Patent Reform Act of 2011, Renamed America Invents Act, to Transition U.S. to “First-Inventor-to-File System”

The U.S. Senate continued on Wednesday, March 2, 2011 its debate on S. 23, the America Invents Act, previously known as the Patent Reform Act of 2011.

Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) opened this week’s debate on the long-pending patent reform legislation, speaking about the importance of transition to a first-inventor-to-file system.

“The transition to a first-inventor-to-file system will benefit the patent community in several ways,” said Leahy.  “It will simplify the patent application system and provide increased certainty to businesses that they can commercialize a patent that has been granted.  Once a patent is granted, an inventor can rely on its filing date on the face of the patent.  This certainty is necessary to raise capital, grow businesses, and create jobs.”

Every industrialized nation in the world uses a patent priority system commonly referred to as “first-to-file” – except the United States.  As business and competition becomes more global, patent applicants are increasingly filing patent applications in other countries for protection of their inventions.  The “first-to-invent” filing system in the United States differs from that in other patent-issuing jurisdictions, causing confusion and inefficiencies for American companies and innovators.

On Tuesday, the Senate adopted a managers’ amendment to S. 23, sponsored by Leahy and Senators Chuck Grassley (R-Iowa) and Jon Kyl (R-Ariz.).

The bipartisan Leahy-Grassley-Kyl managers’ amendment to S. 23, the America Invents Act, makes the following changes to the Committee-reported bill:

• Change the short title of the legislation to “The America Invents Act” (currently pending as Leahy Am. SA 114)

• Correct the fee setting section to avoid any potential “blue slip” issues (currently pending as Leahy Am. SA 114)

- BACKGROUND: Revenue raising legislation must begin in the House of Representatives. This provision will address any possible concerns that the bill as originally drafted could lead to so-called blue slip concerns regarding its origin.

• Provide a 50 percent reduction in application and search fees for small entities requesting accelerated patent examination at the U.S. Patent and Trademark Office (USPTO) (currently pending as Bennet Am. SA 116)

- BACKGROUND: The USPTO recently created a “fast track” process to allow applicants to pay an additional fee to cover the cost of having examiners work overtime on certain applications. This provision will ensure that small businesses and inventors receive a 50 percent reduction in the fee.

• End fee diversion at the U.S. Patent and Trademark Office; establish a revolving fund to ensure that funds collected by the USPTO can be used at the USPTO

- BACKGROUND: This provision will benefit users of the patent system who expect the money they pay in fees to be used for patent services and operations, and will benefit the patent office, which is completely user-funded, by allowing the USPTO to budget for the future.

• Create a pilot program to review the validity of business method patents

- BACKGROUND: Many business method patents are of dubious validity because they are not truly inventive. This provision will create a temporary, limited proceeding at the USPTO to challenge business method patents.

• Strike provisions related to damages and venue (currently pending as Bennet Am. SA 118)

- BACKGROUND: These provisions as currently drafted do not make substantive changes to existing law. The current damages provisions establish a gatekeeper role for the court, but do not change the actual legal standard for awarding damages. The current venue provisions codify recent circuit court decisions, provide useful clarity, but make no meaningful change to applicable law. Striking these provisions will address recent concerns of the high tech community, and address concerns of certain Members of the House.

• Change the definition of a “micro entity”

- BACKGROUND: This provision will provide more clarity and increase the income threshold.

• Technical changes

- BACKGROUND: This provision makes minor modifications to effective dates, federal jurisdiction and residency requirements of Federal Circuit judges.

In a first-to-file system, prior art can include the inventor’s own disclosure of his or her invention prior to the filing date of the application. Such systems do not provide the inventor with any grace period during which time he or she is allowed to publish his or her invention without fear of it later being used against him or her as prior art, according to the proponents of the proposed legislation.

The American Invents Act, however, adopts a one-year grace period for inventors. This will protect inventors from having their own invention used against them as prior art, while encouraging early disclosure of new inventions, regardless of whether an application may later be filed for a patent on it. Prior art will be measured from the filing date of the application, and will typically include all art that publicly exists prior to the filing date, other than disclosures by the inventor within one year of the filing.

The America Invents Act was introduced in the Senate on January 25, 2011, by Senator Leahy, Senator Orrin Hatch (R-Utah) and Senator Chuck Grassley (R-Iowa).

The legislation is cosponsored by Senators Jon Kyl (R-Ariz.), Amy Klobuchar (D-Minn.), Jeff Sessions (R-Ala.), Al Franken (D-Minn.), Joe Lieberman (ID-Conn), Christopher Coons (D-Del.), Richard Blumenthal (D-Conn.), Kirsten Gillibrand (D-N.Y.), Herb Kohl (D-Wis.), Tom Harkin (D-Iowa), Sheldon Whitehouse (D-R.I.), and Chuck Schumer (D-N.Y.). The Senate Judiciary Committee unanimously approved the legislation by a 15-0 vote on February 3, 2011. Congressional efforts to reform the nation’s patent system first began in 2005. The Senate Judiciary Committee has reported patent reform legislation to the full Senate in each of the last three Congresses.

Also See:

Strong Growth in Demand for Intellectual Property Rights in 2012 – WIPO

USPTO Updates Professional Conduct Rules and Registration Examination for Patent Attorneys

Expanded SHIELD Act Filed to Combat Patent Trolls

USPTO Publishes Final Rules and Guidelines Governing First-Inventor-to-File

USPTO Seeking Comments on Matters Related to the Harmonization of Substantive Patent Law