What You Should Know About the Patent Reform Act

On September 16, 2011, President Obama signed into law the Smith –Leahy America Invents Act, the most important revision of the patent statute since its enactment in 1952. Here is a summary of provisions important to inventors and businesses.

1. First inventor to file, not first to invent. In a change taking place on March 16, 2013, the first inventor who files a patent application in the United States Patent and Trademark Office (USPTO) will be entitled to a patent, rather than the person who first invents the subject matter in question. There will no longer be any first-to-invent contest between two inventors who independently conceived of and reduced to practice an invention. The first of those two inventors to file a patent application will win. A right of priority will still be accorded to an earlier foreign-filed patent application or an earlier US patent application (which could possibly be a provisional patent application), by which the filing date of such an earlier patent application will be the effective filing date of the current one. Conditions concerning timing and content of the prior application will still have to be met. Signing and dating a technical disclosure, or creating and storing other evidence of an inventor’s conception, won’t be relevant any longer, except to establish the fact that the inventor independently invented the subject matter and didn’t derive it from someone else. It won’t save the inventor a place in line.
2. Derivation proceedings. It will not be possible for a mere copyist to obtain patent protection on someone else’s invention, just by beating the real inventor to the patent office. While first-to-invent contests are going to go away, the new law establishes two kinds of derivation proceedings by which a copyist can be challenged. This is why the new priority is more properly called “first inventor to file” rather than “first to file.”
3. Grace period. Also surviving is a grace period by which time an inventor or his assignee must file a patent application. The applicant has one year from the time that a first disclosure of the invention is made by the applicant to get a patent application on file. This disclosure can be a public use, a printed publication or any other way in which an invention becomes available to the public. It no longer matters in which country the disclosure is made.
4. Technical disclosures of others. Normally, all technical disclosures of others (public uses, patents or other printed publications) made anywhere in the world and before the effective filing date constitute prior art to the patent application and may be asserted against the claimed subject matter to demonstrate lack of novelty or obviousness. There is one exception to this. If, in less than a year prior to the application filing date, an inventor discloses an invention, anyone else’s disclosure junior to the inventor’s disclosure will not count as prior art. U.S. patent applications of others are treated as prior art if they were effectively filed prior to the inventor’s public disclosure of the invention.
5. “On sale.” The old law had also had a separate condition for patentability: the invention could not have been placed on sale more than one year prior to the application filing date. This “on-sale” bar survives in modified form in the new statute. According to the case law developed on this point under the old law, an invention could be placed “on sale” even in circumstances where that offer for sale is a private communication rather than a public disclosure. It is unclear whether the new law accords a grace period to the inventor for this act; placing an invention “on sale” by the inventor is not listed as an exception to the general rule of absolute novelty, only a “disclosure” by the inventor. It is unclear whether “disclosure” means “public disclosure” or incorporates “private offer for sale”, or whether merely offering to sell something incorporating an invention is a “disclosure” of an invention at all. Because of this ambiguity, we are counseling clients not to offer for sale a product incorporating an invention at any time prior to the effective filing date of a patent application disclosing that invention. It is expected that this new language will be the subject of litigation in the foreseeable future. This change and all of the above changes take effect March 16, 2013.
6. Best mode. The old law required that the specification contain a description of the best mode known to the inventor for carrying out the invention. This requirement continues – but, curiously, a defendant will no longer be able to attack an issued patent on the ground that the “best mode” is not disclosed. The practical result of this is that as long as the USPTO (which almost never inquires into this) is satisfied that the specification discloses the best mode for carrying out the invention, whether or not the application actually states such won’t matter to a patent’s later enforceability. The specification will still have to contain sufficient information to enable a person skilled in the art to ascertain what the invention is, and how to make and use it. The changes to “best mode” take effect September 16, 2012.
7. Defense: Prior internal commercial use. The old statute had in it a “prior commercial use” defense, but it was limited to assertions of so-called “business method” patents. In the new law, a defendant may interpose this defense for any kind of invention. The prior internal commercial use must have happened at least one year prior to the earlier of the inventor’s public disclosure of the invention, or the inventor’s effective filing date. In combination with the new conditions for patentability, this means that in order to be successfully interposed as a defense, the prior internal commercial use might have to be as old as two years prior to the effective filing date of the application on which the patent in question issued. The defense is personal, does not invalidate the patent, is transferable only in limited circumstances and will result in the assessment of attorneys’ fees if the assertion of the defense is made without a “reasonable basis.” Curiously, this defense may not be used against any invention owned, at the time the invention was made, by an “institution of higher education” or the IP licensing arm of same, where the invention was made using government grant money. The defense applies to any patent issued on or after September 16, 2011.
8. Re-work of the reexamination process. The present statute allows for two kinds of reexamination by the USPTO of already issued patents, one (called “inter partes”) in which the requester substantially participates in the proceeding, and one (called “ex parte”) in which the requester (if other than the patent owner) doesn’t. Effective September 16, 2012, these are replaced with “post-grant review”, “inter partes review” and “supplemental examination.” The first two can be used by a person other than the patent owner, while the last is reserved for the patent owner. “Post grant review” permits review based on an allegation of invalidity in view of any source of prior art, including prior public uses; “inter partes review” and “supplemental examination” are based on patents and printed publications only.
9. Curtailment of “False Marking” actions. The old patent statute (35 USC §292) permitted a qui tam action against anyone who intentionally mismarked a product with a patent number. The section provided that a fine of “not more than” $500 could be assessed for doing so, with one-half going to the plaintiff and one-half going to the US Government. Recent case law had held that this fine is assessed per article. Thus sprang up a cottage industry seeking compensation from companies which had not changed their patent number markings on their products to remove expired patents. The new Act abolishes the qui tam action. A party may recover for false marking only if it can prove “economic injury”. Continuing to carry expired patent numbers on a product won’t be actionable at all. There is also offered a method of “virtual marking” by referring to an address of an Internet posting (the contents of which then can be changed from time to time), but we have doubts about whether changing up, e.g., an injection molding tool to insert a URL of a web site is at all practical, or whether the result would be understood; the notice literally required by the statute would take the general form, “Pat. [or patent] www.website.com.” This change is effective as of September 16, 2011.
10. Noninfringement Opinion Letters. The failure to obtain one cannot be considered as evidence of willful infringement. The Act is silent as to what treatment should be accorded to the issuance of such an opinion letter, however. This change is effective as of September 16, 2012.
11. Prioritized Examination. Prior to the Act, the USPTO made certain applications “special”, meaning that they were examined out of order of their filing date. A “petition to make special” could be filed on any of a number of grounds. The most popular of these was an “accelerated examination” ground in which the Applicant performed and characterized a prior art search. More recently, applicants had to submit an “Accelerated Examination Support Document” in which the applicant made numerous admissions against interest in characterizing the prior art search results; and even the acceptance of these vastly augmented petitions to make special became rare. The statute now provides for a “prioritized examination fee” of $4,800, or $2,400 if the applicant is a “small entity” (independent inventors and small businesses having fewer than 500 employees). The Director of the USPTO may prescribe additional requirements and may limit the number of prioritized examinations per year. If the Director imposes no or few additional requirements, prioritized examination will prove to be popular for commercially important inventions; if the Director imposes the equivalent of the old “Accelerated Examination Support Document”, this provision will be rarely used because of the damage such a document causes to the patentee when the patent is asserted against an infringer. The prioritized examination fee is available on September 26, 2011, but it’s yet unclear what conditions will attach to the prioritized examination it pays for.
12. Fees. Most USPTO filing fees go up 15%, effective September 26, 2011.

There are numerous other provisions, e.g. relating to the inventor’s oath or declaration, reissue, correction of inventorship, conduct of litigation, how the USPTO is funded, and special provisions for colleges and universities, business method patents and even automated teller machines. Should you have any questions concerning the new statute, we would be pleased to talk to you about them.

Jefferson Perkins
Momkus McCluskey LLC
1001 Warrenville Road, Suite 500
Lisle, IL 60532-4306
t. (630) 434 0414
f. (630) 434 0444
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