Navigating the shifts in U.S. patent law

OTTAWA -- The America Invents Act (House Bill H.R. 1249) was passed by the United States Senate on September 8, 2011 and is expected to be signed by President Obama in short order.  This is the most vigorous revision of US patent law since the 1950’s.

Many of the reforms could be considered good housekeeping--simplifying certain procedures.  Others will have more substantive impact on the patent programs for technology companies. Here's a review of some of three major changes.

First to file: Patents will be assigned to the first person/entity to file an application rather than to the first person/entity to conceive the invention.  This aligns the U.S. patent office will the other major international patent offices.  The first-to-file concept has received significant attention as many view it as favoring large corporations over individual inventors and start-ups.

Data from Canada indicates that applications from sole inventors went down when the Canadian patent office switched to a first-to-file system. However, the first to invent system does not seem to be used by that constituency to any extent.  Under the first-to-invent system, disputes over invention dates are addressed through a hearing known as an interference proceeding.  In 2010, there were only 52 applications for an interference proceeding compared to over 500,000 patent applications.

Under a first-to-file system, the application pipeline should change.  In fact, some commentators are predicting that the use of provisional applications will increase as inventors and applicants will be eager to secure the earliest possible filing dates to best protect their ideas. Technology companies will almost certainly have to consider filing more, earlier and more aggressively than in the past, and then look to regularly prune such applications during prosecution to maintain cost controls over their programs.

Prior Commercial Use: This defense was previously limited to business method patents.  With the new law, it has been expanded to all subject matter.  A person who has made commercial use of the subject matter in the United States at least one year before the effective filing date of the patent can use this as a defense against patent infringement.

This change creates a new equation in deciding which inventions to patent.  When inventions are sold, or can otherwise be detected from their use in a related end product, they may be considered self-disclosing.  Such inventions that put prior art on record through the sale of the end product, don’t require this defense.

Companies with inventions that cannot be detected from their use in an end product face a trade off. They could disclose the invention to the public in a patent, thus keeping someone else from patenting the same invention but losing secrecy over it, or treat it as a trade secret and face the risk of someone else patenting the concept and enforcing their rights.

The prior commercial-use defense eliminates that trade off. So, companies can now consider the most strategic and effective forms of invention protection for their business needs--via patents or trade secret protection, while not being forced to lose control of their own secrets.

Virtual markings: Financial damages for patent infringement are calculated from the date the infringer was put on notice about the patent.  This notice can be provided in several different ways.

One excellent method is to mark all products using the patented invention with the patent number.  Obviously, this is easy to do for large items such as folding chairs and jet skis, but is very challenging for integrated circuits and other small products. Some companies have listed the relevant patents on datasheets or on a Web site, but it was uncertain if this would be sufficient.

The new law permits virtual markings where a product can be associated with a set of patent numbers. Moreover, virtual markings make it easier for patent holders to remove the notice pertaining to expired or abandoned patents. This is still prohibited under the new reforms, although the ability to seek damages for such false marking claims is more limited than in the past. Technology companies should take advantage of this change.

Other changes include restrictions on false marking claims, pre-issuance submissions, post grant review, reform of inter partes re-examination, and the elimination of the best mode requirement.

Mike Mclean is vice president for intellectual property rights and professional services at UBM TechInsights based in Ottawa. UBM TechInsights is a sister company to UBM Electronics, publisher of EE Times.