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America Invents Act – Patent ‘reform’ but possibly not simplification

Anthony Blum June 20, 2011

The U.S. now appears closer to a more substantial overhaul of the patent system than has been seen in many years. The “America Invents Act,” sponsored by Sen. Patrick Leahy (D-VT), passed the Senate on March 8, 2011. More recently, Rep. Lamar Smith (R-TX) introduced a similar bill in the House of Representatives. The House Judiciary Committee approved that bill on April 14, 2011 and submitted its report to the full House on June 1, 2011. These similar bills would change the patent system, affecting such topics as post-grant review proceedings; prior-use defenses; false marking; pre-issuance submission by third parties; USPTO fee-setting authority; micro-entity fees; supplemental examination; residency of Federal Circuit judges; tax strategy patents; best mode; transitional post-grant review for business-method patents; and USPTO funding and satellite offices. 

The proposed change from a First-to-Invent system to a First-Inventor-to-File (“FITF”) system is one of the most controversial issues. However, the details of this have not been widely discussed. Some reports incorrectly assume that it will harmonize U.S. law with those of the rest of the world. While the proposed legislation would move the U.S. further down the path to harmonization, major distinctions would remain. To understand these distinctions, Sections 102 and 103 regarding novelty and nonobviousness are discussed below. 

As of now, Section 102 (novelty) is the same in both versions of the bill. Essentially, a person is entitled to a patent under this section unless (1) “the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention” or (2) “the claimed invention was described in a patent issued . . . or in an application for patent published or deemed published . . . in which the patent or application . . . names another inventor and was effectively filed before the effective filing date of the claimed invention.” Thus, this provides the first-to-file rule as has been heavily reported. 

As expected, the new Section 102 would also change the system to provide for worldwide novelty. Thus, foreign sales and uses would be prior art under the proposed legislation. New Section 102 would also continue to allow for the use of secret prior art — similar to current Section 102(e) — except it appears to be even broader. U.S. patents and published applications would be prior art as of their earliest filing date, including a foreign filing date, under the plain language of the legislation. Under current law, these are only prior art as of the earliest U.S. filing date. Moreover, it appears that WIPO publications would no longer be secret prior art under the proposed legislation. It is not clear whether this is an intentional change or simply an oversight. Last, secret prior art will continue to be applicable under a Section 103 obviousness analysis. This is contrary to the European patent system in which secret prior art is only used for novelty and not in the inventive-step analysis.

While the above is the general rule for novelty under the proposed patent reform, there are a number of very important exceptions — which don’t exist in much of the rest of the world. As widely discussed, there is a one-year grace period for disclosures made by the inventor as well as for disclosures by another (in a public disclosure, patent or patent application) in which that subject matter was obtained from the inventor. See new Sections 102(b)(1)(A) and 102(b)(2)(A). This exception does not apply to disclosures by others not derived from the inventor — unlike under current law. Thus, the current one-year grace period is substantially weakened, as is expected in a FITF system. 

Yet, there is another, less commonly discussed exception in the proposed legislation that would allow inventors to essentially swear behind such disclosures (and disclosures in secret prior art) if the inventor publicly disclosed the subject matter of the invention first, before those disclosures. See new Section 102(b)(1)(B) and 102(b)(2)(B). Basically, if an inventor publicly discloses his or her invention (such as in an academic publication) and then files within a year, disclosures, patents and applications by others after the inventor’s public disclosure but before the inventor’s filing date would not be prior art under the plain language of the legislation. This means that the system is not truly FITF. Sometimes the second (or subsequent) filer would actually be entitled to the patent under this exception. In these cases, the U.S. patent process would actually be more akin to a First-Inventor-to-Disclose-or-File system under the proposed legislation.

At this point, it is not entirely clear how the above exception would work in practice. For example, “publicly disclosed” is not defined. Presumably, the exception refers to enabling disclosures (such as in printed publications), but some commentators have suggested otherwise. Relying on such a different interpretation would be inadvisable, though, unless and until more guidance is provided. Doing so could inadvertently cause the loss of patent protection. In fact, it will continue to be more prudent to first file before any disclosure whatsoever — as is already recommended under current law — because it may be hard to show that the exceptions apply. For example, a public disclosure may have been derived from an inventor’s earlier disclosure, but it may not be possible to prove. Alternatively, the inventor’s prior public disclosure may not adequately enable the desired claims. Moreover, much of the rest of the world requires absolute novelty, so filing first is required if patent protection is desired outside of the U.S.

While the pending versions of the “America Invents Act” do represent patent “reform,” they may not represent patent “simplification.” The reforms will not provide complete harmonization with the rest of the world with respect to novelty and obviousness. But if passed, the proposed legislation would drastically alter the current patent landscape in the U.S. — whether positively or negatively remains to be seen.