The America Invents Act
A Straightforward Guide to the 2011 Patent Reform Bill
Article Date: Thursday, November 03, 2011
Written By: Lance Lawson
Congress passed the America Invents Act ("AIA") on Sept. 9, 2011, and the President signed it into law on Sept. 16, 2011. As anticipated for more than five years, the AIA brings with it the most sweeping changes to U.S. patent law since the 1952 Patent Act. The move from a first-to-invent to a first-to-file system will go into effect on March 16, 2013 and is the linchpin to many of the more significant changes, including broadening definitions of prior art and a broadened prior commercial use defense.
The AIA also makes significant changes to post-grant administrative proceedings, including replacing the current inter partes reexamination proceeding with separate Post-Grant Review and Inter Partes Review proceedings. Most changes to the administrative proceedings become effective one year after the date of enactment (Sept. 16, 2012). Indeed, the AIA specifically provides that unless otherwise provided, the provisions of the AIA take effect one year after enactment. There are, however, a number of provisions that take effect immediately upon enactment, and as noted above, several important provisions, including those relating to first-to-file, take effect 18 months after enactment (March 16, 2013). For these reasons, practitioners are encouraged to become familiar with the effective dates of each of the provisions of the AIA.
On the litigation front, among other things the AIA limits the circumstances where patentees can join accused infringers in the same lawsuit. The best mode requirement is no longer a basis for invalidating a patent. There are significant changes to the false marking statute, which will likely eliminate the overwhelming majority of the false marking lawsuits filed in the past twenty months. The AIA changed the USPTO fee schedule, including an immediate 15 percent surcharge on most administrative fees. The AIA also provides a prioritized examination procedure that moves a patent application "to the front of the line" upon payment of a specified surcharge.
The purpose of this article is to summarize most of the AIA provisions to ensure practitioners are aware of the changes, and explain in more detail several of the more significant changes to U.S. patent law. Accordingly, this article organizes the AIA into six categories: (1) substantive patent law; (2) preissuance submissions and post-grant administrative proceedings; (3) litigation; (4) USPTO practice and operations; (5) USPTO fees and funding; and (6) miscellaneous provisions.
Substantive Patent Law First-to-File - § 3; 35 U.S.C. §§ 102 and 103. Arguably the most significant change to our current patent law system in the U.S. is moving from a first-to-invent to a first-to-file system effective on March 16, 2013. § 3(b), (n); 35 U.S.C. § 102(a) (Citations preceded by only a "§" symbol are to the relevant section in the AIA. For ease of reference and where relevant, the article includes citations to the corresponding section in the patent statute, title 35 of the United States Code, e.g., "35 U.S.C. § __."). Hence, as of that date, an invention with a claimed effective filing date on or after March 16, 2013 will be subject to the first-to-file rule. Thus, an inventor who made his invention second in time but was the first to file the patent application will generally be entitled to a patent covering the same claimed subject matter over the inventor who was the first to invent but the second to file a patent application.
Over time, the move to a first-to-file system will have many far-reaching effects, and there will no doubt be many articles published in the coming weeks and months that analyze and explain the new law. First-to-file will largely harmonize the U.S. patent law system with the patent systems in the international communities, most of which are first-to-file systems.
Because the provision does not take effect for nearly eighteen months, U.S. companies and patent practitioners have time to consider their patent prosecution strategies in light of the conversion to a first-to-file system. For most practical purposes, the U.S. patent filing system will become a "race to the Patent Office." When the U.S. system converts to first-to-file on March 16, 2013, the date of the invention will no longer be relevant to establishing the priority of the invention; rather, only the effective filing date will be relevant in most cases. Thus, delay in filing the patent application could result in a loss of substantive patent rights due to intervening prior art, including patent applications of others.
Prior Art: definition expanded and includes "Secret" Prior Art - § 3; 35 U.S.C. § 102(a)(1) and (2). The first-to-file system also makes significant changes and in some cases broadens the definition of "prior art." The ability to "swear behind" prior art cited against a patent application is, for the most part, eliminated. The prior art changes go into effect with the first-to-file provisions on March 16, 2013. Under 35 U.S.C. § 102(a)(1), prior art will include art anywhere in the world (scope expansion) before the effective filing date of the application (time expansion), including a new category of art that is "otherwise available to the public":
A person shall be entitled to a patent 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.
§ 3; 35 U.S.C. § 102(a)(1). The new definition also includes U.S. patent applications (or PCT applications designating the U.S.) that are later patented or published, but which were filed "before the effective filing date of the claimed invention." § 3; 35 U.S.C. § 102(a)(2). These U.S. patent applications are a form of "secret" prior art because they are prior art as of their earliest effective filing date (which can be the date of an earlier foreign application) even though they are not available to the public until after publication or issue. Current U.S. law limits the effective filing date to the earliest actual filing date in the U.S. In contrast, many other countries limit the use of unpublished patent applications to questions of novelty, whereas they apply to novelty and obviousness in the U.S. As noted above, under the first-to-file system, a party cannot swear behind the prior art.
Obviousness determined at effective filing date - § 3; 35 U.S.C. § 103. The significant change to obviousness is that it will be judged as of the effective filing date, rather than at the time the invention was made. § 3; 35 U.S.C. § 103.
One Year Personal Grace Period: Public Disclosures by the inventor one year or less before the effective filing date of the claimed invention - § 3; 35 U.S.C. § 102(b). Under the AIA, specified disclosures by the inventor or joint inventor that occur prior to the filing date of an application will not defeat novelty; indeed, these public disclosures by the inventor could help to defeat other potential prior art. Under the new law, there remains a one year grace period, but it will no longer be tied to the date of filing a patent application in the U.S. Rather, the one-year grace period will provide that a public disclosure made by a first inventor one year or less before the "effective" filing date of the patent application will not be prior art against the later-filed application. §3; 35 U.S.C. 102(b). Further, any subsequent disclosure by a second inventor of the same subject matter already disclosed by the first inventor also will not be prior art to the first invention. But if the second inventor files a patent application after the first disclosure by the first inventor, the public disclosures by the first inventor will be prior art to the application filed by the second inventor.
Notably, the relevant sections of the AIA do not specify what would constitute a sufficient disclosure under § 102(b) to preempt a subsequent filer. In addition, it is important to note that a public disclosure before filing the U.S. application may negatively impact the ability to file corresponding patent applications in many foreign countries. Overall, there will likely be a good deal of discussion surrounding the interpretation of the one-year grace period and the appropriate patent application filing strategies given the new changes contained in the AIA.
Derivation Proceedings § 3(i), (n); 35 U.S. C. § 135. Because there will be no interference proceedings under the first-to-file system, interferences will eventually be phased out. Instead of an interference, an applicant may initiate a new process named a "derivation proceeding." § 3(i), (n); 35 U.S. C. § 135(b). If the filing party prevails in the derivation proceeding, the other party's claims will be deemed to be finally refused. A party must file the petition within one year of the date of the first publication of a claim that is the same or substantially the same as the earlier application's claim. The Patent Trial and Appeal Board will have jurisdiction over derivation proceedings.
Preissuance Submissions and Post-Grant Administrative Proceedings
Summary of Changes. The AIA ushers in substantial changes to the administrative proceedings for challenging a patent after grant, and most of these changes take effect one year after enactment (Sept. 16, 2012). While each of these proceedings is covered in more detail below, they warrant a short introduction. Ex parte reexamination proceedings will largely remain unchanged. The AIA will replace inter partes reexamination with inter partes review ("IPR") in which, among other changes, the threshold question for review will be "a reasonable likelihood that the requestor would prevail" with respect to at least one patent claim rather than a "substantial new question of patentability."
Further, the AIA provides for a Post Grant Review ("PGR"), which is a new proceeding allowing for relatively broader challenges to a patent but a party must initiate the proceeding within the first nine months after grant or reissue. In addition, in a PGR proceeding, the threshold standard for initiating the review is a preponderance standard: whether it is "more likely than not" that at least one patent claim is unpatentable. The IPR's "a reasonable likelihood that the petitioner will prevail" on at least one claim initial standard is different from a PGR's initial standard. But for both a PGR and IPR, the evidentiary standard for proving the unpatentability of a claim is by a preponderance of the evidence, which of course is significantly lower than the "clear and convincing" evidentiary standard one must prove in patent litigation in federal courts and at the ITC. In addition, unlike the current inter partes reexamination that limits the proceedings to patents with actual filing dates on or after Nov. 29, 1999, the new IPR currently has no such limitation.
For the patentee, the AIA provides for Supplemental Examination, a new proceeding that will allow the patentee to amend or have the Examiner review additional prior art after issue. If the Director finds there is a substantial new question of patentability, the PTO can order reexamination.
In addition to these post-grant administrative proceedings, the AIA has also added a provision for preissuance submissions, which allows third parties to submit prior art to the PTO prior to the patent issuing.
Preissuance Submissions by Third Parties - § 8; 35 U.S.C. § 122(e). The new section on preissuance submissions by third parties provides an opportunity for "any" third party to submit to the USPTO, for inclusion in the record of a patent application, any patent, published patent application, or other printed publications "of potential relevance to the examination" of a patent application pending in the USPTO. § 8; 35 U.S.C. § 122(e). The time limit for submitting a pre-issuance submission is the earlier of (i) date of the notice of allowance, or (ii) the later of six months after publication or first rejection. In addition to identifying the document, the pre-issuance submission must include a description of the relevance of the document. The process with the USPTO is not interactive: other than identifying the document and describing its relevance, the party filing the preissuance submission may not otherwise communicate with the examiner or USPTO. This provision takes effect one year after the date of enactment (Sept. 16, 2012).
Citations of Prior Art - § 6(g); 35 U.S.C. § 301. Section 6(g) of the AIA amends 35 U.S.C. § 301 to expand the information that may be placed on record in the USPTO for any patent including written statements made by the patent owner in proceedings in the USPTO or federal court regarding the meaning of one or more patent claims. These statements can be used only for claim interpretation in reexamination, PGR, and IPR proceedings.
Ex Parte Reexamination. The USPTO's ex parte reexamination procedures remain largely unchanged under the AIA. Hence, ex parte proceedings continue in their previous form as a post-grant option to challenge the patentability of a patent. See 35 U.S.C. §§ 302 to 307. One notable change is the new law will eliminate the option to pursue an action in District Court to obtain the patent after an adverse reexamination. Instead, judicial review occurs only by appeal to the Court of Appeals for the Federal Circuit.
Post-Grant Review Proceedings - § 6(d); 35 U.S.C. §§ 321-329. Post-Grant Review is a new administrative proceeding by which third parties will be able to seek review of a patent within nine months from grant of the patent (or issuance of a reissue patent). § 6(d). The new PGR adds sections 321-329 to 35 U.S.C. The threshold standard for a PGR is the preponderance of the evidence: "more likely than not that at least 1 of the claims challenged in the petition is unpatentable." § 6(d); 35 U.S.C. § 324(a). A PGR proceeding may consider all grounds of invalidity that can be raised as a defense in patent infringement litigation under 35 U.S.C. § 282, including arguments that the patent claim is anticipated under § 102, obvious under § 103, and indefinite or not enabled under § 112. § 6(d); 35 U.S.C. § 321(b). A PGR may also proceed on the grounds that the petition "raises a novel or unsettled legal question that is important to other patents or patent applications." § 6(d); 35 U.S.C. § 324(b). In addition to prior art, a party may submit affidavits and declarations, including expert opinions, in support of the petition.
Once filed, the USPTO will make the petition available to the public. The patentee will have an opportunity to file a preliminary response to the petition. In addition to the initial petition and response by the patentee, some discovery can be available for the parties, subject to rules to be promulgated by the USPTO. Regarding timing, the determination of whether to grant a petition for a PGR will happen relatively quickly as the USPTO must make such determination within three months of the patentee filing its initial response, and issue its final determination within one year after initiation of the PGR.
The one year time limit for the final decision is subject to a possible six-month extension "for good cause." § 6(d); 35 U.S.C. § 326(a)(11). The Patent Trial and Appeal Board will conduct each PGR and the final determination will be appealable directly to the Court of Appeals for the Federal Circuit.
Any third party can file a petition for a PGR and there is not a requirement that the patentee threaten the third party before one can commence the proceeding. Regarding the relationship to patent litigation in federal courts, a PGR is not available if the petitioner previously filed a civil action challenging the validity of a claim (this does not include a counterclaim alleging invalidity). If the petitioner files a civil action challenging the validity of a claim of the patent while the PGR is pending, the civil action is automatically stayed until the patent owner moves to lift the stay or files a counterclaim alleging the petitioner is infringing a claim of the patent. Regarding the effect of a settlement on the PGR, if the petitioner and patent owner reach a settlement, they may jointly request termination of the PGR prior to a final decision on the merits.
One important consideration regarding a PGR is its preclusive effect on litigation proceedings. If the PGR results in a final written decision by the USPTO, then the petitioner is estopped from commencing another proceeding in the USPTO, or asserting invalidity in litigation in federal court or in a § 337 proceeding before the ITC, regarding the same claim in the patent on any ground the petitioner "raised or reasonably could have raised" during the PGR proceeding. 35 U.S.C. § 325(e). In a PGR proceeding, the patentee may request one time to cancel or amend the patent claims, but the patentee cannot broaden the scope of any amended claims nor introduce new matter. The evidentiary standard in a PGR proceeding for proving unpatentability of a claim is by "a preponderance of the evidence." § 6(d); 35 U.S.C. § 326(e).
The administrative fee to file the PGR may be costly. The AIA provides that the Director of the USPTO shall establish the fees to be paid by the person requesting the review, and that such amounts should be reasonable considering the cost to the USPTO of the PGR.
Inter Partes Review - § 6(a); 35 U.S.C. §§ 311-318. The new IPR, along with the new PGR, will replace the current inter partes reexamination procedures, and replaces 35 U.S.C. §§ 311-318 with new §§ 311-319. As with the current inter partes reexamination, the new IPR procedure keeps the limitation on issues that can be considered to novelty and obviousness in light of only prior art patents and publications. Also, there is a threshold standard that must be met before the USPTO will order review.
But instead of having to show a "substantial new question of patentability" as required under the current inter partes reexamination procedures, the new IPR threshold standard will be whether the petition has shown there is "a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the one claims." § 6(a); 35 U.S.C. § 314(a). Although IPRs do not come into effect until September 16, 2012, this change to the threshold standard applies immediately to inter partes reexaminations filed after enactment of the AIA. Also, the IPR's "reasonable likelihood" threshold standard is different from the PGR's preponderance/"more likely than not" threshold standard noted above. Also as noted above, unlike the current limitation in the inter partes reexamination to patents with actual filing dates on or after Nov. 29, 1999, there currently is no such time limitation in an IPR.
Many of the other provisions of the new IPR are the same or similar to those contained in the new PGR proceedings discussed above:
• The IPR procedure complements the timing of the PGR in that a party may commence an IPR after nine months from grant or reissue of a patent, or after a PGR proceeding.
• Once filed, the USPTO will make the petition available to the public.
• The patentee will have an opportunity to file a preliminary response to the petition.
• Some limited discovery can be available for the parties, subject to rules to be promulgated by the USPTO.
• The USPTO must determine whether to institute the IPR within three months of the patentee filing its preliminary response, and issue its final determination within one year of the USPTO initiating (six-month extension available for "good cause").
• The Patent Trial and Appeal Board will conduct each IPR and the final determination will be appealable directly to the Court of Appeals for the Federal Circuit.
• Any third party can file a petition for an IPR and there is not a requirement that the patentee threaten the third party before one can commence the proceeding.
• An IPR is not available if the petitioner previously filed a civil action challenging the validity of a claim. If the petitioner files a civil action challenging the validity of a claim of the patent while the IPR is pending, the civil action is automatically stayed until the patent owner moves to lift the stay or files a counterclaim alleging the petitioner is infringing a claim of the patent. But filing a counterclaim in a civil action challenging the validity of a patent claim does not constitute filing a civil action challenging the validity of a patent claim for the purposes of the IPR.
• If the IPR results in a final written decision by the USPTO, then the petitioner is estopped from commencing another proceeding in the USPTO, or asserting invalidity in litigation in federal court or in a § 337 proceeding before the ITC, regarding the same claim in the patent on any ground the petitioner "raised or reasonably could have raised" during the IPR proceeding. 35 U.S.C. § 315(e).
• The patentee may cancel or amend its claims, but the patentee cannot broaden the scope of any amended claims nor introduce new matter.
• The evidentiary standard in an IPR proceeding for proving unpatentability of a claim is by "a preponderance of the evidence." § 6(a); 35 U.S.C. § 316(e).
• If the petitioner and patent owner reach a settlement, they may jointly request termination of the IPR any time prior to a final decision on the merits.
• The administrative fee to file the IPR may be costly and will be established by the USPTO.
• The USPTO must determine whether to initiate and IPR within three months of the patentee filing its preliminary response, and the PTAB must issue its final determination within one year of initiation of the IPR. The one year time limit is subject to a possible six-month extension "for good cause."
• The Patent Trial and Appeal Board will conduct each IPR and the final determination will be appealable directly to the Federal Circuit.
As noted above, both the PGR and IPR proceedings should ordinarily conclude within one year from commencing the proceeding. These changes are expected to expedite USPTO review of issued patents by (1) providing proceedings of definite and relatively short duration, and (2) avoiding delays by appeal to the Board of Appeals and Interferences available after the current inter partes reexamination proceedings.
As also noted above, the preclusive effect of an IPR is an important consideration for third parties considering challenging the validity of a claim or claims in a patent. Time will tell, but similar to the current inter partes reexamination proceedings, the preclusive effect of the final determination in an IPR may dissuade a significant number of parties from utilizing the IPR as an avenue to challenge the validity of patent claims.
Supplemental Examination - § 12; 35 U.S.C. § 257. The new Supplemental Examination procedure will be available to the patent owner and asks the USPTO to consider, reconsider, or correct information that is "relevant" to the patent. The purpose of the new rule is to allow the patentee to correct information in the file history that might otherwise cloud the enforceability of the patent: "A patent shall not be held unenforceable on the basis of conduct relating to information that had not been considered, was inadequately considered, or was incorrect in a prior examination of the patent if the information was considered, reconsidered or corrected during a supplemental examination of the patent." § 12; 35 U.S.C. § 257(c).
After receiving the request, the USPTO will have three months to determine whether there is "a substantial new question of patentability." If so, the USPTO will order reexamination of the patent. The USPTO will conduct the reexamination in accordance with the same procedures for an ex parte reexamination, except that the patent owner will not have the right to file a statement under 35 U.S.C. § 304. The Supplemental Examination proceeding will address all identified substantial new questions, without limitation to patents and printed publications. Hence, in that sense the new Supplemental Examination procedure is broader than the current ex parte reexamination proceeding. Because it allows patent owners to make corrections to the file history, the new Supplemental Examination proceeding will give patent owners an opportunity correct a patent and its file history prior to enforcing the patent.
Litigation
Prior User Rights: Defense to Patent Infringement Based on Prior Commercial Use - § 5(a); 35 U.S.C. § 273. Section 5 of the AIA addresses the prior user defense, which became effective on enactment and applies to any patents issued on after the date of enactment. Prior to enactment of the AIA, 35 U.S.C. § 273 provided a prior user defense only against method claims of doing or conducting business. The new law creates a significantly broader prior user right for parties who commercially used the "subject matter" on which they are being sued in the United States, and did so at least one year prior to the effective filing date of the patented invention or the date on which the claimed invention was disclosed to the public. § 5; 35 U.S.C. § 273(a). Regarding the burden of proof, the party asserting the prior use defense must establish it by clear and convincing evidence. § 5; 35 U.S.C. § 273(b). Commercial use includes the period during which an application for marketing approval is pending before a regulatory body. § 5; 35 U.S.C. § 273(c).
There are several limitations on the prior use defense. The prior user defense is a personal defense. § 5; 35 U.S.C. § 273(e). One cannot license or assign it by itself nor can it be expanded by acquisition. In order to establish the prior user defense, the use relied upon must not have been abandoned. § 5; 35 U.S.C. § 273(e)(4). Further, the prior use defense is not a general license for the entire patent; rather, the defense only extends to the apparatus or method used. Also, the defense is not available if, at the time the claimed invention was made, it was owned or subject to an obligation to assign it to either an institution of higher education or a "technology transfer organization" with the primary purpose of commercializing technologies developed by institutions of higher education.
The interplay with the broader prior user defense and trade secrets will be an important and interesting subject as the law develops. The new prior user defense may very well increase the value and importance of maintaining one's technology as trade secrets. If a party is successful in establishing the prior user defense, the party presumably will be allowed to continue using the subject matter of the prior use even if patented later by a third party.
Venue: U.S. District Court for the Eastern District of Virginia - § 9. Effective on enactment, venue for litigation with the USPTO in federal district courts will now be in the United States District Court for the Eastern District of Virginia instead of the District of Columbia. AIA § 9.
Best Mode Requirement - § 15; 35 U.S.C. § 282. Effective immediately, the AIA provides that failure to disclose the best mode will no longer be a basis for invalidation of a patent. One of the purposes behind eliminating the best mode requirement is to reduce patent litigation issues involving intent. The best mode requirement, however, remains a requirement for patentability of patent applications.
Advice of Counsel - § 17; U.S.C. § 298 (new). With respect to advice of counsel, effective on Sept. 16, 2012, the failure of a party to obtain the advice of counsel with respect to any allegedly infringed patent, or failure to present such advice, may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement of the patent.
Jurisdiction and Procedural Matters - § 19. State Court Jurisdiction Limited and Removal - § 19(a) and (c); 28 U.S.C. 1338(a) and 28 U.S.C. § 1454. Effective on enactment, the AIA amends § 1338 and provides that "[n]o State court shall have jurisdiction over any claim for relief arising under an Act of Congress relating to patents, plant variety protection, or copyrights." § 19(a); 28 U.S.C. § 1338(a). This section of the AIA also provides a procedure for removal from a State court to a Federal court of any case concerning patents, plant variety, and copyrights, and is added as a new section (§ 1454). In addition to removal under existing § 1446, the new section provides that the action may be removed by any party and the time limitations of § 1446(b) can be extended "for good cause shown."
Limitations on Joinder of Accused Patent Infringers § 19(d); 35 U.S.C. § 299. An important new provision from the standpoint of patent litigation and accused infringers, effective for civil actions filed after the date of enactment, relates to limitations to joinder of accused patent infringers in one action in U.S. district courts. Such joinder of multiple accused infringers will be proper only if:
• A right to relief is asserted with respect to the same transaction or occurrence, or series of transactions or occurrences, and related to the same accused product or process, and
• Questions of fact common to all defendants or counterclaim defendants will arise in the action.
§ 19(d); 35 U.S.C. § 299. Further, accused infringers may not be joined nor have their actions consolidated for trial, based solely on allegations that they infringed or are infringing the patent or patents in suit. This section includes a waiver provision, which allows an accused infringer to waive the limitations on joinder contained in this section with respect to that party. Hence, this provision allows accused infringers to decide whether they want to remain joined in a lawsuit with multiple accused infringers. It is worth noting that the limitation on joinder of accused infringers in patent litigation proceedings in U.S. district courts does not apply to § 337 patent infringement proceedings brought in the ITC.
Patent "Virtual" Marking - § 16(a); 35 U.S.C. § 287(a). The AIA provides several significant changes to the patent marking provisions, all of which went into effect upon enactment. The new provisions provide for "virtual" marking of a patent number by reference to a publicly-accessible internet address. This provision of course will make it easier in many cases for patentees to keep current the marking of their products with patent numbers.
Patent False Marking - § 16(b); 35 U.S.C. § 292(a), (b). The AIA changes the false marking statute to provide that only the U.S. Government may sue for the statutory civil penalty, and that private parties can sue for compensatory damages only on a showing of a competitive injury. Finally, and importantly, the AIA provides that marking a product with a patent number that covers the product but that has since expired will no longer be a violation of the marking statute. Because these changes became effective upon enactment, they will effectively eliminate nearly all of the patent false marking cases filed in 2010 and 2011 (the overwhelming majority of which were based on expired patents and sought the civil penalty by parties unable to show a competitive injury). Indeed, soon after the President signed the AIA into law, the U.S. District Court for the Eastern District of Texas dismissed - sua sponte - a number of false marking lawsuits.
USPTO Practice and Operations
Assignee filing of applications - § 4; 35 U.S.C. §§ 115 and 118. The assignee filing provisions will go into effect one year after enactment (Sept. 16, 2012). This provision will alter some of the paperwork signed by the inventors; for example, applicants will be allowed to file a combined assignment and declaration. In the event an inventor refuses to sign the oath or declaration or otherwise cannot be found, the assignee may submit a substitute statement instead of the inventor declaration. § 4(a); 35 U.S.C. § 115(d). Further, the AIA provides that an assignee may file an application on behalf of the inventor under certain circumstances. § 4(b); 35 U.S.C. § 118.
Prioritized Examinations § 11(h). An applicant can request a "prioritized examination" of an application for a fee of $4,800. This $4,800 surcharge is in addition to the usual administrative fees for filing, search, examination, processing, and publication. The applicant need not provide a reason for the request, but it must be made at the time the application is filed. Requesting a prioritized examination places the application at the top of the Examiner's queue. An application for a priority examination is limited to four independent claims and a total of thirty claims. This prioritized examination provision went into effect on enactment, but currently is limited to 10,000 applications per year, presumably due to PTO examination constraints.
Patent Trial and Appeal Board - § 7; 35 U.S.C. § 6. The Board of Patent Appeals and Interferences is superseded by the Patent Trial and Appeal Board ("PTAB"). The PTAB will have jurisdiction over appeals during patent examination and ex parte reexamination, and conduct derivation, PGR, and IPR proceedings. The AIA requires that the Board sit in panels of at least three members.
USPTO Fees and Funding
The AIA made a number of changes to the USPTO fees and funding. Fees collected by the USPTO in excess of appropriations shall be placed in a separate fund for potential use by the USPTO. § 22. While there was much discussion about legislation that would mandate that all fees collected by the USPTO would be used only for operation of the USPTO, those provisions did not make it into the AIA. Accordingly, among other things, annual appropriations are necessary to fund the USPTO operations. New fee provisions of particular interest are summarized below.
Immediate 15 percent Surcharge on most USPTO Fees - § 11(i). The AIA grants the USPTO fee-setting authority, subject to a rule-making and review procedure. The AIA imposed a 15% surcharge on most fees, including maintenance fees, which became effective 10 days after the President signed the legislation (Sept. 26, 2011).
Small Entities and Micro Entities § 10(b) and (g); 35 U.S.C. § 123. The AIA continues the previous 50 percent reduction in major fees for small entities. In addition, the AIA adds a new category of "Micro Entities" and grants such entities a 75% reduction in most fees, including the fee for prioritized examination. § 10(b), (g); 35 U.S.C. § 123. Micro Entities can include, among others, those employed by, or who assign an application to, an institution of higher education.
Miscellaneous Provisions
Certain Tax Strategies are not patentable - § 14. Section 14 of the AIA is a new provision and provides that certain tax strategies for reducing, avoiding, or deferring tax liability are not patentable. Instead, these tax strategies are considered prior art. This section does not apply to inventions concerning preparation of tax returns or financial management. This change became effective upon enactment and applies to any pending patent application and any patent issued after enactment.
Human Organisms are Not Patentable Subject Matter - § 33. Section 33 of the AIA provides that "no patent may issue on a claim directed to or encompassing a human organism." This change became effective upon enactment and applies to any pending patent application and any patent issued after enactment.
Transitional Procedure for Business Method Patents Related to Financial Products or Services - § 18. The AIA provides for a transitional program for reviewing the validity of business method patents related to financial products or services, and such program will sunset after eight years. This new procedure applies to business method patents that claim "a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service." The USPTO has one year to implement regulations establishing a post-grant review program for these business method patents, so it will become effective on Sept. 16, 2012. The transitional program will employ the standards and procedures of the new PGR (§ 6 and new PGR provisions discussed supra).
Priority Examinations for Technologies Important to the National Economy or National Competitiveness - § 25; 35 U.S.C. § 2(b)(2). The AIA includes a new provision providing for priority examination for applications to products, processes, or technologies "that are important to the national economy or national competitiveness." This change becomes effective on Sept. 16, 2012.
Calculation of a 60-day Period for Application of Patent Term Extension - § 37; 35 U.S.C. § 156(d)(1). The AIA clarifies 60-day deadline for fling an application for patent term extension after receiving regulatory approval to market the product. This provision became effective upon enactment of the AIA.
Pro bono program - § 32. Section 32 of the AIA requires the USPTO work with and support intellectual property law associations in establishing pro bono programs designed to assist small businesses and independent inventors.
Patent Ombudsman Program for Small Businesses - § 28. Section 28 of the AIA requires the USPTO to establish a Patent Ombudsman Program in order to provide support relating to patent filings for small businesses and individual inventors.
Satellite Offices for the USPTO - §§ 23 and 24. Subject to available resources, the USPTO is authorized to establish "three or more" satellite offices in the U.S. within three years of enactment, i.e., by Sept. 16, 2014. This section of the AIA provides the criteria for selecting the location of the satellite offices, including geographic diversity; evaluations prepared by the Office's Nationwide Workforce Program that resulted in Detroit, Michigan as the first satellite office; consider the purposes of the satellite office program including recruitment and retention of patent examiners; availability of scientific and technically knowledgeable personnel in the region, and the economic impact to the region.
Studies by the USPTO - §§ 26, 27, 29, 31, and 34. Several provisions in the AIA require the USPTO to conduct studies, including implementation of the AIA (§ 26); effective ways to provide certain genetic diagnostic tests where gene patents and exclusive licensing from primary genetic diagnostic tests exist (§ 27); methods to study the diversity of patent applicants (§ 29); how the USPTO can aid small businesses with international patent protection (§ 31); and the "consequences" of patent litigation by non-practicing entities (conducted by the Comptroller General of the U.S.) (§ 34).
Conclusion
As discussed above, the AIA brings the most significant changes to U.S. patent laws since at least the 1952 Patent Act. Some of the provisions went into effect on enactment, many after one year, and still others do not take effect until March 16, 2013. Practitioners should be aware of the changes in the law, and also familiarize themselves with the dates the various provisions come into effect and how such changes will impact their practice. There is no doubt that it will take a number of years, and possibly a decade or two, to fully sort out the details in the interpretation and construction of the new statute and its impact on U.S. patent law. These are indeed interesting times for patent practitioners in the U.S. •
Lance Lawson is a partner in the IP Group of Nelson Mullins Riley & Scarborough and resides in the firm's Charlotte office. Lawson has more than 15 years of litigation experience.
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