Sweeping changes to the U.S. patent system are imminent. By a vote of 95 to 5 the Senate passed the “America Invents Act” on March 8, 2011. If the Act become law, which is likely, it will be profoundly important to inventors, patent owners, and defendants in patent litigation. The House of Representatives is considering its own version of the America Invents Act, introduced on March 30. The House began debate on the bill on March 30 and we expect quick action.
The most important changes to current patent law are to the time when the inventor must file a patent application to protect his or her patent rights. These changes may be referred to as ‘absolute novelty’ and ‘first to file,’ discussed separately below.
Current Law: One Year Grace Period vs. Absolute Novelty
For many years, U.S. inventors have been able to defer filing a patent application for up to one year from the occurrence of any of three events: (1) a sale or offer of sale of the invention, (2) public use of the invention, or (3) disclosure of the invention in a printed publication. This one year grace period allows the inventor to develop the invention and to determine the valuable commercial aspects of the invention before incurring the expense of filing a patent application.
The rest of the world generally follows an ‘absolute novelty’ approach; namely, any public disclosure of an invention immediately terminates all patent rights. The ‘absolute novelty’ approach can be unfair, as when an invention is disclosed by a person who stole the invention. Several countries provide a grace period when a public disclosure is made in breach of a trust.
Grace periods generally benefit inventors, particularly individual inventors and small business inventors that have limited resources to pursue patent applications. ‘Absolute novelty’ generally favors large businesses, which can afford more patent filings, and patent infringement defendants, which generally will have fewer patents to defend against and more ways to defend against a patent.
The ‘America Invents Act’ moves the U.S. beyond ‘absolute novelty.’
Under the prohibitions of the Act, if any of the following occurs prior to the filing date of the patent application, then the inventor is not entitled to a patent:
1. The invention was offered for sale.
2. The invention was described in a printed publication.
3. The invention was used publicly.
4. The invention was “otherwise available to the public.”
Note that these prohibitions do not include a grace period. Under the prohibitions, a public use or an offer for sale of the invention IMMEDIATELY terminates all U.S. patent rights, even if the public use or offer of sale does not disclose how the invention works and does not disclose how to make or use the invention.
The prohibitions of the Act go well beyond ‘absolute novelty’ as applied in the rest of the world. The rest of the world does not care about whether an invention is sold, whether the invention was publicly used or whether the invention is ‘otherwise available.’ The rest of the world cares only whether the invention was publicly disclosed. Under the Act, there will be situations in which a U.S. inventor is precluded from obtaining a patent in the U.S., but nonetheless would be entitled to a patent under the law of, for example, Europe.
The Act creates exceptions to the absolute novelty prohibitions. The inventor can create a one-year grace period if the inventor elects to disclose the invention publicly. The inventor’s public disclosure in effect inoculates the invention against any intervening prior art for one year. If the inventor files a patent application within that one year period, then the inventor has the same grace period that U.S. inventors currently enjoy.
The problem for inventors is that the public notice exception is inconsistent with the law of other countries and forces inventors to make a no-win choice. If an inventor publicly discloses an invention to trigger the one year grace period, the inventor automatically forfeits all foreign patent rights across the globe. Many individual and small business inventors will forfeit their foreign patent rights to gain the benefit of the one-year grace period that they have now for free. Many other individual and small business inventors will refuse to disclose for fear of loss of foreign rights, and will nonetheless lose U.S. patent rights because of intervening prior art. The final choice for the inventor is to file a patent application immediately. The problem with filing an early patent application is that at the early stages the invention likely is not adequately developed to determine whether it is valuable and to determine what aspects of the invention are valuable. The inventor is likely to either waste economic resources filing patent applications for valueless inventions or to miss the valuable aspects of the invention in the premature patent application.
Current Law: First to Invent vs. First to File
For many years, America has followed the philosophy of ‘first to invent;’ namely, the first person to create an invention is entitled to the patent rights, even if that person is not the first to file a patent application. An inventor can defer filing a patent application without fear of changing his or her patent rights (provided that he or she diligently pursues the invention) because those patent rights were determined at the time the invention was conceived rather than the time the patent application was filed.
The rest of the world generally follows the ‘first to file’ approach; namely, the first person to file a patent application is entitled to the patent rights, regardless of whether that person first conceived the invention.
‘First to invent’ again favors inventors, particularly individual and small business inventors that have limited resources to pursue patent applications. ‘First to file’ generally favors large business, which can afford more patent filings, and patent infringement defendants, which generally will have fewer patents to defend against and more ways to defend against a patent.
The ‘America Invents Act’ Adopts First-to-File
Under the Act, if two patent applications address the same invention, the second person to file a patent application is precluded from obtaining a valid patent. The Act includes exception to first-to-file. Generally, prior patent applications by the inventor or prior applications based on the inventor’s work or under common owner ship with the current application do not trigger first-to-file.
Note that the first-to-file exceptions do not affect the printed publication limitations under the ‘absolute novelty’ discussion appearing above. Once an inventor’s patent application is published, then that patent application becomes prior art for any subsequent patent applications filed by the inventor. The Act does not instruct us as to whether publication of a patent application will be considered ‘public disclosure’ by the applicant to trigger the one-year grace period under the absolute novelty requirements.
Effect of the ‘America Invents Act’ on Inventors
If the Act becomes law, inventors must radically change how they treat new inventions. Whenever an inventor conceives of an invention, the inventor must be aware of and choose among the following three options:
(a) The inventor can file a patent application immediately, such as a provisional application. Doing so will preserve patent rights in the U.S. and around the world for one year. The provisional application must meet all of the technical requirements for a patent application, including the enablement and written description requirements. Otherwise, the provisional application is not worth the pixels in which it is written and the inventor risks loss of his or her patent rights. Meeting the enablement and written description requirements generally means that the inventor will retain a patent attorney or patent agent to prepare the application.
(b) The inventor can publicly disclose the invention. Public disclosure of the invention by the inventor preserves the inventor’s U.S. patent rights against intervening disclosures by others for one year. Such disclosure also forfeits all foreign patent rights. The technical requirements for a public disclosure are not yet clear. Public disclosure can be an attractive option if the inventor is absolutely, positively certain that he or she will not seek to commercialize the invention outside the U.S.
(c) The inventor can keep the invention secret. Keeping the invention secret avoids loss of foreign patent rights caused by public disclosure, but risks loss of all patent rights due to an intervening disclosure from another inventor. In addition, failure to keep the invention absolutely, positively secret risks loss of all patent rights. If someone learns of the invention from the inventor and inadvertently or intentionally discloses the invention, then all patent rights are lost unless the inventor can prove that the disclosure was derived from the inventor. This will not be an easy task if the disclosure is in the form of, say, an anonymous website hosted in Russia.
The net effect of the Act is to require inventors and invention owners to spend more money sooner to protect their inventions. Although harmful to all inventors and invention owners, the detrimental effect is greatest on individual inventors and small business invention owners.
— Robert Yarbrough, Esq.