Posts Tagged “Patent Reform Act 2011”

I doubt that it’s news to many people that the US is changing from a so-called first-to-invent priority system for awarding patents to a first-(inventor)-to-file system. And that pending change (March of 2013) has a lot of people running around as if the sky were falling. It’s not. You aren’t really in a race to the patent office to beat another inventor.

For most inventors this switch, per se, will have no effect on their patent applications. The chances that you and another inventor more or less simultaneously invent and file the same invention is small. After all, there are currently just a handful of “interference” procedures to sort out who was the first to invent. And in those procedures, the first inventor to file usually comes out on top anyway.

That’s not to say the switch will not have an impact on you. The collateral damage from the switch to first to file is that the scope of problematic prior art is significantly increased. In the present system you can “swear behind” a piece of prior art by presenting evidence that your date of invention was earlier than the date of the prior art.

Such swearing behind only makes sense when the date of invention is important (as it is now). Essentially you are proving that you had fully conceived your invention before the piece of prior art was known to the public; even if it took a year of diligent work to reduce your invention to practice (during which time the prior art became public) you are still entitled to the patent.

Under first-to-file, the idea of using the date of conception to provide priority goes out the window… all first to file cares about is, not surprisingly, when you file. But even this change is not a totally new concept to wrap your head around. If you’ve even been interested in getting a patent outside the US you have seen this issue before. In virtually the rest of the world, “absolute novelty” reigns; if your invention has been disclosed to the public, you lose.

Admittedly, under the new US rules things are even more difficult since prior art can be invalidating for both novelty AND obviousness, but the basic principle of needing to file before someone else makes a public disclosure is the same.

So, after March 16, 2013, there’s no race to beat another inventor to the patent office but there is an imperative to file before some (academic sort?) publishes something that will destroy your right (and everybody else’s) to get a patent. But right now, before first to file, you should make a concerted effort to file (at least a provisional application) on any potentially patentable invention you’ve been working on.

If you don’t, the piece of prior art you can swear behind on March 15th will be invalidating on March 16th.

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It’s one of those “evergreen” local TV news segments. You’ve heard it many times: “People/fans/devotees starting lining up at 6AM today to be among the first to buy… the new iPhone/Red Sox tickets/the latest version of Grand Theft Auto”. Luckily for inventors, getting priority for your patent application doesn’t involve camping outside the patent office until the examiner first opens your file – not many of us have two or three years to kill. In fact, under the still current “first to invent” law we don’t have to worry about being first in line at the patent office (although it never hurts!)

However, as we all know, the rules have changed and more changes – “first to file” in particular – are coming soon. A few weeks ago I got an email from a client. He wrote:

“We having something that we would like to patent. What are the guidelines now with the new patent law on how long can you wait to do the application?

I told him that nothing in the new law changes how long you CAN wait before filing. Currently you CAN wait indefinitely to file but it there is a risk you might lose out to a later inventor when the patent office determines you could have filed earlier.

What will change after March of next year is that the risk of losing to the later inventor becomes a certainty. First To File means that if you don’t file “now” and some other person later independently invents the same invention and files before you do, he or she definitely gets the patent.

Of course, under current or new rules, you only lose your right to the patent if there is a second, independent inventor. The longer you wait to file, the greater the risk of losing the patent to another inventor. Under “first to invent” you might lose it for holding your invention back while the other inventor was willing to share. Under “first to file” you were simply too late getting in line at the box office… uh, patent office.

My advice for now and after next March is to file at least a provisional application as soon as you practically can. Make sure you have a place in the ticket line. If you are pretty sure that no one else is working on the same invention, you can periodically re-file the same application provisionally, thereby pushing back the deadline for converting to a regular application. It’s like letting people who don’t want the same seats as you do go in front of you in line.

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Keeping your invention as a trade secret just got a lot less risky under the new patent laws – assuming, that is, that your invention is a process or apparatus that you use internally to  make a product or perform a service for a customer. On the other hand, if your secret is embedded in what you are selling – enterprise software sold/licensed under non-disclosure, for example – then you are probably still at risk of being sued for infringement should someone later patent your invention.

Let’s be clear about what the trade secret risk was, prior to September. Perhaps you had invented a manufacturing technique that allowed you to produce widgets significantly faster/better/cheaper than any other manufacturer. From the finished product, no one could reverse engineer your internal manufacturing technique. Typically you would try to keep the details of your technique as a trade secret instead of filing a patent application. Why? You kept it as a trade secret because your patent application, by definition, reveals your secret process and yet it is hard to enforce your patent since you would not be able to tell from your competitor’s finished products if they are infringing your patent.

The risk, however, is that a competitor who independently invented the same technique after you did was (and still is) free to patent it. And once his patent issued, you would be an infringer. Of course, it’s true that it’s hard for your competitor to enforce his patent rights against you, since your finished products don’t reveal your infringing activities. But nevertheless, you were put at risk of being sued for infringement even though you had invented the invention first and had been using it for perhaps many years.

But at last the new patent law has removed this Catch-22, at least in most cases. Under the new law, your prior commercial use of your invention will serve as a defense against an infringement suit. To make use of this defense , generally, you must be able to prove that you were using the invention “commercially” at least one year prior to the filing date of the patent application. Essentially you have to be using that great manufacturing technique to actually make and sell products.

Notice that these “prior user rights” only protect you from an infringement suit for using the invention. It does not allow you to sell copies of the invention to other manufacturers. But as of this past September, you can feel a little less paranoid about being on the losing end of an infringement suit for using your own trade secret invention. As always, it is a good idea to discuss your patent strategy with your patent attorney to understand how the details of the law affect your situation.

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Like many pieces of major legislation, the September 16th passage of the “America Invents Act” had some people running around with their hair on fire… whereas the reality is that many of its most ballyhooed provisions don’t come into play for a year or more. In the next couple of posts I’ll review what you need to think about now…and eventually review what you need to think about later.

The provisions of the act can be broken down into three groups; those coming into effect on or before November 15, 2011, those coming into effect on September 16, 2012, and those coming into effect on March 16, 2013. [For the nit-pickers, yes, some of the later provisions will apply to pending or even issued patents, so there is some earlier impact than their effective dates]. Anyway, let’s look at the most significant provisions that are or will be in effect by a month from now.

Provisions that affect everyone (financial):

  1. There is now a 15% surcharge on Patent Office fees.
  2. Starting 11/15 there is a $400 “electronic filing incentive” (actually a paper filing disincentive surcharge)
  3. There is now a “Micro-Entity” filing category that qualifies for a 75% discount off filing fees.

Item 1. is pretty clear and is already incorporated into the fee schedule from the PTO.
Item 2. is also clear – so if you are almost ready to file a (non-provisional) application on paper, do it before 11/15 to save yourself $400 ($200 small entity).
Item 3., when you read who qualifies as a micro-entity, is really directed at the independent inventor. Here are the qualifications:

  • Qualifies as a small entity;
  • Has not been named as an inventor on more than 4 previously filed patent applications;
  • Did not, in the calendar year preceding the calendar year in which the applicable fee is paid, have a gross income exceeding 3 times the median household income [approximately $50,200]; and
  • Has not assigned, granted, or conveyed (and is not under obligation to do so) a license or other ownership interest in the application concerned to an entity that, in the calendar year preceding the calendar year in which the applicable fee is paid, had a gross income exceeding 3 times the median household income.

Note that being named as an inventor on a patent assigned to a prior employer doesn’t count against you.

Prior User Rights (trade secrets):

The only other immediately effective provision of importance to most of my clients is the expansion of “prior user rights”. Prior user rights means that you can be protected from an infringement suit IF you can prove that you were using the invention commercially in secret for at least a year before the patent holder disclosed the invention publicly.

Under prior law you had a Catch-22 situation; you could maintain your trade secret for years and suddenly risk being sued for infringement should someone else patent your invention, or you could file a patent application, which made your secret public, and risk never being able to enforce your patent (since the actual invention in a trade secret is inherently not visible to the outside world).

Under the new law you can maintain your secrets and still have an infringement defense. It would appear that you will be okay if you maintain an evidentiary chain showing that you were using the invention in commerce. For example, keep process control records that show use of the invention to make a product that you sold. Even stronger as evidence – involve a third party who has no financial interest in the invention. For example, a trusted customer to whom, under NDA, you have revealed the processes you used to fill his orders.


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