“This is not a patent reform bill. This is a big corporation patent giveaway that tramples on the rights of small inventors.”
– Senator Maria Cantwell (D-WA)
On September 8, 2011, The U.S. Senate voted to adopt the June 23, 2011, House of Representative’s version of the Leahy-Smith America Invents Act, advancing it to President Obama’s desk, who has indicated he will sign it into law. Passage of this “patent reform” bill, which received bi-partisan support by passing the House 304-117, and the Senate 89-9, has been recognized as the first major overhaul to the patent system in almost 60 years! So what does this mean for small- and medium-sized enterprises (SMEs)?
Although the legislation is some 58-pages long, highlights of interest to SME’s include:
- Effective 10 days after President Obama’s signing of the bill, a 15-percent surcharge will be added to all USPTO patent filing and maintenance fees.
- The USPTO currently gives a 50% discount to small entities. Now, the USPTO is authorized to offer a 75% discount on its filing fees to newly-defined “micro entities” – those that have not been named as an inventor on more than four previously-filed patent applications and did not in preceding calendar year have a gross income exceeding three times the U.S. median household income.
- Patents will no longer be granted for “any strategy for reducing, avoiding, or deferring tax liability”, and any claim “directed to or encompassing a human organism.”
- The United States switches from a “first to invent” jurisdiction to a “first to file” jurisdiction. This ends the current “interference practice” where an inventor may challenge an earlier-filed patent application by arguing that their date of invention is before such earlier-filed patent application. This change makes U.S. patent law consistent with just about every other industrialized country in the world.
- A patent-owner plaintiff will no longer be able to sue multiple defendants in one law suit unless the right to such plaintiff’s relief arises “out of the same transaction, occurrence, or series of transactions or occurrences relating to the making, using, importing into the United States, offering for sale, or selling of the same accused product or process,” and “questions of fact common to all defendants or counterclaim defendants will arise in the action.”
- The law establishes a new post-grant review system that provides a nine-month window for challenging an issued patent on any grounds. The new system takes effect in one year for certain business method patents (“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”), but applies to all other patents with priority filing dates that fall 18 months after President Obama’s signature. Review may be granted upon a showing that “it is more likely than not that at least 1 of the claims challenged is unpatentable,” or “the petition raises a novel or unsettled legal question that is important to other patents or patent applications.”
- The new law eliminates the “best mode” ground for invalidating an issued patent. That is, a patent can no longer be canceled, invalidated or held unenforceable based on an alleged failure by an inventor to disclose “specific instrumentalities and techniques [that] have been developed by the inventor and known to him at the time of filing as the best way of carrying out the invention.” Glaxo, Inc. v. Novopharm Ltd., 52 F.3d 1043, 1050 (Fed. Cir. 1995).
- Currently, prior users of a business method – who kept that method as a trade secret and never filed for a patent – have a defense to patent infringement in the event that someone else obtained a patent for that method. The new law extends this “prior use defense” to all patents regardless of technology classification.
- The USPTO, aside from its Alexandria, VA headquarters, will be required to open three or more satellite offices within three years, with the first being in Detroit, Michigan.
- The new law also directs the USPTO to: complete, within one year, a Small Business Study on the effects of switching to a first-to-file system and eliminating the interference practice; assist and support pro bono programs for independent inventors and small businesses; and complete, within four years, a study on the new law’s implementation that must address access by small businesses to investment capital.
Obviously, the full effects of the new law (and the soon-to-come implementing regulations) won’t be known for some time. Will it reduce the USPTO’s backlog, decrease pendency and improve the quality of issued patents!? Stay tuned for these answers, as well as more analysis.
