Thanks to the recently-passed America Invents Act, Nevada businesses may find it easier to get “patent pending” status for their inventions, but the race against competitors has not yet begun.
Perhaps most notably, the Act will transform the U.S. patent system from a “first to invent” to a “first to file” system, the first major reform of the patent system in over 60 years. Under this new system, the first inventor to file a patent application will be entitled to priority, regardless of whether that inventor was the first to invent. The shift to “first inventor to file” is aimed at improving certainty in the patent system. For priority purposes, only the date of filing will need to be determined, not the actual date of invention. Further, the majority of other countries already follows this “first to file” system. This shift will bring the U.S. into conformity with those countries. This change will become effective March 16, 2013, giving inventors less than a year to prepare for what may turn filing for patents into a race to the Patent Office.
Recognizing that startups, small business, and first-time inventors may be disadvantaged in such a race, the Act attempts to level the playing field by lowering some fees for what the Act calls “micro entities.” Before the passage of the Act, “small entities”, such as independent inventors, non-profit organizations, and companies with fewer than 500 employees, could qualify for a 50% reduction in filing fees. Soon, micro entities will be able to qualify for a 75% reduction in filing fees, significantly reducing a financial barrier to entry. To qualify, micro entities 1) must qualify as a small entity, 2) cannot be named as an inventor on more than four previously-filed applications, 3) cannot have a gross income exceeding three times the median household income, or about $150,000, and 4) must not transfer ownership to an entity that has gross income exceeding three times the median household income. Inventors at institutions of higher education may also qualify as micro entities.
Once a patent application is filed, the process typically only includes the inventor, the inventor’s patent attorney, and a patent examiner from the Patent Office. Before a patent issues, the patent examiner must determine that the invention is novel (new in all the world), non-obvious (not merely a combination of existing technology), and useful. Third parties are able to submit “prior art” (documents like previously-filed patent applications, issued patents, and other printed publications) to the Patent Office in hopes of convincing the patent examiner that a patent should not be issued because the invention is not novel or non-obvious based on the submitted prior art.
While third party submissions may seem like a powerful tool in stopping competitors from patenting undeserving inventions, they are rarely used in practice. Before the Act, third party submissions could only be submitted without comment, and few parties were willing to let the Patent Office interpret their submissions unguided. Later this year, the Act will permit third parties to submit prior art with comment — all while remaining anonymous. This change is likely to introduce more third party involvement and is intended to increase the quality of issued patents.
Wise businesses will recognize that intervening in their competitor’s patenting process means having a hand in their own fate. Today’s patents turn into tomorrow’s costly litigation, and the Act provides several opportunities to shape that litigation or even head it off entirely. Third party submissions must be made before the patent issues, and two new procedures allow challenges to an issued patent: post-grant review and inter partes review. Post-grant reviews can be sought within the first nine months after a patent issues and can raise a wider variety of challenges than the inter partes review, which can be brought starting at nine months after the patent issues. If litigation is the cure for patent infringement, then these new options can be the prevention.
Finally, if a business finds itself defending a patent infringement lawsuit, the Act provides some new defenses, like prior commercial use. And for patent holders, products can now be marked with a URL that points to a website listing of the patents that protect that product, rather than listing the patents on the product itself. Accordingly, the patent system has shown its flexibility and resilience through tremendous advances in technology. Expect the Act to define the U.S. patent system for years to come.
Derek Jamison is an attorney with Armstrong Teasdale who practices primarily in Intellectual Property Law.
