Dramatic changes to the patent law are underway that will have a significant impact on the patent application process. On September 16, 2011, President Obama signed into law the America Invents Act which includes amendments that will shift the focus of the patent granting process in the United States from the first person to conceive of an invention to the first to file an application. The new law also makes additions to the types of prior activities that may prevent a patent from being granted and adds new procedures for competitors to challenge a patent in the Patent Office as compared to the courts. The changes occur in stages over the next eighteen months, with some of the provisions already being in effect.

1. "First To File" and the Creation of New Prior Art

Under the prior US patent system that is still in effect, a patent is granted to the person who can prove they were the "first to invent" the development, while the majority of the world grants patents based upon who is the "first to file" an application for the invention. Additionally the old US law extends a one year grace period to inventors that allows an invention to be publicized or commercialized by anyone without barring the filing of a patent application within the one year window. Most of the other countries in the world do not provide such a grace period and an application must be filed before any public disclosure of the invention. The new law is an effort to harmonize the US patent system with those of other countries, although under the new law the US system remains something of a hybrid of the "first to invent" and the "first to file" approaches.

The new US law will base the grant of a patent on the first application to be filed for the invention. The new law will still provide a restricted version of the one year grace period, but this provision will likely be subject to significant scrutiny in the courts once it takes effect. The one year grace period will still apply to activities of the inventor and those working with the inventor. With some exceptions, however, under the new law the grace period will not apply to disclosures or commercial activities of others, which can then be cited against the inventor's application.

The various forms of prior activities that can be cited against a patent application are generically referred to as "prior art." These types of activities have included information disclosed in patents and printed publications, as well as technology that is included in a public use or an offer to sell equipment. The one year grace period removes the activities of the inventor and those working with the inventor from the prior art just as under the old law, provided the inventor can establish the activities originate from the inventor.

Under the new law, the prior activities of others that occur prior to the filing date of an application are now considered to be prior art, even those that occur during what previously had been the one year grace period. There are exceptions. One exception arises if the applicant can establish that the other person's activities were derived from the inventor, in which case the one year grace period would still apply to those activities. Another exception arises if the inventor can prove that the inventor "publicly" disclosed the invention during the one year window, in which case any later disclosures by others cannot be used against the inventor's application.

With the focus being shifted in the United States to the filing of the application, rather than when the invention occurred, what will be required to establish these exceptions and whether the exception will apply to all commercial activities by others will likely remain a question for some time. The new patent law uses terms that were not found in the prior law and are not defined in the new law, such as "disclosure." Although the prior cases interpreting the old law give significant guidance, certain situations will require a first round of decisions by the appropriate court in order to provide certainty. Reliance on an exception to the first to file basic premise may have risk until that certainty is established. More importantly, other countries still require a filing before any public disclosure, so taking advantage of the public disclosure exception would likely preclude most foreign patent protection.

Companies that routinely consider patents in other countries may not feel the impact of the changes as strongly as others. Still, the ultimate outcome of the changes will likely be a far greater emphasis on the filing for patents early to avoid these difficulties.

2. Patent Oppositions and Citation of Prior Art

The new law also adds new procedures to challenge the validity of an issued patent in a proceeding in the Patent Office, as well as to bring information to the attention of the Patent Office during the application process by another person.

The current law allows a person or company to contest an issued patent by asking for a reexamination. Current reexamination rules have specific limitations, such as being limited to prior art that is printed such as patents or publications. For various reasons, however, these existing procedures that allow a competitor to request the reexamination of a patent have seen limited use. It remains to be seen whether the new procedures for challenging patents in the Patent Office, which were implemented to reduce the expense of a patent challenge, will see widespread use. These changes do not take place until September 16, 2012. As that date draws near inventors should consider application filings and then pending application claims, since applications in which all the claims have a sufficiently early date will not be subject to the post grant review.

3. False Patent Marking Suits Are Terminated

The new patent act has put a halt to a recent phenomenon of lawsuits brought to allege "false marking" against a patent owner or former patent owner. The patent law provides for marking products with a patent notice in order to potentially preserve the right of the patent owner to collect damages for any violation. However, all patent owners have not necessarily been diligent in removing patent notice as patents have expired, and some have made errors in marking products with patent notice in the first place. In some instances competitors have complained about these situations under patent laws governing the proper use of patent notice. Regardless of the motivation of competitors that led to the initial court decisions that expanded the potential for false marking lawsuits, a virtual floodgate of litigation opened around the country charging false marking against patent owners.

The current change in the patent law put an immediate halt to all pending and future lawsuits alleging false patent marking, whether filed before or after September 16, 2011.

4. Virtual Marking

Under the prior law, with limited exception a patent notice was required to be placed on the patented object in order to potentially preserve the patent owner's right to collect damages for infringement. This required a reference to patent and the patent number to be marked on the product. As some companies obtain a number of patents over a period of years that could apply to a given piece of equipment, this marking requirement created difficulties for manufacturers.

Under the new law a patent owner may provide virtual notice of a patent by marking the product with a website that includes the patent information and then maintaining a site that includes that information related to the patented products.

5. Micro Entity

Under the old law an inventor could qualify as a "small entity" depending upon the number of employees associated with the patent owner and licensees. A small entity was, and still is, only required to pay government fees that are half the normal fee. The new law adds a still further level of "micro entity" that further reduces the government filing fee for inventors that qualify as small entities, have filed fewer than four patent applications and meet other requirements such as limits regarding income.

6. Patent Office Retention of Patent Application Fees

One of the most hotly contested areas involving the new patent law is the effort to allow the Patent Office to retain for its own use the fees paid by patent applicants. Previously Congress has used a portion of these funds for other needs. The new law made internal changes that increase the potential for the Patent Office to use the fees paid by patent applicants, but these funds may still be tapped for other needs. Hopefully these changes will promote increased retention of fees by the Patent Office and assist in Patent Office efforts to reduce the backlog and processing time for applications. Only time will tell on this change.

If you have questions about patents, contact our Michigan patent attorneys at (616) 975-5500.