Major improvements to U.S. Patent Law passed by Congress

After many years of gestation, the U.S. House of Representatives on June 23 passed the America Invents Act. The Senate passed its own version in March 2011. While there is some minor work required to reconcile both versions, what is clear is that U.S. Patent Law is on the verge of the largest substantive changes in 60 years, and that U.S. law will be more harmonised with international norms than ever before.

First to File
The most important change from an Australian perspective is the move to a ‘first to file’ type system. In the rest of the world, regardless of who invented first, the first inventor to file becomes the legitimate patent owner. This is not currently the case in the U.S.

At present, an inventor who files later but invents first can, subject to very stringent evidence requirements, obtain the patent rights. However, this expensive and time consuming procedure – called an interference – creates
significant uncertainty for investors and the public at large.

It also creates an anomaly where in some cases one party owns the U.S. patent, after a successful interference,
supplanting the owner throughout the rest of the world. Although the example of small inventors was often used to justify the first to invent principle, in fact the overwhelming beneficiaries were U.S. corporates who understood how to play this game.

The U.S. will now abolish this distinction, and operate a first to file system, in common with the rest of the world. This will, for example, make current elaborate laboratory notebook practices involving witnessing of pages unnecessary for patent law purposes.

New Review Processes
Many countries, for example  Japan, Australian and under the European Patent System, have had review procedures available to challenge a decision to grant a patent at the patent office, and benefiting from the technical
expertise of the patent office examiners. These are generally known as opposition systems, and provide an alternative to challenge in the court system.  Although a limited form of this existed previously in the U.S., a more extensive version will operate as the new inter-partes review and post grant proceedings. These proceedings will be handled by the Administrative Patent Judges of the current Interference Trial Section of the USPTO. A window will operate after grant for such reviews and again after filing patent infringement litigation.

This will provide an avenue for much lower cost challenges to dubious patents.

Fees and Delays
There has been a major push, supported by business in general, to allow the patent office to keep all the fees it
collects, so that the funds can be re-invested in measures to reduce the backlog of patent applications. There are (as at 27 June 2011) 703, 175 pending U.S. patent applications which have not been examined. The USPTO is a major
operation, employing almost 10,000 staff and having annual revenue of about 2.1 Billion USD. Historically, this pool has been convenient one to dip into to assist the general budget issues of the U.S. Federal Government. A limited form of this measure was passed by the House, in contrast to the Senate, where the full segregation was allowed. This will have to be settled by negotiation, prior to signature by President Obama.

The process of patent reform in the U.S. has taken many years, and although this Act does not resolve all the issues, it will make a vast improvement, especially from the perspective of non-U.S. users of the U.S. patent system.

by Peter Franke

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