Patent Reform

President Obama signed the new patent law (America Invents Act, 2011) on September 16, 2011.The reform is the largest since 1952, and perhaps the largest since 1836, when the United States moved from patent registration system to patent examination system.

by Susanne Somersalo, Esq., Ph.D.

President Obama signed the new patent law (America Invents Act, 2011) on September 16, 2011.The reform is the largest since 1952, and perhaps the largest since 1836, when the United States moved from patent registration system to patent examination system.

Congress has debated the need for reform the Patent Act for a long time: five Congresses have discussed the legislative amendments. In adopting the new law the goals set by the Congress were to encourage innovation and create new jobs, improve patent quality, and speed up the granting of patents, to improve the patent holder security to preserve his rights and to offer alternatives to expensive court proceedings.

First to file system

The United States has been the last major jurisdiction to maintain the system where the first inventor is entitled to a patent. Everywhere else in the world the first applicant is entitled to a patent. The current U.S -system, which ensures a patent to the first inventor, is known for lengthy and costly interference procedures.

The patent reform will harmonize the United States patent laws with the rest of the world. The change from first-to-invent to first-to-file system sounds like a huge change. However, this change may not change much current practices Large firms and universities have probably long time ago shaped their innovation policies to comply with universal first to file –system. Globalization is today’s trend, and therefore large companies rarely file in United States only. Individual inventors and small enterprises are the groups that most likely would file their patent applications in the U.S. alone. However, small enterprises and independent inventors have never been the group who initiated interference procedures, mainly because of the high costs.

The new law does not, however, quite unreservedly give the first applicant the right to the patent. Congress was obviously concerned that there may be malicious individuals and companies who are trying to steal the inventions of others, hurrying to apply for a patent for an invention which is actually not theirs. In this case there is a procedure for determining the real inventor. Thus, the U.S. actually will adopt a first-inventor- to- file-system.

The United States has a pretty unique system where an inventor is entitled to patent even after disclosing the invention, if the disclose took place within one year from filing. Most of the other major countries have a requirement of absolute novelty, meaning that the inventor cannot get a patent if he disclosed his invention before filing. The new law is not going to change this one year period before filing.

Post grant proceedings

A major change in the new Act are the post grant procedures. The new law ensures two procedures to challenge an already issued patent. The first possibility is a Post Grant Review, in which anyone can submit a claim of unpatentability within nine months after the grant of the patent. The argument at may be based on anything which could result in invalidation of the patent. One can use publications, statements, declarations, expert opinions, etc. as support of the claim.

The other option is to file an inter partes -review process any time after the nine months period for post grant review expired. At this point, the opposition can be based only on lack of novelty or on obviousness and only published articles can be used as support.

These new opposition procedures are similar to opposition procedures exist in Europe and Asia, and international companies are already accustomed to these procedures. Yet, this change in the law seems to be the change, which inventors are most concerned about. In the United States inventors are not quite comfortable with the idea that even if the Patent Office has examined and application and issued a patent, it may still be challenged by third parties. Although re-examination has been possible under the old law, a significant difference to the new system is a fairly low standard to file post grant review. Under the old law, the standard for reexamination was that the challenging party had to show that there was a substantially new question of patentability. According to the new law, it is enough to show that it is likely that at least one claim is not patentable. This could be a considerably lower standard than the previously used, although we will have to wait to see how this standard is applied.

The new procedures may affect particularly computer and the software industry. These industries typically include input from independent inventors and small enterprises, while life-science industries usually involve expensive experiments that can be conducted only in larger facilities. There is possibility that larger companies may begin to file post grant procedures against patents of individual entrepreneurs. The new post grant procedures explicitly spell out an option to settle, and this may be a way for larger companies to get licenses. On the other hand this may also be an opportunity for inventors to get their products to the markets.

Improvements in the quality of patents

The new law is intended to improve patent quality. Because the post grant procedures ensure an easy way to get an issued patent into review, it is assumed that any poor quality patent would be challenged. Another way to improve patent quality is that inventors are now expected to file better quality patents in fear of loosing their rights in post grant procedures. On the other hand, the new law may also result in inventors hurrying to file in order to an early filing date, which might not be the way to improve patent quality.

Another possible reason for improvement in the quality of patents is that under the new law The Patent Office received the power to set it’s own fees. This change is intended to ensure that the Patent Office may hire more examiners and establish three new offices. This change is intended to expedite the current intolerably prolonged patent examination and thereby improve the patent quality.

The new law will become in place gradually. The first step was increasing fees. All the fees increased by 15% at the end of September. The change to first –to-file will take place in beginning of 2013.

It will remain to be seen what the new law brings along. There are several ambiguous parts in the law, because there are new terms that are not explained. Hopefully the Federal Rules will bring clarity to part of these ambiguities. Regardless of how the rules are written, there will also be new issues to be tried in the courts. It will take easily ten or twenty years before we have case law to address all these issue. Thus, we need to be patient.

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