U.S. Congress has been discussing patent reform for a number of years now. Various versions of bills have been tossed around and debated at length, and the patent issues generally have then been put on a shelf, taking back burner to other important issues requiring the attention of Congress. It really had gotten to the “never cry wolf” stage for if/when anything was to come of the patent reform discussions and patent lawyers had grown weary with breath holding wondering if change was going to take place. However, this week, both the House and the Senate have passed bills to make the proposed patent reforms into law. The legislation has landed on President Obama’s desk. It appears that he will sign the pending bill into law shortly.
One big change is pro-University and small inventor. Specifically, the America Invents Act will decrease USPTO fees for Universities, small entities and non-profits. This is great news – the fee reduction is up to 50%, depending upon the type of fee. It will also decrease the percentage of certain invention-related royalties that must be paid to the federal government.
Patent reform laws likely to go into effect include a fundamental patent philosophy change taking the U.S. from a first-to-invent patenting system to a first-to-file patent system. This dramatically impacts patent prosecution and is aimed to bring the U.S. patent system more in line with patenting in foreign countries. Under this file-to-file system, generally the person who gets to the patent office to file an application first will win. This means that patenting strategy will shift to a strategy of filing sooner rather than later to ensure rights are not lost. Should an inventor delay in filing an application, she could lose rights to a competitor who filed first.
Patent litigation may also change. Imminent patent reform laws impact patent litigation with creation of a new post patent issue review system at the USPTO enabling anyone, including patent litigation defendants, to challenge the patent. This proceeding, which does not take place in Federal Court, is supposed to be a more cost effective way to handle patent disputes. It is a mechanism to challenge the validity of a patent. The judging body will be a panel of technically trained Administrative Patent Judges. This new proceeding is similar to inter partes reexamination proceedings already in existence. There is a discrete timeframe when this option is available as an alternative to patent litigation. It impacts discovery, as well as may create estoppel preventing a patent litigant from re-litigating issues decided before the USPTO panel. There will be much strategizing by patent litigation lawyers to work this new mechanism into patent litigation strategy.
Proposed patent reform laws eliminate patent interference proceedings altogether. This really is a by-product of switching from a first to invent to a first to file patent program. No longer must inventorship timing disputes be heard by the U.S.P.T.O. Contests regarding who filed first and derivation contests regarding whether an application was directed to an invention not invented by the applicant, but by another, will still be heard by the U.S.P.T.O.
Patent reform laws likely to go into effect include expansion of prior user rights, which likely strengthens trade secret rights. The pending legislation defines new prior user rights which may trump a later issued patent, such that a company would not be forced to pay royalties for continuing to practice technologies pre-dating the patent. In this sense, there is added incentive in some circumstances to keep innovations secret rather than patent them, and a new defense to patent infringement is gained. This new category of rights will impact patent application filing and patent prosecution strategy and decisions.
Patent reform laws plan to limit who may bring a claim for false marking. A false marking claim is a legal action against someone who claims that they have patent protection for a good, by marking it with a patent number, when they do not. This may happen most often in a context where a patent has expired, but the patent holder has not halted its patent marking. The new laws would narrow the group of persons able to bring such actions from “any person” to only the United States or a party proving competitive injury. This law would go into effect immediately, and appears to be an attempt to prevent the recent trend to file such suits by persons seeking to make a business out of doing so.
Finally, pending patent reform will likely increase many USPTO fees over time. Specifically, the America Invents Act gives fee setting authority to the USPTO, such that it would have the ability to set its own fees. This added systemic flexibility may result in more frequent changes to the fee structures. It also provides greater funding for the PTO, which will hopefully result in more timely examination of currently backlogged pending applications.
The imminent changes impact patenting strategies for patent prosecution and patent litigation. The reform is dramatic enough to warrant an audit of patenting policies, procedures and strategies by all inventors and companies seeking patent protection. New strategies are needed to deal with the patent reform.