Ernest Grumbles III

Ernest Grumbles III is an IP (intellectual property) and business development attorney at the Minneapolis firm Adams Monahan, where he works with entrepreneurs and early stage, tech-oriented enterprise. He is also Co-Founder of MOJO Minnesota, a collective supporting entrepreneurs and promoting innovation policy and community in Minnesota. He enjoys fresh air and lots of caffeine and is constantly trying new things (instead of sleeping). He may be reached at: egrumbles@adamsmonahan.com.

Patent Reform 2011 - Highlights of the America Invents Act

Posted by: Ernest Grumbles III under Government Updated: October 6, 2011 - 11:15 PM
 
After much bluster and at times painful rhetoric, the U.S quietly passed the America Invents Act, the first major patent law overhaul since 1952. That the patent statutes have undergone no major changes in over 50 years is testament to the gap between law and the world of business and technology. While new and existing businesses often have to pivot overnight (watch what happens every time Facebook adds a new feature), statutes remain. The obvious exceptions to this are the court-made changes that occur every few months (decisions of the Supreme Court or Federal Circuit Court of Appeals, for example). And while those court decisions can and do plug gaps and clarify the law, many times the decisions leave the thorniest questions unanswered (like the Bilski decision on software and business method patents). Statutes can provide this clarity, for better or worse.  Below are highlights of the Act signed into law by President Obama on September 16, 2011.
 
Biggest Change: First to File Wins the Patent:  Under the revised statute (35 U.S.C. § 102), whoever files first on a legitimate and patentable invention will be the one who gets the patent, consistent with the standard long used in almost every other nation. Previously in the U.S., if Company A invented a concept and Company B later invented the same concept but filed for a patent before Company A, Company A could still file and use its earlier invention to get the patent. In reality, the Patent Office has dealt with very few of these types of disputes (called patent interferences). Now, effective for patent applications filed on or after March 16, 2013, Company B will generally be the one entitled to the patent. This does not mean someone can file first on a patentable idea that someone else conceived - just that the Patent Office will award the patent to the first legitimate inventor who steps forward.  As a practical matter, it’s always been better to get your patent application filed earlier than later, and that’s even truer now.
 
The law also expands protections for earlier inventors to continue to use their technology even if a later-inventing party receives a patent.  In essence, if you were using some technology (process or product) more than one year prior to a third party’s patent filing on such technology, you can continue to use it even after the third party’s patent issues. Your prior use becomes a defense to a later claim of infringement. Under prior law, this was limited to certain types of process inventions.
 
A Few Small Business Enhancements:  The America Invents Act includes a number of provisions aimed at improving the patent process for small business. These include:
  • Fast-Tracking Patent Applications – Addressing concerns of patent delays, which can harm early-stage businesses seeking financing, the PTO is rolling out a fast-track program that guarantees initial patent review within 12-months from filing (instead of average 3-year wait). The fees for fast-tracking are considerably higher than standard patent filings fees ($4800), but the PTO is to implement a 50% fee reduction for small business entities ($2400). Expect some quick activity on this front.
  • Micro-Entity Fee Reduction – Over the next 12 months, the PTO will be implementing a 75% patent fee reduction for very small businesses or individual inventors, referred to in the Act as “micro-entities.” This fee reduction is supplemental to the existing 50% fee reduction for “small entities.”
  • Establishment of a Patent Ombudsman for Small Business – Per the Act, the PTO is to establish a Patent Ombudsman office, which is to provide support and services to small businesses and independent inventors.

A Patent Quality Improvement: Post-Grant Patent Review:  The U.S. will have a new process to seek review of patents before they go into effect. For a 9-month period after issuance, persons can challenge a patent for any alleged defect. The person opposing a patent must show likelihood that at least one claim of the patent is unpatentable or that there are important legal questions raised that would affect several other patents. This provision will generally apply to patents filed in spring 2013. After the 9-month period, review may only be sought for based on claims that the patent is invalid due to an earlier patent or printed publication. 

Litigation-Related Provisions - While there had been efforts to place general limits on patent damages and new restrictions on where patent suits may be filed, these did not make it into the final bill.  Expect continuing controversy on these issues. Here’s what did go into law:

  • Effective immediately under 35 U.S.C. § 292, only the U.S. government can bring false marking claims based on public rights. Prior to this change, many claims had been filed by (intermeddling) private parties on behalf of the public against companies that (usually inadvertently) marked their products with inapplicable or expired patents. Companies experiencing actual competitive injury from false marking with an inapplicable patent can still seek damages from such injury. Marking a product with an expired patent will no longer be a violation of law.
  • New limits have been placed on the ability of plaintiffs to sue several unrelated parties in the same lawsuit. This is effective immediately under 35 U.S.C. § 299.
  • An inventor’s failure to disclose the “best mode” of practicing an invention is no longer a basis to invalidate a patent (although the inventor still has an obligation to disclose best mode).
Sum Up  The America Invents Act made a number of significant changes to U.S. patent law, some to harmonize U.S. practice with foreign practice, others to improve the patent examination process, including for small business, and a few to address some problematic litigation-related issues.  A number of the changes require further development or implementation by the USPTO.  So stay tuned to see whether and how the new provisions actually impact day to day process at the PTO and on the rights of our nation's inventors.

 

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