Leahy-Smith America Invents Act: The Most Comprehensive Overhaul to the Patent System Since 1836

President Obama finally signed the long-debated patent reform bill (Leahy-Smith America Invents Act) into law last month, after seven years of failed Congressional attempts at reforming the patent system.  The bill hopes to reduce patent litigation costs, provide greater certainty to patent owners, increase efficiency at the USPTO, and limit the powers of patent trolls, which are companies whose sole purpose is to buy patents and sue others without making any tangible product themselves.

Here are some notable changes to the current patent law:

First to File Wins: The law will switch from a first to invent system to a first to file system for patent applications filed on or after March 16, 2013.  If the inventor makes certain public disclosures, then he will have a one year grace period to file the patent application.  This change puts us in-line with the patent laws of many other countries, which also use a first to file system. As a corollary, this removes the complex “interference proceedings,” but has spawned “derivation proceedings” to handle disputes.

In this change, the key dates are actually the inventor’s filing date OR the inventor’s earlier public disclosure date.  If the inventor discloses first then files within a year, the patent actually goes not to the first to file, but to the first to publicly disclose.

Overall Fee Increase: The law provides for a 15% increase in a lot of USPTO fees as of last month.

Smaller Fees for Micro Entities: The law provides for a micro entity status, which allows for a 75% discount on USPTO fees. You have to qualify first as a small entity, the inventor cannot have more than four previously filed patent applications, and the applicant’s gross income must be less than the designated level.

Prioritized Examination: For about $5,000, you can have the option to have your patent examined ahead of other applications.

More Satellite USPTO Offices: The law authorizes the USPTO to open more satellite offices through the country. The USPTO previously announced plans to open one in Detroit.

New Good Faith Prior Use Defense: The law creates a new defense to patent infringement.  There is no infringement of a patent if the subject matter was a process, machine, manufacture, or composition of matter that was used in good faith commercially in the U.S. at least one year before the effective filing date of the patent of public disclosure of the invention.  This defense only applies to patents issued after September 16, 2011.  This defense cannot be assigned to another entity but does extend to customers through the application of the patent exhaustion doctrine. Basically, innocent infringement done in private, under certain circumstances, will not be penalized.

No More Best Mode Defense: The law removes the best mode defense to patent infringement. An inventor is still required to set forth the best mode to obtain the patent, but failure to do so is no longer a basis for invalidating or rendering an issued patent unenforceable.  Of course, this is only effective after the filing date.

Willful Infringement: The law states that failure to obtain an opinion of counsel regarding patent non-infringement cannot be considered when determining a finding of willful infringement.

Posted: 10-6-2011