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Leahy-Smith America Invents Act Signed Into Law

September 27, 2011

President Obama signed the Leahy-Smith America Invents Act (the “Act”) into law on September 16, 2011. The Act is the first major overhaul of the U.S. patent system since 1952 and it will significantly change how patents are processed and reviewed.

Adoption of the Act transitions the U.S. from a first-to-invent system to a first-inventor-to-file patent system. This change brings the U.S. patent system into line with the first-to-file systems of most other countries.

The Act’s immediate and upcoming changes to the existing law are summarized below.

Changes to Definitions of Prior Art

Under the existing law, to be considered prior art, public use and on-sale activities are required to take place in this country and there is a one-year grace period for filing a patent application after public use and on-sale activities. Under the Act, a claimed invention is not novel if it was patented, described in a printed publication, in public use, on sale or otherwise available to the public before the effective filing date. Exceptions are provided for a disclosure made one year or less before filing if the disclosure is made by the inventor or by another who obtained the subject matter from the inventor, or if the subject matter had previously been disclosed by the inventor. As such, the Act preserves, with some changes, the one-year grace period for certain types of disclosures.

Also under the existing law, a U.S. patent or published U.S. patent application that was issued or published after the filing date of the invention is considered prior art as of the earliest filing date in the United States or the filing date of an international application designating the U.S. Under the Act, a U.S. patent or published U.S. patent application is considered prior art as of the filing date of the earliest application to which it claims priority, including foreign-filed applications.

The effective date for these changes is 18 months from enactment of the Act.

Derivation Proceedings

Interference proceedings have been replaced with a “derivation” proceeding. The derivation proceeding can be used to resolve inventorship issues. The proceeding is designed to ensure the first-inventor-to-file is the true inventor, and did not derive the invention from someone else. A derivation proceeding may be requested by an individual wishing to challenge a patent within one year of the issuance of the patent.

This provision takes effect 18 months after enactment.

Prior Use Defense

Under the existing law, prior users of a business method are provided with a defense to infringement in the event that a different party obtains a patent for that method. Specifically, the prior users avoid liability by proving prior commercial use of an asserted business method claim at least one year before a patent’s effective filing date. Under the Act, the prior use defense is extended to all types of patents and is no longer limited to business methods. Prior users can avoid liability by showing prior commercial use at least one year before the effective filing date of a patent.

This provision applies to any patent issued on the date of or after enactment.

Preissuance Submissions by Third-Parties

Under the existing law, third-parties may only submit prior art before the publication of an application. Adoption of the Act permits third-parties to submit prior art before the earlier of i) the notice of allowance or ii) the later of six months after publication of the application or the date of the first rejection.

This provision takes effect one year after enactment.

Priority Examination

Prioritized examination of a nonprovisional application for an original utility or plant patent can be obtained. A $4,800 fee for requesting priority examination is required. The Director of the United States Patent and Trademark Office may prescribe conditions for accepting a request for priority examination and limit the number of granted requests.

This provision takes effect 10 days after enactment.

The Director is further authorized to provide for prioritization of examination of patent applications for products, processes or technologies that are important to the national economy or national competitiveness.

This provision takes effect one year after enactment.

Post-Grant Review

The Act creates a new “post-grant review” procedure for challenging a patent within nine months of issuance. The procedure can be based on any ground for invalidating a patent set forth in the patent laws and is not limited to evaluating questions of novelty and obviousness.

This provision takes effect one year after enactment.

Inter Partes Review

Inter partes reexamination has been replaced with an “inter partes review” procedure. The inter partes review procedure can be used for challenging a patent after nine months have passed from either issuance or reissuance. The procedure eliminates the “substantial new question” of patentability standard previously used for instituting inter partes reexaminations and replaces it with a lower “reasonable likelihood of success” standard.

This provision takes effect one year after enactment.

Fees

A 15% surcharge will be collected on all patent fees.

This provision takes effect 10 days after enactment.

An additional fee of $400 is charged for non-electronic filing of non-provisional utility patent applications as an incentive to file electronically.

This provision takes effect 60 days after enactment.

Micro Entities

Under the existing law, small entities are allowed a 50% reduction on many patent fees. Under the Act, the additional designation of “micro entity” is created. Many fees are reduced by 75% for applicants who qualify as a micro entity. An applicant may qualify as a micro entity by certifying that it meets prior patent filing and revenue criteria. Institutions of higher education may also qualify as a micro entity.

Although the micro entity designation is established on the date of enactment, implementation of reduced fees under the micro entity designation will occur after rulemaking.

Supplemental Examination

Supplemental examination may be requested by a patent owner for an issued patent to consider, reconsider or correct information believed to be relevant to the patent. Within three months after the request, a certificate indicating whether the information presented raises a “substantial new question” of patentability will be issued by the United States Patent and Trademark Office. If the information presented raises a substantial new question of patentability, a reexamination will be conducted.

This provision takes effect one year after enactment and applies to all patents regardless of issue date.

Tax Strategies

Under the Act, tax strategies for reducing, avoiding or deferring tax liability can not be used to distinguish an invention from the prior art. This does not apply to a method, apparatus or system used solely for preparing a tax return/filing or products used solely for financial management, with some caveats.

This provision took effect on the date of enactment and applies to all patent applications regardless of filing date and any patent that is issued on or after the date of enactment.

Best Mode

Under the Act, the requirement that an applicant must disclose the best mode for carrying out the invention is preserved. However, failure to disclose the best mode in a patent application is eliminated as a defense in infringement actions.

This provision took effect on the date of enactment and applies to proceedings commenced on or after that date.

Patent Marking

Previously, patentees were required to label products covered by a patent with the patent number. Under the Act, patentees may virtually mark their products. Virtual marking allows a patentee to meet the requirements for patent marking by labeling their products with the word “Patent” or the abbreviation “Pat.” together with an Internet address where the relevant patent number(s) can be accessed.

The prior law governing lawsuits for falsely marking products with patent information has also been changed. Under the Act, only the federal government or a party who has suffered a competitive injury as a result of false marking may bring such lawsuits.

These provisions took effect on the date of enactment.

Advice of Counsel Defense

The Act prohibits courts and juries from drawing a negative inference from evidence that a defendant in a patent lawsuit failed to obtain a legal opinion with respect to allegations of willful infringement and inducing patent infringement.

This provision takes effect one year after enactment.

Business Method Patents

The Act creates a special post-grant review procedure for “business method” patents. A party who is sued by a business method patent holder may request a review of the patent before continuing with the lawsuit. Business method patents are defined to include those that claim a method or corresponding apparatus for performing data processing operations utilized in the practice, administration or management of a financial product or service, but not patents for technological inventions.

This provision takes effect one year after enactment.

 

For More Information, Contact:

Jeffrey M. Weinick
Member of the Firm
(973) 530-2028
jweinick@wolffsamson.com