America Invents Act: Analysis by David Pressman

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By David Pressman, author of Patent It Yourself

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The new America Invents Act (AIA) makes major changes in the law but it’s not a complete revision of the patent statutes. Former Patent Court Judge Paul Michel said that “many sections are poorly written and ambiguous.” Others have said that it will take years to clarify the grey areas. I would have liked it if the AIA had fixed some of the real problem areas, such as (a) the inability of independent inventors and small entities to enforce their patents if the infringer has shallow pockets or the infringement product volume is small, (b) clarifying the nebulous doctrine of equivalents, and (c) clarifying the currently fuzzy law from the Bilski v. Kappos Supreme Court decision on the machine or transformation test and the eligibility of business methods for patents. Also the AIA makes the law substantially more complicated, as you will see below; this is probably due to the influence of various lobbyists. However we must live with the AIA, so here’s an overview to show how it affects users of PIY. I have divided the provisions of the Act into the following parts:

1. First-To-File Replaces First-To-Invent And Expanded Definition Of Prior Art

2. New Fees And Funding

3. Unpatentable Subject Matter

4. Challenges To Or Supplemental Examination Of Patent Applications and Patents

5. Litigation

6. Miscellaneous

7. Reports and Studies

After each provision I have cited the relevant the section of the AIA and its effective date. You can see the actual AIA in PDF format or learn more about the AIA implementation at the USPTO website. The PTO has not written rules for most of the new provisions, so these can’t take effect until the PTO provides appropriate rules. Here is a timeline for when the provisions are supposed to go into effect.

1. First-To-File Replaces First-To-Invent And Expanded Definition Of Prior Art

Perhaps the main change wrought by the AIA is the new First-To-File (FTF) provision that replaces the First-To-Invent statutes. Under FTF, 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 PTO and benefit those (e.g., 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 PTO 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 makes an exception for applications filed by a company: if a company files an application, it can’t 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.

To help those inventors whose inventions were stolen or misappropriated, the AIA creates “derivation proceedings” to determine if one person “derived” or purloined the invention from another. 

Also the AIA abolishes 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 one-year grace period has also been decimated so that any publication, public use, or offer of sale of an invention before an application’s actual filing date will bar the application. An exception: 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. However it is still unwise 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 uncertain derivation proceeding. Sec. 3. Effective 2013 Mar 16.

Advice: Despite the abolition of Rule 131 declarations and most of the usability of any other evidence of conception and reduction to practice, you should still document your invention conceptions and building and testing as detailed in Chapter 3 of Patent It Yourself. Such evidence may be needed to prove derivation in case anyone else copies the invention and files their own patent application on it. If you can afford to do so, file provisional patent applications (PPA) on your inventions and any improvements you make as soon as possible and file your regular patent application within one year of your earliest provisional to protect your rights. But, as always, be sure that each provisional teaches how to make and use it in “full, clear, concise, and exact terms,” as required by § 112 of the patent laws; otherwise you won’t be able to rely on your PPA’s date.

Expanded Prior Art: Along with the FTF change, the AIA expands the scope of prior art that can be used to reject the claims of an application or invalidate a patent. 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: (a) if the claimed invention was available to the public before the present application’s filing date, such availability is valid as prior art, (b) a US patent application of another that is entitled to a foreign or domestic priority date is prior art as of the foreign or domestic priority date, (c) prior use and on sale activities are prior art, even if done in another country. Sec. 3. Effective 2012 Mar 16.

Prior Commercial Use: Suppose your patent covers an invention that is a process, or is a machine, manufacture, or composition of matter that is used in a manufacturing or other commercial process. And suppose you find an infringer who has used the invention in the US commercially, or transferred a useful end result of the commercial use over one year before either (a) you patent’s filing date, or (b) the date you disclosed the invention to the public. In any of these cases, the alleged infringer has a complete defense to any claim of infringement of your patent, provided the infringer can prove their defense by clear and convincing evidence. Sec. 5, Effective 2011 Sep 16.

Advice: If you’re prosecuting a patent application, or charging someone with infringement, be aware of the previous two paragraphs and the additional ways that they enable an adversary to defeat your patent.

Learn How to Run an Invention Business.

2. New Fees And Funding

The USPTO has posted the current fee schedule (as of September 26, 2011)

Prioritized Examination: You may notice that in the list of new fees, there is a new fee by which a well-heeled inventor or company can buy prioritized examination of a patent application for $4800 (Large Entity) or $2400 (Small Entity). This service, which gives more credence to the axiom, “Gold rules the law,” is limited to 10,000 applications the first year. Sec. 11. Effective 2011 Sep 26.

Advice: If you really need your application to issue faster, and you can afford the steep price, buy a prioritized examination.

Paper Filing Surcharge: Also, although not on the above list, the AIA provides a strong incentive to file via the Internet (EFSWeb). If you file your application in paper form, the PTO will impose a stiff $200 surcharge ($400 for large entities). Sec. 10. Effective 2011 Nov 15.

Advice: This is a no-brainer. It’s much easier and cheaper to file by EFS-Web anyway. I also advise that you become a registered e-filer so that you can also view your application papers and docket entries online and file amendments online too.

Micro-Entity Fee Reduction: If you’re a micro-entity, you’ll be able to get a 75% reduction on most fees. A micro-entity is an independent inventor (or university employee obligated to assign the invention to the university) who: (a) has not filed more than five non-assigned patent applications in their lifetime, (b) has a gross income is less than three times the median US income, and (c) has no obligation to assign and who has not assigned their application to a non-micro-entity. Sec. 10. Effective 2011 Sep 16. [Note: However, implementation of this provision may not actually take effect until 2012 or 2013. Learn more about distinguishing small entities and micro entitites.]

Advice: Another no-brainer: If you meet the qualifications, go for it.

Pro Bono Program: The AIA provides that “[t]he Director shall work with and support intellectual property law associations across the country in the establishment of pro bono programs designed to assist financially under-resourced independent inventors and small businesses.”  The PTO has not taken any action in this area yet so we don’t know what benefits will accrue to those that the Act euphemistically calls “under-resourced independent inventors and small businesses”. Sec. 32. Effective 2011 Sep 16.

Advice: When the rules and benefits come out, take advantage if you can.

Reserve Fund: The AIA establishes a PTO Fee Reserve Fund in the Treasury so that amounts collected in excess of the PTO’s appropriations for any year shall be held for PTO purposes. Sec. 22. Effective 2011 Oct 1.

Find out How to Qualify for a Patent

3. Unpatentable Subject Matter

Tax Avoidance Schemes: Section 14 of the AIA reads as follows: “[A]ny strategy for reducing, avoiding, or deferring tax liability, whether known or unknown at the time of the invention or application for patent, shall be deemed insufficient to differentiate a claimed invention from the prior art.” However inventions for other aspects of taxation, such as facilitating preparation of tax returns, are OK. I wonder about the constitutionality of a law that in effect says, even if an invention is novel and unobvious, the law deems it insufficiently different if it’s in a certain area. I don’t know why the drafters chose to prevent the patenting of tax-avoidance schemes in this way; rather than simply excluding them from patentable subject matter as they did with atomic weapons and humans (see next paragraph). Sec. 14. Effective 2011 Sep 16.

Human Organisms: The AIA states that no patent may issue on any human organism. Sec. 33. Effective 2011 Sep 16.

 Advice: Don’t try to patent human beings or tax avoidance schemes (unless the law is successfully challenged).

4. Challenges To Or Supplemental Examination Of Patent Applications and Patents

The AIA provides several ways that patent applications and patents can be challenged or attacked.

Patent Applications: Any member of the public may ask the examiner to consider prior art (patents and other publications) for any application before the earlier of (A) a notice of allowance, or (B) the later of (1) six months after the publication of the application, or (2) the date of the first rejection of any claim of the application. The submission must state the relevance of the publication and pay a fee. Sec. 6. Effective 2012 Sep 16.

Advice: If you’re aware of another’s pending application that you feel is not patentable, submit your evidence under this procedure

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. However 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. If a party initiates a post-grant or inter parties (see next paragraph) review, the party cannot use the basis or grounds for the review in a later declaratory judgment or infringement civil action. Sec. 6. Effective 2012 Sep 16.

Advice: If you’re aware of another’s patent that you feel should not have issued, and your evidence meets the criteria, and you are willing to forego the right to use the evidence in court, file for a post-grant review within nine months after issuance.

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. Also the standard for review is now the higher standard of the previous paragraph, is limited to patents and other publications, and must be initiated after nine months after grant or after termination of post-grant review proceedings. Sec. 6. Effective 2012 Sep 16.

Advice: If you’re aware of another’s patent that you feel should not have issued, your evidence meets the criteria, you’re willing to forego the right to use the evidence in court, and you’re willing to go through an adversary proceeding, file for a post-grant review after nine months has passed after issuance.

Supplemental Examination: The AIA establishes a new procedure, called Supplemental Examination, by which a patent owner may request reexamination of the patent in order to have the PTO consider, reconsider, or correct any information relevant to the patent. In addition to prior art, the information can even be inequitable conduct, which the patent holder may correct. Sec. 12. Effective 2012 Sep 16.

Advice: If you’re aware of any defects in your patent or in your past conduct that may cast a cloud on your patent, request Supplemental Examination.

Transitional Provision For Business Method Patents: In addition to the above PGR procedure, the AIA provides a transitional eight-year transitional period whereby anyone can have the PTO review the validity of any business method patent (excluding those that are for technological inventions) based on prior art. The Director of the PTO must write regulations within a year, including a definition of “technological inventions.” Sec. 18. Effective 2012 Sep 16.

Advice: If you’re aware of another’s non-technological business method patent that you feel should not have issued, file you may for a post-grant review for up to eight years after issuance.

5. Litigation:

Failure To Disclose Best Mode No Longer A Litigation Defense: Existing patent law (§ 112) still requires an applicant to disclose the best mode of practicing the invention, but failure to disclose this is no longer a litigation defense. It has been dangerous to call any embodiment the best mode anyway, since courts that have ruled on patents which state a best mode have tended to give less weight to the other modes. Sec. 15. Effective 2011 Sep 16.

Advice: As advised in Patent It Yourself (PIY), don’t label any embodiment the best mode unless your examiner requires it (rare). Simply list the embodiments and call them, “first”, “second,” etc., and not “preferred” or “best”.

Multiple Defendants: Heretofore a patent holder could sue multiple defendants in the same lawsuit if they all infringed the patent. Under the new law, a patent holder may sue multiple defendants in one suit only if the defendants have committed related acts of infringement. The meaning of “related acts of infringement” will be up to the courts to determine. Sec. 19. Effective 2011 Sep 16.

Court Venue Change: D.C. to Virginia: Heretofore suits against the PTO 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 Act changes the venue for such suits to the District Court for the Eastern District of Virginia, near the PTO. Sec. 9. Effective 2011 Sep 16.

Patent Number Marking: Under the new law, patentees may comply with the patent marking statute (see Patent It Yourself, Ch. 15, Sec. D) by virtual marking, i.e., reference to an Internet site, rather than having to put the actual patent number on the goods. Also the Act states that now only the U.S. may sue a patent owner for statutory damages for false marking but private parties may sue for compensatory damages incurred due to false marking. Finally, marking a product with the number of an expired patent is no longer a violation of the patent marking statute. Sec. 16. Effective 2011 Sep 16.

Advice: Review the advantages and disadvantages of marking and not marking in Chapter 15 of PIY. If you choose to mark, put the patent number directly on the goods or on a web site with a reference to the site on the goods, whichever is easier.

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. Sec. 17. Effective 2012 Sep 16.

No State Court Patent Jurisdiction: State courts no longer have jurisdiction of any suit relating to patents and involving an act of Congress. Sec. 19. Effective 2011 Sep 16.

Learn how to Apply for a Patent

6. Miscellaneous

Statute Of Limitations for Discipline Of Attorneys And Agents: The Act provides that disciplinary proceedings against any registered attorney or agent must commence within 10 years after the alleged misconduct occurred or within one year after it was brought to the attention of any PTO employee. Sec. 3. Effective 2011 Sep 16.

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). Sec. 4. Effective 2012 Sep 16.

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.” Sec. 25. Effective 2012 Sep 16.

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 PTO must establish a Patent Ombudsman Program to investigate complaints and mediate settlements between (a) small businesses and independent inventors and (b) the PTO. Sec. 28. Effective 2012 Sep 16.

Advice: When the rule comes out, if you have any complaints or difficulty with anyone at the PTO and you think they are not being fair or have not followed the rules, complaining to the Ombudsman.

SIR Program Repealed: The Act repeals the Statutory Invention Registration (SIR) program, probably because inventors did not use this to any significant extent. Sec. 3. Effective 2012 Sep 16.

Satellite PTO Offices: The Act directs the PTO to open three new satellite offices around the US. The PTO has already committed to open the first satellite office in Detroit. The purpose of establishing the satellite offices is to enable applicants to be able to interview examiners more easily, but can an interview really be effective if the examiner in charge of the application which is the subject of the interview is not in the satellite office? Sec. 23. Effective 2014 Sep 16.

Advice: If you’re near enough to a satellite office and you need an interview or any other personal service, visit the satellite office, but be aware of the possible disadvantage noted in the previous paragraph.

7. Reports and Studies: The AIA requires the PTO to mane numerous reports and studies and to report its findings to Congress over the next few years. I have not listed these here since they are not of immediate concern to most users of PIY, but if you’re interested, see Secs. 3, 16, 23, 26, 27, 29, 31, and 34 of the AIA, which can be seen at the location on the PTO’s site as noted at the beginning of this analysis.

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