First major patent changes in decades proposed

05/21/2011

Recently, the House and Senate both introduced bills to reform the U.S. patent system, which has remained relatively unchanged for decades. Each bill is entitled the “America Invents Act.” Although differences exist, certain provisions are common to both bills. The Senate version has passed, and the House version was just recently voted to the floor by the Judiciary Committee for a final vote. The following briefly describes three of the major changes that could take place if provisions in the current versions of the America Invents Act become law.
A First-to-File System
One proposed change would transition the U.S. away from a first-to-invent and to a first-to-file system. In the first-to-invent system, there are two steps: (1) conception of the invention and (2) reduction to practice. As long as an inventor conceives of an invention first in time and diligently works to perfect it (i.e. reduce the invention to practice), that inventor is the one qualified to receive patent protection subject to the other requirements of patentability. The new first-to-file system would award patent protection to the first person to file a patent application, regardless of the date of actual invention.
Currently, if two parties seek patent protection for the same invention, a complicated procedure known as an interference proceeding takes place. The U.S. Patent and Trademark Office ultimately concludes interferences by awarding the patent to the party it determines to have invented first. By contrast, in a first-to-file system most conflicts would be resolved with a relatively simple administrative inquiry.
For exceptional cases, the bill has created a new derivation proceeding to replace interference proceedings. A patent applicant could challenge a patent grant within a year of issuance if that applicant believes the named inventor on the issued patent derived the invention from the subject matter of the applicant’s pending patent application. The Trademark Office’s Board of Patent Appeals would then decide whether a derivation took place before reassessing the patentability of both the issued patent and the pending application. Proponents of the first-to-file system contend that it would help the U.S. harmonize its patent system with those of most other countries and alleviate the complexities of interferences. They also claim that a first-to-file system would encourage inventors to more promptly file patent applications to the benefit of the public. Critics of the bill contend that the first-to-file system will disfavor smaller inventors who lack the resources to file patent applications on every potential new invention.
Restrictions to False-Marking Litigation
False marking is the improper identification of a product as being patent protected. As patent numbers are often embedded into expensive molds, and patents do not expire until years after issuance, maintaining proper marking is an administrative challenge. Recently, the number of false-marking suits against companies which are slow to remove such expired patent numbers from their products has risen. Commentators have criticized such suits and contended the plaintiffs are rarely actual competitors but rather opportunistic third parties bringing suit to take advantage of the statutory fines of “not more than $500 for every … offense.” Defendants selling large numbers of products bearing incorrect or expired patent numbers face huge potential liabilities, even if a court were to impose less than the $500 maximum. Rather than risk such a large, adverse judgment, defendants commonly have settled these cases. The America Invents Act would limit persons who could bring false-marking actions to those who have in fact “suffered a competitive injury,” while also instituting a statute of limitations to cut off the ability to file suit after a certain period of time. Advocates of these changes claim that they will greatly curtail the overall number of false-marking cases while limiting such actions to persons who actually have been harmed. A party who could not demonstrate a competitive injury likely would not have standing to bring a false-marking suit forward.
Expanded Third-Party Action in the USPTO
The America Invents Act includes specific provisions that would expand the influence of third parties during examinations and after patent issuance. A third-party submissions provision would allow third parties to submit prior art, such as published patents or industry publications, along with comments to the examiner reviewing a pending application. A new post-grant review provision would also permit third parties to contest the validity of any claim in an issued patent, within nine months of issuance.
Advocates claim that these expanded third-party rights will enhance the Trademark Office review while creating a cost-effective way to challenge pending applications. Conversely, critics contend the new provisions will further complicate patent examinations and open the door to frivolous submissions of prior art designed to frustrate, rather than promote, efficiency during the review of patent applications at the Trademark Office. •

George Chaclas is a Providence-based counsel in the intellectual property department of Edwards Angell Palmer & Dodge. Peter Cuomo is a Boston-based associate in the firm’s intellectual property litigation-practice group.

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