The Leahy-Smith America Invents Act was passed by the Senate on September 8, 2011, without amendment, and on September 16, 2011, the new legislation was signed into law by President Obama. The new patent reform legislation (H.R. 1249) will help clarify and simplify the patent application process and help harmonize the U.S. patent system with all other foreign trading partners. These changes are intended to enable U.S. inventors at universities and elsewhere to compete more effectively in the global marketplace. The bill is composed of a number of carefully drafted provisions to improve patent quality, reduce patent litigation costs, end backlog of patent applications, streamline office operations, and enhance the overall foundation of the modernized patent system.
The new legislation makes a number of significant changes. The U.S. will move from a “first-to-invent” system to a “first-to-file” system. Almost all other countries have already adopted this system, awarding patent rights to the first inventor to file a valid patent application. Up until now the U.S. has operated as a “first-to-invent” system, awarding patent rights to inventors who first conceive and reduce a technology or invention to practice. A key advantage to this new provision is that it brings the U.S. system into alignment with the patent laws of most foreign countries.
It will be interesting to see how this new provision affects small universities and businesses given that it creates a race to the patent office between inventors filing on technologies with similar claims. UR OTT has always encouraged inventors to move quickly with filing invention disclosures so as to get a provisional patent application on file as soon as possible. This new provision will only reinforce that message.
Another major provision, of the new law, is the Expedited, Non-Judicial Post Grant Review Process. This new condition establishes “post-grant review” before the Patent Trial and Appeal Board to review validity of issued patents within 9 months of grant on any patentability issue except best mode. The new review procedure is intended to create a more efficient and cost-effective avenue to challenge patents.
Supporters of this new process believe it’s a better way to weed out weak patents containing insubstantial claims and strengthen robust patents that are challenged and survive. Those opposed to this new option argue it will significantly raise the number of patent challenges filed against inventors and contend that the administrative process for reviewing the disputes will be inadequate and undependable compared to those argued in court. The impact of this new procedure will depend on how often it is used and how well the challenge is handled inside the Patent and Trademark Office (PTO). If we assume qualified personnel will be reviewing the cases, then this new provision should prove a more efficient and affordable way to resolve validity questions.
A third key provision is “Funding for the Patent and Trademark Office.” Funding for the PTO is one of the major political battles this new law is focused on fixing. For years the PTO has generated significant revenue from the fees it charges. Congress regularly sweeps those fees away from the PTO and uses them for other appropriations as it sees fit. The PTO has argued for years that it is not left with enough revenue to resource its operations appropriately. As the backlog of patent applications grows, this issue intensifies. On the other hand, the Federal budget crisis has made those revenues more valuable than ever before to Congress.
The new Act represents something of a compromise. First, it allows the PTO to set its own fees (until now, fees were set by Congress), and imposes a 15% surcharge on most fees, which was put into effect September 26, 2011. Second, the Act creates a Reserve Fund that sets aside fees in excess of the amount appropriated for the PTO. The money in the Reserve fund must be appropriated by Congress in order for the PTO to use it.
Also, beginning on September 26, 2011, a fast track or prioritized examination will be available to patent applicants for a fee of $4,800, which will enable applicants to receive a final determination of patentability within one year of their application filing date. This new condition is designed to help expedite the patent process for products, processes, or technologies important to the economy or national competitiveness of U.S. markets.
Other Provisions with Minor Impact on the University:
- Prior art exception for your own publications within one-year of patent filing fine tuned to eliminate certain prior art.
- Prior user defense established for patent infringement
- New ability of third parties to submit relevant prior art during prosecution
- Supplemental examination instituted to cure inequitable conduct
- Restrictions on ability to sue for false patent marking on products
The America Invents Act marks the conclusion of a long and tough debate on how best to modernize our nation’s patent system. This new legislation seeks to encourage innovation, create new jobs in the U.S., and provide the necessary resources for the USPTO to operate efficiently. The potential the new provisions hold remain promising, while the effects the new law will have on small universities and businesses, across the country, remains to be seen.