• New Patent Law Significantly Impacts Businesses and the Economy
  • September 16, 2011
  • Law Firm: Lowndes Drosdick Doster Kantor Reed Professional Association - Orlando Office
  • Congress now has passed, and President Obama is expected to sign, the first major revision to the U.S. patent law in more than 50 years. The landmark bipartisan bill, known as the Leahy-Smith America Invents Act, has been under consideration by Congress for six years.

    The sweeping changes to the patent system provided by the Act will significantly affect businesses across the country, inventors, and the U.S. economy. The Act implements a first-inventor-to-file standard for patent approval, creates a post-grant review system to weed out bad patents, and helps the Patent and Trademark Office ("PTO") address the backlog of patent applications, among other things.

    First-to-File
    The Act transitions the United States from the first-to-invent system currently in use to a first-inventor-to-file system, which is used by every other industrialized nation in the world. A first-inventor-to-file system will simplify the application system, will end the need for expensive discovery and litigation over priority dates, and will put an end to expensive interference proceedings while helping to ensure that inventors can establish priority by filing simple and inexpensive provisional applications.

    Administrative Challenges
    Under current law, there are two ways to challenge the validity and enforceability of a patent that has been issued. A patent may be challenged in district court litigation or in a reexamination at the PTO, where the PTO reviews the validity of already-issued patents on the request of either the patent holder or a third party.

    The Act replaces the optional inter partes reexamination with an “inter partes review” that is to be conducted by the new Patent Trial and Appeal Board (which replaces the Board of Patent Appeals and Interferences) within one year, with a possible six month extension for good cause; appeals go directly to the U.S. Court of Appeals for the Federal Circuit. The Act changes the standard from a substantial “new question of patentability” for an inter partes reexamination to a more difficult standard for inter partes review: a "reasonable likelihood" that the petitioner will prevail with respect to at least one of the challenged claims.

    As a result of these changes, inter partes reviews should be completed more quickly now than inter partes examinations were in the past.

    The Act also creates a new post-grant review procedure before the Patent Trial and Appeal Board that is similar to the current European practice. Post-grant review may be commenced by any third party within nine months after a patent’s issue date or the date a broadened patent is reissued so long as the third party challenging the patent has not previously filed suit to challenge the patent’s validity.

    Requests for post-grant review do not have to be based on issues of prior art. Moreover, a petition may be granted where it demonstrates that it is more likely than not that at least one of the claims challenged in the petition is unpatentable. A request for post-grant review also may be initiated if it seeks to raise a novel or unsettled legal question that is important to other patents or applications.

    Litigation over False Patent Marking
    There has been a surge of false-marking qui tam actions since the Federal Circuit’s recent decision in Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009), holding that Section 292's $500 fine is assessed for each product that is falsely marked. These false marking suits frequently have been based on allegations that a valid patent that covered a product had expired, but that the manufacturer continued to sell products stamped with the patent.

    Addressing the recent growth in this kind of litigation, the Act replaces the qui tam remedy for false marking with a new action that allows a party that has suffered a competitive injury as a result of that marking to seek compensatory damages. The United States is allowed to seek the $500-per-article fine, and competitors may recover in relation to actual injuries that they have suffered as a result of false marking, but the Act eliminates litigation brought by unrelated, private third parties.

    Prior Art
    Under current law, prior art includes sales and public use activities that take place only within the United States. The Act expands the definition of prior art by eliminating the phrase "within this country" from Section 102, thus including sales and public use activities that occur in the United States and anywhere else around the globe.

    PTO Fee Setting Authority
    The Act provides fee setting authority for the PTO to help to ensure that it is properly funded and can reduce the backlog of patent applications. The bill mandates a reduction of fees by 50% for small entities and 75% for "micro-entities".

    Tax Patents
    The Act prohibits patents on tax strategies and codifies the "Weldon Amendment" to prohibit issuance of a patent on a claim directed to or encompassing a human organism.

    Conclusion
    The America Invents Act promises to alter patent practice a great deal. We will continue to examine and analyze the changes under the Act and how they affect you.