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What Inventors Need to Know About The New Patent Law

Touted as a boon for inventors, the “Leahy-Smith America Invents Act,” (AIA) the largest patent overhaul in over a century, is looking more and more like a boon for patent lawyers. So what are the key changes, and how do they affect you.

First to file
The first-to-file provision of AIA moves the United States closer toward harmonization with the rest of the world. The AIA is a first-to-file system, but gives inventors a one-year grace period for filing after the public disclosure of details of the invention originating from the inventor. Previously, the United States had a first-to-invent system, giving inventors an opportunity to test their inventions before spending the money for patent protection. This change gives inventors a huge incentive to file a patent application as soon as possible. While this does not add much of a burden to large corporations, it can inflict quite a financial burden on smaller inventors.

Fee Increase
While the AIA promises patent fee reductions for small inventors down the road, the immediate affect of the AIA has been a 15% patent fee increase across the board. At some unknown date in the future, small inventors will ostensibly qualify for a 50% fee reduction (actually 42.5% if you factor in the immediate 15% increase and assume no additional fee increases in the interim).

Prioritized Examination

For $4,800, inventors can move their patent applications to the top of the examination heap and obtain a yeah or nay on their patent application within one year. Given the cost, this new program will likely benefit large corporations more than small inventors. Additionally, it would seem like shifting patent examiners toward these prioritized examinations runs the risk of delaying examination of other inventors’ applications beyond the current twenty-eight month turnaround.

Patent Marking
The AIA revises the old law on marking your invention with a patent number. Previously, anyone could sue you for false marking. Now, only the government and entities actually suffering an injury can sue you for damages associated with false marking. Additionally, the AIA allows you to mark your item with “patented” or “pat.” and provide a URL where the actual patent numbers can be found. Both of these provisions benefit smaller inventors, who often have a more difficult time keeping their required patent markings up to date.

Prior Use Defense
In 1999, the American Inventors Protection Act allowed accused infringers of “business method” patents to use the defense that they had been using the business method commercially more than one year before the inventor filed the patent application. The AIA extends this defense to a much broader array of subject matter, including processes, machines, manufacture, and compositions of matter used in a manufacturing or other commercial process. Given that they are less likely to protect their inventions, this new provision appears to be beneficial to smaller inventors.

Best Mode
While inventors must still describe in their patent application the “best mode” for practicing their invention, the AIA now prevents defendants from invalidating patents on this ground. As smaller inventors are probably more likely to run afoul of the best mode requirement, this change is good for small inventors.

Patent Trolls
Patent trolls are companies that do not manufacture anything, but simply buy up patents and sue people with them. While the AIA was touted as a troll killer, it ended up with very little teeth in this regard. One provision that did make it through was that it is now tougher for a patent troll to group several defendants together into one lawsuit. This makes it more difficult and costly for a patent troll to sue smaller inventors.

Pre-Issuance Attacks
Starting next year, third parties will be able to submit prior art to the Patent Office, along with a concise description of the relevance of the prior art. While these pre-issuance attacks may end up strengthening any resulting patent, a well-funded third-party may be able to use this new system to spend a smaller inventor out of a patent before it even issues.

Post-Grant Attacks

The AIA provides a new supplemental examination procedure. Under this procedure, the patent owner may request the Patent Office “consider, reconsider, or correct information believed to be relevant” to a patent. The main benefit of this supplemental examination procedure appears to be that it allows a patent owner to preemptively address issues relating to allegations of inequitable conduct during prosecution of the patent application.

Third parties will still be able to attack patents post grant. Under the AIA, a third-party can initiate an ex parte (the third-party is not allowed to participate in the review) post-grant examination by submitting to the Patent Office published prior art references, along with details as to why the references raise a “substantial new question of patentability.” If the Patent Office finds the prior art does raise a substantial new question of patentability, the reexamination proceeds without the third-party.

The AIA also provides for a new post-grant review. Any third-party may request the cancellation of one or more patent claims granted within the previous nine months. The Patent Office may authorize the post-grant review if the petitioner presents information that, “if not rebutted, would demonstrate that it is more likely than not that at least one of the claims challenged in the petition is unpatentable.” The petitioner is not limited to using only settled law under this type of reexamination. The petitioner may make also raise “a novel or unsettled legal question that is important to other patents or patent applications.” This appears to be a mechanism to take the interpretation of patent laws out of the hands of courts and place it into the hands of the Patent Office.

For inter partes (the third-party participates in the review) review, the AIA creates a new Patent Trial and Appeal Board (PTAB). Third-parties must wait at least nine months after the patent has been granted to request an inter partes reexamination. Once an inter partes examination is requested, the PTAB determines whether there is a “reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition.” This is a higher standard than the ex parte “substantial new question of patentability.” If the petitioner fails to raise an issue that could reasonably have been raised, such as a known piece of prior art, the petitioner may be estopped from using that prior art in the future. Such estoppel, however, would not bind any defendant not a party to the inter partes reexamination.

While the AIA changes to post-grant patent examination would appear to generate better vetted patents, the time-consuming and costly procedures could bankrupt a small inventor before they can even bring a lawsuit for patent infringement. Unlike a lawsuit, with the potential of a monetary judgment to entice an attorney to take the case on a contingent fee arrangement, pre-grant and post-grant examinations offer no such enticement. Small inventors will have to finance them out of pocket.

Conclusion
Touted as a boon to small inventors, the benefits the AIA provides to small inventors are tiny, and the detriments large. The main downside to small inventors is the requirement that they race to get their patent attorneys to file patent applications for them as soon as possible to avoid losing their patent to a larger corporation with the finances to file early and often. Only time will tell just how good or bad the AIA is for small inventors. One thing for sure, however, is that the Leahy-Smith America Invents Act will certainly provide patent attorneys with job security for many years to come.

Brett Trout

Posted in Internet Law, Patent Law. Tagged with , , , .