Pennsylvania Litigation Blog

On September 8, 2011, members of the United States Congress passed the Leahy-Smith America Invents Act (H.R. 1249) with a vote of 88-9, without amendment to the House bill passed in late June. The bill is awaiting signature by President Obama. Once the bill is awaiting a signature by President Obama, it will introduce sweeping patent reform, the most notable being a change from a first to invent system.  Some provisions become effective immediately while others will not take effect for at least one year after the date of enactment.  The following is a brief overview of some of the key provisions which may impact your business or practice.

These provisions will take effect immediately and are applicable to pending proceedings:

False Marking

Qui tam actions brought by affected private parties for false marking suits will be eliminated. Going forward, only the U.S. government can sue for statutory damages, although persons who have suffered a "competitive injury" from false marking can bring a civil action for damages "adequate to compensate for the injury."

A prior commercial use defense will be available against an infringement assertion based on a patent issued on or after the date of enactment. The defense is personal and can be raised if the defendants’ commercial use that would otherwise infringe a claimed invention occurred one year before the filing date of the application of the patent.

Failure to disclose the "best mode" in a patent will no longer be a basis for invalidating the patent or for ruling a patent unenforceable. This will be applicable to new cases only and will practically eliminate the best mode requirement for patent applicants.

Inter partes reexamination is replaced with inter partes review (IPR) proceedings that will be adjudicated by administrative patent judges. The old “substantial new question of patentability" standard for reexamination is changed in IPRs  to "a reasonable likelihood that the requestor would prevail" with respect to at least one of the challenged claims.

The new statute also prohibits the initiation of an IPR proceeding, if the petition is filed after the petitioner (or the real party in interest) has challenged validity in a declaratory judgment action. However, if the declaratory judgment action is filed after filing a petition for the IPR, the declaratory judgment action will be stayed, unless, for example, a counterclaim for patent infringement is initiated.  Additionally, to open an IPR, a petitioner must file a petition for an IPR proceeding within one year of a civil action asserting infringement.

 

The following provisions will take effect 10-days after enactment:

A 15-percent surcharge will be added to all patent-related fees, including patent maintenance fees.

The USPTO will be authorized to proceed with its "Track I" program for fee-based prioritized examination. That program was earlier proposed by the USPTO as reported in previous client alerts here and here, but not implemented because of budgetary constraints The fee to enter Track I will be $4,800 for large entities or $2,400 for small entities.

The following provisions will take effect 1-year after enactment:

Transition From a First to Invent System to a First to File System:

Under the current system, a patent is granted to the inventor who first invents the relevant invention. With the change in legislation, patents will be granted to the person who first files for a patent, regardless of whether he or she was first to invent the product. 

The shift to a first to file system changes the requirements for novelty, under a new §102 wherein patents, printed publications, public uses, sale of the invention that predate the patent application's effective filing date constitute prior art.  There will be one major exception though, wherein prior art does not include disclosures made by an applicant or obtained through the applicant 1 year or less before the effective filing date of the claimed invention.

New Post Grant Review Proceedings and U.S. Patent and Trademark Office (USPTO) Practices:

This bill retains existing ex parte reexamination, adds preissuance submissions by third parties,  and adds post-grant review. Note also that the Act immediately expands post-grant inter partes reexamination renamed as inter partes review as described above

 

The inter partes review, or lawsuits where all parties are given reasonable opportunity to attend and be heard in hearings, will be implemented. Within inter partes review as part of the American Invents Act, there must be a showing that a party will likely prevail on the issue in question. Additionally, joinder of parties will be accommodated as well as multiple proceedings pursuant to new provisions. 

 

Changes to 35 U.S.C. § 135 will add derivation proceedings to replace current interference proceedings. Derivation proceedings determine whether the inventor named in an earlier-filed application derived the claimed invention from the inventor named in a later-filed application without authorization.

 

Several amendments were introduced before H.R. 1249 was passed, but failed.  One amendment would have ended "fee diversion”, while another amendment that would limit a new program to limit business method patents.

 

Once effective, the  America Invents Act will shape the practice of patent law and will greatly impact the filing and prosecution of patent applications, as well as patent litigation.  We will send further updates and details after the bill is signed into law and the USPTO begins implementation.