March 21, 2011

U.S. Senate Approves America Invents Act

On March 8, the U.S. Senate passed by a margin of 95-5 a major piece of patent reform legislation (S.23), which the Senate titled the “America Invents Act.”  If enacted into law, key provisions of the Senate bill would change how the United States Patent and Trademark Office (“PTO”) evaluates priority of inventorship, establish a new framework for third-party involvement in pending and newly issued patents, alter the requirements for filing patent applications, and change the scope of claims and defenses that can be brought in litigation. Key provisions of the Senate bill include:

  • Transition of the United States to a First-to-File System. Perhaps the most significant change in the Senate bill is that it would award patent rights to the inventor who is the first to file a patent application even if somebody else made the invention first but filed their patent application after the first filer. Under current U.S. patent law, the first inventor is entitled to a patent, not necessarily the first filer. The PTO conducts patent interference proceedings to determine priority of invention. Adoption of the Senate bill’s “first-to-file” system would eliminate interference practice and harmonize U.S. law in this regard with the rest of the world.
  • Third-Party Involvement in Pending and Issued Patents. The Senate bill offers more opportunities for third parties to challenge issued patents or pending patent applications:  pre-issuance third-party submissions, third-party requested post-grant review and inter partes post-grant review. The bill would allow third parties to challenge pending patent applications by submitting prior art publications to the PTO for consideration by the patent examiner prior to the patent’s issuance. The bill also would create a European style opposition period of nine months following patent issuance, during which third parties could challenge the validity of an issued patent.
  • Changes to Who Can File a Patent Application. Under current law, only inventors are allowed to file patent applications. The Senate bill would allow the owner of a patent application (such as the inventor’s employer) to file the patent application. Under the proposed changes, the owner of the application would also be allowed to execute the required inventor’s oath or declaration if the inventor refused to do so.
  • Creation of a Supplemental Examination Procedure. Passage of the Senate bill into law would create a new supplemental examination procedure allowing patent owners to present additional information to the PTO during the life of the patent. Patent owners who use the procedure would be insulated against later claims of inequitable conduct to the extent they were based on the information considered by the PTO during the supplemental examination.
  • Restriction of False Marking Lawsuits. The Senate bill would limit the use of the false marking provisions of the Patent Act. Under current law, a company that improperly marks a product sold in the United States with a patent number, such as because the patent has expired or does not cover the product, can be subject to a fine of up to $500 for each product sold. False marking lawsuits can be filed essentially by anyone on behalf of the U.S. government. The bill would eliminate these lawsuits except those initiated by the government or filed by a competitor that actually has been injured by the alleged false marking.
  • Elimination of the Best Mode Defense. The Senate bill would eliminate the defense for failure to disclose the best mode of carrying out the invention in the patent. Under current law, a patent applicant is required to disclose the best mode for carrying out the claimed invention and failing to do so could invalidate the patent. The bill retains the best mode requirement for patent applications but removes it as a basis for an invalidity defense. Thus, there will be no penalty available in litigation for violation of the best mode requirement.

*          *          *          *

The Senate bill has not been passed by the U.S. House of Representatives nor signed by the president, so it is not yet law. The House Subcommittee on Intellectual Property, Competition, and the Internet has held hearings on legislation similar to the “America Invents Act.”  The House Judiciary Committee is expected to introduce its own version of patent reform legislation later this spring.