The America Invents Act: Groundbreaking US patent law changes are here

November/December 2012

The recent enactment of the Leahy-Smith America Invents Act (AIA) has set the stage for what are probably the most sweeping patent law reforms in the past 40 years. The AIA is a culmination of numerous (and mostly fizzled) efforts over a five-year period to bring US laws into harmony with the practices and procedures followed by most countries around the world. As discussed below, implementation of the AIA’s provisions has drastically changed—but not necessarily leveled—the patent playing field.

The AIA affects nearly every facet of patent law as we know it. Here are several key AIA changes that all industry leaders should be keenly aware of going forward:

• The AIA establishes a first-to-file system vs. the current first-to-invent scheme.
• There are many new routes and procedures available for review of US patents and patent applications.
• The AIA expands prior user rights, particularly in the area of process technologies, which are typically held by companies as trade secrets.
• The provisions of the AIA will almost certainly lead to a greater prominence (and scrutiny) of provisional patent application filings.

First to invent vs. first to file

Of the major changes found in the AIA, perhaps the most significant is the change from a first-to-invent system to a first-to-file system. Under the old rules, a person who demonstrated that he or she was first to invent by showing both the conception of a novel idea and the reduction to practice, i.e., a showing of a working or fully functional embodiment of the idea, would be rewarded with a patent over other inventors who had subsequently invented the same subject matter. As long as an inventor was diligent in pursuing a patent for the new invention, who filed an application first was somewhat without moment in determining who ultimately was rewarded with a patent in the case of two competing inventors. The old “first to invent” rule has been in operation since the modern inception of the US patent system.

The new rules of the AIA implement a system whereby the first-to-file inventor (who can still show conception and reduction to practice) wins the patent battle against a competing inventor. The new rule, which goes into effect on March 16, 2013, is essentially in harmony with the rest of the world, which has operated under a first-to-file regime for many years.

There some important caveats that all inventors and companies should keep in mind concerning the new first-to-file rules:

• There is a limited one-year grace period to the new rule for the publication of new inventions by inventors. (This exception does not include sale activities or public use of an invention, only printed disclosure.)
• This exception provides a powerful sword and shield for inventors, whereby an earlier inventor publication will not prevent that inventor from obtaining first-filer status, but it will act as damaging prior art to another inventor—even if that inventor is first to file. Put another way, if an inventor publishes an new invention, a competing inventor files a patent application first, and the original publishing inventor files a patent application second, but within one year of his or her publication date, the first inventor may still be able to obtain patent rights over the first filer, despite the fact that the first inventors patent application was second in line.

There are many practical implications to the shift from first-inventor to first-file rules. First, the inventor who is first to invent is essentially irrelevant. The person who is first to file (or publish) controls priority and key prior art dates related to the technology at issue. This is likely to result in a rush to file (or publish) first, ask questions later. Unfortunately, it may also result in an increase of the filing of incomplete inventions. Overall, it is highly likely in a competitive field that there will be an increase in preemptive disclosures, and/or provisional patent application filing practice will likely increase.

To prosper in today’s competitive environment, it is important not only to obtain and protect one’s own patent rights but also not to encroach on the patent rights of others. It can be difficult, however, to determine with any reasonable certainty the metes and bounds of another’s exclusionary patent rights, short of expensive and lengthy litigation in a federal district court. To address this problem, the AIA implemented several new routes for lower-cost review of pending and issued claims by the United States Patent and Trademark Office (USPTO).

New routes for patent and trademark review

Preissuance submission (benefit to third parties). Preissuance submissions are submissions of prior art by third parties in any pending patent applications. They are intended to reduce the risk that unpatentable claims will mistakenly be allowed by examiners who are unfamiliar with the prior art.

A third party may file a preissuance submission for any pending patent application that is filed on or after September 16, 2012. The preissuance submission may be filed anonymously but must be based on a prior art publication and must contain a concise statement of the asserted relevance of each submitted publication to the pending claims. Preissuance submissions must be filed before (i) a notice of allowance is issued or (ii) the later of six months after the application is published, or the date of the first rejection of any claim.

This route offers significant advantages over other processes for challenging patent claims:

• The submitter can remain anonymous.
• The submitter may comment on the prior art that is submitted (formerly, third-party submissions of prior art were allowed, but the submitter was not allowed to comment on the art, which risked having the examiner not apply the art in the way the third party desired).
• According to proposed rules implementing this provision, the concise description of relevance can take the form of a claim chart; i.e., the submitter can propose specific rejections of pending claims based on prior art.
• Unlike other routes, the third party need not submit the best prior art known to it, and can reserve better prior art for a post-issuance challenge.
• This route will have a lower cost compared to other routes; proposed rules suggest that no fee will be required for submission of three or fewer publications.

Supplemental examination (benefit to patentees). As of September 16, 2012, a patentee may file a request for supplemental examination of any issued patent still in force. Unlike other routes for correcting issued patents, the request for supplemental examination may be based on any grounds believed to be relevant and is not limited to printed publications. The USPTO must decide within three months whether a substantial new question of patentability is created by the submitted information, in which event the USPTO will order a reexamination of the issued claims.

Several key advantages of this route include:

• It provides a post-issuance route for a patentee to submit prior art for USPTO consideration with having to formally seek reissue or reexamination.
• It provides an avenue to address potential grounds for invalidity or unenforceability before an infringer can raise them.
• It can cure unintentional failures to disclose prior art, because a patent will not be held unenforceable based on information that was not considered during prior examination, so long as it is considered by the PTO in a supplemental examination. (However, cannot be used to cure intentional failures to disclose prior art, which constitutes material fraud).

Post-grant review (benefit to third parties). Under the AIA, a third party may file a request for post-grant review, based not merely on printed publications, but rather any ground for potential lack of patentability, including prior sale and prior public use, both of which—until now—could only be raised during litigation.

Post-grant review applies to patents issued on applications filed after March 16, 2013, and may not be filed anonymously. A petition must be filed within nine months of patent grant or issuance of a reissue patent but may not be filed if the submitter has previously filed a civil action alleging invalidity of the patent at issue. Like a request for supplemental examination, the grounds for a petition for post-grant review are not limited merely to printed publications and rather can include prior sale or prior public use.

The USPTO must act within three months of the submission, and will order a post-grant review of the issued claims if (i) under a more likely than not standard, at least one challenged claim is unpatentable or (ii) the submission presents a novel or unsettled legal issue.

Advantages to this route will be:

• The patentee’s response is limited to showing why the petition should not be granted.
• The post-grant review will be conducted by technically proficient Patent Trial and Appeal Board reviewers.
• The patentee has only one opportunity to amend or propose substitute claims.
• The review can be terminated by settlement between the parties.

Prior user rights

A second major change to US patent laws under the new AIA is found in the expansion of prior user rights. These rights are a desirable but seldom available patent infringement defense, particularly in the chemical industry, where many processes, both on the small research and development (R&D) scale and the large industrial scale are often held by companies as closely guarded trade secrets. Under the new rules of the AIA, which went into effect on September 16, 2011, protections for process users, who are practicing technologies out of the public eye, are expanded to cover “a[ny] process, or consisting of a machine, manufacture, or composition of matter used in a manufacturing or other commercial process.” This is an important provision for the chemical sector that cuts both ways:

• The defense is a personal defense requiring “good faith” commercial use in the United States.
• The defense must be asserted “in connection with an internal commercial use.”  
• The commercial use in question must occur at least one year before the earlier of “(a) the effective filing date of the claimed invention or (b) the date on which the claimed invention was disclosed to the public.”
• The technology at issue cannot be licensed/assigned except as good faith transfer of an entire business or line of business.
• Defense is not available to products themselves.

The bottom line: prior user rights under the AIA provide a defense to claims of patent infringement claims, where a company has been secretly using a patented process, for perhaps many years. From a practical perspective, the new prior user rights rules may dissuade some inventors from filing for process patents, which in turn may lead to a decrease in publicly available information, and an increase in trade secrets.

Greater prominence (and scrutiny) of provisional patent applications

Provisional patent application was introduced to US patent law in 1994 to “match” the longstanding 12-month priority that was accorded to foreign-filed applications. A provisional patent application is nothing more than a first step toward obtaining a patent; by itself, it will never mature into a patent. But a provisional patent application nevertheless can be beneficial because it (i) is cheaper and less complex to prepare; (ii) may establish a potentially earlier effective filing date; (iii) permits use of a “patent pending” notice; and (iv) is never published; it is abandoned.

Under the AIA, the statutory benefits of provisional patent applications remain unchanged. However, the strategic benefits of provisional filings gain more prominence because such filings are likely to become ubiquitous to secure the earliest possible priority date. For a solo inventor or a small entity, a provisional filing can be a hedge against losing a USPTO filing race to a larger and better-funded entity. By the same token, to a large entity a strategy of serial provisional filings can be a hedge against losing a technology development race to a competitor.

Particularly in view of the Draconian first-to-file system ushered in by the AIA, provisional patent applications are also likely to be subject to much more scrutiny. A disgruntled “also-ran” will be likely to dissect any provisional application that confers priority of invention to another. A provisional filing later deemed to be insufficient will not preserve a priority date and may render invalid any patent based on that provisional filing.

A perhaps unintended outcome of the AIA is that provisional patent applications will likely become more complex and complete in content, in order to best support the earliest possible priority date for the broadest possible subject matter, and hence may end up mimicking a regular patent filing in most respects, including costs to prepare.

Paul S. Tully is an owner/partner at the law firm McDonnell, Boehnen, Hulbert & Berghoff in Chicago, Illinois, USA. His practice includes all aspects of patent law, including patent litigation, patent preparation and prosecution, due diligence, patent licensing and negotiations, initial public offering and venture capital due diligence related to intellectual property, opinion preparation, preparation and evaluation of secrecy agreements, freedom-to-operate studies, and client counseling. His technology experience and expertise includes pharmaceuticals, small molecules, biologics, chemicals, organic/organometallic chemistry, materials chemistry, process chemistry, medicinal chemistry, biotechnology, medical devices, chemical and mechanical engineering, diagnostics, catalysts, polymer technology, personal care technology, and formulations.

Jeremy E. Noe is an owner/ partner with McDonnell Boehnen Hulbert & Berghoff LLP. Noe's practice spans all aspects of patent litigation, patent and trademark preparation and prosecution, opinion preparation, and client counseling. In his patent prosecution practice, Noe leverages a deep understanding of cosmetic chemistry and consumer product formulation, acquired during his 15-year R&D career in consumer product development prior to becoming an attorney. He also assists clients on a wide range of other patent and trademark issues, including due diligence investigations, pre-litigation counseling, portfolio management, and evaluation of licensing opportunities. His technology experience involves a broad range of life sciences technologies, including pharmaceutical compounds and formulations, drug delivery systems, medical devices, and biotechnology, as well as a broad range of process engineering and manufacturing technologies.

What is prior art?

Prior art refers to the sum total of information—documented and undocumented—that has been disclosed publicly in any form (patents, published articles, presentations, things known or used publicly, and the like) from anywhere in the world about an invention before a given date. It establishes novelty and is the main criteria used to determine whether or not an invention is patentable.