Sep 27, 2011

America Invents Act Provisions and Its Implications on U.S. Patent Law

On September 16, 2011, President Obama signed the Leahy-Smith America Invents Act (“AIA”) into law. The AIA’s passage and enactment accomplishes the first significant reform to the United States’ patent system in almost 60 years.

The provisions of the AIA aim to harmonize the U.S. patent law with the patent laws of other countries, simplify and reduce costs of patent litigation, and increase patent quality. Though many of the provisions will not go into effect for several months, it is important to understand those changes today, as they may influence future actions.


Arguably the most important change to the U.S. patent system under the AIA is the move from a “first-to-invent” system to a “first-inventor-to-file” system. Under the U.S.’s first-to-invent system, which is still active, the right to a patent is awarded to the inventor who can establish the earliest date of invention. In comparison, under the AIA, the right to a patent will be awarded to the first inventor with the earliest-filed application. This change moves the U.S. closer to harmonizing its patent system with that of every other major system in the world, including Europe and Japan. The provisions regarding the first-inventor-to-file system go into effect March 16, 2013.

Impact on Patent Litigation

The AIA also affects patent litigation, and especially false-marking. Under the previous system, any private individual could file a civil suit against a patent holder to obtain a $500 penalty per false-marking incident. Under the AIA, only the U.S. can collect the $500 penalty. While competitors who can show “competitive injury” can file a suit based upon false-marking, the competitor will be limited to damages that adequately compensate the injury. This provision was effective September 16, 2011, and applies to any pending suit.

The number of defendants allowed in a patent infringement lawsuit has also been altered by the AIA. Before the AIA’s enactment, plaintiffs frequently filed one lawsuit against different defendants whose only connection was that they were accused of infringing the same patent(s)-in-suit. The AIA explicitly states that accused infringers cannot be defendants to the same suit if their only connection is that they are accused of infringing the same patents. For a patent infringement suit to have multiple defendants, it must arise out of the same transaction or occurrence, and any right to relief must be asserted against the defendants jointly and/or severally. This provision of the AIA was effective on September 16, 2011, and applies to any suit filed on or after that date.

The AIA eliminates some defenses to patent infringement. Under the previous system, U.S. patent law provided a best mode invalidity defense for infringers in a patent suit. The AIA eliminates the best mode invalidity defense, explicitly excluding the failure to disclose the best mode as a defense in litigation. However, the AIA does not eliminate the best mode requirement entirely – an inventor must still comply with the best mode requirement during prosecution. In other words, an examiner can reject claims if the inventor fails to disclose the best mode. There are still questions as to whether or not invalidity can be found based on the failure to satisfy the best mode requirement in post-grant review procedures. This provision went into effect on September 16, 2011, and applies in all proceedings filed on or after that date.

In addition, the AIA has expanded the prior use defense that was formerly only available in litigation over business method patents to all patent litigation. A person who can show that he or she was commercially using an invention at least one year prior to the effective filing date of the patent can avoid patent infringement. This provision went into effect on September 16, 2011, and applies to any patent issued on or after that date.

The AIA also establishes that the failure to obtain opinion of counsel or present evidence of such advice to a court cannot be used to prove willfulness or intent to induce infringement. This provision will go into effect on September 16, 2012.

Prior Art Expansion

What qualifies as prior art is also modified by the AIA. Under the old provisions, certain actions, such as public disclosures or offers for sale, had to occur within the U.S. in order to qualify as prior art. The AIA eliminates such a requirement, allowing those and other actions that occur outside of the U.S. to qualify as novelty-defeating prior art events. Additionally, the AIA modifies when a disclosure or action qualifies as prior art. The previous system provided a one-year grace period for disclosures of the claimed invention that occurred within the year preceding the filing of an application. Under the AIA, any printed publication or public action that occurs before the effective filing date of an application, even by just one day, qualifies as prior art, with one exception. That exception is for disclosures attributable to the inventor. However, such disclosures must occur within the year preceding the effective filing date of the application in order to avoid classification as prior art. These provisions go into effect March 16, 2013.

The AIA also increases pre-issuance involvement by third parties. Under the current system, third parties can only submit prior art for applications that have not been published. The AIA permits third parties to submit prior art during prosecution, but the submission must be made before a first rejection or within six months of the publication of the application, and before a notice of allowance has been made. These changes go into effect September 16, 2012.

Post Grant Review Proceedings

Currently, a third party can only challenge the validity of an issued patent before the United States Patent and Trademark Office (“USPTO”) through two proceedings: an ex parte reexamination and an inter partes reexamination. The AIA, while leaving the ex parte reexamination process untouched, creates two additional processes to replace inter partes reexamination: a post-grant review procedure and a supplemental examination procedure. The post-grant review and inter partes review procedures allow a third party to actively participate in challenges to patents through discovery processes and other means. A later-filed civil action is stayed if a post-grant or inter partes review is pending.

The post-grant review procedure allows a third party to challenge a patent on most invalidity issues. A petition for post-grant review must be filed within nine months of the issuance of the patent. The petition must show that it is more likely than not that at least one claim of the patent is unpatentable, or must raise a novel or unsettled legal question in order for the petition to be granted. The third party can use patents, printed publications and other factual evidence, supported by affidavits and declarations, to support its challenge or question. The petitioner has the burden to prove its challenge by a preponderance of evidence during the process.

When a third party misses the opportunity to request the post-grant review, a inter partes review procedure may be initiated. In order for an inter partes review petition to be granted, the requester must show that there is a reasonable likelihood that he or she would prevail with respect to at least one of the claims challenged in the request. Unlike the post-grant review, the petition is limited to challenges based only on patent references and printed publications. The petitioner has the burden to prove its challenge by a preponderance of evidence. Both the post-grant review process and inter partes review process begin September 16, 2012.

Inter partes reexamination, as it transitions into post grant and inter partes review, is currently still available. However, the petitioner needs to show more than just a substantial new question of patentability; the petitioner must now show that there is a reasonable likelihood that he or she would prevail with respect to at least one of the claims challenged in the request. This change was effective September 16, 2011.

The AIA creates a supplemental examination procedure that allows a patent owner to cure inequitable conduct or mistakes that occurred during the prosecution of an issued patent. Patent owners can submit previously undisclosed information or fix incorrect information that may affect the enforceability of a patent. If the submitted information raises a substantial new question of patentability, an ex parte reexamination procedure begins. If no new substantial question is raised, such information cannot be used at a later date to show that the patent is unenforceable. However, the patent may not be protected by this process if the patent is challenged before the submission, or, in some cases, during the supplemental examination and resulting reexamination. The supplemental examination procedure will be available on September 16, 2012, and will be available to any patent.

Changes with USPTO Fees

In addition to increasing many patent service fees, the AIA creates a separate surcharge fee. The surcharge fee charges an additional 15% on all general fees, maintenance fees, patent search fees, and request for continued examination fees. Further, the AIA establishes the Prioritized Examination Fee, which allows a person to request a prioritized examination of a utility or plant application for an additional $4,800, which can be reduced by 50% for small entities. However, the number of priority examinations allowed per year is limited. These increases and additional fees went into effect September 26, 2011.

The AIA also establishes a micro-entity discount of 75% on fees. To qualify as a micro-entity, the inventor must first qualify as a small entity. In addition, the inventor must not have filed more than four non-provisional applications previously in the U.S. The inventor, or its assignee, cannot have a gross income that exceeds three times the U.S. median household income. In addition, institutes of higher learning, and employees who receive a majority of income from such institutes, qualify as micro-entities. The USPTO has not announced when the micro-entity discount will be available.

Patent Prosecution and Litigation in the Future

The America Invents Act has and will significantly change the patent landscape as we know it. The AIA’s impact will not be fully known until years after all of its provisions are enforced, which is still 18 months from now. As those changes are implemented, Smith, Gambrell, and Russell will be available to assist and provide any needed guidance.

For more information on the AIA, contact your SGR Intellectual Property counsel.

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