The America Invents Act ("AIA"), the most comprehensive revision of U.S. patent law since 1952, recently became law, although most of its sweeping provisions do not take effect for one or more years, and its effects may lag several years thereafter.
First-to-File Now Replaces First-to-Invent
Among other advantages, the AIA creates a first-to-file patent system in greater harmonization with the patent systems of other countries that replaces the first-to-invent patent system that has been the basis of U.S. patent law since its inception. Proponents of the new first-to-file system say that it eliminates the need for the arcane and rather expensive interference practice that has been used for 200 years in the U.S. to determine who is the first to invent between competing patent applicants. Interference proceedings in the Patent Office were so expensive that smaller businesses could seldom afford or justify the expense. With no chance of another person claiming to be the first inventor and being in an interference proceeding, it has been said that the new U.S. law will provide certainty to small businesses and individual inventors that their inventions will be protected.
New System Is Not a "Pure" First-to-File System
The new U.S. patent system is not a pure first-to-file system, unlike the absolute novelty systems of Europe and most other countries. The new system is a first-to-file system only in situations where no one has publicly disclosed the invention. Because the new U.S. law provides a grace period that allows the inventor to disclose the invention up to one year prior to filing, an inventor who publicly discloses the invention before but files the corresponding patent application after another may still be entitled to the patent. That is, the mere filing of a patent application does not provide any greater certainty to the inventor that another inventor will not end up holding the patent rights than under the old law.
Consider this example. Bob makes an invention in January. Susan independently makes the same invention in February and publicly discloses it in March, for example in a publication or by showing it at a trade fair. Bob files a U.S. patent application for his invention in April. Under the old patent law, Susan's public disclosure could be cited as prior art against Bob, but Bob could remove Susan's public disclosure as prior art by demonstrating that his invention occurred prior to Susan's disclosure. Under the new law, Bob cannot antedate Susan's invalidating disclosure. Bob has no recourse. Therefore, it is critical for businesses to rapidly identify their inventions and immediately file provisional patent applications to minimize the risk that another's public disclosure will forever bar any patent rights to their inventions. A non-provisional application can be filed within the year following the filing of the provisional application while claiming the provisional filing date.
Continuing with the above example, assume that Susan files a patent application for her invention in May. Although Bob is the first to invent and the first to file, Susan gets the patent for the invention. Her own disclosure does not bar her from patenting her invention in the U.S., if she files her patent application within one year of her disclosure.
Prior Secret User Rights
In another substantial departure from the old patent law, the AIA introduces prior user rights, which provide a defense to patent infringement for those who have used a process in secret more than one year before another person files a patent application for the invention. Prior user rights are likely to greatly benefit large businesses who can readily exploit technology in secret (e.g., a manufacturing process), giving no benefit of public disclosure, but will likely be less beneficial to the small business.
New Patent Office Procedures for Invalidating a Competitor's Patent
The AIA also introduces robust new procedures for invalidating patents—post-grant review and inter partes review. Both of these procedures provide alternatives to litigating the validity of a patent in the courts by allowing a party to challenge a patent, relatively inexpensively, before a panel of three technically trained administrative patent judges at the Patent Office. Both procedures allow limited discovery and require a preponderance of the evidence to prove invalidity rather than overcoming a clear and convincing proof burden for invalidity in the courts.
Post-grant review allows a challenge to a patent on the basis of any statutory ground for invalidity. However, post grant review must be sought within nine months of the patent grant date. Thus, for businesses in patent-intensive fields, it is now more important than ever to closely monitor a competitor's patent activities so as not to miss the nine-month deadline. Inter partes review replaces the current inter partes reexamination procedure. Inter partes review procedure becomes available nine months after the patent grant date and limits invalidity challenges to prior art patents and publications.
The effect of post-grant review and inter partes review on the small business is bifurcated. For those businesses who may be accused of patent infringement but who are too small to fund a defense to an infringement lawsuit, the new patent review proceedings may be a true blessing. However, for those small businesses and individual inventors who cannot afford to practice their inventions, post-grant review, and other AIA measures, may weaken their ability to monetize their patents through contingency lawsuits.
Conclusion
Regardless of whether the AIA will ultimately promote or hinder U.S. innovation, having a sound strategy with respect to patents is important for all businesses. Small businesses in particular need competent patent counsel to help them navigate the uncharted waters of the AIA so as to extract the most benefit possible from the U.S. and foreign patent systems consistent with the needs of their business.
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