The America Invents Act at section 102 changes the way that inventors and companies that own inventions do business. In one of the most important developments for inventors and invention owners, ALL U.S. PATENT RIGHTS IMMEDIATELY TERMINATE if any of the following events occurs on or after March 17, 2013, unless the inventor has filed a patent application:
1. the invention is on sale;
2. the invention is in public use;
3. the invention is described in a printed publication; or
4. the invention is otherwise available to the public.
This change in the law reverses what U.S. inventors have been accustomed to for generations. Under the prior law, the inventor could file a patent application up to one year after the date of a sale or offer for sale, public use or disclosure of the invention in a printed publication. This one-year ‘grace period’ will no longer exist for sales or offers for sale or for public use. A new, limited one-year grace period exists for public disclosures by the owner of the invention, but not for sales or public use. The fly in the ointment is that any such public disclosure immediately terminates the inventor’s foreign patent rights.
In short, the inventor or invention-owning company that wishes to protect its U.S. and foreign patent rights should KEEP THE INVENTION SECRET PRIOR TO FILING A PATENT APPLICATION. Remember that this part of the new law goes into effect March 17, 2013.
This is all a bit complicated, so consider the following examples:
Example 1: On March 17, 2013, the day the new requirements go into effect, the Alpha Company opens a booth at a vending industry trade show. Alpha Company has invented a new and novel vending machine, which it brings to the trade show. Alpha Company has not yet filed a patent application to protect the new vending machine. The new and novel aspects of the machine are not apparent from looking at Alpha’s display and Alpha does not reveal how to make and use the invention.
a. An Alpha representative offers to sell the new vending machine to a customer at the trade show. The machine is ‘on sale’ and Alpha Company immediately forfeits its U.S. patent rights, even though the offer for sale did not disclose the invention. The vending machine still may be patented in Europe, Asia and the rest of the world, provided Alpha does not run afoul of some other prohibition. The rest of the world does not care about sales or offers for sale.
b. The Alpha representative demonstrates the machine to a customer by putting a coin in the machine and dispensing a piece of candy. This is a ‘public use’ of the invention. Alpha Company immediately forfeits its U.S. patent rights, even though the public use did not disclose the invention. The vending machine still may be patented in the rest of the world, because the rest of the world does not care about public use.
Example 2: At the same trade show, Beta Company brings its own new vending machine. Beta Company also has not filed a patent application for the new machine. The machine is not yet operational and Beta is not ready to take orders for the machine, so Beta does not sell or publicly use the machine.
a. Beta produces a brochure that discloses how to make and use the invention. The brochure is on Beta’s table at the trade show and available to the public. This is a ‘printed publication,’ and ordinarily such a printed publication will immediately terminate U.S. patent rights; however, because the disclosure came from Beta Company, the company has one year to file its U.S. patent application. The printed publication also immediately terminates most foreign patent rights.
b. A Beta Company representative gives a presentation at the trade show disclosing how to make and use the invention. This is a public disclosure. The company does NOT forfeit U.S. patent rights, because the disclosure came from Beta Company. The new law includes a limited grace period for public disclosures by the inventor. The Beta Company has one year to file the U.S. patent application, provided it does not trigger some other prohibition. The public disclosure immediately terminates most foreign patent rights.
Alpha Company loses its patent rights, even though it did not disclose the invention. Beta Company keeps its patent rights, even though it DID disclose the invention. Counterintuitive? You bet. So what could Alpha have done to protect its rights? What can you do to protect your rights?
WHAT YOU CAN DO NOW: You can prepare now so that you are not surprised and so that you do not forfeit important patent rights after March 17, 2013. Section A below will be of particular interest to you if your company has inventive employees. Section B below applies to you if you are an independent inventor.
A. COMPANIES WITH EMPLOYEE INVENTORS: A company with inventive employees can take the following steps to be ready for March 17, 2013:
1. Develop company-wide employment agreements, employee handbooks and company policies that require employees to promptly report inventions to the company. The employment agreements and employee handbooks should provide that inventions are automatically assigned to the company. Be aware that the laws of many states, including Pennsylvania, include special requirements for a change to an employee agreement.
2. Develop a company strategy to promptly review all employee inventions for commercial value. For those inventions determined to have value, promptly decide how to protect the invention (trade secret, patent or copyright). For inventions that the company decides to protect through patenting, develop a procedure to promptly file a provisional, utility, PCT (international) or design patent application, as appropriate.
3. Develop company forms and policies requiring visitors and other members of the public to sign non-disclosure agreements as a condition for entering company premises where an unprotected invention may be in use.
4. Train employees on the importance of not using any invention in any setting that could be considered public until a patent application is filed for the invention.
5. Train employees of the importance of not marketing or accepting orders for a product incorporating an invention until a patent application is filed for the invention.
6. Train employees about the importance of not disclosing an invention, either in writing or verbally, until a patent application is filed or until the company makes a deliberate decision to forfeit foreign patent rights and publicly disclose the invention.
B. INDEPENDENT INVENTOR: The independent inventor can prepare now for March 17, 2013:
1. The inventor can require anyone with whom the inventor deals (consultants, designers, engineers, suppliers, attorneys) to sign a non-disclosure agreement. The non-disclosure agreement will alert the inventor’s associates of the importance of secrecy and will avoid any argument that a use in the associate’s present is a public use or that any disclosure to the associate is a public disclosure.
2. Although this part of the law does not go into effect until 2013, the inventor should become accustomed to evaluating inventions promptly and deciding whether to protect the invention by patent. If the inventor decides to protect the invention by patent, or if the inventor is unsure whether the invention is valuable, then the inventor should consider a provisional patent application as a relatively cost-effective way to preserve the inventor’s rights for one year. Please remember that a provisional patent application that does not meet enablement and written description requirements will not protect the inventor’s rights. We do not recommend that the inventor prepare a provisional application himself or herself.
3. Although this part of the law does not go into effect until 2013, the inventor should become accustomed to guarding against any sale or offer for sale of the invention until a patent application is filed. The inventor also should become accustomed to guarding against any use of the invention in public until the patent application is filed. Do not be lulled by the promise of a one year grace period for disclosures by the inventor. From the Act, such a grace period does not apply to public use or to sales. Under prior court decisions, an offer of a license or assignment of the invention is not a sale and so does not terminate patent rights. We expect that those existing decisions will apply to the new law, and so expect that the inventor still can shop the invention to a potential licensee.
4. The inventor should not post information on the invention to a website or distribute any printed publication disclosing the invention prior to filing a patent application or prior to deciding to waive foreign patent rights by publicly disclosing the invention.
The foregoing strategies are only a few of many changes that will be required by the America Invents Act. We will discuss other changes in future newsletters.
— Robert Yarbrough, Esq.