Issue No. 11 - Nov. (2012 vol. 45)
DOI Bookmark: http://doi.ieeecomputersociety.org/10.1109/MC.2012.362
Amy M. DeCloux , Edwards Wildman Palmer LLP
Ralph A. Loren , Edwards Wildman Palmer LLP
Brian M. Gaff , Edwards Wildman Palmer LLP
Signed into law on 16 September 2011, the America Invents Act (AIA) made many significant changes to US patent law, including a transition to a first-inventor-to-file system and the institution of post-grant review, which allows challenging a patent on any grounds related to patentability within nine months of a patent's issuance.
In our September 2012 column, we discussed the post-grant review procedure and other methods the AIA provides to challenge patents ("Patent Reform: New Tools for Challenging Patent Validity as of September 2012," pp. 9-11). In this month's installment, we provide a brief overview of other aspects of the AIA.
Be sure to check the IEEE Computer Society's website for the podcast that accompanies this article ( www.computer.org/portal/web/computing now/computing-and-the-law).
First to File
Most parts of the AIA took effect one year after signing—on 16 September 2012. However, the first-to-file system will become effective on 16 March 2013.
Traditionally, US patents were granted to those persons who were the first to invent the subject matter that the patent covered. That meant that even if multiple people independently conceived the invention, and each person applied for a patent, the person who invented first was the one eligible to receive the patent. The US Patent Office used an administrative procedure—known as an interference—to resolve disputes over who was the first to invent.
That will all change for many patent applications filed on or after 16 March 2013. For those applications, the inventor who was the first to file is deemed the true inventor eligible for a patent. If others independently conceived the invention and filed their patent applications after the person who filed first, they will lose their ability to get a patent.
While there are some very narrow exceptions to this, it's important to realize that this rule also holds even when a later filer conceived the invention before the first filer. In other words, if a person who is first to conceive an invention delays filing a patent application, and a second person later independently conceives the same invention and files an application right away, the first inventor will likely be ineligible for a patent; the second inventor will win.
One aspect of US patent law limits this rule's rigidity: the one-year grace period after public disclosure for an inventor to file an application. This allows an inventor to make a public disclosure about the invention and delay filing an application for up to one year from the date of the disclosure. If that disclosure occurs and then someone else files a patent application on the same invention before the inventor has filed an application, the inventor might be able to rely on the date of his earlier disclosure. This could allow the second filer to be eligible for a patent. Be careful, though, because the scope of the disclosure is important to the scope of the patent.
Because the focus is now on the patent application filing date instead of the date of the invention, the definition of prior art has changed. Prior art is preexisting information, such as that disclosed in a printed publication, that describes the invention. Public use or sale of the invention is prior art as well.
Before the AIA, prior art that predated the date of the invention could prevent an inventor from obtaining a patent. Now, the prior art need only be earlier than the application filing date. The public use or sale of the invention used to be limited to acts in the US; these acts in another country are now considered prior art as well. This makes more prior art available as roadblocks to getting a patent.
This first-to-file system is how most patent offices outside the US have operated. This change makes the US patent system more similar to systems in other countries. However, inventors—and their employers—need to recognize how important it is to get their patent applications on file quickly, or at least consider the merits of making strategic disclosures to preserve their patent rights.
Effects on Patent Litigation
The AIA will change how patent litigation is conducted. In particular, the AIA provides two new mechanisms for challenging the validity of patents: post-grant review and inter partes review. These procedures are administrative, not judicial, and are conducted in the US Patent Office. Their goal is to provide individuals or businesses accused of infringing a patent with an avenue to challenge that patent more quickly and at less cost compared to litigation in federal court. Our September 2012 column in Computer and the associated podcast provide a full discussion of post-grant and inter partes review.
Parties accused of patent infringement now have a new defense that they can raise in court: prior commercial use. If an accused infringer can show that he commercially used what the patent covers at least one year before the earlier of the patent application filing date or the date the invention was disclosed, he might prevail. Before the AIA, this defense was limited to patents that cover business methods. The AIA expanded the defense to allow its use with patents that cover "any subject matter consisting of a process, machine, manufacture or composition of matter used in a manufacturing or other commercial process." However, an accused infringer can't use this defense if an institute of higher education owns the patent.
A typical occurrence before the AIA was the filing of patent infringement lawsuits that had one plaintiff (the patent owner) and multiple—sometimes dozens of—defendants (the accused infringers). Usually, there were no business or corporate connections between the defendants; the only commonality was that the plaintiff was accusing all of them of infringement of the same patent, which complicated litigation. The AIA now prohibits joining unrelated defendants in a single action for patent infringement unless there are common facts and the defendants were involved together in the same acts that caused the alleged infringement. The fact that separate defendants are accused of infringing the same patent isn't a basis for bringing the defendants together in a single lawsuit.
When a court determines that a party has infringed a patent, it will typically consider whether that infringement was willful. Willfully infringing a patent essentially requires that the infringer knew or should have known that there was a high likelihood that its actions constituted infringement of a valid patent. If a court determines that the infringement was willful, then the penalty that the infringer pays to the patent owner could be doubled or tripled.
Usually, an accused infringer will get advice from a patent lawyer about whether it is infringing a patent. The lawyer typically gives the advice in the form of an opinion—a written document that analyzes the patent at issue and the potentially infringing item. Before the AIA, the failure to get such an opinion could be used to prove willful infringement. The AIA prevents patent owners from raising the lack of an opinion as a basis to prove willful infringement.
Other AIA-inspired changes to litigation include ending challenges to patent validity based on a failure to satisfy the Best Mode requirement, which obligates an inventor to, at the time of filing a patent application, disclose the best way that he knows to use, or practice, the invention. Also, the AIA modified the patent marking requirements to allow virtual marking of products with the patent numbers that cover those products, and bars litigation based on marking products with the numbers of patents that have expired. The latter issue was a source of hundreds of lawsuits from 2009 to 2011.
Additional effects that the AIA will have on litigation will likely become apparent over time. The law has been in force for only a short time. As lawsuits are filed and progress through the courts, the law will become more fully defined and provide additional guidance to patent owners and others impacted by the changes to the law.
Other Aspects of The Aia
The AIA has some other provisions, including the following.
Derivation proceedings, a mechanism that counterbalances the first-to-file system, are designed so that the first (true) inventor can challenge the first applicant's right to a patent by demonstrating that the first applicant is claiming an invention derived from the true inventor. With many limitations, derivation proceedings can be conducted administratively either in the US Patent Office or litigated conventionally in federal court.
The derivation proceedings concept isn't new—only the procedure is new. It's triggered when both involved parties file patent applications and at least one of the involved parties charges that the other party derived the invention from it. However, only the party having the later effective filing date can initiate derivation proceedings. Further, the claims in the competing patents or patent applications must not be patentably distinct.
It could be challenging for the first inventor to prevail over the first applicant in derivation proceedings. As the term implies, the focus is on whether the first applicant derived the invention from the first inventor. Therefore, the first inventor might need to provide evidence that important details of his invention were transmitted to the first applicant and that the first applicant used them to file a patent application. This contrasts with situations in which multiple inventors independently conceived the same invention. Finding evidence of transmission and use may be difficult in practice.
Third parties can submit any reference, such as a patent, published patent application, or other printed publication, during the examination of a patent application for the patent examiner to consider. The patent office will include the reference in the record of the examination. In contrast to the pre-AIA practice that limited the time for submitting references to two months following the publication of patent application, the AIA extends the time to the earlier of (i) the date a notice of allowance is given or mailed in the application, or (ii) the later of either six months after publication, or the date of the first rejection during the examination of the application.
The AIA reduced certain fees for qualified small entities and introduced a new class called micro entities. A micro entity is an applicant that qualifies as a small entity, hasn't been named as an inventor on more than four previously filed patent applications, doesn't have a gross income exceeding three times the median household income for the preceding calendar year, and hasn't transferred ownership interest in the application to another entity exceeding the income limit. Institutes of higher education are included in the definition of micro entities, but this definition is subject to further regulations to be prescribed.
Filing by assignee
The AIA allows assignees of inventions such as employers of inventors to file patent applications. This will facilitate filing when the inventor won't cooperate, can't be found, or is incapacitated.
Inventions that relate to strategies for reducing, avoiding, or deferring taxes aren't patentable. However, inventions that relate to preparing and filing tax returns or are used solely for financial management aren't covered by this prohibition.
There are other parts of the AIA that, as they come into force, will become clearer and for which the effects will be better understood. There are usually unintended consequences that result when large-scale legislation is enacted. Time will tell the scope and severity of these consequences, if any, that relate to the AIA. Until then, inventors, patent applicants, and patent owners should stay in close contact with their patent attorneys to keep abreast of AIA-related matters and to consider whether changes to their patent strategies are warranted.
Brian M. Gaff is a senior member of IEEE and a partner at the Edwards Wildman Palmer LLP law firm. Contact him at firstname.lastname@example.org.
Ralph A. Loren is a partner at the Edwards Wildman Palmer LLP law firm. Contact him at email@example.com.
Amy M. DeCloux is an associate at the Edwards Wildman Palmer LLP law firm. Contact her at firstname.lastname@example.org.