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Intellectual Property Alert: The Leahy-Smith America Invents Act

September 26, 2011

On September 16, 2011, President Obama signed the Leahy-Smith America Invents Act (H.R. 1249) into law. The Leahy-Smith America Invents Act ("the Act") makes the most sweeping changes to U.S. Patent Law seen in decades, including moving the U.S. to a "first to file" country and bringing it closer in line to the "first to file" systems throughout the world. While the "first to file" provision does not take effect until March 16, 2013, many other provisions will take effect sooner, including some immediately.

While we here at Carmody & Torrance await further commentary and rules to be issued by the Patent and Trademark Office (and decisions rendered by the courts) on the implementation and interpretation of the specifics of the Act, the following outlines some of the more significant provisions of the Act. If after review, you would like to discuss any of the short-term and/or long-term impact of the changes, please contact Arthur Schaier at 203-575-2629, aschaier@carmodylaw.com or any member of the Carmody & Torrance Intellectual Property Group.

We suspect that the most significant provision will be the enactment of "First to File" (effective March 16, 2013). The Act changes the current law from a "first to invent" to a "first to file" system. For example, "novelty of an invention" will be based on whether "the claimed invention was patented, described in a printed publication, or in public use, on sale or otherwise available to the public before the effective filing date of the claimed invention." Inventors will no longer be able to "swear behind" an earlier filing of another by asserting that he/she was the "first to invent," independent of the actual filing date of the application. Now, it may be a "race" to the Patent Office for application filings.

Also important in the new Act will be the elimination of a provision often relied upon to forgive a certain amount of disclosure prior to filing (i.e. known as the 102(b) "grace period", which provided for the allowability of a patent "as long as the invention was not patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date [the application was filed] in the United States"). Notably however, the new Act still appears to provide for some form of a "grace period" provision ("a disclosure made 1 year or less before the effective filing date of a claimed invention shall not be "prior art" to the claimed invention" if "the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor... "). We will be monitoring closely the interpretation and effect of this provision.

Significant provisions in the Act that are now in effect are:

  • changes to the "Marking" Provisions: The Act immediately permits "virtual marking" where in lieu of physically marking products with patent numbers, the patent owner can "virtually" mark their product with the word "patent" or abbreviation "pat.," together with a publicly accessible website address that associates the product with the patent(s) covering the product. Also, the Act effectively ends "qui tam" actions concerning "false patent marking" brought by anyone other than the United States (for "statutory damages") or a person who has suffered a competitive injury as a result of the alleged "false marking" and only then is the competitor limited to damages "adequate to compensate for the injury." Significantly, the Act also makes it clear that marking with a patent that covered the product but that has since expired is no longer a violation of the statute.
  • an even further reduced (e.g. 75%) fee structure for "micro entities, (in addition to the existing 50% fee reduction for small entities). "Micro entities" will include, for example, "institutions of higher education" and applicants that meet specific income and other requirements;

  • a change in the threshold inquiry for inter partes review (i.e. reexamination) from "a substantial new question of patentability" to a showing that there is "a reasonable likelihood that the requester would prevail with respect to at least one of the claims challenged in the request;"

  • the elimination of a failure to disclose the "best mode" as a basis on which any claim of a patent may be canceled or held invalid or otherwise unenforceable;

  • a 15% surcharge to all patent-related fees, including maintenance fees; and

  • the availability of "prioritized examination" of patent applications, allowing inventors and businesses to have their applications processed more quickly upon the payment of a fee ($4800 (large entity) / $2400 (small entity)).

Other significant provisions in the Act that will become effective on September 16, 2012 are:

  • an even further reduced (e.g. 75%) fee structure for "micro entities, (in addition to the existing 50% fee reduction for small entities). "Micro entities" will include, for example, "institutions of higher education" and applicants that meet specific income and other requirements;

  • a change in the threshold inquiry for inter partes review (i.e. reexamination) from "a substantial new question of patentability" to a showing that there is "a reasonable likelihood that the requester would prevail with respect to at least one of the claims challenged in the request;"

  • the elimination of a failure to disclose the "best mode" as a basis on which any claim of a patent may be canceled or held invalid or otherwise unenforceable;

  • a 15% surcharge to all patent-related fees, including maintenance fees; and

  • the availability of "prioritized examination" of patent applications, allowing inventors and businesses to have their applications processed more quickly upon the payment of a fee ($4800 (large entity) / $2400 (small entity)). 

Other significant provisions in the Act that will become effective on September 16, 2012 are:

  • the availability of a Post Grant Review: There will be certain "post-grant" review opportunities for allowing third parties to ask the Patent and Trademark Office ("PTO") to challenge patents (e.g. within 9 months) after they are issued. This is different from (and in addition to) "reexamination" procedures which themselves have undergone some changes. This "post grant review" process can make it beneficial to monitor the applications of competitors, etc. and assess whether "post-grant" review is advantageous;

  • the extended period for Prior Art Submissions During Examination: In the "old" law, third parties may submit prior art for consideration in others’ patent applications. However, the window for such submissions is currently only 2 months from the "publication" of the application. The Act will extend the window to 6 months, thereby similarly making it beneficial to monitor the filings of third party applications in an effort to submit prior art to the PTO that the examiner might not otherwise have been aware of;

  • applications will be able to be filed in the name of the assignee to which the inventor(s) have assigned or is under an obligation to assign the invention;

  • a provision for the submission of "prior art" to the Patent Office in any third party’s patent and make such "prior art" part of the official file of the patent;

  • new procedures by which a patent owner may request "supplemental examination" of one’s own patent to "consider, reconsider, or correct information" believed to be "relevant" to the patent, thus providing the patent owner with an opportunity to avoid a later finding that the patent is "unenforceable" if such "information" is later considered, reconsidered or corrected during the supplemental examination;

  • a transitional post-grant review proceeding for reviewing the validity of "covered business method patents;" and

  • procedures to permit the Patent Office to prioritize the examination of applications for products, processes, or technologies that are "important" to the national economy or national competitiveness.