Changes to U.S. Patent Law Creates Challenges for Entrepreneurs

Intellectual Property Rights

On September 16, 2011, President Obama signed into law the Leahy-Smith America Invents Act. While not quite total patent reform, the America Invents Act (“AIA”) includes some of the most serious changes to federal patent law as we have ever seen. Read the Announcement from USPTO Director David Kappos by clicking here. The AIA represents something akin to the North American part of the Seven Years’ War (French and Indian War History) except that the battle lines were drawn over the way patents are obtained in the U.S. For a brief description of the battle among stakeholders in U.S. patent reform, click here.

Unfortunately, Congress decided to change the way we do business in this country by adopting (the largely European model, but also one adopted in Canada), a “first-to-file” system to replace the first-to-invent practice of the last 50 years. Now, Congress has unwittingly created a race to the USPTO. In a first-to-file system, the grant of a patent for a given invention goes to the first person to file a patent application/specification for protection of that invention, regardless of the date of actual invention and regardless of whether any other person can stake a claim to creating the invention. Under the “first-to-invent” system, the first and original inventor of something was protected against subsequent designers by the age-old legal adage of “first in time, first in right.” This monumental decision disrupts settled practice among entrepreneurs, inventors, developers and strategists. The new “First-Inventor-to-File” has already come under well-reasoned attack (see, e.g., Gary Lauder, “New Patent Law Means Trouble For Tech Entrepreneurs,” Forbes (09-20-11).

But, Washington and Lee University Economist Alan Marco, who just finished a stint as an expert advisor with the USPTO, views the challenges differently:

“We are not adopting the same system of first-to-file that is the case in the rest of the world,” noted Marco. “Instead, we are adopting the first inventor to file. That’s a significant difference. In the past in the U.S., it had been first-to-invent. So if there was a question about whether or not you were the first to invent, that could be a pretty painstaking and bureaucratic process. Now it is the first inventor who files. If there are multiple inventors, the first one to file is the one who gets the patent. We won’t have people sitting on the sidelines, grabbing an idea and still getting a patent. Furthermore, the new system means that inventors have an incentive to bring their ideas forward in published applications. That information benefits everyone.” (Read Mr. Marco’s complete comments by clicking here)

Some of the other major provisions of the AIA include:

  • Significant changes to novelty and non-obviousness standards, including what makes up prior art, impacts on grace periods, and the end of “swearing behind” a reference
  • Allows non-patent owners to petition for review of a granted patent within 9 months of its date
  • Creates some opportunity for a relatively quick 12-month examination for a patent application
  • Requires the USPTO to conduct a review of issued business method patents
  • Allows challenges to “best mode” as an infringement defense end
  • Significantly changes false marking laws
  • Increases USPTO fees by 15%

In addition to the above changes, the Leahy-Smith America Invents Act also includes changes regarding entities, tax-strategy patents, patent term extensions, reexamination, civil actions about patents and a variety of other issues. Additional information about the Leahy-Smith America Invents Act will be available in the coming weeks.

Feel free to contact me for an appropriate patent attorney referral.

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  • Anonymous
    April 10, 2013, 4:11 am

    great information, but i need help with fudning and manufacturing, where do i go to get financial help. who do i contact for the product to be made up for selling.please give me an explanation, i need some help.Richard Condoluci.