America Invents Act

Patent Reform – Changes that take effect immediately


Effective DateS

September 15, 2011

The U.S. Senate last week passed the House version of the Leahy-Smith America Invents Act (H.R. 1249) (“Act”).  The Act will become law once signed by President Obama.    

The Act will significantly change the American patent system.  Some of the more highly publicized provisions will not take effect for 12 to 18 months after signing.  These provisions include moving from the current “first to invent” system to a “first to file” system and additional mechanisms for post issuance review.   With the “first to file” provision, priority will be given to the first inventor to file a patent application, which will bring U.S. law into harmony with the patent laws of most other countries around the world.  The additional mechanisms for post issuance review  – post grant review, inter partes review, and supplemental examination – create new administrative procedures for challenging or amending a patent after issuance and are intended to reduce litigation.

Certain important provisions will be effective immediately or soon after signing, including:

USPTO PROCEDURES:

Surprise - PTO Fees on the rise.  The Act imposes a 15% surcharge on most PTO fees.  The Act includes a financial incentive to electronically file patent applications.  Applicants not filing electronically will be charged an additional $400 fee (effective 60 days from signing).

Higher Threshold for Inter Partes Reexamination.  The Act imposes a higher threshold for requesting inter partes reexamination.  In order to be granted, the requester will be required to show a reasonable likelihood that the requester will prevail with respect to at least one claim (current law requires a showing of substantial new question of patentability with respect to at least one claim).  This is an interim provision (to be replaced by inter partes review) and will be effective until the implementation of the new administrative post grant review procedures, scheduled to become effective 12 months from signing.  Plus, you can now request an inter partes reexamination for pre-1999 patent.

Limitation on Issuance of Patents.  The Act prohibits a patent claim directed to or encompassing a human organism.  This will apply to all pending applications, not issued patents.

LITIGATION:

Shorter List of Defendants.  The Act limits joinder of unrelated accused infringers in actions commenced on and after signing.  Joinder will be prohibited if solely based on allegations that a defendant has infringed a patent.  The Act also will limit the ability to join together parties in a patent infringement litigation, if the parties only have tenuous connections to the underlying dispute in the litigation.  The most obvious impact of this limitation will be on multi-defendant actions brought by non-practicing entities (NPE's).

Goodbye "Best Mode" Defense.  The Act eliminates failure to disclose best mode as a basis for adjudging a patent invalid or unenforceable.  This provision will only apply to lawsuits filed on or after the signing.

Hello "Infringement Based on Prior Commercial Use" Defense.  The Act expands the prior use defense under § 273 to include all patents, whereas it is currently only available for business method patents.  However, the defense cannot be asserted against universities or technology-transfer companies.

Big Changes Re: False Marking.  The Act amends § 292 to effectively eliminate all pending and future false marking lawsuits.  First, the Act provides that only those plaintiffs who have suffered “competitive” injury as a result of the false marking have standing to sue for compensatory damages.  Second, only the United States government has standing to sue for the fine of “not more than $500 for every such offense.”  Third, no civil or criminal liability arises if one marks a product with an expired patent number, provided that the expired patent actually covered the product. 

Getting with the times - Virtual Marking.  The Act amends § 287 to allow for virtual marking if the word “patent” or “pat.” is marked on a product, along with a reference to an internet website that the public can access free of charge to learn more about the specific patent. 

Venue.  Appeals of decisions issued by the U.S. Patent & Trademark Office (e.g., suspensions of attorneys or agents to practice before the PTO, actions to obtain a patent, derivation proceedings, etc.) will be heard by the U.S. District Court for the Eastern District of Virginia instead of the U.S. District Court for the District of Columbia.