America Invents Act, Patents

Leahy-Smith America Invents Act

Formerly known as the Patent Reform Act of 2011, the Leahy-Smith America Invents Act is close to being passed into law. Versions of the Act were approved in March in the Senate (S. 23, 95-5) and in June in the House (H.R. 1249, 304-117), and the House bill has been referred to the Senate.

The most publicized difference between the bills is the issue of fee diversion. The bill in the Senate effectively ends fee diversion. The Patent and Trademark Office gets to set, keep, and allocate all of its fees by setting up a Revolving Fund, which provides that excess funds stay under the PTO’s control until they are expended. The House bill allows fee diversion to continue. A Patent and Trademark Fee Reserve Fund is established in the Treasury, and where fees exceed the amount appropriated to the PTO in appropriations acts, the PTO has to ask for use of excess funds. However, for fiscal year 2012, the House Appropriations Committee approved a bill that prevents fee diversion for that year, giving the PTO access to any excess fees. This bill also effectively authorizes the “Track I” prioritized examination.

The most important part of the Act is the change from a first-to-invent to first-to-file system, or, as the bill refers to it, a first-inventor-to-file system. The new system will require inventions to have nearly absolute novelty – publication, public use, on sale, and other disclosures (anywhere) before the filing date will be bars to a patent. A grace period will benefit inventors, joint inventors, or one who obtained the subject matter directly or indirectly from an inventor, by providing that disclosure by those parties made within one year prior to the effective filing date is not a bar to a patent.

Other features of the Act include:

— Establishing Derivation Proceedings (replacing interference proceedings to determine if an inventor named in an earlier application derived the claimed invention from an inventor named in a petitioner’s application);

— Codifying procedures allowing a Substitute Inventor Oath or Declaration;

— Allowing an assignee, a person to whom the inventor is under an obligation to assign, or another person with sufficient proprietary interest to file an application;

— Setting out third party administrative challenges that include (a) submission of patents or publications by third parties during pendency of an application, (b) post-grant review proceeding for 9 months from grant, and (c) inter partes review, after 9 months from grant or by the date of termination of a post-grant review;

— Eliminating the best mode requirement as a basis for invalidating a patent (although this remains a requirement for issuance of a patent by the PTO);

— Marking, whereby for false marking, suit may be brought only by the U.S. government or by one who has suffered a competitive injury, and virtual marking will be allowed (“Patent” or “Pat.” followed by Internet address for posting of patent numbers);

— Providing a defense to infringement based on prior commercial use;

— With respect to willful infringement and advice of counsel, codifying “The failure of an infringer to obtain the advice of counsel with respect to any alleged infringed patent, or the failure of the infringe to present such advice to the court or jury may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement of the patent”; and

— Tax Strategies being deemed within the prior art, which will eliminate any new tax avoidance or reduction patents.

Matt Witsil

About Matt Witsil

Registered Patent attorney Matt Witsil has been an MVA Intellectual Property team member since 1999, focusing his practice on patent prosecution, opinions, corporate intellectual property transactions and technology licensing. He also advises clients on copyright and trademark issues.

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