Capital Infusion - May 2013: A New Day for Patents

As of March 16, 2013, all the provisions of the Leahy-Smith American Invents Act (“AIA”) have become effective. The AIA creates a new patent system for the United States with important ramifications for all technology companies.

The United states Is Now Under a First-Inventor-to-File System

Before the change, the American patent system was a first-inventor-to-invent system. Under this old system, in a competition between independent inventors, the first individual or individuals to invent were generally awarded the patent. Thus, individuals who were first to invent but second to file at the United States Patent and Trademark Office (“USPTO”) were able—potentially—to receive the patent. No more.

Under the AIA’s new first-inventor-to-file system, the first inventor to file a patent application in the United States will be awarded the patent. This is a momentous shift from the first-inventor-to-invent system. The first-inventor-to-file system applies to U.S. patent applications that contain, or contained at any time, at least one claim having an effective filing date on or after March 16, 2013. Furthermore, unlike under the first-inventor-to-invent system, inventors under the first-inventor-to-file system are not able to use the invention date to avoid prior art that appears between the invention date and filing date.

A Larger Universe of Prior Art

The universe of prior art available for comparison to the invention has increased significantly as of March 16. This may make it more difficult to obtain a patent. Under the old law, an inventor had one year from when the invention appeared in a publication or was used or sold (each constituting prior art) to file a patent application. This one-year period was known as a “grace period.” Under the new provisions, the blanket one-year grace period is gone. Any prior art available before the filing date is now available to apply against the patent application with one important exception. The exception provides that if the invention was directly or indirectly disclosed within one year of the filing date by the inventor, the inventor will not be blocked by prior art appearing between the disclosure and the filing date. The exact scope of this exception is ill-defined and should not be relied upon until the courts interpret it.

The AIA also expands the universe of prior art by eliminating what was called the Hilmer Doctrine. Under the long-standing Hilmer Doctrine, only published U.S. applications and international applications that designated the United States as recipient were available for use as prior art as of their initial filing date. Now, published patent applications and patents—regardless of where filed or in what language they are filed—are available as prior art effective as of their initial filing date.

The AIA has also removed geographical limitations that existed for certain prior art. Under the old law, public use and sales activities could not be used as prior art if the activities occurred outside the United States. Now, the relevant provision has no geographical restriction.

Post-Grant Review

Sometime after March 16t, we will see the new Post Grant Review (“PGR”) process used to challenge the validity of issued patents upon any grounds of patentability (novelty, obviousness, lack of enablement, etc.). The PGR provides a mechanism for challenging the validity of patents at the USPTO instead of the federal courthouse. To use a PGR, the petitioner must show that it is “more likely than not that at least one of the claims challenged is unpatentable.” Moreover, a PGR must be initiated within nine months of a patent grant and is only applicable to patents issued under the new first-inventor-to-file system. Because of this latter requirement, we will most likely not see a PGR for at least one or two years.

Recommendations

Under the new law, you should file as soon as possible after creating a new invention. Filing processes should be reviewed and streamlined. Furthermore, you should discuss the filing timeline with your attorney on each patent application.

You should also consider monitoring patents issued to your competitors and evaluating opportunities under the PGR proceedings to challenge a competitor’s intellectual property before it can create problems for you in the marketplace. A timely filed PGR may help you to avoid high-cost litigation down the road.