: D.C. to Virginia

Heretofore suits against the USPTO to compel it to grant a patent after it has refused to do so had to be brought in the US District (Federal) Court in D.C. The AIA changes the venue for suits against the USPTO from the US Federal District Court in DC to the US Federal District Court for the Eastern District of Virginia, located near the USPTO.

False and Virtual Patent Number Marking

Only parties with standing to sue for false marking are the US Government and a party who has suffered a competitive injury.  The Qui Tam lawsuits are eliminated and instead, only the government can seek a per article fine for false marking.  A competitor can seek compensatory damages.  Marking a product with the number of an expired patent is no longer a violation of the patent marking statute.

Virtual marking

Virtual marking moves the manner of marking into the digital age.  Constructive notice of patent can be made by marking “patented” on the article, together with an address of a posting on the Internet that associates the patented article with the number of the patent.

Advice Of Counsel

A failure to seek the advice of an attorney may no longer be used to prove that an accused infringer did so willfully or that a defendant intended to induce infringement.

New USPTO Fees And Funding

On January 18, 2013, the USPTO revised their fee schedule (link to current Fee Schedule)[3].

Prioritized Examination:  An option is now available to obtain special prioritized status after the patent application is filed.  The prioritized examination fee for a patent application is $4800 (Large Entity) or $2400 (Small Entity).

Paper Filing Surcharge

The AIA provides a strong incentive to file online via the EFS Web.  Applications that are filed in paper are now charged a $200.00 surcharge ($400 for large entities).

Micro-Entity Fee Reduction

Micro-entities are entitled to a 75% reduction on most fees. A micro-entity is defined as an independent inventor (or university employee obligated to assign the invention to the university) who:

  1. Qualifies as a small entity;
  2. Has not been named as an inventor on more than 4 previously filed patent applications;
  3. Did not, in the calendar year preceding the calendar year in which the applicable fee is paid, have a gross income exceeding 3 times the median household income; and
  4. Has not assigned, granted, or conveyed (and is not under obligation to do so) a license or other ownership interest in the application concerned to an entity that, in the calendar year preceding the calendar year in which the applicable fee is paid, had a gross income exceeding 3 times the median household income.

The Micro Entity Final Rule is available here[4].  The rules of practice are still being prepared and the micro entity discount should become available this year.

Pro Bono Program: The AIA directs the USPTO to work with intellectual property law associations across the country in order to establish pro bono programs for financially under-resourced inventors and small businesses.  A pilot program in Minnesota was launched in June of 2010 to provide legal services to help such individuals and businesses obtain solid patent protection.   This program is still being developed and additional information is available here[5].

Miscellaneous

Assignee Filing

An assignee of the invention may file the application without the inventor’s signature on behalf of the inventor if the assignee can show that this is necessary to preserve the rights of the parties. The patent will issue in the inventor’s name(s).

Priority Examination For Important Technologies

The Act provides for “prioritization of examination of applications for products, processes, or technologies that are important to the national economy or national competitiveness.”

Advice: When the rules come out, if you really need to speed up examination, and if you qualify, request expedited examination if it falls in one of the special technological areas..

 Ombudsman

The USPTO must establish a Patent Ombudsman Program to investigate complaints and mediate settlements between small businesses and independent inventors and the USPTO.

Satellite USPTO Offices

The Act directs the USPTO to open three new satellite offices around the US. The USPTO has already opened the first office in satellite office in Detroit. Additional offices are being opened in Dallas, Colorado and Silicon Valley.  Each office will include the same type of patent search resources that are available now at the public search room at the USPTO main campus in Alexandria, Virginia.

* Please contact us if you have any questions about the AIA or any other intellectual property matters.

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