America Invents Act

In September 2011, Congress passed the Leahy-Smith America Invents Act (AIA). The AIA involves the most substantial changes to U.S. patent law since the 1960s. The following highlights the major changes as they pertain to the filing and evaluation of patent applications:

  • Regarding inventorship, the U.S. will be changing from a first-to-invent to a first-inventor-to-file country, effective March 16, 2013.  Interference practice to challenge an earlier-filed patent or application claiming the same subject matter on the grounds that the later filing applicant conceived the invention first will no longer be available.
  • The reference date for determining appropriate prior art will be the effective filing date. The “swearing behind” procedures currently available under 37 C.F.R. 1.131 to try and predate prior art will no longer be available.
  • Failure to disclose the best mode in a patent application no longer serves as grounds for invalidating a patent, effective September 16, 2011. This does not mean that the applicant should still not disclose the best mode at the time the application was filed. Indeed, 35 U.S.C. 112 still contains the best mode requirement under the AIA, and the best mode requirement ties into the adequacy of disclosure requirements.
  • Once the first-inventor-to-file change becomes effective, the 1 year grace period for public use or commercial activities such as sales or offers for sale currently provided for under 35 U.S.C. 102(b) will no longer be available. The new law does not, however eliminate the one year grace period for filing of an application by the inventor after direct or indirect disclosure by the inventor.
  • Derivation Proceedings will be available to determine whether the applicant of the earlier-filed application derived the invention from the applicant of the later-filed application. The new law provides for both administrative derivation proceedings before the Patent Trial and Appeal Board under 35 U.S.C. 135 and/or civil court derivation proceedings under 35 U.S.C.

Other changes cover post grant proceedings. Procedures available for challenging a patent are/will be: Inter partes review; post grant review; transitional proceedings; and re-examination. Some of these procedures became available on September 16, 2011, and others will become effective on September 16, 2012. A Supplemental Examination Procedure under 35 U.S.C. 257 will be available to the patent owner starting on September 16, 2012 to address issues which could have a detrimental impact on the issued patent, for example by removing issues that would otherwise render the patent enforceable including possibly inequitable conduct.

What Does the AIA Mean for Small Businesses and Startups?

There is been considerable negative commentary on the AIA that the change to a first-inventor-to-file system will favor large corporations which generally have the resources, including in-house legal staff, to get patent applications filed quickly. That is, large corporations will have a distinct advantage under the first-inventor-to-file system.

Moreover, many commentators scoff at Congress’ position that the new patent laws will promote substantial job growth. Indeed, it is well documented that small businesses and startups have been largely responsible for job growth over the years. As the argument goes, the first-to-invent system, which has been in effect since 1786 as per the U.S. Constitution, encouraged risk taking and investment because it recognized that the first-to-invent should be awarded any valuable patent rights. That is, the first-to-invent system leveled the playing field between individuals/small companies and large corporations, and has been responsible for promoting American entrepreneurship through the centuries.

Yet, the AIA is here to stay. One thing that does need to be emphasized is that the first-inventor-to-file system under the AIA does not remove the requirement that the invention described within the patent application was indeed invented by the named inventor. Remember that the term is the first-inventor-to file and not first-to-file. Also, there will be available to a later-filing inventor procedures for contesting an earlier filed application.

Small businesses and investors will need to adjust to the AIA, and the time to start doing is sooner than later so that they can develop effective IP protection strategies. As discussed in the provisional patent applications webpage, provisional patent applications may take on more importance as a way to meet the first-inventor-to-file requirement.

In addition, documents such as non-disclosure agreements (“NDAs”) should be utilized to provide documented proof of any proprietary information which is to be disclosed under the terms of the NDA. Such information may turn out to be very useful if the inventor decides to take advantage of the AIA’s derivation proceedings. Any and all disclosed proprietary information should be carefully documented with a clear description of the disclosed information, the date of the disclosure, and the person to whom the information was disclosed. The inventive entity disclosing the proprietary information should also determine the minimum amount of proprietary information which it really does need to disclose for the objective at hand, e.g., to obtain investment funding through a venture capitalist.

Small businesses and start-ups might also consider developing valuable IP based on a combination of patent and trade secret strategies.

In conclusion, small businesses and start-ups have time to take steps to adapt to the new first-inventor-to-file system before it becomes effective on March 16, 2013. IP development strategies may well need to be thought out more carefully than ever before since the timing of a patent application’s filing will need to be critical component of any IP development strategy. And perhaps certain small businesses and start-ups may be in a better position to forge ahead with new innovations relative to large corporations because sometimes large corporations just are not poised to act quickly to address new technical opportunities.

We hope the above information on the AIA is useful. If you have any concerns related to obtaining a patent and/or other types or IP protection such as copyrights, trade secrets, and/or trademarks; management of your IP portfolio; and/or IP commercialization, including IP licensing, call us at (305) 279-4740 or contact us online for a FREE consultation.