Article by William S. Ramsey, P.C.

Thoughts on the New Patent Law

The final provisions of the America Invents Act (AIA) kick in on March 16, 2013.

This new law provides a patent to the first person to file an application, rather than the current first person to invent.  

Another major change is in the definition of prior art.  Prior art is the earlier patenting, publication, public use, etc. which provides an enabling disclosure which describes the exact invention, or, when combined with other item of prior art, makes the pending invention obvious to a person skilled in the art.  Prior art prevents patentability of the application, unless it can be overcome by arguing or amendment of the claims.

In the past, prior art disclosure, to be effective against a patent application, must have occurred before the invention was made, or greater than one year before the patent application was filed.  Foreign public use of the invention didn’t count as prior art.

The AIA makes prior art effective anytime up to the date of  patent application.  The AIA also removes the geographic restrictions on prior art.  In addition, there is new and rather ambiguous  “otherwise available to the public” prior art.

There is one major exception to the first to file rule.  If a person has disclosed his or her invention through publication, public use, etc., that person has up to one year in which to file a patent application.  The disclosure cannot be used as prior art against that application.  This leads to the unexpected (to me) conclusion that in some cases the second to file person may get the patent rather than the first to file.

Imagine this situation.  Smith has an invention and publishes on her website an enabling description of that invention.  One day later Jones files a patent application for the same invention, which Jones has independently created.  Smith’s published description can then be used as prior art against Jones’ application, which will not issue.  One year after her publication Smith files a patent application.  Smith’s disclosure cannot be used as prior art against her application.  Thus the second to file, but first to publish, gets the patent.

This strange situation resulted from the desire of Congress to continue the “year of grace” for filing an application after making an invention public, in order to allow the inventor to test the market for the invention.   Did Congress recognize that this might undermine the first to file system?  Who knows – but it would be a good subject for a law school paper.

Another major change is the introduction of two post issuance procedures for testing the validity of issued patents.  The judges will be the Patent Trial and Appeal Board (PTAB), part of the Patent and Trademark Office.  The statutory presumption of validity for issued patents will not apply in PTAB actions, but will continue to apply to federal circuit court cases.  Patents before the PTAB will be judged using the preponderance of evidence standard, rather than the more stringent clear and convincing evidence standard, which continues to apply in the federal district courts. 

Post issuance evaluation at the PTO is intended to speed up the elimination of invalid patents, as well as strengthen the valid ones.  There are many considerations in deciding on its use.  For example, if the patent is found valid by the PTAB, evidence used against the patent before the PTAB cannot be used in a subsequent federal district court case. 

Another change is the extension of the prior use defense to patent infringement to include any process or device  used in manufacturing or commercial use  in the United States if the use occurred greater than one year before the filing date of the patent.

It will take years to learn if these changes are useful or even constitutional.  Here we have the PTAB, part of the administrative branch of the government, determining  validity of a patent which has already been issued by the PTO.  The separation of powers principle would require that a federal circuit court, part of the judiciary branch, review actions of the administrative branch. 

The PTAB also will judge derivation proceedings, in which a first to file applicant has derived or obtained the invention from another, who is a second to file applicant.  This appears similar to current interference proceedings.

The object of these changes is to make U.S. patent law more like that in the rest of the world, although some major differences remain.  For example, any public disclosure of the invention before a U.S. filing, even public disclosure by the applicant, will be prior art against the application in nearly all foreign countries.

We just don’t know how these changes will play out.  The most conservative approach would be to:

           1.  File early.
           2.  File before selling, or offering to sell, or other public disclosure.
3.  Keep good records of invention dates, testing, prior use.

Introduction.

The Leahy-Smith America Invents Act, signed by President Obama September 16, 2011, is the first major revision of the U.S. patent laws since 1952.  It brings the U.S. closer to the rest of the world in patent laws

This discussion is about changes I think are of greatest importance to inventors.  It doesn’t cover changes in government fees, other than the 15% across the board increase effective October 16, 2011, and does not cover matters primarily about the operations of  the Patent and Trademark Office (PTO).  I can’t help but note, however, that the new law requires the first PTO satellite office to be in Detroit and to be named “Elijah J. McCoy United States Patent and Trademark Office.”

First to File.

Effective March 16, 2013 the first person to file a patent application with the PTO will be eligible to receive the patent, as opposed to the current law which awards the patent to the first person to invent the invention, even if that person is in fact the second to file an application.  There is a single exception – if the first person to file an application has in fact derived the invention from the second person to file, that second person will receive the patent.  A trial-like procedure at the PTO will decide issues of derivation.           

This change will lead to a “rush to the patent office” in which patent applications will be shorter, include fewer examples of the invention, and be supported by fewer data .  A side effect probably will be an increase in the number of applications.  It’s hard to imagine how this change will help individual inventors and small companies.   It’s easy to see how the IMBs and Pfizers  with large patent attorney staffs will benefit.

Prior Art.

Under current law, only printed material published greater than one year before the filing of a patent application or evidence of public use or on sale in the U.S. greater than one year before the filing of the patent application can be used as prior art in rejecting an application’s claims.   In addition, under some conditions, a patent applicant can avoid prior art by “swearing behind”, that is, providing evidence of invention before the publication of the cited prior art.

Under the new law, any publication of prior art before filing of an application can serve to prevent patentability.  This exposes an application to considerably more prior art, especially in “hot” areas with lots of inventing, and certainly will make it harder to obtain issued patents.

There is a single exception – an applicant’s own publication or public disclosure of the invention which occurs less than one year before filing a patent application cannot be cited against her claims.  This preserves the year of grace for inventors.  The year of grace sometimes allows inventors the opportunity to test the market for their inventions before incurring the costs of patent application preparation.  The first to file provision, however, probably will cause inventors to keep inventions strictly secret until filing.  No one will want to be a second filer and get involved in a derivation proceeding.

Validity of Issued Patents.

Currently every issued patent is presumed valid by statute.  As a practical matter, this means that defending patent infringement on the grounds that the patent is invalid and should never have issued requires proof of invalidity by “clear and convincing” evidence.  This is a more exacting standard that the “preponderance of the evidence” standard used in other civil trials.  The presumption of validity sometimes means that newly discovered prior art which might well have prevented patentability had it been considered by the examiner before the patent issued, nevertheless is not adequate to justify a finding by a court that the issued patent is invalid.  The presumption of validity gives patent owners considerable clout in intimidating infringers because of the cost and uncertainty involved in challenging  the validity of a patent in court.

The new patent law attempts  to provide certainty  and confidence in the validity of an issued patent at lesser costs through review of the validity of  a patent by the PTO court under certain conditions.  This review is conducted under the  “preponderance of evidence” standard of proof rather than the more stringent standard which will continue to be used in the federal courts.  This presumably will reduce the cost of patent litigation by early elimination of clearly invalid issued patents.

There is an iron fist, however, within this velvet glove.  If a defendant accused in federal court of patent infringement chooses to ask the PTO to review the validity of the involved patent in view of his prior art , and the PTO rules against the defendant by finding the patent to be valid,  the defendant then cannot use that prior art to argue patent invalidity in a subsequent federal court trial.  So a defendant will face a difficult choice –  he can risk the use of his prior art before expert PTO judges (former Examiners) and enjoy use of the lower standard of proof.  Or he can present his prior art before untrained jurors in federal court, where artful trial strategy and presentation might be more effective than at the PTO court, but which also involves the higher standard of  proof.

Conclusion.

It’s hard to see many benefits in the new law for the individual inventor or small business.  In addition to the above points I believe the attorney charges will be higher under the new law.  You may remember the Phase Rule in chemistry.  It states that the experimenter can choose any two of  the three conditions of temperature, pressure, or phase (solid, liquid, or gas) for a compound.  For example, in the case of water you can choose say, temperature (say 120°C) and pressure (say atmospheric) but you will have to accept the fact that under these conditions the phase will be a gas. 

It seems to me that services also follow something like the phase rule.  You can have a service which involves any two of the following three desirable characteristics: fast, cheap, good.  For example, preparation of a patent application can be cheap and good if the inventor is willing to wait for the attorney to work on it between other jobs.  The job can be fast and cheap by forgoing the element good.  It can be fast and good but not cheap, as the attorney will have to dedicate her efforts to that application.  Since the new law will reward application preparation which is fast, and since every inventor wants (and deserves) an application which is good,  it won’t be cheap.

Please call 410-740-2225 for information and an appointment or email: billramsey1@comcast.net
Not Legal Advice.


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