Patent Reform Act of 2011 on the Horizon
On Tuesday, September 6, 2011, the Senate invoked cloture on H.R. 1249, also known as the America Invents Act, making it almost a done deal for passage of this Act. One reason that this bill has succeeded over its predecessors is that, with one major exception, there is little difference between the House and Senate versions. The passage of H.R. 1249 will mark the culmination of a 6-year process to pass patent reform legislation that started with H.R. 2795.
The USPTO has provided a summary of the key provisions of H.R. 1249. One provision omitted from this bill but present in failed predecessors is the issue of damages. This generated significant opposition in the past. While H.R. 1249 is not without detractors, it reflects the compromise reached among individual inventors, universities, large and small business concerns. The most controversial provisions in the bill are the following:
- First Inventor to File. Transitions from a “first-to-invent” to a “first-inventor-to-file” patent system while maintaining a 1-year grace period for disclosures by the inventor.
- Post-Grant Review Proceedings.
(i) Replaces “optional interpartes reexamination” with “interpartes review” to be conducted by Patent Trial and Appeal Board within 1 year. The threshold showing is “reasonable likelihood” that the petitioner will prevail based on published prior art. The estoppel standard is “raised or reasonably could have raised” before the USPTO and the courts. Appeals are directed to the Federal Circuit.
(ii) Establishes a “post-grant review” before the Patent Trial and Appeal Board to review validity of issued patents within 9 months of grant on any patentability issue. The threshold showing is “more likely than not” that at least 1 claim is unpatentable. The estoppel standard is “raised or reasonably could have raised” before the USPTO and the courts.
(iii) Establishes an 8-year transitional post-grant review proceeding for review of the validity of business method patents for financial products or services by defendants accused of infringement.
(iv) Allows a pre-issuance submissions procedure for published prior art but not public, use, sale or improper inventorship, which current 35 U.S.C. 122(c) continues to provide for. Submission must be made before the earlier of (a) allowance, or (b) later of 6 months after the date of application publication or the date of first rejection.
- USPTO’s Fee Setting Authority and Funding. Provides the Director with fee setting authority to cover operating and administrative costs. This authority is subject to a 7 year sunset clause. Fees in excess of appropriated amounts still require authorization under the Appropriations Act.
Practitioners should take note of the effective dates for the key provisions as they differ. The “first-inventor-to-file” provision takes effect 18 months from the passage of the Act for patents and applications with a claim having an effective date on or after the bill is passed. Post-grant review proceedings such as inter partes review, post-grant review, certain business method review, and pre-issuance submissions, become effective 1 year after enactment and applies to patents issued before, on, or after that effective date. The USPTO’s fee setting authority takes effect immediately upon passage of the Act.