Brown & Michaels

The America Invents Act of 2011

The Leahy-Smith America Invents Act of 2011 is the "Patent Reform" law passed by the US Senate on September 8, 2011, which made significant changes to the US Patent Law. The act was signed into law by President Obama on September 16, 2011, but the provisions of the law will be phased in over an 18-month period. The USPTO has a web page on the ongoing implementation of the Leahy-Smith Act.

The following is a summary of most of the provisions of the new law, which are most likely to affect our clients. The law runs 152 pages, and includes many things which are primarily of interest to the USPTO but which don't impact inventors directly, and if you're really interested you can read all 152 pages of the Act here in PDF form (off-site link to the Patently-O site).

Effective immediately on signing - September 16, 2011

Reexamination Standard: Changes standard for inter partes reexamination from “substantial new question of patentability" to a “reasonable likelihood that the requester would prevail.”
Statutory fee amounts: basically, this just puts the current USPTO fee schedule into the law.
Refunds and error in payment: Allows USPTO to refund excess claims fees for canceled claims or fees paid in error.
Micro entity discount: A new 75% discount on some fees will be offered to "micro entities" - small entities even smaller than Small Entities, basically individuals who are below a certain income level and have not filed more than a certain number of patent applications. Although this provision is supposed to take effect on enactment, in a press release dated September 21, 2011, USPTO has said: "At this time the USPTO may not offer the micro entity discount (75%) on any fees." For more information, see our page on Small Entity and Micro Entity fees.
Tax strategies are within the prior art: Effectively eliminates patents on methods of tax reduction, avoidance or deferral. Applies to any patent application that is pending on, or filed on or after enactment date, and to any patent that is issued on or after enactment date.
Best Mode: Failure to state the best mode (preferred embodiment) is no longer grounds for invalidity. Note that this does not remove the requirement in section 112 of the Patent Law to state the best mode in the application, it just makes it impossible to challenge the validity of a patent in litigation based on the failure to do so.
Human organism prohibition: Bans patents "directed to or encompassing human organisms". While commentators have raised concerns that this could be interpreted broadly to ban patents on such things as cell lines or methods of treating people, the USPTO position on this provision is that it does not change existing law or long-standing USPTO policy, which already banned patenting human beings, as such.
Patent term extension for drugs: A very particular section dealing with the consequences of when a product receives permission for patent term extension purposes, if the permission is sent after 4:30 Eastern Time on a business day, or on a non business day. Sometimes referred to in the blogosphere as the "Dog Ate My Homework Act", it is not clear that this will have any effect at all on anything other than Medco's U.S. Patent No. 5,196,404 covering ANGIOMAX (bivalirudin).
Marking (virtual): Allows marking a product with a reference to a web page instead of the actual patent numbers covering the product.
Marking (qui tam actions): Eliminates the ability of anyone but the government to sue a manufacturer who marked a product with an expired patent number to get civil penalties. A party who has suffered commercial harm by such marking can still sue, but only for actual damages.
Civil action under 35 U.S.C. 145: In an ex parte reexamination, a party who disagrees with a ruling of the BPAI (now to be called PTAB) can no longer sue the USPTO in District Court to overturn the ruling.
Multiple-Defendant Lawsuits: This provision is aimed at so-called "trolls", and is intended to make suing multiple defendants on a single patent more expensive. It will prevent a patent owner from suing more than one company in a single lawsuit, if the only grounds for the suit is that they all infringed the same patent. This also applies to prevent a court from consolidating multiple cases just because they all involve infringement of the same patent, unless the defendants agree, so that plaintiffs can't make an end-run around the law by bringing lots of lawsuits and then merging them afterward. The law applies to all lawsuits filed on or after the bill's enactment date.

Ten days after enactment - September 26, 2011 - Now in Effect

Prioritized examination and fee (Track 1): Implements the "fast track" examination program previously announced by the USPTO, but put on hold due to budget limitations.
15% transition surcharge fees: Adds a 15% surcharge to patent fees. Surcharge expires when USPTO revises fee under fee provisions of the Act. A list of fee changes may be downloaded from the USPTO, and the updated fees are reflected in our Patent Budget Estimator and USPTO Patent Fees pages.

Sixty days after enactment - November 15, 2011 - Now in Effect

Paper Filing Penalty: Adds a $400 penalty for applications which are not filed electronically.

One year after enactment - September 16, 2012

Oath or Declaration: Several changes, including: (a) elimination of the requirement that an inventor state his/her citizenship, (b) adds new required wording; (c) allows the required statements to be made in the assignment rather than in the oath or declaration; (d) statements for non-signing inventors; (e) elimination of "lack of deceptive intent" statement in reissue declarations and when changing inventorship; (f) no longer requiring supplemental oath or declaration in reissues.
Third Party Preissuance Submissions: A new section 122(e) is added - Third parties will be allowed to submit certain types of information (publications, patents, published applications, but not public use or sale or improper inventorship, to which section 122(c) applies). Submissions must be made before the earlier of (i) allowance or (ii) the later of six months after the publication of the application or the first rejection. It is not yet clear how this will be done, or what the fee for such filings would be. At the AIPLA convention in October, 2011, the USPTO indicated that it was considering a web-based submission system similar to Peer-to-Patent which would not require a fee, but no official announcement of when (or if) such a system would be implemented has been made.
Supplemental Examination: Applies to all patents, whenever issued. A patent owner can file a Request for Supplemental Examination, supplying information not limited to patents and publications. Supplemental Examination must be carried out within three months. If information supplied raises at least one "substantial new question of patentability", Director is required to conduct a supplemental-examination-ordered ex parte reexamination. If Director becomes aware of fraud either during supplemental examination or reexamination based on supplemental examination, the Director will refer the matter to the Attorney General.
Citing art in an issued patent's file under section 301: Expanded to include written statements of the patent owner filed in proceedings before a Federal court or the Office taking a position on the scope of a patent claim. Provides for submission of additional information with such statements and limits the use of such statements (not to be considered for any purpose other than to determine the proper meaning of a patent claim).
Priority examination for "important technologies": Will allow the Director to provide for priority examination for applications for "products, processes, or technologies that are important to the national economy or national competitiveness". Specifically says that this may be done "without recovering the aggregate extra cost of such prioritization". Watch for enabling regulations for definitions of these terms.
Transitional Program for review of certain business method patents: Eight-year transitional term, during which a petitioner who has been charged with or sued for infringement may bring post-grant review proceeding to determine validity of certain business method patents. Patent must claim a method or corresponding apparatus for performing data processing operations utilized in the practice, administration, or management of a financial product or service, but not patents for technological inventions.

Eighteen months after enactment - March 15, 2013

First Inventor to File: The most significant change in the Act is from the "first to invent" standard for who gets a patent in a conflict between two applicants, to "first inventor to file".

Until this change, if there was any conflict between two inventors, the patent was granted to the first person to invent (conceive plus reduce to practice) in an "interference" proceeding. How "first to invent" worked involved complex sets of rules to decide who was actually first, especially if one inventor conceived first and reduced to practice later, and so on. "First to Invent" also affected what constituted "prior art" - in case of a publication or other prior art, an inventor could "swear behind" the prior art by showing he had invented before the publication.

The change to "first inventor to file" eliminates the need to inquire as to date of invention, although the Act as passed does not go all the way to a pure "first to file" system, where nothing matters but when the application was filed. The applicant still needs to be an inventor - just anyone cannot get a patent simply by filing first - and the patent goes to the application with the earliest "effective date". The effective date for an application will be its actual filing date or, if the inventor published less than a year before the filing date, the date of publication.

There is a transitional provision - patents which were filed under "First to Invent" remain under that standard. "First Inventor to File" will apply to any application with a claim "having an effective date as defined in section 100(i)" on or after the effective date of this provision (i.e. enactment plus 18 months), or (ii) having a specific reference under sections 120, 121, or 365(c) to an application having such a claim (i.e. a continuation, continuation in part, divisional or National Stage of PCT), and to patents based on such applications.

According to the USPTO, this means that the old rules continue to apply to applications filed before March 16, 2013, and to continuations and divisionals of those applications which are filed after March 16th. The new rules will apply to any application that ever contains a claim that has an effective filing date on or after March 16, 2013.

For continuations-in-part (CIPs) it would appear that one would have to look at each claim and see if any claim has an effective date after March 16, 2013. Under the USPTO's interpretation of the rules, once the CIP is filed with at least one claim with an effective date after March 16th, the entire application would be under the First Inventor To File system, even if that claim is later canceled. This would probably mean that most CIPs filed after March 16, 2013, would be under the new rules, since CIPs are, by definition, filed to add new matter.

So, for the foreseeable future, we will be working under a dual system, some applications being judged under "first to invent", and others judged under "first to file".

The change to "first inventor to file" involves a number of other changes to the law, specifically:

Foreign applications are now "prior art" as of their foreign filing date, rather than as of publication.

PCT applications are "prior art" as of their International Filing Date, regardless of language (previously, they had to be published in English).

Public use or sale and "otherwise available": Section 102(a)(1) is amended to add that prior art, in addition to patents, publications, public use or sale, includes the invention being "otherwise available to the public". This section is also amended to remove the words "in this country" after "publicly used or on sale", so that public use or sale anywhere in the world would prevent getting a patent, not just US use or sale as before.

One-year Grace Period: Section 102(b) is amended so that the one-year "grace period" applies only to the inventor's own publications or to publication by someone who obtained it from the inventor. There is no "grace period" for publications by others.

Effective Date vs Filing Date: Publications by the inventor, if less than a year before the application filing date, become the "effective date" for prior art purposes. So, a publication by someone else is "prior art" only if it is published before the effective date. In other words, if the inventor publishes, this "stops the clock" on prior art - anything published later is not prior art, even if it is published before the application filing date. This differs from the "absolute priority" requirement in most foreign countries, where any publication before filing is prior art, even if it is the inventor's own publication.

Section 102 Novelty changes: In addition to the above, the following sections are eliminated as no longer necessary under "first inventor to file": 102(c) (abandonment), 102(d) (first patented in a foreign country), parts of 102(f) (other than impact on derivation and improper inventorship), 102(g) (priority of inventorship, including impact on 37 CFR 1.131 priority of invention affidavits)

Section 103 Obviousness: amended such that obviousness is to be judged as of the effective date of the application, rather than as of the date of invention.

Section 104: This section, dealing with requirements for inventions made abroad, is repealed.

Derivation Proceedings: These will replace interferences as inter-inventor proceedings in the USPTO before the renamed Patent Trial and Appeal Board (PTAB), formerly the Board of Patent Appeals and Interferences (BPAI). Derivation proceedings will be used to determine if an inventor in an application having an earlier effective date in fact derived his invention from the inventor with the application having a later effective date. Unlike interferences, the date of invention would be irrelevant, and the only issue would be if the earlier filer derived from the later.

Statutory Invention Registrations: The SIR program, which was seldom used anyway, will be eliminated.

Other Provisions

Satellite Offices: There will be three satellite patent offices - Detroit (which was previously announced, but put on hold for budget reasons), plus two others (Denver CO and Austin TX have been mentioned).
"Prior commercial use" is added as a defense to infringement for all technologies, if the use was at least one year before effective date of application. Exemption for patents owned by universities or their tech transfer offices.
Post-grant review of patents: Replaces “optional inter partes reexamination” with “inter partes review” to be conducted by Patent Trial and Appeal Board within 1 year (with possible 6-month extension for good cause); available for life of patent after later of 9 months from grant or termination of post-grant review; not available if filed more than 1 year after service of infringement complaint or if petitioner previously filed DJ action alleging invalidity; basis limited to patents or printed publications; provides for intervening rights re any new or amended claims. Threshold showing is “reasonable likelihood” that the petitioner will prevail. Estoppel standard is “raised or reasonably could have raised” before the USPTO and the courts. Director may limit number of proceedings in first 4 years.
Advice of Counsel: Provides that failure of an infringer to obtain advice of counsel cannot be used to prove willfulness or induced infringement.
Misc. Studies: The USPTO is directed to perform some studies, and to review fees.

You can get a summary of the patent provisions from the USPTO, or if you really care, you can read all 152 pages of the Act here in PDF form (off-site link to the Patently-O site).

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