America Invents Act: The Patent Reform Act of 2011

The Leahy-Smith America Invents Act (AIA) is United States federal legislation that was passed by Congress and was signed into law by President Barack Obama on September 16, 2011. The law represents the most significant change to the U.S. patent system since 1952.

Of the many changes in the Patent Reform Act of 2011, the AIA most notably converts the U.S. patent filing system from a First to Invent system to a First-Inventor-to-File system on March 16, 2013 (“the effective date”). The new system will apply to applications that include at least one claim not entitled to a priority date earlier than the effective date. That is, if all of the claims of an application filed after the effective date are entitled to a priority date earlier than the effective date, the prosecution of that application will be governed by the First to Invent system.

Provisions Of AIA:

First to File Patent
The law will switch U.S. rights to the patent from the present "First to Invent" system to a "first-to-file" system for patent applications filed on or after March 16, 2013. The first to file patent law also expands the definition of prior art used in determining patentability. Actions and prior art that bar patentability will include public use, sales, publications, and other disclosures available to the public as of the filing date, other than publications by the inventor within one year of filing (inventor's "publication-conditioned grace period"), whether or not a third party also files a patent application. The law also notably expands prior art to include foreign offers for sale and public uses. Applicants that do not publish their inventions prior to filing will receive no grace period. The proceedings at the U.S. Patent Office for resolving priority contests among near-simultaneous inventors who both file applications for the same invention ("interference proceedings") are repealed, because priority will be determined based on filing date. An administrative proceeding—called a “derivation” proceeding, similar to that currently used within some interference proceedings is provided to ensure that the first person to file the application is actually an original inventor and that the application was not derived from another inventor.

Opposition procedures
The Act revises and expands opposition procedures. The Act retains existing ex parte reexamination, adds preissuance submissions by third parties, expands inter partes reexamination and renames it inter partes review, and adds post-grant review.

Tax strategy inventions
This strategy provides that any strategy for reducing, avoiding, or deferring tax liability, whether known or unknown at the time of the invention or application for patent, shall be deemed insufficient to differentiate a claimed invention from the prior art.

False marking
This eliminates false marking lawsuits except for ones filed by the U.S. government or filed by a competitor who can prove competitive injury. In addition, marking a product with a patent that formerly covered the product, but has since expired, is no longer a violation.

Filing by other than inventor
An entity can file an application on behalf of an inventor who assigned or is under an obligation to assign the invention rights to the entity (or if the entity otherwise has financial interest in the invention), without seeking the inventor's execution of the application. Any patent that issues belongs to the inventor absent a written assignment from the inventor or inventor's estate to the entity.

Best mode
While an inventor is still required to “set forth” the best mode for accomplishing the invention, failure to disclose a best mode is not a basis for invalidating or rendering unenforceable an issued patent. By formally keeping the best mode requirement in the patent law, but by eliminating it as a defense to patent infringement and by therefore making it unenforceable in court, the America Invents Act has left many patent lawyers wondering why the requirement was kept at all.

Prior user rights defense
If an individual/entity begins using an invention ('user') more than a year before a subsequent inventor files for a patent on the same invention, then the user will have the right to continue using the invention in the same way after the subsequent inventor is granted a patent as long as the user did not derive the invention from the subsequent inventor. These prior user rights are limited in scope and transferability, and they also have limited applicability to patents held by universities.

The AIA added a micro-entity status. A micro-entity includes an independent inventor with a previous calendar year gross income of less than 3 times the national median household income who has previously filed no more than four non-provisional patent applications, not including those the inventor was obligated to assign to an employer. A micro-entity also includes a university or an inventor under an obligation to assign the invention to a university. A micro-entity is entitled to a 75% reduction in many of the patent fees payable to the US Patent Office during prosecution of a US patent application. The patent office is expected to develop regulations to identify which fees will be eligible for the reduction and how joint inventors may qualify as a micro-entity.

Confidential Sale
Provides that confidential sales of products containing the patented technology will no longer mark the beginning of the 1 year period to file the patent.

Navigating The New First-Inventor-To-File System

The change from a First to Invent system to a First-Inventor-to-File system was accomplished by replacing current 35 U.S.C. § 102(a)-(g) with new 35 U.S.C. § 102(a)-(d). Most importantly, new § 102 (1) imposes a near absolute novelty requirement with a limited inventor grace period and (2) redefines the universe of available prior art. As the name of the new system suggests, the basic premise is to award patents to the first filer. In its simplest form, the new system eliminates the possibility of antedating a prior art reference based on earlier invention. For example, the timeline below shows a common scenario that occurs during patent prosecution. Under the old system, if Applicant A’s published application is applied as prior art against Applicant B’s patent application, Applicant B could antedate Applicant A’s filing date by showing earlier inventive activity. Under the new system, however, Applicant B cannot antedate and is precluded from obtaining a patent because he/she was not the first to file.

Straddling the Effective Date of the First-Inventor-to-File System
Because the change to a First-Inventor-to-File system does not apply to applications already pending on the effective date, or to applications only having claims entitled to a priority date earlier than the effective date, it is important to understand how these new changes can impact the prosecution of applications filed after the changes are implemented. The timelines below show three scenarios demonstrating whether the new or old system will govern the prosecution of an application filed after the effective date of the changes. The first timeline shows a clear-cut situation: the First to Invent system applies to any application pending before the changes become effective. The third timeline shows a similarly clear case: the First-Inventor-to-File system applies when both the priority date and the application filing date are after the effective date of the changes. The situation is less clear when the priority date and the application filing date straddle the effective date of the new system, as shown in the middle timeline. In this case, if the application included at any time at least one claim not entitled to the earlier priority date, the First-Inventor-to-File system will govern prosecution, even if that claim was cancelled before examination on the merits.

Inventor Grace Period Exception
Despite its name, the new system is not an absolute novelty system because it includes a limited inventor grace period. In particular, the AIA provides a one-year grace period for an inventor’s own work, such as a publication by or obtained from any inventor. For example, if Applicant A publicly discloses first, Applicant A can safely file within one year of that disclosure, even if a third party discloses or files before Applicant A files its patent application. In other words, Applicant A is not precluded from obtaining a patent if a third party files its application between Applicant A’s disclosure and filing dates. Thus, under the new regime, an inventor’s disclosure can act as a placeholder while an inventor prepares its application for filing.

Significant Effective Prior Art Date Changes
The AIA also expands the pool of available prior art. Under the old system, a published U.S. patent application (or a published PCT application that designated the United States and was published in English) qualified as prior art only as of its U.S. (or PCT) filing date, regardless of any foreign priority date. The new regime, however, eliminates all geographical and language distinctions for such applications. Once the changes are implemented, the effective prior art date of such applications will be the earliest filing date to which these applications are entitled to a right of priority, even if the earliest filing date is a foreign priority date. These changes are illustrated in the three timelines that follow this paragraph. As denoted by the star on the first timeline, the published U.S. application qualifies as prior art as of its U.S. provisional filing date under both the new and old regimes. The second and third timelines, however, show how the new regime expands the universe of available prior art. As illustrated in the second timeline, an English international publication of a PCT application designating the United States qualified as prior art under the old system only as of its PCT filing date. Under the new regime, however, that same international publication would qualify as prior art as of the United Kingdom filing date (i.e., the foreign priority date). Similarly, the third timeline shows that, under the new system, the illustrated U.S. patent will qualify as prior art as of the French priority date, regardless of the language of the international publication.

How to Work Within the New System
The AIA’s change from a First to Invent system to a First-Inventor-to-File system therefore involves more than simply awarding patents to the first filer. The change not only can result in loss of patent rights, but also can impact the patentability of applications filed after the changes are implemented. Thus, it behooves patent applicants to gain an early understanding of the changes and develop strategies to their benefit. For example, patent applicants should consider filing new nonprovisional applications before the changes become effective, so that these applications will be governed by the First to Invent system and avoid the larger pool of prior art. In either system, and most especially in the new system, patent applicants should make every effort to file new applications as soon as possible. If preparing and filing a full nonprovisional application requires significant time, patent applicants should consider filing a provisional application to secure an early priority date. Further, patent applicants should take care when adding claims in applications having priority and filing dates that straddle the effective date of the changes. As explained above, adding to an application a single claim not entitled to a preimplementation priority date, even if that claim is later cancelled, will irreversibly cause the application to proceed under the First-Inventor-to-File regime.