The America Invents Act implements significant changes to the U.S. patent system, so it's prudent to consider how those changes impact intellectual property strategies and practices that have developed over the past few decades.
Exactly how the new law will impact any particular patent-owner is largely dependent on the nature of the patentee’s technology, its business model and the competitive and patent landscape. It is clear, though, that anyone filing or litigating patents should carefully reevaluate their IP strategy to make the most of the upcoming changes.
First to File: The most significant change is the adoption of the first-to-file standard in place of the first-to-invent standard for determining whether an applicant is entitled to a claim for an invention. The first-to-file standard awards a patent to whoever is the first to file a patent application disclosing the invention, as long as the invention was not sold or disclosed by someone else any time previously, or by the inventor more than one year before the filing date.
In contrast, the first-to-invent standard awarded a patent to whoever could establish the earliest inventorship, and required consideration of a complex set of rules and case law involving prior art categories, reduction to practice, conception, due diligence and interference practice.
Several consequences flow from the adoption of first-to-file. First, maintenance of detailed lab notebooks becomes less important for establishment of priority, although they will still be useful in the new patent-derivation actions and as a defense to accusations of trade secret misappropriation. Second, companies should be more wary of disclosing an invention to others before a patent application has been filed, unless a strong non-disclosure agreement is in place--preferably one that provides contract remedies if the other party races to the patent office with your invention.
Third, it is more important than ever to file patent applications quickly, even if this means filing an application on an unproven concept, or an application with a less fully-developed disclosure than has been done in the past. And, finally, companies will likely make greater use of provisional applications to avoid large increases in patent costs arising from such additional patent applications on unproven inventions.
Best Mode: The Act also eliminates the best mode requirement, which required inventors to disclose the best mode of carrying out an invention. In the past, failure to make such disclosure would invalidate claims directed to that invention.
This seemingly simple requirement created much confusion. Court rulings were inconsistent regarding what aspects of an invention were subject to the best mode requirement and how much detail must be disclosed.
Eliminating the best mode requirement reduces the import of the classic trade-off between patents and trade secrets. Previously, patentees had to choose patent protection or trade secret protection for an invention. They could not have both, because obtaining patent coverage required publicly disclosing the best mode.
Now, as long as a working embodiment is disclosed, a patentee can obtain a patent on the invention and also protect the most commercially valuable embodiment as a trade secret. Of course, if the best mode is readily discernable from a commercial product, it will likely be preferable to disclose and claim the best mode even if it is not required.
Further, if a company’s invention is an internal process, then a failure to disclose the best mode creates a risk that a competitor could file a patent on the company’s process, and then seek royalties from the company for the use of its own prior invention. This risk is mitigated somewhat by an expanded prior commercial-use defense in the new law, but that defense has certain limitations.
A patentee will need to weigh the benefits of relying on continued trade secret protection against the risks of relying on prior use defense.
New Post-Issuance Review Procedures: The Act also establishes a new post-grant review processes and modifies the inter-partes reexamination procedure, now called inter-partes review.
In the first nine months after issuance, a petitioner may now request a post grant review. The patent office will agree to institute the review if it determines that the prior art "more likely than not" invalidates the claims.
Once instituted, the patent office will invalidate any claims that it determines are invalid by a preponderance of the evidence, and will issue its decision within 18 months after instituting the procedure. Importantly, the patent office will consider any type of art in a post-grant review process--not just patents and publications.
The new inter-partes review procedure is very similar to the old inter-partes reexamination, but is not available until after the close of the post grant review period--nine months after issuance of a patent. And, the patent office will only agree to institute an inter-partes review if it determines that the there is a “reasonable likelihood” that the requestor will be able to invalidate a claim, a stricter standard than it used for the old inter-partes reexamination.
Like the old inter-partes reexamination process, an inter-partes review will consider only prior art that is a patent or printed publication. The patent office will invalidate claims if the requestor establishes invalidity by a preponderance of the evidence, and it must issue its decision within 18 months after instituting the procedure.
The post-grant review process allows in more prior art, and is instituted under a more lax standard, than inter-partes review. But, in order to take advantage of these benefits, a party must file within nine months after issuance.
Companies that may have previously preferred to sit on the sidelines and seek inter-partes review only after being accused of infringement should now take a more proactive approach. Further, given the advantages of the post-grant review process over the inter-partes reexamination process, it would be wise to monitor the patents being prosecuted by key competitors and, upon the allowance of claims that may pose a threat, conduct prior art searches to assess the state of the art.
If a prior art search uncovers a patent or publication that appears likely to invalidate a claim of the patent, then the potential infringer may prefer to wait to file an inter-partes review until it is accused of patent infringement. On the other hand, if the art uncovered is weaker, or is a prior use or sale of the invention without a corresponding publication, a post-grant review may be more appropriate. -Jason Kipnis is a partner at Weil, Gotshal & Manges LLP (Redwood Shores, Calif.).