The Major Provisions of the America Invents Act

Wednesday, November 16, 2011 - 10:23

Many years of effort in Congress to reform U.S. patent law culminated in the enactment of the America Invents Act (“AIA”) on September 16, 2011. Although significantly narrower in scope than its unenacted predecessors, the AIA will nonetheless make a number of important changes to the patent system. 

First to File (AIA § 3, effective Feb. 16, 2013). The AIA substantially revises pertinent sections of the Patent Act, 35 U.S.C. § 101, et seq., to convert the U.S. system from “first to invent,” in which a patent is awarded (in most cases) to the first to reduce an invention to practice, to “first to file,” in which a patent is awarded (again, in most cases) to the first to file for a patent on the invention.

Once the AIA is fully in effect, the first to file for a patent on an invention will generally be entitled to the patent (assuming the other Patent Act requirements are met) unless before the filing date, the invention (i) was available to the public, such as through public use, or (ii) was described in a filed application naming another as the inventor that was later published or later matured into a patent. New 35 U.S.C. § 102(a). The second category differs from the first in that an invention claimed in another’s patent or published patent application is “prior art” as of the effective filing date of the patent or application when the claimed invention would not yet be available to the public and, thus, not yet prior art under the first category. Cf. existing § 102(e). Notably absent from the list of invalidating prior art is the earlier invention of the subject matter by another. Cf. existing § 102(g)(2). 

Certain exceptions, of course, apply.  Primarily, a disclosure made one year or less before the filing date of the application will not preclude a patent if the disclosure was made by the applying inventor (or one who obtained the subject matter directly or indirectly from the inventor) or by any party after public disclosure by the applying inventor. New § 102(b)(1). Similarly, subject matter appearing in a patent (or published patent application) with an earlier filing date will not preclude a later applicant from receiving a patent if (i) the subject matter of the earlier patent was disclosed by or obtained from the later applicant, (ii) prior to the effective filing date of the earlier patent, the subject matter had been publicly disclosed by the later applicant, or (iii) by the effective filing date of the earlier patent, the subject matters of the earlier patent and later application were subject to an obligation of assignment to the same person. New § 102(b). 

Notwithstanding the change to a first-to-file system, the first to file for a patent on an invention will not be entitled to a patent if the invention was derived from a later-filing party. New § 291. Accordingly, the AIA will make available a “derivation proceeding” (which will eventually replace interference proceedings in which competing applicants attempt to prove earlier inventorship) in the Patent & Trademark Office (“PTO”) in which the later-filing party will have the opportunity to obtain a patent by showing derivation by the first to file. New § 135. 

 “Prior User” Defense (H.R. § 5, effective immediately with respect to patents issued on or after Sep 16, 2011). To mitigate the impact of a second inventor receiving a patent by virtue of being the first to file, the AIA provides a defense to some “prior users” of a patented invention. The defense will be available with respect to subject matter consisting of a claimed (i) process or (ii) invention of any type used in a manufacturing or other commercial process if the accused infringer used the subject matter commercially in good faith since at least one year before the effective filing date of the later patent. New § 273(a). Moreover, the sale or other disposition of product or other end result of the commercial process by one entitled to assert a prior user defense will exhaust the patentee’s rights under the patent with respect to the product or other end result. New § 273(d).  

Prior user rights cannot be licensed or transferred and will not be available to a party that had derived the subject matter from the patentee or that abandoned used of the claimed subject matter. New § 273(e)(4). One asserting the prior use defense will have the burden of establishing the defense by clear and convincing evidence. New § 273(b).

PTO Proceedings (AIA §§ 6, 12, effective (except as noted) Sep. 16, 2012). The AIA revises and expands the procedures available in the PTO in which the PTO will, in essence, take a second look at an issued patent to determine whether its claims should be revised or canceled. Currently, a patentee can seek a “reissue” of its patent to correct an error that renders the patent inoperative or invalid; the patentee or a third party can seek an “ex parte reexamination” in which claims of the patent, if warranted, will be canceled, confirmed or amended in view of prior art; or a third party can seek an “inter partes reexamination” to have claims of a patent canceled in view of prior art in an adversarial proceeding.  See existing §§ 251 & 252 (reissue), 302-307 (ex parte reexamination), 311-318 (inter partes reexamination).

Under the AIA, the reissue and ex parte proceedings will remain largely unchanged, but a patentee will have the additional option of seeking a “supplemental examination” proceeding to avoid having a patent declared unenforceable due to information that had not been considered, was inadequately considered or was incorrect in a prior examination. New § 257. Such information, if considered, reconsidered or corrected during a Supplemental Examination, shall not be used to hold a patent unenforceable. 

The inter partes proceeding will be subject to a number of revisions. Most significantly, it will be harder to institute.  Prior to the AIA, an ex parte proceeding would be instituted if the request raised a substantial new question of patentability, but, under the AIA (effective Sep. 16, 2011), an ex parte proceeding will only be granted if the request and any responses show that there is “a reasonable likelihood that the petitioner would prevail” with respect to at least one challenged claim. Compare existing § 312 with new § 314(a). Also under the AIA, an ex parte proceeding will generally not be granted until at least nine months from the date the patent issued.  New § 311(c).  

The two changes to inter partes reexamination (“inter partes review” under the AIA) make room for a new proceeding, the “post grant review.” New §§ 321-329. A third party may request a post grant review within nine months of the issuance of the patent to have one or more patent claims canceled as unpatentable on any grounds for invalidity that could be raised under 35 U.S.C. § 282 (except a failure to satisfy the best mode requirement, see below). This gives the petitioner broader grounds to have a claim declared invalid than the petitioner would have in an ex parte proceeding, in which the PTO will only consider prior art when evaluating a claim. The threshold for instituting a post grant review is also lower than that for instituting an ex parte proceeding: the petitioner need only show that information presented in the petition – if not rebutted – would demonstrate that it is more likely than not that at least one challenged claim is unpatentable. The lower threshold and broader grounds to challenge validity but short time frame for initiating a review are intended to encourage potential challengers to act quickly. 

False & Virtual Marking (AIA § 16, effective for cases pending on Sep. 16, 2011 and thereafter). The AIA amends the marking statute, § 287, to permit a patentee to satisfy the marking requirement by marking a product with the word “patent” (or “pat.”) together with a publicly accessible free Internet site that associates the patented article with the numbers of the patents associated with the article.  The AIA also amends the false marking statute, § 292, by providing that only the United States may sue for the $500 penalty authorized by the statute for false marking. The revised statute, however, permits a party that has suffered actual competitive injury as a result of a violation of the statute to sue for compensatory damages. If a marking is otherwise proper, the fact the patent has since expired will not constitute a violation of the statute.  

Best Mode (H.R. § 15, effective for cases filed on or after Sep. 16, 2011). The AIA eliminates the failure to disclose the best mode of practicing a claimed invention as required under § 112 as a basis for canceling or holding either invalid or unenforceable a patent claim. New § 282. Prior to the AIA, the failure to disclose the best mode of practicing a claimed invention was a ground to validate the patent. To establish a failure to satisfy the best mode requirement, a party had to show, among other things, by clear and convincing evidence that the inventor subjectively possessed a best mode for practicing the invention at the time the application for the patent was filed. Elimination of a failure to satisfy the best mode requirement as a grounds for invalidity appears to have been driven by the difficulties posed by that element.

Willfulness & Advice of Counsel (AIA § 17)). The AIA prohibits the use of a defendant’s failure to obtain advice of counsel with respect to an allegedly infringed patent to prove willful infringement of the patent, which essentially codifies the holding of In re Seagate Technology, LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc). However, notwithstanding Seagate, the failure to obtain advice of counsel remains relevant to the degree to which damages are enhanced after a finding of willfulness is made. Spectralytics, Inc. v. Cordis Corp., 649 F.3d 1336, 1349 (Fed. Cir. 2011). It appears that § 298, which speaks only in terms of using the failure to obtain advice of counsel “to prove” willfulness, does not address whether a lack of advice of counsel can be considered in calculating the enhancement of damages. 

Eric E. Bensen is a co-author of Milgrim on Licensing, Milgrim on Trade Secrets and Bensen & Myers on Litigation Management and advises clients on complex intellectual property issues. 

The foregoing was adapted from LexisNexis Emerging Issue Analysis, “Eric E. Bensen on the America Invents Act,” 2011 Emerging Issues 5900 (LexisNexis 2011), and LexisNexis Emerging Issue Analysis, “Eric E. Bensen on PTO Reissue, Reexamination, and Supplemental Reexamination Proceedings after the America Invents Act,” 2011 Emerging Issues 5901 (LexisNexis 2011).

Copyright © 2011 Matthew Bender & Company, Inc., a member of the LexisNexis Group. All rights reserved. Materials reproduced with the permission of Matthew Bender & Company, Inc., a member of the LexisNexis Group.

Please email the author at ericbensen@gmail.com or contact him through his website, www.ericbensen.com, with questions about this article