Canada: United States Senate Passes Patent Reform Bill

Last Updated: April 7 2011
Article by Robert Irani

On March 8, 2011, the United States Senate voted to pass historic patent reform legislation.

The America Invents Act, originally titled the Patent Reform Act, was passed by the United States Senate by an overwhelming 95–5 vote. If enacted, the Act would be the first comprehensive reform to the United States Patent system in nearly 60 years.

The America Invents Act includes provisions for:

  • Changing from the existing first-to-invent patent system to a first-to-file system;
  • Third-party submissions of prior art for pending applications;
  • Creation of new post-grant review procedures for third-party patent challenges in the United States Patent and Trademark Office (USPTO);
  • Elimination of the best mode defense in patent litigation;
  • Creation of a new Supplemental Examination Process;
  • USPTO fee setting authority, and allowing the USPTO to retain any excesses for use in funding USPTO operations;
  • Limited standing in false patent marking cases;
  • Unpatentability of tax strategies as within the prior art;
  • Creation of a special post-grant review for business method patents;
  • USPTO authority to establish satellite offices; and
  • USPTO authority to prioritize examination of inventions of national importance.

Significant Provisions

The America Invents Act proposes several significant changes to United States patent law.

The most significant change being the transition of the United States Patent Office to a so-called first-to-file system. The shift would confer patent rights on the first person to file an application, as opposed to the first person to invent. As a result, the United States patent system would be closer aligned to the patent regimes of much of the rest of the world, including Canada. A limited one-year grace period would be retained for filing an application after a public disclosure by the inventor or by another who obtained the disclosed information from the inventor.

Further, the new Act would replace present interference proceedings with new derivation proceedings to determine whether the inventor named in an earlier-filed application derived the claimed subject matter from the inventor of a later filed application.

Supporters of first-to-file contend that it will lower the cost and complexity of patent disputes. Critics, meanwhile, warn that it will result in a race to the patent office, ultimately benefiting large corporations while hurting small inventors.

The America Invents Act also includes provisions that affect how a third party may challenge a pending patent application or an issued patent.

With respect to pending applications, the new Act would enable a third party to submit "any patent, published patent application, or other publication of potential relevance to the examination of the application" before the earlier of the date of a notice of allowance; or the later of six months after the publication of the patent application, or the date of the first rejection of the patent application.

With respect to issued patents, the Act creates two different provisions for post-grant review.

Post-Grant Review would allow a patent to be challenged on any grounds by a petition filed within nine months of the grant or re-issuance of a patent.

Inter Partes Review would allow patents to be challenged on the basis of prior art consisting of patents or printed publications only. A petition must be filed at least nine months after the grant or re-issuance of a patent, or following the conclusion of a Post-Grant Review, whichever occurred later.

Other Provisions

There are other important provisions contained in the America Invents Act.

The Act would enable an entity to file an application on behalf of an inventor who assigned, or is under an obligation to assign, the invention rights to the entity, without requiring the inventor's execution of the application. Provisions are also included which would make it easier for an entity to file a substitute inventor's oath when the inventor cannot be reached or is non-cooperative.

While the America Invents Act does not specifically address inequitable conduct, it does provide for a supplemental examination procedure which would permit a patent owner to seek additional review by the USPTO to "consider, or correct information believed to be relevant to the patent". If a substantial new question of patentabilty was raised, rexamination would be ordered. At the conclusion of such supplemental examination, the Act provides that a patent shall not be held unenforceable on the basis of "conduct relating to information that had not been considered, was inadequately considered, or was incorrect in a prior examination" if the information was considered during the supplemental examination of the patent.

While an inventor would still be required to set forth the best mode for accomplishing the invention, failure to disclose the best mode would no longer be grounds for invalidating a patent. The duty to determine whether the best mode requirements had been met would lie solely with the USPTO during examination.

The Act would also allow the USPTO to adjust its own fees to the extent that the aggregate fees collected did not exceed the estimated operating costs of the USPTO. Fees collected would be deposited into a fund for use by the USPTO, effectively ending fee diversion to the United States Treasury's general fund. Also included in the proposed fee setting authority is the creation of a new micro entity status for certain applicants, which would provide a 75-percent reduction in fees. The Act would also allow for establishment of additional USPTO satellite offices.

If finally enacted into law, the America Invents Act would also provide for an expedited review for applications for patents describing inventions deemed key to national priorities, such as clean energy technology; the creation of a transitional post-grant review procedure for business-method patents; the exclusion of tax strategy patents claiming "any strategy for reducing, avoiding, or deferring tax liability", from patent-eligible subject matter; and limiting standing in false marking cases to persons who have suffered competitive injury as a result of a false patent marking.

If enacted into law, the America Invents Act would bring significant changes to the United States Patent system. However, the Senate bill has not yet been passed by the U.S. House of Representatives nor has it been signed by the president. The House Subcommittee on Intellectual Property, Competition, and the Internet has begun consideration of legislation similar to the America Invents Act and the House Judiciary Committee is expected to introduce its own version of patent reform legislation later this spring.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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