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America Invents Act Provides Sweeping Patent Reform
Alan G. Towner, Esq.
The America Invents Act ("AIA") was signed into law on September 16, 2011. It is the first major overhaul of the U.S. patent law since the 1950’s.
Most significantly, the AIA converts the United States from a "first-to-invent" standard to a "first-inventor-to-file" standard of determining priority, thereby bringing the United States into better harmony with the patent laws of foreign countries. The conversion to the first-inventor-to-file system becomes effective on March 16, 2013.
Prior to this change, inventors could rely on prior conception of their invention to establish priority over others, even if they were not the first one to submit a patent application to the United States Patent and Trademark Office ("USPTO"). Under the new law, priority is simply determined by the date that an inventor files his or her patent application. As a consequence, there may often be a “race to the Patent Office,” as inventors working in similar fields try to avoid the loss of patent rights to their competitors. This fundamental change is considered by some to benefit large companies and institutions with well-established patent procedures that enable prompt patent filings. However, there is some concern that smaller companies and individual inventors without the resources or knowledge of the new law may be placed at a disadvantage under the first-inventor-to-file system.
Another major change implemented by the AIA is an increased ability to challenge the validity of patents at the USPTO. Inter Partes Review and Post-Grant Review procedures will allow challengers to ask the USPTO to reconsider whether a patent has been properly granted. Under the Inter Partes Review procedure, a challenger can submit "prior art" to the USPTO and, if there is a reasonable likelihood that the challenger would prevail, the petition for review will be granted. Both the patent owner and the challenger will have opportunities for limited discovery and to make oral arguments before a newly named Patent Trial and Appeal Board ("PTAB").
Under the Post-Grant Review procedure, anyone other than the patent owner may challenge the validity of a US patent within 9 months of its issue date. The USPTO Post-Grant Review procedures are modeled after European patent opposition procedures that have been used for many years. In addition to submitting "prior art" to the USPTO, a challenger utilizing the Post-Grant Review procedure may attack the validity of a recently issued U.S. patent on several other statutory grounds that were historically only available in infringement actions brought in federal courts.
The new Inter Partes Review and Post-Grant Review procedures will take many patent validity disputes out of federal courts and into the USPTO. Unlike the "clear and convincing" standard that must be met in order to invalidate a patent in federal court, the USPTO will use a "preponderance of the evidence" standard when determining whether patents are valid. While this lower evidentiary standard may benefit those seeking to invalidate a patent, if a challenger is not successful at the USPTO, the challenger may be estopped from challenging validity of the patent later in federal court.
The patentability of "business methods" has been a hot topic for several years, culminating in the 2010 Bilski Supreme Court decision, which may have weakened, but did not eliminate, the ability to obtain patents for business methods. In the AIA, Congress has taken what some consider to be a further step to limit patent protection for business methods by allowing anyone who has been sued or charged with infringement of a business method patent to petition the USPTO under a procedure similar to the Post-Grant Review procedure. Beginning September 16, 2012, such alleged infringers can attack a patent if it covers a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except for patents for technological inventions. Congress did not define what constitutes a "technological invention," leaving it to the USPTO and the Court of Appeals for the Federal Circuit to develop the boundaries of what business methods are sufficiently "technological" to avoid additional scrutiny at the USPTO.
The AIA has also curtailed "false patent marking" suits. Under the old patent law, it was an offense to falsely mark goods as "patented," and statutory fines of up to $500 could be imposed for every such offense. Any individual could bring a qui tam action based on false patent marking of a product, and could share half of any money recovered with the U.S. government. In recent years, significant monetary awards in lawsuits brought under the false marking statute spawned a cottage industry of individuals seeking to benefit from such recoveries. Now, only the U.S. government is able to sue for statutory damages for false marking. Individuals who claim products were falsely marked may bring a civil action, but can only recover compensatory damages to the extent they can prove that they suffered a "competitive injury."
The AIA has quickly and drastically changed the landscape of patent protection in the United States. Inventors seeking patent coverage should be aware of the new first-inventor-to-file system and other new requirements impacting the content of their patent applications and the timing of their patent efforts. Those seeking to enforce their patents, and those accused of patent infringement, should be cognizant of the new Inter Partes Review and Post-Grant Review procedures at the USPTO, and should consider how such procedures may impact their patent litigation strategies.
